Case Digest (G.R. No. 84132-33)
Facts:
In 2005, the Province of Cebu was designated by then-President Gloria Macapagal-Arroyo to host the 12th ASEAN Summit scheduled for December 10, 2006. To prepare for the event, the Province decided to construct the Cebu International Convention Center (CICC) located at the New Mandaue Reclamation Area in Mandaue City, Cebu. The project was divided into phases, and in a public bidding held on February 22, 2006, WT Construction, Inc. (WTCI) won the contract to build Phase I, which comprised the substructure of CICC. After finishing Phase I and receiving payment, WTCI also won the bidding for Phase II, which involved the adjacent works to CICC.
As Phase II approached completion, the Province requested WTCI to undertake additional works beyond the original scope. These additional works involved site development, and expansions in structural, architectural, electric, and plumbing components. Aware of the urgency to meet the ASEAN Summit schedule and upon assurances of prompt payment,
...
Case Digest (G.R. No. 84132-33)
Facts:
- Background and Project
- In 2005, the Province of Cebu was selected by former President Gloria Macapagal-Arroyo to host the 12th ASEAN Summit scheduled on December 10, 2006.
- To prepare, the Province decided to construct the Cebu International Convention Center (CICC) at the New Mandaue Reclamation Area, Mandaue City, Cebu, which would serve as the venue for the ASEAN Summit.
- Contract Awards and Works
- The Province held a public bidding for the CICC project; on February 22, 2006, WT Construction, Inc. (WTCI) won the bid for Phase I – the substructure of the CICC.
- After completing and receiving payment for Phase I, WTCI again won the bidding on July 26, 2006 for Phase II – the adjacent works on the CICC.
- Additional Works and Dispute
- As Phase II neared completion, the Province requested WTCI to perform additional works, including site development, and further structural, architectural, electric, and plumbing works (referred to as "additional works").
- WTCI agreed to undertake these additional works despite the lack of public bidding because of the urgent need to complete the project on time and with assurances of prompt payment.
- WTCI completed the additional works by November 2006, weeks before the ASEAN Summit, and subsequently demanded payment.
- Billing and Non-payment
- On February 8, 2007, WTCI billed the Province P175,951,478.69 for site development and extended structural and architectural works.
- On February 12, 2007, WTCI billed the Province P85,266,407.97 for additional electrical and plumbing works.
- The Province refused to pay both claims, prompting WTCI to send a Final Billing on February 21, 2007 for the aggregate amount of P261,217,886.66.
- Further demands for payment were made on March 20, 2007 and September 11, 2007, but the Province still refused to pay.
- Legal Proceedings
- WTCI filed a complaint for collection of sum of money on January 22, 2008 before the RTC, docketed Civil Case No. CEB-34012.
- The Province admitted the existence of additional works but denied there was a contract for them, arguing the absence of public bidding as required by Republic Act No. 9184 (Government Procurement Reform Act).
- Upon joint verification, the value of additional works was pegged at P263,263,261.41.
- RTC Judgment and Reconsideration
- On May 20, 2009, the RTC ruled in favor of WTCI and ordered the Province to pay:
- P263,263,261.41 for the additional works with 12% legal interest per annum from filing of the complaint until fully paid;
- P50,000.00 attorney’s fees;
- costs of suit.
- The RTC found a perfected oral contract for the additional works and awarded compensation under the doctrine of quantum meruit to prevent unjust enrichment.
- The Province filed a motion for reconsideration, arguing the valuation should be P257,413,911.73 and denying liability for interest, claiming WTCI worked at its own risk.
- The RTC granted the motion in part on September 22, 2009, reducing the principal amount to P257,413,911.73 but maintained the 12% interest, attorney’s fees, and costs of suit.
- Court of Appeals (CA) Decision
- The Province appealed to the CA.
- On December 19, 2012, the CA affirmed the RTC’s ruling but reduced the legal interest rate from 12% to 6% per annum.
- The CA deemed the issue of the existence of contract immaterial since the Province acknowledged liability for P257,413,911.73.
- The CA found the refusal to pay was in bad faith, justifying attorney’s fees and costs of suit.
- A motion for reconsideration by the Province was denied August 8, 2013.
- Petitions Before the Supreme Court
- WTCI filed a petition for review on certiorari (G.R. No. 208984), arguing the obligation was a forbearance of money warranting 12% interest computed from the extrajudicial demand dated February 2007.
- The Province also filed a petition (G.R. No. 209245), contending no perfected contract existed, payment was made under quantum meruit, and no liability for interest or attorney’s fees.
- The Supreme Court consolidated the petitions.
Issues:
- Whether the Province of Cebu’s liability to WTCI is in the nature of a loan or forbearance of money.
- Whether legal interest should be computed from the filing of the complaint or from the time of the extrajudicial demand made by WTCI.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)