Case Summary (G.R. No. 177556)
Antecedent Facts
On August 18, 2004, Aguilar and Transcept entered into an Owner-General Contractor Agreement for the construction of a two-storey vacation house, establishing a project cost of approximately P3.49 million, with a completion date projected for June 7, 2005. Aguilar made an initial downpayment of P1 million. As the project progressed, disputes arose over billing practices and the adequacy of the work performed by Transcept. Following substantial compliance issues identified by a testing laboratory, Aguilar alleged substandard work and further withheld payments, leading to Transcept's cessation of work on the project.
Decision of the Construction Industry Arbitration Commission (CIAC)
The CIAC assessed the value of the work completed and determined that Aguilar had overpaid Transcept. Ultimately, the CIAC found that the value of completed work equated to P1,602,359.97, indicating a substantial compliance with the initial contract. The CIAC ruled that Aguilar was entitled to refunds of P30,076.72 for unaccomplished works and P75,000 for consultancy expenses while denying liquidated damages due to the finding of substantial completion.
Decision of the Court of Appeals
Aguilar appealed the CIAC's ruling, leading the Court of Appeals to conduct a reassessment. On January 24, 2007, the Court of Appeals recalculated cost estimations, finding Aguilar was owed P198,916.02 for unaccomplished works and awarded liquidated damages, arguing that Transcept had only achieved 87.81% of the contract obligations. The Court further determined that Transcept was not entitled to costs for additional works as these were deemed rectifications of prior inadequacies.
Key Issues
The central legal issues deliberated included whether the Court of Appeals made errors in: (1) determining the amount due to Aguilar for unaccomplished works; (2) awarding liquidated damages; (3) denying Transcept's claims for additional works; and (4) awarding consultancy service fees to Aguilar.
Ruling of the Supreme Court
The Supreme Court partially granted the petition, emphasizing that the CIAC's assessment of unaccomplished works was accurate based on the total project obligations. The Court struck down the liquidated damages award by referring to provisions under the Construction Industry Authority of the Philippines (CIAP) documents, affirming that the degree of completion met t
...continue readingCase Syllabus (G.R. No. 177556)
Case Overview
- The case involves a petition for review filed by Transcept Construction and Management Professionals, Inc. (Petitioner) against Teresa C. Aguilar (Respondent), challenging the decisions of the Court of Appeals regarding the construction agreement and the subsequent disputes over payments and damages.
- The Supreme Court's ruling was delivered by Justice Carpio on December 8, 2010.
Antecedent Facts
- On August 18, 2004, Aguilar entered into an Owner-General Contractor Agreement (First Contract) with Transcept for a vacation house project in Batangas, costing P3,486,878.64, with a completion target of June 7, 2005.
- Aguilar made a downpayment of P1 million on August 27, 2004.
- Transcept submitted several billing requests for work done, with Aguilar questioning their validity, particularly the Second Billing submitted on February 1, 2005, which led to Transcept halting work due to non-payment.
- Aguilar hired ASTEC to assess the quality of Transcept’s work, which revealed substandard workmanship and fraudulent billing practices.
- On May 30, 2005, the parties entered a Second Contract, extending the completion date to July 29, 2005. Transcept failed to meet this deadline, leading to further disputes.
- Aguilar filed a complaint against Transcept before the Construction Industry Arbitration Commission (CIAC) after her demand for payment and damages was ignored.