(B) Subcontract works.
To carry out complete structural steelworks11 outlined in the Sub-contract Lump Sum Price [of P44,223,909]12 in accordance with the Main Drawing13 and Technical Specifications14 and in accordance with the Main Contract, all of which are available on Site.
(c) Special Conditions of the Sub-Contract.x x x x x x x x x
2. Notwithstanding the provisions of Clause 11(4)15 of the General Conditions of the Sub-contract, this Sub-contract is on a Fixed Lump Sum basis and is not subject to re-measurement. It is the responsibility of [respondent] to derive his own quantities for the purpose of the Lump Sum Sub-contract price. No additional payments will be made to [respondent] for any errors in quantities that may be revealed during the Sub-contract period. (emphasis supplied) 16x x x x x x x x x
(1) written authority from the developer or project owner ordering or allowing the written changes in work and
(2) written agreement of parties with regard to the increase in price or cost due to the change in work or design modification.
Endnotes:
1 Under Rule 45 of the Rules of Court.
2 Penned by Justice Ruben T. Reyes (retired) and concurred in by Justices Andres B. Reyes and Jose L. Sabio, Jr. of the Former Special Fifteenth Division of the Court of Appeals. Rollo, pp. 108-127.
3 Id., pp. 129-130.
4 Contract No. P302-C-001. Id., pp. 363-531.
5 Contract No. P302-C-001, Part E, par. 5 delineated the scope of the structural steelworks as follows:5.0. Structural Steelworks.
5.1. Supply, detailing where required, fabrication, surface preparation, painting and shop trial assembly of structural steelwork and light-gauge steelwork associated with the steel building as shown on the drawings such as columns, beams, girders, girts, purlins, crossbracings, fly braces, sag rods, bridgings, base plates, crane railings and like items.
5.2. Supply of all field connection materials such as nuts, bolts, washers, screws, shims, packers, gaskets, back-up bars and the like.
5.3. Non-destructive testing (NDT) of the Works, in accordance with the approved ITP. A minimum of 5% of welds shall be tested using dye penetrant testing.
5.4. Field assembly and installation (including touch-up painting) of structural steelwork and light-gauge steelwork.
5.5. Preparation of concrete surfaces and supply and installation of grouting after levelling, alignment and tensioning of the structures' bolted connections.
5.6. Supply and installation of cladding including gutters, ridge roll, flashings and other accessories and items including but not limited to down pipes, roller doors, personnel doors and vents as shown in drawings.
Contract No. P302-C-001, Part E, par. 14 referred to the following drawings:
P302-6200-S-401 0 FACTORY BUILDING STRUCTURAL STEEL WORKS FRAME ELEVATION AT LINE 2-6 P302-6200-S-402 0 FACTORY BUILDING STRUCTURAL STEEL WORKS FRAME ELEVATION AT LINE 7-17 P302-6200-S-403 0 FACTORY BUILDING STRUCTURAL STEEL WORKS FRAME ELEVATION AT LINE 1,18-24, A & B P302-6200-S-404 0 FACTORY BUILDING STRUCTURAL STEEL WORKS ELEVATION AT LINE B, E, F, & G P302-6200-S-405 0 FACTORY BUILDING STRUCTURAL STEEL WORKS ROOF FRAMING PLAN P302-6200-S-406 0 FACTORY BUILDING STRUCTURAL STEEL WORKS ROOF BRACING LAYOUT PLAN P302-6200-S-407 0 ADMINISTRATION BUILDING MEZZANINE FLOOR FRAMING PLAN P302-6200-S-408 0 FACTORY BUILDING CRANE BEAM LAYOUT PLAN, SECTIONS & DETAILS P302-6200-S-409 0 FACTORY BUILDING STRUCTURAL STEEL WORKS ELEVATION AT LINE C & D P302-6200-S-410 0 FACTORY BUILDING MISCELLANEOUS SECTIONS & DETAILS P302-6200-S-411 0 FACTORY BUILDING MISCELLANEOUS SECTIONS & DETAILS P302-6200-S-412 0 FACTORY BUILDING ROOF BEAM ARRANGEMENT LAYOUT & DETAILS6 Letter of respondent's application engineer Joel O. Peñalosa to petitioner's project manager Michael Dent. Dated June 5, 1997. Annex "D," id., pp. 526-527.
7 Letter of Dent to respondent's president Oscar A. Mitra.
8 P302-6200-S-405, supra note 5.
9 P302-6200-S-408, id.
10 Sub-Contract No. 68001 (June 1997). Id., pp. 532-551. The subcontract was signed by Dent and Mitra and witnessed by respondent's quantity surveyor Simon Bennett and Peñalosa.
11 Contract No. P302-C-001, Part E, par. 5, supra note 5.
12 Sub-Contract No. 68001 (June 1997), Third Schedule. Rollo, p. 595. The contract price was broken down as follows:
Item No. Description Amount 1.0 Structural Steelworks 1.1 Supply and Fabrication 250 Mpa Steel P20,565,575.45 350 Mpa Light-Gauge 6,648,451.82 1.2 Painting 250 Mpa Steel 4,465,760.00 350 Mpa Light-Gauge 1,443,694.55 1.3 Delivery 250 Mpa Steel Included 350 Mpa Steel Included 1.4 Installation 250 Mpa Steel 5,350,400.00 350 Mpa Light-Gauge 1,729,671.82 TOTAL P40,203,553.64 Plus 10% Value Added Tax (VAT) 4,023,355.36 SUB-CONTRACT LUMP SUM PRICE P44,223,909.00 =============13 Contract No. P302-C-001, Part E, par. 14, supra note 5.
14 SPEC-P302-S-001/0. Rollo,pp. 471-486.
15 11. Valuation of Variations.
x x x x x x x x x
(2) The value of all the authorized variations shall be ascertained by [respondent] by reference to the rates and prices (if any), specified in this subcontract for the like or analogous works, but if there are no such rates and prices or if they are not applicable then such value shall be ascertained in the same manner as specified in the main contract.
x x x x x x x x x
(4) Save where the quantity is expressly stated in any bill of quantities forming part of the sub-contract, no quantity stated therein shall define or limit the extent of any work to be done by the sub-contractor in the execution and completion of the sub-contract works, but any difference between the quantity so billed and the actual quantity executed shall be ascertained by measurement, valued under this clause as if it were an authorized variation and the necessary addition to or deduction from the [lump sum price of P44,223,909] shall be made accordingly.
16 Part II, Special Conditions of Subcontract, Second Schedule. Id., p. 545.
17 Part II, Special Conditions of Subcontract, Third Schedule, par. C. Id., p. 547. The paragraph provides:
Main Contract Site Access Date (S.A.D.) 19 June 1997 Structural Steelworks Steel frame Grid 1 to 4 within 11 weeks of S.A.D. Steel frame Grid 4 to 8 within 15 weeks of S.A.D. Steel frame, Grid 8 to 12 Within 17 weeks of S.A.D. Steel frame, Grid 12 to 18 Within 20 weeks of S.A.D. Steel frame, Grid 18 to 24 Within 20 weeks of S.A.D.
18 Part II, Special Conditions of Subcontract, Second Schedule, par. C(7). Id., p. 546. The paragraph provides:
(6) [Petitioner] shall pay [respondent] a downpayment amounting to 10% of the sub-contract price upon issuance by [respondent] to [petitioner] a performance bond amounting to 10% of the sub-contract price in accordance with Article 15 of the General Conditions of the Contract. The balance amounting to 90% of the sub-contract price shall be paid through monthly progress billings.
19 Rollo, p. 691.
20 Petitioner's liability should be proportionate to cost of the percentage completed in the project. Thus, it is computed as follows:
Petitioner's liability = fixed lump sum price x percentage completed Petitioner's liability = P44,223,909 x 86% Petitioner's liability = P38,032,561.7421 Based on the previous computation, petitioner overpaid respondent by P397,578.95.
22 Docketed as CIAC Case No. 25-98.
23 Rollo, pp. 210-246.
24 Docketed as CA-G.R. SP No. 52090.
25 Civil Code, Art. 1724 provides:
Article 1724. The contractor who undertakes to build a structure or any other work for a stipulated price, in conformity with plans and specifications agreed upon with the land-owner, can neither withdraw from the contract nor demand an increase in the price on account of the higher cost of labor or materials, save when there has been a change in the plans and specifications, provided:
(1) Such change has been authorized by the proprietor in writing; and
(2) The additional price to be paid to the contractor has been determined in writing by both parties. (1593a)
26 Supra note 2.
27 Supra note 3.
28 Civil Code, Art. 1713 provides:
Article 1713. By the contract for a piece of work the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. The contractor may either employ only his labor or skill, or also furnish the material. (emphasis supplied)
29 Rules of Court, Rule 130, Sec. 9 provides:
Section 9. Evidence of written agreements. -- When the terms of an, agreement have been reduced to writing, it is considered as containing all the terms agreed upon and there can be, between the parties and their successors in interest, no evidence of such terms other than the contents of the written agreement.
However, a party may present evidence to modify, explain or add to the terms of the written agreement if he puts in issue in his pleading:
(a) An intrinsic ambiguity, mistake or imperfection in the written agreement;
(b) The failure of the written agreement to express the true intent and agreement of the parties thereto;
(c) The validity of the written agreement; or
(d) The existence of other terms agreed to by the parties or their successors in interest after the execution of the written agreement.
The terms "agreement" includes wills. (emphasis supplied)
30 Roble v. Arbasa, 414 Phil. 343, 355-356 (2001) and Sabio v. International Corporate Bank Inc., 416 Phil. 785, 807 (2001).
31 See note 5 in relation to note 13.
32 Part II, Special Conditions of Subcontract, Second Schedule, par. C. Rollo., p. 545.
33 See notes 7 and 8 in relation to note 5.
34 Statement of admitted facts in the March 19, 1999 CIAC decision, par. 3. Rollo, p. 211.
35 Supra note 25.
36 Titan-Ikeda Construction & Development Corporation v. Primetown Properties Group, Inc., G.R. No. 158768, 12 February 2008, 544 SCRA 466, 489-490 citing Powton Conglomerate, Inc. v. Agcolicol, 448 Phil. 643 (2003).
37 Supra note 6.
38 Supra note 9.
39 Available online at http://www.businessdictionary.com/definition/lump-sum-contract.html.
In a unit price contract, on the other hand, project cost depends on the quantity of items needed to carry out the work. The project cost is therefore provisional. See Hanjin Heavy Industries and Construction Co., Inc. v. Dynamic Planners and Construction Corp., G.R. Nos. 169408 and 170144, 30 April 2008, 553 SCRA 541, 546.
40 Triad Electric and Controls, Inc. v. Power Systems Transport, Inc., No. 94-20783 (USCA, 5th Cir), 30 June 1997.
41 See Uniwide Sales Realty v. Titan-Ikeda Construction and Development Corporation, G.R. No. 122619, 20 December 2006, 511 SCRA 335.