G.R. No. 76787. December 14, 1987
BAYLEN CORPORATION, REYNALDO M. REYES, EDNA L. REYES AND EMMANUEL I. ASTILLERO, PETITIONERS, VS. HON. COURT OF APPEALS (14TH DIVISION) AND JOSE RIZAL COLLEGE, RESPONDENTS.
FELICIANO, J.:
In anticipation of an increase in student enrolment for the
academic year 1970-1971, respondent Jose Rizal
College, sometime in August of 1969, issued invitations to bid for the
construction of a five-storey
school building (Building H, Phase II) within the College’s compound in Mandaluyong, Metro Manila.
Of the four bids submitted, respondent College accepted that of
petitioner Baylen Corporation (hereafter “Baylen“) which, for the amount of P1,196,000.00,
proposed to complete the project within a
period of two hundred (200) working days.
On 16 September 1969,
prior to the execution of a formal written agreement between the parties,
petitioner Baylen mobilized its labor force and began
delivery of construction materials and equipment to the project site. When petitioner Baylen
commenced excavation work on the project site, it discovered that the ground at
the site was not solid and stable enough to support the foundation of the
proposed building. A depression in the
soil surface was also discovered
which likewise posed some technical difficulties. These matters were immediately brought to the
attention of respondent College, which subsequently agreed to conduct
sub-surface exploration tests at the project site and to have the costs of the
same — amounting to P80,000.00 — added on to
petitioner Baylen’s original bid price.
On 30 October 1969,
a Building Contract with a contract price of P1,276,000.00
was formally executed by the parties.
Subsequently, in November of 1969, petitioner Baylen
posted Surety Bond No. G(16)0068 issued by the
Imperial Insurance Company, Inc. in the amount of P255,200.00 to serve as its performance bond.
As work on the project progressed, petitioner Baylen
was able to overcome the problems posed by the condition of the sub-soil and
completed its excavation work in mid-December of 1969. It was at this point in time that the costs
of construction materials dramatically increased as a result of the devaluation
of the Philippine peso due to the adoption of a floating rate of exchange between the Philippine peso and the United
States dollar. Notwithstanding this development, petitioner Baylen proceeded with the project, billing respondent
College periodically for the work accomplished with respect thereto in
accordance with petitioner’s view of paragraph 8 of the Building Contract.
From each of the billings sent by petitioner Baylen,
however, Mr. Fernando Abad, the Supervising Architect
of respondent College, deducted certain substantial amounts before certifying
the same for payment. The result was
that after four billings, only the amount of P210,716.00
had been approved for payment — allegedly P92,681.40 less than what had been
originally billed. Petitioner Baylen requested respondent College to explain the
deductions made by Architect Abad and to promptly pay
the amounts deducted but, Baylen said, no response
was forthcoming. In April of 1970,
petitioner Baylen unilaterally ceased all work on the
project.
Letters were exchanged between the parties but to no avail. The inability of petitioner Baylen and respondent College amicably to settle their
differences led to the mutual filing of civil suits against each other on 29
July 1970 with Branch 26 of the then Court of First Instance of Rizal. The separate
complaints filed by petitioner Baylen and respondent
College were docketed as Civil Case No. 13698 and
Civil Case No. 13697, respectively.
(Civil Case No. 13698 was subsequently dismissed and incorporated as a counterclaim in Civil Case No.
13697.) The surety company, upon being impleaded,
filed a third-party complaint against the officers of petitioner Baylen who had apparently signed the indemnity agreement in
their personal capacities.
Believing that the
substantial aspects of the dispute involved technical matters, the parties
agreed during pre-trial to refer such matters to an independent Commissioner
for determination. Hence, on 2
October 1971, upon
nomination by respondent College and with the consent of petitioner Baylen, Appraisers (Philippines), Inc. was appointed by the trial court to
serve as Commissioner in this case and asked to carry out the following tasks:
“1. To determine what
portion of the whole structure of the building as provided and described in the
plans and specifications (Exhibits J, J-1 to J-3) had been finished;
2. To determine the cost of completing the
building from that point in accordance with the said plans and specifications
at present condition;
3. To determine what is the value of the work
already finished by Baylen Corporation when they
stopped working in April, 1970 in relation to the stipulated contract price of
P1,276,000.00; but this is subject to the plaintiff’s
objection for being immaterial.”[1]
On 1 June
1973, the
Commissioner submitted its report, which contained the following findings:
“Portion of the whole structure of the
building as provided
and described in the plans and specifications finished —
(a)
Reinforced concrete foundation resting on
natural adobe base.
(b)
Approximately 1/2 of ground floor framing
concreted, the other half having only structural reinforcing bars laid in
place.
(c)
Vertical steel bar reinforcements for all
columns extending up to the second floor level installed.
(d)
Reinforcing steel bars of the six (6) main beams along bays at the
stalk room partially installed.
Estimated cost to complete the building in
accordance with said plans and specifications at present condition -?
(As of May 30, 1973) P1,879,160
Value of work already finished by Baylen Corporation -?
(As of April 1970) P
341,330″[2]
Neither
party having objected to the contents of the Commissioner’s report, the same was adopted as a common exhibit.
On 30 June 1976,
upon the conclusion of the trial on the merits, the trial court rendered a
Decision, the dispositive portion of which reads:
“WHEREFORE, on the main complaint, judgment is hereby rendered
in favor of the plaintiff and against the defendants, to wit:
1.
ordering the defendant Baylen
Corporation to pay the plaintiff liquidated damages at the rate of P200.00 a
day from June 6, 1970 with legal
rate of interest until fully paid;
2.
ordering defendant Baylen
Corp. to pay the plaintiff the sum of P1,879,160.00, representing the estimated
costs for the completion of the project, with legal rate of interest from June 6, 1970, until fully paid;
3.
ordering the defendant Baylen
Corporation to pay the plaintiff the sum of P25,000.00 for and as attorney’s
fees; and,
4.
ordering the defendant
Imperial Insurance, Inc. to pay the plaintiff, jointly and severally with the
defendant Baylen Corporation to the extent of
P255,200.00 of the aforementioned amounts.
On the third-party complaint, the third-party defendants are hereby
ordered to pay the third-party plaintiff, jointly and severally, for whatever
amount the third-party plaintiff shall finally pay the plaintiff.
With costs against the defendants Baylen Corporation.
The counterclaims of the defendants are hereby ordered dismissed.
SO ORDERED.”
Both petitioner Baylen (defendant
below) and the surety company (third-party plaintiff below) appealed the above
decision to the Court of Appeals. The
appeal was docketed as CA-G.R. CV No. 61134.
In a Decision dated 30
October 1986, the
Court of Appeals affirmed the judgment of the lower court in the following
manner:[3]
“WHEREFORE, the judgment appealed from is AFFIRMED with the
modification that the defendant Baylen Corporation
and defendant Imperial Insurance Company, Inc., are ordered to pay, jointly and
severally, the plaintiff:
(a) the
sum of P472,546.00, with interest at the legal rate from June 27, 1970 until fully paid;
(b)
the sum of P40,000.00, representing the penalty
of P200.00 a day for a period of 200 days, with legal interest from June 27, 1970 until fully paid;
(c)
the sum of P10,000.00 as and for attorney’s fees.
The liability of defendant Imperial Insurance Company, Inc., to pay
the aforementioned sums of money is limited, however, to P255,200.00,
the extent of its liability under the performance bond it issued.
Proportionate costs against both defendants.
SO ORDERED.”
On
10 December 1986, the Motion for Reconsideration filed by petitioner Baylen was denied.
In
its Petition for Review before this Court, petitioner Baylen
urges the following grounds for grant of the Petition:
a)
that the respondent appellate court erroneously
interpreted stipulations of the parties set out in the Building Contract
between them, more particularly Section 8 thereof;
b)
that the respondent appellate court committed a
grave abuse of discretion in disregarding the Commissioner’s report
notwithstanding the failure of both parties to object to such report and its
adoption as
a common exhibit of the parties; and
c)
the conclusion of the
respondent appellate court relating to the percentage of completion of the
project achieved by petitioner, is grounded entirely on conjecture or
misapprehension of facts.
Considering their interlocking nature, we
shall consider the grounds so
urged by petitioner together.
The stipulations of the Building Contract which the respondent
appellate court, the petitioner urges, misinterpreted, are those found in
Section 8 of the Building Contract, which are:
“8. TERMS OF PAYMENT: The OWNER shall pay to the CONTRACTOR in installments
of not less than thirty (30) days each, until the whole consideration of this
contract has been fully paid, in amounts not to exceed, and proportionate
to, the value of the work done and materials placed or used in said work. The final payment shall be subject to
additions and deductions in accordance with this contract. No payment to the CONTRACTOR shall be made
except upon a
certificate issued by the Architect as to the work done or
completed. No payment made or any
certificate issued by the Architect shall in any way be construed as an
acceptance by the OWNER of any part of the work, nor will the same in any way
lessen the total and final responsibility of then CONTRACTOR.”[4]
(Underscoring supplied).
Baylen is unable to see any uncertainty or
ambiguity in the phrase “in amounts not to exceed, and proportionate to,
the value of the work done and materials placed or used in said
work”. Baylen
contends that the project owner, respondent College, should pay the contract
price in monthly installments equivalent to the “actual value of
work it had accomplished and materials placed or used in the project
every month.”[5] It points to the report of the Commissioner
where the “value of work already finished by Baylen
corporation [as of April 1970]” is set out as “P341,330.00.” It does not appear to us possible to
clarify “the value of the work done etc.” by merely referring to
the “actual value of the work done etc.” Baylen
appears to assume that the reference of this contract phrase is to the
“value” of the labor component and of the materials
component of the “work done”.
The thrust of Baylen’s interpretation is that,
thereunder, it is
entitled to be paid (or reimbursed?) the “value”
(“cost”? or “cost plus profit”?) of the labor and materials
put into the project during the preceding month. One difficulty (and it is not the only
difficulty, as will be seen
later) with Baylen’s interpretation is that it
disregards totally the words “and proportionate to” in the
clause under consideration. Baylen seeks to
explain away the words “and proportionate to” by invoking the maxim noscitur a
sociis; here, Baylen
does not persuade.
Upon the other hand, the project owner, respondent College, urges vigorously that the
monthly installments of the contract
price, which it is obligated by Section 8 to pay, must be proportionate to the percentage of completion of the total project achieved during
the preceding month by petitioner Baylen. In other
words, the project owner contends that
the petitioner contractor is generally entitled
to be paid only the same percentage of the total contract price as the
percentage of completion of the total project
work actually achieved by Baylen; the
contractor is not entitled to be
paid faster than its rate of progress in completing
the project. Thus, if at any
given time, the petitioner contractor
shall have completed x% of the total project,
it shall be entitled to have been paid x% of the total contract price. In the view of project owner, such is the intent which underlies the words
“proportionate to“. If
one were to look merely at the underscored portion of Section 8, quoted above,
one must concede that project owner’s view places a heavy burden upon such a
slender phrase as “and proportionate to”.
Fortunately, as pointed out by the respondent appellate court, the
project owner’s view is reinforced by the fact that the Architect’s Certificate
without which no installment payment could be made
under the Building Contract, must specify “the work done or completed”
and by the nature of the contractor’s undertaking under the Building
Contract. The point is adequately
summarized in the decision of the trial court “fully subscribe[d] to by
the Court of Appeals:”[6]
“Indeed, as maintained by the plaintiff, the contract calls
for such a ratio between the contract price and the work accomplished. This is so as the building, as per plans
and specifications, Exhibits I, J, J-1 to J-36, has to be delivered
to the plaintiff complete and ready for use and occupancy not later than June
15, 1970, at the stipulated contract price of P1,276,000.00,
irrespective of the decrease and increase in the price of the materials and
cost of labor during the period of
construction.
To compute the payment in accordance with the contention of Baylen Corporation, with the increase in the cost of labor
and materials, it (sic) will lead to a situation
where the plaintiff will have to pay the whole stipulated contract price of
P1,276,000.00 even though the work
accomplished is only half through.
Thus, the plaintiff would be left, without sufficient security. Although the plaintiff could retain 10% of
the contract price until after the delivery of the building and there is a surety
bond for P225,200.00, the total of the same is only
P382,800.00. It should be further noted
that Baylen Corporation’s total billings amounted to
about P400,000.00 for a 14.5% work accomplished.
As aptly testified to by Architect Abad:
‘I based my recommendation in proportion to the contract price, otherwise
the owner would have paid the Contractor in excess of what was accomplished
knowing that the contract price was different compared to the actual cost price
of materials and labor at the time.
In other words, had I computed it based on actual costs of labor and
materials, then there will be time when
the Contractor would have been paid more than the percentage of work
accomplished. In other words, there
would be a time when all the payments perhaps would
have been paid to the Contractor and almost only 1/2 of the project is only
finished.’
x x
x x
x x x x x.”
(Underscoring supplied)
Petitioner contractor argued long and hard about the installment
payments which it claims should have been made by the respondent project
owner, possibly because it was necessary for petitioner contractor to make out
a case of prior breach of the
Building Contract on the part of respondent project owner in order that the
walk-out or abandonment by petitioner contractor of the project might itself be justified. It will be seen, however, that the real dispute between petitioner and
private respondent relates not
so much to the amounts of the installment payments properly payable under the Building Contract but rather to who, under that
Contract, must bear the increased costs of constructing and completing the project work. The answer
to this issue must, of course, be looked for in the provisions of the Building Contract
itself.
The Building Contract open with the following terms:
“That for and in consideration of the total amount of ONE
MILLION TWO HUNDRED SEVENTY SIX THOUSAND PESOS (P1,276,000.00), Philippine
Currency, to be paid by the OWNER to the CONTRACTOR, his successors, heirs
and assigns, in the manner hereinafter set forth and specified, the CONTRACTOR
agrees to undertake the complete
construction of a FIVE-STORY (sic) building known as Building
H Phase II in the compound of the Jose Rizal College
at Shaw Boulevard, Mandaluyong, Rizal
for the OWNER, in accordance with the general conditions, plans, and
specifications prepared by the Owner’s
Architect, which are made integral parts of this contract; and the parties
hereby agree and stipulate to be bound by the following terms and conditions.
x x x x x x x
x x.”
(Underscoring supplied)
Thus,
for the stated contract price of P1,276,000.00, petitioner contractor was
obligated to construct and complete a five-storey building in accordance with
agreed plans and specifications,
furnishing in that connection “all the necessary work, labor, constructions (sic), equipments, tools and materials needed for the
construction of the above-mentioned
building —.”[7]
Moreover, the building contracted for was required to be completed
and
“ready for use and occupancy not later than June 15, 1970, unless
prevented by weather, accident or unavoidable cause. The failure of the CONTRACTOR to complete the
erection and construction of said Project, and to deliver the said building to
the OWNER for use and occupancy within the date given, shall entitle the OWNER
to deduct from the contract price herein stipulated as part of the liquidated damages the
sum of P200.00 for each day of delay. It
is understood by the parties that the completion and delivery to the OWNER of
the said building within the stipulated time is imperative in view of the
purpose and use intended for said building, namely, for the holding of classes
beginning the 1970-1971 school year.”[8]
(Underscoring supplied)
The Building Contract was, in fact, one for the supply, erection and construction of a
building on a turn key basis, on a specified completion date. It is especially important to note that the
Building Contract does not contain an escalation clause. Escalation clauses in construction contracts
commonly provide for increases in the contract price under certain specified
circumstances, e.g., as the cost of selected commodities (cement, fuel, steel
bars) or the cost of living in the general community (as measured by, for
instance, the Consumer Price Index officially published regularly by the
Central Bank) move up beyond specified levels.[9]
It is, thus, clear that the Building Contract is a fixed price, lump sum contract. The contract price is a fixed price,
i.e., not subject to escalation. The
contract price is, furthermore, a lump sum price and is not based upon the specified cost of a defined unit of work. Neither is the contract one on a “cost reimbursement”
or “cost reimbursement plus supervision fee” basis, which is what petitioner contractor impliedly
contended. It follows that any increase
in the cost of constructing and completing the project work must, under the Building Contract, be borne by petitioner
contractor. Put a little differently,
petitioner contractor assumed the risk that the cost of constructing the
building might change before the building was completed and turned over to the
project owner.
It is also important to
note that the above result is grounded not only upon the provisions of the
Building Contract, but also upon the provisions of applicable law which is
Article 1724 of the Civil Code:
“ART. 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 landowner, 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.” (Underscoring
supplied)
It is also perhaps well
to note that there is nothing exotic about a contractor assuming
the risk of the costs of construction moving up before completion of a
project. Fixed price, lump sum contracts
are quite common in the construction industry.[10] The contractor can, in the first place, and
commonly does, build into its bid or negotiated
price a realistic contingency factor to protect its
expected profit from erosion by drastic cost increases. In the second place, the well-organized,
credit-worthy contractor should
be able substantially to mitigate the impact of expected or possible increases
in construction costs. It is open to
such a contractor to take advantage of economies of scale by buying
construction materials in bulk and thus availing of bulk discounts, and to
anticipate price increases by buying such materials forward. The contractor can, furthermore, reduce its
effective costs by increasing the productivity and efficiency of its work force
and by keeping its administrative and other overhead costs down. There is thus nothing unfair about holding a contractor to its fixed price, lump
sum contract even in an environment of rising prices.
We turn to the question of the appropriate measure of damages
that respondent project owner is entitled to recover from petitioner Baylen. The trial
court ordered petitioner Baylen to pay to the project
owner the sum of P1,879,160.00 which, per the report
of the Commissioner, was “the estimated cost to complete the building in
accordance with the said plans and specifications at present condition (as of May 30, 1973)”. The Court of Appeals correctly held the trial court to be in error here.
The appropriate measure of direct damages which a contractor, like petitioner Baylen, must pay for
abandoning a project under a fixed price, lump sum contract is not
the cost of constructing or completing the building under conditions of
increased costs, but rather merely the increase over the original contract
price which the project owner would have to pay if the project is to be
completed. The trial court’s decision would
in effect have required Baylen to give the project
owner the building practically free of charge.
The Court of Appeals said, on this point:
“What the defendant must be liable for,
however, are the damages which the plaintiff had suffered as a consequence of its unjustified
refusal to continue the construction.
One of these is the increase in construction cost which is the
difference between what it would cost to finish the building and the contract
price. Thus, deducting the contract
price of P1,276,000.00 from the sum of P1,879,160.00, the cost to complete the
building as found by the Commissioner; the plaintiff must be adjudged to
have suffered actual damages in the sum of P603,160.00.”[11]
(Underscoring supplied)
The Court of Appeals thus
correctly determined the appropriate measure of damages. It went on, however, to state:
“That the evidence shows that for the work the defendant
had accomplished, which was valued by the Commissioner at P341,330.00, it was paid only the sum of P210,716.00. In other words, plaintiff still owed the
defendant the sum of P130,614.00 at the time the
defendant stopped working in 1970. Such being the case, we believe that this
indebtedness of the plaintiff should be taken into account, reducing
defendant’s liability to the plaintiff [to] the sum of P472,546.”
(Underscoring supplied)
The respondent appellate court here fell into error. Both the trial court and the Court of Appeals[12]
found that at the time of Baylen’s abandonment of the
project, Baylen had accomplished only 14.5% of the whole project. Baylen, at that time, had been paid by respondent project
owner P210,716.00 which represented 16.51% of the
contract price of P1,276,000.00.
Petitioner has failed to adduce any compelling reason why we should
overturn these findings of facts. The
difference of P130,614.00 between P341,330.00 (the
“value” of the work actually accomplished as found by the
Commissioner) and P210,716.00 (the amount already paid by the project owner)
must have represented the increase of the costs of reaching the percentage
(14.5%) of completion of the project actually reached by Baylen
as of April 1970. As
such, that increase of P130,614.00 could not have been
included in the total increase of the costs of completing the project, i.e.,
P603,160.00, since that total increase of costs of completion was arrived at
(correctly) by taking the Commissioner’s figure of P1,879,160.00 which was the
cost of carrying forward to completion the project from where petitioner Baylen left off in April 1970. This is clear from the terms of reference
given to the Commissioner by the trial court:
“1. To determine what portion of the whole
structure of the building as provided and described in the plans and
specifications (Exhibits J, J-1 to J-3) had been finished;
2. To determine the cost of completing the
building from that point in accordance with the said plans and
specifications at present condition;
x x
x x
x x x x x.”
(Underscoring supplied)
It
follows that respondent project owner did not owe to petitioner Baylen the amount of P130,614.00
and that that amount should not be deducted from the total increase of
costs for which Baylen is responsible.
Respondent project owner estimated the adjusted cost of the
completed building as P3,863,600.00.[13]
This estimate of cost, however, was made as of 21 April
1978.[14]
We believe that this adjusted 1978 estimated cost cannot be used for
determining the damages petitioner Baylen is liable
for, having been made too long after the actual abandonment of the project by Baylen. Upon the
other hand, it appears to us reasonable to use in this connection the 30 May 1973 figure given by
the Commissioner in his report,
P1,879,160.00.
The other element of damages for which the respondent appellate
court held petitioner liable, was the penalty of liquidated damages in the
amount of P200.00 stipulated in the Building Contract for each day of delay.[15]
The trial court would have held petitioner liable for P200.00 per day until
(apparently) the building was actually constructed and completed. The Court of Appeals, on the other hand,
limited the maximum period of the delay for which petitioner contractor could
be held liable to 200 days. It may be
noted that the Building Contract itself did not put a limit upon the length of
the delay for which the contractor could be held liable. More importantly, however, the terms of the
relevant section of the Building Contract indicate that the
liquidated-damages-for-delay clause was intended to be operative where the
contractor actually completed the project, though beyond the stipulated
completion date; in other words, where the contractor in delay did not
abandon the project uncompleted.
Section 7 read in part:
“x x x The
failure of the CONTRACTOR to complete the erection and construction of said
Project, and deliver the said building to the OWNER for use and
occupancy within the date given shall entitle the OWNER to deduct
from the contract price herein stipulated as part of the liquidated damages
the sum of P200.00 for each day of delay.
It is understood by the parties that the completion and delivery to the
OWNER of the said building within the stipulated time is imperative in view of
the purpose and use intended for said building, namely, for the holding of
classes beginning the 1970-1971 school year.
Since the OWNER is an educational institution and time is of the
essence of this contract, the OWNER shall have the right to take possession of
and use any completed or partially completed portions of the work after the
expiration of the Contract Time; but said taking possession and use shall not be deemed an acceptance of any work
not completed in accordance with the contract.
Neither shall it be deemed a waiver by the OWNER of its right to claim
for damages due to delays in
the completion of the work.”
(Underscoring supplied)
In
this case, however, Baylen did not merely incur delay
in completing the project. Baylen abandoned the project which therefore had to be
taken over by either the project owner or another contractor and
completed. Accordingly, we do not
believe that here, the liquidated damages for delay should be awarded to
respondent College on top of the award of the total increase in costs of
completing the project, there
being no contract stipulation to that specific effect. We do not believe that a penalty clause may casually be extended beyond its natural and ordinary
import.
WHEREFORE, the Petition for Review is DENIED. The decision of the Court of Appeals dated 30
October 1986 is
MODIFIED to the following extent:
1)
Paragraph (a) of the dispositive
portion is amended so as to read as follows:
“The sum of P603,160.00 with interest at the legal rate from June 27, 1970 until fully paid;”
2)
Paragraph (b) of the dispositive
portion is deleted;
As so modified, the decision of the Court
of Appeals is AFFIRMED. No pronouncement
as to costs.
SO ORDERED.
Fernan (Chairman), Gutierrez, Jr., Bidin, and Cortes, JJ., concur.
[1]
Joint Record on Appeal, p. 122.
[2]
Joint Record on Appeal, pp. 138-139.
[3]
The decision was penned by Pronove, J., and
concurred in by Pascual and Javellana,
JJ.
[4]
Joint Record on Appeal, p. 33.
[5]
Petition, pp. 13-14.
[6]
Decision of the Court of Appeals, pp. 10-11.
[7]
Section 1, Building Contract; Joint Record on Appeal, pp. 27-28.
[8]
Section 7, ibid., p. 32.
[9]
See e.g., Regulations and Instructions
on International Competitive Bidding for Major Industrial Projects and
Uniform General Contract Terms and Conditions Applicable thereto (To Implement
P. D. No. 1764 dated 11 January 1981) Appendix V “Cost Escalation Formula
for Local Civil Works”, p. 45.
[10]
See e.g., the Regulations and Instructions, supra note 9, p. 1,
which require contracts for the supply, construction
and installation of industrial plants, or any part thereof (for instance, the
civil works component thereof) to
be submitted to bidding and
awarded on “a turnkey fixed
price, lump sum basis.”
(Sec. 1.2.1 [b]). The same Regulations
and Instructions permit the parties to provide,
“on an exceptional basis subject to approval of the Board of
Investments,” for an escalation formula for the local costs of an
industrial plant project.
[11]
Rollo, pp. 43-44.
[12]
See trial court’s decision, Joint Record on Appeal, p. 195; Court of Appeals’
decision, pp. 12-13, Rollo, pp. 41-42.
[13]
Brief for the
plaintiff-appellee Jose Rizal College, p. 28.
[14]
The date of respondent’s Brief before
the Court of Appeals.
[15]
Section 7, Building Contract; Joint Record on Appeal, p. 32.