- Petitioner
- Continental Cement Corp.
- Respondent
- Filipinas (Prefab) Systems
- Citation
- G.R. No. 176917
- Court
- Supreme Court
- Division
- Third Division
- Ponente
- Nachura, J.
- Decided
- August 4, 2009
Summary
This consolidated case involves a construction contract dispute between Continental Cement Corp. and Filipinas (Prefab) Systems, Inc. over a P82.3 million cement plant expansion project. When FILSYSTEMS threatened to abandon the project due to payment delays, the parties entered a Compromise Agreement. Both parties subsequently claimed the other was in default. The Supreme Court found that CCC was in default for failing to pay progress billings and P3.5 million for accomplished change orders, entitling FILSYSTEMS to P12,345,000 in liquidated damages. However, FILSYSTEMS was also held liable for P6.6 million as the cost of completing the unfinished 7.17% of the project, since it failed to complete its contractual obligation despite being entitled to time extensions due to CCC's payment delays. The decision clarifies the application of Article 1167 of the Civil Code regarding mutual breach scenarios in construction contracts.