F.F. CRUZ & CO., INC. vs. HR CONSTRUCTION CORPORATION | G.R. No. 187521 | March 14, 2012

F.F. CRUZ & CO., INC. vs. HR CONSTRUCTION CORPORATION

G.R. No. 187521,  March 14, 2012 

 

Facts

   

Sometime in 2004, FFCCI entered into a contract with the Department of Public Works and Highways (DPWH) for the construction of the Magsaysay Viaduct, known as the Lower Agusan Development Project. On August 9, 2004, FFCCI, in turn, entered into a Subcontract Agreement with HR Construction Corporation (HRCC) for the supply of materials, labor, equipment, tools and supervision for the construction of a portion of the said project called the East Bank Levee and CutOff Channel in accordance with the specifications of the main contract. Pursuant to the Subcontract Agreement, HRCC would submit to FFCCI a monthly progress billing which the latter would then pay, subject to stipulated deductions, within 30 days from receipt thereof.   The parties agreed that the requests of HRCC for payment should include progress accomplishment of its completed works as approved by FFCCI. Additionally, they agreed to conduct a joint measurement of the completed works of HRCC together with the representative of DPWH and consultants to arrive at a common quantity. Thereafter, HRCC commenced the construction of the works pursuant to the Subcontract Agreement. However, before the project was completed, HRCC pursuant to the arbitration clause in the subcontract agreement filed with the Construction Industry Arbitration Commission a complaint praying that FFCI pay the overdue application plus legal interests they have not paid. FFCCI maintained that HRCC failed to comply with the condition stated under the Subcontract Agreement for the payment of the latter‘s progress billings, i.e. joint measurement of the completed works, and, hence, it was justified in not paying the amount stated in HRCC‘s progress billings. 

 

Issue

Whether or not FFCCI is already barred from contesting HRCC‘s valuation of the completed works having waived its right to demand the joint measurement requirement. 

 

Ruling

The Supreme Court held that FFCCI had waived its right to demand for a joint measurement of HRCC‘s completed works under the Subcontract Agreement. Further, on account of its failure to demand the joint measurement of HRCC‘s completed works, had effectively waived its right to ask for the conduct of the same as a condition sine qua non to HRCC‘s submission of its monthly progress billings. Basically, the instant issue calls for a determination as to which of the parties‘ respective valuation of accomplished works should be given credence. FFCCI claims that its valuation should be upheld since the same was the result of a measurement of the completed works conducted by it and the DPWH.  

 

On the other hand, HRCC maintains that its valuation should be upheld on account of FFCCI‘s failure to observe the joint measurement requirement in ascertaining the extent of its completed works. FFCCI admits that in all three instances where it paid HRCC for its progress billings, it never required compliance with the aforequoted contractual provision of a prior joint quantification. Such repeated omission may reasonably be construed as a waiver by FFCCI of its contractual right to require compliance of said condition and it is now too late in the day to so impose it. Article 6 of the Civil Code expressly provides that ―rights may be waived unless the waiver is contrary to law, public order, public policy, morals or good customs‖. The tribunal cannot see any such violation in this case.