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By William B. Depasupil, Reporter
THE Supreme Court (SC) has ordered controversial
Korean firm Hanjin Heavy Industries and Construction Co., Ltd. (Hanjin)
liable for the delay in the construction of the Davao International
Airport project.
As such, the SC’s Second Division ordered
Hanjin to pay Dynamic Planners and Construction Corp. (Dynamic), the
subcontractor of the project, to pay a total of P352.162 million
plus interest.
The amount represents P293.952,273.36
for the final award and P58,210,336 for retention. The SC also
ordered Hanjin to pay a separate P500,000 for attorney’s fee.
The 33-page decision penned by Justice
Presbitero Velasco, Jr. affirmed with modification an earlier
decision by the Court of Appeals (CA) and the Construction Industry
Arbitration Commission (CIAC).
The CA had earlier ordered Hanjin a 12-percent
interest per annum on the P293.952 million on the net award from the
promulagation of the assailed final award on September 7, 2004,
until paid. The High Court reduced the interest to 6 percent.
Records show that on August 23, 1999, the
Department of Transportation of Communications awarded to Hanjin the
construction of the Davao airport for P1.7 billion, 65 percent of
which in peso and 35 percent in US dollars.
On Feburary 26, 2000, Hanjin and Dynamic
executed a subcontract agreement over a 76.5-percent portion of the
main contracts for the price of P924.67 million.
Among others, the subcontract contained
provision on advance payment and progress billing, the first item
payable within 20 days from the contract signing.
Progress billing represents claims for payment
for works accomplished and materials delivered as construction
progresses.
On April 2002, when 89 percent of the project
had been finished, Hanjin informed Dynamic that no progress billing
would be forthcoming after April 2002. As of that time, a total of
20 progress billings were submitted to Hanjin in the total amount of
P582.1 million, 10 percent of which, or over P58.2 million, was
retained by Hanjin.
Hanjin claimed that Dynamic was delayed in, and
eventually abandoned the project, prompting the company to complete
what was left behind by Dynamic.
Hanjin thus claims that Dynamic should not be
entitled to the retention money and should instead be held liable
for damages.
But the Court sustained the CA and CIAC’s
findings that Dynamic did not abandon the project.
In its resolution dated August 31, 2005, the CA
upheld CIAC’s finding on non-abandonment.
“The CIAC found that Dynamic did not abandon
the subcontract works, but that it was squeezed out of the
subcontract and was rendered by Hanjin incapable of performing the
obligations therein,” the resolution said.
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