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SOUTH
Korean construction giant Hanjin Heavy Industries and
Construction Co. Ltd. has lost a P300-million case to a
former subcontractor that it accused of abandonment,
with the Supreme Court (SC) giving more weight to the
subcontractor’s right to be paid for a completed stage
of construction at the Davao International Airport.
The SC
ordered the construction firm to pay its local
subcontractor Dynamic Planners and Construction Corp. (DPCC)
P300 million and the interest demanded by the latter for
the construction of the Davao International Airport, now
known as the Francisco Bangoy International Airport.
Associate Justice Presbitero Velasco Jr. of the Court’s
Second Division, in ruling thus, has affirmed with
modification the August 31, 2005, decision of the Court
of Appeals ordering Hanjin to pay PDCC P293.95 million
plus retention money of P58.2 million.
However,
the SC reduced from 12 percent to 6 percent the annual
interest on the retention money, reckoned from November
20, 2003, until the total award becomes final and
executory.
A yearly
interest of 12 percent on the total amount adjudged by
the Construction Industry Arbitration Commission (CIAC),
as affirmed by the CA with modifications, shall likewise
be imposed against Hanjin starting from the CIAC’s
issuance of the final award on September 2004 until full
payment of the award.
The
Court dismissed the claim of Hanjin that DPCC was not
entitled to the retention money and should instead be
held liable for damages for abandoning the project.
DPCC
replied it never abandoned the project but merely
suspended it due to Hanjin’s failure to release the down
payment and the payment of its progress billing as
agreed upon.
DPCC
further told the Court that when project works had
reached 94-percent completion in December 2002, Hanjin
took over the project for alleged abandonment.
“Instead
of paying, Hanjin held on to Dynamic’s retention money.
Worse still, Hanjin willfully and in apparent bad faith
took over the unfinished work of Dynamic. To us, and to
CIAC and the CA earlier, Hanjin in effect waived any and
all of its rights to hold Dynamic liable for any
defects, deficiencies, or unfinished work,” said the SC
decision.
DPCC
accused Hanjin of ignoring flaws in the designs of the
project despite notification from experts; the flaws
later resulted in cracks appearing in the
passenger-terminal beams. Hanjin blamed the DPCC for the
defects, but the Association of Structural Engineers of
the Philippines-Task Force Davao International Airport
cleared the DPCC, having failed to discover evidence
that the subcontractor deviated from the design plans
and specifications.
The
Davao airport contract was earlier awarded by the
Department of Transportation and Communications to
Hanjin, who bid P1.0 billion, 65 percent of which was
payable in pesos and the remaining 35 percent in US
dollars. |
