J PLUS ASIA DEVELOPMENT CORPORATION v.

UTILITY ASSURANCE
CORPORATION
G.R. No. 199650
June 26, 2013
Delay/Default
FACTS:
Petitioner J Plus Asia and Martin Mabunay, representing Seven Shades of Blue Trading and
Services, entered into a Construction Agreement whereby the latter under took to build the
formers 72-room condominium/hotel. The project cost P42 million and was to be completed
within one year, reckoned from the first calendar year after the signing of the Notice of Award
and receipt of downpayment (20% of contract price). The downpayment was paid on 14
January 2008. Per agreed work schedule, the completion of the project was December 2008.
Mabunay also submitted the required Performance Bond issued by respondent Utility
Assurance Corporation (UTASSCO) in the amount equivalent to the downpayment, or P8.4
million.
Mabunay commenced the work on 07 January 2008. However, as of 14 November 2008, the
project was only 31.39% complete. Thus, J Plus Asia terminated the contract and sent
demand letters to Mabunay and the respondent surety UTASSCO. J Plus Asia filed a request
for arbitration with the Construction Industry Arbitration Commission (CIAC) and prayed
that Mabunay and UTASSCO pay P8.9 million as liquidated damages and P2.3 million
overpayment that petitioner made to Mabunay. In his Answer, Mabunay stated that the
termination of the contract was premature, and thus the complaint was baseless and in bad
faith.
Based on such dispute, the CIAC ruled in favor of J Plus Asia and ordered Respondents to
pay the corresponding amount. However, this was reversed by CA, which stated that
Mabunay had not yet incurred delay, and was not yet in default because the obligation was
not yet demandable.
ISSUE:
Whether or not Mabunay has incurred delay. YES.
HELD:
Yes, Mabunay was already in delay.
Article 1374 of the Civil Code various stipulations of a contract shall be interpreted
together.
In the case, the work schedule approved by the petitioner was intended not only to serve as its
basis for payment of monthly progress billings, but also for evaluation of work by the
contractor. According to the Construction Agreement, the contractor shall be deemed in
default if it had delayed without justifiable cause the completion of the project by more than
30 calendar days based on official work schedule duly approved by the owner.
Moreover, the Construction Agreement authorizes the petitioner to confiscate the
Performance Bond from the Respondent to answer for all ki

Prepared By: Mariel Angeli R. Quines