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    Metrol Rail v. Gammon

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    Lovely Macaraeg
    The Supreme Court ruled that a contract was perfected between MRT and Gammon Philippines, Inc. A contract is perfected when both parties consent to the object and cause. Here, MRT awarded the contract to Gammon, and Gammon accepted, perfecting the contract. While MRT temporarily suspended the first notice to proceed, this was only a suspension, not a cancellation, so the contract remained binding. The Court found MRT and Gammon believed the contract to be in force, despite temporary suspension, so a contract was perfected between the parties.

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    Metrol Rail v. Gammon

    Uploaded by

    Lovely Macaraeg
    214 views3 pages
    The Supreme Court ruled that a contract was perfected between MRT and Gammon Philippines, Inc. A contract is perfected when both parties consent to the object and cause. Here, MRT awarded the contract to Gammon, and Gammon accepted, perfecting the contract. While MRT temporarily suspended the first notice to proceed, this was only a suspension, not a cancellation, so the contract remained binding. The Court found MRT and Gammon believed the contract to be in force, despite temporary suspension, so a contract was perfected between the parties.

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    The Supreme Court ruled that a contract was perfected between MRT and Gammon Philippines, Inc. A contract is perfected when both parties consent to the object and cause. Here, MRT awarded the contract to Gammon, and Gammon accepted, perfecting the contract. While MRT temporarily suspended the first notice to proceed, this was only a suspension, not a cancellation, so the contract remained binding. The Court found MRT and Gammon believed the contract to be in force, despite temporary suspension, so a contract was perfected between the parties.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    214 views3 pages

    Metrol Rail v. Gammon

    Uploaded by

    Lovely Macaraeg
    The Supreme Court ruled that a contract was perfected between MRT and Gammon Philippines, Inc. A contract is perfected when both parties consent to the object and cause. Here, MRT awarded the contract to Gammon, and Gammon accepted, perfecting the contract. While MRT temporarily suspended the first notice to proceed, this was only a suspension, not a cancellation, so the contract remained binding. The Court found MRT and Gammon believed the contract to be in force, despite temporary suspension, so a contract was perfected between the parties.

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    CIVIL LAW Lovely Macaraeg

    DRAFT NO.: 1

    METRO RAIL TRANSIT DEVELOPMENT CORPORATION v. GAMMON


    PHILIPPINES, INC.
    G.R. NO. 200401, 17 January 2018, (Leonen, J.)

    DOCTRINE OF THE CASE

    When a contract is suspended temporarily, it provisionally ceases to be operative until


    the occurrence of a condition or situation that warrants the lifting of the suspension of the
    contract. It is different from a cancellation of a contract which terminates the contract such
    that it does not become operative again.

    FACTS:
    The case involves MRT’s MRT-3 North Triangle Description Project (Project)
    covering 54 hectares of land, which were allotted for a commercial center and half of
    which would be used for a podium structure (Podium). Gammon Philippines, Inc.
    (Gammon) submitted a bid to complete concrete works of the Podium. On August 27,
    1997, MRTDC issued a Notice of Award (NOA) and Notice to Proceed (NTP) in favor of
    Gammon. Subsequently, MRT wrote Gammon that it would need one or two weeks before
    it could issue the latter the Formal NTP due to current developments in foreign exchange
    rates and interest rates. MRTDC confirmed the temporary suspension of all requirements
    under the terms of the contract until such time as clarification of scope has been received
    from the owner. Afterwards, MRT decided to downscale the Podium’s construction and
    to proceed with Project’s conceptual design and Gammon presented to MRT the
    sequencing and phasing of the work. Then, MRT decided to adopt Gammon’s
    recommendation to construct the Podium up to Level 2 only. On June 11, 1998, Gammon
    received from Parsons the Fourth NTP which expressly cancelled the First and Third NTP
    in which Gammon qualifiedly accepted. MRT rejected Gammon’s qualified acceptance
    and informed Gammon that it would be awarded instead to Filisystems. By that, Gammon
    acknowledged the intent of MRT to grant it to another party. Thus, it notified MRT of its
    claims for reimbursement.

    Gammon filed a Notice of Claim before CIAC against MRT. Subsequently, MRT
    filed a motion to dismiss which was denied. The judgment ruled in favor of Gammon
    regarding its monetary claims. Afterwards, MRT assailed the CIAC Decision before the
    Court of Appeals (CA). However, the CA affirmed the CIAC decision. Thus, MRT filed the
    instant Petition for Review arguing that there is no perfected contract between MRT and
    Gammon.

    ISSUE:

    Is there is a perfected contract between MRT and Gammon?

    RULING:
    YES. A contract is perfected when both parties have consented to the object and
    cause of the contract. There is consent when the offer of one party is absolutely accepted
    by the other party.

    In bidding contracts, this Court has ruled that the award of the contract to the bidder
    is an acceptance of the bidder's offer. Its effect is to perfect a contract between the bidder
    and the contractor upon notice of the award to the bidder. MRT has already awarded the
    contract to Gammon, and Gammon's acceptance of the award was communicated to
    MRT before MRT rescinded the contract. Moreover, this Court rules that MRT did not
    revoke its offer when it temporarily suspended the First Notice to Proceed. In a facsimile
    transmission dated September 12, 1997, Parsons confirmed "the temporary suspension
    of all the requirements under the contract.” The wording of these communications
    indicates that the contract is still binding though on hold. When a contract is suspended
    temporarily, it provisionally ceases to be operative until the occurrence of a condition or
    situation that warrants the lifting of the suspension of the contract. It is different from a
    cancellation of a contract which terminates the contract such that it does not become
    operative again. It can be implied that prior to the Fourth Notice to Proceed, the First and
    Third Notices to Proceed were not cancelled and were still valid and subsisting.
    Additionally, when the parties were discussing the change of plans, MRT did not mention
    that no contract was executed between them. Instead, it sought to modify its terms and
    conditions. Thus, Gammon was made to believe that the First Notice to Proceed was in
    force and effect, albeit temporarily suspended. Given these circumstances, it cannot be
    said that no contract was perfected between the parties.

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