Facts:

The case involves D.M. Wenceslao & Associates, Inc. (DMWAI) as the petitioner and Freyssinet Philippines, Inc. (FPI) as the respondent. The events leading to the case began in January 1989 when DMWAI was contracted to construct the National Historical Institute Building (NHI project). On January 6, 1989, Delfin J. Wenceslao, Jr. (Wenceslao, Jr.) accepted a contract proposal from FPI for the fabrication and delivery of pre-stressed piles for the project, amounting to P2,600,000. The contract stipulated a 30% down payment upon signing and the remaining 70% to be paid through progress payments based on work accomplished, with an interest rate of 18% per annum on delinquent accounts.

By August 5, 1993, FPI filed a complaint against Wenceslao, Jr., doing business as DMWAI, claiming that the NHI project was completed in November 1989, but the full payment for the pre-stressed piles remained unpaid. FPI sought payment of P322,413.15, plus interest at 18% per annum from Novembe...

Facts:

Background of the Case

• In January 1989, D.M. Wenceslao & Associates, Inc. (DMWAI) undertook the construction of the National Historical Institute Building (NHI project).
• On 6 January 1989, Delfin J. Wenceslao, Jr. (President of DMWAI) accepted a contract proposal from Freyssinet Philippines, Inc. (FPI) for the fabrication and delivery of pre-stressed piles for the NHI project, amounting to P2,600,000.
• The contract stipulated a 30% down payment upon signing and the remaining 70% to be paid based on work progress. It also included an 18% per annum interest rate on delinquent accounts.

Completion of the NHI Project

• The NHI project was completed in November 1989, but FPI claimed that DMWAI had not fully paid for the pre-stressed piles.

Filing of the Complaint

• On 5 August 1993, FPI filed a complaint against Wenceslao, Jr., doing business under the name D.M. Wenceslao & Associates and/or D.M. Wenceslao Construction, seeking payment of P322,413.15 plus 18% interest from November 1989, attorney’s fees, and litigation costs.

Amended Complaint

• On 29 March 1994, FPI filed an amended complaint, impleading DMWAI as a party defendant. Wenceslao, Jr. opposed this, arguing it created a new cause of action. The trial court admitted the amended complaint on 12 July 1994.

Trial Court Decision

• On 17 April 1997, the trial court ruled in favor of FPI, ordering DMWAI and Wenceslao, Jr. to jointly and severally pay P322,413.15 with 18% interest, attorney’s fees, and litigation costs.

Appeal to the Court of Appeals

• DMWAI appealed, arguing that the trial court erred in admitting the amended complaint, holding DMWAI liable for the IBRD account, and awarding excessive interest and fees.
• On 10 August 2004, the Court of Appeals modified the trial court’s decision, holding only DMWAI liable for P322,413.15 with 6% interest from the filing of the complaint, and 12% interest after finality of judgment. It deleted the awards for attorney’s fees and litigation expenses.

Motion for Reconsideration

• DMWAI’s motion for reconsideration was denied on 21 January 2005, prompting the petition for review before the Supreme Court.

Issue:

• (Unlock)

Ruling:

• (Unlock)

Ratio:

1. Jurisdiction Over the IBRD Account:

   • Under Section 5, Rule 10 of the Rules of Court, issues not raised in the pleadings but tried with the express or implied consent of the parties are treated as if they were raised in the pleadings.
   • DMWAI’s failure to object to FPI’s evidence on the IBRD account constituted implied consent, allowing the trial court to rule on the matter.

2. Liability for Interest:

   • The 18% interest rate in the contract applied only to the NHI project, which had been fully paid.
   • For the IBRD account, no stipulated interest rate was proven, so the legal interest rate of 6% per annum under Article 2209 of the Civil Code applied from the filing of the complaint.
   • After the judgment becomes final and executory, the interest rate increases to 12% per annum until full payment.

3. No Attorney’s Fees or Litigation Expenses:

   • The Court of Appeals correctly deleted the awards for attorney’s fees and litigation expenses, as there was no evidence of gross and evident bad faith on DMWAI’s part.

Conclusion:

The Supreme Court upheld the Court of Appeals' decision, holding DMWAI solely liable for the unpaid balance on the IBRD account and imposing the appropriate interest rates. The petition was denied for lack of merit.