Case Digest (G.R. No. 194507) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Federal Builders, Inc. (FBI) vs. Foundation Specialists, Inc. (FSI), both parties entered into a sub-contract dated August 20, 1990, whereby FSI agreed to construct the diaphragm wall, capping beam, and guide walls of the Trafalgar Plaza in Makati City for a total contract price of ₱7,400,000.00. Under the agreement, FBI was to pay a 20% downpayment and the balance through progress billings every fifteen days, payable within one week of presentation. FSI completed approximately 97% of the work but, alleging FBI’s refusal to pay Billings No. 3 and 4 amounting to ₱1,635,278.91 with interest from August 1, 1991, filed a sum-of-money complaint in the Regional Trial Court (RTC) of Makati City on January 9, 1992. FBI countered that FSI only completed 85% of its obligations, performed works out of specification, abandoned the site, and that FBI incurred remedial expenses. On May 3, 2001, the RTC awarded FSI ₱1,024,600.00 for Billings 3 and 4 less ₱33,354.40, plus 12% legal interest,... Case Digest (G.R. No. 194507) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Contractual Agreement and Scope of Work
- On August 20, 1990, Federal Builders, Inc. (FBI) engaged Foundation Specialists, Inc. (FSI) as sub-contractor for the construction of the diaphragm walls, capping beam, and guide walls of Trafalgar Plaza in Makati City, at a total contract price of ₱7,400,000.00; FBI was to pay 20% downpayment and the balance via progress billings every 15 days, payable one week after presentation.
- FSI completed approximately 97% of the work by March 8, 1991, but encountered delays in the capping beam and steel props installation due to FBI’s alleged failure to deliver the agreed cement; minor misalignments and rebar dowel placement issues were anticipated in the contract with alternative remedy plans.
- Trial Proceedings
- On January 9, 1992, FSI filed a complaint before the Makati RTC seeking ₱1,635,278.91 for unpaid Billings 3 and 4, plus interest from August 1, 1991, moral and exemplary damages, and attorney’s fees, alleging FBI’s refusal to pay despite demand.
- FBI counterclaimed, asserting FSI completed only 85% of the work, delivered defective and non-specification works, abandoned the jobsite, and sought reimbursement of approximately ₱8,582,756.29 for remedial works.
- Decisions of the Lower Courts
- On May 3, 2001, the RTC ruled in favor of FSI, ordering FBI to pay:
- On July 15, 2010, the Court of Appeals (CA) affirmed with modification: deleted the ₱279,585.00 cement cost and reduced attorney’s fees to ₱50,000.00; upheld the 12% interest; both parties’ motions for reconsideration were denied.
- Supreme Court Petitions
- FSI’s petition (G.R. No. 194621) was dismissed as filed late.
- FBI’s petition (G.R. No. 194507) challenged:
Issues:
- Did the CA err in affirming FBI’s liability to pay Billings 3 and 4 despite alleged defects and FBI’s re-work expenses?
- Did the CA err in imposing 12% legal interest on the award absent a stipulation of loan or forbearance?
- Did the CA err in dismissing FBI’s counterclaim for remedial costs amounting to ₱8,582,756.29?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)