Case Digest (G.R. No. 189526)
Facts:
FGU Insurance Corporation v. Spouses Floro and Eufemia Roxas, G.R. Nos. 189526 and 189656, August 09, 2017, Supreme Court Second Division, Leonen, J., writing for the Court. The consolidated petitions seek review of the Court of Appeals’ May 26, 2009 decision and its September 14, 2009 resolution in CA-G.R. CV No. 30340.The operative dispute arose from a Contract of Building Construction dated May 22, 1979 between Spouses Floro and Eufemia Roxas (owners), Rosendo P. Dominguez, Jr. (contractor/principal) and Philippine Trust Company (Philtrust Bank) (financier). The contract estimated P1,200,000.00 for the project; Philtrust would finance materials up to P900,000.00 and Dominguez agreed to perform construction works for P300,000.00 (labor). A separate May 24, 1979 Agreement fixed the schedule and form of payments for the P300,000.00 labor: three P30,000 cash instalments and a final P210,000 in specified real properties, with 14% interest for non‑payment.
Also on May 24, 1979, Dominguez obtained a performance/surety bond, FGU FIC Bond No. G(23) 5954, with face amount P450,000.00, naming “Floro Roxas and Philippine Trust Company” as obligees and guaranteeing faithful performance. When disputes arose over price adjustments, unpaid instalments, and alleged misapplication of released funds, Dominguez demanded payment and threatened work stoppage; he ultimately ceased work and on March 28, 1980 filed Civil Case No. 130783 in Branch 40, Court of First Instance (later Regional Trial Court) Manila against the Spouses Roxas and Philtrust Bank, seeking among other reliefs rescission of contract clauses and declaration that the FGU bond was unenforceable.
The trial court (Branch XI/Branch 40, RTC Manila) found the Spouses Roxas breached their obligations, justified Dominguez’s non‑completion, and declared the “Whereas Clause” and the May 24 Agreement void; it ordered cancellation of the FGU performance bond and awarded Dominguez several sums and damages (Decision dated September 4, 1990). On appeal, the Court of Appeals (Seventh Division) modified the RTC: it upheld the validity of the contract clauses and the May 24 Agreement, held FGU’s bond valid and FGU solidarily liable for the P450,000 face amount, reversed awards of damages in Dominguez’s favor and instead found Dominguez liable for moral/exemplary damages to the Roxases; it remanded for computation of Philtrust’s other claims (Decision May 26, 2009). Motions for reconsideration were denied (Sept. 14, 2009).
FGU and the Spouses Roxas separately filed petitions for review before this Court (G.R. Nos. 189526 and 189656); the cases were consolidated (March 17, 2010). Dominguez’s participation before the Court was effectively waived. The main issues raised to the Supreme Court concerned the extent of FGU’s liability under the bond, en...(Subscriber-Only)
Issues:
- Did the Court of Appeals err in holding FGU Insurance Corporation liable for the full face amount of P450,000.00 under the performance bond rather than only for the contractor’s cost overrun or actual damages?
- Are Spouses Roxas entitled to liquidated damages under the Contract of Building Construction for delay or abandonment?
- Is there factual basis for awarding Rosendo P. Dominguez, Jr. P90,000.00 with 14% interest and P73,136.75 with legal interest?
- May the liabilities of the Spouses Roxas to Dominguez be set off against any liability of FGU under Articles 1280 and 1283 of the Civil Code?
- Did the Court of Appeals err in remanding the case to the trial court for reception of evidence and computation of Philtrust Bank’s other claims?
- Should Philtrust B...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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