G.R. No. 141715 - Local Superior of the Servants of Charity, Inc. vs. Jody King Construction and Development Corp.

Case Digest (G.R. No. 141715)
Expanded Legal Reasoning Model

Facts:

Background of the Parties

Petitioner Local Superior of the Servants of Charity (Guanellians), Inc. is a religious corporation.
Fr. Luigi de Giambattista, the co-petitioner, serves as its Local Superior.

Invitation and Award of Contract

Petitioners invited various contractors to submit bids for the construction of structures to facilitate their apostolic mission.
Jody King Construction & Development Corporation, being the lowest bidder, was awarded the contract on September 12, 1992, for the construction works.

Bidding Process and Contract Modifications

The initial bid related to the building of a spiritual formation center within the petitioners’ compound (Phase I) at Barangay Pasong Tamo, Quezon City, amounting to P14,327,000.00.
Subsequently, petitioners reduced the scope of works:

A second bidding was conducted on September 20, 1992, despite respondent’s objections.
On October 5, 1992, the scope was further reduced by deleting Building "A" from the planned structures, leading to a cost reduction from P7,761,621.90 to P5,345,919.50.

On October 14, 1992, a building contract was executed specifying Phase I works including:

Site development;
Construction of Building "B";
Construction of Building "C";
Construction of Building "D";
Construction of Caretakers’ Quarters; and
Construction of the Blessed Guanella Hall.

The contract provided a strict construction period of 150 calendar days, running from October 14, 1992, to March 13, 1993.

Additional Works and Subsequent Orders

During the execution of the project, petitioners required respondent to perform 59 additional works beyond the original contract, including the reinstatement of Building "A."
In February 1993, petitioners further required work pertaining to Phase II of the project (finishing works for Buildings "A", "B", "C", "D", the Guanella Hall, and the Caretakers’ Quarters) within the same 150-day period.
The Phase II contract was only formalized on May 28, 1993, with the down payment made on June 2, 1993, despite respondent having already accomplished partial Phase II works.
Petitioners also directed respondent to undertake 73 additional works for Phase II.

Dispute Arising from Billing and Payment

On October 5, 1993, respondent submitted its 12th progress billing.
Petitioners contested the billing basis, specifically questioning aspects such as the inclusion of corrective works deductions, retention money, and cash advances, and refused to acknowledge the bill as due.

Trial Court Proceedings

On September 19, 1994, respondent filed a complaint for breach of contract, specific performance, and damages before the Regional Trial Court, Branch 78, Quezon City (Civil Case No. Q-94-21686).
After trial, the RTC rendered a judgment ordering petitioners to pay respondent various sums covering seven causes of action, including monetary awards and attorney’s fees (the latter subsequently deleted on appeal).
Specific orders covered:

Payment on the first and sixth causes of action;
Payment on the second, third, and fourth causes;
Payment on the fifth cause with an order for interest; and
Judicial costs and fees (the fee award later removed).

Court of Appeals Decision

The Court of Appeals affirmed the trial court’s decision with modifications:

It altered the rate of legal interest awarded to the respondent in accordance with the Eastern Shipping Lines precedent, setting it at six percent per annum up to finality, then shifting to twelve percent per annum thereafter.
The award of attorney’s fees was deleted due to lack of factual basis.

Factual Findings and Evidence Consideration

Lower courts found that:

The two building contracts did not control or govern the 132 additional works ordered by petitioners.
Additional works were directed by petitioners, personally or through their agents, with partial payments already made for these works.
At times, authorization for works was allegedly given directly by petitioners to respondent’s representative, bypassing strict contractual limits.

The trial court’s factual findings, corroborated by the evidence presented (including testimony from Engr. Junia and affiliated affidavits), were given significant weight and deemed conclusive.

Petitioners’ Arguments on Delays and Billing

Petitioners contended that delays in completion of Phases I and II were attributable to respondent’s lack of equipment, manpower, and financial incapability.
They argued that the 12th progress billing failed to reflect deductions and adjustments for corrective works, retention money, and advances.
These contentions raised questions of fact, which fall within the exclusive competence of the trial court, whose findings were supported by the record.

Summary of Procedural History and Final Determination

The trial court’s findings and awards were affirmed by the Court of Appeals.
The appellate review was confined to potential errors of law, not re-examination of the factual determinations made in the lower courts.
The petition for review on certiorari by petitioners was ultimately denied.

Issues:

Whether the additional works ordered by petitioners, which significantly altered the scope of the original contracts, fell under the same contractual framework and pricing stipulated in the building contracts.

Consideration was given to whether such additional works were mere modifications or entirely separate obligations.
The impact of these works on the project’s duration and cost was also examined.

Whether the dispute over the 12th progress billing, particularly regarding the deductions (corrective works, retention, and cash advances), was a matter that should have been adjudicated on questions of fact by the lower courts.

The contention was whether the billing accurately reflected the agreed terms in the contracts.
Whether the adjustments claimed by petitioners were properly substantiated by evidence.

Whether the interest rate awarded on the monetary judgments should be modified as per legal precedents or remain as determined by the lower courts.

The issue involved reconciling lower court and appellate court determinations in light of established legal precedents on interest computation.

Whether the factual findings of the trial court regarding the actual performance, delays, and additional works were supported by the evidence and thus not subject to re-evaluation by the Supreme Court.

This encompasses the analysis of whether any of the well-established exceptions to sustaining lower court factual determinations applied to this case.

Ruling:

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Ratio:

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Doctrine:

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Case Digest (G.R. No. 141715) Core Legal Reasoning Model Expanded

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Case Digest (G.R. No. 141715) Expanded Legal Reasoning Model

Facts:

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Case Digest (G.R. No. 141715)
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Case Digest (G.R. No. 141715)
Expanded Legal Reasoning Model