Case Digest (G.R. No. 121484)
Facts:
Mea Builders, Inc., Vicente Llave, Ernesto Yu and Angel Yuanlian v. Court of Appeals (Former Fifteenth Division) and Metropolitan Bank and Trust Company, G.R. No. 121484, January 31, 2005, the Supreme Court Third Division, Corona, J., writing for the Court.Petitioner MEA Builders, Inc. (MEA) contracted with Capital Resources Corporation (CRC) on July 15, 1982 to construct housing units in Multinational Village for a contract price initially of P39,256,880, payable in cash and negotiable securities, the cash portion to be paid by 90‑day stand‑by letters of credit. On August 11, 1982 MEA, CRC and private respondent Metropolitan Bank and Trust Company (Metrobank) executed a tripartite agreement conditioning Metrobank’s obligation to issue letters of credit upon presentation of a Certificate of Completion accepted by the contractor, owner/owner’s representative, Metrobank representative and Home Financing Corporation (HFC), and requiring an HFC guarantee among other terms.
Subsequent agreements amended the contract price upward and MEA began work. HFC approved a P120 million cash guarantee. To raise capital, MEA obtained an advance of P3,000,000 from Metrobank in March 1983, secured by a promissory note and a continuing suretyship signed by petitioners Llave, Yu and Yuanlian; a balance promissory note for P1,500,000 remained after partial liquidations. MEA completed 45 single detached units by May 1983; Metrobank paid P3,274,263.22 for those units by letter of credit and cash. MEA then suspended operations, later resumed, and demanded further payments. After MEA defaulted on the P1.5M note, Metrobank filed Civil Case No. 8532 in the Makati Regional Trial Court (Branch 147) seeking recovery of the promissory note amount plus interest.
In its answer with compulsory counterclaim MEA acknowledged the documents but alleged the promissory note was not a straight loan but an advance to be liquidated from payments due under the construction agreements and the tripartite arrangement. The trial court (Judge Teofilo L. Guadiz, Jr.) ruled for MEA on July 18, 1991, awarding P18,200,000 representing value of work performed (less the P1.5M note), P9,000,000 actual and consequential damages, 3% monthly interest from May 1984, 10% of amounts due, and dismissal of Metrobank’s complaint.
Metrobank appealed to the Court of Appeals (Eleventh Division). The CA found the trial court’s computation excessive, limited Metrobank’s liability to obligations under the tripartite agreement (i.e., completed units supported by certificates of completion), noted that 120 units appeared in the Progress Report of January 18, 1983 and that 45 units had been paid, and excluded the horizontal project and filling materials from Metrobank’s liability. The CA reduced the award and rendered judgment directing Metrobank to pay MEA P6,308,484.54 (value per Progress Report less P3,274,263.22 already paid and less P1.5M loan) with 26% interest per annum and 12% per annum penalty, with costs. The CA’s August 30, 1994 decision was affirmed as to its modification and its denial of attorney’s fees; its motion for reconsideration was denied on August 11, 1995....(Subscriber-Only)
Issues:
- Under Rule 45, may this Court review the factual findings of the Court of Appeals in this case?
- Did the Court of Appeals err in reducing the trial court’s award for the value of work performed and in deducting amounts (payments for 45 units and the P1.5M loan) from MEA’s counterclaim?
- Was the trial court’s award of P9,000,000 as actual and consequential damages supported by proof with reasonable certainty?
- Were petitioners entitled to attorney’s fees as awarded by the trial court?
- Was Metrobank entitled to interest and penalty charges ...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)