Case Digest (G.R. No. 171312)
Facts:
Sps. Lino Francisco & Guia Francisco, G.R. No. 171312, February 04, 2008, Supreme Court Second Division, Tinga, J., writing for the Court.
The Spouses Francisco engaged DEAC Construction, Inc. (DEAC) to build a three‑storey residential building with mezzanine and roof deck on their lot for a contract price of P3,500,000.00. A downpayment of P2,000,000.00 was paid before the contract execution; further progress payments followed and additional sums were paid for extra work. DEAC subcontracted portions of the work to Vigor Construction and Development Corporation allegedly without the owners’ knowledge or consent. Construction began in October 1994 before the issuance of a building permit.
During construction the Office of the Building Official issued notices of violation (April 7, 1995) citing deviations from the approved plans: reduction of the required setback, projection beyond permitted limits, closure of required open patio, improper window openings on firewall, stockpiling of materials on sidewalk, and inadequate safety measures. The Amended Plans submitted for permit approval bore signatures of Guia Francisco which the owners later claimed were forged by DEAC’s representative. A building permit was eventually issued on March 7, 1995 after corrections to the plans and apparent alterations at City Hall.
On July 1, 1995 the Spouses Francisco, through counsel, formally complained of the unauthorized corrections, forgeries, lack of a permit when work began, deletion of required open space, and poor workmanship; they withheld the final installment of P750,000.00. DEAC insisted it had faithfully performed and offered the owners either to pay the balance to finish the work or to accept payment for work completed (assessed at P250,000.00). The Office of the Building Official issued a Work Stoppage Order on July 21, 1995; the owners filed administrative and criminal complaints against DEAC and its representative for deviations and illegal construction activities, which led to criminal prosecution of respondent Geomar A. Dadula and the project engineer.
The Spouses Francisco filed a civil action for rescission of contract and damages (Civil Case No. 95‑75430, RTC Manila, Branch 28). The RTC found defendants breached the contract — building without the required permit and deviating from approved plans — and that the owners’ refusal to pay the final installment was justified; it ordered partial rescission because the building was about 70–75% complete, directed DEAC to refund P205,000.00 (payment less cost of completed work), and awarded moral and exemplary damages and attorneys’ fees to the Spouses Francisco (Decision dated February 2, 1998).
On appeal the Court of Appeals reversed and set aside the RTC, holding instead that the Spouses Francisco had requested the deviations and therefore respondents had fully complied; it ordered the owners to pay the remaining balance (P670,000.00) and awarded damages, attorneys’ fees and costs in favor of respondents (CA Decision dated July 28, 2005). The Spouses Francisco then brought the matter to this Court by petition for review (assailing the CA Decision), contending they did not authorize the deviations, that DEAC began work without the required permit and forged signatures, and that these breaches justified rescission. Respondents maintained the deviations were owner‑requested and that any delay in permit issuance was a supervisory lapse, and argued the owners ...(Pro-only)
Issues:
- Did the Court of Appeals err in holding that the Spouses Francisco authorized the deviations from the approved plans and thereby waived their right to seek rescission?
- If the respondents breached the contract (including commencing work without a permit and deviating from approved plans), was partial rescission of the contract appropriate and were the RTC’s monetary awards ...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)