Case Digest (G.R. No. 189401) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In VIL-REY PLANNERS AND BUILDERS v. LEXBER, INC., decided on June 15, 2016 under the 1987 Constitution, Vil-Rey and Lexber entered into three successive construction contracts for compacted backfilling on a 56,565 sq. m. property in Barangay Bangad, Cabanatuan City. The first contract dated April 17, 1996, for ₱5,100,000 required completion in 60 days, with a ₱500,000 mobilization downpayment secured by Surety Bond No. 066915 issued by Stronghold Insurance Company, Inc. Upon mutual termination of that agreement, a second contract dated July 1, 1996, for ₱2,988,700.20 was likewise set for 60 days. On December 23, 1996, the parties executed Work Order No. CAB-96-09 for the remaining works, amounting to ₱1,168,728.37 payable 50% upon approval (to be secured by Surety Bond No. 077258 for ₱584,364.19) and the balance upon full completion by January 15, 1997. Lexber granted Vil-Rey an extension to January 31 and an additional five-day grace period, yet Vil-Rey failed to finish. Lexber Case Digest (G.R. No. 189401) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Contracts
- Vil-Rey Planners and Builders (Vil-Rey) agreed with Lexber, Inc. to perform compacted backfill works on Lexber’s 56,565-sqm property in Cabanatuan City.
- Stronghold Insurance Company, Inc. (Stronghold) issued surety bonds securing mobilization payments and performance obligations of Vil-Rey.
- Sequence of Contracts and Surety Bonds
- First contract (17 April 1996): P5,100,000 for 60 days, with P500,000 mobilization downpayment secured by Surety Bond G(16) No. 066915. Vil-Rey to indemnify Stronghold for bond claims.
- Second contract (1 July 1996): Revised scope, P2,988,700.20 for 60 days; mutual termination of first contract.
- Third contract/Work Order No. CAB-96-09 (23 December 1996): P1,168,728.37 for completion by 15 January 1997; 50% downpayment secured by Surety Bond G(16) No. 077258 for P584,364.19, balance upon completion. Vil-Rey again to indemnify Stronghold.
- Default and Judicial Proceedings
- Vil-Rey obtained extension to 31 January 1997 and five-day grace, but failed to finish works.
- Lexber demanded payment under both surety bonds; upon failure of negotiations, filed Complaint in RTC Quezon City for sums due and damages.
- Vil-Rey counterclaimed for alleged underpayment; Stronghold denied liability beyond defects and cross-claimed indemnity.
- Trial Court and CA Rulings
- RTC (12 Dec 2005; partial reconsideration 22 Oct 2007): Held Vil-Rey and Stronghold solidarily liable for full contract price, interest, and P500,000 attorney’s fees (later reduced to P1,084,364.19 and P200,000).
- CA (16 April 2009; resolution 1 Sept 2009): Modified liability to P284,084.46 plus interest, and P50,000 attorney’s fees. Dismissed liability under first bond and counterclaims.
Issues:
- Breach and Surety Liability
- Is Vil-Rey liable for breach of the third contract?
- Did extension of the third contract without surety’s consent extinguish Stronghold’s liability under the second bond?
- Attorney’s Fees
- Is Lexber entitled to contractual attorney’s fees, and in what amount?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)