Case Summary (G.R. No. 196383)
Agreement and Construction Scope
The parties entered into a construction contract wherein petitioner undertook the construction with the obligation to provide necessary materials, labor, technical expertise, and supervision, while respondent was to pay the contract price of ₱11,100,000.00. During the project, respondent demanded additional and change order works not covered by the original contract, leading to a temporary halt in the construction of the main building to prioritize these new requirements.
Trial Court Findings and Ruling
The trial court found the delay in project completion reasonable, attributing it to the additional works ordered by respondent, which were documented and undisputed. Petitioner successfully demonstrated the completion of punch list repairs through credible testimonial and documentary evidence. Consequently, the trial court ruled in favor of petitioner, ordering respondent to pay the remaining contract balance minus government permit and tax costs, attorney's fees, and costs of suit.
Court of Appeals Initial Decision
The Court of Appeals affirmed the trial court’s ruling but deleted the award of attorney's fees due to lack of basis. It modified the payment to deduct penalties and costs related to violations cited by regulatory agencies.
Court of Appeals Amended Decision on Reconsideration
Upon motion for reconsideration by respondent, the Court of Appeals vacated its initial ruling and reversed the decision, holding petitioner liable for the delay due to accepting two separate repair contracts which allegedly postponed project completion. The Court ordered petitioner to pay penalties related to BFP and Maynilad violations, refund balances, and cover costs of suit.
Issues Raised in the Petition for Review
Petitioner assailed the amended decision on several grounds:
- The reversal was erroneous and contrary to overwhelming evidence supporting petitioner’s claim.
- The Court of Appeals misinterpreted facts and misappreciated evidence.
- The appellate court admitted hearsay evidence improperly.
- Respondent lacked authority to appeal.
- The appellate court improperly awarded penalties in absence of payment of required filing fees for counterclaims.
Supreme Court’s Analysis on the Merits
The core issue was petitioner's entitlement to the unpaid contract balance. The Supreme Court gave deference to the trial court’s factual findings, confirmed by unrebutted testimonial and documentary evidence, which showed that delays were caused by respondent’s additional works and order changes. The Court emphasized that the Court of Appeals improperly disregarded this evidence and relied on hearsay in reversing the trial court’s judgment.
Legal Principles Reinforced
- The reciprocal obligations under a construction contract: contractor must build, owner must pay upon completion.
- Quantum meruit principle
Case Syllabus (G.R. No. 196383)
Facts of the Case
- On October 15, 1999, petitioner Robert Pascua, trading as Tri-Web Construction, entered into a contract with respondent G & G Realty Corporation for the construction of a four-storey commercial building and a two-storey kitchen with dining hall.
- The contract stipulated that petitioner would provide all materials, labor, technical expertise, and supervision necessary for the construction, while respondent agreed to pay a total of Eleven Million One Hundred Thousand Pesos (P11,100,000.00).
- During construction, respondent required several additional and change order works outside the scope of the original contract.
- Due to the priority given to the additional works, construction of the main building was temporarily halted.
- Despite delays, petitioner completed the construction project sometime in 2000, albeit later than the scheduled turnover date.
- Both parties engaged in punch listing of minor repairs, which petitioner completed as evidenced by testimonial and documentary proof.
- After completion, respondent refused to pay the outstanding balance under the contract.
Proceedings Before the Trial Court
- Petitioner filed a Complaint for Sum of Money with Damages before the Regional Trial Court (RTC) of Pasig City.
- The RTC found the delay in completion to be reasonable and caused by respondent’s additional works, which were not part of the original agreement.
- The court ruled that petitioner sufficiently proved the completion of punch list repairs.
- The RTC ordered respondent to pay:
- The remaining contract balance, less any government permits and taxes borne by respondent with documentary proof;
- Attorney’s fees of Php50,000.00; and
- Cost of suit.
- The penalty for delay claimed by respondent was disallowed due to justification of the delay.
Court of Appeals Original Decision and Modifications
- The Court of Appeals (CA) affirmed the RTC’s decision on May 11, 2009, with modifications:
- Ordered respondent to pay petitioner the remaining balance of the contract price, less penalties and incidental expenses related to violations cited by the BFP and Maynilad, as well as government permits and taxes borne by respondent.
- Deleted the award of attorney’s fees for lack of basis.
- Respondent filed a motion for reconsideration.
- The CA, in an Amended Decision dated March 15, 2010, reversed its prior ruling, holding that:
- Petitioner caused the delay by undertaki