Case Summary (G.R. No. 156251)
Antecedents
The contractual relationship commenced on December 12, 1989, when PRHC and Firematic entered into a Construction Agreement for the installation of a sprinkler system. The agreement delineated the responsibilities of Firematic, the contractor, including delivering, performing, and ensuring that the sprinkler system was installed in compliance with the provided plans, specifications, and contractual documents. Subsequent communications changed the scope of work, with PRHC informing Firematic on December 11, 1990, that it would no longer proceed with Phase II, resulting in a contract price adjustment.
Modification of Contract and Financial Assistance
As the project progressed, PRHC provided financial assistance to Firematic due to the latter's claimed tight business credit. In turn, PRHC made direct payments for materials, which Firematic had initially proposed, including Peerless fire pumps. Despite the cooperation, the relationship soured when issues arose regarding the quality of materials and compliance with project specifications.
Certification and Completion Issues
PRHC received a Certificate of Completion and a Certificate of Occupancy for the project, but subsequent inspections led to allegations that Firematic delivered and installed imitation Peerless pumps and incompatible fire alarm systems. Firematic billed PRHC for the remaining contract balance, which PRHC contested, claiming incomplete installation and non-compliance with contractual specifications.
Respondent's Complaint and Trial Court Proceedings
Firematic filed a Complaint for Collection against PRHC, alleging non-payment of dues and claiming damages resulting from PRHC's refusal to pay. PRHC countered that it had overpaid for defective work that did not conform to contractual obligations. The Regional Trial Court (RTC) ruled in favor of PRHC, concluding that Firematic had breached the contract by failing to deliver genuine products and properly functional systems.
Court of Appeals Decision
Firematic appealed the RTC decision to the Court of Appeals (CA), which later reversed the RTC’s ruling. The CA determined that PRHC's claim regarding the genuineness of the fire pumps was improbable, as PRHC had inspected the materials without complaint. Although the CA acknowledged breaches concerning the fire alarm system, it ultimately ruled that PRHC owed Firematic a sum, albeit less than what Firematic had originally claimed.
Petitioner’s Grounds for Appeal
PRHC filed a petition seeking to overturn the CA's ruling, arguing that the appellate court erred in its factual conclusions and assessment of the evidence. PRHC contested the CA’s minimal valuation of the unpaid amount, asserting it had provided sufficient evidence to demonstrate that Firematic had failed to fulfill its contractual obligations, which included the delivery of authentic Peerless pumps.
Burden of Proof and Hearsay Evidence
The Supreme Court highlighted the importance of the bur
...continue readingCase Syllabus (G.R. No. 156251)
Case Background
- The case revolves around a construction contract between Philippine Realty and Holdings Corporation (PRHC) and Firematic Philippines, Inc. (Firematic) for the installation of a fire sprinkler system in Tektite Towers, Mandaluyong, Metro Manila.
- The contract consisted of two phases, with specific responsibilities outlined for Firematic regarding the installation and compliance with technical specifications.
- The contract was amended to reflect changes, including the deletion of Phase II and adjustments to the contract price due to change orders.
Contractual Obligations
- Article II of the Contract detailed Firematic's obligations, including the installation of materials, labor, and supervision necessary for completing the sprinkler system.
- Additional documents, including sprinkler system plans and fire protection specifications, were incorporated into the contract.
- Firematic was required to provide materials conforming to the specifications prepared by the architects and ensure that all work was performed in a proper manner.
Changes and Payments
- PRHC informed Firematic of the decision to delete Phase II, which adjusted the contract price for Phase I.
- Financial assistance was requested by Firematic, leading to direct payments by PRHC for materials, which included the approval of specific fire pumps.
- Subsequent contracts for fire alarm systems mirrored the terms of the sprinkler system contract.