Case Summary (G.R. No. 124899)
Applicable Law
The decision arises from the provisions of the civil law concerning construction contracts, specifically Article 1724 of the Civil Code, which governs the contractor's entitlement to additional costs and adjustments to contract prices based on changes in plans, specifications, or increases in material costs. The ruling also refers to principles set forth in the 1987 Philippine Constitution relevant to civil obligations and transactions.
Antecedent Facts
The contract included stipulations for price adjustments based on substantial increases in material costs and procedures for documenting such increases. Work commenced following a 20% down payment, and while Salvador submitted progress billings that included both agreed-upon services and additional works, disputes arose regarding payment for additional costs and work not formally authorized by the respondents.
Rulings of the Trial Court
The Regional Trial Court of San Mateo, Rizal, dismissed Salvador's initial claims and the respondents' counterclaims for lack of sufficient basis. It concluded that Salvador did not adequately specify the increased costs of materials involved, nor did he substantiate the allegations of additional work, either through prior agreements or notifications to the respondents. The trial court emphasized the necessity of a thorough accounting of project expenses.
Rulings of the Court of Appeals
On appeal, the Court of Appeals upheld the trial court's dismissal of Salvador’s claims but determined that respondents had established their entitlement to damages due to Salvador’s cessation of work. The appellate court found Salvador acted in bad faith by stopping construction without valid reasons and awarded the respondents reimbursement, moral damages, exemplary damages, and attorney’s fees.
Claims for Additional Works and Escalation of Contract Price
The Supreme Court affirmed the trial and appellate courts' findings that Salvador’s claims for additional work and price escalation lacked legal grounding. Salvador's failure to comply with the documentation and notice requirements outlined in Article 1724 barred any entitlement to adjustments. The ambiguity in his claims and his inability to substantiate any increases in specific material costs further invalidated his position.
Respondents' Counterclaim and Damages
Despite the initial dismissal of their counterclaims by the trial court, the appellate court awarded respondents damages based on the assertion that they incurred costs to complete the project post-Salvador’s withdrawal. However, the Supreme Court highlighted that the respondents a
...continue readingCase Syllabus (G.R. No. 124899)
Case Overview
- This case is a petition for review by Renato C. Salvador, challenging the Decision of the Court of Appeals dated April 30, 1996.
- The appellate court overturned the ruling of the Regional Trial Court of San Mateo, Rizal, which had dismissed Salvador’s complaint and the counterclaims of the respondents for lack of sufficient basis.
- The Court of Appeals directed Salvador to pay damages to the respondents.
Antecedent Facts
- Maria Romayne Miranda owns a 17,748 square meter parcel of land in Cabcaben, Mariveles, Bataan, registered under TCT No. T-129442.
- Romayne appointed her cousin, Gilbert Miranda, as her attorney-in-fact via a General Power of Attorney dated April 15, 1990.
- On July 9, 1990, Gilbert entered into a Development and Construction Contract with Salvador for the creation of the Haven of Peace Memorial Park at a total contract price of P3,986,643.50, to be completed in 180 working days plus a 45-working day grace period.
- The Contract included provisions regarding changes in plans, price adjustments due to material costs, and stipulations regarding matters not included in the Contract.
Developments of the Project
- Work commenced in July 1990 after a 20% down payment of P797,328.70 was made by Gilbert.
- Salvador submitted periodic billings, which Gilbert paid, including for additional works and change orders.
- By December 1990, Salvador demanded additional payments totaling P1,076,253.32, citing increases in material costs and additional works.
- Gilbert requested detailed computations and receipts to justify these demands but expressed concerns over the validity of the claims.
- Salvador halted work on January 14, 1991, citing non-payment and received a cease-and-desist order from the Depar