Case Summary (G.R. No. 171601)
Petitioner and Respondent
Petitioners sued for breach of contract when respondent extracted only 10,000 cu.m. of aggregates out of the 40,000 cu.m. “allotted” under their agreement and ceased operations.
Key Dates
• Special Permit issued to Lucia Paras: November 14, 1994 (valid six months until May 15, 1995)
• Agreement for Supply of Aggregates executed: December 6, 1994
• Regional Trial Court (RTC) Decision: May 16, 2001 (in favor of petitioners)
• Court of Appeals (CA) Decision: July 4, 2005 (reversing RTC, dismissing complaint)
• CA Resolution denying reconsideration: February 9, 2006
• Supreme Court Decision: April 8, 2015
Applicable Law
• 1987 Philippine Constitution (case decided in 2015)
• Rule 45, Rules of Civil Procedure (Petition for Review on Certiorari)
• Rule 130, Section 9, Revised Rules on Evidence (Parol Evidence Rule and exceptions)
Procedural History
- RTC awarded P720,000 plus attorney’s fees and costs to petitioners for respondent’s failure to haul 30,000 cu.m. of aggregates.
- CA reversed, holding the written agreement clearly imposed no deadline and repudiating the RTC’s reliance on alleged extrinsic understandings in violation of the Parol Evidence Rule.
- Petitioners filed a Rule 45 petition seeking reinstatement of the RTC decision.
Issue
Whether Kimwa was contractually obligated to haul the full 40,000 cu.m. of aggregates by May 15, 1995 and is thus liable for the unhailed 30,000 cu.m.
Analysis: Parol Evidence Rule and Its Exceptions
• General Rule: Written agreements are presumed to embody all terms agreed upon; extrinsic evidence is inadmissible to contradict or vary them.
• Exceptions (Rule 130, Sec. 9): Parties may introduce evidence to prove intrinsic ambiguity, mistake, failure to express true intent, or subsequent terms.
• In their complaint, petitioners alleged that the parties understood the hauling must be completed by permit expiry (May 15, 1995). Respondent’s answer expressly addressed and denied these allegations.
• By pleading and joining issue on mistake and failure to express true intent, both sides opened the door to parol evidence under the established exceptions.
Analysis: Permit and Contract Interpretation
• Petitioners introduced the Special Permit (Exhibit A) showing extraction volume capped at 40,000 cu.m. and validity only until May 15, 1995, of which respondent had actual or constructive notice.
• The written Agreement granted respondent exclusive use of the entire allotment at P240 per truckload, implying a reciprocal obligation to haul the full volume before permit expi
Case Syllabus (G.R. No. 171601)
Procedural Posture
- Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure (G.R. No. 171601, April 8, 2015).
- Petitioners seek reversal of the Court of Appeals’ July 4, 2005 Decision and February 9, 2006 Resolution in CA-G.R. CV No. 74682.
- Prayer to reinstate the Regional Trial Court (Branch 55, Mandaue City) Decision dated May 16, 2001 in Civil Case No. MAN-2412, which granted Spouses Paras damages for breach of contract.
Facts
- Lucia Paras holds a special permit to extract sand and gravel at Kabulihan, Toledo City (Special Permit valid six months from November 14, 1994).
- Kimwa Construction and Development Corporation is a Cebu‐based construction firm dealing in concrete aggregates.
- On December 6, 1994, Lucia and Kimwa executed an “Agreement for Supply of Aggregates.”
- The Agreement allotted 40,000 cubic meters of aggregates exclusively for Kimwa at P240.00 per truckload, to be picked up at Lucia’s permit area.
- Kimwa extracted and hauled only 10,000 cubic meters, then ceased operations and allegedly worked a different concession area.
Contractual Agreement
- Parties: Lucia Paras (“Supplier”) and Kimwa Construction and Development Corp. (“Contractor,” represented by President Corazon Y. Lua).
- Key stipulations in writing:
- Volume allotted: 40,000 cu.m.
- Rate: P240.00 per truckload.
- Exclusive use by Kimwa.
- Payment term: fifteen (15) days after billing.
- No modification or assignment without written agreement.
Complaint and Pleadings
- Spouses Paras allege breach of contract when Kimwa failed to haul full 40,000 cu.m. by May 15, 1995 (expiration of permit).
- Lucia insisted hauling complete quantity before re-channeling date; Kimwa allegedly assured two to three months suffice.
- After initial hauling of 10,000 cu.m., Kimwa stalled and ignored demand letters.
- Kimwa’s Answer contended that 40,000 cu.m. was merely a maximum limit with no deadline and in