Nakpil & Sons v. Court of Appeals
REITERATIONFacts
The Antecedents: The Philippine Bar Association (PBA) contracted Juan F. Nakpil & Sons (NAKPILS) for architectural plans and design, and United Construction Company, Inc. (UNITED) for the construction of its office building. The building was completed in June 1966. On August 2, 1968, a strong earthquake caused major damage, buckling the front columns. UNITED undertook temporary remedial measures. On November 29, 1968, PBA sued UNITED for damages, alleging defects in construction. UNITED filed a third-party complaint against NAKPILS, alleging defects in the architectural plans. The parties agreed to refer technical issues to a commissioner. PBA twice moved for demolition due to the building's precarious state. On April 30, 1979, demolition was authorized. Further earthquakes on April 7, 9, and 12, 1970, caused additional damage. The commissioner found that the August 2, 1968 earthquake damage was caused by defects in NAKPILS' plans, UNITED's deviations and poor workmanship, and PBA's lack of requisite supervision. The trial court agreed with the commissioner, except regarding the owner's supervision, and rendered judgment against UNITED and NAKPILS (except Roman Ozaeta). The Court of Appeals modified the decision, adding an award of P200,000.00 jointly and severally against UNITED and NAKPILS. This Court initially promulgated a decision on October 3, 1986, modifying the Court of Appeals' decision and imposing a solidary indemnity of P5,000,000.00 for damages and P100,000.00 for attorney's fees, payable upon finality, with 12% interest per annum upon failure to pay. Procedural History: The trial court ordered UNITED and NAKPILS (except Roman Ozaeta) to pay P989,335.68 with interest, dismissing the complaint against Juan J. Carlos and the third-party complaint. The Court of Appeals modified this, adding P200,000.00 jointly and severally against UNITED and NAKPILS. This Court's decision on October 3, 1986, modified the Court of Appeals' decision, imposing a solidary indemnity of P5,000,000.00 for damages and P100,000.00 for attorney's fees, with 12% interest upon failure to pay. The Petition: This resolution addresses the motion for reconsideration filed by United Construction Co., Inc. (UNITED) of this Court's October 3, 1986 decision, and the motion for leave to file a second motion for reconsideration (En Banc) by Juan F. Nakpil & Sons (NAKPILS). The Court denied both motions.
Issue(s)
Whether the structural failure necessitating demolition constitutes a 'collapse' under Article 1723 of the Civil Code. Whether the owner (PBA) has a legal duty to provide full-time supervision of construction such that its absence constitutes contributory negligence. Whether wanton negligence in construction design and execution is legally equivalent to bad faith. Whether the imposition of a 12% interest rate on the judgment is legally permissible in a case for damages.
Ruling
The motion for reconsideration filed by United Construction Co., Inc. is denied. The motion for leave to file a second motion for reconsideration by Juan F. Nakpil & Sons is also denied. The motion to refer the case to the Court En Banc is denied. The Court's decision of October 3, 1986, stands.
Ratio Decidendi
On Issue 1: The Court ruled that Article 1723 of the Civil Code remains applicable even if the building did not totally disintegrate. While the building only partially collapsed after the 1968 earthquake, subsequent tremors in 1970 rendered the damage irreversible, making it a danger to the public. The Court emphasized that a state where a building is so damaged that it requires judicial authorization for demolition constitutes a 'collapse' within the meaning of the law. Liability is not escaped simply because the building remains standing if its structural integrity is compromised by the negligence of the architects and contractors. Thus, the NAKPILS and UNITED cannot evade the legal consequences of their defective work by arguing semantics regarding the word 'collapse.' On Issue 2: The Court held that the Philippine Bar Association (PBA) had no legal or contractual duty to provide full-time supervision of the construction. UNITED failed to cite any specific provision of law that imposes such a burden on the owner of the building. In professional construction projects, it is standard practice to rely on the expertise of architects and engineers whose training and expertise make them more qualified to provide effective supervision. The trial court correctly observed that charging the owner with such a technical duty has no basis in custom or the specific contract between the parties. Furthermore, the construction was undertaken on an administration basis upon the specific suggestion of the architects themselves. On Issue 3: The Court maintained its finding that the acts of the defendants were equivalent to bad faith in the performance of their respective tasks. While the lower courts initially emphasized negligence, the Supreme Court found this negligence to be 'wanton' in the creation of the plans, designs, and specifications. Such gross negligence in the performance of contractual obligations is legally equivalent to bad faith, as it shows a reckless disregard for the structural safety of the building. This finding of bad faith means that the defendants cannot use the earthquake as a 'fortuitous event' to exempt themselves from liability, as their negligence created the dangerous condition that the earthquake merely precipitated. Therefore, the distinction between simple negligence and the bad faith found by the Court is supported by the factual evidence of defects and deviations. On Issue 4: The award of P5,000,000 was found to be a 'very conservative estimate' of the total cost of reconstruction, considering that twenty years had passed since the building's loss. The Court noted that the earlier estimate of the Commissioner was limited to repair costs for a partial collapse, which was insufficient once the building required total demolition. Regarding the interest rate, the Court clarified that while the 12% rate under Central Bank Circular No. 416 usually applies to loans and forbearances, it also applies to judgments. In this case, the interest is not being imposed on the damages from the date of the loss, but as a penalty for the delay in payment once the judgment becomes final and executory. Thus, the 12% interest rate is a lawful exercise of the Court's authority to ensure compliance with its final decrees.
Main Doctrine
A motion for reconsideration that merely reiterates arguments already passed upon and resolved in the assailed decision, without presenting new or compelling reasons, shall be denied. The imposition of 12% interest on judgments is applicable only to loans or forbearance of money, goods, or credits, or as allowed in judgments involving such, and not as a general rule on all monetary awards.