Wenceslao v. Readycon Trading
REITERATIONFacts
The Antecedents: D.M. Wenceslao and Associates, Inc. (WENCESLAO) entered into a contract with Public Estates Authority (PEA) for a road project. To fulfill this, WENCESLAO contracted with Readycon Trading and Construction Corp. (READYCON) for asphalt materials worth ₱1,178,308.75. The contract stipulated a 20% downpayment and the balance payable within fifteen (15) days after delivery and performance of services (delivery, laying, and rolling of asphalt). READYCON delivered the materials and performed the services. WENCESLAO paid the downpayment but failed to pay the balance of ₱942,647.00, plus another unpaid account of ₱99,239.70, totaling ₱1,014,110.45. READYCON sent demand letters, which WENCESLAO ignored. Procedural History: READYCON filed a complaint for collection of a sum of money and damages with a prayer for a writ of preliminary attachment. The RTC granted the writ, and WENCESLAO's heavy equipment was attached. WENCESLAO posted a counter-bond, and the equipment was released. WENCESLAO admitted the debt but claimed the contract was also for service, with payment of the balance contingent on government acceptance of the work. The RTC ruled in favor of READYCON, ordering WENCESLAO to pay the principal amount with interest and attorney's fees, and dismissing WENCESLAO's counterclaim. The Court of Appeals affirmed the RTC decision in toto. The Petition: WENCESLAO filed a petition for review, raising issues on whether questions of fact were raised, whether the Court of Appeals erred in not holding READYCON liable for damages due to wrongful attachment, and whether the obligation was not yet due and demandable.
Issue(s)
Whether the posting of a counter-bond waives the right to damages for wrongful attachment, and if READYCON is liable for compensatory damages for the alleged wrongful issuance of the writ of preliminary attachment. Whether the obligation of WENCESLAO to pay READYCON was already due and demandable as of May 30, 1991.
Ruling
The Supreme Court denied the petition, affirming the decision of the Court of Appeals. It held that WENCESLAO is liable to pay READYCON the sum of ₱1,014,110.45 with 12% interest per annum compounded annually from August 9, 1991, until fully paid. However, Dominador Dayrit, acting merely as a representative, was not made personally liable.
Ratio Decidendi
On the issue of wrongful attachment and damages: The Court clarified that posting a counter-bond does not waive the right to seek damages arising from a wrongful attachment. However, to recover actual or compensatory damages for wrongful attachment, proof of actual loss is required. In this case, both the RTC and the Court of Appeals found that READYCON was entitled to the writ of preliminary attachment because the complaint had merit. Since the attaching creditor was found to be entitled to the writ, the condition for the applicant's bond (that the applicant will pay damages if the court finally adjudges that the applicant was not entitled thereto) was not met. Therefore, WENCESLAO was not entitled to an award of actual or compensatory damages. The Court also noted that the appellate court's reliance on Philippine Commercial International Bank v. Intermediate Appellate Court was slightly misplaced, as that case found bad faith and malice, which are not prerequisites for actual damages but are for moral and exemplary damages. On whether the obligation was due and demandable: The Court affirmed the findings of the RTC and the Court of Appeals that the contract clearly stipulated that the balance was payable within fifteen (15) days. The petitioners' contention that the payment was contingent upon government acceptance of the work was not supported by the written contract. The Court reiterated the rule that when the terms of a contract are clear and readily understandable, there is no room for construction. Furthermore, even if the government's acceptance of the work was considered, WENCESLAO still failed to pay the balance after such acceptance, rendering the issue moot and academic. The Court emphasized that it cannot re-examine findings of fact in a petition for review on certiorari under Rule 45, and the lower courts' findings that the extra condition insisted upon by petitioners was not in the contract were binding.
Main Doctrine
The posting of a counter-bond does not waive the right to seek damages arising from a wrongful attachment, but actual damages for wrongful attachment require proof of loss, and are not awarded if the attaching creditor was found to be entitled to the writ.