Asian Construction v. Comfac
REITERATIONFacts
The Antecedents: Petitioner Asian Construction and Development Corporation (AsiaKonstruct) awarded respondent Comfac Corporation contracts for raised flooring systems and airconditioning/ventilation systems for PNOC-EDC projects. Comfac completed and turned over the projects, issuing Certificates of Completion confirmed by AsiaKonstruct's Group Manager. Procedural History: Comfac sent demand letters for the unpaid balance of P1,969,863.50. AsiaKonstruct failed to pay, prompting Comfac to file a collection suit with the Regional Trial Court (RTC), praying for actual damages, attorney's fees, and exemplary damages. AsiaKonstruct raised several defenses, including lack of cause of action, payment, waiver, unauthorized certificates, non-completion, and disputed charges. Due to its counsel's repeated absence, AsiaKonstruct was deemed to have waived its right to present evidence. The RTC ruled in favor of Comfac, ordering AsiaKonstruct to pay the principal amount with interest and penalties, attorney's fees, and costs. AsiaKonstruct appealed to the Court of Appeals (CA), raising issues on the admissibility of invoices, proof of completion, deduction of retention and withholding tax, stipulation of interest and penalties, and award of attorney's fees. The CA affirmed the RTC decision with modifications, reducing the interest to 6% per annum and ordering the deduction of the 1% withholding tax. AsiaKonstruct's motion for reconsideration was denied. The Petition: AsiaKonstruct filed a petition for review before the Supreme Court, assailing the CA's decision and resolution, raising issues on the authentication of exhibits, proof of project completion, entitlement to attorney's fees, and the basis for calculating legal interest.
Issue(s)
Whether Exhibits "K" to "O" (invoices) were properly authenticated in accordance with the Rules of Court, and whether respondent Comfac Corporation was able to prove completion of the project. Whether respondent Comfac Corporation is entitled to attorney's fees. Whether the 6% legal interest should be based on the balance after deducting the 1% withholding tax.
Ruling
The Supreme Court partially granted the petition, modifying the Court of Appeals' decision. AsiaKonstruct was ordered to pay Comfac P1,912,877.15 as the balance payable under the contracts with legal interest of 6% per annum from January 2, 1998. AsiaKonstruct was also ordered to furnish Comfac with the certificate of creditable withholding-tax-at-source for P56,986.35. The award of attorney's fees and costs of litigation was deleted.
Ratio Decidendi
On the authentication of Exhibits "K" to "O" and proof of project completion: The Court reiterated the rule that failure to object to the offered evidence during trial renders it admissible and cannot be raised for the first time on appeal. It noted that AsiaKonstruct's counsel stopped attending hearings when Comfac was about to end its presentation, leading to AsiaKonstruct being deemed to have waived its right to object or present its own evidence. Furthermore, findings of fact by the trial court, especially when affirmed by the Court of Appeals, are binding upon the Supreme Court. The appellate court's conclusion on the authenticity of the Certificates of Completion was therefore binding. On the entitlement to attorney's fees: The Court agreed with AsiaKonstruct that attorney's fees require factual, legal, and equitable justifications as mandated by Article 2208 of the Civil Code. While Comfac was compelled to litigate, the Court found no sufficient showing of bad faith in AsiaKonstruct's refusal to pay, other than an erroneous assertion of the righteousness of its cause. Therefore, without specific findings on the amount to be awarded and lacking sufficient proof of bad faith, the award of attorney's fees was deleted. On the calculation of legal interest and withholding tax: The Court affirmed AsiaKonstruct's position that the 6% legal interest should be based on the net amount after deducting the 1% withholding tax, as the contract stipulated this deduction without qualification. The Court computed the total withholding tax to be P56,986.35 (P16,986.35 from the first contract and P40,000.00 from the second). Consequently, AsiaKonstruct was liable to pay only the balance of P1,912,877.15 (P1,969,863.50 - P56,986.35), and this amount would be subject to the 6% legal interest. AsiaKonstruct was also directed to provide Comfac with the certificate of creditable withholding-tax-at-source for the withheld amount.
Main Doctrine
Failure to object to the admissibility of evidence during trial renders it admissible and cannot be raised for the first time on appeal. Attorney's fees require factual, legal, and equitable justifications, and cannot be awarded in the absence of sufficient showing of bad faith or unjustified refusal to pay.