Industrial Technology Development Institute v. Villanueva
REITERATIONFacts
The Antecedents: On June 25, 1992, the Industrial Technology Development Institute (ITDI) and R.M. Villanueva Construction (RMVC) entered into a contract for the construction of Phase II of ITDI's Microbiology and Genetics Laboratory Building for P10,469,270.00, with a completion deadline of January 10, 1993. RMVC commenced work but fell behind schedule, prompting ITDI to issue warnings regarding significant work slippage. RMVC attributed the delays to structural defects in Phase I and requested a 45-day extension and additional costs. ITDI, however, determined that the delays were solely RMVC's fault, citing unapproved additional works and violations of PD 1594. Consequently, ITDI terminated the contract on January 12, 1993, denied the extension, and demanded RMVC vacate the site. Procedural History: Following the contract termination, the DOST Infrastructure Committee evaluated RMVC's work, finding only 46.7139% completion as of January 10, 1993, and assessed liquidated damages. ITDI presented a summary of RMVC's accountability. RMVC subsequently filed a complaint for sum of money and damages with the Regional Trial Court (RTC), which ruled in favor of RMVC, awarding various sums for uncollected amounts, appropriated construction materials, moral damages, and attorney's fees. Both parties appealed to the Court of Appeals (CA), which affirmed the RTC decision with modifications, reducing actual damages and the cost of construction materials, and deleting moral damages and attorney's fees. ITDI's motion for reconsideration was denied. The Petition: ITDI, through the Office of the Solicitor General, filed a petition for review on certiorari under Rule 45 of the Rules of Court. ITDI seeks to overturn the CA's finding that RMVC completed 51.48% of the project, arguing that the actual completion was only 46.7139%. ITDI also disputes the CA's award for appropriated construction materials, claiming the amount is unsubstantiated. RMVC seeks to uphold the CA's award of actual damages and construction materials. The core issue for the Supreme Court is to resolve the conflicting factual findings regarding the percentage of project completion and the value of appropriated materials, as an exception to the general rule against reviewing factual matters in Rule 45 petitions.
Issue(s)
Whether the Court of Appeals erred in finding that RMVC completed 51.48% of the project, thereby entitling it to actual damages. Whether ITDI is liable for the value of construction materials left by RMVC on the project site.
Ruling
The Supreme Court partially granted the petition, partially reversed and set aside the Court of Appeals' decision. ITDI was ordered to pay RMVC ₱33,909.97 as actual damages and ₱713,992.00 as cost of construction materials, with legal interest at 12% per annum upon finality of the decision.
Ratio Decidendi
On the issue of project completion and actual damages: The Court held that the Court of Appeals erred in awarding actual damages based on a 51.48% completion rate. The Court found that the preponderance of evidence supported ITDI's contention that RMVC only accomplished 46.7139% of the project. This finding was based on ITDI's own evaluations and, crucially, on an admission by RMVC's own witness, Architect Rufino M. Villanueva, that the project was only 46.7139% complete as of January 10, 1993, despite the contract's original termination date of January 10, 1993. The Court noted that the appellate court's reliance on RMVC's self-serving progress report, which was not signed by ITDI's representative and was objected to, was misplaced. Therefore, RMVC was only entitled to damages proportionate to its actual accomplishment, calculated as the difference between the value of 46.7139% completion and the amount already paid, resulting in ₱33,909.97. On the issue of appropriation of construction materials: The Court affirmed the appellate court's award for the cost of construction materials, albeit at a reduced amount. The Court found that ITDI failed to specifically deny RMVC's allegation that it appropriated the unused construction materials left at the site. While ITDI presented its own estimate of the materials' value, it did not deny the act of appropriation itself. This failure to specifically deny a material averment in the complaint is deemed an admission under the Rules of Court. Furthermore, the testimony of ITDI's witness, Engr. Arnaldo Reyes, that the value of the materials was "duly deducted from plaintiff’s indebtedness" indicated that ITDI had indeed appropriated these materials. Consequently, ITDI was held liable for the value of these appropriated materials, which the Court fixed at ₱713,992.00 based on ITDI's own canvass.
Main Doctrine
The Supreme Court held that the appellate court erred in awarding actual damages based on a higher percentage of project completion than what was supported by the evidence. The Court affirmed the principle that a contractor is only entitled to damages proportionate to the actual work accomplished. Furthermore, the Court found that the contractor was entitled to the value of construction materials appropriated by the other party, as this was deemed admitted due to a failure to specifically deny the allegation.