Wenceslao & Associates v. Freyssinet
REITERATIONFacts
The Antecedents: D.M. Wenceslao & Associates, Inc. (DMWAI) contracted Freyssinet Philippines, Inc. (FPI) for the fabrication and delivery of pre-stressed piles for the National Historical Institute Building (NHI project) for ₱2,600,000.00. FPI filed a complaint against DMWAI and Delfin J. Wenceslao, Jr. alleging that despite the completion of the NHI project in November 1989, DMWAI had not fully paid FPI, claiming a balance of ₱322,413.15 plus interest and attorney's fees. Procedural History: FPI amended its complaint to implead DMWAI as a party defendant, which the trial court admitted. The Regional Trial Court (RTC) ruled in favor of FPI, ordering DMWAI and Wenceslao, Jr. to jointly and severally pay FPI ₱322,413.15 with 18% interest per annum from November 1989, plus attorney's fees and costs. The RTC found DMWAI liable for an International Bank for Reconstruction and Development (IBRD) account, even though the NHI project was deemed fully paid, based on a statement of account showing a remaining balance. DMWAI appealed to the Court of Appeals (CA), questioning the admission of the amended complaint, DMWAI's liability for the IBRD account, the joint and several liability, and the interest rate. The CA affirmed the RTC's decision with modification, holding DMWAI solely liable for ₱322,413.15 with 6% interest per annum from the filing of the complaint, and 12% per annum from finality of judgment, while deleting attorney's fees and litigation expenses. The CA denied DMWAI's motion for reconsideration. The Petition: DMWAI filed a petition for review with the Supreme Court, raising issues on the trial court's jurisdiction over the IBRD account and DMWAI's liability for interest on that account.
Issue(s)
Whether the trial court had jurisdiction over the IBRD account. Whether DMWAI is liable to pay interest on the IBRD account.
Ruling
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals, holding D.M. Wenceslao & Associates, Inc. solely liable to Freyssinet Philippines, Inc. for the amount of ₱322,413.15 with interest.
Ratio Decidendi
On the issue of jurisdiction over the IBRD account: The Supreme Court affirmed the Court of Appeals' ruling that the trial court acquired jurisdiction over the IBRD account. This was based on the principle that when evidence is presented on issues not alleged in the pleadings with the express or implied consent of the adverse party, judgment may be rendered on those issues as if they were properly pleaded. DMWAI failed to object to FPI's presentation of evidence regarding the IBRD account, even adopting FPI's Exhibit "J" as its own Exhibit "7." This failure to object constituted implied consent, allowing the trial court to consider the IBRD account. The Court reiterated that litigants were given a full opportunity to support their contentions and refute opposing evidence, thus satisfying the requirements of fair play. The Court found that the basic requirements of fair play were met, and DMWAI was not prejudiced by the inclusion of the IBRD account. On the issue of DMWAI's liability to pay interest on the IBRD account: The Supreme Court affirmed the Court of Appeals' ruling that DMWAI is liable to pay interest on the IBRD account. While the contract for the NHI project specified an 18% interest rate on delinquent accounts, this project was found to be fully paid. The unpaid balance of ₱322,413.15 pertained to the IBRD account. Since no specific interest rate was proven for the IBRD account, the Court of Appeals correctly applied the legal rate of 6% per annum pursuant to Article 2209 of the Civil Code, computed from the date of the filing of the complaint. Furthermore, the Court upheld the appellate court's imposition of a 12% interest rate per annum from the time the judgment becomes final and executory until full satisfaction, as per established jurisprudence on legal interest on judgments.
Main Doctrine
A court may render judgment on issues not alleged in the pleadings if evidence is presented with the express or implied consent of the adverse party, and such issues are considered as if they were raised in the pleadings. Implied consent exists when the adverse party fails to object to the evidence presented.