Pascua v. G & G Realty Corporation
REITERATIONFacts
The Antecedents: Petitioner Robert Pascua, doing business as TRI-WEB CONSTRUCTION, entered into an Agreement with respondent G & G REAL TV CORPORATION on October 15, 1999, for the construction of a four-storey commercial building and a two-storey kitchen with dining hall for P11,100,000.00. During construction, respondent required petitioner to undertake several additional and change order works not covered by the original agreement. Petitioner prioritized these additional works, which caused a halt in the construction of the four-storey building. Petitioner completed the project, albeit behind the scheduled turnover date. After punch listing minor repair works, respondent refused to settle its outstanding obligation. Procedural History: Petitioner filed a Complaint for Sum of Money with Damages before the Regional Trial Court (RTC) of Pasig City. The RTC ruled in favor of petitioner, finding the delay reasonable and caused by the additional works requested by respondent. The RTC ordered respondent to pay the remaining balance, attorney's fees, and costs. On appeal, the Court of Appeals (CA) initially affirmed the RTC ruling with modification. However, upon respondent's motion for reconsideration, the CA issued an Amended Decision, reversing its original ruling and holding petitioner liable for penalties and refundable balance, finding that petitioner's acceptance of new contracts caused the delay. The Petition: Petitioner appealed to the Supreme Court, assailing the CA's Amended Decision, arguing that the CA erred in reversing its original decision, misconstrued facts, misappreciated evidence, and rendered a judgment inconsistent with applicable rulings, finding petitioner liable for delays despite proof that respondent's additional works caused them.
Issue(s)
Whether the Court of Appeals committed a serious error when it overturned and reversed its original decision and declared petitioner liable despite overwhelming proof supporting petitioner's claim for the unpaid balance of the contract price. Whether the Court of Appeals grossly misconstrued and misinterpreted the facts of the case and committed a serious misappreciation of the evidence; and whether the Amended Decision is unjust, erroneous, oppressive, and contrary to law, jurisprudence, and the facts of the case in finding that the delays were caused by the petitioner. Whether the Court of Appeals violated the rules of evidence by admitting hearsay testimony. Whether the Court of Appeals granted respondent's appeal notwithstanding the lack of authority on the part of respondent corporation to interpose the same. Whether the Court of Appeals committed a palpable error when it made a judgment award for BFP and Maynilad penalties despite the non-payment of required filing fees for respondent's counterclaims. Whether petitioner is entitled to the payment of the outstanding balance of the contract price based on the original agreement. Whether petitioner is entitled to the payment of the outstanding balance of the contract price based on additional works and change order works, and the principles of reciprocal obligations and unjust enrichment.
Ruling
The Supreme Court granted the petition, reversed and set aside the Amended Decision of the Court of Appeals, and reinstated the ruling of the Regional Trial Court in favor of the petitioner. WHEREFORE, the instant petition is GRANTED. The Amended Decision dated March 15, 2010 of the Court of Appeals is hereby REVERSED and SET ASIDE. SO ORDERED.
Ratio Decidendi
On the issue of the Court of Appeals' error in overturning its original decision: The Court found merit in the petition, stating that there was no reason to deviate from the factual findings of the trial court, which were supported by evidence. The trial court correctly determined that the respondent's additional works and change order works caused the delay in the construction project. These additional works, such as the construction of a roof deck, installation of aluminum windows, insulation, narra parquet, additional lights, doors, comfort rooms, and air conditioning unit, were not part of the original agreement. The respondent explicitly instructed the petitioner to prioritize these change orders, necessitating a halt in the construction of the four-storey building to allow materials to pass. The Court reiterated that factual findings of trial courts, when supported by unrebutted testimonial and documentary evidence, are entitled to great weight and respect on appeal. Therefore, the appellate court's reversal of its own decision, which disregarded testimonial and documentary evidence and relied on hearsay, was improper. On the issues of misconstrued facts, misappreciation of evidence, and the unjust finding of petitioner-caused delays: The Court emphasized that the evidence on record categorically showed that the delay in the completion of the project was traceable to the series of additional works and change order works required by the respondent, which were not part of the original agreement. The appellate court, in reversing its original decision, completely disregarded the testimonial and documentary evidence adduced below and engaged in a piecemeal evaluation of the case. The Court was not persuaded by the respondent's bare claim that the petitioner caused the delay; instead, proof strongly indicated that the delay was caused by the respondent's requirements for additional and change order works. There is no ratio provided to address whether the Court of Appeals violated the rules of evidence by admitting hearsay testimony. There is no ratio provided to address whether the Court of Appeals granted respondent's appeal notwithstanding the lack of authority on the part of respondent corporation to interpose the same. There is no ratio provided to address whether the Court of Appeals committed a palpable error when it made a judgment award for BFP and Maynilad penalties despite the non-payment of required filing fees for respondent's counterclaims. On the entitlement to the outstanding balance of the contract price based on the original agreement: The Court found merit in the petition, stating that there was no reason to deviate from the factual findings of the trial court, which were supported by evidence. On the entitlement to the outstanding balance of the contract price based on additional works and change order works, and the principles of reciprocal obligations and unjust enrichment: The Court cited Dieparine, Jr. v. Court of Appeals, stating that a construction contract involves reciprocal obligations, where the contractor builds the structure and the owner pays for it upon completion. Since the petitioner completed the construction as per the agreement and the additional works requested, there was no legal basis for the respondent to withhold payment of the balance of the contract price. Furthermore, the Court invoked Heirs of Ramon Gaite v. The Plaza, Inc., holding that under the principle of quantum meruit, a contractor is allowed to recover the reasonable value of services rendered to avoid unjust enrichment. Denying payment for a nearly completed and occupied building would permit unjust enrichment at the contractor's expense. As the petitioner completed the project, it would be unjust to allow the respondent to benefit without paying the contract price.
Main Doctrine
A contractor is entitled to the payment of the outstanding balance of the contract price for construction services rendered, especially when delays were caused by the owner's additional works and change orders, and to deny payment would result in unjust enrichment.