Paras v. Kimwa Construction
REITERATIONFacts
The Antecedents: Spouses Bonifacio and Lucia Paras (petitioners) entered into an "Agreement for Supply of Aggregates" with Kimwa Construction and Development Corporation (respondent) on December 6, 1994. Under the agreement, Lucia Paras, a concessionaire of a sand and gravel permit, allotted 40,000 cubic meters of aggregates to Kimwa at ₱240.00 per truckload, for Kimwa's exclusive use. Kimwa was to pick up the aggregates at Lucia's permitted area. The agreement stipulated that payment would be made 15 days after receipt of billing, and no modifications would be binding unless in writing. Lucia Paras' Special Permit for rechanneling and extraction was valid for six months from November 14, 1994, expiring on May 15, 1995, and allowed for the extraction of approximately 40,000 cubic meters. Procedural History: Kimwa hauled 10,000 cubic meters of aggregates but subsequently stopped. Spouses Paras filed a Complaint for breach of contract with damages, alleging that Kimwa assured them that the 40,000 cubic meters would be hauled within two to three months, and that hauling must be completed before May 15, 1995, due to the permit's expiration. The Regional Trial Court (RTC) ruled in favor of Spouses Paras, ordering Kimwa to pay ₱720,000.00 for the unhauled aggregates, plus attorney's fees and costs. The Court of Appeals (CA) reversed the RTC decision, dismissing the complaint, and denied reconsideration. The CA found the written agreement clear and that the RTC erred in admitting evidence in violation of the Parol Evidence Rule. The Petition: Spouses Paras filed a Petition for Review on Certiorari under Rule 45, praying for the reversal of the CA's decision and the reinstatement of the RTC's ruling.
Issue(s)
Whether respondent Kimwa Construction and Development Corporation is liable to petitioners Spouses Paras for failing to haul 30,000 cubic meters of aggregates by May 15, 1995. Whether parol evidence is admissible to prove that the written agreement failed to express the true intent of the parties regarding the quantity and deadline for hauling the aggregates.
Ruling
The Supreme Court granted the petition, reversed and set aside the Court of Appeals' decision, and reinstated the Regional Trial Court's decision. Respondent Kimwa Construction and Development Corporation is liable for breach of contract for failing to haul the remaining 30,000 cubic meters of aggregates.
Ratio Decidendi
On the issue of liability for breach of contract: The Supreme Court held that the Court of Appeals erred in dismissing the complaint. The petitioners' Special Permit clearly indicated that their authority to extract aggregates was limited to approximately 40,000 cubic meters and was valid only until May 15, 1995. The RTC correctly considered this permit, which was furnished to Kimwa, as evidence that Kimwa was aware of the time constraint. The Court reasoned that it would be contrary to rational human behavior for Lucia Paras to bind her entire business to an allotment without a corresponding assurance from Kimwa that the entire quantity would be hauled within the permit's validity period. Therefore, Kimwa's failure to haul the remaining 30,000 cubic meters constituted a breach of contract, making it liable to the Spouses Paras. On the issue of the admissibility of parol evidence: The Supreme Court held that the Court of Appeals erred in ruling that parol evidence was inadmissible. The Court found that the petitioners, in their Complaint, had put in issue the failure of the written agreement to express the true intent of the parties, specifically concerning the deadline for hauling the aggregates. This fell under one of the exceptions provided in Rule 130, Section 9 of the Revised Rules on Evidence, thus allowing the admission of parol evidence. Respondent Kimwa, by answering the allegations in the Complaint, also participated in putting these issues in contention. The Court emphasized that the written Agreement, while stating 40,000 cubic meters were "allotted" and for Kimwa's "exclusive use," did not explicitly state a deadline.
Main Doctrine
The Supreme Court reversed the Court of Appeals, reinstating the Regional Trial Court's decision, holding that the respondent Kimwa Construction and Development Corporation was liable for breach of contract for failing to haul the remaining 30,000 cubic meters of aggregates. The Court found that the parties' true intent, despite the written agreement, was for Kimwa to haul the entire 40,000 cubic meters by May 15, 1995, a fact that could be proven by parol evidence due to the exceptions under Rule 130, Section 9 of the Rules of Evidence.