Edron Construction v. Provincial Government of Surigao Del Sur
REITERATIONFacts
The Antecedents: Petitioners Edron Construction Corporation and Edmer Y. Lim (collectively, petitioners) entered into three construction agreements with the Provincial Government of Surigao Del Sur (respondent) for the construction of various public facilities. Petitioners alleged that they completed the projects, which were accepted by the respondent as evidenced by Certificates of Final Acceptance. However, the respondent allegedly failed to pay the aggregate amount of P8,870,729.67, prompting petitioners to file a complaint for specific performance and damages. Procedural History: Petitioners filed a complaint for specific performance and damages before the Regional Trial Court (RTC) of Quezon City. The respondent admitted the existence of the contracts but denied liability, claiming there was no unpaid balance and that petitioners were liable for underruns and defective works. Subsequently, the respondent filed a Motion to Dismiss, arguing that petitioners lacked a cause of action due to their failure to submit a sworn statement confirming payment of labor and materials, as required by the contracts. The RTC denied this motion. After trial, the RTC ruled in favor of the petitioners, ordering the respondent to pay P4,326,174.50 with interest and attorney's fees. The respondent appealed to the Court of Appeals (CA). The Petition: The Court of Appeals reversed the RTC's decision, dismissing the complaint for lack of cause of action, holding that the submission of a sworn statement was a condition sine qua non for demanding final payment. Petitioners filed a petition for review on certiorari with the Supreme Court, arguing that the CA erred in dismissing their complaint. The Supreme Court granted the petition, finding that the respondent waived its defense regarding the non-submission of the sworn statement by failing to raise it in its Answer and by filing the Motion to Dismiss out of time. The Court reinstated the RTC's decision, holding the respondent liable for the awarded amount with modified legal interest.
Issue(s)
Whether the Court of Appeals correctly reversed and set aside the RTC ruling and dismissed petitioners' complaint for lack of cause of action based on the alleged non-submission of a sworn statement. Whether the defense of failure to submit a sworn statement, as required by the construction agreement, was timely raised and validly considered, and whether the respondent is liable to the petitioners.
Ruling
The petition is meritorious. The Supreme Court reversed and set aside the Decision and Resolution of the Court of Appeals, and reinstated the Decision of the Regional Trial Court with modification regarding the computation of legal interest.
Ratio Decidendi
On the issue of whether the CA correctly dismissed the complaint for lack of cause of action based on the alleged non-submission of a sworn statement: The CA's dismissal was based on petitioners' alleged non-submission of the sworn statement required by Paragraph 4.3, Article IV of the construction agreements. However, this reliance is misplaced. The Court reiterated the principle under Section 1, Rule 9 of the Rules of Court, which states that defenses and objections not pleaded in a motion to dismiss or in the answer are deemed waived, except for specific exceptions like lack of jurisdiction, litis pendentia, res judicata, or prescription. In this case, respondent's Answer with Counterclaim did not raise the non-execution of the sworn statement as a defense. This issue was only raised in a Motion to Dismiss filed more than a year after the Answer, which was filed out of time as per Section 1, Rule 16 of the Rules of Court. Furthermore, the defense raised in the motion to dismiss did not fall under the exceptions provided in Section 1, Rule 9 of the Rules of Court. Therefore, respondent was precluded from raising this defense, and the CA erred in dismissing the complaint on such ground. On the issue of whether the defense of failure to submit a sworn statement was timely raised and validly considered, and whether the respondent is liable to the petitioners: The RTC correctly found respondent liable, especially considering the Certificates of Final Acceptance issued, which signified satisfactory completion and acceptance of the projects. Consequently, respondent is liable to petitioners for the amount of ₱4,326,174.50, as valued by the Presidential Flagship Committee and accepted by petitioners.
Main Doctrine
A defense not pleaded in the answer or motion to dismiss, except for those concerning jurisdiction, litis pendentia, res judicata, and prescription, is deemed waived and cannot be raised on appeal.