R.S. Tomas, Inc. v. Rizal Cement Co., Inc.
R.S. Tomas, Inc. v. Rizal Cement Co., Inc.
DECISION
PERALTA, J :p
The facts of the case, as culled from the records, are as follows:
On December 28, 1990, respondent and petitioner entered into a
Contract 5 for the supply of labor, materials, and technical supervision of the
following projects:
1. Â J.O. #P-90-212 — Wiring and installation of primary
and secondary lines system.
2. Â J.O. #P-90-213 — Supply and installation of primary
protection and disconnecting switch.
3. Â J.O. #P-90-214 — Rewinding and conversion of one (1)
unit 3125 KVA, 34.5 KV/2.4 KV, 3ø Transformer to 4000 KVA, 34.5
KV/480V, 3ø Delta Primary, Wye with neutral secondary. 6
Petitioner agreed to perform the above-mentioned job orders.
Specifically, it undertook to supply the labor, equipment, supervision, and
materials as specified in the detailed scope of work. 7 For its part,
respondent agreed to pay the total sum of P2,944,000.00 in consideration of
the performance of the job orders. Petitioner undertook to complete the
projects within one hundred twenty (120) days from the effectivity of the
contract. 8 It was agreed upon that petitioner would be liable to respondent
for liquidated damages in the amount of P29,440.00 per day of delay in the
completion of the projects which shall be limited to 10% of the project cost. 9
To secure the full and faithful performance of all its obligations and
responsibilities under the contract, petitioner obtained from Times Surety &
Insurance Co., Inc. (Times Insurance) a performance bond 10 in an amount
equivalent to fifty percent (50%) of the contract price or P1,458,618.18.
Pursuant to the terms of the contract, respondent made an initial payment of
P1,458,618.18 on January 8, 1991. 11
In a letter 12 dated March 9, 1991, petitioner requested for an
extension of seventy-five (75) days within which to complete the projects
because of the need to import some of the materials needed. In the same
letter, it also asked for a price adjustment of P255,000.00 to cover the
higher cost of materials. 13 In another letter 14 dated March 27, 1991,
petitioner requested for another 75 days extension for the completion of the
transformer portion of the projects for failure of its supplier to deliver the
materials.
On June 14, 1991, 15 petitioner manifested its desire to complete the
project as soon as possible to prevent further losses and maintain goodwill
between the companies. Petitioner requested for respondent's assistance by
facilitating the acquisition of materials and supplies needed to complete J.O.
#P-90-212 and J.O. #P-90-213 by directly paying the suppliers. It further
sought that it be allowed to back out from J.O. #P-90-214 covering the
rewinding and conversion of the damaged transformer.
In response 16 to petitioner's requests, respondent, through counsel,
manifested its observation that petitioner's financial status showed that it
could no longer complete the projects as agreed upon. Respondent also
informed petitioner that it was already in default having failed to complete
the projects within 120 days from the effectivity of the contract. Respondent
further notified petitioner that the former was terminating the contract. It
also demanded for the refund of the amount already paid to petitioner,
otherwise, the necessary action would be instituted. Respondent sent
another demand letter 17 to Times Insurance for the payment of
P1,472,000.00 pursuant to the performance bond it issued. DcTSHa
SO ORDERED. 24
The RTC held that the failure of petitioner to complete the projects was
not solely due to its fault but more on respondent's misrepresentation and
bad faith. 25 Therefore, the Court dismissed respondent's complaint. Since
respondent was found to have committed deceit in its dealings with
petitioner, the court awarded damages in favor of the latter. 26 TAESDH
whether or not petitioner is liable for the cost of the contract between
respondent and Geostar. 37
The petition is without merit.
The case stemmed from an action for sum of money or damages
arising from breach of contract. The contract involved in this case refers to
the rewinding and conversion of one unit of transformer to be installed and
energized to supply respondent's power requirements. 38 This project was
embodied in three (3) job orders, all of which were awarded to petitioner who
represented itself to be capable, competent, and duly licensed to handle the
projects. 39 Petitioner, however, failed to complete the projects within the
agreed period allegedly because of misrepresentation and fraud committed
by respondent as to the true nature of the subject transformer. The trial
court found that respondent indeed failed to inform petitioner of the true
condition of the transformer which amounted to fraud thereby justifying the
latter's failure to complete the projects. The CA, however, had a different
conclusion and decided in favor of respondent. Ultimately, the issue before
us is whether or not there was breach of contract which essentially is a
factual matter not usually reviewable in a petition filed under Rule 45. 40EcSCHD
In resolving the issues, the Court inquires into the probative value of
the evidence presented before the trial court. 41 Petitioner, indeed,
endeavors to convince us to determine once again the weight, credence, and
probative value of the evidence presented before the trial court. 42 While in
general, the findings of fact of the CA are final and conclusive and cannot be
reviewed on appeal to the Court because it is not a trier of facts, 43 there are
recognized exceptions 44 as when the findings of fact are conflicting, which
is obtaining in this case. The conflicting conclusions of the trial and appellate
courts impel us to re-examine the evidence presented.
After a thorough review of the records of the case, we find no reason to
depart from the conclusions of the CA.
It is undisputed that petitioner and respondent entered into a contract
for the supply of labor, materials, and technical supervision primarily for the
rewinding and conversion of one (1) unit of transformer and related works
aimed at providing the power needs of respondent. As agreed upon by the
parties, the projects were to be completed within 120 days from the
effectivity of the contract. Admittedly, however, respondent failed, not only
to perform its part of the contract on time but, in fact, to complete the
projects. Petitioner tried to exempt itself from the consequences of said
breach by passing the fault to respondent. It explained that its failure to
complete the project was due to the misrepresentation of the respondent. It
claimed that more time and money were needed, because the condition of
the subject transformer was worse than the representations of respondent.
Is this defense tenable?
We answer in the negative.
Records show that petitioner indeed asked for price adjustment and
extension of time within which to complete the projects. In its letter 45 dated
March 9, 1991, petitioner anchored its request for extension on the following
grounds:
that the wires to be used shall be pure copper and that there was a need to
supply new bushings for the complete rewinding and conversion of 3125
KVA to 4 MVA Transformer. 55 In other words, petitioner was aware that
there was a need for complete replacement of windings to copper and of
secondary bushings. 56 It is, therefore, improper for petitioner to ask for
additional amount to answer for the expenses that were already part and
parcel of the undertaking it was bound to perform. For petitioner, the
contract entered into may have turned out to be an unwise investment, but
there is no one to blame but petitioner for plunging into an undertaking
without fully studying it in its entirety. 57
EAICTS
The Court likewise notes that petitioner repeatedly asked for extension
allegedly because it needed to import the materials and that the same could
not be delivered on time. Petitioner also repeatedly requested that
respondent make a direct payment to the suppliers notwithstanding the fact
that it contracted with respondent for the supply of labor, materials, and
technical supervision. It is, therefore, expected that petitioner would be
responsible in paying its suppliers because respondent is not privy to their
(petitioner and its suppliers) contract. This is especially true in this case
since respondent had already made advance payments to petitioner. It
appears, therefore, that in offering its bid, the source and cost of materials
were not seriously taken into consideration. It appears, further, that
petitioner had a hard time in fulfilling its obligations under the contract that
is why it asked for financial assistance from respondent. This is contrary to
petitioner's representation that it was capable, competent, and duly licensed
to handle the projects.
As to the alleged damaged condition of the subject transformer, we
quote with approval the CA conclusion in this wise:
SO ORDERED.
Velasco, Jr., Abad, Mendoza and Perlas-Bernabe, JJ., concur.
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Footnotes
6.Id. at 1.
7.Id. at 2.
8.Id. at 3.
9.Id. at 4.
13.Records, p. 447.
16.Embodied in a letter dated June 25, 1991, Exhibit "G," Exhibits for the Plaintiff,
p. 26.
22.Id. at 5.
24.Records, p. 620.
25.Id.
26.Id.
27.Rollo , p. 67.
28.Id. at 64-65.
29.Id. at 65.
30.Id.
31.Id. at 66.
32.Id. at 66-67.
33.Id. at 19-20.
34.Id. at 30-34.
35.Id. at 19.
36.Id. at 34.
37.Id. at 37.
39.Id. at 2.
40.Dueñas v. Guce-Africa , G.R. No. 165679, October 5, 2009, 603 SCRA 11, 20.
41.Heirs of Jose Marcial K. Ochoa namely: Ruby B. Ochoa, Micaela B. Ochoa and
Jomar B. Ochoa v. G & S Transport Corporation, G.R. No. 170071, March 9,
2011.
43.Japan Airlines v. Simangan, G.R. No. 170141, April 22, 2008, 552 SCRA 341,
357.
44.Among the recognized exceptions are: (a) when the conclusion is a finding
grounded entirely on speculations, surmises or conjectures; (b) when the
inference made is manifestly mistaken, absurd or impossible; (c) where there
is grave abuse of discretion; (d) when the judgment is based on a
misapprehension of facts; (e) when the findings of facts are conflicting; and
(f) when the CA, in making its findings, went beyond the issues of the case
and the same is contrary to the admissions of both appellant and appellee.
(Id. at 357-358.)
46.Id.
48.Id. at 448.
51.Records, p. 462.
52.Id. at 463.
53.See National Power Corporation v. Premier Shipping Lines, Inc. , G.R. Nos.
179103 and 180209, September 17, 2009, 600 SCRA 153, 176.
54.Records, p. 447.
57.National Power Corporation v. Premier Shipping Lines, Inc. , supra note 53.
58.Rollo , p. 65.
59.Cathay Pacific Airways, Ltd. v. Vasquez , G.R. No. 150843, March 14, 2003, 399
SCRA 207, 220.
60.Id.
61.Id.
63.Rollo , p. 65.
66.Id. at 4.
69.H.L. Carlos Construction, Inc. v. Marina Properties Corp., 466 Phil. 182, 204
(2004).
70.Id.