SECOND DIVISION
[G.R. No. 200524. March 14, 2018.]
HERMAN (BOY) MERCADO, ERICO (ENRICO) SASON AND ANDRES LIMJOCO, DOING BUSINESS UNDER THE NAME "BEAR BUILDERS", petitioners,vs. ROMEO ALIPIO, DOING BUSINESS UNDER THE NAME "R.S. CONSTRUCTION" AND LIMJOCO GROUP CONSTRUCTION AND DEVELOPMENT CORP., respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Second Division, issued a Resolution dated14 March 2018which reads as follows: AIDSTE
"G.R. No. 200524 (Herman (Boy) Mercado, Erico (Enrico) Sason and Andres Limjoco, doing business under the name "Bear Builders" vs. Romeo Alipio, doing business under the name "R.S. Construction" and Limjoco Group Construction and Development Corp.). — This is a Petition for Review 1 under Rule 45 of the Rules of Court seeking to set aside paragraph (d) of the dispositive portion of the Decision 2 dated October 10, 2011 of the Court of Appeals (CA) in CA-G.R. CV No. 92199.
The Facts
The facts, as culled from the records, are as follows:
Respondent Romeo Alipio (Alipio), doing business under the name R.S. Construction, is engaged in the business of construction, public and private projects, and in the hiring of various equipment. 3
Meanwhile, Herman Mercado, Enrico Sason and Andres Limjoco (petitioners) grouped together under a joint venture named Bear Builders are subcontractors of the Limjoco Group of Companies (LGC) in the construction of Taal Splendido Town and Country at Dayap, Laurel, Batangas. 4
Under the project, the scope of the work subcontracted by Bear Builders from the LGC was clearing and grubbing, cut and fill (embankment) and grading and compaction. 5
The aforesaid work of the petitioners was subcontracted by them to Alipio before February 1997 at Forty Pesos (Php40.00) per cubic meter. Under the agreement, petitioners would collect payment from LGC and then in turn, pay Alipio its due under the agreement. 6
On June 4, 1999, Alipio filed a complaint for sum of money before the court a quo, the pertinent excerpts of the same are hereby reproduced, viz.:
2. That [Alipio] is engaged in the business of construction, public and private projects, and in the hiring of various heavy equipment;
3. That [petitioners], grouping themselves together under a joint venture, were sub-contractors of the [LGC] in the construction of Taal Splendido Town and Country at Dayap, Laurel, Batangas;
4. That under the project the scope of the work subcontracted by the [petitioners] from the [LGC] was clearing and grubbing, cut and fill (embankment), and grading and compaction.
5. That the aforesaid work of the [petitioners] was subcontracted by them to [Alipio] before February 1997 at FORTY PESOS (P40.00) PER CUBIC METER. Under the agreement [petitioners] would collect payment from [LGC] and then in turn pay [Alipio] its due under the agreement;
6. That [Alipio] did its work under the subcontract from February 3, 1997 up to May 31, 1997.
7. That [Alipio] was forced to request to withdraw from the contract which [petitioners] approved of, and so, by agreement [Alipio's] relationship with the [petitioners] ended on May 31, 1997 and effective June 1, 1997 [petitioners] would use the equipment of [Alipio] in the job site and will just pay rentals at the rates fixed by the [LGC];
FIRST CAUSE OF ACTION
8. The foregoing allegations are adopted as part hereof;
9. That [Alipio] has sent billing no. 3 to the [petitioners] dated July 28, 1997 (a copy of which being hereto attached as Annex "A") which was paid in part, leaving a balance of TWO HUNDRED EIGHTY THOUSAND TWO HUNDRED FIFTY THREE PESOS AND FIFTY SEVEN CENTAVOS (P280,253.57);
10. That [Alipio] has demanded payment of the above from [petitioners] but they failed and continue to fail to pay;
SECOND CAUSE OF ACTION
11. [Alipio] adopts the allegations of paragraphs 1 to 7 as part hereof;
12. That when [Alipio] was still undertaking the work, [petitioners] deducted from [Alipio's] collections the sum of FOUR HUNDRED FIFTEEN THOUSAND TWO HUNDRED FORTY-EIGHT PESOS AND THIRTY-TWO CENTAVOS (P415,248.32) for V.A.T., from collections on May 7, 1997, May 30, 1997, and July 28, 1997;
13. That it turned out however that [Alipio] was not liable to pay the V.A.T. or the Value Added tax and so [Alipio] demanded the return of the amount from the [petitioners] but the latter failed and continues to fail to pay the amount;
THIRD CAUSE OF ACTION
14. That [Alipio] adopts paragraphs 1 to 7 above as part hereof;
15. That the [petitioners] deducted from [Alipio's] collection a 10% retention based on work accomplished, which 10% amounted to NINE HUNDRED FIFTEEN THOUSAND EIGHT HUNDRED ELEVEN PESOS AND SIXTY-FOUR CENTAVOS (P915,811.64);
16. That [Alipio] demanded from [petitioners] for the return to him of said amount but [petitioners] failed and continues to fail to return the money;
FOURTH CAUSE OF ACTION
17. That [Alipio] adopts paragraphs 1 to 7 above as part hereof; AaCTcI
18. That the rentals for the equipment leased from [Alipio] by the [petitioners] from the period June 1, 1997 to June 12, 1997 used in the project was TWO HUNDRED FOUR THOUSAND SIX HUNDRED PESOS (P204,600.00);
19. That [Alipio] demanded from the [petitioners] the payment of said amount but [petitioners] failed and continues to fail to pay. 7
On March 7, 2001, the petitioners filed a third-party complaint against LGC.
On July 14, 2008, the court a quo rendered a judgment 8 holding petitioners liable for the monetary claims prayed for.
Aggrieved, petitioners elevated the matter to the CA. In a Decision 9 dated October 10, 2011, the appellate court affirmed the trial court's decision but modified the monetary award. The dispositive portion of the decision reads as follows:
WHEREFORE, premises considered, the instant appeal is partly GRANTED. Accordingly, the Judgment of the Regional Trial Court, Branch 43 of San Fernando City, Pampanga in Civil Case No. 11860 dated July 14, 2008 is hereby AFFIRMED with the following modifications:
a) the charge of value added tax in the amount of P415,248.32 and retention in the sum of P915,118.64 imposed against [petitioners] are deleted;
b) the charge for the unpaid rentals of the use of equipment imposed against [petitioners] in the amount of P204,600.00 is also deleted;
c) the award of moral and exemplary damages and attorney's fees are likewise deleted;
d) thus, a 12% interest per annum on the remaining balance in the sum of P280,253.57 from the time of the filing of complaint below is enforced.
SO ORDERED.10 (Underlining Ours)
Petitioners filed a Motion 11 for Partial Reconsideration but the same was denied by the CA in a Resolution 12 dated February 1, 2012.
Hence, this petition.
The Issues
Whether or not the CA erred in ruling that the petitioners are liable to pay Alipio the remaining balance in the sum of Php280,253.57 with 12% interest per annum from the time of the filing of the complaint.
Ruling of the Court
The amount of Php280,253.57 awarded by the appellate court represents the balance due on collection no. 3 for construction works undertaken by Alipio as a subcontractor of the petitioners, which on the other hand, the latter subcontracted from the prime contractor, Limjoco Group Construction and Development Corporation.
Petitioners maintain that the suspensive conditions were not fulfilled by Alipio, thus, it is not entitled to the amount being claimed. In support thereof, petitioners enumerated in its Appellant's Brief the billing and payment process to be followed, viz.:
a) the appellee will submit to the appellants his billing for work he accomplished; b) based from the billing submitted by the appellee to the appellants, the latter will submit the corresponding progress billing to the prime contractor, third party defendant, Limjoco Group Construction and Development Corporation, which was originally sued as [LGC]; c) thereafter the project consultant of the Limjoco Group Construction and Development Corporation will verify the correctness of the volume of work performed by the appellee submitted for payment; d) third party defendant, Limjoco Group Construction and Development Corporation then approves for payment the verified computation of construction work accomplished by the appellee submitted to its by its Project Consultant; e) thereafter, third-party defendant Limjoco Group Construction and Development Corporation pays the appellants P50.00 per cubic meter of work accomplished based on the verified computed accomplished work; and f) out of this payment of P50.00 per cubic meter of work accomplished, the appellants in turn pay the appellee P40.00 per cubic meter of work performed based on the approved verified construction work accomplished and paid to them by the third-party defendant, Limjoco Group Construction and Development Corporation. 13 EcTCAD
That payment due Alipio was made to depend on the suspensive condition of verification and approval of the LGC violated the principle of mutuality of contracts. The principle of mutuality of contracts is expressed in Article 1308 of the Civil Code, which provides:
Art. 1308. The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them.
Petitioners are precluded from unilaterally imposing suspensive conditions without the consent of the other party. Even assuming, for the sake of argument, that payment was indeed made to depend on the approved and verified construction work accomplished by Alipio, he had no way of ascertaining whether or not the progress billing he submitted was verified or not as he was directly dealing with petitioners and not with the LGC. On cross-examination, Alipio testified in this manner:
He did not know the person representing the [LGC] regarding the accomplished work. He communicated with the Bear Builders. He was being paid by the [LGC] but the money came from the Bear Builders. He was submitting the report to Bear Builders. He submitted the reports to defendant Bear Builders three (3) times. He submitted two (2) copies of every billing and he also has a copy thereof. He was paid by Bear Builders the volume of work given by the [LGC], used as computation. He had a copy of the billing bearing the signature of the recipient for the Bear Builders. He gave to the cross-examiner a letter addressed to Mr. Andres Limjoco, dated April 30, 1997, consisting of 10 pages. He did not know whether the [LGC] verified the report he submitted to the Bear Builders. He talked with the Bear Builders and not with the [LGC]. (Underlining Ours)
In support of his claim, Alipio presented a photo copy of the billing statement for collection no. 3 reflecting the remaining balance that petitioners owe him. Petitioners, for their part, claim that there was no remaining balance due on the said project, and that Alipio has already been paid in proportion to the work accomplished. They likewise claim that the photo copy of the billing statement is inadmissible in evidence pursuant to the Best Evidence Rule. 14 The general rule is that a "photocopy," being a mere secondary evidence, is not admissible unless it is shown that the original is unavailable. 15 Section 5 of Rule 130 of the Rules of Court states:
SEC. 5. When original document is unavailable. — When the original document has been lost or destroyed, or cannot be produced in court, the offeror, upon proof of its execution or existence and the cause of its unavailability without bad faith on his part, may prove its contents by a copy, or by a recital of its contents in some authentic document, or by the testimony of witnesses in the order stated.
It is undisputed that there is an obligation on the part of petitioners to pay Alipio upon verification and computation by the LGC of the volume of work accomplished by Alipio. It is likewise settled that upon payment by the LGC to petitioners of Php50.00 per cu m, the latter pays Alipio Php40.00 per cu m — the Php10.00 difference to be kept by petitioners and eventually handed to Alipio. Insofar as billing and payment were concerned, everything was coursed through petitioners.
Given the billing process or arrangement agreed upon by the parties, payment by the LGC for work accomplished automatically obliges petitioners to pay Alipio for further subcontracting the job to the latter. Payment by the prime contractor to petitioners supports the conclusion that the former had already verified and approved the billing statement of Alipio for work accomplished. That Alipio presented a mere photo copy of the statement to prove non-payment by the petitioners of the balance does not alter the fact that the burden of proving payment rests on the petitioners. Petitioners' failure to adduce documentary evidence to prove that payment has been made tilts the scale in favor of Alipio. It likewise bears stressing that the appellate court ruled that there is an original copy of the statement.
The conduct of the parties and the exhibits presented before the trial court indicate that all the conditions and safeguards adopted by the prime contractor (LGC) had been followed which made the prime contractor make payment to his sub-contractor (Bear Builders/petitioners) and as a result of which, the latter made partial payment to Alipio. If Alipio had not submitted his billing statement for collection no. 3, there would not have been partial payments for the work accomplished. In like manner, if Alipio had submitted his billing statement but the same was neither verified nor approved by the prime contractor, no partial payments would be made.
Jurisprudence tells us that one who pleads payment has the burden of proving it; 16 the burden rests on the petitioner to prove payment, rather than on the respondent to prove non-payment. Indeed, once the existence of indebtedness is duly established by evidence, the burden of showing with legal certainty that the obligation has been discharged by payment rests on the debtor. 17
Payment as a mode of extinguishing an obligation must be full or complete payment. Thus, the Court affirms the ruling of the trial court and the appellate court that petitioners remain liable to Alipio in the amount of Php280,253.57.
As to the matter of legal interest due thereon, the appellate court imposed a 12% interest per annum on the remaining balance in the sum of Php280,253.57. The Court, however, would like to modify the same in view of the adjustment set by the Bangko Sentral ng Pilipinas Monetary Board (BSP-MB) in its Resolution No. 796, the pertinent portion of which reads:
The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the following revisions governing the rate of interest in the absence of stipulation in loan contracts, thereby amending Section 2 of Circular No. 905, Series of 1982:
Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of an express contract as to such rate of interest, shall be six percent (6%) per annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank Financial Institutions are hereby amended accordingly.
This Circular shall take effect on 1 July 2013.
WHEREFORE, premises considered, the present petition is DENIED. The Decision dated October 10, 2011 of the Court of Appeals in CA-G.R. CV No. 92199 is hereby AFFIRMED WITH MODIFICATION in that:
Petitioners are ordered to pay respondent Romeo Alipio, jointly and severally, the amount of Two Hundred Eighty Thousand Two Hundred Fifty-Three Pesos and Fifty-Seven Centavos (Php280,253.57), representing the balance of Billing No. 3, plus interest at twelve percent (12%) per annum reckoned from the filing of the complaint to June 30, 2013 and six percent (6%) per annum from July 1, 2013 until full satisfaction of the same. HSAcaE
SO ORDERED."
Very truly yours,
MA. LOURDES C. PERFECTODivision Clerk of Court
By:
(SGD.) TERESITA AQUINO TUAZONDeputy Division Clerk of Court
Footnotes
1.Rollo, pp. 9-29.
2.Id. at 31-50.
3.Id. at 90.
4.Id.
5.Id.
6.Id.
7.Id. at 33-35.
8.Id. at 8-112.
9. Penned by Associate Justice Franchito N. Diamante, with Associate Justices Josefina Guevara-Salonga and Mariflor P. Punzalan-Castillo, concurring; id. at 31-47.
10.Id. at 45-46.
11. Id. at 51-59.
12. Id. at 48-50.
13. Id. at 38.
14. RULES OF COURT, Rule 130, Section 3.
Sec. 3.Original document must be produced; exceptions. — When the subject of inquiry is the contents of a documents, no evidence shall be admissible other than the original document itself, except in the following cases:
(a) When the original has been lost or destroyed, or cannot be produced in court, without bad faith on the part of the offeror; (b) When the original is in the custody or under the control of the party against whom the evidence is offered, and the latter fails to produce it after reasonable notice; (c) When the original consists of numerous accounts or other documents which cannot be examined in court without great loss of time and the fact sought to be established from them is only the general result of the whole; and (d) When the original is a public record in the custody of a public officer or is recorded in a public office.
15. Lee v. Tambago, A.C. No. 5281, February 12, 2008.
16. Vitarich Corporation v. Losin, 649 Phil. 164, 177 (2010).
17. Spouses Agner v. BPI Family Savings Bank, Inc., 710 Phil. 82, 88 (2013).