doctrine
The exception under (a) or (b) under Sec 9 obtains only where "the written
contract is so ambiguous or obscure in terms that the contractual intention of
the parties cannot be understood from a mere reading of the instrument.
facts
construction
agreement and the june 1986 amendements
·
Oct 1985, Rudlin invited proposals for the
construction of a 3-storey school building.
·
The contract was awarded to FBC (P6,933,268.00).
Rudlin represented by its Chairman Lagera, and FBC represented by its VP Jaime Lo,
executed a Construction Agreement
o LD: 1/10 of 1% of the total contract price
for every calendar day of delay
o completion
date not later than April 30, 1986 unless an extension of time has been
"authorized and approved by the OWNER and the ARCHITECT in writing."
·
Rudlin and FBC made amendments to their
Construction Agreement:
1.
FBC shall complete the Project on or before 10 June
1986.
2.
Payment of the balance shall be made after the
parties have reconciled their accounts with regard to the upgrading and downgrading
of the work done on the Project
3.
RII shall pay FBC the unpaid balance as determined
under par 2:
(a) RII
shall pay FBC an additional payment of P250K upon signing hereof, receipt of
which is hereby acknowledged. This is in addition to the P250K paid on 29 May
1986.
(b) The rest
of the unpaid balance shall be payable within a period of 90 days from the date
the said balance is determined, secured by PDC…
(c) Sec 12 (LD)
is waived.
·
June 15, 1986, the school building was and utilized
upon the start of the school year. No reconciliation of accounts took place.
FBC demanded payment of the balance of the adjusted contract price per its
computation, but it was not heeded by Rudlin.
FBC
filed a suit for sum of money
·
FBC alleged that the contract price + adjustments is P7,324,128.44;
that Rudlin paid FBC only P4,874,920.14, thus leaving a balance
of P2,449,208.30.
Rudlin defenses
·
[joke
lang ang amount sa contract] Construction Agreement did not reflect the true
contract price agreed upon, which is P6,006,965.00. The amount of P6,933,268 was
indicated solely for the purpose of obtaining a higher amount of loan from the
BPI. It was due to inadvertence, the parties forgot to sign an agreement
fixing the true contract price.
·
Despite the extension given by Rudlin, FBC still
has not completed the project.
·
[defects] valued at P1,180,127.35 + no
COC.
·
Rudlin had paid FBC P5,564,219.58. After
considering the 10% retention money and the value of additives and deductives,
Rudlin had actually overpaid FBC by P415,701.34.
·
TC appointed 3 Commissioners to resolve factual
issues:
1) Adherence or
non-adherence to the plan and specifications;
2) Additives,
deductives, defects and faults in the construction; [and]
Lower courts:
·
RTC: The subject school building had several
defects specially the waterproofing material.
o contract
price of P6,933,268.00 (not P6,006,965.00)
o FBC was
not liable for the defect in waterproofing and delay in the completion of the
works:
§ changing
of the brand of the waterproofing used in the gutter was fully discussed during
the regular meeting between FBC and Architect Quezon;
petitions
·
FBC: legal interest, AFs + personal liability of
the officers + school should be liable
·
Rudlin: Construction
Agreement is not reflective of the true intent of the parties; in not declaring
that FBC is liable for the defects in the waterproofing since the change in
waterproofing specifications was not approved by Rudlin
issue 1: whether
FBC is liable for the defects in the construction of the subject school building
and delay in the completion of the works;
·
The damage wrought by water seepage causing leaking
roofs and cracks on walls was so pervasive on many portions of the building
that even after the same was inaugurated, most of the classrooms could not be
properly utilized as their defective condition posed danger to the teachers and
students.
·
At the time of ocular inspection in 1988, it was
barely 2 years from the time the building was actually used and yet the overall
structure of the building was severely impaired.
·
FBC cannot escape liability for the poor quality of
waterproofing on the ground that Rudlin’s representative was present during the
meeting when the change in brand to be used was allegedly discussed with his
concurrence. The contract requires that All
changes shall be authorized by a written change order signed by
the OWNER and by the ARCHITECT.
·
In withholding payment of the balance of the
contract price, Rudlin properly
exercised its rights under the Construction Agreement.
·
FBC had not completed the repair works, its demand
for the payment of the final balance was premature.
issue 2: what’s the total
correct total contract price? P6.9M
·
Rudlin Peaches failed to substantiate its claim that the
contract price stated in the Construction Agreement (P6,933,268.00) was
not the true contract price because it had an understanding with FBC’s Jaime B.
Lo that they would decrease said amount to a mutually acceptable amount.
·
Assuming as true Rudlin’s claim that Exh
"7" failed to accurately reflect an intent of the parties to fix the
total contract price atP6,006,965.00, Rudlin failed to avail of its right to seek the reformation of the
instrument to the end that such true intention may be expressed.
·
Rudlin cannot invoke the exception under (a) or (b)
of the above provision. Such exception
obtains only where "the written contract is so ambiguous or obscure in
terms that the contractual intention of the parties cannot be understood from a
mere reading of the instrument. In such a case, extrinsic evidence of the
subject matter of the contract, of the relations of the parties to each other,
and of the facts and circumstances surrounding them when they entered into the
contract may be received to enable the court to make a proper interpretation of
the instrument."
·
Under the 4th exception, however, Rudlin’s evidence is admissible to show the
existence of such other terms agreed to by the parties after the execution of
the contract. No competent evidence was adduced by Rudlin to prove that the
amount of P6,006,965.00 stated therein as contract price was the
actual decreased amount that FBC and Rudlin found mutually acceptable.
·
As to the affidavits executed by Architect Peaches the same do not serve as competent proof of the purported actual contract price
as they did not testify thereon.
issue 3: whether or not
rudlin is entitled to reimbursement. no.
·
As to Rudlin’s counterclaim for reimbursement of
its expenses in repairing the defective waterproofing, not a single receipt was
presented by Rudlin to prove that such expense was actually incurred by it.
The testimony of Rodolfo J. Lagera on the total cost
allegedly spent by Rudlin in repairing the waterproofing works does not
suffice. A court cannot rely on speculations, conjectures or guesswork as to
the fact of damage but must depend upon competent proof that they have indeed
been suffered by the injured party and on the basis of the best evidence
obtainable as to the actual amount thereof
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