FIRST DIVISION
FOUNDATION SPECIALISTS, G.R. No. 170674
INC.,
Petitioner,
Present:
PUNO, C.J., Chairperson,
CARPIO,
- v e r s u s
- CORONA,
LEONARDO-DE CASTRO and
BERSAMIN, JJ.
BETONVAL
READY CONCRETE,
INC.
and STRONGHOLD
INSURANCE
CO., INC.,
Respondents. Promulgated:
August
24, 2009
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D E C I S
I O N
CORONA, J.:
On separate dates, petitioner
Foundation Specialists, Inc. (FSI) and respondent Betonval Ready Concrete, Inc.
(Betonval) executed three contracts[1] for the
delivery of ready mixed concrete by Betonval to FSI. The basic stipulations were:
(a) for FSI to supply the cement to be made into ready mixed concrete; (b) for FSI
to pay Betonval within seven days after presentation of the invoices plus 30% interest
p.a. in case of overdue payments and (c) a credit limit of P600,000 for FSI.
Betonval
delivered the ready mixed concrete pursuant to the contracts but FSI failed to
pay its outstanding balances starting January 1992. As an accommodation to FSI,
Betonval extended the seven day credit period to 45 days.[2]
On
September 1, 1992, Betonval demanded from FSI its balance of P2,349,460.[3] Betonval
informed FSI that further defaults would leave it no other choice but to impose
the stipulated interest for late payments and take appropriate legal action to
protect its interest.[4] While maintaining
that it was still verifying the correctness of Betonval’s claims, FSI sent
Betonval a proposed schedule of payments devised with a liability for late
payments fixed at 24% p.a.[5]
Thereafter,
FSI paid Betonval according to the terms of its proposed schedule of payments.
It was able to reduce its debt to P1,114,203.34 as of July 1993, inclusive
of the 24% annual interest computed from the due date of the invoices.[6] Nevertheless,
it failed to fully settle its obligation.
Betonval
thereafter filed an action for sum of money and damages in the Regional Trial
Court (RTC).[7]
It also applied for the issuance of a writ of preliminary attachment alleging
that FSI employed fraud when it contracted with Betonval and that it was disposing
of its assets in fraud of its creditors.
FSI denied Betonval’s allegations and moved
for the dismissal of the complaint. The amount claimed was allegedly not due
and demandable because they were still reconciling their respective records. FSI
also filed a counterclaim and prayed for actual damages, alleging that its
other projects were delayed when Betonval attached its properties and garnished
its bank accounts. It likewise prayed for moral and exemplary damages and
attorney’s fees.
The RTC
issued a writ of preliminary attachment and approved the P500,000 bond of
respondent Stronghold Insurance Co., Inc. (Stronghold). FSI filed a counterbond
of P500,000 thereby discharging the writ of preliminary attachment,
except with respect to FSI’s excavator, crawler crane and Isuzu pick-up truck, which
remained in custodia legis.[8] An additional counterbond of P350,000
lifted the garnishment of FSI’s receivables from the Department of Public Works
and Highways.
On January 29, 1999, the RTC ruled for
Betonval.[9] However, it awarded P200,000
compensatory damages to FSI on the ground that the attachment of its properties
was improper.[10]
FSI and Stronghold separately filed
motions for reconsideration while Betonval filed a motion for clarification and
reconsideration. In an order dated May 19, 1999, the RTC denied the motions for
reconsideration of Betonval and Stronghold. However, the January 29, 1999
decision was modified in that the award of actual or compensatory damages to FSI
was increased to P1.5 million.[11]
All
parties appealed to the Court of Appeals (CA). However, only the respective
appeals of Betonval and Stronghold were given due course because FSI’s appeal
was dismissed for nonpayment of the appellate docket fees.[12]
In
its appeal, Betonval assailed the award of actual damages as well as the
imposition of legal interest at only 12%, instead of 24% as agreed on.
Stronghold, on the other hand, averred that the attachment was proper.
In
its decision[13]
dated January 20, 2005, the CA upheld the May 19, 1999 RTC order with
modification. The CA held that FSI should pay Betonval the value of unpaid
ready mixed concrete at 24% p.a. interest plus legal interest at 12%.
The CA, however, reduced the award to FSI of actual and compensatory damages, thus:
WHEREFORE, premises
considered, the appealed Order dated May 19, 1999 is MODIFIED as
follows: (a) to increase the rate of interest imposable on the P1,114,203.34
awarded to appellant Betonval from 12% to 24% per annum, with the aggregate sum
to further earn an annual interest rate of 12% from the finality of this
decision, until full payment; (b) to reduce the award of actual damages in
favor of appellee from P1,500,000.00 to P200,000.00; (c) to hold both
appellants jointly and severally liable to pay said amount; and (d) to hold
appellant Betonval liable for whatever appellant surety may be held liable
under the attachment bond. The rest is AFFIRMED in toto.
FSI’s
motion for reconsideration was denied.[14]
In
this petition for review on certiorari,[15] FSI prays
for the following:
(a)
decrease
the rate of imposable interest on the P1,114,203.34 award to Betonval,
from 12% to 6% p.a. from date of judicial demand or filing of the
complaint until the full amount is paid;
(b)
deduct
[from the award to Betonval] the cost or value of unused cement based on [its] invoice
stating 1,307.45 bags computed at the prevailing price;
(c)
award
actual and compensatory damages at P3,242,771.29;
(d)
hold
Betonval and Stronghold jointly and severally liable to pay such actual and
compensatory damages;
(e)
hold
Betonval liable for whatever Stronghold may be held liable under the attachment
bond and
(f)
affirm
in toto the rest of the order.[16]
The
petition has no merit.
Betonval’s Complaint
was not Premature
FSI
argues that Betonval’s complaint was prematurely filed. There was allegedly a
need to reconcile accounts, particularly with respect to the value of the
unused cement supplied by FSI, totaling 2,801.2 bags[17] which supposedly
should have been deducted from FSI’s outstanding obligation. FSI’s repeated
requests for reconciliation of accounts were allegedly not heeded by Betonval’s
representatives.
FSI’s contention is untenable. It neither
alleged any discrepancies in nor objected to the accounts within a reasonable
time.[18] As held
by the RTC, FSI was deemed to have admitted the truth and correctness of the
entries in the invoices since:
[N]o attempts
were made to reconcile [FSI’s] own record with [Betonval] until after the
filing of the complaint, inspite of claims in [FSI’s] Answer about its
significance, and despite having had plenty of opportunity to do so from the
time of receipt of the invoices or demand letters from [Betonval]. [FSI’s] excuse
that it was impractical to reconcile accounts during the middle of transactions
is defeated by the absence of any showing on record that a formal request to
reconcile was issued to [Betonval] despite the completion of deliveries or [FSI’s]
discovery of the alleged discrepancies, as well as its failure to initiate any
meeting with [Betonval], including one which the parties were directed to hold
for that purpose by the Court. Since [FSI] failed to prove the correctness
of its entries against those in [Betonval’s] invoices, its record is
self-serving. xxx (emphasis supplied)
In
view of FSI’s failure to dispute this finding of the RTC because of its failure
to perfect its appeal, FSI is now estopped from raising this issue. There is no
cogent reason to depart from the RTC’s finding.
Undaunted,
FSI retracts. Instead of claiming the balance of the unused cement as
reflected in its records, it now bases its claim on the invoices of
Betonval. FSI relies on the RTC’s statement in the May 19, 1999 order:
Still it can
claim the cost of the balance of unused cement based on [Betonval’s] invoices,
notwithstanding its admission of the obligation in the letter, as it neither
expressed nor implied any intent to waive that claim by said admission.
FSI
contends that this declaration has become final and executory and must be
implemented in the name of substantial justice. Betonval, however, avers that
that the issue on the alleged unused cement was never raised as an affirmative
defense in its answer or in its motion for reconsideration to the January 29,
1999 decision. Neither was this issue raised in the CA. Hence, FSI must not be
allowed to broach it for the first time in this Court. Betonval is correct.
It is
well-settled that issues not raised in the trial court may not be raised for
the first time on appeal. Furthermore, defenses and objections not pleaded
either in a motion to dismiss or in the answer are deemed waived.[19]
More
importantly, the portion of a decision that becomes the subject of an execution
is that ordained or decreed in the dispositive portion.[20] In this
case, there was no award in favor of FSI of the value of the balance of the
unused cement as reflected in the invoices.
The Applicable Interest
Rate is 24% p.a.
There
is no dispute that FSI and Betonval stipulated the payment of a 30% p.a. interest
in case of overdue payments. There is likewise no doubt that FSI failed to pay
Betonval on time.
FSI
acknowledged its indebtedness to Betonval in the principal amount of P1,114,203.34.
However, FSI opposed the CA’s imposition of a 24% p.a. interest on the award to
Betonval allegedly because: (a) the grant to FSI of a 45-day credit extension novated
the contracts insofar as FSI’s obligation to pay any interest was concerned;
(b) Betonval waived its right to enforce the payment of the 30% p.a. interest when
it granted FSI a new credit term and (c) Betonval’s prayer for a 24% p.a. interest
instead of 30%, resulted in a situation where, in effect, no interest rate was supposedly
stipulated, thus necessitating the imposition only of the legal interest rate
of 6% p.a. from judicial demand.
FSI’s
contentions have no merit.
Novation
is one of the modes of extinguishing an obligation.[21] It is
done by the substitution or change of the obligation by a subsequent one which
extinguishes the first, either by changing the object or principal conditions,
or by substituting the person of the debtor, or by subrogating a third person
in the rights of the creditor.[22]
Novation may:
[E]ither be
extinctive or modificatory, much being dependent on the nature of the change
and the intention of the parties. Extinctive novation is never presumed;
there must be an express intention to novate; in cases where it is
implied, the acts of the parties must clearly demonstrate their intent to
dissolve the old obligation as the moving consideration for the emergence of
the new one. Implied novation necessitates that the incompatibility between
the old and new obligation be total on every point such that the old obligation
is completely superceded by the new one. The test of incompatibility is whether
they can stand together, each one having an independent existence; if they
cannot and are irreconcilable, the subsequent obligation would also extinguish
the first.
An extinctive
novation would thus have the twin effects of, first, extinguishing an
existing obligation and, second, creating a new one in its stead. This
kind of novation presupposes a confluence of four essential requisites: (1) a
previous valid obligation, (2) an agreement of all parties concerned to a new
contract, (3) the extinguishment of the old obligation, and (4) the birth of a
valid new obligation. Novation is merely modificatory where the change brought
about by any subsequent agreement is merely incidental to the main obligation (e.g.,
a change in interest rates or an extension of time to pay; in this instance,
the new agreement will not have the effect of extinguishing the first but would
merely supplement it or supplant some but not all of its provisions.)[23]
The obligation to pay a sum of
money is not novated by an instrument that expressly recognizes the old, changes
only the terms of payment, adds other obligations not incompatible with the old
ones or the new contract merely supplements the old one.[24]
The
grant by Betonval to FSI of a 45-day credit extension did not novate the contracts
so as to extinguish the latter. There was no incompatibility between them. There
was no intention by the parties to supersede the obligations under the contracts.
In fact, the intention of the 45-day credit extension was precisely to revive
the old obligation after the original period expired with the obligation
unfulfilled. The grant of a 45-day credit period merely modified the contracts by
extending the period within which FSI was allowed to settle its obligation. Since
the contracts remained the source of FSI’s obligation to Betonval, the
stipulation to pay 30% p.a. interest likewise remained.
Obviously,
the extension given to FSI was triggered by its own request, to help it through
its financial difficulties. FSI would now want to take advantage of that generous
accommodation by claiming that its liability for interest was extinguished by
its creditor’s benevolence.
Neither
did Betonval waive the stipulated interest rate of 30% p.a., as FSI erroneously
claims. A waiver is a voluntary and intentional relinquishment or abandonment
of a known legal right or privilege.[25] A
waiver must be couched in clear and unequivocal terms which leave no doubt as
to the intention of a party to give up a right or benefit which legally
pertains to him.[26]
FSI did not adduce proof that a valid waiver was made by Betonval. FSI’s claim is
therefore baseless.
Parties
are bound by the express stipulations of their contract as well as by what is
required by the nature of the obligation in keeping with good faith, usage and
law.[27]
Corollarily, if parties to a contract expressly provide for a particular rate
of interest, then that interest shall be applied.[28]
It is
clear that Betonval and FSI agreed on the payment of interest. It is beyond
comprehension how Betonval’s prayer for a 24% interest on FSI’s balance could
have resulted in a situation as if no interest rate had been agreed upon.
Besides, FSI’s proposed schedule of payments (September 3, 1992),[29] referring
to Betonval’s statement of account,[30]
contained computations of FSI’s arrears and billings with 24% p.a. interest.
There
can be no other conclusion but that Betonval had reduced the imposable interest
rate from 30% to 24% p.a. and this reduced interest rate was accepted, albeit impliedly,
by FSI when it proposed a new schedule of payments and, in fact, actually made payments to Betonval with 24% p.a.
interest. By its own actions, therefore, FSI is estopped from questioning the
imposable rate of interest.
We
likewise hold that the imposition of a 12% p.a. interest on the award to
Betonval (in addition to the 24% p.a. interest) in the assailed judgment is
proper. When the judgment of the court awarding a sum of money becomes final
and executory, the rate of legal interest shall be 12% p.a. from such
finality until its satisfaction, this interim period being deemed to be by then
an equivalent to a forbearance of credit.[31]
There was Improper
Attachment of FSI’s
Properties
Betonval’s application for the
issuance of the writ of preliminary attachment was based on Section 1(d) and
(e), Rule 57 of the Rules of Court.[32]
However, the CA affirmed the RTC’s factual findings that there was improper
attachment of FSI’s properties. In debunking FSI’s claim for actual damages,
respondents insist that the attachment was proper and that Betonval was able to
sufficiently prove the existence of the grounds for attachment. However, these
are factual matters that have been duly passed upon by the RTC and the CA and
which are inappropriate in a petition for review.
Moreover, we agree with the RTC and
the CA that FSI’s properties were improperly attached. Betonval was not able to
sufficiently show the factual circumstances of the alleged fraud because
fraudulent intent cannot be inferred from FSI’s mere nonpayment of the debt or
failure to comply with its obligation. In Ng Wee v. Tankiansee,[33] we held
that the applicant must be able to demonstrate that the debtor intended to
defraud the creditor. Furthermore:
The fraud must relate to the execution of the agreement and must have been the reason which induced the other party into giving consent which he would not have otherwise given. To constitute a ground for attachment in Section 1 (d), Rule 57 of the Rules of Court, fraud should be committed upon contracting the obligation sued upon. A debt is fraudulently contracted if at the time of contracting it the debtor has a preconceived plan or intention not to pay, as it is in this case. Fraud is a state of mind and need not be proved by direct evidence but may be inferred from the circumstances attendant in each case.[34]
In other words, mere failure to pay its debt is, of and by itself, not enough to justify an attachment of the debtor’s properties. A fraudulent intention not to pay (or not to comply with the obligation) must be present.
Petitioner is not Entitled
to the Amount of Actual
Damages Prayed For
In its bid for a bigger award for
actual damages it allegedly suffered from the wrongful attachment of its
properties, FSI enumerates the standby costs of equipment[35] and
manpower standby costs[36] it
allegedly lost. We cannot grant FSI’s prayer. FSI did not pursue its appeal to
the CA as shown by its failure to pay the appellate docket fees. It is
well-settled that a party who does not appeal from the decision may not obtain
any affirmative relief from the appellate court other than what he has obtained
from the lower court whose decision is brought up on appeal.[37]
WHEREFORE,
the petition is
hereby DENIED.
Costs against petitioner.
SO ORDERED.
Associate Justice
WE CONCUR:
Chief Justice
Chairperson
Associate
Justice Associate Justice
Associate
Justice
Pursuant
to Section 13, Article VIII of the Constitution, I certify that the conclusions
in the above decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
Chief Justice
[1] Individually denominated as "Contract Proposals and Agreements" dated July 23, 1991, September 18, 1991 and March 26, 1992, respectively. Rollo, pp. 86-91.
[2] Records, Vol. I, pp. 143-145. The extension of the credit term from seven days to 45 days was made in a letter dated March 6, 1992. Attached to this letter was a detailed summary of payments based on invoices not paid or covered by postdated checks issued by FSI for various deliveries made or to be made by Betonval between January 14, 1992 to August 18, 1992. The 45-day credit extension was likewise reflected in the various invoices dated between March 31, 1992 to September 3, 1992, all duly received by FSI. Id., pp. 16-66.
[3] Records, Vol. I, pp. 68-69. This amount included the previously unpaid amount and new billings.
[4] Rollo, p. 203.
[5] Id., pp. 72-73. FSI’s proposed schedule of payments had reference to the statement of account of Betonval. Of particular note in this statement of account is Betonval’s computation of interest at 24% computed from due date of the invoices, to which FSI acceded per its September 3, 1992 letter.
[6] Id., p. 15.
[7] Makati City, Branch 125. The action was docketed as Civil Case No. 93-2430. Id., p. 59.
[8] Id., p. 63.
[9] Penned by then Acting Presiding Judge Oscar B. Pimentel. Id., pp. 214-221.
[10]
Id., pp. 214-221. The
dispositive portion of the January 29, 1999 decision stated:
WHEREFORE,
premises considered, judgment is hereby rendered, ordering the defendant to pay
plaintiff the sum of P1,114,203.34, plus legal interest at the rate of 12% per
annum from date of judicial demand or filing of this complaint until the full
amount is paid; and, the sum of P50,000.00 as and by way of reasonable
attorney’s fees, and the costs.
On defendant’s
counterclaim, the award of moral and exemplary damages as prayed for is denied
for lack of merit.
However,
plaintiff and surety are held jointly and severally liable on their attachment
bond for actual damages to defendant and are hereby ordered to pay defendant
P200,000.00 as reasonable compensatory damages arising from the improper
attachment caused by the negligence of plaintiff.
The writ of
attachment having been improperly issued, is hereby ordered dissolved and the
counterbond of defendant discharged.
SO ORDERED.
[11]
Id., 235. The modification
read:
WHEREFORE,
premises considered,
finding merit on the motion of defendant the same is hereby given DUE COURSE.
Consequently, the dispositive portion of the decision of this Court dated 29
January 1999, is hereby amended to read as:
“WHEREFORE,
premises considered, judgment is hereby rendered, ordering the defendant to pay
plaintiff the sum of P1,114,203.34, plus legal interest at the rate of 12% per
annum from date of judicial demand or filing of this complaint until the full
amount is paid; and, the sum of P50,000.00 as and by way of reasonable
attorney’s fees, and costs.
On defendant’s
counterclaim, the award of moral and exemplary damages as prayed for is denied
for lack of merit.
However,
plaintiff is hereby held liable on its attachment bond for actual damages to
defendant and is hereby ordered to pay said defendant a reasonable amount of
P1,500,000.00 as actual and compensatory damages arising from the improper
attachment caused by the negligence of plaintiff. As to the surety, Stronghold
Insurance Company, Inc. the same is hereby held jointly and severally liable
with the plaintiff for the aforesaid liability and is ordered to pay the
defendant in the amount of P500,000.00 as covered by the attachment bond.
The writ of
attachment having been improperly issued, is hereby ordered dissolved and the
counterbond of defendant discharged.”
The motion for
reconsideration filed by the plaintiff as well as that of Stronghold Insurance
Company, Inc. is hereby DENIED for lack of merit.
SO ORDERED. (emphasis in the original)
[12] Id., p. 67.
[13] Penned by Associate Justice Rebecca de Guia-Salvador and concurred in by Associate Justices Portia Aliño-Hormachuelos and Aurora Santiago-Lagman (now retired) of the Seventh Division of the Court of Appeals. Id., pp. 59-78.
[14] Id., pp. 80-84.
[15] Under Rule 45 of the Rules of Court.
[16] Rollo, p. 53.
[17] As reflected in FSI’s record of Bulk Cement Status as opposed to Betonval’s last invoice which only reflected 1,307.45 bags. Id., p. 20.
[18] Id., p. 217.
[19] Rules of Court, Rule 9, Sec. 1.
[20] Davao Light and Power Company, Inc. v. Diaz, G.R. No. 150253, 30 November 2006, 509 SCRA 152, 169.
[21] Civil Code, Art. 1231.
[22] Tolentino, Arturo M., Commentaries and Jurisprudence on the Civil Code of the Philippines (Volume Four), Central Book Supply, Inc., p. 381.
[23] Iloilo Traders Finance, Inc. v. Heirs of Oscar Soriano, Jr., 452 Phil. 82, 89-90 (2003).
[24] Spouses Reyes v. BPI Family Savings Bank, G.R. Nos. 149840-41, 31 March 2006, 486 SCRA 276, 282.
[25] R.B. Michael Press and Escobia v. Galit, G.R. No. 153510, 13 February 2008, 545 SCRA 23, 31.
[26] Id.
[27] Spouses Quiamco v. Capital Insurance & Surety Co., Inc., G.R. No. 170852, 12 September 2008.
[28] Casa Filipino Development Corporation v. Deputy Executive Secretary, G.R. No. 96494, 28 May 1992, 209 SCRA 399, 405.
[29] Records, Vol. I, p. 72.
[30] Id., p. 73.
[31] Eastern Shipping Lines, Inc. v. CA, G.R. No. 97412, 12 July 1994, 234 SCRA 78, 97.
[32] SECTION
1. Grounds upon which attachment may issue. – At the commencement of the
action or at any time before entry of judgment, a plaintiff or any proper party
may have the property of the adverse party attached as security for the
satisfaction of any judgment that may be recovered in the following cases:
(a) xxx
(d) In an action against a party who has been guilty
of a fraud in contracting the debt or incurring the obligation upon which the
action is brought, or in the performance thereof;
(e) In an action against a party who has removed or disposed of his property, or is about to do so, with intent to defraud his creditors; xxx
[33] G.R. No. 171124, 13 February 2008, 545 SCRA 263, 272-273.
[34] Id., citing Liberty Insurance Corporation v. Court of Appeals, G.R. No. 104405, 13 May 1993, 222 SCRA 37.
[35] Standby cost of equipment for its
EDSA/Boni/Pioneer Interchange project amounted to P2,353,952.29. For its
Bulacan Bridge project, the standby equipment cost was pegged at P98,154.
[36] Manpower standby costs for its
EDSA/Boni/Pioneer Interchange project was P312,312 and P478,344
for its Perla Mansion project.
[37] Bank
of the Philippine Islands v. Lifetime Marketing Corp., G.R. No. 176434, 25 June
2008, 555 SCRA 373, 382.