Republic of the Philippines

Supreme Court

Manila

SECOND DIVISION

HYATT ELEVATORS and ESCALATORS CORPORATION,

Petitioner,

- versus -

CATHEDRAL HEIGHTS BUILDING COMPLEX ASSOCIATION, INC.,

Respondent.

G.R. No. 173881

Present:

CARPIO, J., Chairperson,

NACHURA,

PERALTA,

ABAD, and

MENDOZA, JJ.

Promulgated:

December 1, 2010

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D E C I S I O N

PERALTA, J.:

Before this Court is a petition for review on certiorari,[1] under Rule 45 of the Rules of Court, seeking to set aside the April 20, 2006 Decision[2] and July 31, 2006 Resolution[3] of the Court of Appeals (CA), in CA-G.R. CV No. 80427.

The facts of the case are as follows:

On October 1, 1994, petitioner Hyatt Elevators and Escalators Corporation entered into an “Agreement to Service Elevators” (Service Agreement)[4] with respondent Cathedral Heights Building Complex Association, Inc., where petitioner was contracted to maintain four passenger elevators installed in respondent's building. Under the Service Agreement, the duties and obligations of petitioner included monthly inspection, adjustment and lubrication of machinery, motors, control parts and accessory equipments, including switches and electrical wirings.[5] Section D (2) of the Service Agreement provides that respondent shall pay for the additional charges incurred in connection with the repair and supply of parts.

Petitioner claims that during the period of April 1997 to July 1998 it had incurred expenses amounting to Php 1,161,933.47 in the maintenance and repair of the four elevators as itemized in a statement of account.[6] Petitioner demanded from respondent the payment of the aforesaid amount allegedly through a series of demand letters, the last one sent on July 18, 2000.[7] Respondent, however, refused to pay the amount.

Petitioner filed with the Regional Trial Court (RTC), Branch 100, Quezon City, a Complaint for sum of money against respondent. Said complaint was docketed as Civil Case No. Q-01-43055.

On March 5, 2003, the RTC rendered Judgment[8] ruling in favor of petitioner, the dispositive portion of which reads:

WHEREFORE, premises considered, JUDGMENT IS HEREBY RENDERED IN FAVOR OF THE PLAINTIFF AND AGAINST THE DEFENDANT ordering the latter to pay Plaintiff as follows:

1. The sum of P1,161,933.27 representing the costs of the elevator parts used, and for services and maintenance, with legal rate of interest from the filing of the complaint;

2. The sum of P50,000.00 as attorney's fees;

3. The costs of suit.

SO ORDERED.[9]

The RTC held that based on the sales invoices presented by petitioner, a contract of sale of goods was entered into between the parties. Since petitioner was able to fulfill its obligation, the RTC ruled that it was incumbent on respondent to pay for the services rendered. The RTC did not give credence to respondent's claim that the elevator parts were never delivered and that the repairs were questionable, holding that such defense was a mere afterthought and was never raised by respondent against petitioner at an earlier time.

Respondent filed a Motion for Reconsideration.[10] On August 17, 2003, the RTC issued a Resolution[11] denying respondent's motion. Respondent then filed a Notice of Appeal.[12]

On April 20, 2006, the CA rendered a Decision finding merit in respondent's appeal, the dispositive portion of which reads:

WHEREFORE, premises considered, the instant appeal is GRANTED. The Judgment of the Regional Trial Court, Branch 100, Quezon City, dated March 5, 2003, is hereby REVERSED and SET ASIDE. The complaint below is dismissed.

SO ORDERED.[13]

In reversing the RTC, the CA ruled that respondent did not give its consent to the purchase of the spare parts allegedly installed in the defective elevators. Aside from the absence of consent, the CA also held that there was no perfected contract of sale because there was no meeting of minds upon the price. On this note, the CA ruled that the Service Agreement did not give petitioner the unbridled license to purchase and install any spare parts and demand, after the lapse of a considerable length of time, payment of these prices from respondent according to its own dictated price.

Aggrieved, petitioner filed a Motion for Reconsideration,[14] which was, however, denied by the CA in a Resolution dated July 31, 2006.

Hence, herein petition, with petitioner raising a lone issue for this Court's resolution, to wit:

WHETHER OR NOT THERE IS A PERFECTED CONTRACT OF SALE BETWEEN PETITIONER AND RESPONDENT WITH REGARDS TO THE SPARE PARTS DELIVERED AND INSTALLED BY PETITIONER ON THE FOUR ELEVATORS OF RESPONDENT AT ITS HOSPITAL UNDER THE AGREEMENT TO SERVICE ELEVATORS AS TO RENDER RESPONDENT LIABLE FOR THEIR PRICES?[15]

Before anything else, this Court shall address a procedural issue raised by respondent in its Comment[16] that the petition should be denied due course for raising questions of fact.

The determination of whether there exists a perfected contract of sale is essentially a question of fact. It is already a well-settled rule that the jurisdiction of this Court in cases brought before it from the CA by virtue of Rule 45 of the Revised Rules of Court is limited to reviewing errors of law. Findings of fact of the CA are conclusive upon this Court. There are, however, recognized exceptions to the foregoing rule, namely: (1) when the findings are grounded entirely on speculation, surmises, or conjectures; (2) when the inference made is manifestly mistaken, absurd, or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when, in making its findings, the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to those of the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition, as well as in the petitioner’s main and reply briefs, are not disputed by the respondent; and (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record.[17]

The present case falls under the 7^th exception, as the RTC and the CA arrived at conflicting findings of fact.

Having resolved the procedural aspect, this Court shall now address the substantive issue raised by petitioner. Petitioner contends that the CA erred when it ruled that there was no perfected contract of sale between petitioner and respondent with regard to the spare parts delivered and installed.

It is undisputed that a Service Agreement was entered into by petitioner and respondent where petitioner was commissioned to maintain respondent's four elevators. Embodied in the Service Agreement is a stipulation relating to expenses incurred on top of regular maintenance of the elevators, to wit:

SERVICE AND INSPECTION FEE:

x x x x

(2) In addition to the service fee mentioned in the preceding paragraph under this article, the Customer shall pay whatever additional charges in connection with the repair, supply of parts other than those specifically mentioned in ARTICLE A.2., or servicing of the elevator/s subject of this contract.[18]

Petitioner claims that during the period of April 1997 to July 1998, it had used parts in the maintenance and repair of the four elevators in the total amount of P1,161,933.47 as itemized in a statement of account[19] and supported by sales invoices, delivery receipts, trouble call reports and maintenance and checking reports. Respondent, however, refuses to pay the said amount arguing that petitioner had not complied with the Standard Operating Procedure (SOP) following a breakdown of an elevator.

As testified to by respondent's witness Celestino Aguilar, the SOP following an elevator breakdown is as follows: (a) they (respondent) will notify petitioner's technician; (b) the technician will evaluate the problem and if the problem is manageable the repair was done right there and then; (c) if some parts have to be replaced, petitioner will present the defective parts to the building administrator and a quotation is made; (d) the quotation is then indorsed to respondent's Finance Department; and (e) a purchase order is then prepared and submitted to the Board of Directors for approval.[20]

Based on the foregoing procedure, respondent contends that petitioner had failed to follow the SOP since no purchase orders from respondent's Finance Manager, or Board of Directors relating to the supposed parts used were secured prior to the repairs. Consequently, since the repairs were not authorized, respondent claims that it has no way of verifying whether the parts were actually delivered and installed as alleged by petitioner.

At the outset, this Court observes that the SOP is not embodied in the Service Agreement nor was a document evidencing the same presented in the RTC. The SOP appears, however, to be the industry practice and as such was not contested by petitioner. Nevertheless, petitioner offers an excuse for non-compliance with the SOP on its claim that the SOP was not followed upon the behest and request of respondent.

A perusal of petitioner's petition and evidence in the RTC shows that the main thrust of its case is premised on the following claims: first, that the nature and operations of a hospital necessarily dictate that the elevators are in good running condition at all times; and, second, that there was a verbal agreement between petitioner's service manager and respondent's building engineer that the elevators should be running in good condition at all times and breakdowns should only last one day.

In order to prove its allegations, petitioner presented Wilson Sua, its finance manager, as its sole witness. Sua testified to the procedure followed by petitioner in servicing respondent's elevators, to wit:

Q: Can you tell us Mr. witness, what is the procedure actually followed whenever there is a need for trouble call maintenance or repair?

A: The St. Luke’s Cathedral’s personnel, which includes the administrative officers, the guard on duty, or the receptionist, will call us through the phone if their elevators brake (sic) down.

Q: Then, what happened?

A: Immediately, we dispatched our technicians to check the trouble.

Q: And who were these technicians whom you normally or regularly dispatched to attend to the trouble of the elevators of the defendant?

A: With regard to this St. Luke’s, we dispatched Sunny Jones and Gilbert Cinamin.

Q: And what happened after dispatching these technicians?

A: They come back immediately to the office to request the parts needed for the troubleshooting of the elevators.

Q: Then what happened?

A: A part will be brought to the project cite and they will install it and note it in the trouble call report and have it received properly by the building guard or the receptionist or by the building engineers, and they will test it for a couple of weeks to determine if the parts are the correct part needed for that elevator and we will secure their approval, thereafter we will issue our invoices and delivery receipts.

Q: This trouble call reports, are these in writing?

A: Yes, sir. These are in writing and these are being written within that day.

Q: Within the day of?

A: Of the trouble. And have it received by the duly personnel of St. Luke’s Cathedral.

Q: And who prepared this trouble call reports?

A: The technician who actually checked the elevator.

Q: When do the parts being installed?

A: On the same date they brought the parts on the project cite.

Q: You mentioned sales invoice and delivery receipts. Who prepared these invoice?

A: Those were prepared by our inventory clerk under my supervision?

Q: How about the delivery receipts?

A: Just the same.

Q: When would the sales invoice be prepared?

A: After the approval of the building engineer.

Q: But at the time that the sales invoice and delivery receipts were being prepared after the approval of the building engineer, what happened to the parts? Were they already installed or what?

A: They were already installed.

Q: Now, why would the parts be installed before the preparation of the sales invoice and the delivery receipts?

A: There was an agreement between the building engineer and our service manager that the elevator should be running in good condition at all times, breakdown should be at least one day only. It cannot stop for more than a day.[21]

On cross examination, Sua testified that the procedure was followed on the authority of a verbal agreement between petitioner's service manager and respondent's engineer, thus:

Q: So, you mean to say that despite the fact that material are expensive you immediately installed these equipments without the prior approval of the board?

A: There is no need for the approval of the board since there is a verbal agreement between the building engineer and the Hyatt service manager to have the elevator run.

Q: Aside from the building engineer, there is a building administrator?

A: No, ma'am. He is already the building administrator and the building engineer. That is engineer Tisor.

Q: And with regard to the fact that the delivery receipts were acknowledged by the engineer, is that true?

A: Yes, ma'am.

Q: You also mentioned earlier that aside from the building engineer, the receptionist and guards are also authorized. Are you sure that they are authorized to receive the delivery receipts?

A: Yes, ma'am. It was an instruction given by Engineer Tisor, the building engineer and also the building administrator to have it received.

Q: So, all these agreements are only verbally, it is not in writing?

A: Yes, ma'am.[22]

In its petition, petitioner claims that because of the special circumstances of the building being a hospital, the procedure actually followed since October 1, 1994 was as follows:

1. Whenever any of the four elevators broke down, the administrative officers, security guard or the receptionist of respondent called petitioner by telephone;

2. Petitioner dispatched immediately a technician to the St. Luke’s Cathedral Heights Building to check the trouble;

3. If the breakdown could be repaired without installation of parts, repair was done on the spot;

4. If the repair needed replacement of damaged parts, the technician went back to petitioner’s office to get the necessary replacement parts;

5. The technician then returned to the St. Luke’s Cathedral Heights Building and installed the replacement parts and finished the repair;

6. The placement parts, which were installed in the presence of the security guard, building engineers or receptionist of respondents whoever was available, were indicated in the trouble call report or sometimes in the delivery receipt and copy of the said trouble call report or delivery receipt was then given to the blue security guard, building engineers or receptionist, who duly acknowledged the same;

7. Based on the trouble call report or the delivery receipts, which already indicated the replacement parts installed and the services rendered, respondent should prepare the purchase order, but this step was never followed by respondent for whatever reason;

8. In the meantime, the elevator was tested for a couple of weeks to see if the replacement parts were correct and the approval of the building engineers was secured;

9. After the building engineers gave their approval that the replacement parts were correct or after the lapse of two weeks and nothing was heard or no complaint was lodged, then the corresponding sales invoices and delivery receipts, if nothing had been issued yet, were prepared by petitioner and given to respondent, thru its receptionists or security guards;

10. For its purposes, respondent should compare the trouble call reports or delivery receipts which indicated the replacement parts installed or with the sales invoices and delivery receipts to confirm the correctness of the transaction;

11. If respondent had any complaint that the parts were not actually installed or delivered or did not agree with the price of the parts indicated in the sales invoices, then it should bring its complaint or disagreement to the attention of petitioner. In this regard, no complaint or disagreement as to the prices of the spare parts has been lodged by respondent.[23]

In varying language, our Rules of Court, in speaking of burden of proof in civil cases, states that each party must prove his own affirmative allegations and that the burden of proof lies on the party who would be defeated if no evidence were given on either side. Thus, in civil cases, the burden of proof is generally on the plaintiff, with respect to his complaint.[24] In the case at bar, it is petitioner's burden to prove that it is entitled to its claims during the period in dispute.

After an extensive review of the records and evidence on hand, this Court rules that petitioner has failed to discharge its burden.

This Court finds that the testimony of Sua alone is insufficient to prove the existence of the verbal agreement, especially in view of the fact that respondent insists that the SOP should have been followed. It is an age-old rule in civil cases that one who alleges a fact has the burden of proving it and a mere allegation is not evidence.[25]

The testimony of Sua, at best, only alleges but does not prove the existence of the verbal agreement. It may even be hearsay. It bears stressing, that the agreement was supposedly entered into by petitioner's service manager and respondent's building engineer. It behooves this Court as to why petitioner did not present their service manager and Engineer Tisor, respondent's building engineer, the two individuals who were privy to the transactions and who could ultimately lay the basis for the existence of the alleged verbal agreement. It should have occurred to petitioner during the course of the trial that said testimonies would have proved vital and crucial to its cause. Therefore, absent such testimonies, the existence of the verbal agreement cannot be sustained by this Court.

Moreover, even assuming arguendo, that this Court were to believe the procedure outlined by Sua, his testimony[26] clearly mentions that prior to the preparation of the sales invoices and delivery receipts, the parts delivered and installed must have been accepted by respondent's engineer or building administrator. However, again, petitioner offered no evidence of such acceptance by respondent’s engineer prior to the preparation of the sales invoices and delivery receipts.

This Court is not unmindful of the fact that petitioner also alleges in its petition that the non-observance of the SOP was the practice way back in 1994 when petitioner started servicing respondent's elevators. On this note, petitioner argued in the following manner:

And most importantly, the Court of Appeals failed to appreciate that the parts being sought to be paid by petitioner in the Complaint were delivered and installed during the period from April 1997 to July 1998, which followed the same actual procedure adopted since October 1, 1994. Based on the same procedure adopted because of the special circumstances of St. Luke's Cathedral Heights Building being a hospital, respondent has paid the replacement parts installed from October 1994 to March 1997. Never did respondent question the adopted actual procedure from October 1994 to March 1997. x x x[27]

Was the procedure claimed by petitioner the adopted practice since 1994? This Court rules that other than the foregoing allegation, petitioner has failed to prove the same. A perusal of petitioner's Formal Offer of Evidence[28] would show that the only documents presented by it are sales invoices, trouble call reports and delivery receipts, all relating to the alleged transactions between 1997 to 1998. It is unfortunate that petitioner had failed to present in the RTC the documents from 1994 to 1996 for it may have proven that the non-observance of the SOP was the practice since 1994. Such documents could have shown that respondent had paid petitioner in the past without objection on similar transactions under similar billing procedures. The same would have also validated petitioner's claim that the secretary and security guards were all authorized to sign the documents. Unfortunately, for petitioner's cause, this Court has no basis to validate its claim, because other than its bare allegation in the petition, petitioner offers no proof to substantiate the same.

By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.[29] The absence of any of the essential elements will negate the existence of a perfected contract of sale. In the case at bar, the CA ruled that there was no perfected contract of sale between petitioner and respondent, to wit:

Aside from the absence of consent, there was no perfected contract of sale because there was no meeting of minds upon the price. As the law provides, the fixing of the price can never be left to the discretion of one of the contracting parties. In this case, the absence of agreement as to the price is evidenced by the lack of purchase orders issued by CHBCAI where the quantity, quality and price of the spare parts needed for the repair of the elevators are stated. In these purchase orders, it would show that the quotation of the cost of the spare parts earlier informed by Hyatt is acceptable to CHBCAI. However, as revealed by the records, it was only Hyatt who determined the price, without the acceptance or conformity of CHBCAI. From the moment the determination of the price is left to the judgment of one of the contracting parties, it cannot be said that there has been an arrangement on the price since it is not possible for the other contracting party to agree on something of which he does not know beforehand.[30]

Based on the evidence presented in the RTC, it is clear to this Court that petitioner had failed to secure the necessary purchase orders from respondent's Board of Directors, or Finance Manager, to signify their assent to the price of the parts to be used in the repair of the elevators. In Boston Bank of the Philippines v. Manalo,[31] this Court explained that the fixing of the price can never be left to the decision of one of the contracting parties, to wit:

A definite agreement as to the price is an essential element of a binding agreement to sell personal or real property because it seriously affects the rights and obligations of the parties. Price is an essential element in the formation of a binding and enforceable contract of sale. The fixing of the price can never be left to the decision of one of the contracting parties. But a price fixed by one of the contracting parties, if accepted by the other, gives rise to a perfected sale.^{^[32]}

There would have been a perfected contract of sale had respondent accepted the price dictated by petitioner even if such assent was given after the services were rendered. There is, however, no proof of such acceptance on the part of respondent.

This Court shares the observation of the CA that the signatures of receipt by the information clerk or the guard on duty on the sales invoices and delivery receipts merely pertain to the physical receipt of the papers. It does not indicate that the parts stated were actually delivered and installed. Moreover, because petitioner failed to prove the existence of the verbal agreement which allegedly authorized the aforementioned individuals to sign in respondent’s behalf, such signatures cannot be tantamount to an approval or acceptance by respondent of the parts allegedly used and the price quoted by petitioner. Furthermore, what makes the claims doubtful and questionable is that the date of the sales invoice and the date stated in the corresponding delivery receipt are too far apart as aptly found by the CA, to wit:

Further, We note that the date stated in the sales invoice vis-a-vis the date stated in the corresponding delivery receipt is too far apart. For instance, Delivery Receipt No. 3492 dated February 13, 1998 has a corresponding Sales Invoice No. 7147 dated June 30, 1998. What puts doubt to this transaction is the fact that the sales invoice was prepared only after four (4) months from the delivery. The considerable length of time that has lapsed from the delivery to the issuance of the sales invoice is questionable. Further the delivery receipts were received months after its preparation. In the case of Delivery Receipt No. 3850 dated November 26, 1997, Gumisad received this only on July 20, 1998, or after a lapse of eight (8) months. Such kind of procedure followed by Hyatt is certainly contrary to usual business practice, especially since in this case, it involves considerable amount of money.[33]

Based on the foregoing, the CA was thus correct when it concluded that “the Service Agreement did not give petitioner the unbridled license to purchase and install any spare parts and demand, after the lapse of a considerable length of time, payment of these prices from respondent according to its own dictated price.”[34]

Withal, this Court rules that petitioner's claim must fail for the following reasons: first, petitioner failed to prove the existence of the verbal agreement that would authorize non-observance of the SOP; second, petitioner failed to prove that such procedure was the practice since 1994; and, third, there was no perfected contract of sale between the parties as there was no meeting of minds upon the price.

To stress, the burden of proof is on the plaintiff. He must rely on the strength of his case and not on the weakness of respondent's defense. Based on the manner by which petitioner had presented its claim, this Court is of the opinion that petitioner's case leaves too much to be desired.

WHERFORE, premises considered, the petition is DENIED. The April 20, 2006 Decision and July 31, 2006 Resolution of the Court of Appeals, in CA-G.R. CV No. 80427, are AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO

Associate Justice

Chairperson

ANTONIO EDUARDO B. NACHURA ROBERTO A. ABAD Associate Justice Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

ATTESTATION

I attest 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.

ANTONIO T. CARPIO

Associate Justice

Second Division, Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, 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.

RENATO C. CORONA

Chief Justice

^{^[2]} Penned by Associate Justice Rosmari D. Carandang, with Associate Justices Andres B. Reyes, Jr. and Japar B. Dimaampao, concurring; id. at 27-39.

^{^[10]} Records, pp. 141-153.

^{^[12]} Id. at 164-165.

^{^[14]} CA rollo, pp. 76-83.

^{^[15]} Rollo, p. 15.

^{^[16]} Id. at 67-105.

^{^[17]}Citibank, N.A. (Formerly First National City Bank) v. Sabeniano, G.R. No. 156132, October 16, 2006, 504 SCRA 378, 409; Herbosa v. Court of Appeals, 425 Phil. 431, 444 (2002).

^{^[20]} TSN, March 18, 2002, p. 11.

^{^[21]} TSN, January 25, 2002, pp. 7-9. (Emphasis supplied).

^{^[23]} Rollo, pp. 18-19.

^{^[24]} Villanueva v. Balaguer, G.R. No. 180197, June 23, 2009, 590 SCRA 661, 670.

^{^[25]} Heirs of Cipriano Reyes v. Calumpang, G.R. No.138463, October 30, 2006, 506 SCRA 56, 72.

[26] Q: Then what happened?

x x x x

Q: How about the delivery receipts?

A: Just the same.

Q: When would the sales invoice be prepared?

A: After the approval of the building engineer. (TSN, January 25, 2002, pp. 7-9) (Emphasis supplied.)

^{^[27]} Rollo, p. 20.

^{^[28]} Folder of Exhibits, pp. 1-3.

^{^[29]} New Civil Code, Art. 1458.

^{^[30]} Rollo, pp. 36-37.

^{^[31]} G.R. No. 158149, February 9, 2006, 482 SCRA 108.

^{^[32]} Id. at 129. (Emphasis supplied.)