THIRD DIVISION
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ASIAN CONSTRUCTION AND DEVELOPMENT
CORPORATION, Petitioner, - versus - |
G.R.
No. 163915
Present:
Quisumbing, J.,
Chairperson,
Carpio,
Carpio Morales,
Tinga, and VELASCO, JR., JJ. |
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COMFAC CORPORATION, Respondent. |
Promulgated:
October 12, 2006 |
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DECISION
QUISUMBING, J.:
This
petition for review assails the Decision[1]
dated
The
antecedent facts of the case are as follows:
Petitioner
Asian Construction and Development Corporation (AsiaKonstruct) awarded respondent Comfac Corporation a contract for raised flooring system for
the PNOC-EDC, LGPP HVAC Marshalling Station Building, in Ormoc, Leyte, and
another contract for airconditioning and ventilation system for the PNOC-EDC
Marshalling and Relay P1,698,635 and P4,000,000,
respectively. On
On May
5, 8, and 11, 1998, Comfac sent AsiaKonstruct demand letters for the
unpaid balance of P1,969,863.50. But, AsiaKonstruct
failed to pay the amount, prompting Comfac
to file a complaint for collection with the P2,000 attorney’s fee per
appearance, and exemplary damages of P500,000.
In its defense, AsiaKonstruct
alleged that Comfac had no cause
of action; Comfac’s claim had
been paid, waived, abandoned and/or extinguished; the Certificates of
Completion were unauthorized; the projects were not completed; no demand for
payment was made; the amount claimed was not yet due; the amount claimed was
bloated because ASIAKONSTRUCT did not receive all the labor, materials, tools,
equipment, and the technical expertise that were being charged; Comfac did not deduct the withholding
taxes, material charges and the payments made; and it did not agree to pay
interests, penalty, attorney’s fees and court costs.
After the admission of Comfac’s
evidence, the trial court, in an order dated
Wherefore, in view of the foregoing, judgment is hereby rendered in favor of the plaintiff and against the defendant, ordering the latter to pay plaintiff as follows:
1.
the amount of P1,969,863.[50] as actual damages
plus interest at fourteen percent (14%) per annum and penalty at twenty-five
[percent] (25%) per annum from
2.
the amount of P50,000.00 as attorney’s fees; and
3. costs and expenses of litigation.
SO ORDERED.[2]
AsiaKonstruct elevated the case to the Court of Appeals on the following
grounds: (a) the invoices, Exhibits “K” to “O”, and other documentary exhibits were
not properly proved and authenticated; (b) the full completion of the works on
the project was not proven; (c) the 10% retention and 1% expanded withholding
tax was not deducted from the alleged balance of P 1,969,863.50; (d) the
parties did not expressly stipulate in writing the interest and penalties;
(e) the imposition of the 14% interest
plus 25% penalty was unconscionable; and (f) the award of attorney’s fees was
not proper in the absence of proof of bad faith.[3]
The
Court of Appeals upheld the admissibility of the invoices, Exhibits “K” to “O”,
as these were properly presented by Comfac
during the trial and not objected to by AsiaKonstruct. Moreover, the appellate court held that it
was enough that the invoices were identified during the trial since the subject
of the inquiry was not their contents but a fact to which these were merely
collateral or incidental. The appellate
court also upheld (1) the validity of the Certificates of Completion as these
were confirmed and signed by the representative of the project owner; (2) the
correctness of Comfac’s
accounting with respect to the deduction of the 10% retention money and
withholding tax; and (3) the award of attorney’s fees. The appellate court ruled, however, that in
the absence of stipulation, the proper interest payable should only be 6%. The decretal portion of the decision reads:
WHEREFORE, IN VIEW OF THE FOREGOING, the decision appealed from is hereby AFFIRMED, with the following modifications:
a)
a six percent (6%) legal interest per annum on the
amount of P1,969,863.50 as damages is imposed in lieu of the 14%
interest and penalty of 25%; and
b) the 1% withholding tax should be deducted from the balance of each of the contracts.
SO ORDERED.[4]
AsiaKonstruct moved for reconsideration but it was
denied. Now before us, it challenges the
conclusion reached by the Court of Appeals and raises the following issues for
resolution:
I. WHETHER OR NOT EXHIBITS “K” TO “O” WERE PROPERLY AUTHENTICATED IN ACCORDANCE WITH THE RULES OF COURT;
II. WHETHER OR NOT RESPONDENT WAS ABLE TO PROVE COMPLETION OF THE PROJECT;
III. WHETHER OR NOT RESPONDENT IS ENTITLED TO ATTORNEY’S FEES; AND
IV. WHETHER OR NOT THE 6% … INTEREST SHOULD BE BASED ON THE BALANCE AFTER DEDUCTING THE 1% … WITHHOLDING TAX.[5]
We will
discuss the first two issues jointly.
AsiaKonstruct maintains that the invoices were not properly authenticated
as Comfac’s witness, Mrs. Erlinda
Rolda, merely testified on checking the invoices and did not identify the
signatories to these. It reiterates its
assertion that the project was not yet complete and that the Certificates of
Completion were unauthorized.
On the
other hand, Comfac contends that
the invoices were deemed admitted as AsiaKonstruct
did not object to them. It also argues
that its witnesses duly testified to the completion of the projects.
The rule is that failure to object to
the offered evidence renders it admissible,[6]
and the court cannot, on its own, disregard such evidence. We note that AsiaKonstruct’s counsel of record before the trial court,
Atty. Bernard Dy, who actively participated in the initial stages of the case
stopped attending the hearings when Comfac
was about to end its presentation. Thus,
AsiaKonstruct could not object to
Comfac’s offer of evidence nor
present evidence in its defense; ASIAKONSTRUCT was deemed by the trial court to
have waived its chance to do so.
Note also that when a party desires
the court to reject the evidence offered, it must so state in the form of a
timely objection and it cannot raise the objection to the evidence for the
first time on appeal.[7] Because of a party’s failure to timely
object, the evidence becomes part of the evidence in the case. Thereafter, all the parties are considered bound
by any outcome arising from the offer of evidence properly presented.[8]
ASIAKONSTRUCT also questions the
authenticity of the Certificates of Completion.
However, it has been uniformly held that findings of facts by
the trial court, particularly when affirmed by the Court of Appeals, are binding upon this Court.[9] The appellate court’s conclusion on the
authenticity of the Certificates of Completion binds us now.
On the issue of attorney’s fees, AsiaKonstruct contends that attorney’s
fees, being in the nature of actual damages, must be proved by sufficient
evidence. It argues that since Comfac failed to present proof of
actual damage, there is no factual justification for the award. Comfac,
on the other hand, counters that if AsiaKonstruct
had paid its claim, it would have not resorted to litigation, hence the award
is justified.
We agree with AsiaKonstruct on the matter of attorney’s fees. Attorney’s fees are not to be awarded every
time a party wins a suit.[10] Article 2208[11]
of the Civil Code demands factual, legal and equitable justifications for the
award of attorney’s fees and its basis cannot be left to speculation and
conjecture.[12] Attorney's fee
is allowed when a claimant is compelled to litigate with third persons or incur expenses to protect his
interest by reason of an unjustified act or omission on the part of the party
from whom it is sought. Indeed, Comfac was forced to litigate to
collect payments, but due to lack of findings on the amount to be awarded, and
since there is no sufficient showing of bad faith in AsiaKonstruct’s refusal to pay, other
than an erroneous assertion of the righteousness of its cause, the attorney’s
fee cannot be awarded against it.[13]
Anent
the legal interest, AsiaKonstruct
claims that the 6% legal interest should be based on the net amount after
deducting the 1% withholding tax since the amount withheld is not due to Comfac.
It submits that only P1,912,877.15, not P1,969,863.50,
is subject to the 6% legal interest.
In its
Brief filed with the Court of Appeals, Comfac
alleged that the 1% withholding tax was not deducted from the payments of AsiaKonstruct because the latter had
not presented the certificate of creditable withholding-tax-at-source required
by the Bureau of Internal Revenue (BIR).
Although this may be so, it does not mean that the withholding tax could
not be deducted properly. The deduction of the 1% withholding tax from
the balance payable is without qualification in the parties’ contract.[14] AsiaKonstruct
is correct that it is only liable to pay the balance of P1,912,877.15, not the full amount of P1,969,863.50,
and to remit to the BIR the P56,986.35 it had withheld, the computation
of which is shown below.
First contract: P1,698,635
x 1% withholding tax = P 16,986.35
Second contract:
P4,000,000 x 1%
withholding tax = P
40,000.00
Total amount
withheld =
P 56,986.35
Thereafter, ASIAKONSTRUCT
should provide Comfac with the
certificate of creditable withholding-tax-at-source. Conformably, the 6% legal interest should be
based on the balance payable under the contracts which is P1,912,877.15.
WHEREFORE, the
petition is PARTIALLY GRANTED. The
Decision dated
1.
Asian
Construction and Development Corporation (ASIAKONSTRUCT) is ordered to pay Comfac Corporation the amount of P1,912,877.15 as the
balance payable under the contracts with legal interest of 6% per annum from
January 2, 1998, the date of the final statement of account, until fully paid;
2.
Asian
Construction and Development Corporation (ASIAKONSTRUCT) is further ordered to FURNISH
COMFAC Corporation with the certificate of creditable withholding-tax-at-source
for the amount of P56,986.35; and
3.
The
award of attorney’s fees and the costs of litigation is
deleted.
SO ORDERED.
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LEONARDO A. QUISUMBING Associate Justice |
WE CONCUR:
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ANTONIO T. CARPIO Associate Justice |
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CONCHITA CARPIO MORALES Associate Justice |
DANTE O. TINGA Associate Justice |
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PRESBITERO J. VELASCO,
JR. Associate Justice |
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A T T E S T A T I O N
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.
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LEONARDO A. QUISUMBING Associate Justice Chairperson |
C E R T I F I C A T I O N
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.
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ARTEMIO V. PANGANIBAN Chief Justice |
[1] Rollo, pp 24-38.
[2] Records, p. 255.
[3] Rollo, pp. 72-84.
[4]
[5]
[6] Tison v. Court of Appeals, G.R. No. 121027, July 31, 1997, 276 SCRA 582, 596-597.
[7] Arwood
Industries, Inc. v. D.M. Consunji, Inc., G.R. No. 142277, December 11,
2002, 394 SCRA 11, 18.
[8]
[9] Lamis v. Ong, G.R. No. 148923,
[10] Pajuyo v. Court of
Appeals, G.R. No. 146364,
[11] Art. 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other than judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;
(8) In actions for indemnity under workmen’s compensation and employer’s liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorney’s fees and expenses of litigation should be recovered.
In all cases, the attorney’s fees and expenses of litigation must be reasonable.
[12] Pimentel v. Court of Appeals, G.R.
No. 117422,
[13] Servicewide Specialist, Inc. v. Court of Appeals, G.R. No. 110597, May 8, 1996, 256 SCRA 649, 655.
[14] Records, p. 18.