CARAG BUILDERS, INC., PLAINTIFF-APPELLANT, VS. AMADO SY, DEFENDANT-APPELLEE.
CRUZ, J.:
It appears that on December 12, 1990, appellant and appellee entered into a Building Agreement (or “contract”) whereby, in consideration of the sum of P329,000.00 payable under a progress billing schedule, the former undertook to construct a two-bedroom bungalow house (or “building”) for the latter in accordance with the agreed plan and specifications.
Pursuant to the contract, appellee remitted to appellant the amount of P98,700.00 as downpayment.
On January 7, 1991, appellant started the construction of the building.
The abovementioned action was predicated on the averments that without valid and justifiable reason, appellee stopped the construction; that as of the stoppage, appellant had incurred expenses totaling P186,684.32, of which only P98,700.00 was paid by appellee, leaving a balance of P87,984.32; and that despite oral and written demands, appellee failed to pay the amount of P87,984.32.
In answer, appellee alleged that appellant acted with dishonesty and in bad faith and had violated the substantial aspect of the contract; that the construction is substandard; that he has the right to demand work stoppage for breach of contractual obligation; and that the amount sought to be recovered is payable only after construction of the roof beam which has not yet been done. Appellee interposed a counterclaim for actual, moral and exemplary damages.
Upon joint motion of the parties, the lower court created a committee which conducted an ocular inspection of the project. The committee was composed of Engr. Sergio Pontiveros (or “Engr. Pontiveros”; representative of the Office of the Building Official), as chairman, and Engr. Gilbert Sano, (or “Engr. Sano”), Engr. Joey R. Higgins (or “Engr. Higgins”) and Deputy Sheriff Angel L. Doroni (or “Sheriff Doroni”), representatives of appellant, appellee and the court, respectively, as members (orders dated June 6, 1991 and July 19, 1991).
After trial, the lower court rendered a decision dated January 22, 1999, the dispositive portion of which reads:
“WHEREFORE, premises considered, judgment is hereby rendered:
1. Dismissing the complaint for lack of merit;
2. Ordering he (sic) plaintiff to refund to defendant the amount of P108,700.00 as and by way of actual damages;
3. Rescinding the Building Agreement for the construction of defendant’s 2-bedroom bungalow;
4. Directing the plaintiff to demolish the construction work at his expense; and
5. Ordering plaintiff to pay to the defendant P25,000.00 as and by way of exemplary damages, and P15,000.00 as and by way of attorney’s fees.
SO ORDERED.”
Aggrieved, appellant appealed the decision to this Court ascribing errors to the trial court –
1. “WHEN IT RULED THAT THE DEVIATIONS FROM THE PLAN AND SPECIFICATIONS SHOW THE IRREGULAR PERFORMANCE BY (APPELLANT) OF ITS CONTRACTED OBLIGATIONS”;
2. “WHEN IT RULED THAT (APPELLANT) RELIED ON UNCORROBORATED CLAIM THAT IT COMPLIED WITH THE BUILDING PLAN”;
3. “WHEN IN RULED THAT (APPELLEE) DOWNPAYMENT (sic) OF P10,000 AND THEN ANOTHER AMOUNT OF P98,700”;
4. “WHEN IT RULED THAT (APPELLANT) DEMOLISH THE FINISHED WORK AT ITS EXPENSE”;
5. “WHEN IT RULED THAT (APPELLANT) PAYS (sic) (APPELLEE) P25,000 EXEMPLARY DAMAGES AND P15,000 ATTORNEY’S FEES”; and
6. “WHEN IT DID NOT AWARD THE MONETARY CLAIM OF (APPELLANT) FOR DAMAGES AGAINST (APPELLEE).”
We now resolve.
The lower court ruled in favor of appellee on the basis of these findings:
“From the evidence presented, it appears that plaintiff committed serious and substantial deviations from the plan. It did not comply with the specifications in the approved building plan. The technical reports of the defendant’s representative and the court’s representative on the ocular inspection (Exhibits ‘26’ and ‘27’) conducted as part of the trial of this case bolster the findings of deviations from and failure to comply with the specifications.
The deviations from the plan and specifications show the irregular performance by the plaintiff of its contracted obligation.
Plaintiff relies more on its uncorroborated claim that it complied with the plan. It did not exert effort to present its personnel or representatives who dealt with defendant during the execution of the agreement. Plaintiff, through its representatives, promised to rectify the breaches. It did not do so. On the technical aspect, it relied heavily on the unsubstantiated conclusions of Engineer Sano. There was no attempt to explain all the pictures which were shown by defendant.
x x x. Defendant’s evidence reflected visually and by actual measurement and other proofs its claim of deviations and violations committed by plaintiff.”
Well-settled is the rule that conclusions and findings of facts of a trial court, as well as the assessment of the credibility of witnesses, are binding on appellate courts except when there are facts and circumstances of weight and influence overlooked by the former which could alter the result (People vs. Paglinawan, 324 SCRA 97). The exception is obtaining in the case at bench.
We observed that after reciting the testimony of appellee, the trial court immediately concluded that appellant “committed serious and substantial deviations from the plan” without even stating the particulars of those “deviations”. In other words, contrary to the rule that “(t)rial courts should not merely reproduce the respective testimonies of witnesses of both parties and come out with its decretal conclusion”, the court a quo did not “set out in its decision the facts which had been proved and its conclusions culled therefrom” (People vs. Lizada, 396 SCRA 62).
Moreover, the alleged “serious and substantial deviations” were anchored on the inspection reports (Exhs. “26” and “27”) of Engr. Higgins and Sheriff Doroni. However, those reports are hearsay because the two were not called to the witness stand in order to testify thereon, thereby depriving appellant of the right to cross-examine them (Lea Mer Industries, Inc. vs. Malayan Insurance Co., Inc. 471 SCRA 698; Teknika Skills and Trade Services, Inc. vs. National Labor Relations Commission, 212 SCRA 132). Hearsay evidence, whether objected to or not, has no probative value (Liberato vs. People, 446 SCRA 74).
Given the absence of a finding in the appealed decision on “the facts which had been proved and (the trial court’s) conclusions culled therefrom” and the hearsay nature of the inspection reports of Engr. Higgins and Sheriff Doroni, there is absolutely nothing upon which it could have validly rendered a judgment sustaining appellee’s theory.
The trial court committed another egregious error when it did not consider appellant’s evidence, one of the essential requirements of due process (Alliance of Democratic Free Labor Organization vs. Laguesma, 254 SCRA 565). The reasons given were: (i) appellant “did not exert effort to present its personnel or representatives who dealt with (appellee) during the execution” of the contract; and (ii) it “relied heavily on the unsubstantiated conclusions of Engineer Sano.”
Contrary to the trial court’s statement, appellant presented the project engineer, Engr. Sano, who supervised the construction of the building and whose testimony was, on essential points, corroborated by Engr. Pontiveros. Both engineers rendered inspection reports (Exhs. “L” and “N”) and agreed that the building is structurally safe. The reports pertinently read:
Report of Engr. Sano (Exh. “L”). –
“Findings:I. One column with 4-12 mm dia. vertical reinforcement 15 cm. x 30 cm. was constructed near the center along the masonry walls which is not reflected in plans.
II. An additional roof beam with 6-12 mm dia. horizontal reinforcement 15 cm. x 30 cm. in size was constructed across the center which is not also reflected in plans. This adds to the structural stability of the structure.
III. The size and depth of excavation of column footing foundation which were measured at 75 cm. x 75 cm. x 30 cm. thick and 80 cm. in depth, but in plans are 80 cm. x 80 cm. x 30 cm. thick and 90 cm. in depth.
IV. Two columns with 4-12 mm dia. vertical reinforcements each are already concreted. The approved Building Officials correction on the plan reflects a 6-12 mm dia. vertical reinforcement. To complete the number of bars and with the Owner’s consent, item (1) was constructed.
REMARKS AND CONCLUSIONS:
Items 1 & 2 were not reflected in the plans and specifications but were done by Carag Builders, Inc. to strengthen further the structure of the residential unit, upon the instruction of the owner. The structure as a whole is stable and safe, considering that it has only a floor area of 52.5 sq.m., which is supported by 9 columns and perimeter roof beams plus an additional roof beam across the center which reinforces support to the trusses and masonry walls.
As a Project Engineer of Carag Builders, Inc. and being the one who prepared and signed the structural reinforcement of the plans of Mr. Amado Sy, I now certify that the structure is structurally safe. Some defficiences (sic) are considered to be minor and do not affect the structural stability of the said unit.
ACCOMPLISHMENTS as per inspection conducted last August 31, 1991 of the proposed two bedroom residential unit.
1. Soil poisoning
2. Excavation of foundation wall and column footing
3. Concreting of walls and column foundation
4. concreting of columns
5. CHB laying at perimeter walls and T&B walls up to the level of the bottom of roof beams.
6. Assembly of door jambs and steelcasement windows
7. Installation of utility box and junction box together with PVC pipe for electrical outlets and switches including panel board box
8. Erection of bars and assembly of forms to all roof beams
9. Backfilling of floor area and compacting
10. Laying of PVC for plumbing/partial
11. CHB laying at septic tank.”
Report of Engr. Pontiveros (Exh. “N”)
“Inspection/verification conducted on August 31, 1991, re: above captioned building at Lot 4, Block 12 Hobart Village, Novaliches, Quezon City, revealed the following, to wit:
1. The building under construction is a one-storey structure, with an area of 52.5 sq.m. more or less;
2. The columns are already finished and concreted with 4-12mm dia. bars used for vertical reinforcements. This is as per design computations submitted by Engr. Gilbert R. Sano for processing at the Office of the Building Official’s Sub-Office, Novaliches, Quezon City;
3. The plans submitted for approval at the Office of the Building Official showed 4-12 mm dia. for vertical reinforcements of columns;
4. Actual footing foundations found, exposed are measured 0.75 sq.m. while in the plan is .80 sq.m.
The Engineer-In-Charge of construction and who prepared the structural computations under the existing laws may be held responsible for any damage that may occur within a period of 15 years upon the structure.
Inspite of the minor deviations on the plans, the project is structurally safe and sound.”
Inexplicably, the court a quo ignored appellant’s evidence, i.e., testimonies and inspection reports of Engrs. Sano and Pontiveros, which show that appellant had substantially complied with the approved plan and specifications and that the deviations are minor and did not impair the structural fitness of the building. In this connection, We reiterate the maxim that acts of government officials, like Engr. Pontiveros, are presumed to be regular and, in the absence of evidence to the contrary, this legal presumption stands (Chan vs. Court of Appeals, 298 SCRA 713).
The evidence presented by appellant shows that appellee’s plaint on the manner of construction of the building, which was his pretext for withdrawing from the contract, pertains to minor deviations which did not impair the structural integrity of the building.
From the testimony of Engr. Sano, it appears that about four days before the approval (on January 10, 1991) of the plan by the Building Official, appellant already began the mobilization phase of the project and the construction. This was in deference to appellee’s request to fast-track the construction in order that his ailing mother could move in the building soonest (t.s.n., June 24, 1992, pp. 5-6).
The original plan (Exh. “C-2”) contained eight columns in the perimeter of the building (Exh. “C-2-a”), with four vertical reinforcement bars. However, the plan, as approved (Exh. “C”), made modifications: two vertical bars were added to the columns and two horizontal bars for the beams (id., pp. 6-8).
The reason for the modifications could be traced to the overcautious stance of the approving authority on account of the earthquake of July 1990 (id., pp. 8-9). Before that earthquake, Engr. Sano had obtained approval from the Building Official of designs of houses of similar size and built as the building in question, with four vertical bars for each column, instead of six. He had designed more than seventy houses with only four vertical bars. Some of such approved plans were marked in evidence as Exhs. “D”, “E”, “F”, “G”, “H”, “I” and “J” (id., pp. 9-10).
When the plan for the building was approved, appellant had already constructed two columns with four vertical reinforcement bars. Thus, two columns had only four vertical bars while the remaining six columns had six. This deviation from the approved plan was brought about by the advance construction.
Nevertheless, the modifications introduced by the Building Official merely rendered the building overdesigned in terms of stability. Furthermore, at no cost to appellee and in order to allay his apprehension on its safety, appellant constructed an additional column and beam in the midsection of the building which, according to Engrs. Sano and Pontiveros, reduced the load of the building and rendered the same stronger and more stable.
Be that as it may, We note that Engr. Pontiveros found other deviations in the approved plan, i.e., size and depth of the footings, distances of the stir-ups in the columns and beams, and wall footing and existence of honeycomb, although he maintained that the same are minor changes which did not affect the structural stability of the building (t.s.n., March 31, 1993, pp. 5, 7, 11 and 12).
Consequently, it appears that the trial court did not consider that the deviations from the approved plan were minor and did not affect the structural stability of the construction; and that the deviations were, to a large extent, brought about by appellee himself.
We, therefore, hold that appellant had substantially performed in good faith its contractual obligations and that, as of the stoppage of the work by appellee, the value of its work accomplishment was P186,684.32, of which P98,700.00 was already paid by appellee. The stoppage prevented appellant from finishing the construction of the building.
On the other hand, the deviations in the plan, even if minor, had caused damage to appellee in terms of anxiety on the structural fitness of the building. However, he has not substantiated his assertion that he suffered actual damages due to the deviations.
But even as appellee failed to prove entitlement to actual damages, appellant may be assessed for nominal damages in order that the former’s right, which had been violated by the latter, may be vindicated or recognized (Malaga vs. Penachos, Jr., 213 SCRA 516). Under the situation, an award of the sum of P15,000.00 by way of nominal damages is reasonable and fair (Philippine Telegraph & Telephone Corp. vs. Court of Appeals, 388 SCRA 270). This award shall be offset against the unpaid work accomplishment in the sum of P87,984.32 (P186,684.32 minus P98,700.00) with appellant emerging as the creditor to the tune of P72,984.32 (Art. 1234, Civil Code).
On the other hand, the person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith; it is not enough that one suffered sleepless nights, mental anguish or serious anxiety as a result of the actuations of the other party (Vda. de Urbano vs. Government Service Insurance System, 307 SCRA 672; Ace Haulers Corporation vs. Court of Appeals, 338 SCRA 572). However, it does not appear that appellee had acted in bad faith in ordering the stoppage of the work and in refusing to honor appellant’s claim.
Parenthetically, an award of exemplary damages requires, among others, that the act complained of must be accompanied by bad faith or done in a wanton, fraudulent,
oppressive or malevolent manner (Francisco vs. Ferrer, Jr., 353 SCRA 261). Similarly, the trial court, aside from making no finding of bad faith, did not rule that appellee’s stoppage of the construction was done in any of such manner.
Although appellant was forced to litigate to protect its rights, such fact by itself will not justify an award of attorney’s fees under Art. 2209 of the Civil Code as no showing of bad faith could be reflected in appellee’s insistence in the case other than an erroneous conviction of the righteousness of his cause (National Steel Corporation vs. Court of Appeals, 283 SCRA 45). Besides, as earlier shown, appellant is not immaculately clean; it is not entirely blameless.
WHEREFORE, the appealed decision of the Regional Trial Court of Quezon City (Branch 77) is REVERSED and SET ASIDE and another rendered ordering defendant-appellee to pay to plaintiff-appellant the amount of P72,984.32 plus interest thereon at the rate of 6% per annum from date of this judgment, which shall be increased to 12% per annum from finality hereof until fully paid. Costs against defendant-appellee.
SO ORDERED.
Reyes, Jr. and Lanzanas, JJ., concur.