Supreme Court E-Library
Information At Your Fingertips

  View printer friendly version

477 Phil. 292


[ G.R. No. 154106, June 29, 2004 ]




This petition for review assails the decision[1] of the Court of Appeals, dated January 30, 2002, as well as its resolution[2] dated June 20, 2002 in CA-GR CV No. 49101, denying petitioners’ motion for reconsideration. The appellate court affirmed the decision[3] of the Regional Trial Court of Pasig City, Branch 165, in Civil Case No. 61159, ordering petitioners to pay the sum of P1,014,110.45 with interest rate of 12% per annum (compounded annually) from August 9, 1991, the date of filing of the complaint, until fully paid to Readycon Trading and Construction Corp., plus damages.

Petitioner D.M. Wenceslao and Associates, Inc. (WENCESLAO, for brevity) is a domestic corporation, organized under and existing pursuant to Philippine laws, engaged in the construction business, primarily infrastructure, foundation works, and subdivision development. Its co-petitioner, Dominador Dayrit, is the vice-president of said company.[4] Respondent Readycon Trading and Construction Corporation (READYCON, for brevity) is likewise a corporate entity organized in accordance with Philippine laws. Its primary business is the manufacture and sale of asphalt materials.[5]

The facts of this case are not in dispute.

WENCESLAO had a contract with the Public Estates Authority (PEA) for the improvement of the main expressway in the R-1 Toll Project along the Coastal Road in Parañaque City. To fulfill its obligations to the PEA, WENCESLAO entered into a contract with READYCON on April 16, 1991. READYCON agreed to sell to WENCESLAO asphalt materials valued at P1,178,308.75. The contract bore the signature of co-petitioner Dominador Dayrit, as signatory officer for WENCESLAO in this agreement. Under the contract, WENCESLAO was bound to pay respondent a twenty percent (20%) downpayment, or P235,661.75, upon delivery of the materials contracted for. The balance of the contract price, amounting to P942,647, was to be paid within fifteen (15) days thereof. It was further stipulated by the parties that respondent was to furnish, deliver, lay, roll the asphalt, and if necessary, make the needed corrections on a prepared base at the jobsite.[6]

On April 22, 1991, READYCON delivered the assorted asphalt materials worth P1,150,531.75. Accordingly, WENCESLAO paid the downpayment of P235,661.75 to READYCON. Thereafter, READYCON performed its obligation to lay and roll the asphalt materials on the jobsite.[7]

Fifteen (15) days after performance of said work, READYCON demanded that WENCESLAO pay the balance of the contract price. WENCESLAO, however, ignored said demand.

On May 30, 1991, the counsel for READYCON wrote a demand letter to WENCESLAO asking that it make good on the balance it owed. Again, WENCESLAO failed to heed the demand. It did not even bother to reply to the demand letter.[8]

In view of this development, on July 19, 1991, READYCON filed a complaint with the Regional Trial Court of Pasig City for collection of a sum of money and damages, with prayer for writ of preliminary attachment against D.M. Wenceslao and/or Dominador Dayrit, docketed as Civil Case No. 61159. READYCON demanded payment of P1,014,110.45 from petitioners herein with P914,870.75 as the balance of contract price, as well as payment of P99,239.70, representing another unpaid account.[9]

As READYCON timely posted the required bond of P1,150,000, its application for the writ of preliminary attachment was granted.

On September 5, 1991, the RTC Sheriff attached certain assets of WENCESLAO, particularly, the following heavy equipments: One (1) asphalt paver, one (1) bulldozer, one (1) dozer and one (1) grader.[10]

On September 16, 1991, WENCESLAO moved for the release of the attached equipments and posted its counter-bond. The trial court granted the motion and directed the RTC Sheriff to return the attached equipments.

On September 25, 1991, the Sheriff released the attached heavy machineries to WENCESLAO.[11]

In the proceedings below, WENCESLAO admitted that it owed READYCON P1,014,110.45 indeed. However, it alleged that their contract was not merely one of sale but also of service, namely, that respondent shall lay the asphalt in accordance with the specifications and standards imposed by and acceptable to the government. WENCESLAO also alleged that since the contract did not indicate this condition with respect to the period within which the balance must be paid, the contract failed to reflect the true intention of the parties.[12] It alleged READYCON agreed that the balance in the payments would be settled only after the government had accepted READYCON’s work as to its quality in laying the asphalt. By way of counterclaim, WENCESLAO prayed for the payment of damages caused by the filing of READYCON’s complaint and the issuance of the writ of attachment despite lack of cause.[13]

On December 26, 1994, the RTC rendered judgment in this wise:
WHEREFORE, judgment is hereby rendered ordering the defendant D.M. Wenceslao & Associates, Inc. to pay plaintiff as follows:
  1. The amount of P1,014,110.45 with interest at the rate of 12% per annum (compounded annually) from August 9, 1991, date of filing of the complaint, until fully paid.

  2. The amount of P35,000.00 as and for attorney’s fees and expenses of litigation.

  3. Costs of suit.
The counterclaim of the defendants is dismissed for lack of merit.[14]
Dissatisfied with the decision, the petitioners appealed to the Court of Appeals. The appellate court, however, affirmed in toto the decision of the lower court.[15]

In denying the appeal, the appellate court found that contrary to WENCESLAO’s assertion, malice and bad faith in obtaining a writ of attachment must be proved before a claim for damages on account of wrongful attachment will prosper, citing Philippine Commercial International Bank v. Intermediate Appellate Court, 196 SCRA 29 (1991). The CA stressed that the trial court found neither malice nor bad faith relative to the filing of the complaint and the obtaining of the writ of attachment. Also, according to the CA, petitioners did not adduce evidence to show that the attachment caused damage to the cited pieces of heavy equipment.[16]

The appellate court also found that the trial court correctly interpreted the period for payment of the balance. It held that the text of the stipulation that the balance shall be paid within fifteen days is clear and unmistakable. Granting that the sales contract was not merely for supply and delivery but also for service, the balance was already due and demandable when demand was made on May 30, 1991, which was a month after READYCON performed its obligation.[17]

Hence, the instant petition, wherein petitioners raise the following issues:


We find proper for resolution two issues: (1) Is respondent READYCON liable to petitioner WENCESLAO for damages caused by the issuance and enforcement of the writ of preliminary attachment? (2) Was the obligation of WENCESLAO to pay READYCON already due and demandable as of May 30, 1991?

On the first issue, petitioners rely mainly on Lazatin v. Twano and Castro, 112 Phil. 733 (1961), reiterated in MC Engineering v. Court of Appeals, 380 SCRA 116 (2002). In Lazatin, we held that actual or compensatory damages may be recovered for wrongful, though not malicious, attachment. Lazatin also held that attorney’s fees may be recovered under Article 2208 of the Civil Code.[19] Petitioners contend that Lazatin applies in the instant case because the wrongful attachment of WENCESLAO’s equipment resulted in a paralysis of its operations, causing it to sustain a loss of P100,000 per day in terms of accomplishment of work. Since the attachment lasted 19 days it suffered a total loss of P1.9 million. Aside from that, it had to spend P50,000 on the pullout of the equipment and another P100,000 to repair and restore them to their former working condition.[20]

Respondent counters that inasmuch as a preliminary attachment is an available ancillary remedy under the rules, a penalty cannot be meted out for the enforcement of a right, such as in this case when it sought such relief. It stresses that the writ was legally issued by the RTC, upon a finding that READYCON sought the relief without malice or bad faith. Furthermore, WENCESLAO failed to show concrete and credible proof of the damages it suffered. The issuance of a writ and its enforcement entail a rigorous process where the court found that it was not attended by malice or bad faith. It cites Mindanao Savings and Loan Association v. Court of Appeals, 172 SCRA 480 (1989), to the effect where a counter-bond is filed, the right to question the irregularity and propriety of the writ of attachment must be deemed waived since the ground for the issuance of the writ forms the core of the complaint.[21]

We find for the respondent on this issue. However, its reliance upon Mindanao Savings and Loan Association is misplaced.

It is to be stressed that the posting of a counter-bond is not tantamount to a waiver of the right to damages arising from a wrongful attachment. This we have made clear in previous cases, e.g., Calderon v. Intermediate Appellate Court, [22] where we ruled that:
Whether the attachment was discharged by either of the two (2) ways indicated in the law, i.e., by filing a counterbond or by showing that the order of attachment was improperly or irregularly issued, the liability of the surety on the attachment bond subsists because the final reckoning is when “the Court shall finally adjudge that the attaching creditor was not entitled” to the issuance of the attachment writ in the first place. The attachment debtor cannot be deemed to have waived any defect in the issuance of the attachment writ by simply availing himself of one way of discharging the attachment writ, instead of the other. Moreover, the filing of a counterbond is a speedier way of discharging the attachment writ maliciously sought out by the attaching party creditor instead of the other way, which in most instances like in the present case, would require presentation of evidence in a fullblown trial on the merits and cannot easily be settled in a pending incident of the case.[23]
The point in Mindanao Savings, alluded to by respondent, pertained to the propriety of questioning the writ of attachment by filing a motion to quash said writ, after a counter-bond had been posted by the movant. But nowhere in Mindanao Savings did we rule that filing a counter-bond is tantamount to a waiver of the right to seek damages on account of the impropriety or illegality of the writ.

We note that the appellate court, citing Philippine Commercial & Industrial Bank, 196 SCRA 29 (1991), stressed that bad faith or malice must first be proven as a condition sine qua non to the award of damages. The appellate court appears to have misread our ruling, for pertinently what this Court stated was as follows:
The silence of the decision in GR No. 55381 on whether there was bad faith or malice on the part of the petitioner in securing the writ of attachment does not mean the absence thereof. Only the legality of the issuance of the writ of attachment was brought in issue in that case. Hence, this Court ruled on that issue without a pronouncement that procurement of the writ was attended by bad faith. Proof of bad faith or malice in obtaining a writ of attachment need be proved only in the claim for damages on account of the issuance of the writ. We affirm the finding of the respondent appellate court that malice and bad faith attended the application by PCIB of a writ of attachment.[24]
Plainly, we laid no hard and fast rule that bad faith or malice must be proved to recover any form of damages. In Philippine Commercial & Industrial Bank, we found bad faith and malice to be present, thereby warranting the award of moral and exemplary damages. But we denied the award of actual damages for want of evidence to show said damages. For the mere existence of malice and bad faith would not per se warrant the award of actual or compensatory damages. To grant such damages, sufficient proof thereon is required.

Petitioners cite Lazatin and MC Engineering insofar as proof of bad faith and malice as prerequisite to the claim of actual damages is dispensed with. Otherwise stated, in the present case, proof of malice and bad faith are unnecessary because, just like in Lazatin and MC Engineering, what is involved here is the issue of actual and compensatory damages. Nonetheless, we find that petitioner is not entitled to an award of actual or compensatory damages. Unlike Lazatin and MC Engineering, wherein the respective complaints were dismissed for being unmeritorious, the writs of attachment were found to be wrongfully issued, in the present case, both the trial and the appellate courts held that the complaint had merit. Stated differently, the two courts found READYCON entitled to a writ of preliminary attachment as a provisional remedy by which the property of the defendant is taken into custody of the law as a security for the satisfaction of any judgment which the plaintiff may recover.[25]

Rule 57, Section 4 of the 1997 Rules of Civil Procedure states that:
SEC. 4. Condition of applicant’s bond. - The party applying for the order must thereafter give a bond executed to the adverse party in the amount fixed by the court in its order granting the issuance of the writ, conditioned that the latter will pay all the costs which may be adjudged to the adverse party and all damages which he may sustain by reason of the attachment, if the court shall finally adjudge that the applicant was not entitled thereto (italics for emphasis)
In this case, both the RTC and the Court of Appeals found no reason to rule that READYCON was not entitled to issuance of the writ. Neither do we find now that the writ is improper or illegal. If WENCESLAO suffered damages as a result, it is merely because it did not heed the demand letter of the respondent in the first place. WENCESLAO could have averted such damage if it immediately filed a counter-bond or a deposit in order to lift the writ at once. It did not, and must bear its own loss, if any, on that account.

On the second issue, WENCESLAO admits that it indeed owed READYCON the amount being claimed by the latter. However, it contends that while the contract provided that the balance was payable within fifteen (15) days, said agreement did not specify when the period begins to run. Therefore, according to petitioner, the appellate court erred when it held the contract clear enough to be understood on its face. WENCESLAO insists that the balance of the purchase price was payable only “upon acceptance of the work by the government.” In other words, the real intent of the parties was that it shall be due and demandable only fifteen days after acceptance by the government of the work. This is common practice, according to petitioner.

Respondent argues that the stipulation in the sales contract is very clear that it should be paid within fifteen (15) days without any qualifications and conditions. When the terms of a contract are clear and readily understandable, there is no room for construction. Even so, the contention was mooted and rendered academic when, a few days after institution of the complaint, the government accepted the work but WENCESLAO still failed to pay respondent.

Under Article 1582 of the Civil Code, the buyer is obliged to pay the price of the thing sold at the time stipulated in the contract. Both the RTC and the appellate court found that the parties’ contract stated that the buyer shall pay the manufacturer the amount of P1,178,308.75 in the following manner:
20% downpayment - P235,661.75

Balance – payable within fifteen (15) days – P942,647.00
Following the rule on interpretation of contracts, no other evidence shall be admissible other than the original document itself,[26] except when a party puts in issue in his pleading the failure of the written agreement to express the true intent of the parties.[27] This was what the petitioners wanted done.

However, to rule on whether the written agreement failed to express the true intent of the parties would entail having this Court reexamine the facts. The findings of the trial court as affirmed by the appellate court on this issue, however, bind us now. For in a petition for certiorari under Rule 45 of the 1997 Rules of Civil Procedure, this Court may not review the findings of fact all over again. Suffice it to say, however, that the findings by the RTC, then affirmed by the CA, that the extra condition being insisted upon by the petitioners is not found in the sales contract between the parties. Hence it cannot be used to qualify the reckoning of the period for payment. Besides, telling against petitioner WENCESLAO is its failure still to pay the unpaid account, despite the fact of the work’s acceptance by the government already.

With submissions of the parties carefully considered, we find no reason to warrant a reversal of the decisions of the lower courts. But since Dominador Dayrit merely acted as representative of D.M. Wenceslao and Associates, Inc., in signing the contract, he could not be made personally liable for the corporation’s failure to comply with its obligation thereunder. Petitioner WENCESLAO is properly held liable to pay respondent the sum of P1,014,110.45 with interest rate of 12% per annum (compounded annually) from August 9, 1991, the date of filing of the complaint, until fully paid, plus damages.

WHEREFORE, the petition is DENIED. The assailed decision and resolution of the Court of Appeals in CA-G.R. CV No. 49101, affirming the judgment of the Regional Trial Court of Pasig City, Branch 165, in Civil Case No. 61159, are AFFIRMED. No pronouncement as to costs.


Puno, (Chairman), Callejo, Sr., and Tinga, JJ., concur.
Austria-Martinez, J., on leave.

[1] Rollo, pp. 25-31. Penned by Associate Justice Elvi John S. Asuncion, with Associate Justices Romeo A. Brawner, and Rebecca De Guia-Salvador concurring.

[2] Id. at 33.

[3] Id. at 128-137.

[4] Id. at 84.

[5] Id. at 25.

[6] Id. at 26, 129.

[7] Id. at 26, 130. The amount stated is P235,661.00.

[8] Ibid.

[9] Rollo, pp. 27, 129-130.

[10] Id. at 86.

[11] Id. at 133.

[12] Ibid.

[13] Ibid.

[14] Id. at 137.

[15] Id. at 31.

[16] Id. at 29.

[17] Id. at 30.

[18] Id. at 91.

[19] Art. 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other than judicial costs, cannot be recovered, except:

. . .
(11) In any other case where the court deems it just and equitable that attorney’s fees and expenses of litigation should be recovered.
. . .

[20] Rollo, p. 93.

[21] Id. at 119-125.

[22] Nos.L-74696 & L-73916, 11 November 1987, 155 SCRA 531.

[23] Id. at 540-541.

[24] Philippine Commercial International Bank v. IAC, G.R. No. 73610, 19 April 1991, 196 SCRA 29, 36.

[25] SEC. 1, Rule 57, 1997 Revised Rules of Civil Procedure.

[26] Rule 130, SEC. 3. Original document must be produced; exceptions. – When the subject of inquiry is the contents of a document, no evidence shall be admissible other than the original document itself, except in the following cases:
When the original has been lost or destroyed, or cannot be produced in court, without bad faith on the part of the offeror;

When the original is in the custody or under the control of the party against whom the evidence is offered, and the latter fails to produce it after reasonable notice;

When the original consists of numerous accounts or other documents which cannot be examined in court without great loss of time and the fact sought to be established from them is only the general result of the whole; and

(d)When the original is a public record in the custody of a public officer or is recorded in a public office.
[27] Rule 130, SEC. 9. Evidence of written agreements. – When the terms of an agreement have been reduced to writing, it is considered as containing all the terms agreed upon and there can be, between the parties and their successors in interest, no evidence of such terms other than the contents of the written agreement.

However, a party may present evidence to modify, explain or add to the terms of the written agreement if he puts in issue in his pleading:
(a)An intrinsic ambiguity, mistake or imperfection in the written agreement;

(b)The failure of the written agreement to express the true intent and agreement of the parties thereto;

(c)The validity of the written agreement; or

The existence of other terms agreed to by the parties or their successors in interest after the execution of the written agreement.
The term “agreement” includes wills.

© Supreme Court E-Library 2019
This website was designed and developed, and is maintained, by the E-Library Technical Staff in collaboration with the Management Information Systems Office.