KABISIG v. YBC

Kabisig Real Wealth Dev., Inc. and Fernando C. Tio Vs. Young Builders Corporation

G.R. No. 212375

January 25, 2017

FACTS:

Sometime in April 2001, Kabisig Real Wealth Dev., Inc. (Kabisig), through Ferdinand Tio (Tio), contracted the services of Young Builders Corporation to supply labor, tools, equipment, and materials for the renovation of its building in Cebu City.

Young Builders then, finished the work in September 2001 and billed Kabisig for P4,123,320.95. However, despite numerous demands, Kabisig failed to pay. It contended that no written contract was ever entered into between the parties and it was never informed of the estimated cost of the renovation. Thus Young Builders filed an action for Collection of Sum of Money.

On July 31, 2008, the RTC of Cebu City rendered a decision in favor of Respondent ordering the petitioners to pay respondent the amount of P4, 123,320.95 representing the value of services rendered and materials used in the renovation of the building of Kabisig into a restaurant of Ferdinand Tio, by way of actual damages, plus 12% per annum from September 11,2001 until it is fully paid with cost against petitioners.

Therefore, petitioners elevated the case to Court of Appeals wherein the latter affirmed the RTC’s decision with Modification, deleting the award for actual damages while decreasing the amount to P2, 400,000.00 as temperate damages. Subsequently, both petitioners moved for consideration but both were denied by CA. Hence Kabisig filed the instant petition.

ISSUE:

Whether or not Kabisig is liable to Young Builders for the damages claimed.

HELD:

Yes. Under the Civil Code, Article 1356, contracts shall be obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity present. Petitioners contends that they were not liable for there was no written contract formed between the parties and was never informed of the amount for the services rendered. The court said this simply does not hold water. It is settled that once perfected, a contract is generally binding in whatever form, whether written or oral, it may have been entered into.

Furthermore, there is nothing in the law that requires a written contract for the agreement in question to be valid and enforceable. Also, the Court notes that neither Kabisig nor Tio, objected to the renovation work, until it was already time to settle the bill. For the injured party to recover actual damages, however, he is required to prove the actual amount of loss with reasonable degree of certainty premised upon competent proof and on the best evidence available.  The burden of is on the party who would be defeated if no evidence would be presented on either side. Thus, there is a need to establish a preponderance of evidence. In other words, damages cannot be presumed in making an award, and courts must point out specific facts that could afford a basis for measuring compensatory damages. Notwithstanding, Young Builders still deserves to be recompensed for actually completing the work.

To determine the compensation due and to avoid unjust enrichment from resulting out of a fulfilled contract, the principle of quantum meruit may be used. Under this principle, a contractor is allowed to recover the reasonable value of the services rendered despite the lack of a written contract. Its principle justifies the payment of the reasonable value of the services rendered and should apply in the absence of an express agreement on the fees.

Under the established circumstances, the total amount of P2, 400,000.00 which the CA awarded is deemed reasonable compensation under the principle of quantum meruit since the renovation of Kabisig’s building had already been completed in 2001.

Finally, the rate of interest should be modified subject to the provisions of Article 1169 of the Civil Code. The records showed that Young Builders made the demand on September 11, 2001. Also, the rate of legal interest for a judgment awarding a sum of money shall be 6% per annum from the time such judgment becomes final and executory until its satisfaction, the interim period being deemed to be by then an equivalent to a forbearance of credit.

The Court dismisses the petition for lack of merit and affirms the CA’s decision with modification.