Sunday, December 04, 2011

Financial Building Corporation vs. Rudlin International Corporation, et al./Rudlin International Corporation, et al. vs. Financial Building Corporation, G.R. No. 164186/G.R. No. 164347. October 4, 2010

Actual damages; evidence required. As to Rudlin’s counterclaim for reimbursement of its expenses in repairing the defective waterproofing, not a single receipt was presented by Rudlin to prove that such expense was actually incurred by it. Under the Civil Code, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. The award of actual damages must be based on the evidence presented, not on the personal knowledge of the court; and certainly not on flimsy, remote, speculative and nonsubstantial proof. The testimony of Rodolfo J. Lagera on the total cost allegedly spent by Rudlin in repairing the waterproofing works does not suffice. A court cannot rely on speculations, conjectures or guesswork as to the fact of damage but must depend upon competent proof that they have indeed been suffered by the injured party and on the basis of the best evidence obtainable as to the actual amount thereof. It must point out specific facts that could provide the gauge for measuring whatever compensatory or actual damages were borne. 

Parol Evidence Rule; evidence of written agreement. On the issue of the correct total contract price, we hold that Rudlin failed to substantiate its claim that the contract price stated in the Construction Agreement (P6,933,268.00) was not the true contract price because it had an understanding with FBC’s Jaime B. Lo that they would decrease said amount to a mutually acceptable amount. Under the general rule in Section 9 of Rule 130 of the Rules of Court, when the terms of an agreement were reduced in writing, as in this case, it is deemed to contain all the terms agreed upon and no evidence of such terms can be admitted other than the contents thereof. Rudlin argues that under Section 9, Rule 130, a party may present evidence to modify, explain or add to the terms of the written agreement if it is put in issue in the pleading, “[t]he failure of the written agreement to express the true intent and the agreement of the parties thereto.” Assuming as true Rudlin’s claim that Exhibit “7” failed to accurately reflect an intent of the parties to fix the total contract price at P6,006,965.00, Rudlin failed to avail of its right to seek the reformation of the instrument to the end that such true intention may be expressed. 

Evidence of a prior or contemporaneous verbal agreement is generally not admissible to vary, contradict or defeat the operation of a valid contract. Section 9 of Rule 130 of the Rules of Court states: 

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. 

Rudlin cannot invoke the exception under (a) or (b) of the above provision. Such exception obtains only where “the written contract is so ambiguous or obscure in terms that the contractual intention of the parties cannot be understood from a mere reading of the instrument. In such a case, extrinsic evidence of the subject matter of the contract, of the relations of the parties to each other, and of the facts and circumstances surrounding them when they entered into the contract may be received to enable the court to make a proper interpretation of the instrument.” Under the fourth exception, however, Rudlin’s evidence is admissible to show the existence of such other terms agreed to by the parties after the execution of the contract. But apart from the Bar Chart and Cash Flow Chart prepared by FBC, and the testimony of Rodolfo J. Lagera, no competent evidence was adduced by Rudlin to prove that the amount of P6,006,965.00 stated therein as contract price was the actual decreased amount that FBC and Rudlin found mutually acceptable. As to the affidavits executed by Architect Quezon and his associate Roberto R. Antonio, the same do not serve as competent proof of the purported actual contract price as they did not testify thereon. Significantly, the June 5, 1986 Letter-Agreement did not at all mention the total contract price. Likewise, there is nothing in the various letters sent by Rudlin to FBC while construction was in progress and even subsequent to the execution of the said Letter-Agreement indicating that Rudlin corrected the contract price of P6,933,268.00 which FBC had repeatedly mentioned in its letters and documents. Financial Building Corporation vs. Rudlin International Corporation, et al./Rudlin International Corporation, et al. vs. Financial Building Corporation, G.R. No. 164186/G.R. No. 164347. October 4, 2010

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