G.R. No. 213229 - FILINVEST ALABANG, INC., VS. CENTURY IRON WORKS, INC..D E C I S I O N - Supreme Court E-Library

Ruling

accordingly, ordered petitioner Filinvest Alabang, Inc. (petitioner) to pay respondent Century Iron Works, Inc. (respondent) the aggregate amount of P1,392,088.68, plus legal interest at the rate of twelve percent (12%) per annum from the time of default until full payment thereof. The Facts Sometime in 1997 and 1998, petitioner awarded various contracts to respondent, including a contract for the completion of the metal works requirement of Filinvest Festival Supermall amounting to P29,000,000.00, as evidenced by the Agreement for Construction [5] executed by both parties (subject contract), as well as the General Conditions of Contract [6] (General Conditions) which supplements the subject contract. After the completion of said project, respondent tried to fully settle its credit with petitioner, but the latter, despite demands, allegedly withheld without any reasonable ground the payment of the aggregate amount of P1,392,088.68, broken down as follows: ( a ) balance of the retention fee amounting to P40,880.00; ( b ) additional deduction of P227,500.00 from the latter's total payments; and ( c ) the cost of an additional scenic elevator enclosure amounting to P1,123,708.68. This prompted respondent to file the instant case for sum of money with damages against petitioner before.the RTC, docketed as Civil Case No. 68850. [7] In defense, petitioner maintained that: ( a ) it had the right to retain the amounts of P40,880.00 and P227,500.00 as they represented damages arising from respondent's substandard workmanship; and ( b ) the subject contract is lump sum in nature, hence, it cannot be liable for the amount representing the additional scenic elevator enclosure absent any instruction authorizing the construction of the same. [8] The RTC Ruling In a Decision [9] dated August 3, 2010, the RTC granted respondent's claim for the amount of P227,500.00 plus legal interest, but denied the rest of the latter's claims. [10] The RTC found that petitioner is already estopped from claiming damages purportedly arising from respondent's substandard workmanship, considering its issuance of a Certificate of Completion and Acceptance [11] signifying its acceptance of respondent's work as up to par. As such, petitioner must remit the amount of P227,500.00 to respondent. [12] However, the RTC held that since the subject contract is lump sum in nature, petitioner cannot be held liable for the cost of the additional scenic elevator enclosure amounting to P1,123,708.68 as its liability is already fixed at the lump sum contract price of P29,000,000.00. [13] Aggrieved, respondent appealed [14] to the CA. The CA Ruling In a Decision [15] dated December 27, 2013, the CA affirmed the RTC ruling with modification, ordering petitioner to pay respondent the amounts of P40,880.00 and P1,123,708.68 as well, both with legal interest at the rate of twelve percent (12%) per annum from the time of default until full payment. [16] The CA agreed with the RTC that petitioner is est