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PHILIPPINE SUPREME COURT DECISIONS

FIRST DIVISION

[G.R. No. 110340. May 28, 2001.]

WESTERN SHIPYARD SERVICES, INC., Petitioner, v. COURT OF APPEALS and SANTIAGO LIGHTERAGE CORPORATION, Respondents.

D E C I S I O N


PARDO, J.:


The Case


What is before the Court is an appeal 1 from the resolution of the Court of Appeals 2 amending its earlier decision 3 which resolution reduced the amount awarded by the court for payment for services 4 rendered by petitioner Western Shipyard Services, Inc. (hereafter, "WSSI") on a cargo vessel that respondent Santiago Lighterage Corp. (hereafter, "SLC") owned and which reversed the decision of the Regional Trial Court, Branch 113, Pasay City. 5

The Facts


SLC was the owner of a 229-foot general cargo vessel, known as "Dinky," which had an actual value of four million pesos (P4,000,000.00). 6

On February 14, 1983, SLC entered into a contract of services with WSSI for the conversion of "Dinky" into an LCT, to be known as "Loadmaster" which involved the lengthening of the ship to 268 feet, the extension of the vessel’s moulded breadth to 54 feet and moulded depth to 14 feet. 7

In accordance with the contract of services, SLC paid WSSI two hundred thousand pesos (P200,000.00). 8chanrob1es virtua1 1aw 1ibrary

On or about February 28, 1983, the vessel was docked at WSSI’s shipyard. 9

Under the contract of services, completion and delivery to SLC of the renovated vessel shall be within one hundred thirty (130) calendar days from the docking of the vessel and WSSI had the obligation to pay demurrage to SLC in the amount of P10,000.00, a day for everyday of delay beyond the 130 calendar day period. 10

On January 30, 1986, SLC filed with the Regional Trial Court, Pasay City a complaint against WSSI for "rescission of contract with damages and replevin." 11 SLC alleged that: First, even after repeated demands, WSSI defaulted on its commitment to deliver the vessel to SLC after the stipulated period. Second, WSSI violated the terms and conditions of the "contract of services," with respect to the scope of work to be accomplished and the quality thereof. Third, the vessel has been in the continued possession of WSSI and has suffered deterioration due to exposure to the elements; and Fourth, due to the delay or demurrage incurred by WSSI, SLC has suffered unrealized profits the non-operation of the vessel at the minimum rate of four hundred thousand pesos (P400,000.00) a month. 12

Apparently there were two contracts for services, Annex "A" attached to SLC’s complaint and Annex "1" attached to WSSI’s answer. Doubt existed as to which of the two contracts was to be applied. A perusal of the two contracts of services show that they essentially have the same provisions except for the following, quoted verbatim: 13

"ANNEX "A" ANNEX "1"

"A. HULL CONVERSION, ALTERATIONS & REMODELING

"No. 7 Laydays at P537.00 No. lay days.

/day No. 7 Fabricate install

main propulsion

engines, auxiliaries

and other necessary

accessories mountings

and install same

properly, including

installation of all deck

machineries.

No. 8 Undertake sea

trials of the vessel

upon completion and

to test for proper

functioning of all

mechanical and

electrical machineries

of the vessel installed

to the satisfaction

of the shipowner.

Cost of Conversion with reference

to Quotation WS-000186-82 dated

December 15, 1982, revised as follows:jgc:chanrobles.com.ph

"1. Towing of the vessel 1. Towing of the

from Batangas to shipyard vessel from Batangas

and out of Navotas River to shipyard and out of

mouth after completion of Navotas River

mouthwork . . . P18,280.00 after completion of

work . . . . P14,624.00

"2. Sandblasting to bare 2. Sandblast to bare

metal all exterior surface to metal all exterior

include original side shell surface to include P/S

and exterior surface and original side shell P/S

deck of superstructure to one exterior surface

include one coat of epoxy and deck of super-

paint at . . . P4.50/SF/coat. structure, to include

one (1) coat of

epoxy paint at

P3.50/SF/coat.

"8. Installation of pipe 8. Installation of pipe

railings at pilot house railings at the pilot and

at the FWD portion house and at FWD

using 1 1/2" dia. B. I. portion, using 1 1/2"

pipe Sch. 40 at dia., G. I. pipe Sch. 40

P8.40/LF. at P8.40/LF.

"9. Installation of angle bar 9. Installation of 3 x

5 framings at P29.50/LF. angle bar 3 x 5

framings at P14.00

LF.

"10. Furnish to Owner Five 10. Furnish to Owner

(5) copies of approved plans Five (5) copies of by

the Phil. Coast Guard & approval plan by the

ABS Classification Office Phil. Coast Guard &

. . . . P35,000.00 Crop cutting of all

steel materials . . . . Free.

"D. Completion and delivery D. Completion and to

owner shall be within one delivery to owner shall

Hundred Thirty (130) calendar be within One days,

effective upon docking Hundred Twenty (120)

of the vessel; and with a working days effective

demurrage of P10,000.00 upon docking of the

per day of delay. vessel."cralaw virtua1aw library

On April 25, 1990, after trial, the trial court rendered decision reasoning that both contracts were prepared by WSSI, hence, the contracts shall be interpreted against it, as it caused the obscurity. 14 Prescinding from this, the trial court held that Annex "A" shall govern. The trial court then rescinded the contract and ordered WSSI to pay SLC liquidated damages, attorney’s fees and costs. The trial court found that the contract of services provided for a period of one hundred thirty (130) calendar days from the time of the docking of the vessel to its complete reconstruction and renovation and that WSSI had the obligation to renovate it within the time stipulated, its failure to do so constituted a breach thereof. We quote the dispositive portion of the decision: 15

"WHEREFORE, a decision is hereby rendered in favor of the plaintiff and against the defendant as follows:chanrob1es virtua1 1aw 1ibrary

"1. The contract is declared rescinded;

"2. Ordering the defendant to pay plaintiff the sum of P4,000,000.00 (Four Million Pesos); by way of liquidated damages;

"3. Ordering the defendant to pay plaintiff the sum of P30,000.00 by way of attorney’s fees; and

"4. To pay the costs.

"SO ORDERED."cralaw virtua1aw library

In time, WSSI appealed to the Court of Appeals. 16 WSSI argued that the trial court erred in ruling that Annex "A" governs.

On February 7, 1992, contrary to the ruling of the trial court, the Court of Appeals promulgated its decision ruling that there was nothing obscure or ambiguous about the two contracts, hence, there was no justification for construing them against WSSI. According to the Court of Appeals, the trial court had the duty to determine which of the two contracts expressed the parties’ true intentions. 17 Examining the transcripts of the testimonies of witnesses and documents, the Court of Appeals held that Annex "1" superseded Annex "A" and that SLC was to be faulted for the delay. 18 The Court of Appeals decided thus: 19

"PREMISES CONSIDERED, the decision being appealed from is hereby SET ASIDE and in lieu thereof another rendered:jgc:chanrobles.com.ph

"1. Dismissing the complaint;

"2. Ordering plaintiff to pay defendant the following amounts for services rendered;

"a. P 1,253,498.88 with legal interest from the filing of the Answer on March 19, 1986 until fully paid for work accomplished on the vessel "Dinky/LCT Loadstar" ;

"b. P352,617.16 with legal interest from the filing of the Answer on March 19, 1986 until fully paid for work accomplished on the LCT Placer.

"3. Ordering plaintiff to pay defendant the sum of P25,000.00 by way of attorney’s fees and litigation expenses.

"4. Ordering plaintiff to pay the costs.

SO ORDERED."cralaw virtua1aw library

On February 29, 1992, SLC moved for reconsideration of the afore-quoted decision questioning the amounts granted by the Court of Appeals to WSSI. 20

On January 28, 1993, after re-examining the evidence, the Court of Appeals issued a resolution amending its decision of February 7, 1992, effectively reducing the amounts to be awarded to WSSI, to wit: 21

"WHEREFORE, in view of the foregoing, the decision dated February 7, 1992 is hereby correspondingly AMENDED and the dispositive portion thereof AMENDED to read as follows:chanrob1es virtua1 1aw 1ibrary

"(1) Dismissing the complaint;

"(2) Ordering the plaintiff to pay defendant the amount of ONE MILLION SIXTY SEVEN THOUSAND TWO HUNDRED TWENTY EIGHT & 73/100 (P1,067,228.73) with legal interest from the filing of the answer on March 19, 1986, until fully paid for work accomplished on the vessel "Dinky" / "LCT Loadstar" ;

"(3) Ordering the plaintiff to pay defendant the sum of P25,000.00 by way of attorney’s fees and litigation expenses.

"All other claims and/or counterclaims are hereby dismissed for lack of merit.

"SO ORDERED."cralaw virtua1aw library

On February 23, 1993, petitioner filed with the Court of Appeals a motion for reconsideration of the aforementioned resolution. 22

On May 14, 1993, the Court of Appeals denied petitioner’s motion for reconsideration. 23

Hence, this appeal. 24

The Issues


In this appeal, we are asked to resolve: First, whether or not the reduction by the Court of Appeals of the fees to cover services rendered by WSSI from P1,253,498.88 to P1,067,228.73 is justified; and Second, whether the Court of Appeals erred in deleting the award for work accomplished by WSSI on the LCT Placer.25cralaw:red

The Court’s Ruling


The petition is not meritorious. At the outset, we note that the petition raises pure questions of fact.

Under Rule 45, Section 1 of the 1997 Revised Rules of Civil Procedure:jgc:chanrobles.com.ph

"SECTION 1. Filing of petition with Supreme Court. — A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth (1a, 2a). (Emphasis ours)" 26

The Supreme Court is not a trier of facts. 27 Questions that may be entertained in a petition for certiorari must not involve an examination of the probative value of the evidence presented by the litigants. 28

A question of law exists when doubt or difference arises as to what is the pertaining law given a certain state of facts. On the other hand, there is a question of fact when doubt arises as to the truth or falsity of the alleged facts. 29

WSSI casts doubt on the factual findings of the Court of Appeals, stating that the Court of Appeals "drew incorrect conclusions from the evidence extant on the records," and that "this misapprehension of facts led it to misapply the law and therefore, committed reversible error . . ." 30 The rules prevent WSSI from arguing as such.

When the factual findings of the Court of Appeals are supported by substantial evidence, they are conclusive and binding on the parties. 31 "Substantial evidence" is that amount of relevant evidence which a reasonable mind might accept as adequate to justify the conclusion. 32 We find that substantial evidence supports the finding of the Court of Appeals.

Neither do the records show that the Court of Appeals’ reduction of the amounts originally awarded was based on speculation, surmises or conjectures, hence, the factual findings in support of the reduction can not be disturbed. 33

The Fallo

WHEREFORE, finding no reversible error in the resolution appealed from, the petition is DISMISSED. The resolution of the Court of Appeals promulgated on January 28, 1993 is AFFIRMED in toto.chanrob1es virtua1 1aw 1ibrary

No costs.

SO ORDERED.

Davide, Jr., C.J., Puno and Ynares-Santiago, JJ., concur.

Kapunan, J., is on leave.

Endnotes:



1. Filed under Rule 45, Revised Rules of Court (1964 Revision).

2. In CA-G. R. CV No. 26268, promulgated on January 28, 1993, Imperial, J., ponente, Javellana and Guingona, JJ., concurring.

3. Promulgated on February 7, 1992.

4. From P1,253,498.88 to P1,067,228.73 and the resolution further deleting the initial award of P352,617.16 for "award for work" (Court of Appeals Decision, Rollo, pp. 30-47, at p. 47 and Court of Appeals Resolution, Rollo, pp. 51-61, at p. 61).

5. In Civil Case No. 3714-P, Decision, dated April 25, 1990, Judge Baltazar R. Dizon, presiding.

6. Court of Appeals Decision, Rollo, pp. 30-47, at p. 30.

7. Ibid.

8. Ibid.

9. Ibid.

10. Ibid., at p. 31.

11. Docketed as Civil Case No. 3714-P.

12. Complaint, CA Rollo, pp. 5-11, at pp. 6-8.

13. Court of Appeals Decision, Rollo, pp. 3048, at pp. 35-36.

14. The trial court cited Article 1377 of the Civil Code which states that, "The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity." (Decision of the Regional Trial Court, CA Rollo, pp. 61-67, at pp. 63-64).

15. Decision of the Regional Trial Court, CA Rollo, pp. 61-67, at p. 67.

16. Docketed as CA-G. R. CV No. 26268. Brief filed with the Court of Appeals on November 20, 1990 (CA Rollo, p. 81).

17. Court of Appeals Decision of February 7, 1992, Rollo, pp. 30-47 at p. 36.

18. Ibid., p. 44.

19. Ibid., p. 47.

20. Motion for Reconsideration, CA Rollo, pp. 122-139.

21. Court of Appeals Resolution, Rollo, pp. 51-61, at p. 61.

22. Defendant-Appellant’s Motion for Reconsideration, CA Rollo, pp. 166-176.

23. Court of Appeals Resolution of May 14, 1993, Rollo, pp. 78-79.

24. Filed on June 10, 1993, Petition, Rollo, pp. 2-27. On June 5, 1995, we resolved to give the petition due course, Rollo, p. 172.

25. Petition, Rollo, pp. 1-27, at p. 14.

26. At the time of the filing of the petition, the governing rule was Rule 45, Sections 1 and 2 (1964 Revision).

27. Don Orestes Romualdez Electric Cooperative, Inc. (Dorelco) v. National Labor Relations Commission, 319 SCRA 255, 260 [1999].

28. Serna v. Court of Appeals, 308 SCRA 527, 534 [1999]; Bermudez v. Gonzales, G. R. No. 132810, December 11, 2000.

29. Reyes v. Court of Appeals, 328 Phil. 171, 179 [1996].

30. Petition, Rollo, pp. 1-27, at p. 15.

31. Santiago v. Court of Appeals, G.R. No. 109111, June 28, 2000.

32. Austria v. National Labor Relations Commission, 310 SCRA 293, 300 [1999].

33. Castilex Industrial Corporation v. Vasquez, Jr., 321 SCRA 393, 403 [1999].

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