SECOND DIVISION

G.R. No. 173881 : December 1, 2010

HYATT ELEVATORS and ESCALATORS CORPORATION, Petitioner, v. CATHEDRAL HEIGHTS BUILDING COMPLEX ASSOCIATION, INC., Respondent.

D EC I S I O N

PERALTA, J.:

Before this Court is a petition for review on certiorari ,¹ under Rule 45 of the Rules of Court, seeking to set aside the April 20, 2006 Decision² and July 31, 2006 Resolution³ of the Court of Appeals (CA), in CA-G.R. CV No. 80427.

The facts of the case are as follows:chanroblesvirtuallawlibrary

On October 1, 1994, petitioner Hyatt Elevators andEscalators Corporation entered into an "Agreement to Service Elevators"(Service Agreement)⁴with respondent Cathedral Heights Building Complex Association, Inc., wherepetitioner was contracted to maintain four passenger elevators installed inrespondent's building. Under the Service Agreement, the duties and obligationsof petitioner included monthly inspection, adjustment and lubrication ofmachinery, motors, control parts and accessory equipments, including switchesand electrical wirings.⁵ SectionD (2) of the Service Agreement provides that respondent shall pay for theadditional charges incurred in connection with the repair and supply of parts.

Petitioner claims that during the period of April 1997 toJuly 1998 it had incurred expenses amounting to Php 1,161,933.47 in the maintenanceand repair of the four elevators as itemized in a statement of account.⁶Petitioner demanded from respondent the payment of the aforesaid amountallegedly through a series of demand letters, the last one sent on July 18,2000.⁷ Respondent, however, refused to pay theamount.

Petitioner filed with the Regional Trial Court (RTC), Branch100, Quezon City, a Complaint for sum of money against respondent. Saidcomplaint was docketed as Civil Case No. Q-01-43055.

On March 5, 2003, the RTC rendered Judgment⁸ rulingin favor of petitioner, the dispositive portion of which reads:chanroblesvirtuallawlibrary

WHEREFORE,premises considered, JUDGMENT IS HEREBY RENDERED IN FAVOR OF THE PLAINTIFF ANDAGAINST THE DEFENDANT ordering the latter to pay Plaintiff as follows:chanroblesvirtuallawlibrary

1. The sum of P1,161,933.27representing the costs of the elevator parts used, and for services andmaintenance, with legal rate of interest from the filing of the complaint;

2. The sum of P50,000.00as attorney's fees;

3. The costs of suit.

SO ORDERED.^9cra

The RTC held that based on the sales invoices presented bypetitioner, a contract of sale of goods was entered into between the parties.Since petitioner was able to fulfill its obligation, the RTC ruled that it wasincumbent on respondent to pay for the services rendered. The RTC did not givecredence to respondent's claim that the elevator parts were never delivered andthat the repairs were questionable, holding that such defense was a mereafterthought and was never raised by respondent against petitioner at an earliertime.

Respondent filed a Motion for Reconsideration.¹⁰ OnAugust 17, 2003, the RTC issued a Resolution¹¹ denyingrespondent's motion. Respondent then filed a Notice of Appeal.^12cra

On April 20, 2006, the CA rendered a Decision finding meritin respondent's appeal, the dispositive portion of which reads:chanroblesvirtuallawlibrary

WHEREFORE,premises considered, the instant appeal is GRANTED. The Judgment of theRegional Trial Court, Branch 100, Quezon City, dated March 5, 2003, is herebyREVERSED and SET ASIDE. The complaint below is dismissed.

SO ORDERED.^13cra

In reversing the RTC, the CA ruled that respondent did notgive its consent to the purchase of the spare parts allegedly installed in thedefective elevators. Aside from the absence of consent, the CA also held thatthere was no perfected contract of sale because there was no meeting of mindsupon the price. On this note, the CAruled that the Service Agreement did not give petitioner the unbridled licenseto purchase and install any spare parts and demand, after the lapse of aconsiderable length of time, payment of these prices from respondent accordingto its own dictated price.

Aggrieved, petitioner filed a Motion for Reconsideration,¹⁴ whichwas, however, denied by the CA in a Resolution dated July 31, 2006.

Hence, herein petition, with petitioner raising a lone issuefor this Court's resolution, to wit:chanroblesvirtuallawlibrary

WHETHER OR NOT THERE IS APERFECTED CONTRACT OF SALE BETWEEN PETITIONER AND RESPONDENT WITH REGARDS TOTHE SPARE PARTS DELIVERED AND INSTALLED BY PETITIONER ON THE FOUR ELEVATORS OFRESPONDENT AT ITS HOSPITAL UNDER THE AGREEMENT TO SERVICE ELEVATORS AS TORENDER RESPONDENT LIABLE FOR THEIR PRICES?^15cra

Before anything else, this Court shall address a procedural issue raised by respondent in its Comment¹⁶ that the petition should be denied due course for raising questions of fact.

The determination of whether there exists a perfected contract of sale is essentially a question of fact. It is already a well-settled rule that the jurisdiction of this Court in cases brought before it from the CA by virtue of Rule 45 of the Revised Rules of Court is limited to reviewing errors of law. Findings of fact of the CA are conclusive upon this Court. There are, however, recognized exceptions to the foregoing rule, namely: (1) when the findings are grounded entirely on speculation, surmises, or conjectures; (2) when the inference made is manifestly mistaken, absurd, or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when, in making its findings, the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to those of the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition, as well as in the petitioner's main and reply briefs, are not disputed by the respondent; and (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record.^17cra

The present case falls under the 7^th exception, as the RTC and the CA arrived at conflicting findings of fact.

Having resolved the procedural aspect, this Court shall now address the substantive issue raised by petitioner. Petitioner contends that the CA erred when it ruled that there was no perfected contract of sale between petitioner and respondent with regard to the spare parts delivered and installed.

It is undisputed that a Service Agreement was entered into by petitioner and respondent where petitioner was commissioned to maintain respondent's four elevators. Embodied in the Service Agreement is a stipulation relating to expenses incurred on top of regular maintenance of the elevators, to wit:chanroblesvirtuallawlibrary

SERVICE ANDINSPECTION FEE:chanroblesvirtuallawlibrary

x x x x

(2)In addition to the service fee mentioned in the preceding paragraph under thisarticle, the Customer shall pay whatever additional charges in connection withthe repair, supply of parts other than those specifically mentioned in ARTICLEA.2., or servicing of the elevator/s subject of this contract.^18cra

Petitioner claims that during the period of April 1997 to July 1998, it had used parts in the maintenance and repair of the four elevators in the total amount of P1,161,933.47 as itemized in a statement of account¹⁹ and supported by sales invoices, delivery receipts, trouble call reports and maintenance and checking reports. Respondent, however, refuses to pay the said amount arguing that petitioner had not complied with the Standard Operating Procedure (SOP) following a breakdown of an elevator.

As testified to by respondent's witness Celestino Aguilar, the SOP following an elevator breakdown is as follows: (a) they (respondent) will notify petitioner's technician; (b) the technician will evaluate the problem and if the problem is manageable the repair was done right there and then; (c) if some parts have to be replaced, petitioner will present the defective parts to the building administrator and a quotation is made; (d) the quotation is then indorsed to respondent's Finance Department; and (e) a purchase order is then prepared and submitted to the Board of Directors for approval.^20cra

Based on the foregoing procedure, respondent contends that petitioner had failed to follow the SOP since no purchase orders from respondent's Finance Manager, or Board of Directors relating to the supposed parts used were secured prior to the repairs. Consequently, since the repairs were not authorized, respondent claims that it has no way of verifying whether the parts were actually delivered and installed as alleged by petitioner.

At the outset, this Court observes that the SOP is not embodied in the Service Agreement nor was a document evidencing the same presented in the RTC. The SOP appears, however, to be the industry practice and as such was not contested by petitioner. Nevertheless, petitioner offers an excuse for non-compliance with the SOP on its claim that the SOP was not followed upon the behest and request of respondent.

A perusal of petitioner's petition and evidence in the RTC shows that the main thrust of its case is premised on the following claims: first, that the nature and operations of a hospital necessarily dictate that the elevators are in good running condition at all times; and, second, that there was a verbal agreement between petitioner's service manager and respondent's building engineer that the elevators should be running in good condition at all times and breakdowns should only last one day.

In order to prove its allegations, petitioner presented Wilson Sua, its finance manager, as its sole witness. Sua testified to the procedure followed by petitioner in servicing respondent's elevators, to wit:chanroblesvirtuallawlibrary

Q: Can you tell us Mr. witness, what is the procedure actuallyfollowed whenever there is a need for trouble call maintenance or repair?

A: The St. Luke'sCathedral's personnel, which includes the administrative officers, the guard on duty, or the receptionist, will callus through the phone if their elevators brake (sic) down.

Q: Then, what happened?

A: Immediately, wedispatched our technicians to check the trouble.

Q: And who were these technicianswhom you normally or regularly dispatched to attend to the trouble of theelevators of the defendant?

A: With regard to thisSt. Luke's, we dispatched Sunny Jones and Gilbert Cinamin.

Q: And what happenedafter dispatching these technicians?

A: They come backimmediately to the office to request the parts needed for the troubleshootingof the elevators.

Q: Then what happened?

A: A part will bebrought to the project cite and they will install it and note it in the troublecall report and have it received properly by the building guard or thereceptionist or by the building engineers, and they will test it for a coupleof weeks to determine if the parts are the correct part needed for thatelevator and we will secure their approval, thereafter we will issue ourinvoices and delivery receipts.

Q: This trouble callreports, are these in writing?

A: Yes, sir. These are in writing and these are beingwritten within that day.

Q: Within the day of?

A: Of the trouble. And have it received by the duly personnel ofSt. Luke's Cathedral.

Q: And who prepared thistrouble call reports?

A: The technician whoactually checked the elevator.

Q: When do the partsbeing installed?

A: On the same date theybrought the parts on the project cite.

Q: You mentioned salesinvoice and delivery receipts. Whoprepared these invoice?

A: Those were prepared byour inventory clerk under my supervision?

Q: How about thedelivery receipts?

A: Just the same.

Q: When would thesales invoice be prepared?

A: After the approvalof the building engineer.

Q: But at the time thatthe sales invoice and delivery receipts were being prepared after the approvalof the building engineer, what happened to the parts? Were they already installed or what?

A: They were alreadyinstalled.

Q: Now, why would theparts be installed before the preparation of the sales invoice and the deliveryreceipts?

A: There was an agreement between the building engineer and our servicemanager that the elevator should be running in good condition at all times,breakdown should be at least one day only. It cannot stop for more than a day.^21cra

On cross examination, Sua testified that the procedure wasfollowed on the authority of a verbal agreement between petitioner's servicemanager and respondent's engineer, thus:chanroblesvirtuallawlibrary

Q: So, youmean to say that despite the fact that material are expensive you immediately installed theseequipments without the prior approvalof the board?

A: Thereis no need for the approval of the board since there is a verbal agreement between the building engineerand the Hyatt service managerto have the elevator run.

Q: Asidefrom the building engineer, there is a building administrator?

A: No,ma'am. He is already the building administrator and the building engineer. That is engineer Tisor.

Q: Andwith regard to the fact that the delivery receipts were acknowledged by the engineer, is that true?

A: Yes,ma'am.

Q: Youalso mentioned earlier that aside from the building engineer, the receptionist and guards are also authorized.Are you sure that they areauthorized to receive the delivery receipts?

A: Yes,ma'am. It was an instruction given by Engineer Tisor, the building engineer and also the buildingadministrator to have it received.

Q: So, allthese agreements are only verbally, it is not in writing?

A: Yes,ma'am.^22cra

In its petition, petitioner claims that because of the special circumstances of the building being a hospital, the procedure actually followed since October 1, 1994 was as follows:chanroblesvirtuallawlibrary

1. Whenever any of the fourelevators broke down, the administrative officers, security guard or thereceptionist of respondent called petitioner by telephone;

2. Petitioner dispatched immediately atechnician to the St. Luke's Cathedral Heights Building to check the trouble;

3. If the breakdown could be repairedwithout installation of parts, repair was done on the spot;

4. If the repair needed replacement ofdamaged parts, the technician went back to petitioner's office to get thenecessary replacement parts;

5. The technician then returned to the St.Luke's Cathedral Heights Building and installed the replacement parts andfinished the repair;

6. The placement parts, which wereinstalled in the presence of the security guard, building engineers orreceptionist of respondents whoever was available, were indicated in thetrouble call report or sometimes in the delivery receipt and copy of the saidtrouble call report or delivery receipt was then given to the blue securityguard, building engineers or receptionist, who duly acknowledged the same;

7. Based on the trouble call report or thedelivery receipts, which already indicated the replacement parts installed andthe services rendered, respondent should prepare the purchase order, but thisstep was never followed by respondent for whatever reason;

8. In the meantime, the elevator was testedfor a couple of weeks to see if the replacement parts were correct and theapproval of the building engineers was secured;

9. After the building engineers gave theirapproval that the replacement parts were correct or after the lapse of twoweeks and nothing was heard or no complaint was lodged, then the correspondingsales invoices and delivery receipts, if nothing had been issued yet, wereprepared by petitioner and given to respondent, thru its receptionists orsecurity guards;

10. For its purposes, respondent shouldcompare the trouble call reports or delivery receipts which indicated thereplacement parts installed or with the sales invoices and delivery receipts toconfirm the correctness of the transaction;

11. If respondent had any complaint thatthe parts were not actually installed or delivered or did not agree with theprice of the parts indicated in the sales invoices, then it should bring itscomplaint or disagreement to the attention of petitioner. In this regard, no complaint or disagreementas to the prices of the spare parts has been lodged by respondent.^23cra

In varying language, our Rules of Court, in speaking of burden of proof in civil cases, states that each party must prove his own affirmative allegations and that the burden of proof lies on the party who would be defeated if no evidence were given on either side. Thus, in civil cases, the burden of proof is generally on the plaintiff, with respect to his complaint.²⁴ In the case at bar, it is petitioner's burden to prove that it is entitled to its claims during the period in dispute.

After an extensive review of the records and evidence on hand, this Court rules that petitioner has failed to discharge its burden.

This Court finds that the testimony of Sua alone is insufficient to prove the existence of the verbal agreement, especially in view of the fact that respondent insists that the SOP should have been followed. It is an age-old rule in civil cases that one who alleges a fact has the burden of proving it and a mere allegation is not evidence.^25cra

The testimony of Sua, at best, only alleges but does not prove the existence of the verbal agreement. It may even be hearsay. It bears stressing, that the agreement was supposedly entered into by petitioner's service manager and respondent's building engineer. It behooves this Court as to why petitioner did not present their service manager and Engineer Tisor, respondent's building engineer, the two individuals who were privy to the transactions and who could ultimately lay the basis for the existence of the alleged verbal agreement. It should have occurred to petitioner during the course of the trial that said testimonies would have proved vital and crucial to its cause. Therefore, absent such testimonies, the existence of the verbal agreement cannot be sustained by this Court.

Moreover, even assuming arguendo, that this Court were to believe the procedure outlined by Sua, his testimony²⁶ clearly mentions that prior to the preparation of the sales invoices and delivery receipts, the parts delivered and installed must have been accepted by respondent's engineer or building administrator. However, again, petitioner offered no evidence of such acceptance by respondent's engineer prior to the preparation of the sales invoices and delivery receipts.

This Court is not unmindful of the fact that petitioner also alleges in its petition that the non-observance of the SOP was the practice way back in 1994 when petitioner started servicing respondent's elevators. On this note, petitioner argued in the following manner:chanroblesvirtuallawlibrary

Andmost importantly, the Court of Appeals failed to appreciate that the partsbeing sought to be paid by petitioner in the Complaint were delivered andinstalled during the period from April 1997 to July 1998, which followed thesame actual procedure adopted since October 1, 1994. Based on the same procedureadopted because of the special circumstances of St. Luke's Cathedral HeightsBuilding being a hospital, respondent has paid the replacement parts installedfrom October 1994 to March 1997. Never did respondent question the adoptedactual procedure from October 1994 to March 1997. x x x^27cra

Was the procedure claimed by petitioner the adopted practice since 1994? This Court rules that other than the foregoing allegation, petitioner has failed to prove the same. A perusal of petitioner's Formal Offer of Evidence²⁸ would show that the only documents presented by it are sales invoices, trouble call reports and delivery receipts, all relating to the alleged transactions between 1997 to 1998. It is unfortunate that petitioner had failed to present in the RTC the documents from 1994 to 1996 for it may have proven that the non-observance of the SOP was the practice since 1994. Such documents could have shown that respondent had paid petitioner in the past without objection on similar transactions under similar billing procedures. The same would have also validated petitioner's claim that the secretary and security guards were all authorized to sign the documents. Unfortunately, for petitioner's cause, this Court has no basis to validate its claim, because other than its bare allegation in the petition, petitioner offers no proof to substantiate the same.

By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.²⁹ The absence of any of the essential elements will negate the existence of a perfected contract of sale. In the case at bar, the CA ruled that there was no perfected contract of sale between petitioner and respondent, to wit:chanroblesvirtuallawlibrary

Asidefrom the absence of consent, there was no perfected contract of sale becausethere was no meeting of minds upon the price. As the law provides, the fixingof the price can never be left to the discretion of one of the contractingparties. In this case, the absence of agreement as to the price is evidenced bythe lack of purchase orders issued by CHBCAI where the quantity, quality andprice of the spare parts needed for the repair of the elevators are stated. Inthese purchase orders, it would show that the quotation of the cost of thespare parts earlier informed by Hyatt is acceptable to CHBCAI. However, asrevealed by the records, it was only Hyatt who determined the price, withoutthe acceptance or conformity of CHBCAI. From the moment the determination ofthe price is left to the judgment of one of the contracting parties, it cannotbe said that there has been an arrangement on the price since it is notpossible for the other contracting party to agree on something of which he doesnot know beforehand.^30cra

Based on the evidence presented in the RTC, it is clear to this Court that petitioner had failed to secure the necessary purchase orders from respondent's Board of Directors, or Finance Manager, to signify their assent to the price of the parts to be used in the repair of the elevators. In Boston Bank of the Philippines v. Manalo,³¹ this Court explained that the fixing of the price can never be left to the decision of one of the contracting parties, to wit:chanroblesvirtuallawlibrary

A definite agreementas to the price is an essential element of a binding agreement to sell personalor real property because it seriously affects the rights and obligations of theparties. Price is an essential element in the formation of a binding andenforceable contract of sale.The fixing of the price can never be left to the decision of one of thecontracting parties. But a price fixed by one of the contracting parties, ifaccepted by the other, gives rise to a perfected sale.³²

There would have been a perfected contract of sale had respondent accepted the price dictated by petitioner even if such assent was given after the services were rendered. There is, however, no proof of such acceptance on the part of respondent.

This Court shares the observation of the CA that the signatures of receipt by the information clerk or the guard on duty on the sales invoices and delivery receipts merely pertain to the physical receipt of the papers. It does not indicate that the parts stated were actually delivered and installed. Moreover, because petitioner failed to prove the existence of the verbal agreement which allegedly authorized the aforementioned individuals to sign in respondent's behalf, such signatures cannot be tantamount to an approval or acceptance by respondent of the parts allegedly used and the price quoted by petitioner. Furthermore, what makes the claims doubtful and questionable is that the date of the sales invoice and the date stated in the corresponding delivery receipt are too far apart as aptly found by the CA, to wit:chanroblesvirtuallawlibrary

Further, We note thatthe date stated in the sales invoice vis-á-vis the date stated in thecorresponding delivery receipt is too far apart. For instance, Delivery ReceiptNo. 3492 dated February 13, 1998 has a corresponding Sales Invoice No. 7147dated June 30, 1998. What puts doubt to this transaction is the fact that thesales invoice was prepared only after four (4) months from the delivery. Theconsiderable length of time that has lapsed from the delivery to the issuanceof the sales invoice is questionable. Further the delivery receipts werereceived months after its preparation. In the case of Delivery Receipt No. 3850dated November 26, 1997, Gumisad received this only on July 20, 1998, or aftera lapse of eight (8) months. Such kind of procedure followed by Hyatt iscertainly contrary to usual business practice, especially since in this case,it involves considerable amount of money.^33cra

Based on the foregoing, the CA was thus correct when it concluded that "the Service Agreement did not give petitioner the unbridled license to purchase and install any spare parts and demand, after the lapse of a considerable length of time, payment of these prices from respondent according to its own dictated price."^34cra

Withal, this Court rules that petitioner's claim must failfor the following reasons: first,petitioner failed to prove the existence of the verbal agreement that wouldauthorize non-observance of the SOP; second,petitioner failed to prove that such procedure was the practice since 1994; and,third, there was no perfectedcontract of sale between the parties as there was no meeting of minds upon theprice.

To stress, the burden of proof is on the plaintiff. He must rely on the strength of his case and not on the weakness of respondent's defense. Based on the manner by which petitioner had presented its claim, this Court is of the opinion that petitioner's case leaves too much to be desired.

WHERFORE, premises considered, the petition is DENIED. The April 20, 2006 Decision and July 31, 2006 Resolution of the Court of Appeals, in CA-G.R. CV No. 80427, are AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

ANTONIO EDUARDO B. NACHURA
Associate Justice

ROBERTO A. ABAD
Associate Justice

JOSE CATRAL MENDOZA
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

ANTONIO T. CARPIO
Associate Justice
Second Division, Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

RENATO C. CORONA
Chief Justice