Republic of the Philippines
Court of Appeals
Manila
SPECIAL THIRTEENTH DIVISION
BITRADE, INC., CA-G.R. CV NO. 114763
Plaintiff-Appellee,
Members:
– versus - ANTONIO-VALENZUELA, N.G.,
Chairperson
ALIÑO-GELUZ, E.R., and
*
RODRIGO J. CIUDADANO, SAN GASPAR-GITO, E.L., JJ
doing business as proprietor of
SAFE AND GREEN FARM, Promulgated:
Respondent-Appellant. August 15, 2022
x-----------------------------------------------------------------------------------------x
DECISION
ALIÑO-GELUZ, J.:
Before Us is an appeal of the Decision dated August 30, 2019 1
of the Regional Trial Court, Branch 25, Biñan, Laguna in Civil Case
No. B-8544, which rendered judgment in favor of Bitrade, Inc.,
(appellee) and ordered Rodrigo J. Ciudadano (appellant) to pay Ten
Million Eight Thousand Nine Hundred Forty-Six Pesos
(P10,008,946.00) and Two Hundred Fifty Thousand Pesos
(P250,000.00) as attorney's fees to the appellee.
*
Vice J. Dela Rosa (on leave), per Office Order No. 362-22-RSF dated August 2, 2022.
1
Rollo, pp. 85-93.
CA-G.R. CV NO. 114763 Page 2
Decision
FACTS OF THE CASE
On December 5, 2009, the appellant signed a purchase order
agreement with the appellee for the purchase of various poultry
equipment in the total amount of Fifteen Million Six Hundred Thirty
Two-Thousand Four Hundred Forty-Two Pesos (P15,632,442.00). 2
On January 4, 2010, appellant paid 50% of the amount due, or
a total of Seven Million Eight Hundred Sixteen Thousand Two
Hundred Eleven Pesos (P7,816,211.00).
On February 17, 2010, appellant agreed to purchase again from
the appellee other poultry equipment worth Two Million One Hundred
Fifty-Three Thousand Seven Hundred Twenty-Five Pesos
(P2,153,725.00). Copies of the agreement of the parties on even date
were sent to the appellant but he failed to return any signed copy to
the appellee.
Appellee made a complete delivery and installation of the
various poultry equipment, as indicated in the Purchase Order
Agreement dated December 5, 2009 and Delivery Receipt No. 7391
dated February 26, 2010. The poultry equipment were also certified
to have been duly served and delivered by the appellee, through Dr.
Arnel A. Amurao (Amurao).3
The poultry equipment covered by the Agreement dated
February 17, 2010 was also duly delivered to the appellant, as shown
by Delivery Receipt No. 7444 dated March 30, 2010 4 and as certified
by Dr. Amurao.5
The appellee also delivered one EBM fan part worth Thirty-Nine
Thousand Pesos (P39,000.00) to the appellant on June 21, 2010,
2
Rollo, p. 85; RTC Decision, p. 1.
3
Rollo, p. 86; RTC Decision, p. 2.
4
Exhibit “F”; Records, p. 354.
5
Rollo, p. 86; RTC Decision, p. 2.
CA-G.R. CV NO. 114763 Page 3
Decision
covered by Delivery Receipt No. 7854. 6 This was a replacement part
on account of prior misuse by the appellant.7
The appellee then sent to the appellant the Statement of
Account dated August 3, 2010, covering all the equipment it had
delivered. However, the appellant refused to settle his unpaid
obligation amounting to P10,084,946.00. 8
On October 19, 2010, appellee sent a letter to appellant
demanding that the latter should settle his outstanding obligation
amounting to Ten Million Eight Thousand Nine Hundred Forty-Six
Pesos (P10,008,946.00). 9
The appellant in his answer alleged that the equipment
delivered and installed by the appellee deviated from the approved
standards and specifications required of the Tunnel Ventilation and
Poultry Equipment of San Miguel Foods, Inc. (SMFI), which was
discussed by the appellant to Hermogenes Lara (Lara), the
authorized representative of the appellee during the quotation period.
Also, the delivery made on March 30, 2010 was not requested by the
appellant but rather was made by the appellee's own volition after the
appellant complained that they were not up to par with the standards
and specifications as agreed upon during negotiations. 10
Ruling of the Regional Trial Court
On August 30, 2019, the court a quo rendered the assailed
decision, the dispositive portion of which reads-
“WHEREFORE, judgment is hereby rendered ordering
the defendant Rodrigo Ciudadano to pay the plaintiff Bitrade,
Inc. the following:
6
Exhibit “G”; Records, p. 355.
7
Id.
8
Id.
9
Id.
10
Rollo, pp. 86-87; RTC Decision, pp. 2-3.
CA-G.R. CV NO. 114763 Page 4
Decision
1. Ten Million Eight Thousand Nine Hundred Forty[-]Six
Pesos (P10,008,946.00) with legal interest from date of
demand until fully paid;
2. Two Hundred [sic]
3. [sic]
4. Two Hundred Fifty Thousand Pesos (P250,000.00) as
attorney's fee.
SO ORDERED.”11
Notably, the RTC, in its earlier Order dated December 5, 2012,
granted the Motion for Issuance of Writ of Preliminary Attachment
filed by the appellee. The Writ of Preliminary Attachment was issued
against any or all of the properties of the appellant sufficient to satisfy
the appellee's demand.12 The RTC denied the appellant's Motion to
Discharge Writ of Preliminary Attachment in its Order dated May 14,
2015. 13
THE ISSUES
In praying that the trial court's decision be overturned, appellant
raises the following issues before this Court, viz:
“A.
The Trial Court committed grave, serious and
reversible errors in fact and in law when it ruled in
favor of plaintiff-appellant [sic] Bitrade and against
defendant-appellant Cuidadano [sic] finding the
latter liable to pay the former the amount of Ten
Million Eight Thousand Nine Hundred Forty[-]Six
Pesos (P10,008,946.00), with legal interest from
date of demand until fully paid, as actual damages,
and Two Hundred Fifty Thousand Pesos
(P250,000.00) as attorney's fees, plus costs of suit.
11
Rollo, p. 93; RTC Decision, p. 9.
12
Rollo, p. 96.
13
Records, p. 255.
CA-G.R. CV NO. 114763 Page 5
Decision
B.
The Trial Court committed grave, serious, and
reversible errors in fact and in law when it did not
dismiss the instant case for lack of legal and factual
basis, and denying defendant-appellant's compulsory
counterclaims.
C.
The Trial Court committed grave, serious, and
reversible errors in fact and in law when it awarded
actual damages and attorney's fees to plaintiff-
appellee Bitrade, despite utter lack of factual and
legal basis.
D.
The RTC Branch 24 committed grave, serious and
reversible errors in fact and in law when it issued the
assailed Order dated 05 December 2012, which
granted plaintiff-appellee's motion for issuance of
writ of preliminary attachment by finding defendant-
appellant guilty of fraud in contracting the debt or
incurring the obligation upon which this action is
brought; and thereafter issuing the writ of preliminary
attachment dated 07 December 2012.
E.
The Trial Court committed grave, serious, and
reversible errors in fact and in law when it issued the
assailed Order dated 14 May 2015 and denied
defendant-appellant's “Motion to Discharge Writ of
Preliminary Attachment” dated 09 February 2015.
CA-G.R. CV NO. 114763 Page 6
Decision
F.
The Trial Court committed grave, serious, and
reversible errors in fact and in law when it issued the
assailed Order dated 30 July 2015 and denied
defendant-appellant's motion for reconsideration of
the Order dated 14 May 2015.”14
THE RULING OF THIS COURT
The appeal is not meritorious.
The appellee has proven and duly established by
preponderance of evidence that it is entitled to the outstanding
balance of P10,008,946.00, to be paid by the appellant. As declared
by the RTC in its Decision, “it appears that the appellee had already
complied with its obligations. Despite demands, appellant had failed
to pay his obligation.”15
The appellant raised the following arguments to justify its
refusal to pay: 1) that there is no complete delivery made by the
appellee, as the equipment delivered and installed were different from
that of the approved standards and specifications required of the
Tunnel Ventilation and Poultry Equipment of SMFI, which standards
and specifications were said to have been discussed to appellee's
representative, Lara, before the quotation was made; and 2) that the
second delivery, covered by the December 5, 2009 Agreement was
not ordered by the appellant and that the appellee voluntarily made
the delivery, after the appellant complained that the equipment
previously delivered and installed were not compliant with the
standards set forth by SMFI.
On the appellant's first argument, We agree with the finding of
the RTC that in the contracts entered into between the parties, there
were no provisions or reference to any of the specifications set forth
14
Appellant's Brief, pp. 14-15; Rollo, pp. 52-53.
15
Rollo, p. 92; RTC Decision, p. 8.
CA-G.R. CV NO. 114763 Page 7
Decision
by SMFI. While the appellant presented during the trial the Award
Letter16 it executed with SMFI containing specifications for a broiler
house, the appellee was not a party to the said document. The basic
principle of relativity of contracts is that contracts can only bind the
parties who entered into it, and cannot favor or prejudice a third
person, even if he is aware of such contract and has acted with
knowledge thereof. Where there is no privity of contract, there is
likewise no obligation or liability to speak about. 17 Simply put, this
Court cannot deem the contents and specifications in the said SMFI
contracts as written into, or incorporated in, the purchase orders
executed between the herein parties.
In order to bolster appellant's argument regarding the SMFI
specifications, appellant, during the trial, presented a handwritten
document titled as Agreement and Warranty (Agreement), signed
between the appellant and Lara, representative of the appellee. The
Agreement contained warranties, such that all equipment would not
be made in China and that the equipment to be supplied would only
take twenty-two days to install, which were not stated in the
December 5, 2009 purchase order. These warranties were
supposedly part of the discussions made between the parties during
the negotiation stage of the agreements. However, the Agreement
does not contain any express reference to the SMFI award. 18 Lara
testified that he had not executed any agreement with the appellant
on behalf of the appellee. Moreover, Lara stated that he had seen
the photocopy of the Agreement for the first time only as an
attachment to the appellant's Answer and that the signature
appearing thereon above his name and the words “BITRADE
REPRESENTATIVE” is not his signature.19
It is a hornbook doctrine that the findings of fact of the trial court
are entitled to great weight on appeal and should not be disturbed
except for strong and valid reasons, because the trial court is in a
better position to examine the demeanor of the witnesses while
16
Records, pp. 438-439.
17
PNB v. Dee, G.R. No. 182128, February 19, 2014; citing Sps. Borromeo v. Court of Appeals,
G.R. No. 169846, March 28, 2008.
18
Records, p. 440.
19
Records, p. 368.
CA-G.R. CV NO. 114763 Page 8
Decision
testifying.20 We therefore yield to the RTC's findings inasmuch as it
did not give probative value to the Agreement 21 allegedly executed
between the appellant and Lara, which was specifically denied by the
latter during his testimony. The appellant's claim that the appellee
was remiss in its obligation because it delivered items that did not
conform with SMFI standards cannot hold water, as the appellant had
failed to establish that the appellee was bound by the terms of such
SMFI award.
The present situation is also covered by the parol evidence rule,
articulated in Section 10, Rule 130 of the Revised Rules of Court:
SEC. 9. Evidence of written agreements. - When the terms of
an agreement have been reduced in 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
(d) The existence of other terms agreed to by the
parties or their successors in interest after the
execution of the written agreement.
The "parol evidence rule" described above forbids any addition
to or contradiction of the terms of a written instrument by testimony or
other evidence purporting to show that, at or before the execution of
the parties' written agreement, other or different terms were agreed
upon by the parties, varying the purport of the written contract. When
an agreement has been reduced to writing, the parties cannot be
20
Tayco v. Heirs of Concepcion Tayco-Flores, G.R. No.168692, December 13, 2010.
21
Exhibit “2”
CA-G.R. CV NO. 114763 Page 9
Decision
permitted to adduce evidence to prove alleged practices, which to all
purposes would alter the terms of the written agreement. Whatever is
not found in the writing is understood to have been waived and
abandoned.22 The subsequent agreement presented by the appellant
does not come under the purview of Section 9(d) of the parol
evidence rule as “terms agreed upon by the parties after the
execution of the agreement.” As discussed, the due execution of the
Agreement23 is questionable as it had been specifically denied by the
alleged signatory, Lara. Moreover, the said document makes no
express reference to the main agreement that it supposedly modifies
or explains. We also note that Lara presented a collection receipt 24
and his Senior Citizen ID25 bearing his signature to prove that his
signature was falsified. More importantly, Lara expounded during
cross-examination that he had not been authorized by the appellee to
enter on its behalf and sign any agreement or warranty, such as the
aforementioned Agreement.26
On the appellant's second argument, there were several judicial
admissions made by the appellant throughout the course of trial
affirming that there had been obligations established between the
parties, and that the appellee has already complied with its
obligations. To recall, the parties had signed the December 5, 2009
purchase agreement and appellant made payment to the appellee
equivalent to 50% of the amount due. Another purchase agreement
had been signed on February 17, 2010 and delivery was made, as
evidenced by Receipt No. 7444 dated March 30, 2010. Appellee had
also delivered one EBM fan part worth P39,000.00 on June 21, 2010.
Appellee then sent to the appellant his Statement of Account dated
August 3, 2010, which contained the precise breakdown of the
delivered items and their total amount, as alleged and proven by the
appellee during the trial.27 We particularly note that these matters
have been duly admitted by the appellant in his Answer, as recounted
by the RTC in the Decision.
22
Alferez v. Spouses Canencia, G.R. No. 244542, June 28, 2021 citing Heirs of the Deceased
Carmen Cruz-Zamora v. Multiwood International Inc., G.R. No. 146428, January 19, 2009.
23
Exhibit “2”; Records, p.440.
24
Exhibit B-1-A and C-1-A.
25
Exhibit Q and Q-1.
26
Rollo, p. 88; RTC Decision, p. 4.
27
Rollo, p. 91; RTC Decision, p. 7.
CA-G.R. CV NO. 114763 Page 10
Decision
A party who judicially admits a fact cannot later challenge the
fact as judicial admissions are a waiver of proof; production of
evidence is dispensed with. A judicial admission also removes an
admitted fact from the field of controversy. Consequently, an
admission made in the pleadings cannot be controverted by the party
making such admission and are conclusive as to such party, and all
proofs to the contrary or inconsistent therewith should be ignored,
whether objection is interposed by the party or not. The allegations,
statements or admissions contained in a pleading are conclusive as
against the pleader. A party cannot subsequently take a position
contrary of or inconsistent with what was pleaded. 28
Accordingly, it is basic that a contract is the law between the
parties. Obligations arising from contracts have the force of law
between them and should be complied with in good faith. 29 As it was
duly established during the trial that over ten million pesos worth of
equipment has already been delivered to the appellant, it would be
unjust enrichment on their part if they refuse to pay for the said
amount.
Finally, on the award of attorney's fees under Article 2208 by
the RTC, We disagree with the award made by the RTC. The grant of
attorney's fees demands factual, legal, and equitable justification to
avoid speculation and conjecture surrounding the grant thereof. 30 It is
therefore required for the courts to clearly and distinctly set forth in
their decisions their factual findings for the basis of the award. 31 The
Court's pronouncement in Benedicto v. Villaflores32 elucidated the
rationale on why courts must explain their decision for granting
attorney's fees:
28
Alfelor v. Halasan, G.R. No.165987, March 31, 2006.
29
IP E-Game Ventures, Inc., v. Tan, G.R. No. 239576, June 30, 2021.
30
KLM Royal Dutch Airlines v. Tiongco, G.R. No. 212136, October 4, 2021.
31
Id., See also CIVIL CODE, Article 2208.
32
G.R. No. 185020, October 6, 2010.
CA-G.R. CV NO. 114763 Page 11
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“It is settled that the award of attorney's fees is the exception
rather than the general rule; counsel's fees are not awarded
every time a party prevails in a suit because of the policy that
no premium should be placed on the right to litigate. Attorney's
fees, as part of damages, are not necessarily equated to the
amount paid by a litigant to a lawyer. In the ordinary sense,
attorney's fees represent the reasonable compensation paid to
a lawyer by his client for the legal services he has rendered to
the latter; while in its extraordinary concept, they may be
awarded by the court as indemnity for damages to be paid by
the losing party to the prevailing party. Attorney's fees as part
of damages are awarded only in the instances specified in
Article 2208 of the Civil Code. As such, it is necessary for
the court to make findings of fact and law that would
bring the case within the ambit of these enumerated
instances to justify the grant of such award, and in all
cases it must be reasonable.” [Emphasis supplied]
In the RTC Decision, the RTC indicated that “the plaintiff
[appellee] was forced to litigate and bring this suit against defendant
[appellant] to enforce a valid claim. However, to the mind of the
Court, under the circumstances prevailing, the amount of
P250,000.00 is fair and reasonable”.
As held in Belmonte v. Magas33, “[e]ven when a claimant is
compelled to bring his cause to court or incur expenses to protect his
rights, attorney's fees still may not be awarded as part of damages
where no sufficient showing of bad faith could be reflected in a party's
persistence in a case other than an erroneous conviction of the
righteousness of his cause.” We note that the RTC Decision is bereft
of any discussion as to the evident bad faith on the part of the
appellant in his dealings with the appellee. The appellant, though
mistaken, had set forth his allegations and defenses in accordance to
his understanding as to what exactly are the obligations of the parties
pursuant to their agreements. Thus, in the absence of the factual,
legal and equitable justification for the award of attorney's fees in the
RTC Decision, We rule that the award must be deleted.
33
G.R. No. 240482, May 5, 2021.
CA-G.R. CV NO. 114763 Page 12
Decision
WHEREFORE, the appeal is DENIED. The Decision dated
August 30, 2019 of the Regional Trial Court Branch 25, Biñan,
Laguna in Civil Case No. B-8544 is hereby AFFIRMED with
MODIFICATION in that the amount of P250,000.00 as attorney's fees
in favor of Bitrade, Inc., is hereby DELETED.
SO ORDERED.
EMILY R. ALIÑO-GELUZ
Associate Justice
WE CONCUR:
NINA G. ANTONIO-VALENZUELA
Associate Justice
EMILY L. SAN GASPAR-GITO
Associate Justice
CERTIFICATION
Pursuant to Article VIII, Section 13 of the Constitution, it is hereby
certified that the conclusions in the above decision were reached in
consultation before the case was assigned to the writer of the opinion of
the Court (Sec. 5, Rule 8, RIRCA [a]).
NINA G. ANTONIO-VALENZUELA
Associate Justice
Chairperson, Special Thirteenth Division
CA-G.R. CV NO. 114763 Page 13
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