ChanRobles Virtual law Library
[
NORECO 2 vs. EQUATORIAL SECURITY AGENCY
SECOND DIVISION
Sirs/Mesdames:
Quoted hereunder, for your information, is a resolution of this Court dated JUL 27 2005.
G.R. No. 168297 (NEGROS ORIENTAL 2 ELECTRIC COOPERATIVE (NORECO 2) vs. EQUATORIAL SECURITY AGENCY, INC.)
For resolution is a Petition for Review on Certiorari seeking the reversal of the Court of Appeals Decision [1] cralaw dated 25 February 2005 which affirmed the Decision dated 12 November 2002 of the Regional Trial Court (RTC) of Dumaguete City, Branch 36.
As summarized by the appellate court, the facts of the case are as follows:
On 20 May 1995, plaintiff Equatorial Security Agency, Inc. and defendant Negros Oriental II Electrical Cooperative (NORECO) entered into a Contract for Security Services by virtue of which the former obligated itself to provide security guards for the purpose of maintaining law and order at the latter's various premises, namely: main office at Real Street, Dumaguete City, motor pool at Mangnao, Dumaguete City, Tanjay sub-office at Tanjay, Negros Oriental, Siaton sub-office at Mckinley Street, its substation office at National Highway, all of Siaton, Negros Oriental and sub-office at Bayawan, Negros Oriental. The said security services contract stipulated, among others:
10. Term of the Contract
(This contract supersedes all other agreements and shall be effective on May 22, 1995 and for a period of two (2) years thereafter, unless sooner terminated by either party upon written notice by one to the other thirty (30) days prior to proposed date of termination. Further, after the expiration of this Agreement, or after its termination by either party in accordance with this contract, all claims which may have accrued to either party, prior to the date of expiration or termination shall be respected. There may be a renewal of this contract upon such new terms and conditions to be agreed upon.)
Prior to the termination of the security services contract, plaintiff, in a letter dated 26 September 1996, proposed to defendant for an extension of the term of the contract with a corresponding manifestation that it intends to invest substantially in new equipments for their guards for it to continue providing quality security services to its clients.
On 16 October 1996, both parties executed an Amendment to Contract for Security Services stipulating among others that: the defendant, through its Board of Directors, found plaintiff's proposal as fair and reasonable considering that substantial investments for new equipments for the guards will redound to the protection of defendant's interests; that defendant agrees to extend the contract for another period of five (5) years from the expiry date of the existing contract - or 22 May 1994 -; that the existing contract is amended insofar as the term from May 22, 1997 to May 22, 2002 and all the other conditions thereon remains the same. The pertinent portions of the amendment are as follows:
WHEREAS, the Board of Directors considers the request of the Agency for an extension of five (5) years from May 22, 1997, the expiry date of the existing contract, as reasonable and fair in consideration of the substantial investment for new equipments for the guards which will redound to the protection of the Cooperative's interests.
WHEREAS, the Board of Directors, in accepting the proposal of the Equatorial Security Agency in its session held on October 7, 1996, hereby amends the existing contract aforecited insofar as the Term is concerned from May 22, 1997 to May 22, 2002, with all other conditions thereon remaining the same. The Board is hereby authorized to sign for the Cooperative in this Amended Contract.
In a letter dated 21 March 2000, defendant informed plaintiff that its Board of Directors, during its board meeting conducted on 15 November 1999, has decided to terminate plaintiff's security services effective after thirty (30) days from receipt by plaintiff of the said letter.
On 24 April 2000, plaintiff filed this complaint for Preliminary Injunction, Permanent Injunction, Damages with Temporary Restraining Order against defendant. In its complaint, plaintiff contends that defendant's termination of the security services contract violated the terms and conditions agreed upon by the parties, specifically the extension until 22 May 2002 and that, as a result of the termination, the former stood to lose profits and incur litigation expenses. Plaintiff likewise seeks that it is entitled to the payment of moral and exemplary damages and litigation expenses since defendant's termination was done in bad faith without valid cause besmirching plaintiff's reputation which led to the filing of this case.
In its Answer, defendant avers that it was convinced to amend the contract on the basis of plaintiff's proposal that it will upgrade its security services. However, defendant contends that plaintiff dismally failed to comply with its offer and obligation to upgrade its security services prompting defendant to send a notice to terminate the security services contract. More than that, defendant insists that the notice of termination is in consonance with Section 10 of the contract, that is, both parties agreeing that either of them can preterminate the contract provided written notice is given to the other party thirty (30) days prior to the proposed date of termination.
Trial on the merits ensued and thereafter the court a quo rendered a decision dated 12 November 2002 in favor of the plaintiff. In resolving the issues, the court a quo took into account the lack of factual antecedents or violation of the terms and stipulations on the part of the plaintiff that would warrant the pretermination of the contract. Thus, in the absence of valid and justifiable ground defendant's notice to terminate the contract before the expiration date agreed upon by the parties constitutes a breach entitling plaintiff to damages.
The Court of Appeals affirmed in toto the decision of the lower court.
We affirm the Court of Appeals and the trial court.
At the outset, the petition itself is defective, considering that the legal fees and deposit for costs were paid late on 21 April 2005, due date being 22 March 2005.
The present petition hinges on the determination of the rights of the petitioner to pre-terminate the contract entered into by it and the respondent, pursuant to the express provision of their Contract for Security Services. It must be stressed that this is a factual issue requiring reevaluation and examination of the probative value of evidence presented which is not proper in a petition for review on certiorari. Besides, this issue had already been squarely resolved by the Court of Appeals and we find no impelling reason to set it aside. The Court of Appeals ratiocinated as follows:
Our pivot of inquiry is the correct construction or interpretation of subject contract for security services and its subsequent amendment by the parties.
As a general rule, contractual stipulations should be considered as the law between the parties. However, the Court will also consider the acts of the parties, contemporaneous and subsequent to the contract, to ascertain and judge the real intention of the contracting parties. Several attendant factors in that genre lend support to this finding, to wit: 1) prior to the termination of the original contract, plaintiff-appellee proposed to defendant-appellant for an extension of the term of the contract considering that the former will substantially invest in the business to acquire equipment to be used for their security guards; 2) that defendant-appellant, through its Board of Directors, found the proposal as reasonable and fair and agreed to the extension for another five (5) years on account of the substantial investment what will redound to the benefit of defendant-appellant; 3) that on account of the renewal, plaintiff-appellee substantially invested in the purchase of modern equipment for the security guards assigned to defendant-appellant; and 4) that since the renewal of the contract, plaintiff-appellee supplied security services for more than three (3) years without any complaint from defendant-appellant of its dissatisfaction with the service rendered. These contemporaneous and subsequent acts at the time the parties amended the contract for security services show that the parties intended the duration of the contract for a period of five (5) years without prejudice to a pre-termination due to a valid and justifiable cause, viz failure to comply with the proposal to substantially invest in the purchasing of modern equipment for the security guards assigned at defendant-appellant's offices. Thus, We are not persuaded by defendant-appellant's pretension that the amendment to the term did not take into account the proximate reason for the extension of the term. It would be downright unfair and unjust for plaintiff-appellee to suffer losses after all the financial investments, efforts and the trouble that they had gone through precisely to improve their security services for the benefit of defendant-appellant. In the mind of this Court, what motivated defendant-appellant to amend the contract and extend the term was the proposal of improving security services, said improvement having been substantially complied by plaintiff-appellee herein.
All told, the rescission of a contract will not be permitted for a slight or casual breach, but only for such substantial and fundamental breach as would defeat the very object of the parties in making the agreement; the question of whether a breach of contract is substantial depends upon the attending circumstances. However, in this case, no error was committed by the court a quo in concluding that the plaintiff-appellee complied with the terms and conditions of the contract. As shown by evidence presented during the trial, no breach, substantial or otherwise, was committed by plaintiff-appellee during its provision of security services to defendant-appellant. Not once during the said period were they informed by management of any complaint to warrant a rescission or pre-termination of the contract. From all indications, plaintiff-appellee was able to perform its obligation of providing the required number of security guards and purchasing additional modern equipments to protect defendant-appellant's properties and employees. It would be tantamount to an injustice to the rights of plaintiff-appellee when it is clear that it had faithfully complied with its obligation in accordance with their agreement without any compliance on the part of defendant-appellant as to its performance of its corresponding obligation.
Furthermore, if We allow defendant-appellant to unilaterally pre-terminate the security services contract, this is also in violation of the well-settled rule on mutuality of contracts which provides that the validity or compliance of a contract cannot be left to the will of one of the contracting parties. As it is, a contract must bind both parties, based on the principles (1) that obligations arising from contracts have the force of law between the contracting parties; and (2) that there must be mutuality between the parties based on their essential equality, to which is repugnant to have one party bound by the contract leaving the other free therefrom. The Court does not countenance the unbridled right of defendant-appellant to unilaterally pre-terminate the contract sans valid and justifiable cause especially so when it agreed to extend the term because it found the proposal of plaintiff-appellee to substantial investment on new equipments for the guards as reasonable and fair, hence, making defendant-appellant liable for damages.
It must be stressed that in petitions for review on certiorari, the jurisdiction of the Supreme Court in cases brought before it from the Court of Appeals is limited to reviewing questions of law. For a question to be one of law, it must involve no examination of the probative value of the evidence presented by the litigants. The findings of fact of the appellate court are generally conclusive in this Court, which is not a trier of facts. [2] cralaw Not being a trier of facts, this Court has to accord due credence to the factual conclusions reached by the Court of Appeals and the RTC, especially so that their conclusions are more than amply supported by the evidence.
WHEREFORE, finding no reversible error on the part of the Court of Appeals, the instant petition is hereby DENIED for lack of merit.
SO ORDERED.
Very truly yours,
(Sgd.) LUDICHI YASAY-NUNAG
Clerk of Court
Endnotes:
[1] cralaw Penned by Associate Justice Pampio A. Abarintos with Associate Justices Mercedes Gozo-Dadole and Ramon Bato, Jr., concurring.
[2] cralaw Melchor Custodio v. Rosendo F. Corrado, G.R. No. 146082, 30 July 2004, 435 SCRA 500.
HERE FOR THE LATEST SUPREME COURT JURISPRUDENCE
PHILIPPINE SUPREME COURT DECISIONS
QUICK SEARCH
