GR 104047; (April, 2002) (Digest)
G.R. No. 104047 ; April 3, 2002
MC ENGINEERING, INC., petitioner, vs. THE COURT OF APPEALS, GERENT BUILDERS, INC. and STRONGHOLD INSURANCE CO., INC., respondents.
FACTS
Petitioner MC Engineering entered into a main contract with Surigao Coconut Development Corporation (SUCODECO) for restoration works. Petitioner then subcontracted the civil works portion to respondent Gerent Builders for a fixed price of P1,665,000. Subsequently, SUCODECO and petitioner amended their main contract, increasing the price for civil works. Gerent demanded a share in this price increase, claiming the subcontract incorporated the main contract’s provision for price readjustment. When petitioner refused, Gerent filed a complaint with a prayer for a writ of preliminary attachment. The trial court initially issued the writ, but the Court of Appeals later nullified it, finding the attachment improperly issued. After trial, the Regional Trial Court dismissed Gerent’s complaint and awarded damages to petitioner against Gerent and its surety, Stronghold Insurance, for the wrongful attachment.
ISSUE
The primary issue is whether respondent Gerent Builders is entitled to a share in the price increase granted in the amended main contract between petitioner and SUCODECO.
RULING
The Supreme Court ruled in favor of petitioner MC Engineering, reversing the Court of Appeals. The legal logic is anchored on the principle of relativity of contracts and the specific terms of the subcontract. The subcontract between petitioner and Gerent was for a fixed, lump-sum price of P1,665,000. It did not contain any stipulation that Gerent would benefit from any future price escalation in the main contract. The subsequent amendment to the main contract, which increased the price for civil works, was a separate agreement between petitioner and SUCODECO. The provision stating “except for the amendment above specified, all the other provisions of the original contract shall remain the same” applied only to the parties to that amended contract—petitioner and SUCODECO. It did not automatically extend benefits to Gerent, a non-party to that amendment. Gerent’s claim was extinguished by its president’s affidavit acknowledging full payment and satisfaction of the subcontract price. Furthermore, the Court affirmed the trial court’s award of nominal damages and attorney’s fees to petitioner. The writ of attachment was wrongfully issued because Gerent’s money claim was unfounded, not being one of the grounds for attachment under the Rules of Court. The surety bond answered for the damages resulting from this wrongful attachment.