G.R. No. 113342 . July 30, 2001
M.R. ESCOBAR EXPLOSIVE ENGINEERS, INC., petitioner, vs. COURT OF APPEALS AND HANIL DEVELOPMENT CO., LTD., respondents.

FACTS

In the early 1970s, Hanil Development Co., Ltd. (Hanil) was awarded a contract by the Ministry of Public Works and Highways (MPWH) to construct the Iligan-Cagayan de Oro-Butuan Highway Project. On November 14, 1976, Hanil subcontracted the rock-blasting portion to M.R. Escobar Explosive Engineers, Inc. (Escobar). The compensation was stipulated at P20.00 per cubic meter, with the quantity to be assessed based on the cross-section method if the rocks were solid (par. 9(a) of the agreement), or based on a joint survey if the rocks were soft and removable by ripper (par. 9(b)). Escobar commenced work on January 3, 1977, and was terminated by Hanil on December 15, 1978. Escobar was fully paid for areas A-2 and B-4 but claimed a partial unpaid balance of P1,341,727.40 for areas B-2, B-3, and C-1, contending that the rocks there were solid and should be paid using the cross-section method (the same method used by MPWH to pay Hanil), not the joint survey method used by Hanil. Escobar filed Civil Case No. 35966 for sum of money. The trial court ruled in favor of Escobar, ordering Hanil to pay the claimed amount, attorney’s fees, and costs. During execution proceedings, the trial court issued garnishment and levy orders against Hanil, which the Court of Appeals later voided. The trial court also initially disapproved Hanil’s appeal and granted execution, but the Court of Appeals annulled these orders and reinstated the appeal. During the appeal, Hanil filed an Application for Judgment against the attachment bond posted by Escobar and its insurer. The Court of Appeals initially dismissed Hanil’s appeal but the Supreme Court reversed and directed hearings on the bond application. On August 23, 1993, the Court of Appeals rendered a Decision reversing the trial court, dismissing Escobar’s complaint, and awarding Hanil attorney’s fees and nominal damages under its counterclaim, and further ordering Escobar and its bondsman to pay Hanil attorney’s fees and litigation expenses under the attachment bond. Both parties filed motions for reconsideration, which were denied. Escobar filed the present Petition for Review on Certiorari.

ISSUE

The primary issue raised by petitioner Escobar is whether the Court of Appeals erred in not affirming the trial court’s decision in its favor and in awarding damages and attorney’s fees to Hanil.

RULING

The Supreme Court denied the petition. The Court of Appeals’ decision, which reversed the trial court and dismissed Escobar’s complaint, was upheld. The appellate court found that Escobar failed to substantiate its claim that the rocks in the contested areas (B-2, B-3, C-1) were solid and therefore payable under the cross-section method (par. 9(a) of the subcontract). The evidence showed that the parties had consistently applied the joint survey method (par. 9(b)) for payment during the execution of the work, and Escobar accepted payments based on this method without protest. Furthermore, the Court of Appeals found that Escobar’s claim was based on the erroneous premise that it should be paid identically to how Hanil was paid by the MPWH, ignoring the distinct terms of their own subcontract agreement. Consequently, the dismissal of the complaint was proper. The awards of damages and attorney’s fees to Hanil under its counterclaim and against the attachment bond were also sustained, as they were based on the improper issuance of the writ of attachment and the unfounded suit.