G.R. No. 138700 ; June 9, 2004
Mindanao State University, petitioner, vs. Roblett Industrial and Construction Corp., et al., respondents.

FACTS

Mindanao State University (MSU) entered into two construction contracts with Roblett Industrial and Construction Corporation (Roblett) in 1974 and 1976 for a Student Center/Cafeteria and a Girls Dormitory/Recreation Hall, respectively. The projects experienced suspensions due to changes in MSU’s presidency and a policy requiring Board of Regents approval for contracts. The contract price for the first project was escalated, and a performance bond was later issued by Quazar Insurance Agency, as agent for Paramount Insurance Corporation, to secure Roblett’s obligations. MSU alleged that Roblett eventually abandoned the projects after incurring delays and receiving overpayments, particularly claiming that for the first project, Roblett had drawn 97% of the escalated price for only 67% accomplishment.
MSU filed a complaint for sum of money and damages against Roblett and Paramount Insurance, seeking refunds for alleged overpayments, enforcement of the performance bond due to delay, and damages. Roblett denied abandoning the projects and being overpaid, countering that the suspensions and delays were attributable to MSU’s own administrative actions and changes in leadership.

ISSUE

The core issue is whether Roblett is liable for overpayment, delay, and breach of contract, justifying rescission and damages, and whether Paramount Insurance is liable under the performance bond.

RULING

The Supreme Court denied MSU’s petition and affirmed the lower courts’ dismissal of the complaint. The legal logic centered on the burden of proof and the principle that he who alleges must prove. MSU failed to present clear and convincing evidence to substantiate its claim of overpayment. The Court noted that the alleged overpayment was premised on a report (the Zozobrado Committee Report) that assessed the project’s accomplishment before the MSU Board of Regents approved the price escalations. Since the Board subsequently approved these escalations, the basis for computing any overpayment became unclear and unproven.
Furthermore, the Court found that MSU did not successfully refute the trial court’s findings attributing the project suspensions and delays to MSU’s internal administrative changes and policy shifts. Roblett’s obligation to proceed was contingent on a “Notice to Proceed,” and the evidence indicated that the delays were caused by MSU’s actions. Consequently, MSU failed to indubitably prove that Roblett welched on its contractual obligations, rendering discussions on rescission and damages unnecessary. Regarding the performance bond, the Court found no need to rule on its enforcement due to the failure to prove breach. It also noted the trial court’s finding that the bond might be unenforceable as the agent, Quazar, exceeded its authority and the principal, Paramount, did not ratify it.