GR 151402; (August, 2008) (Digest)
G.R. No. 151402; August 22, 2008
BENGUET CORPORATION, DENNIS R. BELMONTE, EFREN C. REYES and GREGORIO A. FIDER, petitioners, vs. CESAR CABILDO, respondent.
FACTS
Petitioner Benguet Corporation, a mining company, entered into a Contract of Work with respondent Cesar Cabildo, a former employee turned service contractor, for the painting of Mill Buildings and Bunkhouses at its Balatoc mining site, including necessary repairs. The contract, signed on March 23, 1983, specified a detailed price schedule per square meter for various tasks like painting, scraping, and scaffolding. It contained no fixed completion period but included clauses on payment retention, independent contractor status for Cabildo, and a prohibition against subcontracting. Cabildo commenced work on March 7, 1983, even before the formal signing, and received a partial payment for initial accomplishments.
Subsequently, Benguet Corporation prevented Cabildo from proceeding with the exterior painting of the Mill Buildings. Instead, the corporation awarded a separate contract for the same exterior painting work to another individual, Rolando Velasco, who offered a lower price. For the Bunkhouses, Benguet Corporation unilaterally suspended the work, citing the rainy season and the company’s financial difficulties. Cabildo filed a complaint for breach of contract and damages.
ISSUE
Whether petitioners Benguet Corporation and its officers breached the Contract of Work with respondent Cabildo.
RULING
Yes, the petitioners committed a breach of contract. The Supreme Court affirmed the findings of the lower courts. The Contract of Work was a valid and binding agreement. By awarding the contract for the exterior painting of the Mill Buildings—the very subject matter of Cabildo’s contract—to another contractor (Velasco), petitioners actively prevented Cabildo from fulfilling his obligations. This act constituted a clear violation of their contractual commitment. The Court found unpersuasive the petitioners’ claim that the contract covered only interior painting, noting that the contract’s terms and the parties’ conduct indicated otherwise.
Regarding the painting of the Bunkhouses, the Court ruled that the unilateral suspension by Benguet Corporation was unjustified. The Contract of Work contained no provision allowing for suspension due to weather conditions or the company’s financial state. A contract is the law between the parties, and absent a stipulation authorizing suspension, one party cannot arbitrarily halt performance for reasons not contemplated in the agreement. Consequently, this suspension also constituted a breach. The dismissal of the petitioners’ counterclaim was likewise upheld. The Supreme Court denied the petition and affirmed the Court of Appeals’ decision holding petitioners liable for breach of contract.