GR 156251; (April, 2007) (Digest)
G.R. No. 156251 . April 27, 2007.
PHILIPPINE REALTY HOLDINGS CORPORATION, Petitioner, vs. FIREMATIC PHILIPPINES, INC., Respondent.
FACTS
Petitioner Philippine Realty Holdings Corporation (PRHC) entered into two Construction Agreements with respondent Firematic Philippines, Inc. for the installation of a sprinkler system and a fire alarm system in the Tektite Towers project. The contracts incorporated technical specifications requiring that equipment bear labels from an internationally recognized testing laboratory and comply with NFPA standards. After completion, PRHC refused full payment, alleging that Firematic installed defective and non-conforming fire pumps not listed by Underwriters Laboratories (UL) as required.
Firematic filed a complaint for sum of money to collect the balance. PRHC counterclaimed, seeking reimbursement for overpayments and damages, arguing the installed Peerless fire pumps were defective and non-compliant. The trial court ruled for Firematic, ordering PRHC to pay the balance. The Court of Appeals affirmed, finding that PRHC failed to substantiate its claim of defective installation and that Firematic substantially performed its obligations.
ISSUE
Whether the Court of Appeals erred in affirming the trial court’s decision that Firematic was entitled to payment despite allegations of installing non-conforming and defective fire pumps.
RULING
The Supreme Court denied the petition and affirmed the appellate court’s decision. The core legal logic rests on the burden of proof in civil cases and the principle of substantial performance. PRHC, as the party alleging breach of contract, carried the burden to prove by preponderance of evidence that Firematic installed defective and non-compliant equipment. The Court found that PRHC failed to discharge this burden.
The evidence showed that the fire pumps, though not UL-listed, were Peerless-branded and operational. The Bureau of Fire Protection issued a Fire Safety Inspection Certificate, indicating the system’s functionality and compliance. PRHC’s own acceptance and use of the system for years without formal rejection of the pumps weakened its claim of non-conformity. The contract required equipment to be “listed and approved,” but PRHC did not prove that UL listing was an exclusive requirement or that the installed pumps were unapproved for their intended service. Absent clear proof that the pumps were defective or that their specific brand violated the contract’s essential terms, Firematic’s substantial performance entitled it to payment, minus any proven damages for deviations—which PRHC failed to establish. The findings of fact by the lower courts, being supported by evidence, are binding.