GR 171312; (February, 2008) (Digest)
G.R. No. 171312 ; February 4, 2008
SPS. LINO FRANCISCO & GUIA FRANCISCO, petitioners, vs. DEAC CONSTRUCTION, INC. and GEOMAR A. DADULA, respondents.
FACTS
The Spouses Francisco engaged DEAC Construction, Inc. to build a residential building for a contract price of P3,500,000.00. Construction commenced in October 1994 without the required building permit, leading to a criminal complaint against Lino Francisco for illegal construction. The permit was eventually issued in March 1995 after DEAC submitted amended plans, which contained a forgery of Guia Francisco’s signature. Subsequently, the Office of the Building Official issued a Notice of Violation against the owner due to several deviations from the approved plans, including a reduced setback from the property line and the covering of a required open patio.
The Spouses Francisco, through counsel, formally complained of these infractions, including the lack of a permit at the start, the forgery, deviations from plans, and poor workmanship. They eventually filed a case seeking rescission of the contract and damages. The Regional Trial Court (RTC) ruled in their favor, ordering partial rescission and awarding moral and exemplary damages and attorney’s fees. The Court of Appeals (CA) reversed the RTC, upholding DEAC’s monetary claims against the spouses.
ISSUE
Whether the Court of Appeals erred in reversing the RTC’s decision which found DEAC to have violated the construction contract and the National Building Code, thereby justifying rescission and an award of damages in favor of the Spouses Francisco.
RULING
The Supreme Court granted the petition, reversing the CA and reinstating the RTC’s decision. The Court found that DEAC committed fundamental breaches of the construction contract. Starting construction without the requisite building permit was a violation of law (PD 1096) and the contract itself, exposing the owners to criminal liability. The forgery of Guia Francisco’s signature on the amended plans to secure the permit was a fraudulent act that vitiated consent.
More critically, the deviations from the approved plans, particularly the reduction of the setback and the closing of the open patio, constituted violations of the National Building Code. These were not minor alterations but material changes that affected the structure’s legality and the owners’ proprietary rights. The Court emphasized that a construction contractor is bound to follow the approved plans and specifications. DEAC’s unilateral changes, undertaken without the owners’ written consent as required by the contract, amounted to a substantial breach. This breach went to the very essence of the agreement, warranting rescission under Article 1191 of the Civil Code. The award of damages by the RTC was proper due to the fraud, bad faith, and the palpable violation of the owners’ rights committed by DEAC.