G.R. No. 182946 ; October 5, 2011
ALCATEL PHILIPPINES, INC., Petitioner, vs. I.M. BONGAR & CO., INC. and STRONGHOLD INSURANCE CO., INC., Respondents.

FACTS

Philippine Long Distance Telephone Company (PLDT) engaged Alcatel Philippines, Inc. (Alcatel) for civil works on its Fast Track Project. On June 20, 1991, Alcatel subcontracted with I.M. Bongar and Co., Inc. (Bongar) for the construction of manholes and conduits for ₱12,047,407.00, giving a 20% down payment. Bongar, with Stronghold Insurance Co., Inc. (SIC) as surety, posted a Performance Bond and an Advance Payment Bond. The contract, effective July 29, 1991, required completion within 90 days. Bongar fell behind schedule, delivered inferior work, and failed to complete by October 29, 1991. After submitting a new target of May 31, 1992, Bongar stopped work on April 20, 1992, forcing Alcatel to take over. Alcatel terminated the contract and demanded liabilities from Bongar and SIC. Upon their refusal, Alcatel filed a damages case. The Regional Trial Court (RTC) ordered Bongar and SIC to pay Alcatel jointly and severally for uninstalled materials (₱919,471.10) and attorney’s fees and costs (₱500,000.00), but denied Alcatel’s claims for overpayment (₱500,482.41) and additional completion costs (₱1,098,208.02) for lack of evidence. The Court of Appeals (CA) affirmed but deleted the attorney’s fees award because, while stated in the dispositive portion, it was not discussed in the body of the decision. Alcatel appealed.

ISSUE

1. Whether the CA erred in deleting the award of attorney’s fees.
2. Whether the CA erred in denying Alcatel’s claims for a refund of overpayment and payment of additional completion costs.

RULING

1. On the award of attorney’s fees: The Supreme Court PARTLY GRANTED the petition. It held that the CA erred in deleting the award. While the RTC did not specifically discuss the basis for attorney’s fees in the body of its decision, its factual findings clearly supported such an award under Article 2208 of the Civil Code. The RTC found that Bongar persistently violated the contract by failing to complete the work on time, requesting a seven-month extension for a three-month project, and refusing to return uninstalled materials, compelling Alcatel to litigate to protect its interest. Thus, the award was reinstated.
2. On the claims for overpayment and additional costs: The Supreme Court upheld the CA and RTC’s denial of these claims. Alcatel argued that Bongar’s failure to specifically deny the claims in its answer constituted an admission. However, the Court found that Bongar vehemently disputed the claims in its answer, and Alcatel failed to substantiate them with sufficient evidence, such as receipts for the alleged overpayments and reprocurement costs. The burden of proof was on Alcatel, and its belief that proof was unnecessary due to Bongar’s pleading was unfounded.
DISPOSITIVE PORTION: The Court SET ASIDE the CA decision and REINSTATED the RTC decision dated September 24, 2001.