GR 220211; (June, 2017) (Digest)
G.R. No. 220211. June 5, 2017. EDRON CONSTRUCTION CORPORATION and EDMER Y. LIM, Petitioners, vs. THE PROVINCIAL GOVERNMENT OF SURIGAO DEL SUR, represented by GOVERNOR VICENTE T. PIMENTEL, JR., Respondent.
FACTS
Petitioners Edron Construction Corporation and Edmer Y. Lim filed a complaint for specific performance and damages against the Provincial Government of Surigao del Sur. The petitioners entered into three separate construction agreements with the respondent for public infrastructure projects. They alleged that despite completing the works and receiving Certificates of Final Acceptance, the respondent failed to pay the aggregate balance of ₱8,870,729.67, despite demands. The petitioners later accepted a reduced valuation of ₱4,326,174.50 from a Presidential Flagship Committee, but the respondent still refused payment.
In its Answer, the respondent admitted the contracts but defended non-payment by alleging underruns, defective works, prescription, and petitioners’ non-observance of specifications. More than a year after filing its Answer, the respondent filed a Motion to Dismiss on the ground of failure to state a cause of action, arguing that the petitioners failed to submit a sworn statement attesting to full payment of all labor and materials—a condition for final payment under Paragraph 4.3 of the contracts. The trial court denied this motion.
ISSUE
Whether the Court of Appeals correctly dismissed the complaint for lack of cause of action based on the petitioners’ non-submission of the sworn statement required under the construction agreements.
RULING
The Supreme Court reversed the Court of Appeals and reinstated the trial court’s decision with modification. The legal logic centers on the waiver of defenses under procedural rules. The respondent’s failure to plead the specific defense of non-compliance with the sworn statement requirement in its Answer or in a timely motion to dismiss resulted in the waiver of that defense.
Section 1, Rule 9 of the Rules of Court states that defenses not pleaded in a motion to dismiss or in an answer are deemed waived. The respondent’s Answer raised other defenses—such as no unpaid balance, defective works, and prescription—but did not raise the absence of the sworn statement as a ground for dismissal or a defense. The respondent only raised this particular ground in a Motion to Dismiss filed over a year after its Answer, which was correctly denied by the trial court. Consequently, the respondent was deemed to have waived this defense. The cause of action was properly established through the evidence of completed work, acceptance via Certificates of Final Acceptance, and the respondent’s own judicial admissions. The Supreme Court thus held the petitioners were entitled to the reduced claim of ₱4,326,174.50 with appropriate interest and attorney’s fees.