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Tan vs.

GVT Engineering Services


G.R. no. 153057 Aug. 7, 2006
Austria-Martinez, J.

Facts:

- Spouses George and Susan Tan (the Spouses) entered into a contract with GVT Engineering
Services (GVT), through its owner/manager Gerino Tactaquin (Tactaquin) for the construction of
their residential house at La Vista. The construction price was P1.7M. The Spouses also hired
Engineer Rudy Cadag (Cadag) to supervise the construction.
o In the course of the construction, however, the Spouses made several changes and caused
the deletion of several items in the GVT’s scope of work. This resulted in differences
between the two, and eventually, the latter stopped the construction of the house.
- GVT, through Tactaquin, filed a complaint for specific performance and damages against the
Spouses and Cadag, contending that because of the changes made by the latter, the former had to
borrow money; that the Spouses deleted several portions of their contract and later awarded it to
other contractors; and that the Spouses caused unreasonable delay in the delivery of the materials.
o The Spouses answered that GVT performed several defective works; that they had to
delete and hand it to other contractors to avert further losses; that the changes made were
agreed by both parties; and that GVT, being a single proprietorship, had no legal
personality in a civil action.
- RTC: found for GVT; ordered the Spouses to pay GVT the sum representing the balance of the
contract price, the 5% retention fee, moral damages, attorney’s fees, and litigation expenses.
- CA: affirmed with modifications; deleted the award for MD, attorney’s fees and litigation
expenses, and dismissed the case against Cadag.

Hence, this appeal.

Held:

- It is evident by the allegations in the complaint that it is not actually GVT that brought suit, but
Tactaquin. Hence, there can be no issue as to the legal personality of plaintiff..
o Averments in the complain refer to plaintiff as a natural person. Also, there was a prayer
for moral damages, which is available only for natural persons.
- Both the RTC and CA gave credence to the averments of GVT.
o Examination of records show that the Spouses, indeed, have caused such changes in the
contract and that GVT has in fact shown its refusal to give consent to the changes as
evidenced by the minutes of the meeting held among the representatives of both sides.
- The Spouses are liable for damages for having breached their contract with respondent.
o Art. 1234 CC if the obligation has been substantially performed in good faith, the
obligor may recover as though there had been a strict and complete fulfillment less
damages suffered by the obligee.
o Since GVT substantially performed in GF, it shall be entitled to the remaining contract
price. (96% of the contract price = 74% where they left off + 22% from those deleted
parts of the contract that the Spouses awarded to other contractors)
o GVT is also entitled to the 5% retention fee (as per their contract) for the breach was
made by the Spouses. However, since GVT was only able to establish an amount of
retention fee which was less than what was awarded by the RTC, the same should be
lessened proportionately.
- Cadag is not part of the contract between the two. Considering that the cause of action was breach
of contract, he cannot be made to answer for the Spouses’ default.
- Cadag was employed by the Spouses to supervise the construction. Acting as such, his role is
merely that of an agent.
o The essence of agency being the representation of another, it is evident that the
obligations contracted are for and on behalf of the principal. A consequence of this
representation is the liability of the principal for the acts of his agent performed within
the limits of his authority that is equivalent to the performance by the principal himself
who should answer therefor.
o Since there is no allegation that Cadag exceeded his authority, all his acts are considered
as those of the Spouses. Therefore, the latter should be responsible.

Appealed decision of the CA affirmed with Modification.