Summary/Outline of Arguments

for Answer to Complaint

WAWAJVCO INC.
Plaintiff,

-versus-

KWAN SING CONSTRUCTION CORPORATION

and WESTERN GURANTY CORPORATION
Defendants.

Civil Case No. R-MKT-20-0181

Plaintiff WawaJVCO Inc.'s Complaint

MERITS

I. The plaintiff has a right to demand for the payment/return of the amount of
Php 7,979,709.20 from defendant Kwan Sing Construction Corporation and
Western Guaranty Corporation.

Complainant’s Argument Our Response

Breach of contract is the failure without

a. Article 1305 of the Civil Code
provides that "a contract is a meeting
of the minds between two persons
whereby one binds himself, with
respect to the other, to give something
or to render somer service." A contract
is a juridicial convention manifested in
legal form by virtue of which one or
more persons bind themselves in favor
of another or others, or reciprocally, to
the fulfillment of a prestationto give,
to do or not to do. Moreover, parties
are free to establish contractual
stipulations as long as the same is not
contrary to law, morals, public order
justifiable excuse to comply with the terms
of a contract. The breach may be willful or
done unintentionally. It is the failure, without
legal excuse, to perform any promise which
forms the whole or part of the contract
(Nakpil v Manila Towers Dev. Corp. GR
No. 160867 and 160886 [20/09/06]).
The delay in mobilization attributed to KS is
in fact and in truth due to Wawa JV’s own
failure to properly negotiate right of way to
the project site or due to adverse weather
conditions, which is beyond the control of
Kwan Sing. While the delay in the
implementation of lugeon testing is in fact
 and public policy. due to Wawa JV’s own insistence to utilize a
slower more inefficient testing method.
b. As mentioned above, defendant Kwan Hence, KS was not totally without justifiable
Sing failed to begin mobilization and excuse/s in fulfilling its obligation on time.
drilling within the mandatory two (2-)
week period from receipt of the down The case of Rizal Commercial Banking
payment. This is a fundamental breach Corporation (RCBC), vs. Court Of
of the Kwan Sing Contract as its Appeals and Felipe Lustre, G.R. No.
failure to mobilize "defeats the object 133107 March 25, 1999, provides:
of the parties in entering into an Delay in the performance of the
agreement". obligation, however, must be
malicious or negligent. If delay is
only due to inadvertence without any
malice or negligence, the obligor
cannot be held liable under Article
1170 of the Civil Code.

Thus, assuming that respondent Kwan Sing

was guilty of delay in the performance of his
obligation, it cannot be held liable for
damages. There is no imputation, much less
evidence, that Kwan Sing acted with malice
or negligence in failing to comply with his
obligation. Malice and negligence are not
presumed. The party alleging it has the
burden of proof in establishing that the
obligor’s delay in the performance of
obligation is malicious or negligent.

II. The plaintiff has a right to demand for the payment of Php 7,703,760.30 from
defendant WGC.

Complainant’s Arguments Our Response

The case of Estrella Palmares vs. Court of

a. It cannot be denied that defendant Appeals and M.B. Lending
WGC, as provided in the Surety Corporation, G.R. No. 126490, March 31,
Bond, assumed to be absolutely, 1998, provides that:
directly, primarily, and solidarily
liable with defendant Kwan Sing A creditor's right to proceed against
for the return of the down payment the surety exists independently of
(to the extent of Php his right to proceed against the
7,703,760,30). principal. Under Article 1216 of the
Civil Code, the creditor may proceed
 against any one of the solidary debtors
or some or all of them simultaneously.
The rule, therefore, is that if the
obligation is joint and several, the
creditor has the right to proceed even
against the surety alone. Since,
generally, it is not necessary for the
creditor to proceed against a
principal in order to hold the surety
liable, where, by the terms of the
contract, the obligation of the surety
is the same that of the principal,
then soon as the principal is in
default, the surety is likewise in
default, and may be sued
immediately and before any
proceedings are had against the
principal. Perforce, in accordance
with the rule that, in the absence of
statute or agreement otherwise, a
surety is primarily liable, and with the
rule that his proper remedy is to pay
the debt and pursue the principal for
reimbursement, the surety cannot at
law, unless permitted by statute and
in the absence of any agreement
limiting the application of the
security, require the creditor or
obligee, before proceeding against
the surety, to resort to and exhaust
his remedies against the principal,
particularly where both principal and
surety are equally bound.

III. The plaintiff is entitled to payment of interest at double the legal interest
as prescribed by the Monetary Board.

Complainant’s Arguments Our Response

a. Thus, defendant Kwan Sing is liable

for interest, to be computed at a rate
of Six percent (6%) per annum, from
04 December 2019 until 19 December
 2019 (the date that the Notice of
Claim was received by defendant
WGC) while defendants Kwan Sing
and WGC are, jointly and severally,
liable for interest, to be computed at a
rate of twelve percent (12%) per
annum, from 19 December 2019 (the
date that the Notice of Claim was
received by the defendant WGC) until
the amount of Php 7,979,709.20 is
fully paid.
IV. The defendants are liable to the plaintiff for exemplary damages.
Complainant’s Arguments
a. On the part of defendant Kwan Sing,
and aside from failing to make good
upon its own indisputably due
obligation, it has not done anything to
successfully and justifiably compel
defendant WGC to make good upon
the Surety Bond thereby contributing
to the delay.
Our Response
Under the Civil Code, exemplary damages are
due in the following circumstances:
Article 2232. In contracts and quasi-
contracts, the court may award exemplary
damages if the defendant acted in a wanton,
fraudulent, reckless, oppressive, or
malevolent manner.
The failure of KS in complying with its
obligation on time was not due to gross
negligence or fraud or bad faith. Its failure
was due to circumstances beyond its control.
It was primarily and proximately due to the
fault and negligence of Wawa JV as stated in
our response to “I”. Negligence or bad faith or
fraud is not presumed. Mere allegations
without any proof is not sufficient to make the
defendant liable. Absence any evidence, the
defendant is presumed to be in good faith and
not negligent.
Article 2233. Exemplary damages cannot be
recovered as a matter of right; the court will
decide whether or not they should be
adjudicated.
Article 2234. While the amount of the
 exemplary damages need not be proven, the
plaintiff must show that he is entitled to
moral, temperate or compensatory damages
before the court may consider the question of
whether or not exemplary damages should be
awarded.

In this case, the plaintiff failed to prove that it

is entitiled to moral, temperate or
compensatory damages. In fact, it does not
claim any of the said damages in its
complaint. Article 2234 expressly provides
the word “must”, which makes it mandatory
for the plaintiff to show cause that it is really
entitiled first to moral, temperate and
compensatory damages before claiming
exemplary damages. Hence, Wawa JV shall
not be entitled to exemplary damages.

V. Due to the actions and evident bad faith of the defendants, the plaintiff was
constrained to litigate and to engage the services of counsel. Thus, the
defendants should be held, jointly and severally, liable to the plaintiff for
attorney's fees in the amount of at least Five Hundred Thousand Pesos
(Php 500,000.00), or such amount as may be proven during trial, plus costs
of suit and other litigation expenses.

Complainant’s Arguments Our Response

It clearly appears that there is no occasion to

a. reconsider an award of exemplary damages to
plaintiff. It will follow likewise that attorney's
fees should not be imposed.