Tuesday, December 8, 2015

Breach of contract must be substantial; must be proven.

SANGGUNIANG PANLUNGSOD NG BAGUIO CITY vs. JADEWELL PARKING SYSTEMS CORPORATION, G.R. No. 160025, April 23, 2014; with companion cases: GR 163052; G.R. No. 164107; G.R. No. 165564; G.R. No. 172215; G.R. No. 172216; G.R. No. 173043; G.R. No. 174879; G.R. No. 181488. 

“x x x.

c. On the allegation of Jadewell’s substantial breach of the MOA.

The Baguio City government has repeatedly mentioned that Jadewell had so far installed only 14 parking meters, with only 12 functioning. The COA-CAR Report dated 13 July 2003 enumerated 12 findings,158 a majority of which indicates that Jadewell was remiss in the fulfilment of its obligations under the MOA. While Finding Nos. (1), (2), (3), (4), (5), (8) and (12) of the COA-CAR Report state that Jadewell collected parking fees, Jadewell failed to properly remit the same. Finding No. (11) of the COA-CAR Report states that Jadewell failed to have its parking attendants deputized,159 a condition under the MOA that is also important to the overall objective of the endeavor.

The MOA does not specifically provide for the exact number of parking meters to be installed by Jadewell pursuant to the parties’ objective in regulating parking in the city. Nevertheless, 100 parking spaces were allotted as mentioned in Annex A of the MOA.160 The agreement also obligates Jadewell to have its parking attendants deputized by the DOTC-LTO so that they shall have the authority to enforce traffic rules and regulations in the regulated areas.161 To the Court’s mind, these are two of the most important obligations that Jadewell had to comply with, considering the nature and objective of the agreement it had entered into.

Despite the enumeration of the above-mentioned faults of Jadewell, we do not make a categorical finding that there was substantial breach committed by Jadewell to justify a unilateral rescission of the MOA. We find, however, that the RTC had not properly received evidence that would allow it to determine the extent of the claimed violations of the MOA. Had these violations by Jadewell been proven in a proper hearing, the finding of a substantial breach of the MOA would have been a distinct probability.

Unfortunately, neither the RTC nor the CA provided a clear basis for their rulings on the extent of the breach of the MOA by Jadewell. Save from reiterating the Sanggunian’s litany of violations said to be committed by Jadewell, there was no testimony on record to prove such facts and no indication as to whether the RTC or CA dismissed them or took them at face value.

Whatever the extent of breach of contract that Jadewell may have committed – and the enumeration of Jadewell’s alleged faults in Resolution 37 is quite extensive – the City of Baguio was still duty-bound to establish the alleged breach.

Matters became complicated when the RTC and the CA lumped the issues on the due process violation of Baguio City with Jadewell’s alleged substantial breaches under the MOA, instead of making a clear finding on the existence and extent of such breach. The facts and legal issues were thus muddled.

We find fault in the lower and appellate court’s lapse in examining the issue on Jadewell’s alleged substantial breach. Evidence-taking had to be undertaken by these courts before they could arrive at a judicial conclusion on the presence of substantial breach.

We thus DENY the Petition of the Sanggunian Panlungsod in G.R. No. 160025 and AFFIRM the questioned CA Decision. However, we reject the ruling made by the appellate court that the violations of Jadewell under the MOA were not substantial. We hold that there is no sufficient evidence on record to make such determination.

While Jadewell prays for damages against the public respondent, and while ordinarily we could grant the same, the context of this case prevents us from giving any form of recompense to Jadewell even if the rescission of the MOA did not follow the required legal procedure. This is because it would be appalling to grant Jadewell any award of damages, considering (1) it installed only 14 out of the apparently 100 contemplated parking meters; (2) its employees, private citizens who did not possess any authority from the LTO, were manually collecting parking fees from the public, and (3) it did not, apparently properly remit any significant amount of money to the City of Baguio. These three facts are uncontested, these omissions are offensive to the concept of public service that the residents of Baguio were promised through Jadewell. From its ambiguous responses extant in the records, it is clear that Jadewell does not appear to be an investor who has lost in its investments in the Baguio City project. Thus, we do not award any damages to Jadewell.

X x x.”