Ching v. (Deceased)

CAGUIOA, J.:

Before the Court is a Petition for Review on Certiorari1 (Petition) under Rule 45 of the Rules of Court filed by petitioner Chua Ping Hian, also known as Jimmy Ching (petitioner Ching), against respondent Silverio Manas (respondent Manas), assailing the Amended Decision2 dated October 13, 2011 (assailed Decision) rendered by the Court of Appeals3 (CA) in CA-G.R. CV No. 88099. The Facts and Antecedent Proceedings As narrated by the CA, and as culled from the records of the instant case, the essential facts and antecedent proceedings of the case are as follows: [Petitioner Ching] and his family own several cinemas in Metro Manila. Sometime in July 1997, [respondent Manas] learned that Ching was going to open four theaters in the Sunshine Mall Plaza in Taguig, Metro Manila.

He visited [petitioner] Ching at the latter's office at Spring Cinema, Libertad, Pasay City and introduced himself as a supplier of movie equipments (sic) to Emilio Ching's ([petitioner] Ching's brother) cinemas at Holiday Plaza, Libertad, Pasay City. [Petitioner] Ching informed [respondent] Manas that he needed five complete sets of Simplex Model XL movie projectors for the cinemas at Sunshine Mall. [Respondent] Manas informed [petitioner] Ching that he happened to have Simplex Model XL projectors which are US Rebuilt.

He then invited [petitioner] Ching to his house in Makati where said projectors were stored so that the latter could see the same. Since only four Simplex projectors were available then, [respondent] Manas assured [petitioner] Ching that the fifth set of Simplex Model XL will arrive from the United States anytime. On 15 August 1997, [respondent] Manas and [petitioner] Ching executed the Contract of Sale, the pertinent portions of which reads: x x x x 1 OBJECT OF SALE - The SELLER hereby agrees to sell and deliver to the BUYER "FIVE (5) SETS OF SIMPLEX Model XL 35MM MOVIE PROJECTOR and SOUND REPRODUCER, U.S. REBUILT, each set complete with accessories of accurate and exact fittings, the quatity (sic), full descriptions/specifications of the complete items composing each set are as listed in the list hereto attached ANNEX "A"

and made as integral part hereof; 2 PURCHASE PRICE AND MANNER OF PAYMENT­ For each complete set, the purchase price shall be SIX HUNDRED THIRTY THOUSAND PESOS (P630,000.00), Philippine currency, or the total sum of THREE MILLION ONE HUNDRED FIFTY THOUSAND PESOS (P3,150,000.00) for the entire five (5) complete sets, which stipulated purchase price shall be paid by the BUYER to the SELLER in the following manner: (a) A downpayment of 30% or P945,000.00 upon the signing of this Contract; (b) A second payment of 40% or P1,260,000.00 upon full and complete delivery of all the items above-mentioned at the site to be designated by the BUYER provided the complete delivery is effected on or before Jan. 15, 1998; and (c) The balance of 30% or P945,000.00 after the complete installation, dry run/testing and satisfactory operations of all the units/sets installed. 3 INSTALLATION - The SELLER shall undertake the complete installation of the apparatus/equipment herein purchased at his own expense provided all the wires and materials to be used in the installation shall be for the account of the BUYER.

4 WARRANTY - The SELLER hereby warrants full and satisfactory usefulness of all the apparatus, equipment, parts and accessories for two (2) years counted from the date of their installation.

During said warranty period, any breakdown or malfunction due to the poor quality or manufacturing defects of the main apparatus, its parts and accessories shall be replaced or repaired by the SELLER at his own expense, except xenon and exuter bulbs, switches and meters. 5 DUTY & TAXES - The SELLER hereby warrants to hold the BUYER free and harmless for any duty or taxes that may be assessed by the government on all the articles herein sold. 6 NON-PERFORMANCE OF OBLIGATION - In the event of failure by the SELLER to deliver and install the apparatus/equipment herein purchased, the BUYER shall have the option of rescinding this Contract with damages or institute a legal action for specific performance with damages.

On the other hand, in the event (sic) failure by the BUYER to pay any installment of the herein agreed purchase price when such is already due, the BUYER shall be liable to pay an interest on the amount due at the rate of fourteen (14%) percent per annum. 7 VENUE OF ACTION - In the event of any legal action that may arise from this Contract; the venue shall be in the appropriate court in Pasay City, exclusively. x x x x In anticipation of the signing of the above contract, or on 19 July 1997, [petitioner] Ching paid [respondent] Manas the amount of P945,000.00 as downpayment.

The four sets of Simplex XL projectors were delivered on 22 August 1997. Several other equipments (sic), parts and accessories for the projector sets were delivered within the period of 22 August 1997 until 8 May 1999. [Petitioner] Ching claims that he asked [respondent] Manas to deliver the fifth Simplex projector set and install the projectors.

[Respondent] Manas, not having yet the fifth Simplex XL projector set, prevailed on [petitioner] Ching to receive a Century brand projector. After all, it was intended only to be a standby projector. Because the opening date of his cinemas was fast approaching, [petitioner] Ching agreed.

The Century projector, which in the market is a little higher in price than the Simplex brand, was delivered on 29 November 1998. Despite the clarity of paragraph 3 of the contract, the parties differed in the interpretation thereof. Said paragraph reads: x x x x 3 INSTALLATION - The SELLER shall undertake the complete installation of the apparatus/equipment herein purchased at his own expense provided all the wires and materials to be used in the installation shall be for the account of the BUYER.

x x x x [Respondent] Manas claims to have completed installation of the projectors. On the other hand, [petitioner] Ching asserts that [respondent] Manas failed to completely install the apparatus/equipment prompting him to hire Nelson Ruzgal to do the wiring connections for a fee of P20,000.00. Ruzgal commenced his work on the wirings to make the apparatus/equipments (sic) work on 26 November 1998.

He was assisted by the two projectionists of [petitioner] Ching, Adan Mostera and Lito Pilar. Two days before the scheduled opening of the cinemas, on 23 December 1998, Ruzgal and the projectionists could not light the lamphouses. [Respondent] Manas, who had been observing them, called in his own technician to help.

Since the lamphouse would not light, [respondent] Manas' technician took some parts from the rectifier. After re-installing said parts, the lamphouse lit up. Having observed how [respondent] Manas' technician focused the lamphouses and lit the xenon bulb, Ruzgal and [petitioner] Ching's two projectionists, went to the other theaters to adjust the lamphouses.

Since the adjusting mechanism was found inside the lamphouse and the bulb inside emitted heat, it took them almost an hour to adjust one lamphouse. It took Ruzgal and the projectionists overnight to finish adjusting all ten lamphouses. On 24 December 1998, the trial run of the cinemas was successfully held and the cinemas officially opened on 25 December 1998.

In the first four months after operations, some parts of the projectors started having problems.

[Respondent] Manas was informed of the defects and asked to replace the same but he failed to do so. The defective equipments (sic) and their defects are as follows: 1. Two pieces optical lens malfunctioned, first, in February 1999 and another in March 1999.

Because [respondent] Manas did not replace the same, [petitioner] Ching bought the parts at Star Theater Supply, Inc. 2. Ten pieces lamphouses and one reflector. In March to April 1999, the lamphouses misaligned.

In an attempt to fix the same, one of [petitioner] Ching's projectionists, opened the lamphouse and ended up breaking the reflector inside. Since [respondent] Manas did not repair or replace the same and no spare parts were readily available in the market, [petitioner] Ching contracted Rodegelio Anday to fabricate lamphouses for him for the contract price of P555,000.00. 3.

Ten pieces rectifiers. In April 1999, the rectifiers also malfunctioned due to electrical fluctuations. 4.

One piece projector motor. In late 1999 to early 2000, the projector motor which drives the projector to run and play the movies, did not work To avoid stoppage in the operations of his cinemas, [petitioner] Ching utilized available spare parts from the other cinemas he owned. Sometime in May 1999, [respondent] Manas wrote [petitioner] Ching a notice of full compliance of the terms of the contract of sale.

He also asked Lito Pilar, one of [petitioner] Ching's projectionists to affix his signature thereon. It reads thus: Sir: FULLY COMPLETED AND COMPLIED with the terms of the CONTRACT OF SALE -10 units XL projection film systems of Cinemas 1, 2, 3, 4 - Sunshine Cinema Mall, FTC Complex. LOCATORS 1 2 3 4 Projector Heads Ok Ok Soundheads/Motors Ok Ok Xenon Lamphouses Ok Ok Rectifiers Ok Ok Lenses, Flat/Mascope Ok Ok BOOTH ACCESSORIES Ok Ok Projectionist Adan Mostera Lito Pilar Kindly inspect the whole projection systems of Cinemas 1, 2, 3, 4 and should you find them to your fullest satisfaction, please release the remaining balance (70%) of the Contract of Sale be paid and release to the undersigned.

Thank you. Very respectfully yours, (Sgd.) Silverio M Manas [Petitioner] Ching received a copy of this letter only after he received the summons of the court a quo. On 24 August 1999, [respondent] Manas' lawyer, Redentor A. Salonga, wrote [petitioner] Ching a demand letter, which reads thus: Sir: I have been retained by Mr. Silverio M Manas to take the necessary action to enforce the collection of your account in his favor in the principal amount of P2,205,000.00 which represents the difference between the principal contract price of P3,150,000.00 for certain movie equipment delivered and installed by Mr. Manas and utilized in your movie houses, and your downpayment of P945,000.00.

I understand from Mr. Manas that you proposed to liquidate your account in monthly installments of P250,000.00, which was however, not accepted by Mr. Manas. Through this letter of demand, it is hoped that you will pay, on or before 10 September 1999, the aforesaid principal amount of P2,205,000.00 or propose to Mr. Manas in writing, an acceptable and better schedule of payment for his approval. In default thereof, I shall be left with no other choice but to institute the appropriate legal action not only for the principal but also for interests and damages.

x x x x [Petitioner] Ching, replied through a letter written by his lawyer, Roger L. Em, dated 8 September 1999, the pertinent portion of which reads: x x x x According to Mr. Jimmy Ching, he encountered the following problems in his dealings with Mr. Manas, to wit: 1.) Mr. Ching agreed to pay Mr. Manas a second payment of P1,260,000.00 provided complete delivery of the object of the sale is effected on or before 15 January 1998. Actual delivery of the items was completed only on 8 May 1999. Mr. Ching suffered damages on account of the long delayed complete delivery.

2.) Mr.

Manas made express warranty for full and satisfactory usefulness of all apparatus, equipment, parts and accessories for two (2) years from date of installation/ as already advised by Mr. Ching to Mr. Manas, two (2) optical lenses were defective; ten (10) units of projector lamp house including the reflectors (without xenon lamp) were defective and inefficient; and ten (10) units of Rectifiers were defective and inefficient. These defective and inefficient part/accessories from another supplier for a total price of P555,000.00. Considering that both parties appear to have their respective causes of action, we believe it would be to the best interests of our respective clients if the matter be settled according to the proposal of Mr. Ching, a copy of which is attached.

Litigating the matter in court might be very expensive to both parties and could take several years to obtain a final judgment. We will appreciate it if you could convince Mr. Manas to accept the attached proposal. Upon his acceptance, Mr. Ching will immediately send over the amount of P400,000.00 as installment for August and September 1999.

x x x x The attached proposal reads: STATEMENT 10 units Simplex Model XL 3mm movie Projectors with Projector Heads, sound head/motors, Xenon lamphouse, rectifiers, lenses, etc. @ 315.00 3,150,000.00 To be returned and deducted from total cost 2 pcs. Optical lens (defective) 9,800.00 -19,600.00 10 units Projector Lamp House including reflector w/o Xenon Lamp (defective and inefficient) @ 18,500.00 -185,000 10 units rectifiers (defective and inefficient) @ 37, 000.00 -370,000.00 Advertising Commitment - 25,000.00