8/18/2019 Mea Builders v CA and Metrobank

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MEA BUILDERS v CA and METROPOLITAN BANK TRUST AND COMPANY

DAMAGES; CONCEPT

FACTS:

• MEA entered into a contract with Capital Resources Corp (CRC) for the construction of housing

units for CRCs subdivision in consideration of P39M.

• MEA, CRC and METROBANK entered into a tripartite agreement—letters of credit would be issued

to cover the cash portions of payments on completed housing units in the contract.

• Metrobank expressed willingness to finance construction of the CRC subdivision through a letter to

Home Financing Corp(HFC).

• MEA, in order to increase its capital, secured from Metrobank an advance of P3M from the amount

which may become due to it under the tripartite agreement. Metrobank advanced the amount but was

covered by a promissory note and a suretyship agreement executed by co-petitioners Llave, Yu and

Yuanlian.

• After finishing a number of houses, MEA was paid by metrobank****

• Subsequently, Metrobank advised that MEA hold off construction work until CRC would have sold a

substantial number of completed unit—To reduce abrupt shelling out of money

• MEA objected to suspension and demanded payment for their work accomplishments.

• Meanwhile, MEA defaulted on the promissory note, Metrobank filed case to recover amount

covered by promissory note.

• MEA conteded that the real agreement in the promissory note is not a simple loan but an advance of 

their payment.

• TC—in favor of MEA; CA—modified TC decision insofar as the TC awards the sum of P18.2M.

Considered it a computation.

RULING:

• CA correctly reduced the amount due to MEA. Metrobank has already paid for a number of houses;

the amount paid to such houses should be deducted from the award.

• TC included in computation filling materials advanced by MEA. But this was charged to CRC not to

Metrobank.

• CA also correctly deleted the P9M award of compensatory damages.

• LEGALLY, Damages is the sum of money which the law awards or imposes as a pecuniary

compensation, a recompense or satisfaction for an injury done or a wrong sustained as a

consequence either of a breach of a contractual obligation or a tortuous act.• Here, no breach of contractual obligation nor bad faith on the part of Metrobank—petitioners failed

to establish actual or compensatory damages.