Guarantees can be honored only for periods specified in contracts


Persida Acosta

Dear PAO,
My father entered into a contract with a construction firm for beautifying the outer walls of our house by placing some granitite wash-out finish. Being an engineer himself, my father constantly supervised the work of the firm. Upon turnover, the firm gave a no-defect guarantee for the beautification within one year after turnover as embodied in the contract. Eight months after the turnover, the walls started to peel off. My father called the attention of the firm, which subsequently rectified the defects. Six months later, the walls peeled off much worse. The firm no longer attended to the problem. Instead, it gave my father a meager amount to share with the costs of the repair. My father spent a lot for the repair. He now wants know if he can make the firm liable for the total amount of obligation due him for the subsequent service contractor whom he commissioned to repair the walls .
Sincerely yours,

Dear Truman,
The case of William Golangco Construction Corporation vs. Philippine Commercial International Bank (G.R. No. 142830, March 24, 2006 penned by late Chief Justice Renato Corona) can enlighten you in your situation. It stated:

“The autonomous nature of contracts is enunciated in Article 1306 of the Civil Code.

Article 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy.

Obligations arising from contracts have the force of law between the parties and should be complied with in good faith. In characterizing the contract as having the force of law between the parties, the law stresses the obligatory nature of a binding and valid agreement.

The provision in the construction contract providing for a defects liability period was not shown as contrary to law, morals, good customs, pubic order or public policy. By the nature of the obligation in such contract, the provision limiting liability for defects and fixing specific guaranty periods was not only fair and equitable; it was also necessary. Without such limitation, the contractor would be expected to make a perpetual guarantee on all materials and workmanship.

The adoption of a one-year guarantee, as done by WGCC and PCIB, is established usage in the Philippines for private and government construction contracts. The contract did not specify a different period for defects in the granitite wash-out finish; hence, any defect therein should have been brought to WGCCs attention within the one-year defects liability period in the contract.

We cannot countenance an interpretation that undermines a contractual stipulation freely and validly agreed upon. The courts will not relieve a party from the effects of an unwise or unfavorable contract freely entered into.” (Emphasis supplied)

In your situation, you have clearly stated that the guarantee of the firm is merely for one (1) year. When your father decided for a rework, it was already beyond the stipulated period.

Succinctly, at square with the above-quoted case, your father cannot make the firm he commissioned liable for the peeling off that occurred in your house’s walls beyond the agreed period, as he is bound by the contract as a law between them. Moreover, he specifically supervised the works of the firm as an expert who has access to the execution of the task. He must have found out right there and then if the firm is using substandard materials for the same. Hence, given the facts, it may be improbable that the firm can be held liable to pay for the obligations relating to the rework of your walls.

Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.

We hope that we were able to enlighten you on the matter.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to


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