Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&amp;view=article&amp;id=50648:gr-158768-2008&amp;catid=1502&amp;Itemid=566
Timestamp: 2019-04-19 14:24:41+00:00

Document:
G.R. No. 158768 - TITAN-IKEDA CONSTRUCTION AND DEVELOPMENT CORP. v. PRIMETOWN PROPERTY GROUP, INC.
TITAN-IKEDA CONSTRUCTION & DEVELOPMENT CORPORATION, Petitioner, v. PRIMETOWN PROPERTY GROUP, INC., Respondent.
This Petition for Review on Certiorari 1 seeks to set aside the decision of the Court of Appeals (CA) in CA-G.R. CV No. 613532 and its resolution3 denying reconsideration.
1. the [project] shall cover the scope of work of the detailed construction bid plans and specifications and bid documents dated 28 September 1993, attached and forming an integral part hereof as Annex A.
2. the contract price for the said works shall be P130 million.
3. the payment terms shall be "full swapping" or full payment in condominium units. The condominium units earmarked for the [petitioner] are shown in the attached Annex B.
(b) 20% or remaining balance - upon completion of the project as provided in the construction contract and simultaneous with the posting by [petitioner] of the reglementary guarantee bond.
Petitioner started working on the project in February 1994.
On June 30, 1994, respondent executed a deed of sale12 (covering 114 condominium units and 20 parking slots of the MPT collectively valued by the parties at P112,416,716.88)13 in favor of petitioner pursuant to the "full-swapping" payment provision of the supplemental agreement.
Meanwhile, petitioner and respondent were discussing the possibility of the latter's take over of the project's supervision. Despite ongoing negotiations, respondent did not obtain petitioner's consent in hiring ITI as the project's construction manager. Neither did it inform petitioner of ITI's September 7, 1995 report.
The mutual agreement arrived at sometime in the last week of August 1995 for [respondent] to take over the construction supervision of the balance of the [project] from [petitioner's] [e]ngineering staff and complete [the] same by December 31, 1995 as promised by [petitioner's] engineer.
The [petitioner's] accomplished works as of this date of [t]ake over is of acceptable quality in materials and workmanship.
Engineers Antonio Co, general construction manager of respondent, and Luzon Y. Tablante, project manager of petitioner, signed the letter.
Because respondent ignored petitioner's demand, petitioner, on December 9, 1996, filed a complaint for specific performance29 in the Housing and Land Use Regulatory Board (HLURB).
While the complaint for specific performance was pending in the HLURB, respondent sent a demand letter to petitioner asking it to reimburse the actual costs incurred in finishing the project (or P69,785,923.47).30 In view of the pendency of the HLURB case, petitioner did not heed respondent's demands.
3. Attorney's fees in the amount of P100,000 as acceptance fee, P1,000 appearance fee per hearing and 25% of the total amount awarded to [petitioner].
With costs against the [respondent].
Petitioner moved for reconsideration but it was denied. Hence, this petition.
Here, a glaring contradiction exists between the factual findings of the RTC and the CA. The trial court found that respondent contributed to the project's delay because it belatedly communicated the modifications and failed to deliver the necessary materials on time. The CA, however, found that petitioner incurred delay in the performance of its obligation. It relied on ITI's report which stated that petitioner had accomplished only 48.71% of the project as of October 12, 1995.
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 some service.50 This case involved two contracts entered into by the parties with regard to the project.
The parties first entered into a contract for a piece of work51 when they executed the supplemental agreement. Petitioner as contractor bound itself to execute the project for respondent, the owner/developer, in consideration of a price certain (P130,000,000). The supplemental agreement was reciprocal in nature because the obligation of respondent to pay the entire contract price depended on the obligation of petitioner to complete the project (and vice versa).
Because the parties agreed to extinguish the supplemental agreement, they were no longer required to fully perform their respective obligations. Petitioner was relieved of its obligation to complete the project while respondent was freed of its obligation to pay the entire contract price. However, respondent, by executing the June 30, 1994 deed of absolute sale, was deemed to have paid P112,416,716.88. Nevertheless, because petitioner applied part of what it received to respondent's outstanding liabilities,56 it admitted overpayment.
Article 2154. If something is received when there is no right to demand it and it was unduly delivered through mistake, the obligation to return it arises.
With regard to the first requisite, because the supplemental agreement had been extinguished by the mutual agreement of the parties, petitioner became entitled only to the cost of services it actually rendered (i.e., that fraction of the project cost in proportion to the percentage of its actual accomplishment in the project). It was not entitled to the excess (or extent of overpayment).
In this instance, respondent paid part of the contract price under the assumption that petitioner would complete the project within the stipulated period. However, after the supplemental agreement was extinguished, petitioner ceased working on the project. Therefore, the compensation petitioner received in excess of the cost of its actual accomplishment as of October 12, 1995 was never due. The condominium units and parking slots corresponding to the said excess were mistakenly delivered by respondent and were therefore not due to petitioner.
Article 2160. He who in good faith accepts an undue payment of a thing certain and determinate shall only be responsible for the impairment or loss of the same or its accessories and accessions insofar as he has thereby been benefited. If he has alienated it, he shall return the price or assign the action to collect the sum.
c) the records of this case do not show the actual number of condominium units and parking slots sold by petitioners.
Because this Court is not a trier of facts, the determination of these matters should be remanded to the RTC for reception of further evidence.
The RTC must first determine the percentage of the project petitioner actually completed and its proportionate cost.62 This will be the amount due to petitioner. Thereafter, based on the stipulated valuation in the June 30, 1994 deed of sale, the RTC shall determine how many condominium units and parking slots correspond to the amount due to petitioner. It will only be the management certificate and the keys to these units that petitioner will be entitled to. The remaining units, having been mistakenly delivered by respondent, will therefore be the subject of solutio indebiti.
What exactly must petitioner give back to respondent? Under Article 2160 in relation to Article 2154, it should return to respondent the condominium units and parking slots in excess of the value of its actual accomplishment (i.e., the amount due to it) as of October 12, 1995. If these properties include units and/or slots already sold to third persons, petitioner shall deliver the proceeds of the sale thereof or assign the actions for collection to respondent as required by Article 2160.
Respondent never sent petitioner a written demand asking it to accelerate work on the project and reduce, if not eliminate, slippage. If delay had truly been the reason why respondent took over the project, it would have sent a written demand as required by the construction contract. Moreover, according to the October 12, 1995 letter-agreement, respondent took over the project for the sole reason that such move was part of its (respondent's) long-term plan.
Respondent, on the other hand, relied on ITI's September 7, 1995 report. The construction contract named GEMM, not ITI, as construction manager.67 Because petitioner did not consent to the change of the designated construction manager, ITI's September 7, 1995 report could not bind it.
In view of the foregoing, we hold that petitioner did not incur delay in the performance of its obligation.
The supplemental agreement was a contract for a stipulated price.68 In such contracts, the recovery of additional costs (incurred due to changes in plans or specifications) is governed by Article 1724 of the Civil Code.
2. the additional price to be paid to the contractor has been determined in writing by both parties.
The RTC awarded compensatory damages based on the rental pool rates submitted by petitioner75 and on the premise that all those units would have been leased had respondent only finished the project by December 31, 1995.76 However, other than bare assertions, petitioner submitted no proof that the rental pool was in fact able to lease out the units. We thus hold that the "losses" sustained by petitioner were merely speculative and there was no basis for the award.
WHEREFORE, the petition is hereby GRANTED.
2. dismissing petitioner Titan-Ikeda Construction and Development Corporation's claims for the cost of additional work (or change order) and damages.
2. the computation of petitioner Titan-Ikeda Construction and Development Corporation's actual liability to respondent Primetown Property Group, Inc. or vice-versa, and the determination of imposable interests and/or penalties, if any.
2 Penned by Associate Justice Godardo A. Jacinto (retired) and concurred in by Associate Justices Eloy R. Bello, Jr. (retired) and Josefina Guevara-Salonga of the Fifth Division of the Court of Appeals. Dated March 15, 2002. Rollo, pp. 10-18, 34-42, 81-89.
3 Dated May 29, 2003. Id., pp. 20-23, 91-94.
4 Refers to the foundation of the building, particularly the concrete and steel works up to the topping of the last floor without any finishing.
5 Rollo, pp. 55, 200, 255.
6 Exhibit "A," records, pp. 474-488.
8 Refers to all the finishing works including putting up partitions, doors, windows and interior and exterior finishes.
9 Exhibit "B," records, pp. 490-492.
10. All other terms and conditions appearing in the construction contract, not otherwise in conflict with the above terms, shall remain in full force and binding upon the Parties insofar as they may be applicable with the [project] contemplated therein.
19.1. The construction managers shall have general management, inspection, monitoring and administration of the [project]. They shall have the authority to stop the [project] whenever such stoppage may be necessary to ensure the proper execution of this contract. The construction managers, in consultation with [respondent] and ARCHITECT, shall decide on matters pertaining to architectural and engineering designs, workmanship, materials and construction.
19.2. The construction managers shall interpret the terms and conditions of this contract and shall mediate between and recommend decide on all claims of [respondent] or [petitioner] and shall resolve such other matters relating to the execution and progress of the works.
12 Exhibit "8," id., pp. 506-509 and rollo, p. 23.
14 Exhibits "13-P," "13-Q," "13-R," "13-S," and "13-T," records, pp. 537-541.
16 Exhibit "F," records, pp. 383-409.
19 Exhibit "C," id., p. 499.
17. It is understood that in case of failure on the part of [petitioner] to complete the [project] herein stipulated and agreed on, or if the [project] to be done under this contract is abandoned by [petitioner] or the latter fails to insure its completion within the required time, including any extension thereof, and in any of these cases, [respondent] shall have the right to rescind this contract by giving notice in writing to that effect to [petitioner] and its bondsmen. [Respondent] shall then take over the [project] and proceed to complete the same on its own account.
17.1. It is further agreed and understood that in case of rescission, [respondent] shall ascertain and fix the value of the [project] completed by [petitioner] such usable materials on the [project] taken.
17.2. In the event that the total expenditures of [respondent] supplying the scope of [petitioner's] work to complete the project, including all charges against the project prior to rescission of the contract, and not in excess of the contract price, then the difference between the said total expenditures of [respondent] and the contract price may be applied to settle claims, if any, with the conformity of [petitioner] filed by workmen employed on the project and by suppliers furnishing materials therefor. The balance, if any should be paid, to the [petitioner] but no amount in excess of the combined value of the unpaid completed work and retained percentage at the time of the rescission of this contract shall be paid. No claim for prospective profits on the work done after rescission of this contract shall be considered or allowed.
"Rescission" under article XVII of the construction contract never took place. Respondent notified neither petitioner nor its bondsmen that it was invoking its right to rescind under the contract. On the contrary, it was petitioner who drafted the October 12, 1995 letter-agreement. (The said letter was printed on petitioner's letterhead.) Thus, the succeeding paragraphs quoted above are inapplicable in this case.
20 Exhibit "F-1," id., p. 386.
21 TSN, December 19, 1997, pp. 67-68.
22 Id., pp. 94-95 and records, pp. 95-96.
23 Id. Petitioner did not protest the new arrangement. In fact, it detailed a project engineer at site who monitored only the progress of works in its condominium units.
24 Exhibits "5-E" and "5-F," id., pp. 502-503.
Petitioner's letter dated October 17, 1995 provided a detailed account of the respondent's liabilities. That letter was duly acknowledged by respondent.
26 Exhibit "7," id., p. 505.
Records show that at the time petitioner was working on the (MPT) project, it was also working on respondent's Sunnette Tower and Citadel projects. It is unclear in relation to which project this cost was incurred.
27 A management certificate attests to the fact that the condominium corporation is at least 60% Filipino (or that foreigners own not more than 40% of that corporation). It is a condition precedent to the issuance of condominium certificates of title.
29 Docketed as HLRB Case No. 9657. Petitioner prayed for the issuance of the management certificate and condominium certificates of title and the delivery of keys to its respective buyers. Records, pp. 48-53.
30 Exhibit "G," id., pp. 410-412.
31 Penned by housing and land use arbiter Emmanuel T. Pontejos. Rollo, pp. 113-119.
34 Records, pp. 518-519. It is not clear whether the said writ was implemented.
35 Docketed as Civil Case No. 97-1501. Id., pp. 1-6 and rollo, p. 12.
37 Refer to paragraph 1 of the supplemental agreement.
39 See notes 24, 25 and 26. Respondent's liabilities did not only pertain to the MPT project (both structural and architectural works) but included those incurred in the Sunnette Tower and Citadel projects.
41 Id., pp. 109-110. In a rental pool agreement, the owners of several condominium units agree to lease their respective units at stipulated rates and divide the rent (or their earnings) proportionately according to the area of their respective units.
42 Penned by Judge Escolatico U. Cruz, Jr. of RTC Branch 58, Makati City. Dated August 5, 1998. Id., pp. 95-112.
43 CA rollo, pp. 50-87. Under Rule 41 of the Rules of Court.
Article 22. Every person who through an act or performance by another, or by any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.
5. lack of other remedy.
The principle of unjust enrichment is inapplicable in this instance since petitioner received the condominium units and parkings slots as advance payment for services it should have rendered pursuant to the supplemental agreement. There was therefore a justifiable cause for the delivery of excess properties.
49 Austria v. Gonzales, Jr., 465 Phil. 355, 364 (2004).
50 Civil Code, Art. 1305.
Art. 1713. By the contract for a piece of work the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. The contractor may either employ only his labor or skill or also furnish the material.
52 Evidence "G," records, p. 499.
53 TSN, December 19, 1997, pp. 94-97.
56 See notes 24, 25 and 26.
57 Velez v. Balzarza, 73 Phil. 630 (1942). See also City of Cebu v. Judge Piccio, 110 Phil. 558 (1960). See also Andres v. Manufacturer's Hanover Trust, G.R. No. 82670, 15 September 1989, 177 SCRA 618.
59 Refer to Article 2154.
60 Refer to Article 2160.
61 Id. See also Melencio S. Sta. Maria, Jr., Obligations and Contracts: Text and Cases, 1st ed., p. 509.
63 4 Jose B.L. Reyes and Ricardo C. Puno, An Outline of Philippine Civil Law, 1957 ed., 28. See Philippine Export and Foreign Loan Guarantee Corporation v. V.P. Eusebio Construction, Inc., 478 Phil. 269, 290 (2004).
Article 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation.
3) When demand would be useless, as when the obligor has rendered it beyond his power to perform.
In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins.
64 Solid Homes v. Tan, G.R. NOS. 145156-57, 29 July 2005, 465 SCRA 137, 147-148.
65 Supra note 10. The supplementary agreement clearly stated the construction contract, save those matters explicitly discussed in the former, governed the project.
66 Exhibit "A-7," records, p. 481.
68 Refer to paragraph 2 of the January 31, 1994 supplemental agreement.
69 448 Phil. 643 (2003).
70 Id., pp. 652-653 citing Weldon Construction Corporation v. Court of Appeals, G.R. No. L-35721, 12 October 1987, 154 SCRA 618, 632-634.
See also San Diego v. Sayson, 112 Phil. 1073 (1961). We explained the rationale of Article 1724.
"That the requirement for a written authorization is not merely to prohibit admission of oral testimony against the objection of the adverse party can be inferred from the fact that the provision is not included among those specified in the Statute of Frauds, Article 1403 of the Civil Code. As it does not appear to have been intended as an extension of the Statute of Frauds, it must have been adopted as a substantive provision or a condition precedent to recovery."
72 TSN, December 18, 1997, pp. 127-128. The records contain neither a document allowing a change order or an agreement as to increase in cost.
73 Powton Conglomerate, Inc. v. Agcolicol, supra note 69 at 655-656.
74 Integrated Packing Corporation v. Court of Appeals, 388 Phil. 835, 846 (2000). See also Smith Kline Beckman Corporation v. Court of Appeals, 456 Phil. 213, 225-226 (2003).
78 Reyes and Puno, supra note 63 at 274. This case involves estoppel by judgment. Estoppel by judgment bars the parties from raising any question that should have been put in issue and decided in previous proceedings.
79 See Metro Manila Transit Corporation v. D.M. Consortium, Inc., G.R. No. 147594, 7 March 2007, 517 SCRA 632, 642.

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