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Cases assignment from title 2 contracts ra1305-1317

1. puig vs. sellner

2.insular life vs. asset builder

3. perez vs. pomar

4, ortigas co., vs. feati bank and asia trust

5, curpoz vs. ca

Republic of the Philippines

SUPREME COURT

Manila

EN BANC

DECISION

October 18, 1923

G.R. No. L-20013

ANDRES PUIG, plaintiff-appellee,vs.

GEO. C. SELLNER and B. A. GREEN, defendants-appellants.

Williams and Ferrier for appellants.

Salinas and Salinas for appellee.

Villamor (Ignacio),J .:

This litigation arose from the non-payment of a promissory note signed by the

defendants, which is as follows:

On or before July 12, 1921, we promise to pay jointly and severally at Manila to the

order of D. Andres Puig or his general attorney-in-fact, D. Ramon Salinas, the sum

of forty seven thousand pesos (P47,000), Philippine currency, which we received on

this date from said Mr. Salinas by way of loan at 10 per cent per annum; and we

hereby guarantee our said obligation with five hundred seventy (570) preferred

shares of the Manila Improvement Co. of the face value of one hundred pesos

(P100) each, which will be issued within fifteen (15) days in the name of Mr. Puig,

who shall hold them until we fulfill this obligation. In case we fail to make payment

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on July 12, 1921, the shares pledged shall become the property of D. Andres Puig.

Manila, July 12, 1920. (Sgd.) Geo. C. Sellner. (Sgd.) B. A. Green.

The Honorable Geo. R. Harvey, judge, rendered a carefully prepared decision,

sentencing the defendants Geo. C. Sellner and B. A. Green to pay the plaintiff

jointly and severally the sum of forty-seven thousand pesos (P47,000), as principal,thirty-five pesos (P35), balance of the interest for the fourth quarter of 1921, the

interest on said principal at the rate of ten per cent (10%) per annum from January

1, 1922, until the judgment is paid, and the cost; and ordering, moreover, in the

event that the defendants should fail to pay the full amount of the judgment within

three (3) months from the date thereof, that the sheriff of this city proceed to sell

the five hundred seventy (570) shares pledged at public auction to the highest

bidder, after attaching the same and advertising said sale during the legal period in

two local newspapers, one in English and another in Spanish, in order that the

plaintiff may recover the amount of the judgment after compliance with the

formalities prescribed by law. From this judgment the defendants have appealed,

and in their brief they assign seven errors, which, to our mind, can be reduced to

one, namely, that numbered 2, which is as follows:

The trial court erred in not holding that the condition contained in the note, to wit,

In case we fail to make payment on July 12, 1921, the shares pledged shall

become the property of D. Andres Puig, was valid and binding against the plaintiff,

as well as against the defendants.

The question as to the validity of a stipulation, such as that now before us, was

already decided by the supreme court of Spain in the negative, as may be seen,among others, in a decision dated November 3, 1902, wherein it is said:

That while it is true that contracts are binding, whatever may be the form in which

they may have been entered into, if the essential conditions required for their

validity exist, and that the obligations arising therefrom have the force of law

between the contracting parties, who must fulfill them according to the terms

thereof, it is likewise evident that these two percepts of articles 1278 and 1091 of

the Civil Code are subject to the provisions of article 1255, which does not permit

the making of stipulations contrary to law, morals or public order, one of which

stipulations would be, according to the general language of article 1859, that

wherein it is agreed that the debtor (creditor) may appropriate the thing pledged,

as if it were sold to him, by the mere lapse of the term of the contract of loan, and

said stipulation being void, under article 1884 of said Code, as to the mortgagee,

there is no reasonable ground, in view of the precedents of our old law, for holding

it lawful with respect to the pledgee, who in the absence of other conditions validly

stipulated may not ignore the requirements of article 1872 in the alienation of the

property pledged, for it is a right granted the creditor and can be waived by him, it

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is also a guaranty given the debtor, which he should not lose by the will alone of

the creditor, or by making a stipulation that is void in law. (94 Jur. Civ., 412, 420.)

And in this jurisdiction, a similar question was presented several times to this court

of decision. In the case of Mahoney vs. Tuason (39 Phil., 952), it was held:

The creditor has no right to appropriate to himself the personal property and

chattels pledged, nor he can he make payment by himself and to himself for his

own credit with the value of the said property, because he is only permitted to

recover his credit from the proceeds of the sale at public auction of the chattels and

personal property pledged not in the manner prescribed by article 1872 of the Civil

Code but in that provided for in section 14 of the said Act No. 1508, which is the

one force.

And it was further held:

The vice of nullity which vitiates the additional agreement entered into by thecontracting parties authorizing the creditor to appropriate the property and effects

pledged in payment of his credit does not affect substantially the principal contract

of chattel mortgage with regard to its validity and efficacy, for the reason that the

principal contract of pledge or chattel mortgage having been perfected it can

subsist although the contracting parties have not agreed as to the manner the

creditor could recover his credit from the value of the things pledged, in case of the

insolvency of the debtor, inasmuch as the law has expressly established the

procedure in order that the creditor may not be defrauded or deceived in his right

to recover his credit from the proceeds of the chattels retained by him as a

security, in case the debtor does not comply with his obligation, because, if the

debtor could not pay his debt, there exist no just or legal reason which prevents the

creditor from recovering his credit from the proceeds of the effects pledged sold at

a sale effected in accordance with law.

Adhering, therefore, to the doctrines laid down by this court in the case aforecited,

we hold that the judgment appealed from is in accordance with law, and must be,

as is hereby, affirmed with costs against the appellants. So ordered.

Street, Malcolm, Avancea, Johns and Romualdez, JJ., concur.

Johnson, J., took no part.

FIRST DIVISION

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[G.R. No. 147410. February 5, 2004]

THE INSULAR LIFE ASSURANCE COMPANY, LTD., petitioner, vs.

ASSET BUILDERS CORPORATION, respondent.

D E C I S I O N

PANGANIBAN,J .:

Where the parties merely exchange offers and counteroffers, no agreement orcontract is perfected. A party may withdraw its offer or counteroffer prior to its receipt ofthe other partys acceptance thereof. To produce an agreement, the offer must becertain and the acceptance timely and absolute.

The Case

Before us is a Petition for Review on Certiorari[1]under Rule 45 of the Rules ofCourt, assailing the September 20, 2000 Decision [2]and the March 7, 2001Resolution[3]of the Court of Appeals (CA) in CA-GR CV No. 61607. The dispositive partof the Decision reads as follows:

IN THE LIGHT OF ALL THE FOREGOING, the appeal of the [petitioner]is DISMISSED. The Decision of the Court a quo is AFFIRMED.[4]

The assailed Resolution denied petitioners Motion for Reconsideration.

The Facts

The appellate court summarized the facts of the case as follows:

Sometime in November, 1992, the Insular Life Assurance Company, Limited,

[petitioner], invited companies/corporations engaged in the building constructionbusiness to participate in the bidding of [petitioners] proposed Insular Life building

in Lucena City. [Petitioner] distributed copies ofBid Document[s], including thegeneral construction x x x contract, with the winning bidder and Bid ProposalForms[,] and furnished copies of the Instruction to Bidders to participatingbidders, containing the rules to be followed in the bidding, including the followingrules: (a) all bond proposals shall be accompanied with a bid bond from the InsularGeneral Insurance Company, Inc., in an amount equivalent to ten (10) percent of thebid or five (5) percent ofthe bid in Managers or Cashiers check payable to Insular
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Life, which bid bonds will be returned to the bidder after sixty (60) days from openingof bids or after award of the project, whichever date comes first;[5](b) the bid shall bevalid for sixty (60) days [after] opening of bids[,] but the owner of the project (the[petitioner]) had the option to request the bidder to extend the bid validity period afterexpiration of the original validity period;[6][and] (c) the bidder, whose proposal had

been deemed acceptable and complying with the requirements of the owner([petitioner]) and the project, shall be notified in writing to personally appear toexecute the Contract Agreements within five (5) days after the receipt ofthe Notice of Award[,] and that failure on the part of the winning bidder to executethe contract shall constitute a breach of the agreement, as effected by acceptance ofthe proposal, resulting in the nullification of the award; and that the bond heretofore,offered by the winning bidder shall be retained by the owner ([petitioner]) as paymentdue for liquidated damages.[7]

Asset Builders Corporation, [respondent], with four (4) other bidders, namely,Q.K.

Calderon Construction [Co., Inc.], Specified Contractors, A.[A.] AlarillaConstruction[,] and Serg Construction, submitted their respective bid proposalssecured by bid bonds, valid for sixty (60) days.[8] Under its Proposal Form whichthe [respondent] submitted to the [petitioner], [respondent] bound and obliged itself toenter into aContract with the petitioner within ten (10) days from notice of theaward, with good and sufficient securities for the faithful compliance thereof.[9]

OnNovember 9, 1993, the respective proposals of the bidders were opened. The[petitioner] forwarded a Summary of Bids and Tender Documents to AdrianWilson International Associate[s], Inc.[10](AWIA for brevity), [petitioners]designated Project Manager[,] for the proposed Insular Life Building in LucenaCity for its evaluation and analysis. AWIA, in due time, submitted a report of itsevaluation to the Real Property Division of the [petitioner]. As [could] be gleanedfrom the Report of AWIA, [respondents] P12,962,845.54[11]bid was the lowestamong the bidders.

On January 21, 1994, Engineer Pete S. Espiritu (Espiritu for brevity) of the RealProperty Department, who was designated as Project Coordinator of thepetitioner[,] recommended that [respondent] and the other bidders, Q.K.CALDERON [CONSTRUCTION] CO., INC. AND SPECIFIEDCONTRACTORS, be subjected to post-qualification proceedings, including theinspection of their respective offices, equipment, as well as past and present projects,and that said bidders be subjected to credit and financial investigations.[12]

[Petitioner] concurred with the recommendation of Espiritu and, indeed, post-qualification, inspection[,] and evaluations of [respondent] and Q.K. CalderonConstruction Co., Inc. were effected. On January 25, 1994, [petitioner], with
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concurrence of [respondent], visited [respondents] main office at the Tektite Tower

and its past and present projects, i.e., the four (4) and two (2) storey AirTransportation buildings in its compound; the Government Service Insurance System(GSIS) Headquarters Complex; and the National Historical Institute Building, and[respondents] equipment. On February 14, 1994, Espiritu suggested that a bid

clarification and negotiation be undertaken with prospective contractors.

On February 23,1994, Abraham Torrijos of [petitioners]Real PropertyDepartment (hereinafter referred to as Torrijos) recommended the approval bythe Board of Directors of [petitioner] of the award of the general construction of theProposed Lucena Building, in favor of[respondent], emphasizing that:

2. Asset Builders Corporation is a (sic) AAA category Contractor. It hasextensive experience in vertical and horizontal projects. The company [has been]subjected to a post qualification and credit investigation, the results of which are

satisfactory and acceptable, thus making it technically competent and financiallycapable of contracting the work.[13]

On February 24, 1994, a conference was held by and among the representatives of

the [petitioner] and of the [respondent], including [respondents] Operations Manager,

Engineer Ramon Abu, for some clarifications. [Petitioner] proposed that [respondent]adjust its bid from P12,961,845.54 to P13,000,000.00 to accommodate the wageincrease brought about by Wage Order No. 03, series of 1993, effective December 3,1993. However, [respondents] representatives were noncommittal, declaring that theyhad [to] report to the management of the [respondent] the proposal of [petitioners]representatives, for its consideration and approval. Subsequently, the [respondent]agreed to the readjustment of the amount of its bid as proposed by the [petitioner].

On March 9, 1994, Januario L. Flores (Flores for brevity), head of the RealProperty Department and Assistant Vice-President of the [petitioner], submitted toMabini L. Juan, the Chief Operating Officer and Senior Executive Vice-President ofthe [petitioner], his findings on the post-qualification, evaluation and creditinvestigation of [respondent], with the recommendation that the award be given to the[respondent]:

2. On the basis of the above very positive indicators, RPD[,] E.L. Mariano, [F.B.] Mariano Associates and Co.[,] and Adrian Wilson Intl Associates, [Inc.]recommen[d] to award the Lucena [p]roject to Asset Builders Corporation. Wehonestly believe that they will do a good job.

3. For your consideratio[n/a]pproval.[14]
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On March 14, 1994, [Flores] signed aNotice to Proceed, addressed to the[respondent], for the conformity of the latters President, Rogelio P. Centeno. Underthe [ultimate] paragraph of the Notice to Proceed, the [respondent] may start itsmobilization and proceed with the construction immediately[,] pending execution ofthe Construction Agreement.[15]The [petitioner prepared] a draft of the contract to

be executed by the [petitioner] and the [respondent].

On the same day, [Torrijos] informed, by letter, Engineer Bernardo A.

Sajorda (Sajorda for brevitys sake), Project Manager of AWIA, that [petitioner]had awarded the general construction contract of the proposed Lucena Building to the[respondent] and advised AWIA to coordinate with [respondent] and inform the latterthat a pre-construction meeting [would] be held on March 22, 1994 at the job site.[16] Acopy of theNotice of Award was appended to said letter.[17] Sajorda forthwithinformed Rogelio P. Centeno, the President of [respondent], by Memorandum that,pursuant to the AWARD to [respondent], of the general construction of the ProposedLucena Building, a pre-construction conference [would] be held on March 22, 1994 atthe job site, during which the following will be discussed:

1. Contract Amount and completion time

2. Role of AWIA

3. Project Contractors Key [p]ersonnel [l]ist with [s]ignatures and[p]ositions

4. Channel of [c]ommunications among Architect, Insular Life,ASSET and AWIA

5. [Contractor submittals i.e.Work Schedule, Schedule of]Prices, etc.

6. As-built[s] drawings

7. Submitt[al] of shop drawings prior to use of materials

8. Sanitation

9. Safety programs (first aid kit and hard hats)

10. Night work

11. CAR (Contractors All Ris[k I]nsurance)
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12. Owners review of payrolls, vouchers, etc. (sic) payments etc.

13. Sub-contracting [for] approval of subs.

14. Photographs every month

15. Billings based on actual work accomplishments. Undistributedmaterials not billable

16. Security measures

17. Tests as required by spec[]s

18. Take note of specific requirements before final payment ismade[18]

The [respondent] received a copy of the Memorandum of Sajorda, on March 17,1994. On March 18, 1994, the [petitioner] transmitted to the [respondent] thefollowing documents, evidenced by a Transmittal Sheet, received by Roy Roxas,for the [respondent], to enable the latter to secure a Building Permit for the project:

ONE (1) LOT DOCUMENTS/PLANS FOR BUILDING PERMIT

4 SETS OF STRUCTURAL COMPUTATION

5 SETS OF SPECS FOR GENERAL CONSTRUCTION

3 SETS OF ELECTRICAL LOAD COMPUTATION

5 COPIES OF PRC ID [&] PTR OF DESIGN ENGRS.

6 SETS OF ELMA PLANS

5 SETS OF [R]MDA PLANS/SPECS[19]

On March 22, 1994, thePre-Construction Conference ensued with the

representatives of the [petitioner] and its Project Manager and of the [respondent], inthe person of its Project Engineer, J.G. Quizon, in attendance:

Attendees: CARLOS M. ESPIRITU --AWIA Asst. Project Manager
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BERNARDO [A]. SAJORDA --AWIA Project Manager

EDMUNDO C. SABATER --AWIA Resident Engineer

JANUARIO L. FLORES --IL/RPD Manager

J.G. QUIZON --ASSET Project Manager

PETE S. ESPIRITU --IL/RPD

Project Coordinator

ABRAHAM P. TORRIJOS -- IL/RPD Asst. Manager[20]

During the conference, the following were discussed and clarified:

1. Contract Amount and Completion Time: Contract is for P13,000,000.00, tobe completed within 210 calendar days; day one to be 5 days after receipt of NTP bythe Contractor. Actual site mobilization to be first week of April 1994, per Mr. J.G.Quizon. Issuance of building and other permits being worked out by the

Contractor.[21]

On March 26, 1994, Jacobo G. Quizon, the Project Manager of [respondent], sent to

AWIA a letter requesting for the TCT lot description for the purpose of relocation ofthe monuments and the staking out of the building:

We have the honor to request your good office, in relocating the monuments[,] as per

TCT lot description[s,] prior to staking out the building[;] likewise, we can do therelocation[,] provided the cost will be reimbursed to the Owner[,] with an approximatefee of P5,000.00 lump sum.

Further, problems may occur regarding structur[al] excavation for footing [and

footing] tie beams at Grid Line A & 4. As per plan, the proposed depth [of]excavation of about 2.5[0M] along the existing adjacent building walls will expose theCHB footing.[22]

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Thereafter, a Ground Breaking ceremony was held at the project site, with RogelioB. Centeno, the President of [respondent], [and] Pete S. Espiritu and Januario L.Flores of the [petitioner] in attendance. A billboard announcing the construction of[the] Insular Life Building in Lucena City, with the [respondent] as the GeneralContractor, was also erected in the project site.

However, the [respondent] did not affix its conformity to anyNotice of Award,much less commence its construction of the project. Neither did it executeany Construction Agreement. Subsequently, the [respondent] wrote the[petitioner] a letter dated April 5, 1994, informing the [petitioner] that the [respondentwould] not be able to undertake the project anymore[,] because the prerequisite paperwork and attendant processing could not be fast-trac[k]ed and that, since the previoustwo (2) weeks, prices had escalated, which rendered its bid unattractive.[23] On April25, 1994, the [petitioner] wrote a letter to the [respondent], in response to its April 5,1994 [letter], informing the [respondent] that, in view of the unjust withdrawal ofthe [respondent] from the project, despite the award of the project to the [respondent],the [petitioner] was impelled to engage the services of another contractor to completethe project[,] without prejudice to further action of the [petitioner] against the[respondent] for its withdrawal, pursuant to Section 10 of the Instruction toBidders, quoted, infra:

The exact amount of damages to the Owner due to the failure to execute the Contract

may be deemed difficult to determine. Failure, thereof, to execute the Contract withinfive (5) days after the receipt of the Notice of Award shall cause [the] annulment ofthe award. The amount of bid bond deposited with the proposal shall be retained bythe Owner as payment due for liquidated damages incurred.

By way of riposte, the [respondent] sent a letter to the [petitioner] averring that: (a) it

never received any written Notice of Award from the [petitioner]; [and] (b) since itsbid offer had a lifetime of sixty (60) days from November 9, 1993 or until January 8,1993 (sic)[,] its offer was automatically withdrawn after said date, since the[petitioner] had not requested the [respondent] for the extension of the lifetimethereof.

On December 23, 1994, the [petitioner] filed a complaint[24]against the [respondent],with the Regional Trial Court[25]of Makati City, forDamages, x x x:

x x x x x x x x x

The [petitioner] alleged,inter alia, in its complain[t t]hat the [respondent] was dulynotified by AWIA of the award, in its favor, by the [petitioner], of the project[,] butthe [respondent] unjustly and arbitrarily withdrew from the project and refused to

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execute the Construction Contractwith the [petitioner,] which impelled the latterto engage the services of another contractor for the project at the priceof P14,500,000.00 and that, consequently, the [petitioner] was obliged to pay theamount of P1,500,000.00 which was [the] difference between the contract price of theproject with the [respondent] in the amount of P13,000,000.00 andP14,500,000.00, by

way of actual damages or, alternatively, by way of liquidated damages. In itsAnswer[26]to the complaint, the [respondent] alleged, inter alia, that it never receivedany Notice of Awardor Notice to Proceed; its bid had expired by January 8,1994, without the [petitioner] asking the [respondent] for the extension thereof[,] andinterposed counterclaims for damages against the [petitioner], praying that, after dueproceedings, judgment be rendered in its favor, x x x:

x x x x x x x x x

After due proceedings, the Courta quo rendered a Decision,[27]dated December [5],

1997, in favor of the [respondent] and against the [petitioner], ordering the dismissalof the complaint of the [petitioner] and ordering the latter to pay damages to the[respondent], the dispositive portion of which is quoted, infra:

WHEREFORE, judgment is rendered DISMISSING the Complaint with costs against

[petitioner].

On the counter-claim, Insular Life Assurance Co., Ltd., is hereby ordered to payAsset Builders Corporation the sums of Pesos: Five Hundred Thousand(P500,000.00) as compensation for the injury to the latters business standing, and

Pesos: Seventy Five Thousand (P75,000.00) by way of attorneys fees and expensesof litigation.

Filing fees on the amount ofP2,135,000.00 [respondent] sought in the counter-claimshall constitute a first lien on the recovery from [petitioner].

x x x x x x x x x

The [petitioner] interposed its appeal from the Decision of the Courta quo andposed, for [the CAs] resolution, the threshold issues of whether or not: (a) a

construction contract was perfected by and between the [petitioner] and the[respondent] for the construction of petitioners building project in Lucena City; (b)the [respondent] waived Section 9 of the Instruction to Bidders and was estoppedfrom claiming that no construction contract was perfected between it and the[petitioner]; [and] (c) the [respondent] was liable for damages to the [petitioner].[28]
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Ruling of the Court of Appeals

The CA affirmed the lower courts Decision.According to the appellate courtsruling, the failure of petitioner to prove that it gave respondent a written notice of theformers unqualified acceptance of the latters bid, as required in the Instruction to

Bidders, did not give birth to consent. The appellate court explained that when theexact terms desired were not in the offer, any modification or variation therefrom wouldannul that offer. Furthermore, estoppel did not apply because of petitioners owncarelessness or want of diligence.

Hence this Petition.[29]

The Issues

I. The Court of Appeals gravely erred in not holding that there exists a valid

contract for the construction of the building project between IL[30]and ABC.[31]

II. The Court of Appeals gravely erred in not holding that IL has notified ABC ofthe award of the construction of the building project to it before it withdrew its bidproposal.

III. The Court of Appeals gravely erred in not holding that ABCs withdrawalfrom the contract constituted a breach of that contract.

IV. The Court of Appeals gravely erred in not holding that the contract had beenperfected and that its consummation stage [had] in fact been commenced.

V. The Court of Appeals gravely erred in not holding that ABC isestopped from claiming the contract was not perfected.

VI. The Court of Appeals gravely erred in not holding that ABC, instead of IL, isliable for damages[,] and that, at worst, there is no evidence that supported the awardin favor of ABC.

VII. In any event, there is no basis to penalize IL for going to court.[32]

There is really only one major issue: Was there a valid contract between petitionerand respondent?

The Courts Ruling

The Petition is unmeritorious.

Sole Issue:Existence of a Contract
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No Notice of Award,No Contract

It is elementary that, being consensual,[33]a contract[34]is perfected[35]by mereconsent.[36] From the moment of a meeting [37]of the offer and the acceptance[38]upon the

object and the cause that would constitute the contract,[39]consent arises.[40]However,the offer must be certain[41]and the acceptance seasonable and absolute; [42]ifqualified,[43]the acceptance[44]would merely constitute a counter-offer.[45]

Equally important are the three distinct stages of a contract -- its preparation ornegotiation, its perfection, and finally, its consummation.[46] Negotiation begins when theprospective contracting parties manifest their interest in the contract and ends at themoment of their agreement. The perfection or birth of the contract[47]occurs when theyagree upon the essential elements thereof.[48] The last stage is its consummation,wherein they fulfill or perform the terms agreed upon in the contract, culminating in theextinguishment thereof.[49]

In the case at bar, the parties did not get past the negotiation stage. The eventsthat transpired between them were indeed initiated by a formal offer, butthispolicitacin was merely an imperfect promise that could not be considered a bindingcommitment.[50]At any time, either of the prospective contracting parties may stop thenegotiation and withdraw the offer.

In the present case, in fact, there was only an offer and a counteroffer[51]that did notsum up to any final arrangement containing the elements of a contract. [52] Clearly, nomeeting of minds was established.[53] First, only after the bid bond had lapsed werepost-qualification proceedings, inspections, and credit investigationsconducted. Second, the inter-office memoranda issued by petitioner, as well as other

memoranda between it and its own project manager, were simply documents to whichrespondent was not privy. Third, petitioner proposed a counteroffer to adjustrespondents bid to accommodate the wage increase of December 3, 1993.

In effect, the rule on the concurrence of the offer and its acceptance [54]did not apply,because other matters or details -- in addition to the subject matter and theconsideration -- would still be stipulated and agreed upon by the parties .[55] While therewas an initial offer made, there was no acceptance; but when there allegedly came anacceptance that could have had a binding effect, the offer was already lacking. Theoffer and its acceptance did not meet to give birth to a contract. [56]

Moreover, the Civil Code provides that no contract shall arise unless its acceptance

is communicated to the offeror.[57]

That is, the mere determination to accept the proposalof a bidder does not constitute a contract; that decision must be communicated to thebidder.[58]Although consent may be either express or implied,[59]the Instruction to Biddersprepared by petitioner itselfexpresslyrequired (1) a formal acceptance and (2) a periodwithin which such acceptance was to be made known to respondent. The effect ofgiving the Notice of Award to the latter would have been the perfection of thecontract.[60]No such acceptance was communicated to respondent; therefore, noconsent was given. Without that express manifestation, as required by the terms of its
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proposal, there was no contract. The due execution of documents representing acontract is one thing, but its perfection is another.[61]

There is no issue as regards the subject of the contract or the cause of theobligation. The controversy lies in the consent -- whether there was an acceptance bypetitioner of the offer made by respondent; and, if so, whether that acceptance was

communicated to the latter, thereby perfecting the contract. The period given to theformer within which to accept the offer was not itself founded upon or supported by anyconsideration. Therefore, under the law, respondent still had the freedom and the rightto withdraw the offer by communicating such withdrawal to petitioner[62]before the lattersacceptance of the offer;[63]or, if the offer has been accepted,[64]before the acceptancecame to be known by respondent.[65]

Petitioner avers that an acceptance was made, but this allegation has not beenproven. Respondent had no knowledge of such acceptance when it communicated itswithdrawal to the former. Notably, this right to withdraw was not exercised whimsicallyor arbitrarily by respondent. It did send a formal letter on April 5, 1994, expressing and

explaining its withdrawal. As of that date, the decision to award the contract had notbeen made according to the terms of the Instruction to Bidders.

Besides, the subsequent acts between the parties did not even serve as aconfirmation of that decision. The existence of a second proposal -- petitioners requestfor an adjustment of the bid to accommodate the wage increase -- in fact belies theperfection of any contract arising from the first.[66]To the Courts mind, there was indeedno acceptance of the offer made by respondent. Such failure to comply with a conditionimposed for the perfection of a contract resulted in failure of the contract.[67]

Subsistence of an Offer

Even Without a Bid Bond

Certainly, the bid bond is an indispensable requirement for the validation of a bidproposal.[68]This requisite ensures the good faith of bidders and binds them to enter intoa contract with the owner, should their proposal be accepted.[69]One who submits a bidnot only signifies assent to the terms and conditions of a proposal, but impliedly bindsoneself to them, if and when the bid is considered. The Invitation to Bidders evenprovided that incomplete proposals might be sufficient cause for their rejection. [70]If mereinsufficiency of a bond required of a bidder is a ground for rejection, a fortiori, all themore so is the total want thereof.

The proposal of respondent was merely validated by its bid bond, which wasconsidered by petitioner. The expiration of the bond on January 8, 1994,[71]did not meanthat the bid also lapsed on the same date. The bond, which was an accessory, merelyguaranteed the performance of the principal obligation and could not exist without thelatter.[72]The former was given for the benefit of petitioner, which could legally waiveit. The bid continued without a bond, but still no formal acceptance was made. Again,on that basis, no contract was perfected.
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In the interpretation of a contract, the literal meaning of its stipulations controls, iftheir terms are clear and leave no doubt as to the intention of the contractingparties.[73]When there is no ambiguity in the language of a contract, there is no room forconstruction,[74]only compliance.[75]This rule applies to the Instruction to Bidders, whichprovides that failure to execute the Contract shall constitute a breach of agreement as

effected by acceptance of the proposal.[76]

The language is clear and, like contracts ingeneral, is the law between the parties.[77]The contract must be fulfilled according to itsliteral sense.[78]

No Estoppel

As aptly held by the appellate court, respondents acts subsequent to the expirationof the bid bond did not constitute a waiver of Section 9 of the Instruction to Bidders. Tobe valid and effective, waivers must be couched in clear and unequivocal terms, leavingno doubt as to the intention of those giving up a right or a benefit that legally pertains to

them.[79]Respondent, contrary to the claim of petitioner, despite its repeated requests,never received a copy of the Notice of Award. Indeed, the former never adopted aninconsistent position, attitude or course of conduct that caused loss or injury to thelatter.[80]The attendance of respondent in the pre-construction conference and theground-breaking ceremony was part of the negotiation process. Thus, petitioners claimof estoppel against it could not be applied.

Estoppel cannot be sustained by mere argument or doubtful inference; it must beclearly proved in all its essential elements by clear, convincing and satisfactoryevidence.[81]It is hardly separable from the waiver of a right.[82]The party claimingestoppel must show the following elements: (1) lack of knowledge and of the means of

knowledge of the truth as to the facts in question; (2) reliance, in good faith, upon theconduct or statements of the party to be estopped; and (3) action or inaction basedthereon of such character as to change the position or status of the party claiming theestoppel, to his injury, detriment or prejudice.[83]

None of these elements was proven.

First, petitioner had the knowledge and the means of knowledge of the truth as tothe facts in question. It had the means of knowing if respondent had been served acopy of the Notice of Award, yet the former did not preserve a copy of such Notice,which supposedly bore the signature of the latters employee who had receivedit. Petitioner did not even enter in its corporate logbooks the release to and receipt by

respondent of that copy. The latter had every reason to withdraw its bid, given that theprerequisite paper work and attendant processing could not be fast-tracked.[84]

Second, respondents conduct and statements were always consistent andreliable. The manner of acceptance of all bids was prescribed by petitioneritself. Applying Article 1321 of the Civil Code, such prescription must be compliedwith,[85]yet it did not follow its own rules. Of no moment was its reliance in good faithupon respondent. Good faith is always presumed, unless contrary evidence isadduced.[86]
http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn73http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn73http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn73http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn74http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn74http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn74http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn75http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn75http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn75http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn76http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn76http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn76http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn77http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn77http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn77http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn78http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn78http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn78http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn79http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn79http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn79http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn80http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn80http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn80http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn81http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn81http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn81http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn82http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn82http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn82http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn83http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn83http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn83http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn84http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn84http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn84http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn85http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn85http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn85http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn86http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn86http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn86http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn86http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn85http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn84http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn83http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn82http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn81http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn80http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn79http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn78http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn77http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn76http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn75http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn74http://sc.judiciary.gov.ph/jurisprudence/2004/feb2004/147410.htm#_ftn73

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Third, the action or inaction of petitioner that caused its own injury was its ownfault. The written Notice of Award, which constituted the acceptance of the proposal,was a sine qua non to the perfection of the contract.[87]The misplacement of such vitaldocument was inexcusable. Without it, there was no contract. Moreover, the March 14,1994 Notice to Proceed clearly stated that its issuance would depend upon the

execution of the construction agreement.Estoppel is a shield against injustice; the party invoking its protection should not be

allowed to use it to conceal its own lack of diligence [88]or want of reasonable care andcircumspection.[89]

WHEREFORE, the Petition is hereby DENIED, and the assailed Decision andResolutionAFFIRMED. Costs against petitioner.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Ynares-Santiago, and Carpio, JJ., concur.Azcuna, J., on official leave.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

November 16, 1903

G.R. No. 1299

VICENTE PEREZ, plaintiff-appellee,

vs.

EUGENIO POMAR, Agent of the Compaia General de Tabacos, defendant-appellant.

Francisco Dominguez for appellant.

Ledesma, Sumulong and Quintos for appellee.

TORRES,J .:

In a decision dated February 9, 1903, the judge of the Sixth Judicial District,

deciding a case brought by the plaintiff against the defendant for the recovery of

wages due and unpaid, gave judgment against the latter for the sum of $600 and

the costs of suit, less the sum of $50, Mexican.

On August 27, 1902, Don Vicente Perez filed in the Court of First Instance of

Laguna a complaint, which was amended on the 17th of January of this year,

asking that the court determine the amount due the plaintiff, at the customary rate

of compensation for interpreting in these Islands, for services rendered in the

Tabacalera Company, and that, in view of the circumstances of the case, judgment

be rendered in his favor for such sum. The complaint also asked that the defendant

be condemned to the payment of damages in the sum of $3,200, gold, together
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with the costs of suit. In this complaint it was alleged that Don Eugenio Pomar, as

general agent of the Compaia General de Tabacos in the said province, verbally

requested the plaintiff on the 8th of December, 1901, to act as interpreter between

himself and the military authorities; that after the date mentioned the plaintiff

continued to render such services up to and including May 31, 1902; that he had

accompanied the defendant, Pomar, during that time at conferences between the

latter and the colonel commanding the local garrison, and with various officers and

doctors residing in the capital, and at conferences with Captain Lemen in the town

of Pilar, and with the major in command at the town of Pagsanjan, concerning the

shipment of goods from Manila, and with respect to Pagsanjan to this city; that the

plaintiff during this period held himself in readiness to render services whenever

required; that on this account his private business, and especially a soap factory

established in the capital, was entirely abandoned; that to the end that such

services might be punctually rendered, the agent, Pomar, assured him that the

Tabacalera Company always generously repaid services rendered it, and that hetherefore did not trouble himself about his inability to devote the necessary amount

of time to his business, the defendant going so far as to make him flattering

promises of employment with the company, which he did not accept; that these

statements were made in the absence of witnesses and that therefore his only proof

as to the same was Mr. Pomars word as a gentleman; that the employees of the

company did not understand English, and by reason of the plaintiffs mediation

between the agent, and the military authorities large profits were obtained, as

would appear from the account and letterpress books of the agency corresponding

to those dates. In the amended complaint it was added that the defendant, on

behalf of the company, offered to renumerate the plaintiff for the services renderedin the most advantageous manner in which such services are compensated, in view

of the circumstances under which they were requested; and that the plaintiff, by

rendering the company such services, was obliged to abandon his own business,

the manufacture of soap, and thereby suffered damages in the sum of $3,200,

United States currency.

The defendant, on the 25th of September, 1902, filed an answer asking for the

dismissal of the complaint, with costs to the plaintiff. In his answer the defendant

denied the allegation in the first paragraph of the complaint, stating that it was

wholly untrue that the company, and the defendant as its agent, had solicited theservices of the plaintiff as interpreter before the military authorities for the period

stated, or for any other period, or that the plaintiff had accompanied Pomar at the

conferences mentioned, concerning shipments from Manila and exports from some

of the towns of the province to this capital. He stated that he especially denied

paragraphs 2 of the complaint, as it was absolutely untrue that the plaintiff had

been at the disposal of the defendant for the purpose of rendering such services;

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that he therefore had not been obliged to abandon his occupation or his soap

factory, and that the statement that an offer of employment with the company had

been made to him was false. The defendant also denied that through the mediation

of the plaintiff the company and himself had obtained large profits. The statements

in paragraphs 6, 7, 8, and 9 of the complaint were also denied. The defendant

stated that, on account of the friendly relations which sprang up between the

plaintiff and himself, the former borrowed from him from time to time money

amounting to $175 for the purposes of his business, and that he had also delivered

to the plaintiff 36 arrobas of oil worth $106, and three packages of resin for use in

coloring his soap; that the plaintiff accompanied the defendant to Pagsanjan, Pilar,

and other towns when the latter made business trips to them for the purpose of

extending his business and mercantile relations therein; that on these excursions,

as well as on private and official visits which he had to make, the plaintiff

occasionally accompanied him through motives of friendship, and especially

because of the free transportation given him, and not on behalf of the company ofwhich he was never interpreter and for which he rendered no services; that the

plaintiff in these conferences acted as interpreter of his own free will, without being

requested to do so by the defendant and without any offer of payment or

compensation; that therefore there existed no legal relation whatever between the

company and the plaintiff, and that the defendant, when accepting the

spontaneous, voluntary and officious services of the plaintiff, did so in his private

capacity and not as agent of the company, and that it was for this reason that he

refused to enter into negotiations with the plaintiff, he being in no way indebted to

the latter. The defendant concluded by saying that he answered in his individual

capacity.

A complaint having been filed against the Compaia General de Tabacos and Don

Eugenio Pomar, its agent in the Province of Laguna, the latter, having been duly

summoned, replied to the complaint, which was subsequently amended, and stated

that he made such reply in his individual capacity and not as agent of the company,

with which the plaintiff had had no legal relations. The suit was instituted between

the plaintiff and Pomar, who, as such, accepted the issue and entered into the

controversy without objection, opposed the claim of the plaintiff, and concluded by

asking that the complaint be dismissed, with the costs to the plaintiff. Under these

circumstances and construing the statutes liberally, we think it proper to decide thecase pending between both parties in accordance with law and the strict principles

of justice.

From the oral testimony introduced at the trial, it appears that the plaintiff, Perez,

did on various occasions render Don Eugenio Pomar services as interpreter of

English; and that he obtained passes and accompanied the defendant upon his

journeys to some of the towns in the Province of Laguna. It does not appear from

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the evidence, however, that the plaintiff was constantly at the disposal of the

defendant during the period of six months, or that he rendered services as such

interpreter continuously and daily during that period of time.

It does not appear that any written contract was entered into between the parties

for the employment of the plaintiff as interpreter, or that any other innominatecontract was entered into; but whether the plaintiffs services were solicited

or whether they were offered to the defendant for his assistance, inasmuch

as these services were accepted and made use of by the latter, we must

consider that there was a tacit and mutual consent as to the rendition of

the services. This gives rise to the obligation upon the person benefited by

the services to make compensation therefor, since the bilateral obligation

to render services as interpreter, on the one hand, and on the other to pay

for the services rendered, is thereby incurred. (Arts. 1088, 1089, and 1262 of

the Civil Code). The supreme court of Spain in its decision of February 12, 1889,

holds, among other things, that not only is there an express and tacit consent

which produces real contract but there is also a presumptive consent which is the

basis of quasi contracts, this giving rise to the multiple juridical relations which

result in obligations for the delivery of a thing or the rendition of a service.

Notwithstanding the denial of that defendant, it is unquestionable that it was with

his consent that the plaintiff rendered him services as interpreter, thus aiding him

at a time when, owing to the existence of an insurrection in the province, the most

disturbed conditions prevailed. It follows, hence, that there was consent on the part

of both in the rendition of such services as interpreter. Such service not being

contrary to law or to good custom, it was a perfectly licit object of contract, andsuch a contract must necessarily have existed between the parties, as alleged by

the plaintiff. (Art. 1271, Civil Code.)

The consideration for the contract is also evident, it being clear that a mutual

benefit was derived in consequence of the service rendered. It is to be supposed

that the defendant accepted these services and that the plaintiff in turn rendered

them with the expectation that the benefit would be reciprocal. This shows the

concurrence of the three elements necessary under article 1261 of the Civil Code to

constitute a contract of lease of service, or other innominate contract, from which

an obligation has arisen and whose fulfillment is now demanded.

Article 1254 of the Civil Code provides that a contract exists the moment that one

or more persons consent to be bound, with respect to another or others, to deliver

some thing or to render some service. Article 1255 provides that the contracting

parties may establish such covenants, terms, and conditions as they deem

convenient, provided they are not contrary to law, morals or public policy. Whether

the service was solicited or offered, the fact remains that Perez rendered to Pomar

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services as interpreter. As it does not appear that he did this gratuitously, the duty

is imposed upon the defendant, having accepted the benefit of the service, to pay a

just compensation therefor, by virtue of the innominate contract offacio ut

des implicitly established.

The obligations arising from this contract are reciprocal, and, apart from the

general provisions with respect to contracts and obligations, the special provisions

concerning contracts for lease of services are applicable by analogy.

In this special contract, as determined by article 1544 of the Civil Code, one of the

parties undertakes to render the other a service for a price certain. The tacit

agreement and consent of both parties with respect to the service rendered by the

plaintiff, and the reciprocal benefits accruing to each, are the best evidence of the

fact that there was an implied contract sufficient to create a legal bond, from which

arose enforceable rights and obligations of a bilateral character.

In contracts the will of the contracting parties is law, this being a legal doctrinebased upon the provisions of articles 1254, 1258, 1262, 1278, 1281, 1282, and

1289 of the Civil Code. If it is a fact sufficiently proven that the defendant, Pomar,

on various occasions consented to accept an interpreters services, rendered in his

behalf and not gratuitously, it is but just that he should pay a reasonable

remuneration therefor, because it is a well-known principle of law that no one

should be permitted to enrich himself to the damage of another.

With respect to the value of the services rendered on different occasions, the most

important of which was the first, as it does not appear that any salary was fixed

upon by the parties at the time the services were accepted, it devolves upon thecourt to determine, upon the evidence presented, the value of such services, taking

into consideration the few occasions on which they were rendered. The fact that no

fixed or determined consideration for the rendition of the services was agreed upon

does not necessarily involve a violation of the provisions of article 1544 of the Civil

Code, because at the time of the agreement this consideration was capable of being

made certain. The discretionary power of the court, conferred upon it by the law, is

also supported by the decisions of the supreme court of Spain, among which may

be cited that of October 18, 1899, which holds as follows: That as stated in the

article of the Code cited, which follows the provisions of law 1, title 8, of the fifth

partida, the contract for lease of services is one in which one of the partiesundertakes to make some thing or to render some service to the other for a certain

price, the existence of such a price being understood, as this court has held not

only when the price has been expressly agreed upon but also when it may be

determined by the custom and frequent use of the place in which such services

were rendered.

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No exception was taken to the judgment below by the plaintiff on account of the

rejection of his claim for damages. The decision upon this point is, furthermore,

correct.

Upon the supposition that the recovery of the plaintiff should not exceed 200

Mexican pesos, owing to the inconsiderable number of times he acted asinterpreter, it is evident that the contract thus implicitly entered into was not

required to be in writing and that therefore it does not fall within article 1280 of the

Civil Code; nor is it included within the provisions of section 335 of the Code of Civil

Procedure, as this innominate contract is not covered by that section. The contract

of lease of services is not included in any of the cases expressly designated by that

section of the procedural law, as affirmed by the appellant. The interpretation of the

other articles of the Code alleged to have been infringed has also been stated fully

in this opinion.

For the reasons stated, we are of the opinion that judgment should be renderedagainst Don Eugenio Pomar for the payment to the plaintiff of the sum of 200

Mexican pesos, from which will be deducted the sum of 50 pesos is made as to the

costs of this instance. The judgment below is accordingly affirmed in so far as it

agrees with this opinion, and reversed in so far as it may be in conflict therewith.

Judgment will be entered accordingly twenty days after this decision is filed.

Arellano, C.J., Willard, and Mapa, JJ., concur.

Separate Opinions

MCDONOUGH,J ., dissenting:

I dissent from the opinion of the majority. In my opinion there is no legal evidence

in the case from which the court may conclude that the recovery should be 200

Mexican pesos. I am therefore in favor of affirming the judgment.

Perez vs. Pomar (G.R. No. L-1299, November 16, 1903)

I wish to digest the said case below, for legal research

purposes of the visitors of this blog. Thus:

Facts:
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The petitioner Don Vicente Perez filed before the Court

of First Instance of Laguna a complaint asking the court to

determine the amount due to him for the services he rendered

in the Tabacalera Company and that the defendant Eugenio

Pomar be condemned to the payment of damages amounting to

$3,200, gold, together with the costs of suit. Prior to this event,

the petitioner was asked to be an English interpreter between

the defendant and the military authorities and that after that

incident, the petitioner continued to render his services to therespondent and that he obtained passes and accompanied

Pomar upon his journeys to some of the towns in Province of

Laguna( e.g conferences between the respondent and the

colonel commanding the local garrison, conferences with

Captain Lemen in the town of Pilar, major in command in

Pagsanjan about the shipment of goods from Manila) and thatthe plaintiff was assured by the respondent that in every

rendered service to the said company, there would be such

payment. Thus, caused him to abandon his soap business and

suffered damages in the sum of $3,200. The defendant filed for

dismissal of the complaint denying the allegations stated by

the petitioner. He also stated that Perez borrowed from time totime money amounting to $175 for his soap business, that

Perez purposes in accompanying him is to extend his business

and mercantile relations, free transportation, and that Perez

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had acted as interpreter of his own free will without any offer

of payment and therefore no legal relation between them

existed.

Issue:

Whether or not the respondent is oblige to pay the

continued service rendered by the petitioner.

Held:

Yes. The Court decision is that the judgement should be

rendered against Don Eugenio Pomar for the payment to the

plaintiff of the sum of 200 Mexican pesos.

Ratio:

The Court ruled out that if there is a tacit and mutual

consent as to the rendition of the services, the defendant is still

obliged to pay such compensation to the petitioner even if

there is no written contract entered between the two parties onthe basis of quasi-contract. When one party knowingly

receives something for nothing, the courts may impose a quasi

contract. Under a quasi contract, neither party is originally
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intended to create an agreement. Instead, an arrangement is

imposed by a judge to rectify an occurrence of unjust

enrichment. On the services rendered by the petitioner in the

province of Laguna, it follows that there was a bilateral

obligation on the part of both parties because the defendant

accepted the benefit of the service rendered by the petitioner

and that in turn the petitioner expected him to pay his rendition

of service. Provided in Article 22 of the Civil Code,Every

person who through an act of performance by another, or anyother 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. The fact that the defendant consented

to accept an interpreter's services on various occasions,

rendered in his behalf and not considered as free, it is just that

he should pay the reasonable payment because it is well-known principle of law that no one should be permitted to

enrich himself to the damage of another.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-24670 December 14, 1979

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ORTIGAS & CO., LIMITED PARTNERSHIP, plaintiff-appellant,vs.FEATI BANK AND TRUST CO., defendant-appellee.

Ramirez & Ortigas for appellant.

Taada, Teehankee & Carreon for appellee.

SANTOS,J .:

An appeal interposed on June 23, 1965 by plaintiff-appellant, Ortigas & Co.,Limited Partnership, from the decision of the Court of First Instance of Rizal,Branch VI, at Pasig, Hon. Andres Reyes presiding, which dismissed its complaint

in Civil Case No. 7706, entitled, "Ortigas & Company, Limited Partnership,plaintiff, v. Feati Bank and Trust Company, defendant," for lack of merit.

The following facts a reproduction of the lower court's findings, which, in turn,are based on a stipulation of facts entered into by the parties are not disputed.Plaintiff (formerly known as "Ortigas, Madrigal y Cia") is a limited partnership anddefendant Feati Bank and Trust Co., is a corporation duly organized and existingin accordance with the laws of the Philippines. Plaintiff is engaged in real estatebusiness, developing and selling lots to the public, particularly the Highway HillsSubdivision along Epifanio de los Santos Avenue, Mandaluyong, Rizal. 1

On March 4, 1952, plaintiff, as vendor, and Augusto Padilla y Angeles andNatividad Angeles, as vendees, entered into separate agreements of sale oninstallments over two parcels of land, known as Lots Nos. 5 and 6, Block 31, ofthe Highway Hills Subdivision, situated at Mandaluyong, Rizal. On July 19, 1962,the said vendees transferred their rights and interests over the aforesaid lots infavor of one Emma Chavez. Upon completion of payment of the purchase price,the plaintiff executed the corresponding deeds of sale in favor of Emma Chavez.Both the agreements (of sale on installment) and the deeds of sale contained thestipulations or restrictions that:

1. The parcel of land subject of this deed of sale shall be used theBuyer exclusively for residential purposes, and she shall not beentitled to take or remove soil, stones or gravel from it or any otherlots belonging to the Seller.

2. All buildings and other improvements (except the fence) which may be constructed atany time in said lot must be, (a) of strong materials and properly painted, (b) providedwith modern sanitary installations connected either to the public sewer or to an approved

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septic tank, and (c) shall not be at a distance of less than two (2) meters from itsboundary lines. 2

The above restrictions were later annotated in TCT Nos. 101509 and 101511 ofthe Register of Deeds of Rizal, covering the said lots and issued in the name of

Emma Chavez.3

Eventually, defendant-appellee acquired Lots Nos. 5 and 6, with TCT Nos.101613 and 106092 issued in its name, respectively and the building restrictionswere also annotated therein. 4 Defendant-appellee bought Lot No. 5 directly fromEmma Chavez, "free from all liens and encumbrances as stated in Annex'D', 5while Lot No. 6 was acquired from Republic Flour Mills through a "Deed ofExchange," Annex "E". 6TCT No. 101719 in the name of Republic Flour Millslikewise contained the same restrictions, although defendant-appellee claims thatRepublic Flour Mills purchased the said Lot No. 6 "in good faith. free from allliens and encumbrances," as stated in the Deed of Sale, Annex "F" 7between itand Emma Chavez.

Plaintiff-appellant claims that the restrictions annotated on TCT Nos. 101509,101511, 101719, 101613, and 106092 were imposed as part of its generalbuilding scheme designed for the beautification and development of the HighwayHills Subdivision which forms part of the big landed estate of plaintiff-appellantwhere commercial and industrial sites are also designated or established. 8

Defendant-appellee, upon the other hand, maintains that the area along thewestern part of Epifanio de los Santos Avenue (EDSA) from Shaw Boulevard to

Pasig River, has been declared a commercial and industrial zone, per ResolutionNo. 27, dated February 4, 1960 of the Municipal Council of Mandaluyong,Rizal. 9 It alleges that plaintiff-appellant 'completely sold and transferred to thirdpersons all lots in said subdivision facing Epifanio de los Santos Avenue" 10 andthe subject lots thereunder were acquired by it "only on July 23, 1962 or morethan two (2) years after the area ... had been declared a commercial andindustrial zone ... 11

On or about May 5, 1963, defendant-appellee began laying the foundation andcommenced the construction of a building on Lots Nos. 5 and 6, to be devoted to

banking purposes, but which defendant-appellee claims could also be devotedto, and used exclusively for, residential purposes. The following day, plaintiff-appellant demanded in writing that defendant-appellee stop the construction ofthe commerical building on the said lots. The latter refused to comply with thedemand, contending that the building was being constructed in accordance withthe zoning regulations, defendant-appellee having filed building and planningpermit applications with the Municipality of Mandaluyong, and it had accordinglyobtained building and planning permits to proceed with the construction. 12

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On the basis of the foregoing facts, Civil Case No. 7706, supra, was submitted inthe lower court for decision. The complaint sought, among other things, theissuance of "a writ of preliminary injunction ... restraining and enjoiningdefendant, its agents, assigns, and those acting on its or their behalf fromcontinuing or completing the construction of a commercial bank building in the

premises ... involved, with the view to commanding the defendant to observe andcomply with the building restrictions annotated in the defendant's transfercertificate of title."

In deciding the said case, the trial court considered, as the fundamental issue,whether or not the resolution of the Municipal Council of Mandaluyong declaringLots Nos. 5 and 6, among others, as part of the commercial and industrial zoneof the municipality, prevailed over the building restrictions imposed by plaintiff-appellant on the lots in question. 13The records do not show that a writ ofpreliminary injunction was issued.

The trial court upheld the defendant-appellee and dismissed the complaint,holding that the subject restrictions were subordinate to Municipal Resolution No.27, supra. It predicated its conclusion on the exercise of police power of the saidmunicipality, and stressed that private interest should "bow down to generalinterest and welfare. " In short, it upheld the classification by t