TITAN-IKEDA VS PRIMETOWN
In 1992, respondent Primetown Property Group,
Inc. Entered into a contract with petitioner Titan-
Ikeda Construction and Development Corporation
for the structural works of its 32-storey Makati
Prime Tower (MPT)
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 work 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).
Thereafter, the parties entered into a second
contract. They agreed to extinguish the
supplemental agreement as evidenced by the
October 12, 1995 letter-agreement which was duly
acknowledged by their respective representatives.
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.
On October 12, 1995, petitioner sought to confirm
respondent's plan to take over the project. Its letter
stated:
....to take over the construction supervision of the
balance of the project from [petitioner's]
engineering staff and complete the same by
December 31, 1995 as promised by [petitioner's]
engineer.
This mutual agreement on the take over should not
be misconstrued in any other way except that the
take over is part of the long range plan of
[respondent] that [petitioner], in the spirit of
cooperation, agreed to hand over the construction
supervision to [respondent] as requested. (Prime
Tower na lang daw ang magsupervise from then on
and that Titan Ikeda willingly surrendered that
ISSUE: Whether or not CA erred in giving weight to ITI's report
because the project evaluation was commissioned only by
respondent, in disregard of industry practice (without its consent).
WN TITAN INCURRED DELAY.NO
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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.
Respondent never sent petitioner a written demand asking it to
accelerate work on the project and reduce, if not eliminate, slippage
(as stated in their Article XIV.DELAYS AND ABANDONMENT of their
contract)
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. Because petitioner did not consent to the
change of the designated construction manager, ITI's September 7,
1995 report could not bind it.
Issue of delay. Mora or delay is the failure to perform the obligation
in due time because of dolo (malice) or culpa (negligence). A debtor is
deemed to have violated his obligation to the creditor from the time
the latter makes a demand. Once the creditor makes a demand, the
debtor incurs mora or delay.
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, it admitted
overpayment.
Because petitioner acknowledged that it had been overpaid, it was
obliged to return the excess to respondent. Embodying the principle
of solutio indebiti,
In this instance, respondent paid part of the contract price under the
supervision)
However records showed that respondent
Primetower did not merely take over the
supervision of the project but took full control
thereof.
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.
Stated simply, respondent erroneously delivered excess units to
petitioner and the latter, pursuant to Article 2154, was obliged to the
return them to respondent.
One who receives payment by mistake in good faith is, as a general
rule, only liable to return the thing delivered. If he benefited
therefrom, he is also liable for the impairment or loss of the thing
delivered and its accessories and accessions.60 If he sold the thing
delivered, he should either deliver the proceeds of the sale or assign
the action to collect to the other party.
Case remanded to identify the ff:
The RTC must first determine the percentage of the project petitioner
actually completed and its proportionate cost. This will be the
amount due to petitioner.
We hold that petitioner did not incur delay
The supplemental agreement was a contract for a stipulated price. 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.
Article 1724. The contractor who undertakes to build a structure or
any other work for a stipulated price, in conformity with plans and
specifications agreed upon with the landowner, can neither withdraw
from the contract nor demand an increase in the price on account of
higher cost of labor or materials, save when there has been a change
in plans and specifications, provided:
1. such change has been authorized by the proprietor in writing; and
2. the additional price to be paid to the contractor has been
determined in writing by both parties.
Both must concur to recover damages. Petitioner submitted neither
one.Other than bare assertions, petitioner submitted no proof that
the rental pool was in fact able to lease out the units.
Decision of CA set aside.