Weldon Construction Corporation v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioner Weldon Construction Corporation (successor-in-interest of Weldon Construction) sued respondent Manuel Cancio to recover P62,378.82 as a 10% commission and P23,788.32 for additional works on the Gay Theater building. Petitioner claimed a contract of supervision (Exhibit "A"), while respondent asserted a construction contract for a stipulated price of P600,000.00 (Exhibit "5"), which he claimed to have fully paid. Procedural History: The Court of First Instance of Manila ruled in favor of petitioner, ordering respondent to pay the supervision fee. On appeal, the Court of Appeals reversed, dismissing the complaint and awarding damages to the respondent. After several motions for reconsideration, the Court of Appeals modified its decision to dismiss the counterclaims as well, leading to the present petition for certiorari. The Petition: Petitioner seeks to enforce the alleged contract of supervision (Exhibit "A") to recover commission and costs of additional works, arguing that the agreement was for supervision on a commission basis, not a fixed-price construction contract.
Issue(s)
Whether the agreement between the parties is a contract of supervision on a commission basis or a construction contract for a stipulated price. Whether petitioner is entitled to recover the cost of additional works on the building.
Ruling
The Supreme Court affirmed the decision of the Court of Appeals dismissing the complaint. The Court held that the established agreement between the parties was a construction contract for a stipulated price (Exhibit "5"), which had been fully performed and paid. Consequently, petitioner is not entitled to claim a commission or the cost of additional works.
Ratio Decidendi
On the nature of the contract: The Court found that the parties' conduct and performance aligned with the Building Contract (Exhibit "5"), a contract for a piece of work for a stipulated price, rather than the proposal for a supervision contract (Exhibit "A"). The Court emphasized that the manner in which parties conduct their transactions prevails over the name given to the contract. The payments made by the respondent, described as "as per accomplishment," were consistent with partial payments of the P600,000.00 contract price, not replenishments of a revolving fund as proposed in Exhibit "A". The Court noted that Exhibit "A" was merely a proposal that never attained perfection, evidenced by the subsequent submission of Exhibit "4" and the executed Building Contract (Exhibit "5"). The Court applied the principle that once a contract is consummated or fully performed, its existence and binding effect cannot be disputed, regardless of minor issues regarding the exact date of signing by one party, as long as performance and signatures are present. On the claim for additional works: The Court denied the claim for the cost of additional works, citing Article 1724 of the Civil Code. This article requires that any change in plans and specifications and the additional price to be paid must be authorized by the proprietor in writing. The Court found no written authority for the changes made nor a written agreement on the additional price. The Court stressed that compliance with these written requisites is a condition precedent to recovery, designed to prevent litigation arising from misunderstandings, as exemplified by the present case. The absence of such written documentation barred the petitioner's claim for additional costs.
Main Doctrine
A contract for a piece of work for a stipulated price, akin to a construction contract, is consummated upon full performance by both parties, precluding subsequent claims for commission or additional works unless authorized in writing as per Article 1724 of the Civil Code.