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)

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

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 petitioners consent in
hiring ITI as the projects construction
manager. Neither did it inform petitioner
of ITIs 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,

________________________________________________________
_
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

1995 as
engineer.

promised

by

[petitioner's]

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
supervision)
However records showed that respondent
Primetower did not merely take over the
supervision of the project but took full
control thereof.

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
respondents 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 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.