G.R. No. L-11744; May 28, 1958
PILAR GIL VDA. DE MURCIANO, represented by her attorney-in-fact, CARLOS RODRIGUEZ, petitioner, vs. THE AUDITOR GENERAL, ET AL., respondents.

FACTS

The petitioner owned property in Porac and Floridablanca, Pampanga. After liberation, the United States Army occupied it and paid a monthly rental of P6.00 per hectare. Subsequently, from May 1, 1948, to October 8, 1949, the Artillery Firing Group of the Philippine Ground Force, Armed Forces of the Philippines, used a portion as an impact area. On July 27, 1950, the Office of the Chief of Engineers, AFP, through Lt. Col. Rigoberto J. Atienza, forwarded to the petitioner a quitclaim agreement for her signature, offering to pay P15,067.31 as “complete payment of rentals for the entire period of occupancy… at the rate of P6.00 per hectare per month,” which was the same rate the U.S. Army paid. The agreement stated that upon payment, the AFP would be released from all claims. The petitioner, through her attorney-in-fact, signed the agreement on August 14, 1950. Due to non-receipt, a new identical agreement was prepared and signed by the petitioner on April 4, 1951. Before it could be signed by the AFP representative, a reorganization occurred, transferring signing authority to the Chief of Staff. The Chief of Staff, after a survey, found the damage did not justify the P15,067.31 payment and instead offered P3,386.40. The petitioner refused. After negotiations, the AFP paid the petitioner P7,000 “without prejudice to further claims on the balance.” The petitioner later requested the Auditor General to pay the balance of P8,067.31 (P15,067.31 minus P7,000) plus interest. The Chief of Staff recommended denial, arguing the use was intermittent, there was no contract, the P7,000 was based on quantum meruit, and proof of damage was insufficient. The Deputy Auditor General denied the claim, prompting this petition for review.

ISSUE

Whether the petitioner is entitled to the payment of the balance of her claim amounting to P8,067.31 from the government based on a perfected contract.

RULING

Yes. The Supreme Court reversed the decision of the Deputy Auditor General. The Court held that a contract was perfected when the AFP, through its authorized representatives, offered to pay P15,067.31 and the petitioner accepted it by signing the quitclaim agreement. This contract was binding upon both parties. The subsequent refusal of the Chief of Staff to sign the written agreement and the unilateral reduction of the amount did not affect the validity of the already perfected contract, as a contract cannot be left to the will of one party. The Court found that the petitioner’s acceptance of the P7,000 payment did not constitute a waiver of her right to the balance, as it was explicitly made “without prejudice to further claims.” The Court ruled the petitioner is entitled to the balance of P8,067.31. However, she is not entitled to interest from May 1, 1948, as demanded, but only from June 26, 1956, the date she filed her claim with the Auditor General, which constituted the demand for payment. The Auditor General was ordered to approve the payment of P8,067.31 with legal interest from June 26, 1956.