GR 161904; (April, 2005) (Digest)
G.R. No. 161904 . April 26, 2005
ASIAN CONSTRUCTION AND DEVELOPMENT CORPORATION, Petitioner, vs. NOEL T. TULABUT, doing business under the name and style of N.T. TULABUT CONSTRUCTION SUPPLY, Respondent.
FACTS
Petitioner Asian Construction and Development Corporation (ACDC) contracted respondent Noel T. Tulabut for construction works at the Philippine Centennial Exposition. After partial payments, ACDC issued a check for a subsequent project, which was dishonored due to insufficient funds. Respondent completed the project and submitted final billings totaling ₱486,409.45. Despite written demand, petitioner failed to pay, prompting a collection suit.
In its defense, ACDC claimed the respondent had not fully completed or turned over the project, and that its payment obligation was contingent on receiving payment from the government project owner. The petitioner also argued that industry practice dictated payment only after issuance of a certificate of completion, which was not presented. The trial court ruled for the respondent, ordering payment of the balance with interest and attorney’s fees. The Court of Appeals affirmed with modification, reducing the attorney’s fees.
ISSUE
Whether the Court of Appeals erred in applying estoppel to presume project completion and in awarding attorney’s fees.
RULING
The Supreme Court denied the petition, upholding the appellate court’s decision. On the first issue, the Court ruled that the petitioner is estopped from denying the completion of the works and its liability. The petitioner’s authorized officers had approved the purchase orders and the respondent’s final billings without objection. By these voluntary acts, ACDC affirmed the rights and obligations under the contract. The principle of mutuality of contracts under Article 1308 of the Civil Code binds both parties; the validity or compliance cannot be left to the will of one alone. The petitioner’s unsubstantiated claim of non-completion, against its own approved documents, is barred by estoppel.
Regarding attorney’s fees, the award was proper due to the petitioner’s evident bad faith. The Court noted the petitioner issued a bouncing check without prior notice, feigned ignorance of the dishonor and a subsequent demand letter, and failed to make any prompt commitment to settle the obligation or replace the check. This wanton refusal to fulfill a valid obligation compelled the respondent to litigate, justifying the award. The Court found no reversible error in the assailed judgment.