G.R. No. 248971 . August 31, 2022
DOMINGO F. ESTOMO, PETITIONER, VS. CIVIL SERVICE COMMISSION, REGIONAL OFFICE NO. X, AS REPRESENTED BY THE REGIONAL DIRECTOR, CSC REGION X, RESPONDENT.

FACTS

Petitioner Domingo F. Estomo’s construction firm entered into a contract with respondent Civil Service Commission (CSC) Regional Office No. X for the construction of the third floor of its building. The project commenced, and the CSC made several progress payments. During construction, Estomo performed and billed for numerous extra works. The building was inaugurated, but the CSC refused full payment, citing deficiencies and Estomo’s failure to submit required documents, including an approved Extra Work Order. Estomo filed a complaint for sum of money. The Regional Trial Court (RTC) partially granted his motion for judgment on the pleadings, ordering the CSC to pay the unpaid balance of the original contract price, but it dismissed the claim for payment of extra works for lack of an approved Extra Work Order. Both parties appealed. The Court of Appeals (CA) reversed the RTC, declaring the CSC’s entire obligation extinguished, reasoning that Estomo’s failure to submit the complete documentary requirements, a suspensive condition, prevented the obligation to pay from arising.

ISSUE

Whether the Court of Appeals erred in ruling that the CSC’s obligation to pay the contract balance was extinguished due to Estomo’s alleged non-compliance with documentary requirements.

RULING

Yes. The Supreme Court reversed the CA and reinstated the RTC’s decision with modification. The legal logic centers on the nature of the contractor’s documentary submissions. The Court held that the submission of documents like the Certificate of Completion is not a suspensive condition but a constructive condition, a duty incidental to the main obligation. Non-compliance does not extinguish the obligation but merely gives the obligee a right to either compel performance or sue for damages. The CSC’s acceptance and inauguration of the building constituted constructive delivery and acceptance of the project, obligating it to pay. For the extra works, the Court affirmed their disallowance. Presidential Decree No. 1594 and its Implementing Rules require prior approval through a Change/Extra Work Order for extra works exceeding 15% of the original contract price. Estomo admitted the extra works reached this threshold but proceeded without the mandatory approved order. Consequently, he assumed the risk of non-payment. The obligation to pay for these unapproved extra works never legally accrued. The Court ordered the CSC to pay the unpaid balance of the original contract, minus standard tax withholdings, with legal interest.