GR L 35721; (October, 1987) (Digest)
G.R. No. L-35721 October 12, 1987
WELDON CONSTRUCTION CORPORATION, petitioner, vs. COURT OF APPEALS and MANUEL CANCIO, respondents.
FACTS
Petitioner Weldon Construction Corporation sued respondent Manuel Cancio to recover a 10% commission and payment for additional works on the Gay Theater building. Weldon based its claim for commission on a letter-offer (Exhibit “A”) dated March 7, 1961, proposing to handle the administration of the construction for a 10% commission on total cost. Cancio resisted, presenting a formal Building Contract (Exhibit “5”) dated March 30, 1961, which stipulated a fixed contract price of P600,000 for the construction, which amount he had fully paid. This contract contained no provision for a separate supervisory commission.
The parties also disputed the claim for extra works. Weldon asserted it performed additional construction upon Cancio’s request. Cancio countered that any such additions were agreed to be without extra cost. The trial court found the existence of extra works but ruled for Cancio, a decision affirmed by the Court of Appeals.
ISSUE
The primary issues were: (1) Whether Weldon is entitled to a 10% supervisory commission under Exhibit “A”; and (2) Whether Weldon is entitled to payment for the alleged extra works.
RULING
The Supreme Court denied both claims and affirmed the appellate court’s decision. On the first issue, the Court ruled that the subsequent, notarized Building Contract (Exhibit “5”) superseded the earlier letter-offer (Exhibit “A”). The formal contract, which embodied the complete agreement for a lump-sum price, was the binding document. The letter was merely a preliminary proposal that was effectively revoked and replaced by the definitive contract. Therefore, no separate commission was due.
On the second issue, the Court applied Article 1724 of the Civil Code, which mandates that for a contractor to recover for extra work, there must be: (1) a written authority from the owner for the changes, and (2) a written agreement on the additional price. The Court emphasized these are strict conditions precedent to recovery. The record contained no such written authority or written price agreement for the extra works. The mere finding by the trial court that extra works were done, or that the owner requested them, is insufficient without the required written documents. The purpose of the law is to prevent precisely such disputes arising from oral misunderstandings. Consequently, the claim for extra works was also barred.