G.R. No. 173320 - Manzano vs. Lazaro

On February 16, 1998, Eduardo B. Manzano (petitioner) and Antonio B. Lazaro (respondent) entered into a Professional Services Contract in connection with petitioner’s candidacy for Vice-Mayor of Makati City.
The contract, effective from February 16, 1998 until May 15, 1998, detailed the roles, responsibilities, and compensation of each party.

A monthly rate of SEVENTY THOUSAND PESOS (P70,000.00) for a period of three months, payable in two equal tranches on the 15th and 30th of each month.
A bonus amounting to TWO HUNDRED THOUSAND PESOS (P200,000.00) payable upon the electoral victory to Vice-Mayor.

Petitioner won as Vice-Mayor of Makati City, triggering the bonus condition.
In a transmittal letter dated June 16, 1998, petitioner’s payroll indicated that respondent would receive P15,000.00 initially, with a remaining balance of P20,000.00 contingent upon submission of an inventory of campaign equipment.
On July 3, 1998, respondent submitted a letter confirming the turnover of the required equipment and demanding payment of the remaining P20,000.00 and the agreed bonus of P200,000.00.
Petitioner acknowledged receipt of the equipment in his letter dated July 17, 1998 but noted that he required the liquidation of campaign expenses before disbursing the balance.
Further correspondence on July 30, 1998 clarified that the preparation of an audited financial report on campaign expenses was not within respondent’s responsibilities but rather that of other personnel (Robert Gomez and Soliman Cruz).

Respondent filed an action for collection of sums due, claiming nonpayment of the balance and bonus as stipulated in the contract.
The Regional Trial Court (RTC), Branch 97, Quezon City, rendered a decision on June 7, 2004, ordering petitioner to pay a total of PHP220,000.00 (comprising the professional service fee for May 1–15, 1998, plus the bonus) and additional attorney’s fees of PHP30,000.00.
The Court of Appeals (CA) affirmed the RTC decision in its ruling dated February 28, 2006 and denied petitioner’s motion for reconsideration in its Resolution dated June 21, 2006.
Petitioner then elevated the case to the Supreme Court through a Petition for Review on Certiorari.

Frequent absence during campaign sorties and public meetings.
Failure to provide essential services such as the mobilization of campaign resources and the provision of poll watchers.
The misrepresentation of his expertise in managing political campaigns.

Petitioner contended that these alleged breaches should justify withholding the bonus and the remaining balance, alleging that respondent’s performance vitiated his consent to the contract.
Petitioner maintained that awarding the bonus despite these breaches would result in unjust enrichment.

The petition raised multiple substantive errors regarding the interpretation and enforcement of the contract, particularly focusing on alleged breaches, misrepresentations, and the issues surrounding vitiated consent.
The Supreme Court ultimately had to determine whether the lower courts erred in enforcing the contractual obligations in the light of alleged contractual breaches by respondent.

Whether the Court of Appeals erred in limiting its discussion solely to the voidability of the Professional Services Contract and its alleged ratification by petitioner, without addressing respondent’s alleged material breaches and his entitlement to the bonus.
Whether the Court of Appeals failed to properly assess and hold that respondent had committed a serious breach by not performing his duties as the head of petitioner’s campaign operations.
Whether the Court of Appeals erred in not finding that respondent misrepresented himself as an expert in political campaign management, thereby affecting the validity of petitioner’s consent to the contract.
Whether, on grounds of equity and substantial justice, respondent should be deprived of the balance of his remuneration to avoid unjust enrichment in view of his alleged non-performance.