Case Summary (G.R. No. 120881)
Agreement for Engineering Services
• November 17, 1959 contract: appellee to render structural (12½%), electrical (2½%), mechanical (2½%), sanitary (2½%) engineering services as percentages of appellant’s architect’s fee
• Supplemental “clarification”: excluded foundation soil exploration and principally engineering works; allowed fee increases on projects under ₱100,000
Statement of Account and Dispute
• December 11, 1961, appellee’s account: total fees ₱116,565.00 less prior payments ₱57,000.00 → balance ₱59,565.00
• May 18, 1962, appellant’s resume: only ₱10,861.08 due; remitted that amount, refused by appellee
Complaint, Pleadings, and Counterclaim
• August 10, 1962 complaint (4 causes):
- Fees: US$28,000.00 + ₱100,204.46 (₱30,881.25 balance)
- ₱17,000 consequential/moral damages
- ₱55,000 moral damages + attorneys’ fees
- ₱25,000 actual damages + attorneys’ fees
• Appellant’s answer: admitted services but limited fees to ₱80,336.29 (₱10,861.08 balance); denied damages; pleaded estoppel, incomplete/unsatisfactory services; counterclaimed actual and moral damages + ₱10,000 attorneys’ fees
Proceedings Before the Commissioner
• Parties agreed that appellee’s right to fees was not denied; only the amount was in controversy
• Commissioner’s findings (undisputed):
– IRRI project fee: US$28,000.00 (20% of US$140,000.00)
– Other projects: ₱51,539.91 due
– Prior payments: ₱69,475.46
– Recommended attorneys’ fees: ₱5,000.00
• Legal issues submitted: application of estoppel; permissibility of dollar payment and applicable exchange rate
Trial Court Decision
Dispositive portion ordered:
• Appellant to pay appellee ₱51,539.91 + US$28,000.00 (converted at current exchange at payment time) less ₱69,475.46, with interest from filing date
• Attorneys’ fees: ₱8,000.00; costs against appellant
• Counterclaim dismissed
Issues on Appeal
- Whether appellee’s December 11, 1961 exhibits estopped him from claiming higher fees
- Whether dollar-denominated balance must be paid at date-of-obligation exchange or at payment time
- Whether only ₱15,792.05 was due
- Whether attorneys’ fees should be limited to ₱5,000.00
- Whether appellant was entitled to counterclaim relief
Estoppel
• Civil Code, Art. 1431 requires reliance upon representation by the party invoking estoppel
• Commissioner found no reliance by appellant; appellee’s Exhibit 1-A based on innocent mistake
• Exhibits were not judicial admissions and statements of account are prima facie but impeachable for mistake
• Estoppel not established; trial court correctly refused to apply it
Conversion of Dollar Obligations
• Republic Act 529 (1950) prohibits payment clauses in foreign currency for post-enactment obligations; IRRI fee obligation (1961) governed by RA 529
• Exchange rate at payment time governs conversion; consistent with Engel v. Velasco (1941) and U.S. authorities
• IRRI proceeds not subject to preferred P2.00/USD rate; likely converted at free-market rate; trial court correctly ordered conversion at current rate upon payment
Amounts Due and Factual Findings
• Appellant agreed to submit only legal issues; facts as found by Commissioner were undisputed and binding
• Challenges to Commissioner’s computation of ₱51,539.91 for non-IRRI projects came too late; trial court properly refused t
Case Syllabus (G.R. No. 120881)
Procedural History
- Appeal from the decision of February 10, 1967 of the Court of First Instance, Rizal (Branch V, Quezon City), Civil Case No. Q-6561
- Complaint filed August 10, 1962 with four causes of action seeking fees and various damages
- Parties agreed to refer factual issues to a Commissioner under Rule 33, Sec. 11
- Commissioner’s Report submitted findings of fact and recommended P5,000.00 attorney’s fees
- Trial court adopted the Report’s facts, resolved two legal issues, and rendered judgment ordering payment of fees and P8,000.00 attorney’s fees
- Appeal brought directly to the Supreme Court, raising only questions of law
- Writ of attachment issued June 3, 1969 upon appellee’s bond
Factual Background
- Appellee (Octavio P. Kalalo), a civil engineer, firm O.A. Kalalo and Associates
- Appellant (Alfredo J. Luz), an architect, firm A.J. Luz and Associates
- November 17, 1959 agreement (Exh. A) for appellee to render engineering design services for percentages of architect’s fee
- Services: design computations, sketches, contract drawings, technical specifications, bill of quantities, cost estimates, construction consultation
- Agreed fees: structural 12½%, electrical 2½%, mechanical 2½%, sanitary 2½%
- Clarification letter excluded soil exploration, principally engineering projects, and allowed fee increase on projects under ₱100,000
Performance and Account Statement
- Engineering services rendered on ten projects (e.g., Fil-American Life Insurance Buildings, General Milling Flour Mill, IRRI Research Center)
- December 11, 1961: appellee sent statement of account (Exh. 1) and itemized Exh. 1-A claiming total fees ₱116,565.00 less payments ₱57,000.00, balance ₱59,565.00
- May 18, 1962: appellant’s résumé claimed only ₱10,861.08 due and remitted that amount by check
- June 14, 1962: appellee refused check as full payment
Pleadings and Claims
- First cause: fees of US$28,000 and ₱100,204.46 less ₱69,323.21 paid, balance US$28,000 and ₱