SALONTE v.

COA
G.R. No.207348, August 19, 2014
CIVIL LAW

FACTS:
In 1989, the City of Mandaue (City) and F.F. Cruz and Co., Inc. (F.F. Cruz) entered into a
Contract of Reclamation which was estimated to be finished in six years. During the contracts
duration, F.F. Cruz is allowed to make improvements in the area, free of rentals, which such
shall be turned over to the City after the construction is finished supported by a Memorandum of
Agreement (MOA). F.F. Cruz constructed houses and a canteen, among others. In 1997, eight
years after the contract was initiated, a road widening project was conducted by the Department
of Public Works and Highways (DPWH), with Samuel Darza as project director. The project
affected the improvements made by F.F. Cruz. Rowena Solante paid an amount of money,
approved by Darza, to F.F. Cruz as payment for the demolition of such improvements. Darza
brought to the attention the Office of the Ombudsman, Visayas, the irregularities conducted in
the implementation of the project, and such was referred to the Commission on Audit (COA).
COA released a report saying that the amount of money paid by DPWH is not for F.F. Cruz
because the latter is no longer the owner of the properties at the time of payment. F.F. Cruz,
Solante, and Darza were held liable for the transaction. F.F. Cruz appealed, and Solante filed for
a motion for reconsideration but such were jointly denied. F.F. Cruz appealed to COA Central,
while the letter-complaint of Darza was upgraded to an Ombudsman case and was dismissed
for lack of merit. COA ruled that ruling in favor of F.F. Cruz will make the government pay for the
cost of the demolished improvements and will defeat the intention of parties as regards
compensation due from the contractor for its use of subject land. COA denied the motion for
reconsideration by saying that despite the fact that the Project was not turned over to the City,
the contention that the ownership of the said improvements would not be acquired yet by the
City would put the entire contract at the mercy of F.F. Cruz, thus, negating the mutuality of
contracts.

ISSUES:
Whether or not the F.F. Cruz is to be paid for the cost of the demolished properties

RULING:
Yes. F.F. Cruz is to be paid for the cost of the demolished properties.
Article 1193 of the Civil Code provides that:
Obligations with a resolutory period take effect at once, but terminate upon arrival
of the day certain.
A day certain is understood to be that which must necessarily come, although it
may not be known when.

If the uncertainty consists in whether the day will come or not, the obligation is
conditional, and it shall be regulated by the rules of the preceding Section.

A plain reading of the Contract of Reclamation reveals that the six (6)-year period
provided for project completion, or, with like effect, termination of the contract was a mere
estimate and cannot be considered a period or a "day certain" in the context of the aforequoted
Art.1193. To be clear, par. 15 of the Contract of Reclamation states: "[T]he project is estimated
to be completed in six (6) years." As such, the lapse of six (6) years from the perfection of the
contract did not, by itself, make the obligation to finish the reclamation project demandable,
such as to put the obligor in a state of actionable delay for its inability to finish. The lapse of six
(6) years from the perfection of the subject reclamation contract could not have automatically
vested Mandaue City, under the MOA, with ownership of the structures.
The Court has held in J Plus Asia Development Corporation v. Utility Assurance
Corporation that, In this jurisdiction, the following requisites must be present in order that the
debtor may be in default: (1) that the obligation be demandable and already liquidated;(2) that
the debtor delays performance; and (3) that the creditor requires the performance judicially or
extrajudicially.
In the instant case, the records are bereft of any document whence to deduce that the
City of Mandaue exacted from F.F. Cruz the fulfilment of its obligation under the reclamation
contract. And to be sure, not one of the exceptions to the requisite demand under Art.1169 is
established, let alone asserted.