(e) International Rice Research

Republic of the Philippines

Institute, Research center Los Baños,
SUPREME COURT
Laguna;
Manila
(f) Aurelia's Building at Mabini, Ermita,
EN BANC
Manila;
G.R. No. L-27782 July 31, 1970
(g) Far East Bank's Office at Fil-
OCTAVIO A. KALALO, plaintiff-appellee, American Life Insurance Building at
vs. Isaac Peral Ermita, Manila;
ALFREDO J. LUZ, defendant-appellant.
(h) Arthur Young's residence at Forbes
Amelia K. del Rosario for plaintiff-appellee. Park, Makati, Rizal;
Pelaez, Jalandoni & Jamir for defendant-appellant. (i) L & S Building at Dewey Blvd.,
Manila; and

ZALDIVAR, J.: (j) Stanvac Refinery Service Building

at Limay, Bataan.
Appeal from the decision, dated, February 10, 1967,
of the Court of First Instance of Rizal (Branch V, On December 1 1, '1961, appellee sent to appellant
Quezon City) in its Civil Case No. Q-6561. a statement of account (Exhibit "1"), 3 to which was
attached an itemized statement of defendant-
On November 17, 1959, plaintiff-appellee Octavio A. appellant's account (Exh. "1-A"), according to which
Kalalo hereinafter referred to as appellee), a the total engineering fee asked by appellee for
licensed civil engineer doing business under the firm services rendered amounted to P116,565.00 from
name of O. A. Kalalo and Associates, entered into an which sum was to be deducted the previous
agreement (Exhibit A ) 1 with defendant-appellant payments made in the amount of P57,000.00, thus
Alfredo J . Luz (hereinafter referred to as appellant), leaving a balance due in the amount of P59,565.00.
a licensed architect, doing business under firm
name of A. J. Luz and Associates, whereby the On May 18, 1962 appellant sent appellee a resume
former was to render engineering design services to of fees due to the latter. Said fees, according to
the latter for fees, as stipulated in the agreement. appellant. amounted to P10,861.08 instead of the
The services included design computation and amount claimed by the appellee. On June 14, 1962
sketches, contract drawing and technical appellant sent appellee a check for said amount,
specifications of all engineering phases of the which appellee refused to accept as full payment of
project designed by O. A. Kalalo and Associates bill the balance of the fees due him.
of quantities and cost estimate, and consultation On August 10, 1962, appellee filed a complaint
and advice during construction relative to the work. against appellant, containing four causes of action.
The fees agreed upon were percentages of the In the first cause of action, appellee alleged that for
architect's fee, to wit: structural engineering, 12-½ services rendered in connection with the different
%; electrical engineering, 2-½%. The agreement projects therein mentioned there was due him fees
was subsequently supplemented by a "clarification in sum s consisting of $28,000 (U.S.) and
to letter-proposal" which provided, among other P100,204.46, excluding interests, of which sums
things, that "the schedule of engineering fees in this only P69,323.21 had been paid, thus leaving unpaid
agreement does not cover the following: ... D. the $28,000.00 and the balance of P30,881.25. In
Foundation soil exploration, testing and evaluation; the second cause of action, appellee claimed
E. Projects that are principally engineering works P17,000.00 as consequential and moral damages; in
such as industrial plants, ..." and "O. A. Kalalo and the third cause of action claimed P55,000.00 as
Associates reserve the right to increase fees on moral damages, attorney's fees and expenses of
projects ,which cost less than P100,000 ...." 2 litigation; and in the fourth cause of action he
Pursuant to said agreement, appellee rendered claimed P25,000.00 as actual damages, and also for
engineering services to appellant in the following attorney's fees and expenses of litigation.
projects:
In his answer, appellant admitted that appellee
(a) Fil-American Life Insurance rendered engineering services, as alleged in the first
Building at Legaspi City; cause of action, but averred that some of appellee's
(b) Fil-American Life Insurance services were not in accordance with the agreement
Building at Iloilo City; and appellee's claims were not justified by the
services actually rendered, and that the aggregate
(c) General Milling Corporation Flour amount actually due to appellee was only
Mill at Opon Cebu; P80,336.29, of which P69,475.21 had already been
(d) Menzi Building at Ayala Blvd., paid, thus leaving a balance of only P10,861.08.
Makati, Rizal; Appellant denied liability for any damage claimed by
appellee to have suffered, as alleged in the second,
third and fourth causes of action. Appellant also set interest thereon from the filing of the
up affirmative and special defenses, alleging that complaint in the case until fully paid
appellee had no cause of action, that appellee was for; by ordering the defendant to pay
in estoppel because of certain acts, representations, to plaintiff the further sum of
admissions and/or silence, which led appellant to P8,000.00 by way of attorney's fees
believe certain facts to exist and to act upon said which the Court finds to be
facts, that appellee's claim regarding the Menzi reasonable in the premises, with costs
project was premature because appellant had not against the defendant. The
yet been paid for said project, and that appellee's counterclaim of the defendant is
services were not complete or were performed in ordered dismissed.
violation of the agreement and/or otherwise From the decision, this appeal was brought, directly
unsatisfactory. Appellant also set up a counterclaim to this Court, raising only questions of law.
for actual and moral damages for such amount as
the court may deem fair to assess, and for During the pendency of this appeal, appellee filed a
attorney's fees of P10,000.00. petition for the issuance of a writ of attachment
under Section 1 (f) of Rule 57 of the Rules of Court
Inasmuch as the pleadings showed that the upon the ground that appellant is presently residing
appellee's right to certain fees for services rendered in Canada as a permanent resident thereof. On June
was not denied, the only question being the 3, 1969, this Court resolved, upon appellee's posting
assessment of the proper fees and the balance due a bond of P10,000.00, to issue the writ of
to appellee after deducting the admitted payments attachment, and ordered the Provincial Sheriff of
made by appellant, the trial court, upon agreement Rizal to attach the estate, real and personal, of
of the parties, authorized the case to be heard appellant Alfredo J. Luz within the province, to the
before a Commissioner. The Commissioner rendered value of not less than P140,000.00.
a report which, in resume, states that the amount
due to appellee was $28,000.00 (U.S.) as his fee in The appellant made the following assignments of
the International Research Institute Project which errors:
was twenty percent (20%) of the $140,000.00 that I. The lower court erred in not
was paid to appellant, and P51,539.91 for the other declaring and holding that plaintiff-
projects, less the sum of P69,475.46 which was appellee's letter dated December 11,
already paid by the appellant. The Commissioner 1961 (Exhibit "1") and the statement
also recommended the payment to appellee of the of account (Exhibit "1-A") therein
sum of P5,000.00 as attorney's fees. enclosed, had the effect, cumulatively
At the hearing on the Report of the Commissioner, or alternatively, of placing plaintiff-
the respective counsel of the parties manifested to appellee in estoppel from thereafter
the court that they had no objection to the findings modifying the representations made
of fact of the Commissioner contained in the Report, in said exhibits, or of making plaintiff-
and they agreed that the said Report posed only two appellee otherwise bound by said
legal issues, namely: (1) whether under the facts representations, or of being of
stated in the Report, the doctrine of estoppel would decisive weight in determining the
apply; and (2) whether the recommendation in the true intent of the parties as to the
Report that the payment of the amount. due to the nature and extent of the engineering
plaintiff in dollars was legally permissible, and if not, services rendered and/or the amount
at what rate of exchange it should be paid in pesos. of fees due.
After the parties had submitted their respective II. The lower court erred in declaring
memorandum on said issues, the trial court and holding that the balance owing
rendered its decision dated February 10, 1967, the from defendant-appellant to plaintiff-
dispositive portion of which reads as follows: appellee on the IRRI Project should be
WHEREFORE, judgment is rendered in paid on the basis of the rate of
favor of plaintiff and against the exchange of the U.S. dollar to the
defendant, by ordering the defendant Philippine peso at the time of
to pay plaintiff the sum of P51,539.91 payment of judgment. .
and $28,000.00, the latter to be III. The lower court erred in not
converted into the Philippine currency declaring and holding that the
on the basis of the current rate of aggregate amount of the balance due
exchange at the time of the payment from defendant-appellant to plaintiff-
of this judgment, as certified to by the appellee is only P15,792.05.
Central Bank of the Philippines, from
which shall be deducted the sum of IV. The lower court erred in awarding
P69,475.46, which the defendant had attorney's fees in the sum of
paid the plaintiff, and the legal rate of P8,000.00, despite the
 commissioner's finding, which While it is true that plaintiff vacillated
plaintiff-appellee has accepted and in his claim, yet, defendant did not in
has not questioned, that said fee be anyway rely or believe in the different
only P5,000.00; and claims asserted by the plaintiff and
instead insisted on a claim that
V. The lower court erred in not
plaintiff was only entitled to
granting defendant-appellant relief on
P10,861.08 as per a separate resume
his counter-claim.
of fees he sent to the plaintiff on May
1. In support of his first assignment of error 18, 1962 (See Exhibit 6). 4
appellant argues that in Exhibit 1-A, which is a
The foregoing finding of the Commissioner, not
statement of accounts dated December 11, 1961,
disputed by appellant, was adopted by the trial
sent by appellee to appellant, appellee specified the
court in its decision. Under article 1431 of the Civil
various projects for which he claimed engineering
Code, in order that estoppel may apply the person,
fees, the precise amount due on each particular
to whom representations have been made and who
engineering service rendered on each of the various
claims the estoppel in his favor must have relied or
projects, and the total of his claims; that such a
acted on such representations. Said article provides:
statement barred appellee from asserting any claim
contrary to what was stated therein, or from taking Art. 1431. Through estoppel an
any position different from what he asserted therein admission or representation is
with respect to the nature of the engineering rendered conclusive upon the person
services rendered; and consequently the trial court making it, and cannot be denied or
could not award fees in excess of what was stated in disproved as against the person
said statement of accounts. Appellant argues that relying thereon.
for estoppel to apply it is not necessary, contrary toAn essential element of estoppel is that the person
the ruling of the trial court, that the appellant should
invoking it has been influenced and has relied on
have actually relied on the representation, but that the representations or conduct of the person sought
it is sufficient that the representations were to be estopped, and this element is wanting in the
intended to make the defendant act there on; that instant case. In Cristobal vs. Gomez, 5 this Court
assuming arguendo that Exhibit 1-A did not put held that no estoppel based on a document can be
appellee in estoppel, the said Exhibit 1-A invoked by one who has not been mislead by the
nevertheless constituted a formal admission that false statements contained therein. And in Republic
would be binding on appellee under the law on of the Philippines vs. Garcia, et al., 6 this Court ruled
evidence, and would not only belie any inconsistent that there is no estoppel when the statement or
claim but also would discredit any evidence action invoked as its basis did not mislead the
adduced by appellee in support of any claim adverse party-Estoppel has been characterized as
inconsistent with what appears therein; that, harsh or odious and not favored in law. 7 When
moreover, Exhibit 1-A, being a statement of misapplied, estoppel becomes a most effective
account, establishes prima facie the accuracy and weapon to accomplish an injustice, inasmuch as it
correctness of the items stated therein and its shuts a man's mouth from speaking the truth and
correctness can no longer be impeached except for debars the truth in a particular case. 8 Estoppel
fraud or mistake; that Exhibit 1-A furthermore,
cannot be sustained by mere argument or doubtful
constitutes appellee's own interpretation of the inference: it must be clearly proved in all its
contract between him and appellant, and hence, is essential elements by clear, convincing and
conclusive against him. satisfactory evidence. 9 No party should be
On the other hand, appellee admits that Exhibit 1-A precluded from making out his case according to its
itemized the services rendered by him in the various truth unless by force of some positive principle of
construction projects of appellant and that the total law, and, consequently, estoppel in pains must be
engineering fees charged therein was P116,565.00, applied strictly and should not be enforced unless
but maintains that he was not in estoppel: first, substantiated in every particular. 1 0
because when he prepared Exhibit 1-A he was The essential elements of estoppel in pais may be
laboring under an innocent mistake, as found by the considered in relation to the party sought to be
trial court; second, because appellant was not estopped, and in relation to the party invoking the
ignorant of the services actually rendered by estoppel in his favor. As related to the party to be
appellee and the fees due to the latter under the estopped, the essential elements are: (1) conduct
original agreement, Exhibit "A." amounting to false representation or concealment of
We find merit in the stand of appellee. material facts or at least calculated to convey the
impression that the facts are otherwise than, and
The statement of accounts (Exh. 1-A) could not
inconsistent with, those which the party
estop appellee, because appellant did not rely
subsequently attempts to assert; (2) intent, or at
thereon as found by the Commissioner, from whose
least expectation that his conduct shall be acted
Report we read:
upon by, or at least influence, the other party; and
(3) knowledge, actual or constructive, of the real either his ignorance or innocent mistake and he,
facts. As related to the party claiming the estoppel, therefore, is not bound by it.
the essential elements are (1) lack of knowledge Appellant further contends that Exhibit 1-A being a
and of the means of knowledge of the truth as the statement of account, establishes prima facie the
facts in questions; (2) (reliance, in good faith, upon accuracy and correctness of the items stated
the conduct or statements of the party to be therein. If prima facie, as contended by appellant,
estopped; (3) action or inaction based thereon of then it is not absolutely conclusive upon the parties.
such character as To change the position or status An account stated may be impeached for fraud,
of the party claiming the estoppel, to his injury, mistake or error. In American Decisions, Vol. 62, p.
detriment or prejudice. 1 1 95, cited as authority by appellant himself. we read
The first essential element in relation to the party thus:
sought to be estopped does not obtain in the instant An account stated or settled is a mere
case, for, as appears in the Report of the admission that the account is correct.
Commissioner, appellee testified "that when he It is not an estoppel. The account is
wrote Exhibit 1 and prepared Exhibit 1-A, he had not still open to impeachment for
yet consulted the services of his counsel and it was mistakes or errors. Its effect is to
only upon advice of counsel that the terms of the establish, prima facie, the accuracy of
contract were interpreted to him resulting in his the items without other proof; and the
subsequent letters to the defendant demanding party seeking to impeach it is bound
payments of his fees pursuant to the contract to show affirmatively the mistake or
Exhibit A." 1 2 This finding of the Commissioner was error alleged. The force of the
adopted by the trial court. 1 3 It is established , admission and the strength of the
therefore, that Exhibit 1-A was written by appellee evidence necessary to overcome it
through ignorance or mistake. Anent this matter, it will depend upon the circumstances
has been held that if an act, conduct or of the case.
misrepresentation of the party sought to be
estopped is due to ignorance founded on innocent In the instant case, it is Our view that the ignorance
mistake, estoppel will not arise. 1 4 Regarding the mistake that attended the writing of Exhibit 1-A by
essential elements of estoppel in relation to the appellee was sufficient to overcome the prima facie
party claiming the estoppel, the first element does evidence of correctness and accuracy of said Exhibit
not obtain in the instant case, for it cannot be said 1-A.
that appellant did not know, or at least did not have Appellant also urges that Exhibit 1-A constitutes
the means of knowing, the services rendered to him appellee's own interpretation of the contract, and is,
by appellee and the fees due thereon as provided in therefore, conclusive against him. Although the
Exhibit A. The second element is also wanting, for, practical construction of the contract by one party,
as adverted to, appellant did not rely on Exhibit 1-A evidenced by his words or acts, can be used against
but consistently denied the accounts stated therein. him in behalf of the other party, 1 7 yet, if one of the
Neither does the third element obtain, for appellant parties carelessly makes a wrong interpretation of
did not act on the basis of the representations in the words of his contract, or performs more than the
Exhibit 1-A, and there was no change in his position, contract requires (as reasonably interpreted
to his own injury or prejudice. independently of his performance), as happened in
Appellant, however, insists that if Exhibit 1-A did not the instant case, he should be entitled to a
put appellee in estoppel, it at least constituted an restitutionary remedy, instead of being bound to
admission binding upon the latter. In this continue to his erroneous interpretation or his
connection, it cannot be gainsaid that Exhibit 1-A is erroneous performance and "the other party should
not a judicial admission. Statements which are not not be permitted to profit by such mistake unless he
estoppels nor judicial admissions have no quality of can establish an estoppel by proving a material
conclusiveness, and an opponent. whose admissions change of position made in good faith. The rule as to
have been offered against him may offer any practical construction does not nullify the equitable
evidence which serves as an explanation for his rules with respect to performance by mistake." 1 8
former assertion of what he now denies as a fact. In the instant case, it has been shown that Exhibit 1-
This may involve the showing of a mistake. A was written through mistake by appellee and that
Accordingly, in Oas vs. Roa, 1 6 it was held that the latter is not estopped by it. Hence, even if said
when a party to a suit has made an admission of Exhibit 1-A be considered as practical construction
any fact pertinent to the issue involved, the of the contract by appellee, he cannot be bound by
admission can be received against him; but such an such erroneous interpretation. It has been held that
admission is not conclusive against him, and he is if by mistake the parties followed a practice in
entitled to present evidence to overcome the effect violation of the terms of the agreement, the court
of the admission. Appellee did explain, and the trial should not perpetuate the error. 1 9
court concluded, that Exhibit 1-A was based on
2. In support of the second assignment of error, that provided in Circular No. 121 of the Central Bank of
the lower court erred in holding that the balance the Philippines, dated March 2, 1961. amending an
from appellant on the IRRI project should be paid on earlier Circular No. 117, and in force until January
the basis of the rate of exchange of the U.S. dollar 21, 1962 when it was amended by Circular No. 133,
to the Philippine peso at the time of payment of the thus:
judgment, appellant contends: first, that the official 1. All foreign exchange receipts shall
rate at the time appellant received his architect's be surrendered to the Central Bank of
fees for the IRRI project, and correspondingly his those authorized to deal in foreign
obligation to appellee's fee on August 25, 1961, was exchange as follows:
P2.00 to $1.00, and cites in support thereof Section
1612 of the Revised Administrative Code, Section 48 Percentage of Total to be surrendered
of Republic Act 265 and Section 6 of Commonwealth at
Act No. 699; second, that the lower court's Preferred: Free Market Rate: Rate:
conclusion that the rate of exchange to be applied
in the conversion of the $28,000.00 is the current (a) Export Proceeds, U.S. Government
rate of exchange at the time the judgment shall be Expenditures invisibles other than
satisfied was based solely on a mere presumption of those specifically mentioned
the trial court that the defendant did not convert, below. ................................................
there being no showing to that effect, the dollars 25 75
into Philippine currency at the official rate, when the (b) Foreign Investments, Gold
legal presumption should be that the dollars were Proceeds, Tourists and Inward
converted at the official rate of $1.00 to P2.00 Remittances of Veterans and Filipino
because on August 25, 1961, when the IRRI project Citizens; and Personal Expenses of
became due and payable, foreign exchange controls Diplomatic Per
were in full force and effect, and partial decontrol personnel ................................. 100" 2
was effected only afterwards, during the Macapagal 1
administration; third, that the other ground
The amount of $140,000.00 received by appellant
advanced by the lower court for its ruling, to wit,
that appellant committed a breach of his obligation foil the International Rice Research Institute project
is not within the scope of sub-paragraph (a) of
to turn over to the appellee the engineering fees
received in U.S. dollars for the IRRI project, cannot paragraph No. 1 of Circular No. 121. Appellant has
not shown that 25% of said amount had to be
be upheld, because there was no such breach, as
proven by the fact that appellee never claimed in surrendered to the Central Bank at the preferred
rate because it was either export proceeds, or U.S.
Exhibit 1-A that he should be paid in dollars; and
there was no provision in the basic contract (Exh. Government expenditures, or invisibles not included
in sub-paragraph (b). Hence, it cannot be said that
"A") that he should be paid in dollars; and, finally,
even if there were such provision, it would have no the trial court erred in presuming that appellant
converted said amount at the free market rate. It is
binding effect under the provision of Republic Act
529; that, moreover, it cannot really be said that no hard to believe that a person possessing dollars
would exchange his dollars at the preferred rate of
payment was made on that account for appellant
had already paid P57,000.00 to appellee, and under P2.00 to $1.00, when he is not obligated to do so,
rather than at the free market rate which is much
Article 125 of the Civil Code, said payment could be
said to have been applied to the fees due from the higher. A person is presumed to take ordinary care
of his concerns, and that the ordinary course of
IRRI project, this project being the biggest and this
debt being the most onerous. business has been
followed. 2 2
In refutation of appellant's argument in support of
the second assignment of error, appellee argues Under the agreement, Exhibit A, appellee was
entitled to 20% of $140,000.00, or the amount of
that notwithstanding Republic Act 529, appellant
can be compelled to pay the appellee in dollars in $28,000.00. Appellee, however, cannot oblige the
appellant to pay him in dollars, even if appellant
view of the fact that appellant received his fees in
dollars, and appellee's fee is 20% of appellant's himself had received his fee for the IRRI project in
dollars. This payment in dollars is prohibited by
fees; and that if said amount is be converted into
Philippine Currency, the rate of exchange should be Republic Act 529 which was enacted on June 16,
1950. Said act provides as follows:
that at the time of the execution of the judgment. 2
0 SECTION 1. Every provision contained
in, or made with respect to, any
We have taken note of the fact that on August 25,
1961, the date when appellant said his obligation to obligation which provision purports to
give the obligee the right to require
pay appellee's fees became due, there was two
rates of exchange, to wit: the preferred rate of payment in gold or in a particular kind
of coin or currency other than
P2.00 to $1.00, and the free market rate. It was so
Philippine currency or in an amount of
 money of the Philippines measured expressed in Philippine currency at the rate of
thereby, be as it is hereby declared exchange at the time of judgment rather than at the
against public policy, and null, void rate of exchange prevailing on the date of
and of no effect, and no such defendant's breach. This is also the ruling of
provision shall be contained in, or American court as follows:
made with respect to, any obligation The value in domestic money of a
hereafter incurred. Every obligation payment made in foreign money is
heretofore or here after incurred, fixed with respect to the rate of
whether or not any such provision as exchange at the time of payment. (70
to payment is contained therein or CJS p. 228)
made with respect thereto, shall be
discharged upon payment in any coin According to the weight of authority
or currency which at the time of the amount of recovery depends upon
payment is legal tender for public and the current rate of exchange, and not
private debts: Provided, That, ( a) if the par value of the particular money
the obligation was incurred prior to involved. (48 C.J. 605-606)
the enactment of this Act and The value in domestic money of a
required payment in a particular kind payment made in foreign money is
of coin or currency other than fixed in reference to the rate of
Philippine currency, it shall be exchange at the time of such
discharged in Philippine currency payment. (48 C.J. 605)
measured at the prevailing rate of
exchange at the time the obligation It is Our considered view, therefore, that appellant
was incurred, (b) except in case of a should pay the appellee the equivalent in pesos of
loan made in a foreign currency the $28,000.00 at the free market rate of exchange
stipulated to be payable in the same at the time of payment. And so the trial court did
currency in which case the rate of not err when it held that herein appellant should pay
exchange prevailing at the time of the appellee $28,000.00 "to be converted into the
stipulated date of payment shall Philippine currency on the basis of the current rate
prevail. All coin and currency, of exchange at the time of payment of this
including Central Bank notes, judgment, as certified to by the Central Bank of the
heretofore or hereafter issued and Philippines, ...." 2 4
declared by the Government of the Appellant also contends that the P57,000.00 that he
Philippines shall be legal tender for allhad paid to appellee should have been applied to
debts, public and private. the due to the latter on the IRRI project because
Under the above-quoted provision of Republic Act such debt was the most onerous to appellant. This
529, if the obligation was incurred prior to the contention is untenable. The Commissioner who was
enactment of the Act and require payment in a authorized by the trial court to receive evidence in
particular kind of coin or currency other than the this case, however, reports that the appellee had
Philippine currency the same shall be discharged in not been paid for the account of the $28,000.00
Philippine currency measured at the prevailing rate which represents the fees of appellee equivalent to
of exchange at the time the obligation was incurred. 20% of the $140,000.00 that the appellant received
As We have adverted to, Republic Act 529 was as fee for the IRRI project. This is a finding of fact by
enacted on June 16, 1950. In the case now before Us the Commissioner which was adopted by the trial
the obligation of appellant to pay appellee the 20% court. The parties in this case have agreed that they
of $140,000.00, or the sum of $28,000.00, accrued do not question the finding of fact of the
on August 25, 1961, or after the enactment of Commissioner. Thus, in the decision appealed from
Republic Act 529. It follows that the provision of the lower court says:
Republic Act 529 which requires payment at the At the hearing on the Report of the
prevailing rate of exchange when the obligation was Commissioner on February 15, 1966,
incurred cannot be applied. Republic Act 529 does the counsels for both parties
not provide for the rate of exchange for the manifested to the court that they
payment of obligation incurred after the enactment have no objection to the findings of
of said Act. The logical Conclusion, therefore, is that facts of the Commissioner in his
the rate of exchange should be that prevailing at report; and agreed that the said
the time of payment. This view finds support in the report only poses two (2)legal issues,
ruling of this Court in the case of Engel vs. Velasco namely: (1) whether under the facts
& Co. 2 3 where this Court held that even if the stated in the Report, the doctrine of
obligation assumed by the defendant was to pay the estoppel will apply; and (2) whether
plaintiff a sum of money expressed in American the recommendation in the Report
currency, the indemnity to be allowed should be that the payment of amount due to
 the plaintiff in dollars is permissible (b) the recommendation in the
under the law, and, if not, at what Commissioner's Report that
rate of exchange should it be paid in defendant be ordered to pay plaintiff
pesos (Philippine currency) .... 2 5 the sum of '$28,000.00 (U.S.) or its
equivalent as the fee of the plaintiff
In the Commissioner's report, it is spetifically
under Exhibit 'A' in the IRRI project.'
recommended that the appellant be ordered to pay
the plaintiff the sum of "$28,000. 00 or its More specifically this Memorandum
equivalent as the fee of the plaintiff under Exhibit A proposes to demonstrate the
on the IRRI project." It is clear from this report of the affirmative of three legal issues
Commissioner that no payment for the account of posed, namely:
this $28,000.00 had been made. Indeed, it is not First: Whether or not plaintiff's letter
shown in the record that the peso equivalent of the dated December 11, 1961 (Exhibit 'I')
$28,000.00 had been fixed or agreed upon by the and/or Statement of Account (Exhibit
parties at the different times when the appellant '1-A') therein enclosed has the effect
had made partial payments to the appellee. of placing plaintiff in estoppel from
3. In his third assignment of error, appellant thereafter modifying the
contends that the lower court erred in not declaring representations made in said letter
that the aggregate amount due from him to and Statement of Account or of
appellee is only P15,792.05. Appellant questions the making plaintiff otherwise bound
propriety or correctness of most of the items of fees thereby; or of being decisive or great
that were found by the Commissioner to be due to weight in determining the true intent
appellee for services rendered. We believe that it is of the parties as to the amount of the
too late for the appellant to question the propriety engineering fees owing from
or correctness of those items in the present appeal. defendant to plaintiff;
The record shows that after the Commissioner had Second: Whether or not defendant
submitted his report the lower court, on February can be compelled to pay whatever
15, 1966, issued the following order: balance is owing to plaintiff on the
When this case was called for hearing IRRI (International Rice and Research
today on the report of the Institute) project in United States
Commissioner, the counsels of the dollars; and
parties manifested that they have no Third: Whether or not in case the
objection to the findings of facts in ruling of this Honorable Court be that
the report. However, the report poses defendant cannot be compelled to
only legal issues, namely: (1) whether pay plaintiff in United States dollars,
under the facts stated in the report, the dollar-to-peso convertion rate for
the doctrine of estoppel will apply; determining the peso equivalent of
and (2) whether the recommendation whatever balance is owing to plaintiff
in the report that the alleged payment in connection with the IRRI project
of the defendant be made in dollars is should be the 2 to 1 official rate and
permissible by law and, if not, in what not any other rate. 2 7
rate it should be paid in pesos
(Philippine Currency). For the purpose It is clear, therefore, that what was submitted by
of resolving these issues the parties appellant to the lower court for resolution did not
prayed that they be allowed to file include the question of correctness or propriety of
their respective memoranda which the amounts due to appellee in connection with the
will aid the court in the determination different projects for which the appellee had
of said issues. 2 6 rendered engineering services. Only legal questions,
as above enumerated, were submitted to the trial
In consonance with the afore-quoted order of the court for resolution. So much so, that the lower
trial court, the appellant submitted his court in another portion of its decision said, as
memorandum which opens with the following follows:
statements:
The objections to the Commissioner's
As previously manifested, this Report embodied in defendant's
Memorandum shall be confined to: memorandum of objections, dated
(a) the finding in the Commissioner's March 18, 1966, cannot likewise be
Report that defendant's defense of entertained by the Court because at
estoppel will not lie (pp. 17-18, the hearing of the Commissioner's
Report); and Report the parties had expressly
manifested that they had no objection
 to the findings of facts embodied "those conclusions reached by the trior from shifting
therein. testimony, weighing evidence, and passing on the
We, therefore hold that the third assignment of error credit of the witnesses, and it does not denote those
inferences drawn by the trial court from the facts
of the appellant has no merit.
ascertained and settled by it. 3 0 In the case at bar,
4. In his fourth assignment of error, appellant the estimate made by the Commissioner of the
questions the award by the lower court of P8,000.00 attorney's fees was an inference from the facts
for attorney's fees. Appellant argues that the ascertained by him, and is, therefore, not a finding
Commissioner, in his report, fixed the sum of of facts. The trial court was, consequently, not
P5,000.00 as "just and reasonable" attorney's fees, bound by that estimate, in spite of the manifestation
to which amount appellee did not interpose any of the parties that they had no objection to the
objection, and by not so objecting he is bound by findings of facts of the Commissioner in his report.
said finding; and that, moreover, the lower court Moreover, under Section 11 of Rule 33 of the Rules
gave no reason in its decision for increasing the of Court, the court may adopt, modify, or reject the
amount to P8,000.00. report of the commissioner, in whole or in part, and
Appellee contends that while the parties had not hence, it was within the trial court's authority to
objected to the findings of the Commissioner, the increase the recommended attorney's fees of
assessment of attorney's fees is always subject to P5,000.00 to P8,000.00. It is a settled rule that the
the court's appraisal, and in increasing the amount of attorney's fees is addressed to the sound
recommended fees from P5,000.00 to P8,000.00 the discretion of the court. 1
3

trial court must have taken into consideration It is true, as appellant contends, that the trial court
certain circumstances which warrant the award of did not state in the decision the reasons for
P8,000.00 for attorney's fees. increasing the attorney's fees. The trial court,
We believe that the trial court committed no error in however, had adopted the report of the
this connection. Section 12 of Rule 33 of the Rules Commissioner, and in adopting the report the trial
of Court, on which the fourth assignment of error is court is deemed to have adopted the reasons given
presumably based, provides that when the parties by the Commissioner in awarding attorney's fees, as
stipulate that a commissioner's findings of fact shall stated in the above-quoted portion of the report.
be final, only questions of law arising from the facts Based on the reasons stated in the report, the trial
mentioned in the report shall thereafter be court must have considered that the reasonable
considered. Consequently, an agreement by the attorney's fees should be P8,000.00. Considering
parties to abide by the findings of fact of the that the judgment against the appellant would
commissioner is equivalent to an agreement of facts amount to more than P100,000.00, We believe that
binding upon them which the court cannot the award of P8,000.00 for attorney's fees is
disregard. The question, therefore, is whether or not reasonable.
the estimate of the reasonable fees stated in the 5. In his fifth assignment of error appellant urges
report of the Commissioner is a finding of fact. that he is entitled to relief on his counterclaim. In
The report of the Commissioner on this matter reads view of what We have stated in connection with the
as follows: preceding four assignments of error, We do not
consider it necessary to dwell any further on this
As regards attorney's fees, under the provisions of assignment of error.
Art 2208, par (11), the same may be awarded, and
considering the number of hearings held in this WHEREFORE, the decision appealed from is
case, the nature of the case (taking into account the affirmed, with costs against the defendant-
technical nature of the case and the voluminous appellant. It is so ordered.
exhibits offered in evidence), as well as the way the Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal,
case was handled by counsel, it is believed, subject Castro, Fernando, Teehankee, Barredo and Villamor,
to the Court's appraisal of the matter, that the sum JJ., concur.
of P5,000.00 is just and reasonable as attorney's
fees." 2 8
# Footnotes
It is thus seen that the estimate made by the
Commissioner was an expression of belief, or an 1 Annex A to complaint, pp. 18-21,
opinion. An opinion is different from a fact. The Record on Appeal.
generally recognized distinction between a 2 Record on Appeal, pp. 21-26.
statement of "fact" and an expression of "opinion" is
that whatever is susceptible of exact knowledge is a 3 Record on Appeal, pp. 115-118.
matter of fact, while that not susceptible of exact 4 Record on Appeal, p. 96.
knowledge is generally regarded as an expression of
opinion. 2 9 It has also been said that the word 5 50 Phil. 810, 821.
"fact," as employed in the legal sense includes 6 91 Phil. 46, 49.
7 Coronel, 7 et al. vs. CIR, et al., 24 27 Record on Appeal, pp. 113-115.
-SCRA, 990, 996. 28 Record on Appeal, p. 97; emphasis
8 28 Am. Jur., 2d. , pp. 601-602. supplied.
9 Rivers vs. Metropolitan Life Ins. Co. 29 Pitney Bomes Inc. vs. Sirkle et al.,
of New York, 6 NY 2d. 3, 5. 248 S. W. 2d. 920.
10 28 Am. Jur. 2d. p. 642. 30 Porter vs. Industrial Commission of
Wisconsin, et al., 173 Wis. 267, 181
11 Art. 1437, Civil Code. 28 Am. Jur.
N.W. 317, 318.
2d, pp. 640-641; Reyes and Puno, an
Outline of Philippine Civil Law, Vol. IV, 31 San Miguel Brewery, Inc. vs.
p. 277. Magno, L-21879, Sept. 29, 1967, 21
SCRA 292.
12 Record on appeal, pp. 95-96.
13 Record on Appeal, p. 155.
14 Ramiro vs. Grato 54 Phil. 744, 750;
Coleman vs. Southern Pacific Co., 14
Cal App. 2d 121, 296 P2d 386.
15 Wigmore, Evidence, 3d ed., Vol. IV.
pp. 21-23.
16 7 Phil. 20, 22.
17 Corbin On Contracts, Vol. 3, P. 145.
18 Corbin On Contracts, Vol. 3, p. 147,
and cases cited therein.
19 In re Chicago & E. 1. Rv. Co., 94
F2d 296; Boucher vs. Godfrey, 178 A
655, 119 Conn 622.
20 Citing 48 CJ, 605, 606-607 in
support of his submission.
21 Arthur P. Bacomo Central Bank
Circulars and Memoranda, 1949-
1968, p. 389.
22 Rule 131, See. 5, pars. (d) and (g),
Rules of Court.
23 47 Phil 115, 142.
24 This ruling modifies the decision in
Arrieta vs. National Rice and Corn
Corporation, L-15645, January 31,
1964 (10 SCRA 79), where it was held
that the obligation based on dollar
should be converted into the
Philippine peso at the rate of
exchange prevailing at the time the
obligation was incurred, or on July 1,
1952. The provision of Rep. Act 529
was wrong applied in this case,
because the obligation arose after the
enactment of Rep. Act 529 (June 16,
1950). The rate of exchange
prevailing at the time the obligation
was incurred would apply only to
obligations that were incurred prior to
the enactment of Rep. Act 529, but
not to obligations incurred after the
enactment of said Act. 25 Record on
Appeal, p. 149.
26 Record on Appeal, p. 99.