OCTAVIO A. KALALO, PLAINTIFF-APPELLEE, VS. ALFREDO J. LUZ, DEFENDANT-APPELLANT.

Appeal from the decision, dated February 10, 1967, of the Court of First Instance of Rizal (Branch V, Quezon
City) in its Civil Case No. Q-6561.

On November 17, 1959, plaintiff-appellee
Octavio P. Kalalo
(hereinafter referred to as appellee), a
licensed civil engineer doing business under the firm name of O.A. Kalalo and Associates, entered into an agreement (Exhibit
A)^[1]
with defendant-appellant Alfredo J. Luz (hereinafter referred to as appellant),
a licensed architect, doing business under the firm name of A.J. Luz and
Associates, whereby the former was to render engineering design services to the
latter for fees, as stipulated in the agreement.  The services included design computation and
sketches, contract draw­ing and technical specifications of all engineering
phases of the project designed by O.A. Kalalo and As­sociates,
bill of quantities and cost estimate, and con­sultation and advice during
construction relative to the work.  The
fees agreed upon were percentages of the architect’s fee, to wit:  structural engineering, 12-1/2%; electrical
engineering, 2-1/2%; mechanical engineering, 2-1/2%; and sanitary engineering,
2-1/2%.  The agreement was subsequently
supplemented by a “clarification to letter-proposal” which provided,
among other things, that “the schedule of engineering fees in this
agreement does not cover the following: 
x x x D. Foundation
soil explora­tion, testing and evaluation; E. Projects that are prin­cipally
engineering works such as industrial plants, x x x” and “O.A. Kalalo and
Associates reserve the right to increase fees on projects which cost less than
P100,000 x x x“.^[2]
Pursuant to said agreement, appellee rendered
engineering services to appellant in the following pro­jects:

(a)  
Fil-American
Life Insurance Building
at Legaspi City;

(b)  
Fit-American
Life Insurance Building
at Iloilo City;

(c)  
General Milling Corporation Flour
Mill at Opon, Cebu;

(d)  
Menzi
Building at Ayala
Blvd., Makati,
Rizal;

(e)  
International Rice Research
Institute, Research Center,
Los Baños, Laguna;

(f)    
Aurelia’s Building at Mabini, Ermita, Manila;

(g)  
Far East Bank’s Office at Fil-American-Life Insurance Building at Isaac Peral, Ermita, Manila;

(h)  
Arthur Young’s residence at Forbes
Park, Makati, Rizal;

(i)     
L & S
Building at Dewey
Blvd., Manila; and

(j)     
Stanvac
Refinery Service Building at Limay, Bataan.

On December 11, 1961,
appellee sent to appellant a statement of account
(Exhibit “1”)^[3],
to which was attached an itemized statement of defendant-appellant’s account (Exh. “1-A”), according to which the total
engineering fee asked by appellee for services
rendered amounted to P116,565.00 from which sum was to be deducted the previous
payments made in the amount of P57,000.00, thus leaving a balance due in the
amount of P59,565.00.

On May 18, 1962
appellant sent appellee a resume of fees due to the
latter.  Said fees, according to ap­pellant,
amounted to P10,861.08 instead of the amount claimed by the appellee.  On June
14, 1962 appellant sent appellee a check
for said amount, which appellee refused to accept as
full payment of the balance of the fees due him.

On August 10, 1962,
appellee filed a complaint against appellant,
containing four causes of action.  In the
first cause of action, appellee alleged that for
services rendered in connection with the different projects therein mentioned
there was due him fees in sums consisting of $28,000 (U.S.) and P100,204.46,
excluding interests, of which sums only P69,323.21 had been paid, thus leaving
unpaid the $28,000.00 and the balance of P30,881.25.  In the second cause of action, appellee claimed P17,000.00 as consequential and moral
damages; in the third cause of action he claimed P55,000.00 as moral damages,
attorney’s fees and expenses of litiga­tion; and in the fourth cause of action
he claimed P25,000.00 as actual damages, and also for attorney’s  fees and expenses of litigation.

In his answer, appellant admitted that appellee
rendered engineering services, as alleged in the first cause of action, but
averred that some of appellee’s services were not in
accordance with the agreement and appellee’s claims
were not justified by the services actually rendered, and that the aggregate
amount actually due to appellee was only P80,336.29,
of which P69,475.21 had already been paid, thus leaving a balance of only
P10,861.08.  Appellant denied liability
for any damage claimed by appellee to have suffered,
as alleged in the second, third and fourth causes or action.  Appellant set up affirmative and special
defenses, alleging that appellee had no cause of
action, that appellee was in estoppel
because of certain acts, representations, admissions and/or silence, which led
appellant to believe certain facts to exist and to act upon said facts, that appellee’s claim re­garding the Menzi
project was premature because appellant had not yet been paid for said project,
and that appellee’s services were not complete or
were performed in violation of the agreement and/or otherwise unsatisfactory.  Appellant also set up a counterclaim for
actual and moral damages for such amount as the court may deem fair to assess,
and for attorney’s fees of P10,000.00.

Inasmuch as the pleadings showed that the appellee’s
right to certain fees for services rendered was not denied, the only question
being the assessment of the proper fees and the balance due to appellee after deducting the admitted payments made by
appellant, the trial court, upon agreement of the parties, authorized the case
to be heard before a Commissioner.  The
Commissioner rendered a report which, in resume, states that the amount due to appellee was $28,000.00 (U.S.) as his fee in the
International Research Institute Project which was twenty per cent (20%) of the
$140,000.00 that was paid to appellant, and P51,539.91 for the other projects,
less the sum of P69,475.46 which was already paid by the appellant.  The Commissioner also recommended the payment
to appellee of the sum of P5,000.00 as attorney’s
fees.

At the hearing on the Report of the Commissioner, the respective
counsel of the parties manifested to the court that they had no objection to
the findings of fact of the Commissioner contained in the Report, and they
agreed that the said Report posed only two legal issues, namely:  (1) whether under the facts stated in the
Report, the doctrine of estoppel would apply; and (2)
whether the recommendation in the Report that the payment of the amount due to
the plaintiff in dollars was legally permissible, and if not, at what rate of
exchange it should be paid in pesos. 
After the parties had submitted their respective memorandum on said
issues, the trial court rendered its decision, dated February 10, 1967, the dispositive portion of which reads as follows:

“WHEREFORE, judgment is rendered in favor of plaintiff and
against the defendant, by ordering the defendant to pay plaintiff the sum of
P51,539.91 and $28,000.00, the latter to be converted into the Philippine
currency on the basis of the current rate of exchange at the time of the payment
of this judgment, as certified to by the Central Bank of the Philippines, from
which shall be deducted the sum of P69,475.46, which the defendant had paid the
plaintiff, and the legal rate of interest thereon from the filing of the
complaint in this case until fully paid for; by ordering the defendant to pay
to plaintiff the further sum of P8,000.00 by way of attorney’s fees which the
Court finds to be reasonable in the premises, with costs against the
defendant.  The counterclaim of the
defendant is ordered dismissed.”

From the decision, this appeal was brought directly to this
Court, raising only questions of law.

During the pendency of this appeal, appellee filed a petition for the issuance of a writ of
attachment under Section 1 (f) of Rule 57 of the Rules of Court upon the ground
that appellant is presently residing in Canada as a permanent resident
thereof.  On June 3, 1969, this Court
resolved, upon appellee’s posting a bond of
P10,000.00, to issue the writ of attachment, and ordered the Provincial Sheriff
of Rizal to attach the estate, real and personal, of
appellant Alfredo J. Luz within the province, to the value of not less than
P140,000.00.

The appellant made the following assignments of errors:

I.  The lower court erred in
not declaring and holding that plaintiff-appellee’s
letter dated December 11, 1961 (Exhibit “1”) and the statement of
account (Exhibit “1-A”) therein enclosed, had the effect,
cumulatively or alternatively, of placing plaintiff-appellee
in estoppel from thereafter modifying the
representations made in said exhibits, or of making plaintiff-appellee otherwise bound by said rep­resentations, or of
being of decisive weight in determining the true intent or the parties as to
the nature and extent of the engineering services ren­dered and/or the amount
of fees due.

II.  The lower court erred in
declaring and holding that the balance owing from defendant-appellant to
plaintiff-appellee on the IRRI Project should be paid
on the basis of the rate of exchange of the U.S. dollar to the Philippine peso
at the time of payment of judgment.

III.  The lower court erred
in not declaring and holding that the aggregate amount of the balance due from
defendant-appellant to plaintiff-appellee is only
P15,792.05.

IV.  The lower court erred in
awarding attorney’s fees in the sum of P8,000.00, despite the commissioner’s
finding, which plaintiff-appellee has accepted and
has not questioned, that said fee be only P5000.00; and

V.  The lower court erred in
not granting defendant-appellant relief on his counter­claim.”

1.       In support of his
first assignment of error appellant argues that in Exhibit 1-A, which is a
statement of accounts dated December 11, 1961, sent by appellee
to appellant, appellee specified the various projects
for which he claimed engineering fees, the precise amount due on each
particular engineering service rendered on each of the various projects, and
the total of his claims; that such a statement barred appellee
from asserting any claim contrary to what was stated therein, or from taking
any position different from what he asserted therein with respect to the nature
of the engineering services rendered; and consequently the trial court could
not award fees in excess of what was stated in said statement of accounts.  Appellant argues that for estoppel
to apply it is not necessary, contrary to the ruling of the trial court, that
the appellant should have actually relied on the representation, but
that it is sufficient that the representations were intended to make the
defendant act thereon; that assuming arguendo
that Exhibit 1-A did not put appellee in estoppel, the said Exhibit 1-A nevertheless constituted a
formal admission that would be binding on appellee
under the law on evidence, and would not only belie any inconsistent claim but
also would discredit any evidence adduced by appellee
in support of any claim inconsistent with what appears therein; that, moreover,
Exhibit 1-A, being a statement of account, establishes prima facie
the accuracy and correctness of the items stated therein, and its correctness
can no longer be impeached except for fraud or mistake; that Exhibit 1-A,
furthermore, constitutes appellee’s own
interpretation of the contract between him and appellant, and hence, is
conclusive against him.

On the other hand, appellee admits that
Exhibit, 1-A itemized the services rendered by him in the various construction
projects of appellant and that the total engineering fees charged therein was
P116,565.00, but maintains that he was not in estoppel:  first, because when he prepared Exhibit 1-A
he was laboring under an innocent mistake, as found by the trial court; second,
because appellant was not ignorant of the services actually rendered by appellee and the fees due to the latter under the original
agreement, Exhibit A; and, third, because appellant did not rely on the data appaering in Exhibit 1-A, nor did he act by reason there­of.  Appellee further
maintains that he cannot be bound by Exhibit 1-A after it was satisfactorily
shown that there were services not included therein although actually rendered
by him to appellant, and that the fees were not correctly charged because of appellee’s ignorance of the legal implications or the terms
of the agreement, Exhibit “A”.

We find merit in the stand of appellee.

The statement of accounts (Exh. 1-A)
could not estop appellee,
because appellant did not rely there­on as found by the Commissioner, from
whose Report we read:

“While it is true that plaintiff vacillated in his claim, yet,
defendant did not in anyway rely or believe in the different claims asserted by
the plaintiff and instead insisted on a claim that plaintiff was only entitled
to P10,861.08 as per a separate resume of fees he sent to the plaintiff on May 18, 1962 (See Exhibit 6).”^[4]

The foregoing finding of the Commissioner,
not dis­puted by appellant, was adopted by the trial court in its
decision.  Under article 1431 of the
Civil Code, in order that estoppel may apply the
person, to whom representations have been made and who claims the estoppel in his favor must have relied or acted on such
representations.  Said article provides:

“Art. 1431. Through estoppel an
admission or representation is rendered conclusive upon the person making it,
and cannot be denied or disproved as against the person relying thereon.”

An essential element of estoppel is
that the person invoking it has been influenced and has relied on the
representations or conduct of the person sought to be estopped,
and this element is wanting in the instant case.  In Cristobal vs.
Gomez,^[5]
this Court held that no estoppel based on a document
can be invoked by one who has not been misled by the false statements contained
therein.  And in Republic of the
Philippines vs. Garcia, et al.,^[6]
this Court ruled that there is no estoppel when the
statement or action invoked as its basis did not mislead the adverse
party.  Estoppel
has been characterized as harsh or odious, and not favored in law^[7].  When misapplied, estoppel
becomes a most effective weapon to accomplish an injustice, inasmuch as it
shuts a man’s mouth from speaking the truth and debars the truth in a
particular case^[8].  Estoppel cannot be
sustained by mere argument or doubtful inference; it must be clearly proved in
all its essential elements by clear, convincing and satisfactory evidence^[9].  No party shall be precluded from making out
his case according to its truth unless by force of some positive principle of
law, and, consequently, estoppel in pais must be applied strictly and should not be enforced un­less
substantiated in every particular^[10].

The essential elements of estoppel in pais may be considered in relation to the party sought to
be estopped, and in relation to the party invoking
the estoppel in his favor.  As related to the party to be estopped, the essential elements are:  (1) conduct amounting to false representation
or concealment of material facts; or at least calculated to convey the
impression that the facts are otherwise than, and inconsistent with, those
which the party subsequently attempts to assert; (2) intent, or at least
expectation that this conduct shall be acted upon by, or at least influence,
the other party; and (3) knowledge, actual or constructive, of the real
facts.  As related to the party claiming
the estoppel, the essential elements are (1) lack of
knowledge and of the means of knowledge of the truth as to the facts in
question; (2) reliance, in good faith, upon the conduct or statements of the
party to be estopped; (3) action or inaction based
thereon of such character as to change the position or status of the party
claiming the estoppel, to his injury, detriment or
prejudice.^[11]

The first essential element in relation to the party sought to be
estopped does not obtain in the instant case, for, as
appears in the Report of the Commissioner, appellee
testified “that when he wrote Exhibit 1 and prepared Exhibit 1-A, he had
nor yet consulted the services of his counsel and it was only upon advice of
counsel that the terms of the contract were interpreted to him resulting in his
subsequent letters to the defendant demanding payments of his fees pursuant to
the contract Exhibit A.”^[12]
This finding of the Commissioner was adopted by the trial court.^[13]
It is established, therefore, that Exhibit 1-A was written by appellee through ignorance, or mistake.  Anent this matter, it has been held that if
an act, conduct or misrepresentation of the party sought to be estopped is due to ignorance founded on innocent mistake, estoppel will not arise.^[14]
Regarding the essential elements of estoppel in
relation to the party claiming the estoppel, the
first element does not obtain in the instant case, for it cannot be said that
appellant did not know, or at least did not have the means of knowing, the
services rendered to him by appellee and the fees due
thereon as provided in Ex­hibit A.  The
second element is also wanting, for, as adverted to, appellant did not rely on
Exhibit 1-A but consistently denied the accounts stated therein.  Neither does the third element obtain, for
appellant did not act on the basis of the representations in Exhibit 1-A, and
there was no change in his position, to his own injury or prejudice.

Appellant, however, insists that if Exhibit 1-A did not put appellee in estoppel, it at least
constitu­ted an admission binding upon the latter.  In this connection, it cannot be gainsaid
that Exhibit 1-A is not a judicial admission. 
Statements which are not estoppels nor judicial admissions have no
quality of conclusiveness, and an opponent whose admissions have been offered
against him may offer any evidence which serves as an explanation for his
former assertion of what he now denies as a fact.  This may involve the showing of a mistake.^[15]
Accordingly, in Oas vs. Roa,^[16]
it was held that when a party to a suit has made an admission of any fact
pertinent to the issue involved, the admission can be received against him; but
such an admission is not conclusive against him, and he is entitled to present
evidence to overcome the effect of the admission.  Appellee did
explain, and the trial court concluded, that Exhibit 1-A was based on either
his ignorance or innocent mistake and he, therefore, is not bound by it.

Appellant further contends that Exhibit 1-A, being a statement of
account, establishes prima facie the accuracy and correctness of
the items stated therein.  If prima
facie, as contended by appellant, then it is not absolutely conclusive
upon the parties.  An account stated may
be impeached for fraud, mistake or error. 
In American Decisions, Vol. 62, p. 95, cited as authority by appellant
himself, we read thus:

“An account stated or settled is a mere admission that the
account is correct.  It is not an estoppel.  The
account is still open to impeachment for mistakes or errors.  Its effect is to establish, prima facie,
the accuracy of the items without other proof; and the party seeking to impeach
it is bound to show affirmatively the mistake or error alleged.  The force of the admission and the strength
of the evidence necessary to overcome it will depend upon the circumstances of
the case.”

In the instant case, it is Our view that
the ignorance or mistake that attended the writing of Exhibit 1-A by appellee was sufficient to overcome the prima facie
evidence of correctness and accuracy of said Exhibit 1-A.

Appellant also urges that Exhibit 1-A constitutes appellee’s own interpretation or the contract, and is,
therefore, conclusive against him. 
Although the practical construction of the contract by one party,
evidenced by his words or acts, can be used against him in behalf of the other
party,^[17]
yet, if one of the parties carelessly makes a wrong interpretation of the words
of his contract, or performs more than the contract requires (as reasonably
interpreted independently of his performance), as happened in the instant case,
he should be entitled to a restitutionary remedy,
instead of being bound to continue to his erroneous interpretation or erroneous
performance, and “the other party should not be permitted to profit by
such mistake unless he can establish an estoppel by
proving a material change of position made in good faith.  The rule as to pratical
construction does not nullify the equitable rules with respect to performance
by mistake.”^[18]
In the instant case, it has been shown that Exhibit 1-A was written through
mistake by appellee and that the latter is not estopped by it. 
Hence, even if said Exhibit 1-A be considered as prac­tical construction
of the contract by appellee, he cannot be bound by
such erroneous interpretation.  It has
been held that if by mistake the parties followed a practice in violation of
the terms of the agreement, the court should not perpetuate the error.^[19]

2.       In support of the
second assignment of error, that the lower court erred in holding that the
balance from appellant on the IRRI project should be paid on the basis of the
rate of exchange of the U.S. dollar to the Philippine peso at the time of
payment of the judgment, appellant, contends: 
first, that the official rate at the time appellant received his
architect’s fees for the IRRI project, and correspondingly his obligation to appellee’s fee on August 25, 1961, was P2.00 to $1.00, and
cites in support thereof Section 1612 of the Revised Administrative Code,
Section 48 of Republic Act 265 and Section 6 of Commonwealth Act No. 699;
second, that the lower court’s conclusion that the rate of exchange to be
applied in the conversion of the $28,000.00 is the current rate of exchange at
the time the judgment shall be satisfied was based solely on a mere presumption
of the trial court that the defendant did not convert, there being no showing
to that effect, the dollars into Philippine currency at the official rate, when
the legal presumption should be that the dollars were converted at the official
rate of $1.00 to P2.00 because on August 25, 1961, when the IRRI project became
due and payable, foreign exchange controls were in full force and effect, and partial
decontrol was effected only afterwards, during the Macapagal
administration; third, that the other ground advanced by the lower court for
its ruling, to wit, that appellant committed a breach of his obligation to turn
over to the appellee the engineering fees received in
U.S. dollars for the IRRI project, cannot be upheld, because there was no such
breach, as proven by the fact that appellee never
claimed in Exhibit 1-A that he should be paid in dollars; and there was no
provision in the basic contract (Exh. “A”)
that he should be paid in dollars; and, finally, even if there were such
provision, it would have no binding effect under the provision or Republic Act
529; that, moreover, it cannot really be said that no payment was made on that
account, for appellant had already paid P57,000.00 to appellee,
and under Article 1254 of the Civil Code, said payment could be said to have
been applied to the fees due from the IRRI project, this project being the
biggest and this debt being the most onerous.

In refutation of appellant’s argument in support of the second
assignment of error, appellee argues that
notwithstanding Republic Act 529, appellant can be compelled to pay the appellee in dollars in view of the fact that appellant
received his fees in dollars, and appellee’s fee is
20% of appellant’s fees; and that if said amount is to be converted into
Philippine Currency, the rate of exchange should be that at the time of the
execution of the judgment.^[20]

We have taken note of the fact that on August 25, 1961, the date when appellant said
his obligation to pay appellee’s fees became due,
there were two rates of exchange, to wit: 
the preferred rate of P2.00 to $1.00, and the free market rate.  It was so provided in Circular No. 121 of the
Central Bank of the Philip­pines,
dated March 2, 1961,
amending an earlier Cir­cular No. 117, and in force until January 21, 1962 when it was amended by
Circular No. 133, thus:

“1. All foreign exchange receipts shall be surrendered to the
Central Bank of those authorized to deal in foreign exchange as follows:

Percentage
of Total to be

surrendered at

Preferred  :      Free
Market

Rate                Rate

:

(a) Export
Proceeds,

U.S.
Government

Expenditures and

invisibles other
than

those specifically

mentioned below ………             25                         75

(b) Foreign
Investments,

Gold Proceeds,
Tourists

and Inward
Remittances

of Veterans and
Filipino

Citizens; and
Personal

Expenses of
Diplomatic

Personnel ………………             –                           100″^[21]

The amount of $140,000.00 received by appellant for the International
Rice Research Institute pro­ject is not within the scope of sub-paragraph (a)
of paragraph No. 1 of Circular No. 121. 
Appellant has not shown that 25% of said amount had to be surrendered to
the Central Bank at the preferred rate because it was either export proceeds,
or U.S. Government expenditures, or invisibles not included in sub-paragraph
(b). Hence, it cannot be said that the trial court erred in presuming that
appellant converted said amount at the free market rate.  It is hard to believe that a person
possessing dollars would exchange his dollars at the preferred rate of P2.00 to
$1.00 when he is not obligated to do so, rather than at the free market rate
which is much higher.  A person is
presumed to take ordinary care of his concerns, and that the ordinary course of
business has been followed.^[22]

Under the agreement, Exhibit A, appellee
was en­titled to 20% of $140,000.00, or the amount of $28,000.00.  Appellee, however,
cannot oblige the appellant to pay him in dollars, even if appellant himself
had received his fee for the IRRI project in dollars.  This payment in dollars is prohibited by
Republic Act 529 which was enacted on June
16, 1950.  Said act provides
as follows:

“SECTION 1.  Every
provision contained in, or made with respect to, any obligation which provision
purports to give the obligee the right to require
payment in gold or in a particular kind of coin or currency other than
Philippine currency or in an amount of money of the Philippines measured
thereby, be as it is hereby declared against public policy, and null, void and
of no effect, and no such provision shall be contained in, or made with respect
to, any obligation hereafter incurred. 
Every obligation heretofore or hereafter incurred, whether or not any
such provision as to payment is contained therein or made with respect thereto,
shall be discharged upon payment in any coin or currency which at the time of
payment is legal tender for public and private debts:  Provided, That, (a) if the obligation
was incurred prior to the enactment of this Act and required payment in a
particular kind of coin or currency other than Philippine currency, it shall be
discharged in Philippine currency measured at the prevailing rate of exchange
at the time the obligation was incurred, (b) except in case of a loan made in a
foreign currency stipulated to be payable in the same currency in which case
the rate of exchange prevailing at the time of the stipulated date of payment
shall prevail.  All coin and currency,
including Central Bank notes, heretofore or hereafter issued and declared by
the Government of the Philippines
shall be legal tender for all debts, public and private.”

Under the above-quoted provision of Republic Act 529, if the
obligation was incurred prior to the en­actment of the Act and require
payment in a particular kind of coin or currency other than the Philippine
currency the same shall be discharged in Philippine currency measured at the
prevailing rate of exchange at the time the obligation was incurred.  As We have adverted to, Republic Act 529 was
enacted on June 16, 1950.  In the case now before Us the obligation of
appellant to pay appellee the 20% of $140,000.00, or
the sum of $28,000.00, accrued on August
25, 1961, or after the enactment of Republic Act 529.  It follows that the provision of Republic Act
529 which requires payment at the prevailing rate of exchange when the
obligation was incurred cannot be applied. 
Republic Act 529 does not provide for the rate of exchange for the
payment of obligation incurred after the enactment of said Act.  The logical conclusion, therefore, is that
the rate of exchange should be that prevailing at the time of payment.  This view finds support in the ruling of this
Court in the case of Engel vs. Velasco & Co.^[23]
where this Court held that even if the obligation assumed by the defendant was
to pay the plaintiff a sum of money expressed in American currency, the
indemnity to be allowed should be expressed in Philippine currency at the rate
of exchange at the time of judgment rather than at the rate of exchange
prevailing on the date of defendant’s breach. 
This is also the ruling of American courts, as fol­lows:

“The value in domestic money of a payment made in foreign
money is fixed with respect to the rate of exchange at the time of payment.”
(70 CJS, p. 228)

“According to the weight of authority the amount of recovery
depends upon the current rate of exchange, and not the par value of the
particular money involved.” (48.C.J. 605-606)

“The value in domestic money of a payment made in foreign
money is fixed in reference to the rate of exchange at the time of such
payment.” (48 C.J. 605)

It is Our considered view, therefore, that appellant should pay
the appellee the equivalent in pesos of the
$28,000.00 at the free market rate of exchange at the time of payment.  And so the trial court did not err when it
held that herein appellant should pay appellee
$28,000.00 “to be converted into the Philip­pine currency on the basis of
the current rate of exchange at the time of payment of this judgment, as
certified to by the Central Bank of the Philippines,…”^[24]

Appellant also contends that the P57,000.00 that he had paid to appellee should have been applied to the fees due to the
latter on the IRRI project because such debt was the most onerous to
appellant.  This contention is
untenable.  The Commissioner who was
authorized by the trial court to receive evidence in this case, however,
reports that the appellee had not been paid for the
account of the $28,000.00 which represents the fees of appellee
equivalent to 20% of the $140,000.00 that the appellant received as fee for the
IRRI project.  This is a finding of fact
by the Commissioner which was adopted by the trial court.  The parties in this case have agreed that
they do not question the finding of fact of the Commissioner.  Thus, in the decision appealed from the lower
court says:

“At the hearing on the Report of the Commissioner on February
15, 1966, the counsels for both parties manifested to the court that they have
no objection to the findings of facts of the Commissioner in his report; and
agreed that said report only poses two (2) legal issues, namely:  (1) whether under the facts stated in the
Report, the doctrine of estoppel will apply; and (2)
whether the recommendation in the Report that the payment of amount due to the
plaintiff in dollars is permissible under the law, and, if not, at what rate of
exchange should it be paid in pesos (Philippine currency)….”^[25]

In the Commissioner’s report, it is specifically recommended that
the appellant be ordered to pay the plaintiff the sum of “$28,000.00 or
its equivalent as the fee of the plaintiff under Exhibit A on the IRRI
project.” It is clear from this report of the Commis­sioner that no
payment for the account of this $28,000.­00 had been made.  Indeed, it is not shown in the record that
the peso equivalent of the $28,000.00 had been fixed or agreed upon by the
parties at the different times when the appellant had made partial payments to
the appellee.

3.       In his third
assignment of error, appellant contends that the lower court erred in not
declaring that the aggregate amount due from him to appellee
is only P15,792.05.  Appellant questions
the proprie­ty or correctness of most of the items of fees that were found by
the Commissioner to be due to appellee for services
rendered.  We believe that it is too late
for the appellant to question the propriety or correctness of those items in
the present appeal.  The record shows
that after the Commissioner had submitted his report the lower court, on February 15, 1966, issued the
following order:

“When this case was called for hearing today on the report of
the Commissioner, the counsels of the parties manifested that they have no
objection to the findings of facts in the report.  However, the report poses only legal issues,
namely:  (1) whether under the facts
stated in the report, the doctrine of estoppel will
apply; and (2) whether the recommendation in the report that the alleged
payment of the defendant be made in dollars is permissible by law and, it not,
in what rate it should be paid in pesos (Philippine Currency).  For the purpose of resolving these issues the
parties prayed that they be allowed to file their respective memoranda which
will aid the court in the determination of said issues.”^[26]

In consonance with the afore-quoted order of the trial court, the
appellant submitted his memorandum which opens with the following statements:

“As previously manifested, this Memorandum shall be confined
to:

“(a) the finding in the Commissioner’s Report that defendant’s
defense of estoppel will not lie (pp. 17-18, Report);
and

“(b) the recommendation in the Commissioner’s Report that
defendant be ordered to pay plaintiff the sum of ‘$28,000.00 (U.S.)
or its equivalent as the fee of the plaintiff under Exhibit ‘A’ in the IRRI
project.’

“More specifically this Memorandum proposes to demonstrate the
affirmative of three legal issues posed, namely:

“First:  Whether
or not plaintiff’s letter dated December 11, 1961 (Exhibit ‘1’) and/or
Statement of Account (Exhibit ‘1-A’) therein enclosed has the effect of placing
plaintiff in estoppel from thereafter modifying the representations
made in said letter and Statement of Account or of making plaintiff otherwise
bound thereby; or of being decisive or great weight in determining the true
intent or the parties as to the amount of the engineering fees owing from
defendant to plaintiff;

“Second:  Whether
or not defendant can be compelled to pay whatever balance is owing to plaintiff
on the IRRI (International Rice and Research Institute) project in United
States dollars; and

“Third:  Whether
or not in case the ruling of this Honorable Court be that defendant cannot be
compelled to pay plaintiff in United States
dollars, the dollar-to-peso convertion rate for
determining the peso equivalent of whatever balance is owing to plaintiff in
connection with the IRRI project should be the 2 to 1 official rate and not any
other rate.”^[27]

It is clear, therefore, that what was submitted by appellant to
the lower court for resolution did not include the question of correctness or
propriety of the amounts due to appellee in
connection with the different projects for which the appellee
had rendered engineering services.  Only
legal questions, as above enumerated, were submitted to the trial court for
resolution.  So much so, that the lower
court in another portion of its decision said, as follows.

“The objections to the Commissioner’s Report embodied in defendant’s
memorandum of objections, dated March
18, 1966, cannot likewise be entertained by the Court because at
the hearing of the Commissioner’s Report the parties had expressly manifested
that they had no objection to the findings of facts embodied therein.”

We, therefore, hold that the third assignment of error of the
appellant has no merit.

4.       In his fourth
assignment of error, appellant questions the award by the lower court of
P8,000.00 for attorney’s fees.  Appellant
argues that the Commissioner, in his report, fixed the sum of P5,000.00 as
“just and reasonable” attorney’s fees, to which amount appellee did not interpose any objection, and by not so
objecting he is bound by said finding; and that, moreover, the lower court gave
no reason in its decision for increasing the amount to P8,000.00.

Appellee contends that while the
parties had not objected to the findings of the Commissioner, the assessment of
attorney’s fees is always subject to the court’s appraisal, and in increasing
the recommended fees from P5,000.00 to P8,000.00 the trial court must have
taken into consideration certain circumstances which warrant the award of
P8,000.00 for attorney’s fees.

We believe that the trial court committed no error in this
connection.  Section 12 of Rule 33 of the
Rules or Court, on which the fourth assignment of error is presumably based,
provides that when the parties stipulate that a commissioner’s findings of fact
shall be final, only questions of law arising from the facts mentioned in the
report shall thereafter be considered. 
Consequently, an agreement by the parties to abide by the findings of
fact of the commissioner is equivalent to an agreement of facts binding upon
them which the court cannot disregard. 
The question, therefore, is whether or not the estimate of the
reasonable fees stated in the report of the Commissioner is a finding of fact.

The report of the Commissioner on this matter reads as follows:

‘”As regards attorney’s fees, under the provisions of Art.
2208, par. (11), the same may be awarded, and considering the number of
hearings held in this case, the nature of the case (taking into account the
technical nature of the case and the voluminous exhibits offered in evidence),
as well as the way the case was handled by counsel, it is believed, subject
to the Court’s appraisal of the matter, that the sum of P5,000.00 is just
and reasonable as attorney’s fees.”^[28]

It is thus seen that the estimate made by the Commissioner was an
expression of belief, or an opinion.  An opinion
is different from a fact.  The
generally recognized distinction between a statement of “fact” and an
expression of “opinion” is that whatever is susceptible of exact
knowledge is a matter of fact, while that not susceptible of exact knowledge is
generally regarded as an expression of opinion^[29].  It has also been said that the word
“fact”, as employed in the legal sense, includes “those
conclusions reached by the trior from shifting
testimony, weighing evidence, and passing on the credit of the witnesses, and
it does not denote those inferences drawn by the trial court from the facts
ascertained and settled by it.^[30]
In the case at bar, the estimate made by the Commissioner of the attorney’s
fees was an inference from the facts ascertained by him, and is, therefore, not
a finding of fact.  The trial court, was,
consequently, not bound by that estimate, in spite of the manifestation of the
parties that they had no objection to the findings of facts of the Commissioner
in his report.  Moreover, under Section
11 of Rule 33 of the Rules of Court, the court may adopt, modify, or reject the
report of the commissioner, in whole or in part, and hence, it was within the
trial court’s authority to increase the recommended attorney’s fees of
P5,000.00 to P8,000.00.  It is a settled
rule that the amount of attorney’s fees is addressed to the sound discretion of
the court^[31].

It is true, as appellant contends, that the trial court did not
state in the decision the reasons for increasing the attorney’s fees.  The trial court, however, had adopted the report
of the Commissioner, and in adopting the report the trial court is deemed to
have adopted the reasons given by the Commissioner in awarding attorney’s fees,
as stated in the above-quoted portion of the report.  Based on the reasons stated in the report,
the trial court must have considered that the reasonable attorney’s fees should
be P8,000.00.  Considering that the
judgment against the appellant would amount to more than P100,000.00, We
believe that the award of P8,000.00 for attorney’s fees is reasonable.

5. In his fifth assignment of error appellant urges that he is
entitled to relief on his counterclaim. 
In view of what We have stated in connection with the preceding four
assignments of error, We do not consider it necessary to dwell any further on
this assignment of error.

WHEREFORE, the decision appealed from is affirmed, with
costs against the defendant-appellant.

SO ORDERED.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Castro,
Fernando, Teehankee, Barredo,
and Villamor,
JJ., concur.

---

^[1] Annex
A to complaint, pp. 18-21, Record on Appeal.

^[2]
Record on Appeal, pp. 21-26.

^[3]
Record on Appeal, pp. 115-118.

^[4]
Record on Appeal, p. 96.

^[5]
50 Phil. 810, 821.

^[6]
91 Phil. 46, 49.

^[7] Coronel, et, al., vs. CIR, et al., 24 SCRA, 990,
996.

^[8]
26 Am. Jur., 2d., pp. 601-602.

^[9]
Rivers vs. Metropolitan Life Ins. Co. of New York,
6 N.Y., 2d. 3, 5.

^[10]
28 Am. Jur. 2d p. 642.

^[11]
Art. 1437, Civil Code; 26 Am. Jur. 2d, pp. 640­-641;
Reyes and Puno, an Outline of Philippine Civil Law,
Vol. IV, p. 277.

^[12]
Record on Appeal, pp. 95-96.

^[13]
Record on Appeal, p. 155.

^[14]
Ramiro vs. Graño, 54 Phil. 744, 750; Coleman vs.
Southern Pacific Co., 141 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. I. Ry. 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, Sec. 5, pars. (d) and (g), Rules of Court.

^[23]
41 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 wrongly 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.

^[27]
Record on Appeal, pp. 113-115.

^[28]
Record on Appeal, p. 97; underscoring supplied.

^[29]
Pitney Bomes Inc. vs. Sirkle,
et al., 248 S. W. 2d. 920.

^[30]
Porter vs. Industrial Commission of Wiscon­sin,
et al., 173 Wis. 267, 181 N.W.
317, 318.

^[31]
San Miguel Brewery, Inc. vs. Magno, L-21879, Sept. 29, 1967, 21 SCRA 292.