Ong v.

Bogalbal
G.R. 149140|September 12, 2006
Ponente: Chico-Nazario, J.
Facts:
Ernesto Bogalbal, an architect-contractor, entered into an Owner-Contractor
Agreement with Victoria Ong for the construction of a proposed boutique owned
by the latter. The Agreement stipulates a contract price of P200k and that
payments shall be made by progress billing to be collected every 2 weeks based
on value of work accomplishment.
Petitioner refused to pay the 4th Billing Period covering March 4-18, 1995
equivalent to 15.47% of the total job. Respondent contends that her refusal to
pay was linked to the petitioners request to rush the flooring which caused
damage to the tile color. The petitioner, on the other hand, contends that her
refusal to pay was in relation to an excess of the value of the work accomplished.
The petitioner and the respondent made a compromise agreement that the
petitioner shall pay the respondent the 4th Billing payment if the flooring is
finished by April 24, 1995. When it became apparent that he could not complete
the flooring on or before said date, he abandoned the job.
The petitioners continued refusal to pay brought the respondent to file a
complaint. The MeTC ruled in favor of the respondent while the RTC ruled in favor
of the petitioner. The CA, on the other hand, reversed and set aside the RTC
decision.
Issues/Ruling:
WON Ongs refusal to pay is grounded on a novation of the agreement i.e. to
finish the flooring?-NO
o Ong claims a defense that the respondent agreed to finish the flooring
before the 4th billing shall be paid. She contends that this obligation was
not fulfilled hence payment is not due.
o If there is indeed an agreement then there has been a novation. However,
novation is never presumed. The evidence shows that there has been no
novation of the contract.
o Even assuming that there is indeed a novation of the contract, according
to Art. 1186 of NCC, the condition of finishing the flooring is deemed
fulfilled when Ong hired new contractors which prevented Bogalbal to
fulfill such condition.
WON respondent is justified in abandoning the project?-NO
o According to Art. 1191 par. 1 of NCC, the failure of the petitioner to fulfill
her obligation to pay grants the respondent the power to rescind his
obligation to finish the job. However, such power to rescind, absent a
stipulation in the Owner-Contractors Agreement, can only be empowered
by resorting to the courts i.e. a judicial declaration.
WON petitioner is entitled to the award of damages?-NO
o According to Art. 1192 of NCC, when both parties to the contract
committed a breach of the obligation, the second infractor is not liable to
damages because it is deemed compensated by the first infractors
liability for damages . However, the first infractor is still liable for damages
but the same should be tempered by the courts.

o
o

Art. 2215(1) does not conflict with Art 1192. The former provision merely
states that the courts can mitigate the damages equitably. Such provision
still contemplates that the one whose liability for damages may be
mitigate is the first infractor.
It is petitioner who first violated the contract. Hence, it is Ong who is liable
for damages which may be redued depending on what is equitable under
the circumstances.
CAUTION: Art. 1192 presupposes that the contracting parties are on equal
footing with respect to their principal obligations. The respondent was able
to finish 88.5% of the original contract and 60% of the flooring while only
73.38% of the contract was paid. Petitioner must first pay the value of the
accomplished work before damages shall be computed.