Ong v.

Bogñalbal
G.R. 149140|September 12, 2006
Ponente: Chico-Nazario, J.

Facts:
 Ernesto Bogñalbal, 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 petitioner’s 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 petitioner’s 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 Ong’s 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 Bogñalbal 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-Contractor’s 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 infractor’s liability for damages . However, the first infractor is still liable for
damages but the same should be tempered by the courts.
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.
o 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.
o 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.