Spouses William & Jeanette Yao vs Carlomagno Matela

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Spouses William & Jeanette Yao vs Carlomagno Matela
G.R. No. 167767
August 29, 2006

Facts:

These consolidated petitions for review assail the Decision of the Court of Appeals dated September 30, 2004, which modified the Decision of the Regional Trial Court of Las Piñas City, as well as the Resolution dated April 15, 2005, denying the motions for reconsideration of both parties. Spouses William and Jeanette Yao pray that the assailed decision and resolution of the Court of Appeals be reversed and set aside and that the original complaint filed by Carlomagno B. Matela in the lower court be dismissed for lack of merit. On the other hand, Matela prays that the judgment of the Court of Appeals be modified by ordering the spouses Yao to pay the amount of P741,482.00 as actual damages instead of P391,582.00, plus interest and attorney’s fees.

On March 30, 1997, the spouses Yao contracted the services of Matela, a licensed architect, to manage and supervise the construction of a two-unit townhouse at a total cost of P5,090,560.00.

On the other hand, Matela prays that the judgment of the Court of Appeals be modified by ordering the spouses Yao to pay the amount of P741,482.00 as actual damages instead of P391,582.00, plus interest and attorney’s fees.

On April 1, 2002, the Regional Trial Court of Las Piñas City, Branch 275 rendered judgment in favor of Matela, ordering the spouses to pay the architect the sum of P741,428.00 plus legal rate of interest from the filing of the Complaint until fully paid and P50,000.00 as and by way of attorney’s fees and to pay the costs.
The trial court anchored its decision on the following findings of facts: Defendant spouses engaged the professional services of the plaintiff on March 30, 1997 to manage and supervise the construction of their two unit townhouses in Makati City at the agreed construction cost of P5,090,560.00. The construction started in the first week of April, 1997 and was completed by the plaintiff in April, 1998.

On the other hand, the Court of Appeals declared that as to the second assigned error, defendants-appellants claimed that plaintiff-appellee failed to finish the project within the agreed one hundred eighty (180) days. They pointed out that one hundred eighty (180) days from April 1997 ended on October 1997, however, the units were turned over only in April 1998. The Court does not find any merit in this argument either. Any delay in the delivery is cured by acceptance of the thing after delay incurred.

Issues:

a)W/N respondent Matela is entitled to the additional construction cost?

b)W/N the decision of the CA is not dismissing the complaint of the respondent and not awarding the counterclaim of the spouses Yao is in accordance with law and jurisprudence?

Held:

Matela claims that although the spouses Yao did not expressly admit their obligation as regards the additional construction cost of P300,000.00, they impliedly admitted the same as evidenced by the testimony of Jeanette Yao before the court a quo.
On the other hand, the spouses Yao contend that the complaint for the collection of a sum of money filed by Matela should be dismissed because it was the latter who breached his undertaking by using sub-standard materials and not completing the project. They also allege that the payments they made amounting to P4,699,610.93 should be considered as sufficient payment for the construction of the project.
In the instant case, we find that the factual findings of the trial court and Court of Appeals are contradicted by the evidence on record. Thus, a review of the facts is in order.

As agreed by the parties, Matela will construct the townhouses in accordance with the Specification while spouses Yao will pay Matela the agreed construction cost based on progress billings. The spouses Yao will not pay Matela the agreed price in full unless the latter has fully complied with and has discharged his obligations as specified in the contract.

In his book on Obligations and Contracts, the late Court of Appeals Justice Desiderio Jurado made the following discussion on reciprocal obligations.
The rule then is that in reciprocal obligations, one party incurs in delay from the moment the other party fulfills his obligation, while he himself does not comply or is not ready to comply in a proper manner with what is incumbent upon him. If neither party complies or is ready to comply with what is incumbent upon him, the default of one compensates for the default of the other. In such case, there can be no legal delay.

Evidently, both parties in this case breached their respective obligations. The well entrenched doctrine is that the law does not relieve a party from the effects of an unwise, foolish or disastrous contract, entered into with full awareness of what he was doing and entered into and carried out in good faith. Such a contract will not be discarded even if there was a mistake of law or fact.

WHEREFORE, the Decision dated September 30, 2004 of the Court of Appeals in CA-G.R. CV No. 75264 which affirmed with modification the Decision of the Regional Trial Court of Las Piñas City, Branch 275, and its Resolution dated April 15, 2005 denying reconsideration thereof, are REVERSED and SET ASIDE. The contract between spouses William and Jeanette Yao and Carlomagno B. Matela is DEEMED EXTINGUISHED and each of the parties shall bear their own losses. SO ORDERED.