G.R. No. 26321 , February 24, 1927
TSUNETARO TAKAO, plaintiff-appellant, vs. CARMEN BELANDO VDA. DE ITURRALDE, defendant-appellee.

FACTS

Tsunetaro Takao (contractor) entered into a contract with Carmen Belando Vda. de Iturralde (owner) to construct two houses for a total price of P30,700, to be completed within 90 working days. The contract included a penalty clause of P20 per day for delay. The owner appointed Architect Carlos A. Barretto to supervise the construction. Upon completion, Takao claimed the houses were finished in accordance with the contract and demanded payment of the balance of P8,180, plus P645 for extras. The owner refused payment, alleging the houses were not completed according to the contract. Takao filed an action to recover the amounts, while the owner counterclaimed for damages and specific performance, seeking an order for Takao to complete the houses and pay the penalty for delay. The trial court ruled in favor of the owner, ordering Takao to deliver possession, complete the houses within 30 days, and pay damages of P20 per day from July 1, 1925. Takao appealed.

ISSUE

1. Were the two buildings completed in accordance with the terms of the contract?
2. If not, what amount of damages should be allowed?

RULING

1. Yes, the buildings were completed in accordance with the contract. The Supreme Court found that the preponderance of evidence, particularly the documentary proofs, established completion. Key certificates included:
* Exhibit G: A certificate dated July 20, 1925, from the owner’s appointed supervising architect, Carlos A. Barretto, stating that the houses were “fully completed.”
* Exhibits C & D: Certificates dated July 7, 1925, from the City Engineer and Superintendent of Construction, confirming the buildings were constructed in conformity with city ordinances.
* Other Evidence: A certificate from the City Engineer’s office regarding completed plumbing work and the owner’s own prior action for ejectment (Exhibit O) implied her claim of ownership and right to possession, which was inconsistent with her assertion of non-completion.

2. The claims for penalties/damages by both parties are disallowed. Given the finding that the plaintiff completed the contract, there was no basis for the owner’s claim for delay damages. Conversely, the Court found no basis in justice and equity to award the penalty claimed by the contractor for the owner’s alleged delay in payment.

DISPOSITIVE PORTION:
The judgment of the lower court is REVERSED. Judgment is rendered in favor of plaintiff-appellant Tsunetaro Takao, ordering defendant-appellee Carmen Belando Vda. de Iturralde to pay him the sum of P8,825 (representing the unpaid balance of P8,180 plus P645 for extras), with costs.