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CONSOLIDATED INDUSTRIAL GASES, INC., Petitioner, vs. ALABANG MEDICAL

CENTER, Respondent. G.R. No. 181983, November 13, 2013

REYES, J.:

!"#$% On August 14, 1995, CIGI, as contractor and AMC, as owner, entered into acontract where! the "or#er ound itse$" to provide $aor and #ateria$s "or theinsta$$ation o" a #edica$ gas pipe$ine s!ste# "or the "irst, second and third "$oors%Phase 1 insta$$ation pro&ect' o" the hospita$ "or the contract price o" P9,(5),*+5.1(which AMC du$! paid in "u$$.

he herein $ega$ controvers! arose a"ter the parties entered into another agree#ent onOctoer -, 199) this ti#e "or the continuation o" the centra$ied #edica$ o/!gen andvacuu# pipe$ine s!ste# in the hospita$0s "ourth "i"th "$oors %Phase + insta$$ationpro&ect' at the cost o" P+,+)*,-44.4+. his second contract "o$$owed the sa#e ter#s and

conditions o" the contract "or the Phase 1 insta$$ation pro&ect. CIGI "orthwith co##encedinsta$$ation wor2s "or Phase + whi$e AMC paid the partia$ a#ount o" P1,333,333 with theagree#ent that the a$ance sha$$ e paid through progress i$$ing and within 15 da!s"ro# the date o" receipt o" the origina$ invoice sent ! CIGI.

On August 4, 199*, CIGI sent AMC Charge a$es Invoice o. 1+5(4* as co#p$etioni$$ing "or the unpaid a$ance o" P1,+)*,-44.4+ "or the Phase + insta$$ation pro&ect.6hen the sa$es invoice was $e"t unheeded, CIGI sent a de#and $etter to AMC on7anuar! *, 199(. AMC, however, sti$$ "ai$ed to pa! thus pro#pting CIGI to "i$e aco$$ection suit e"ore the RC on epte#er 15, 199(.

CIGI c$ai#ed that AMC0s o$igation to pa! the outstanding a$ance o" the contract price"or the Phase + insta$$ation pro&ect is a$read! due and de#anda$e pursuant to Artic$e II,page 4 o" the contract stating that the pro&ect sha$$ e paid through progress i$$ingwithin 15 da!s "ro# the date o" receipt o" origina$ invoice.

 AMC averred that its o$igation to pa! the a$ance o" the contract price has not!et accrued ecause CIGI sti$$ has not turned over a co#p$ete and "unctiona$ #edica$o/!gen and vacuu# pipe$ine s!ste#. AMC a$$eged that CIGI has not !et tested Phases1 and + which constitute one centra$ied #edica$ o/!gen and vacuu# pipe$ine s!ste#o" the hospita$ despite sustantia$ pa!#ents a$read! #ade.

Issue8 6hether or not CIGI0s de#and "or pa!#ent upon AMC is proper.

Ru$ing8 o.

The subject installation contracts bear the features of reciprocal  obligations.

Reciproca$ o$igations are those which arise "ro# the sa#e cause, and :in; which eachpart! is a detor and a creditor o" the other, such that the o$igation o" one is dependentupon the o$igation o" the other. he! are to e per"or#ed si#u$taneous$!, so that theper"or#ance o" one is conditioned upon the si#u$taneous "u$"i$$#ent o" the other.< Inreciproca$ o$igations, neither part! incurs in de$a! i" the other does not co#p$! or is notread! to co#p$! in a proper #anner with what is incu#ent upon hi#. =ro# the #o#entone o" the parties "u$"i$s his o$igation, de$a! ! the other egins.

>nder the su&ect contracts, CIGI as contractor ound itse$" to insta$$ a centra$ied#edica$ o/!gen and vacuu# pipe$ine s!ste# "or the "irst to "i"th "$oors o" AMC, which inturn, undertoo2 to pa! the contract price there"or in the #anner prescried in thecontract. ?eing reciproca$ in nature, the respective o$igations o" AMC and CIGI aredependent upon the per"or#ance o" the other o" its end o" the dea$ such that an! c$ai#

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o" de$a! or non@per"or#ance can on$! prosper i" the co#p$aining part! has"aith"u$$! co#p$ied with its own o$igation.

ere, CIGI co#p$ains that AMC re"used to aide ! its underta2ing o" "u$$ pa!#ent.6hi$e AMC does not dispute its $iai$it! to pa! the a$ance o" P1,+)*,-44.4+ eing

c$ai#ed ! CIGI, it asserts, however that the sa#e is not !et due ecause CIGI sti$$ hasnot turned over a co#p$ete and "unctiona$ #edica$ o/!gen and vacuu# pipe$ine s!ste#.CIGI is !et to conduct a test run o" the insta$$ation and an orientationBse#inar o" AMCe#p$o!ees who wi$$ e invo$ved in the operation o" the s!ste#. CIGI, on the other hand, does not den! that it "ai$ed to conduct the agreed orientationBse#inar and test runut it $a#es AMC "or such o#ission and asserts that the $atter "ai$ed to heed CIGI0sreuest "or e$ectrica$ "aci$ities necessar! "or the test run. CIGI a$so contends that itso$igation is #ere$! to provide $aor and insta$$ation.

he Court has painsta2ing$! eva$uated the records o" the case and ased thereon, therecan e no other conc$usion than that CIGI0s a$$egations "ai$ed to #uster #erit. he Court

"inds that CIGI did not "aith"u$$! co#p$ete its prestations and hence, its de#and "or pa!#ent cannot prosper ased on the "o$$owing grounds8 %a' under the two insta$$ationcontracts, CIGI was ound to per"or# #ore prestations than #ere$! supp$!ing $aor and #ateria$sD and %' CIGI "ai$ed to prove ! sustantia$ evidence that it reuested

 AMC "or e$ectrica$ "aci$ities as such, its "ai$ure to conduct a test run andorientationBse#inar is un&usti"ied.