Ek Lee Steel Works Corporation v. Manila Castor Oil Corporation

Summary

This Supreme Court case involves a construction contract dispute between Ek Lee Steel Works Corporation and Manila Castor Oil Corporation regarding a P3.4 million castor oil plant project in Davao City. The contractor sued for unpaid balance after allegedly abandoning the project due to non-payment, while the owner claimed the contractor failed to meet completion deadlines. The trial court initially favored the contractor based on substantial performance doctrine, but the Court of Appeals reversed, finding the contractor failed to complete work by the June 15, 1988 deadline set in a modified agreement. The Supreme Court affirmed the dismissal, ruling that while the May 1988 letter did not novate the original contracts, it modified payment terms, and the contractor failed to prove completion by the deadline. The Court applied Civil Code provisions on reciprocal obligations, finding neither party could claim the other was in delay when both failed to comply with their respective obligations. The decision highlights the importance of contract compliance and burden of proof in construction disputes.