44. GANZON vs.COURT OF APPEALS and GELACIO E.

TUMAMBING
(G.R. No. L-48757, May 30, 1988)

FACTS:

On November 28, 1956, Gelacio Tumambing contracted the

services of Mauro B. Ganzon to haul 305 tons of scrap iron from
Mariveles, Bataan, to the port of Manila on board the lighter LCT
"Batman. Pursuant to that agreement, Mauro B. Ganzon sent his
lighter "Batman" to Mariveles where it docked in three feet of
water. Gelacio Tumambing delivered the scrap iron to defendant
Filomeno Niza, captain of the lighter, for loading which was
actually begun on the same date by the crew of the lighter under
the captain's supervision. When about half of the scrap iron was
already loaded, Mayor Jose Advincula of Mariveles, Bataan,
arrived and demanded P5,000.00 from Gelacio Tumambing. The
latter resisted the shakedown and after a heated argument between
them, Mayor Jose Advincula drew his gun and fired at Gelacio
Tumambing who sustained injuries.

After sometime, the loading of the scrap iron was resumed. But on
December 4, 1956, Acting Mayor Basilio Rub, accompanied by
three policemen, ordered captain Filomeno Niza and his crew to
dump the scrap iron where the lighter was docked. The rest was
brought to the compound of NASSCO. Later on Acting Mayor Rub
issued a receipt stating that the Municipality of Mariveles had
taken custody of the scrap iron.

Tumabing sued Ganzon; the latter alleged that the goods have not
been unconditionally placed under his custody and control to make
him liable. The trial court dismissed the case but on appeal,
respondent Court rendered a decision reversing the decision of the
trial court and ordering Ganzon to pay damages.

ISSUE: 

Whether or not a contract of carriage has been perfected.

HELD: 

Yes.
By the said act of delivery, the scraps were unconditionally placed
in the possession and control of the common carrier, and upon
their receipt by the carrier for transportation, the contract of
carriage was deemed perfected. Consequently, the petitioner-
carrier's extraordinary responsibility for the loss, destruction or
deterioration of the goods commenced. Pursuant to Art. 1736, such
extraordinary responsibility would cease only upon the delivery,
actual or constructive, by the carrier to the consignee, or to the
person who has a right to receive them. The fact that part of the
shipment had not been loaded on board the lighter did not impair
the said contract of transportation as the goods remained in the
custody and control of the carrier, albeit still unloaded.

Before Ganzon could be absolved from responsibility on the

ground that he was ordered by competent public authority to
unload the scrap iron, it must be shown that Acting Mayor Basilio
Rub had the power to issue the disputed order, or that it was
lawful, or that it was issued under legal process of authority. The
appellee failed to establish this. Indeed, no authority or power of
the acting mayor to issue such an order was given in evidence.
Neither has it been shown that the cargo of scrap iron belonged to
the Municipality of Mariveles. What we have in the record is the
stipulation of the parties that the cargo of scrap iron was
accumulated by the appellant through separate purchases here and
there from private individuals. The fact remains that the order
given by the acting mayor to dump the scrap iron into the sea was
part of the pressure applied by Mayor Jose Advincula to
shakedown Tumambing for P5,000.00. The order of the acting
mayor did not constitute valid authority for Ganzon and his
representatives to carry out.
45. FIL-ESTATE PROPERTIES, INC. AND FIL-ESTATE
NETWORK INC., Petitioners, vs.

SPOUSES CONRADO AND MARIA VICTORIA

RONQUILLO, Respondents.

G.R. No. 185798               January 13, 2014

PONENTE: Perez

FACTS:

                Petitioner Fil-Estate Properties, Inc. is the owner and

developer of the Central Park Place Tower while co-petitioner Fil-
Estate Network, Inc. is its authorized marketing agent. Respondent
Spouses Conrado and Maria Victoria Ronquillo purchased from
petitioners an 82-square meter condominium unit for a pre-selling
contract price of P5,174,000.00. On 29 August 1997, respondents
executed and signed a Reservation Application Agreement wherein
they deposited P200,000.00 as reservation fee. As agreed upon,
respondents paid the full downpayment of P1,552,200.00 and had
been paying the P63,363.33 monthly amortizations until
September 1998.

                Upon learning that construction works had stopped,

respondents likewise stopped paying their monthly amortization.
Claiming to have paid a total of P2,198,949.96 to petitioners,
respondents through two (2) successive letters, demanded a full
refund of their payment with interest. When their demands went
unheeded, respondents were constrained to file a Complaint for
Refund and Damages before the Housing and Land Use
Regulatory Board (HLURB). Respondents prayed for
reimbursement/refund of P2,198,949.96 representing the
total amortization payments, P200,000.00 as and by way of moral
damages, attorney’s fees and other litigation expenses.

                On 13 June 2002, the HLURB in favor of herein

respondents. The Arbiterconsidered petitioners’ failure to develop
the condominium project as a substantial breach of their obligation
which entitles respondents to seek for rescission with payment of
damages. The Arbiter also stated that mere economic hardship is
not an excuse for contractual and legal delay.
 ISSUES:

1. Whether or not the Asian financial crisis constitute a

fortuitous event which would justify delay by petitioners in the
performance of their contractual obligation;
2. Assuming that petitioners are liable, whether or not 12%
interest was correctly imposed on the judgment award

HELD:

FIRST ISSUE: NO

                The Supreme Court held that the Asian financial crisis is

not a fortuitous event that would excuse petitioners from
performing their contractual obligation.

                The Court ruled that “we cannot generalize that

the Asian financial crisis in 1997 was unforeseeable and beyond the
control of a business corporation. It is unfortunate that petitioner
apparently met with considerable difficulty e.g. increase cost of
materials and labor, even before the scheduled commencement of
its real estate project as early as 1995. However, a real estate
enterprise engaged in the pre-selling of condominium units is
concededly a master in projections on commodities and currency
movements and business risks. The fluctuating movement of the
Philippine peso in the foreign exchange market is an everyday
occurrence, and fluctuations in currency exchange rates happen
everyday, thus, not an instance of caso fortuito.”

SECOND ISSUE: NO

                The Court held that 6% is the proper legal interest rate.

                The resulting modification of the award of legal interest is,

also, in line with our recent ruling in Nacar v. Gallery Frames,
embodying the amendment introduced by the Bangko Sentral ng
Pilipinas Monetary Board in BSP-MB Circular No. 799 which
pegged the interest rate at 6% regardless of the source of
obligation.
46. METRO CONCAST STEEL CORP., SPOUSES JOSE S.
DYCHIAO AND TIU
OH YAN, ET. AL. vs. ALLIED BANK CORPORATION
G.R. No. 177921, December 4, 2013

PONENTE: Perlas-Bernabe, J.
TOPIC: Fortuitous Event

FACTS:
On various dates and for different amounts, Metro Concast, a
corporation duly organized and existing under and by virtue of
Philippine laws and engaged in the business of manufacturing
steel,5 through its officers, herein individual petitioners, obtained
several loans from Allied Bank. These loan transactions were
covered by a promissory note and separate letters of credit/trust
receipts.
They alleged that the economic reverses suffered by the Philippine
economy in 1998 as well as the devaluation of the peso against the
US dollar contributed greatly to the downfall of the steel industry,
directly affecting the business of Metro Concast and eventually
leading to its cessation. Petitioners offered the sale of Metro
Concast’s remaining assets, consisting of machineries and
equipment, to Allied Bank, which the latter, however, refused.
Eventually, with the alleged conformity of Allied Bank, through
Atty. Saw, a Memorandum of Agreement dated November 8, 2002
(MoA) was drawn between Metro Concast, represented by
petitioner Jose Dychiao, and Peakstar, through Camiling, under
which Peakstar obligated itself to purchase the scrap metal for a
total consideration of ₱34,000,000.00
Allied Bank appealed to the CA which, in a Decision32 dated
February 12, 2007, reversed and set aside the ruling of the RTC,
ratiocinating that there was "no legal basis in fact and in law to
declare that when Bankwise reneged its guarantee under the
[MoA].
Consequently, the CA granted the appeal and directed petitioners
to solidarily pay Allied Bank their corresponding obligations under
the aforementioned promissory note and trust receipts, plus
interests, penalty charges and attorney’s fees. Petitioners sought
reconsideration37 which was, however, denied in a Resolution38
dated May 10, 2007.
ISSUE:
Whether or not the loan obligations incurred by the petitioners
under the subject promissory note and various trust receipts have
already been extinguished.

RULING:
While it may be argued that Peakstar’s breach of the MoA was
unforseen by petitioners, the same us clearly not "impossible"to
foresee or even an event which is independent of human will."
Neither has it been shown that said occurrence rendered it
impossible for petitioners to pay their loan obligations to Allied
Bank and thus, negates the former’s force majeure theory
altogether. In any case, as earlier stated, the performance or breach
of the MoA bears no relation to the performance or breach of the
subject loan transactions, they being separate and distinct sources
of obligations. The fact of the matter is that petitioners’ loan
obligations to Allied Bank remain subsisting for the basic reason
that the former has not been able to prove that the same had
already been paid or, in any way, extinguished. In this regard,
petitioners’ liability, as adjudged by the CA, must perforce stand.
Considering, however, that Allied Bank’s extra-judicial demand on
petitioners appears to have been made only on December 10, 1998,
the computation of the applicable interests and penalty charges
should be reckoned only from such date.
47. PHILIPPINE REALTY AND HOLDINGS CORP. vs. LEY
CONSTRUCTION
AND DEVELOPMENT CORPORATION
G.R. no. 165548, June 13, 2011

PONENTE: Sereno, J.
TOPIC: Fortuitous Event

FACTS:
Sometime between April 1988 and October 1989, the two
corporations entered into four major construction projects, as
evidenced by four duly notarized "construction agreements." These
were the four construction projects the parties entered into
involving a Project 1, Project 2, Project 3 (all of which involve the
Alexandra buildings) and a Tektite Building. LCDC committed
itself to the construction of the buildings needed by PRHC, which
in turn committed itself to pay the contract price agreed upon.
Both parties agreed to enter into another agreement. Abcede asked
LCDC to advance the amount necessary to complete construction.
Its president acceded, on the absolute condition that it be allowed
to escalate the contract price. Abcede replied that he would take
this matter up with the board of directors of PRHC.The board of
directors turned down the request for an escalation agreement.
However, On 9 August 1991 Abcede sent a formal letter to LCDC,
asking for its conformity, to the effect that should it infuse P36
million into the project, a contract price escalation for the same
amount would be granted in its favor by PRHC.

ISSUE:
Whether or not there is a fortuitous event in the case at bar.

RULING:
There is a fortuitous event in the case at bar.
Under Article 1174 of the Civil Code, to exempt the obligor from
liability for a breach of an obligation due to an "act of God" or force
majeure, the following must concur:
(a) the cause of the breach of the obligation must be independent
of the will of the debtor; (b) the event must be either unforseeable
or unavoidable; (c) the event must be such as to render it
impossible for the debtor to fulfill his obligation in a normal
manner; and (d) the debtor must be free from any participation in,
or aggravation of the injury to the creditor. The shortage in
supplies and cement may be characterized as force majeure. In the
present case, hardware stores did not have enough cement
available in their supplies or stocks at the time of the construction
in the 1990s. Likewise, typhoons, power failures and interruptions
of water supply all clearly fall under force majeure. Since LCDC
could not possibly continue constructing the building under the
circumstances prevailing, it cannot be held liable for any delay that
resulted from the causes aforementioned.