Fil-Estate Properties, Inc., petitioner vs. Sps.

Gonzalo and Consuelo Go, respondents

GR No. 178221 || December 1, 2010 || Ponente: Perez, J.

Facts:
On December 29, 1995, Fil-Estate Properties, Inc., (Fil-Estate) entered into a contract to sell a
condominium unit [located in its project “Eight Sto. Domingo Place” in Q.C.] with the Go Spouses. Sps. Go
paid Fil-Estate paid ₱ 3,439,000.07 of the full contract price set at ₱ 3,620,000. Since Fil-Estate was not able
to build the condominium, Sps. Go demanded return of their payment. Fil-Estate did not yield, causing Sps.
Go to file before the Housing Land Use Regulatory Board (HLURB) a complaint for reimbursement of the
full contract price of the condominium unit, plus damages, attorney’s fees, and cost of suit. Fil-Estate, in its
answer, alleged that Sps. Go had no cause of action since the non-construction of the condominium was due
to the Asian Financial Crisis (AFC), a fortuitous event which the former did not have control.
The HLURB Regional Director approved the finding of the HLURB Arbiter in favor of Sps. Go,
rationalizing that the devaluation of the Philippine Peso is not a fortuitous event as any fluctuation in the
value of peso is a daily occurrence which is foreseeable, and its deleterious effects avoided by economic
measures. He furthers his point by citing: 1) Art. 1475 NCC which provides that upon perfection of a contract,
the parties may demand performance; and 2) Art. 1191 NCC which provides that should one of the parties
fail to comply with the obligation the aggrieved party may choose between fulfillment or recission of the
obligation, with damages in either case. The Board of Commissioners of the HLURB denied Fil-Estate’s
petition for review and consequent motion for reconsideration.
With regards the appeal filed by Fil-Estate in the Court of Appeals, the latter court affirmed the
decisions of the HLURB, restating that the 1997 AFC could not be considered a fortuitous event, and that
during the perfection of the contract in 1995, until 1996, the region was not yet in crisis; thus, should have
started, and even completed the project.

Issue(s):

i. WoN the Asian Financial Crisis of 1997 was tantamount to fortuitous event, excusing Fil-Estate
from liability of delivery (or reimbursement)?
a. Fil-Estate claims that the AFC was a fortuitous event unforeseen or inevitable within the
meaning of Art. 1174. Specifically, the extreme economic exigency and extraordinary currency
fluctuations, which affected industries such as real estate, could not have been reasonably
foreseen and were beyond the contemplation of the contracting parties.
b. Furthermore, Fil-Estate claims that it did not commit fraud, especially since they did not
abandon the project, instead, suspended it for the time being. It had already asked the HLURB
for extension of completion.

Ruling:

SC: The SC ruled in favor of Sps. Go, finding that the AFC of 1997 is NOT a fortuitous event,
consequently not exempting Fil-Estate from its obligation.

i. With regards the nature of the AFC as a question of fact:

a. General rule is that questions of fact may not be raised in petition for review cases in the SC,
save in cases were there were different apprehension of facts between the trial court(s) and the
Court of Appeals. In the instant case, there was no distinction made.
ii. With regards to the status of AFC as a fortuitous event:
a. The Court cited several jurisprudences providing that the AFC of 1997 is not among the
fortuitous events contemplated under Art. 1174 NCC; thus, does not constitute a valid
justification to renege an obligation.
b. The AFC cannot be generalized as unforeseeable and beyond the control of a business
corporation like Fil-Estate since the latter, who engages in pre-selling condominiums, is
presumed to master the fluctuating movement of the Philippine Peso in foreign exchange
markets.
iii. With regards to the awarding of damages:
 a. Sps. Go had indeed filed a complaint demanding reimbursement (a judicial demand), thus,
interest at legal rate must be added to the reimbursement along with attorney’s fees and cost of
suit.
Doctrine:

The Asian Financial Crisis is not a fortuitous event that could exempt corporations from liability as
it is part of corporations’ duty to master and foresee the fluctuating movement of the Philippine Peso in the
foreign currency market.

Additional Notes:

None.