116595-2007-Fil-Estate Properties Inc. v. Spouses Go PDF
116595-2007-Fil-Estate Properties Inc. v. Spouses Go PDF
116595-2007-Fil-Estate Properties Inc. v. Spouses Go PDF
RESOLUTION
QUISUMBING , J : p
For review on certiorari are the Decision 1 dated June 9, 2004 of the Court of Appeals in
CA-G.R. SP No. 79624, and its Resolution 2 dated August 3, 2004, denying the motion for
reconsideration.
The basic facts in this case are undisputed.
On December 29, 1995, petitioner Fil-Estate Properties, Inc. (Fil-Estate) entered into a
contract to sell a condominium unit to respondent spouses Gonzalo and Consuelo Go at
"Eight Sto. Domingo Place", a condominium project of petitioner located on Sto. Domingo
Avenue, Quezon City. The spouses paid a total of P3,439,000.07 of the full contract price
set at P3,620,000.00. AaSHED
Because petitioner failed to develop the condominium project, on August 4, 1999, the
spouses demanded the refund of the amount they paid, plus interest. When petitioner did
not refund the spouses, the latter filed a complaint against petitioner for reimbursement of
P3,620,000 representing the lump sum price of the condominium unit, plus interest,
P100,000 attorney's fees, and expenses of litigation before the Housing and Land Use
Regulatory Board (HLURB).
In answer, petitioner claimed that respondents had no cause of action since the delay in
the construction of the condominium was caused by the financial crisis that hit the Asian
region, a fortuitous event over which petitioner had no control.
On July 18, 2000, the HLURB Regional Director approved the decision of the Housing and
Land Use Arbiter in favor of the spouses Go. The HLURB ratiocinated that the Asian
financial crisis that resulted in the depreciation of the peso is not a fortuitous event as any
fluctuation in the value of the peso is a daily occurrence which is foreseeable and its
deleterious effects avoided by economic measures. The HLURB went on to say that when
petitioner discontinued the development of its condominium project, it failed to fulfill its
contractual obligations to the spouses. And following Article 1475 3 of the Civil Code,
upon perfection of the contract, the parties, here the spouses Go, may demand
performance. And under Article 1191 4 of the same code, should one of the parties, in this
instance Fil-Estate, fail to comply with the obligation, the aggrieved party may choose
between fulfillment or rescission of the obligation, with damages in either case. Inasmuch
as Fil-Estate could no longer fulfill its obligation, the spouses Go may ask for rescission of
the contract with damages. The dispositive portion of the decision reads:
WHEREFORE, the foregoing considered, judgment is hereby rendered as follows:
The Board of Commissioners of the HLURB denied petitioner's petition for review and
consequent motion for reconsideration. 6 The Office of the President dismissed
petitioner's appeal and denied its motion for reconsideration. 7
On appeal, asserting that both the HLURB and the Of ce of the President
committed reversible errors, Fil-Estate asked the Court of Appeals to set aside the
orders it is appealing. cSCTID
The Court of Appeals affirmed the actions taken by the HLURB and the Office of the
President and declared that the Asian financial crisis could not be considered a fortuitous
event and that respondents' right is provided for in Section 23 8 of Presidential Decree
(P.D.) No. 957, otherwise known as "The Subdivision and Condominium Buyers' Protective
Decree." The appellate court also noted that there was yet no crisis in 1995 and 1996 when
the project should have been started, and petitioner cannot blame the 1997 crisis for
failure of the project, nor for even not starting it, because the project should have been
completed by 1997.
The appellate court denied petitioner's motion for reconsideration.
Hence, this petition raising two issues for our resolution as follows:
I.
On the first issue, did the Court of Appeals err in ruling that the Asian financial crisis was
not a fortuitous event?
Petitioner, citing Article 1174 1 0 of the Civil Code, argues that the Asian financial crisis was
a fortuitous event being unforeseen or inevitable. Petitioner likewise cites Servando v.
Philippine Steam Navigation Co., 1 1 to bolster its case. Petitioner explains that the extreme
economic exigency and extraordinary currency fluctuations could not have been
reasonably foreseen and were beyond the contemplation of both parties when they
entered the contract. Petitioner further asserts that the resultant economic collapse of the
real estate industry was unforeseen by the whole Asia and if it was indeed foreseeable,
then all those engaged in the real estate business should have foreseen the impending
fiasco. Petitioner adds that it had not committed any fraud; that it had all the required
CD Technologies Asia, Inc. © 2016 cdasiaonline.com
government permits; and that it had not abandoned the project but only suspended the
work. It also admits its obligation to complete the project. It says that it had in fact asked
the HLURB for extension to complete it. 1 2 aIcDCH
In their Comment, respondents submit that the instant petition be rejected outright for the
reason that petitioner has not raised any question of law in the instant petition. The
questions of whether or not the Asian financial crisis is a fortuitous event, and whether or
not attorney's fees should be granted, are questions of facts which the Court of Appeals
recognized as such.
Respondent spouses reiterate that contrary to what petitioner avers, the delay in the
construction of the building was not attributable to the Asian financial crisis which
happened in 1997 1 3 because petitioner did not even start the project in 1995 when it
should have done, so that it could have finished it in 1997, as stipulated in the contract.
Preliminarily, respondents bring to the attention of this Court the strange discrepancy in
the dates of notarization of the Certification of Non-Forum Shopping and the Affidavit of
Service both notarized on September 24, 2004, while the Secretary's Certification was
notarized a day earlier on September 23, 2004. However, we shall not delve into
technicalities, but we shall proceed with the resolution of the issues raised on the merits.
Indeed, the question of whether or not an event is fortuitous is a question of fact. As a
general rule, questions of fact may not be raised in a petition for review for as long as there
is no variance between the findings of the lower court and the appellate court, as in this
case where the HLURB, the Office of the President, and the Court of Appeals were agreed
on the fact.
Worthy of note, in a previous case, Asian Construction and Development Corporation v.
Philippine Commercial International Bank, 1 4 the Court had said that the 1997 financial
crisis that ensued in Asia did not constitute a valid justification to renege on obligations.
We emphatically stressed the same view in Mondragon Leisure and Resorts Corporation v.
Court of Appeals, 1 5 that the Asian financial crisis in 1997 is not among the fortuitous
events contemplated under Article 1174 of the Civil Code.
Also, 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. TSaEcH
Are respondents entitled to reimbursement of the amount paid, plus interest and
attorney's fees?
Yes. Section 23 of P.D. No. 957 is clear on this point.
It will be noted that respondents sent a demand letter dated August 4, 1999 to Fil-Estate
asking for the return of "the total amount paid including amortization interests" and "legal
interest due thereon." 1 6 The latter did not respond favorably, and so the spouses filed a
complaint demanding the reimbursement of P3,620,000 representing the lump sum price
of the condominium unit with interest at the legal rate, and P100,000 attorney's fees. But
CD Technologies Asia, Inc. © 2016 cdasiaonline.com
the respondents actually sought the refund of P3,620,000.00, the lump sum cost of the
condominium, more than their actual payment of P3,439,000.07. We are thus constrained
to award only P3,439,000.07, representing the sum of their actual payments plus
amortization interests and interest at legal rate which is 6% per annum from the date of
demand on August 4, 1999. We are not unaware that the appellate court pegged the
interest rate at 12% on the basis of Resolution No. R-421, Series of 1988 of the HLURB.
But, conformably with our ruling in Eastern Shipping Lines, Inc. v. Court of Appeals, 1 7 the
award of 12% interest on the amount of refund must be reduced to 6%.
Moreover, we are constrained to modify the Court of Appeals' grant of attorney's fees
from P25,000 to P100,000 as just and equitable since respondents were compelled to
secure the services of counsel over eight years to protect their interest due to petitioner's
delay in the performance of their clear obligation.
WHEREFORE, the petition is DENIED for lack of merit. Petitioner is hereby ordered (1) to
reimburse respondents P3,439,000.07 at 6% interest starting August 4, 1999 until full
payment, and (2) to pay respondents P100,000.00 attorney's fees. Costs against
petitioner.
SO ORDERED. HDATSI
1. Rollo, pp. 26-31. Penned by Associate Justice Renato C. Dacudao, with Associate
Justices Edgardo F. Sundiam and Japar B. Dimaampao concurring.
2. Id. at 33.
3. Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds
upon the thing which is the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts.
4. Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of
the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing
the fixing of a period.
This is understood to be without prejudice to the rights of third persons who have
acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law.
5. Rollo, p. 40.
6. Id. at 59-63.
7. Id. at 92 and 97.
8. SEC. 23. Non-Forfeiture of Payments. — No installment payment made by a buyer in a
subdivision or condominium project for the lot or unit he contracted to buy shall be
CD Technologies Asia, Inc. © 2016 cdasiaonline.com
forfeited in favor of the owner or developer when the buyer, after due notice to the owner
or developer, desists from further payment due to the failure of the owner or developer to
develop the subdivision or condominium project according to the approved plans and
within the time limit for complying with the same. Such buyer may, at his option, be
reimbursed the total amount paid including amortization interest[s] but excluding
delinquency interests, with interest thereon at the legal rate.
9. Rollo, p. 16.
10. Art. 1174. Except in cases expressly specified by the law, or when it is otherwise
declared by stipulation, or when the nature of the obligation requires the assumption of
risk, no person shall be responsible for those events which could not be foreseen, or
which though foreseen, were inevitable.
11. Nos. L-36481-2, October 23, 1982, 117 SCRA 832. IAcDET