Case Summary (G.R. No. 117190)
Applicable Law
• 1987 Philippine Constitution (decision after 1990)
• New Civil Code
– Art. 1167 (failure to perform)
– Art. 1169 (reciprocal obligations)
– Art. 1174 (fortuitous events)
– Art. 1236–1237, 1240 (payments)
– Art. 1371 (contract interpretation)
• Rule 131, Sec. 3(y), Revised Rules on Evidence (presumption of ordinary course of nature)
Factual Background
In April 1987 Tanguilig offered to construct and install a windmill system for Herce at ₱60,000, with a one‐year guaranty from acceptance. Herce paid ₱30,000 down and ₱15,000 by installment, leaving a ₱15,000 balance. On March 14, 1988, Tanguilig sued to collect the unpaid balance. Herce claimed credit for ₱15,000 paid to SPGMI for a deep well, asserted that the well installation was part of the windmill contract, and sought offset for alleged defects after a wind caused system collapse.
Trial Court Findings
The trial court held that:
- The windmill contract did not include deep well construction, as reflected in two separate letter proposals.
- There was no clear proof that construction defects caused the windmill’s collapse.
Accordingly, it rendered judgment for Tanguilig.
Court of Appeals Ruling
The Court of Appeals concluded that:
- The parties had agreed to include deep well installation, noting the term “deep well” in both proposals and Pili’s testimony that Tanguilig told him the well cost would be deducted from ₱60,000.
- Herce’s ₱15,000 payment to SPGMI extinguished his balance.
- Force majeure did not apply, and Tanguilig must reconstruct under the one‐year guaranty.
Reconsideration was denied, prompting Tanguilig’s petition to the Supreme Court.
Issues Presented
- Whether the windmill contract included installation of a deep well.
- Whether Tanguilig must reconstruct the windmill under the one‐year guaranty after collapse.
Analysis on Contractual Inclusion of Deep Well
– Contract Interpretation: Under Art. 1371, clear terms govern. Two proposals (₱87,000 and ₱60,000) described a windmill “suitable for” a 2–3-inch deep well pump, without specifying well construction or materials. The prepositions “for” and “suitable for” merely denote compatibility, not inclusion. Conjunctions such as “and” or “with” would be required to imply inclusion.
– Contemporaneous Acts: No written agreement or authorization shows petitioner engaged SPGMI or instructed Herce to pay Pili on his behalf. Herce’s direct payment to Pili and the absence of any assignment or creditor‐debtor relationship between petitioner and SPGMI confirm the well installation was a separate, respondent’s expense.
Analysis on Force Majeure and Guaranty Obligation
– Fortuitous Event Test (Art. 1174): To exonerate, the event must be independent, unforeseeable, render performance impossible, and involve no fault by the obligor. Herce testified only to a “strong wind,” not a typhoon—an ordinary occurrence in windmill sites and thus foreseeable. The presumption under Rule 131 that things occur in the ordinary course of nature remains unrebutted.
– Reciprocal Obligations and Default (Arts. 1167–1169): Petiti
Case Syllabus (G.R. No. 117190)
Facts
- In April 1987, petitioner Jacinto M. Tanguilig, trading as J.M.T. Engineering and General Merchandising, offered to construct a windmill system for respondent Vicente Herce Jr.
- After negotiation, both parties agreed on a contract price of ₱60,000.00, with a one-year guaranty from completion and acceptance.
- Respondent paid a ₱30,000.00 down payment and a ₱15,000.00 installment, leaving a balance of ₱15,000.00.
- On March 14, 1988, petitioner filed a collection suit for the unpaid ₱15,000.00 balance.
Contractual Agreement and Proposals
- Two written proposals were exchanged:
• Exh. “1” (May 19, 1987): Quoted ₱87,000.00 for a windmill suitable for a 2-inch deep well, excluding the cylinder pump.
• Exh. “A” (May 22, 1987): Quoted ₱60,000.00 for windmill assembly for a 2- or 3-inch deep-well pump, including tower, blades, appurtenances, and concreting materials, but without installation of the well itself. - Respondent accepted the second proposal and construction commenced immediately.
Payment and Dispute
- Respondent denied owing the ₱15,000.00 balance, claiming he paid that amount to San Pedro General Merchandising Inc. (SPGMI) for the deep well installation to which the windmill would connect.
- He argued the deep well formed part of the windmill project, and any outstanding balance should be offset by defects in the windmill after its collapse in strong wind.
- Petitioner countered that the contract price covered only windmill assembly and installation, excluding the deep well, and that the collapse resulted from force majeure (typhoon).
Trial Court Ruling
- The lower court held the deep well construction was not part of the windmill project, based on the clear, unambiguous proposals (Exhs. “1” and “A”).
- It found n