Tanguilig vs. Court of Appeals

The construction of a deep well is not included in a contract for a windmill system where the contract documents merely describe the windmill as "suitable for" or "for" a deep well pump without expressly including the deep well as a component, and where the owner directly paid a third party for the deep well construction. Furthermore, a strong wind does not constitute a fortuitous event exempting a contractor from liability for a windmill's collapse, as wind is a foreseeable and necessary element for windmill operation, and the collapse creates a presumption of inherent construction defects that the contractor must rebut to avoid liability under the contractual guaranty.

• In April 1987, petitioner Jacinto M. Tanguilig, doing business as J.M.T. Engineering and General Merchandising, proposed to construct a windmill system for respondent Vicente Herce Jr. for a consideration of P60,000.00 with a one-year guaranty from the date of completion and acceptance.
• Two written proposals were submitted: the first dated May 19, 1987 (Exh. "1") offered a windmill system for P87,000.00 which was rejected; the second dated May 22, 1987 (Exh. "A") offered a windmill assembly for P60,000.00 which was accepted by respondent.
• The accepted proposal specified a "Windmill assembly for 2 inches or 3 inches deep-well pump" and listed materials including angle bars, G.I. pipes, float valves, and concreting materials for the foundation, but made no mention of deep well construction or materials therefor.
• Respondent paid P30,000.00 as down payment and P15,000.00 as installment, leaving a balance of P15,000.00.
• Respondent separately contracted San Pedro General Merchandising Inc. (SPGMI), through its proprietor Guillermo Pili, to construct the deep well for P15,000.00, which respondent paid directly to Pili.
• The windmill was installed and connected to the deep well, but subsequently collapsed after a strong wind hit the area.
• On March 14, 1988, petitioner filed the collection suit for the P15,000.00 balance.
• Respondent defended by claiming that the deep well was part of the windmill contract and that his payment to SPGMI should be credited against his balance to petitioner, and alternatively, that the windmill collapsed due to construction defects and the balance should be offset by reconstruction costs.

• The construction of the deep well was not included in the P60,000.00 contract price, which covered only the windmill assembly and installation; the contract documents merely described the windmill as suitable "for" a deep well pump to indicate compatibility, not inclusion.
• The collapse of the windmill was caused by a typhoon or strong wind constituting a fortuitous event (force majeure) that exempts him from liability under Article 1174 of the Civil Code.
• He delivered the windmill in good and working condition which respondent accepted without protest, and he disowned any obligation to repair or reconstruct the system.
• Payment made by respondent to SPGMI was not payment to him because Pili was not authorized to receive payment on his behalf, and no creditor-debtor relationship existed between him and SPGMI regarding the deep well construction.

• The construction of the deep well was included in the agreement as evidenced by the mention of "deep well" in both proposals and by the testimony of Guillermo Pili that petitioner verbally agreed the deep well cost would be deducted from the P60,000.00 contract price.
• Since the deep well formed part of the windmill system, his payment of P15,000.00 to SPGMI should be credited to his account with petitioner, effectively extinguishing his obligation to pay the remaining balance.
• The windmill collapsed due to inherent defects in construction, not because of a typhoon or force majeure, and petitioner is bound by the one-year guaranty to reconstruct the system.
• Petitioner is liable for damages and the cost of reconstruction should be offset against the contract balance, or alternatively, respondent should not be required to pay the balance due to petitioner's breach of the guaranty obligation.

• Procedural:
  • N/A
• Substantive Issues:
  • Whether the construction of a deep well was included in the contract to construct the windmill system.
  • Whether the petitioner is obligated to reconstruct the windmill after it collapsed, or whether he is exempt from liability by reason of a fortuitous event.

• Procedural:
  • N/A
• Substantive:
  • On the first issue, the Court ruled that the deep well was NOT included in the contract. The terms of the written proposals are clear and unambiguous; the phrases "suitable for" and "for" a deep well pump merely describe the windmill's compatibility with such pumps and do not indicate inclusion of the deep well itself. The absence of any itemization or description of deep well materials in the contract price of P60,000.00 confirms this interpretation. Furthermore, the contemporaneous and subsequent acts of the parties demonstrate that the deep well was constructed pursuant to a separate agreement between respondent and SPGMI, evidenced by respondent's direct payment to Pili without written authority from petitioner to accept such payment on his behalf.
  • On the second issue, the Court ruled that petitioner IS obligated to reconstruct the windmill. The collapse was not caused by a fortuitous event because a strong wind is neither unforeseeable nor unavoidable in a windmill installation—wind is a necessary element for windmill operation. Petitioner failed to prove that a typhoon actually occurred; he merely stated there was a "strong wind." The presumption that things happen according to the ordinary course of nature and the ordinary habits of life (Rule 131, Section 3[y]) was not rebutted by petitioner, supporting the inference of inherent construction defects. Finally, in reciprocal obligations, neither party incurs in delay if the other does not comply with what is incumbent upon him; since petitioner failed to comply with the guaranty obligation to maintain the windmill, respondent cannot be said to be in default, and Article 1167 of the Civil Code mandates that the reconstruction be executed at petitioner's cost.

• Interpretation of Contracts; Primordial Consideration of Parties' Intention — The intention of the parties shall be accorded primordial consideration in contract interpretation, and in case of doubt, their contemporaneous and subsequent acts shall be principally considered (Article 1371, Civil Code). In this case, the Court examined the parties' conduct regarding the deep well construction and payment to determine the true scope of the contract.
• Fortuitous Event (Force Majeure) — To claim exemption from liability under Article 1174 of the Civil Code, the event must be the sole and proximate cause of the loss. The four requisites are: (a) the cause of the breach must be independent of the will of the debtor; (b) the event must be either unforeseeable or unavoidable; (c) the event must 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 (citing Nakpil v. Court of Appeals). The Court applied this to reject the "strong wind" defense, noting that wind is foreseeable and necessary for windmill operation.
• Payment to Unauthorized Person — Payment shall be made to the person in whose favor the obligation has been constituted, or his successor in interest, or any person authorized to receive it (Article 1240, Civil Code). Respondent's payment to SPGMI was not payment to petitioner because Pili was not authorized to receive payment on petitioner's behalf.
• Reciprocal Obligations; Delay — In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him (Article 1169, last paragraph, Civil Code). The Court applied this to hold that respondent was not in default in paying the balance because petitioner first failed to comply with the guaranty obligation to maintain the windmill.
• Specific Performance at Debtor's Cost — If a person obliged to do something fails to do it, the same shall be executed at his cost (Article 1167, Civil Code). The Court ordered petitioner to reconstruct the windmill at his own expense pursuant to this provision and the contractual guaranty.

• "Since the terms of the instruments are clear and leave no doubt as to their meaning they should not be disturbed." — Emphasizing the principle that clear contractual terms should be applied as written without interpretation.
• "It is a cardinal rule in the interpretation of contracts that the intention of the parties shall be accorded primordial consideration." — Establishing the hierarchy of evidence in contractual interpretation.
• "A strong wind in this case cannot be fortuitous - unforeseeable nor unavoidable. On the contrary, a strong wind should be present in places where windmills are constructed, otherwise the windmills will not turn." — Defining the limits of the fortuitous event defense in the context of windmill construction.
• "In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him." — Stating the rule regarding delay in reciprocal obligations.

• Kasilag v. Rodriguez, 69 Phil. 217 (1939) — Cited for the cardinal rule that the intention of the parties shall be accorded primordial consideration in contract interpretation.
• GSIS v. Court of Appeals, G.R. No. 52478, October 30, 1986 — Cited for the principle that contemporaneous and subsequent acts shall be principally considered in interpreting contracts under Article 1371 of the Civil Code.
• Serrano v. Court of Appeals, No. L-46357, October 9, 1985 — Cited alongside GSIS for the interpretation of contracts considering contemporaneous acts.
• Nakpil v. Court of Appeals, Nos. L-47851, L-47863, L-47896, October 3, 1986 — Controlling precedent establishing the four requisites that must concur for a party to claim exemption from liability by reason of fortuitous event under Article 1174.
• National Power Corporation v. Court of Appeals, G.R. Nos. L-47379 and 47481, May 16, 1988 — Cited for the consistent holding that the fortuitous event must be the sole and proximate cause of the loss.
• National Power Corporation v. Court of Appeals, G.R. Nos. 103442-45, May 21, 1993 — Cited for the same principle regarding fortuitous events and proximate causation.

• Art. 1167, New Civil Code — Provides that if a person obliged to do something fails to do it, the same shall be executed at his cost; applied to order petitioner to reconstruct the windmill at his expense.
• Art. 1169, last par., New Civil Code — States that in reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner; applied to reject petitioner's claim that respondent was in default.
• Art. 1174, New Civil Code — Exempts a party from liability when the loss occurs due to a fortuitous event; applied to reject petitioner's defense regarding the windmill collapse.
• Art. 1236 and 1237, New Civil Code — Provisions regarding payments made by a third person; distinguished as inapplicable because no creditor-debtor relationship was established between petitioner and SPGMI.
• Art. 1240, New Civil Code — Mandates that payment shall be made to the creditor or any person authorized to receive it; applied to hold that respondent's payment to SPGMI was not payment to petitioner.
• Art. 1371, New Civil Code — Directs that in case of doubt in contract interpretation, the contemporaneous and subsequent acts of the parties shall be principally considered.
• Sec. 3, par. (y), Rule 131, Revised Rules on Evidence — Presumption that things have happened according to the ordinary course of nature and the ordinary habits of life; applied to infer defects in the windmill construction when petitioner failed to rebut the presumption.