PNCC vs. CA. G. R. No. 116896.

May 5, 1997Nature
: Petition for review on certiorari of decision made by the Court of Appeals (CA)
Facts
: On 18 November 18!" peti ti oner Phi l i ppi ne Nati onal Constructi on Corporati on (PNCC)
e#ecuted a contract of l ease wi th pri vate respondents" sti pul ati n$ to pay rent for the use of
l and" at the monthl y rate of P %&"&&&'&& payabl eyearly in advance' (he said land is to be used by
petitioner as site for a roc) crushin$ plant' (he term of lease is for fiveyears" commencin$ on the date of
issuance of an industrial clearance by the *inistry of +uman ,ettlements (*inistry)'On - .anuary 18/
PNCC obtai ned a (emporary 0se Permi t from the *i ni stry for the proposed roc) crushi n$
pro1 ect'Nine days later private respondents wrote to PNCC" as)in$ for the first annual rental" and
assurin$ that they have stoppedconsiderin$ proposals of other a$$re$ates plants in favor of PNCC'2n
reply" PNCC ar$ued that the contract must commence on the date of issuance by the *inistry of an
industrial clearancein their favor' 2t also e#pressed its desire to terminate the contract it e#ecuted with
respondents" due to 3
financial, as well as technical difficulties
'4 5espondents refused to accede to PNCC6 s re7uest for pre termi nati on and on 1 *ay
18/" instituted an action a$ainst PNCC for ,pecific Performance with 8ama$es' (rial court ruled in favor
of respondents andordered PNCC to pay rentals for two years" with le$al interests plus attorney6s fees'
(he Court of Appeals affirmed thedecision of the trial court upon appeal by PNCC9 hence" this case'
Issues
:(1) :ON contract commences on the date of issuance of clearance by *inistry9(%) :ON PNCC should
be released from its contract with respondents due to unforeseen events and causes beyond itscontrol9(;)
:ON sum of money ordered to be paid by the court is e#cessive and9(<) :ON PNCC was deprived of
ri$ht to due process'
Held
: Petition denied'
Rato
:(1) PNCC is estopped from claimin$ that =ease Contract commences on the date of issuance of
clearance by *inistry"because in its letter to respondents" PNCC reco$ni>ed its obli$ation to pay rentals
counted from the date the temporarypermit was issued'(%) PNCC cites Art' 1%//" assertin$ that it should
be released from the obli$atory force of the contract because
its purposedi d not mat er i al i >e due t o unf or eseen event s and causes beyond i t s co
nt r ol ' +owever " t hi s ar t i cl e appl i es onl y t oobli$ations 3to do4 and not 3to $ive4" while
obli$ation arisin$ out of said contract is an obli$ation 3to do4' ?urther" PNCCe#ecuted the contract with
open eyes on the deterioratin$ conditions of the country and
mere pecuniary inability to fulfill an engagement does not discharge a contractual obligation
' (he 3unforeseen events and causes beyond its control4 citedby PNCC are not the le$al and physical
impossibilities contemplated in Art' 1%//'(;) PNCC asserts that it was not able to use and en1oy the land
and is not entitled to pay dama$es cited by the court'+owever" respondents suffered dama$es
because of i ts i nabi l i ty to use the premi ses' 5espondents are enti tl ed toindemnification under
Art' 1/! of the Civil Code'(<) PNCC was not depri ved of due process because tri al court
$ranted several postponements to peti ti oner before i t waived the presentation of evidence
in petitioner6s behalf