Republic v.

Litton
94 Phil 52 (Nov. 28, 1953)
Paras, C.J.:
SUMMARY: The Gov’t entered into contracts w/ Litton for the purchase of supplies to be used for the elections, to be delivered on or before
Mar. 1, 1946. Litton failed to deliver all the goods on said date, thus the Gov’t sued them after the latter was compelled to make open market
purchases. Litton, as a defense, claimed that the delivery was on the condition that the Gov’t would timely obtain the corresponding export license
and shipping priority for the goods to be shipped from the U.S. SC held that it was not the Gov’t’s obligation to secure the license for Litton, and
the delivery was unconditional; thus, they cannot invoke anymore force majeure for having incurred in delay in the delivery of the goods.
DOCTRINE: Where the obligation expressly provides for a stipulated period for the delivery of the goods, force majeure cannot be invoked
for failing to make the delivery within the stipulated period, in view of the fact that the seller assumed liability in all eventualities.

FACTS:
1. The Government entered into 2 contracts w/ Litton: one was on Dec. 22, 1945 for the purchase of 96K padlocks at
Php 1.87 each; the other was on Dec. 26, 1945 for the purchase of office supplies at the total value Php 25, 979.55.
The contracts stated that the goods must be delivered on or before Mar. 1, 1946, to be used in the elections on
Apr. 23, 1946. Surety bonds were issued by Central Surety in favor of Litton to secure faithful performance of the
obligation.
2. It is alleged that Litton failed to deliver the said supplies on time; that they were only able to deliver 34, 200
padlocks by Apr. 18, 1946; and that because of these, the Gov’t incurred losses because it was compelled to make
open market purchases.
3. In the purchase orders, it was provided in Important Conditions No. 2 that the stipulated delivery period shall
not be exceeded. However, should there be delay in delivery, due to an act of the Government, to force majeure, or
to a condition clearly beyond contractor's control, the Purchasing Agent of the Gov’t may grant a reasonable time
for extension, if applied before default is incurred. Deliveries made within the extended period of time shall not
be subject to any of the penalties provided.
4. Under Important Conditions No. 4, Government has a right to impose a penalty for failure to make delivery when
due, either (a) to deduct for each day of delay in delivery after the period granted, a liquidated damage in the amount
of 1% per day of the total value of the contract, or, if the contract has been partially filled within the stipulated time,
the total value of the unfilled portion thereof; or (b) to make an open market purchase of the supplies that the
contractor failed to deliver and to charge to him the excess in price, if any. In any case, the Gov’t reserves the right
to rescind the contract.
5. The Gov’t sued Litton after the latter refused to pay the sum of money representing the difference b/w the
price paid for said open market purchases and the price that could have been paid under the contracts.
5. Litton claims that the delivery of the supplies on or before Mar. 1, 1946 was on the condition that the Gov’t
would timely obtain the corresponding export license and shipping priority, w/c the latter failed to do and was
something beyond their control. They also prayed for the complaint’s dismissal and interposed a counterclaim for
payment of unpaid price for supplies delivered after the elections.
6. The CFI ruled in favor of the Gov’t as to both causes of action, but granted Litton's counterclaims representing
the unpaid price of padlocks and stationery delivered to the Gov’t after the elections, and deducted also the sum
collected from Litton as penalty for delayed delivery (before the elections) of 34,200 padlocks.

ISSUE/S:
WoN the delivery of the supplies on or before Mar. 1, 1946 was subject to a condition – NO
WoN it was the Gov’t’s obligation to secure an export license for Litton – NO

RATIO:
The ff circumstances show that Litton undertook to deliver goods on or before March 1, 1946 w/o any condition:
- Circular Proposal No. 13 (Nov. 27, 1945) issued to local dealers to bid expressly stated that the supplies will be
used for the coming elections and the bidder was required to "state the shortest time of delivery, which
should not be later than March 1, 1946 and that deliveries made before March 1 will be preferred. It is then
preposterous to suppose that delivery after the elections would ever be contemplated or accepted.
- The bonds issued by Central Surety stated that delivery was to be made on or before March 1, 1946. This
negates Litton’s claim that delivery was subject to any contingency, much less to the Gov’t’s ability to secure
export license and shipping priority.
3. In a letter dated Feb. 28, 1946, Litton even asked the Gov’t for an extension since it can’t deliver the goods on
Mar. 1, pursuant to Important Conditions No. 2. Under said Condition, the purchasing agent has the discretion to
grant or not grant the request, and it ignored such request.
It was not the Gov’t’s obligation to secure an export license for Litton:
1. In a letter dated Dec. 12, 1945 for their bid, Litton stated that the shipment will be made from the U.S. during
January 1946, provided they are able to obtain export license and shipping space xxx. As held by the CFI, it was still
Litton's sole obligation to obtain the necessary export license and shipping space; and that although the Gov’t made
certain efforts to expedite the issuance of the necessary license, the same "were in the nature of a friendly
assistance to Litton and can in no way be interpreted or construed as if the Gov’t were the party bound to secure the
export license or shipping space.”
2. It was not the obligation of the Government to secure the export license for Litton; in its Dec. 15, 1945 letter,
Litton only asked the Gov’t to give a certification that the padlocks were urgently needed by the Philippine
Government so as to warrant the early issuance of the license.
3. The fact that the Gov’t made certain efforts to expedite the issuance of the license, the same do not prove that it
was their obligation to do so or that Litton's duty to deliver the articles on or before March 1, 1946 was subject to the
condition re the issuance of the license. Such efforts were only in furtherance of the Litton’s Dec. 15 letter.
Furthermore, the fact that the license was issued in the name of the Gov’t does not show that it assumed the
obligation of obtaining the same, the detail being undoubtedly formal.
4. Also, complaint on the delay on the part of the Gov’t is immaterial since it was found out that the padlocks and
stationery were placed in the New York docks in Jan., 1946 in spite of the delay in the issuance of the license. As
regards the stationery, no export license was even required.
5. Having incurred in delay, Litton cannot invoke
- the delay in the issuance of the export license by the proper authorities,
- the fact that the ships carrying the supplies were not allowed to berth at the piers,
- or that one of the ships had to pass by Shanghai upon orders of the War Shipping Commission, and another
vessel was stranded on Bonin Islands,
in view of the fact that they assumed liability in all eventualities. This is authorized by article 1105 of the old Civil
Code (now Article 1174 of the NCC). They are therefore liable to the penalty imposed in the contract.
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.

JUDGMENT:
Wherefore, with the modification that Litton's liability for damages is reduced by P90,000, the appealed judgment is
in all other respects affirmed. So ordered with costs against the appellants.

(based on: gdrive reviewer [Sales Expanded Syllabus])