b. Fortuitous Event

Fortuitous Event or Force Majeure

The principle embodied in the act of God doctrine strictly requires that the act must be occasioned solely by the violence of nature. Human intervention is to be excluded from creating or entering into the cause of the mischief. (Schmitz Transport & Brokerage Corporation v. Transport Venture, Inc., et al., G.R. No. 150255, 22 Apr. 2005)

GR: No person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable (Art. 1174, NCC)

XPN: Except in cases:

• Expressly specified by law
• When it is otherwise declared by stipulation; or
• When the nature of the obligation requires the assumption of risk. (Art. 1174, NCC)

Requisites of fortuitous event

• The event must be independent of the human will or at least of the obligor’s will;
• The event could not be foreseen or if could be foreseen, must have been impossible to avoid;
• The event must be of such character as to render it impossible for the obligor to comply with his obligation in a normal manner;
• The obligor must be free from any participation in, or the aggravation of the injury of the obligee. (De Leon, 2012; Schmitz Transport & Brokerage Corporation v. Transport Venture, Inc., et al., G.R. No. 150255, 22 Apr. 2005; Yobido v. CA, G.R. No. 113003, 17 Oct. 1997)

LAST CLEAR CHANCE

When a building collapses during an earthquake

GR: No one can be held liable in view of the fortuitous event if the proximate cause of the collapse of the building is an earthquake.

XPN: If the proximate cause is the defective designing or construction, or directly attributable to the use of inferior or unsafe material, it is clear that liability exists. (NCC, Art. 1723; Juan F. Nakpil & Sons v. Court of Appeals, G.R. No. L-47851, April 15, 1988)

Requisites of Fortuitous Events (NIIU)

• Event must be Independent of obligor’s will;
• Event is Unforeseeable or unavoidable
• Such event renders it Impossible for the debtor to perform (not only makes it difficult, but impossible)
• No contributory negligence (Lasam v. Smith, G.R. No. L-19495)

General rule: An obligor is not responsible for a fortuitous event, except when the law expressly provides otherwise, a stipulation declares otherwise, or the nature of the obligation requires the assumption of risk (CIVIL CODE, art. 1174). A fortuitous loss does not necessarily extinguish the obligation.

Exceptions: (SALTD-G)

• If by Law the obligor is liable even for fortuitous event
• If by Stipulation the obligor is liable even for fortuitous event
• If the nature of the obligation requires the Assumption of the risk (CIVIL CODE, art. 1174)

Example: D insured his house against fire for P500,000.00 with R, an insurance company. Later, the house was destroyed by accidental fire.

Although the cause of the loss is a fortuitous event, D may recover the amount of the policy. In a contract of insurance, the insurer (R), in consideration of the premium paid by the insured (D), undertakes to indemnify the latter for the loss of the thing insured by reason of the peril insured against even if the cause of the loss is a fortuitous event. Here, risk of loss or damage is an essential element in the obligation. (DE LEON 78-79 (2019))

• If the loss of the thing occurs after the obligor incurred in Delay; and
• If the obligor promised to deliver the same thing to Two or more persons who do not have the same interest (CIVIL CODE, art. 1165)
• If the thing to be delivered is Generic

Declaration of martial law, per se, is not a fortuitous event. While a lot of businesses suffered financial reverses during this period, it could not be used as a defense when sued for collection of debts validly incurred. (Philippine Free Press v. CA, G.R. No. 132864)

The Asian Debt Crisis in 1997 is not a fortuitous event. A real estate company engaged in preselling of condominium units should have been able to assess foreign exchange risks. The fluctuating movement of the Philippine Peso in the FX market is a daily occurrence, so Megaworld cannot claim fortuitous events as an excuse for non-delivery of units. (Megaworld Globus Asia Inc. v. Tanseco, G.R. No. 181206)

The Christmas season cannot be cited as an act of God that would excuse a delay in the processing of claims by a government entity that is subject to routine accounting and auditing rules. (MIAA v. ALA Industries Corp, G.R. No. 147349)

The sudden act of a passenger who stabbed another passenger in the bus is within the context of force majeure. But before common carrier may be absolved, it is not enough that the accident was caused by force majeure. The common carrier must still prove that it was not negligent in causing injuries. (Bachelor Express, Inc. v. CA, G.R. No. 85691)

If obligation is to deliver materials for a fixed period such as 30 years, fortuitous events occurring within the period, such as the outbreak of war which took 6 years out of the 30-year period and destroyed plants, machinery and equipment and prevented the obligor from making deliveries, the occurrence of such a fortuitous event will not extend the period of the contract beyond its fixed period. This is because the obligor was excused from performance during the period when the fortuitous events prevented it from performing its obligations. (Victorias Planters Association, Inc. v. Victorias Milling Co., Inc., G.R. No. L-6648)

A person obliged to perform an obligation is NOT excused from a fortuitous event when the nature of the obligation requires the assumption of risk. In other words, it is NOT enough that the event should not be foreseen or anticipated, but it must be one that is impossible to foresee or to avoid. (Republic v. Luzon Stevedoring, G.R. No. L21749)

Requisites of Rebus Sic Stantibus:

• The event or change could not have been Foreseen at the time of the execution of the contract
• The performance is extremely Difficult, but NOT impossible (because if it is impossible, it is extinguished by impossibility)
• The event was not due to the Act of any of the parties
• The contract is for a Future prestation

The difficulty of performance contemplated should be such that one party would be placed at a disadvantage by the unforeseen event. Mere inconvenience, or unexpected impediments, or increased expenses did not suffice to relieve the debtor from a bad bargain. (Tagaytay Realty v. Gacutan G.R. No. 160033)

Article 1267 grants the courts the power of relief, but not of revision. The Courts do not have the authority to remake, modify or revise the terms and conditions of the contract. (Occena v. Hon. Jabson, G.R. No. L-44349) Case-name verification required before publication: G.R. No. L-44349 is identified as Jesus v. Occena (October 29, 1976).

Art. 1267 is not restricted to obligations to do. The term “service” should be understood as referring to the “performance of the obligation”, a phrase which encompasses all obligations. (NATELCO v. Court of Appeals, G.R. No. 107112)

Mere inconvenience, unexpected impediments, increased expenses, or even pecuniary inability to fulfill an engagement, will not relieve the obligor from an undertaking that it has knowingly and freely contracted. The closure of respondent's business was neither a fortuitous nor an unforeseen event that rendered the lease agreement functus officio. (Sps Poon v. Prime Savings Bank, G.R. No. 183794)