In the realm of Philippine contract law, parties often encounter situations where performance becomes impossible due to unforeseen and unavoidable circumstances. While frequently used interchangeably in casual conversation, the terms Fortuitous Event and Force Majeure carry specific legal nuances under the Civil Code of the Philippines and established jurisprudence.
1. Defining the Concepts
Under Philippine Law, the umbrella term used by the Civil Code is "Fortuitous Event" (caso fortuito). Article 1174 provides the general rule:
"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."
Fortuitous Event (Caso Fortuito)
Strictly speaking, these refer to Acts of God. These are events that occur naturally without human intervention.
- Examples: Earthquakes, typhoons, volcanic eruptions, lightning strikes, and floods.
Force Majeure (Fuerza Mayor)
These refer to Acts of Man. These are events that, while independent of the debtor's will, stem from human activity.
- Examples: War, riots, strikes (if justified), robbery with violence, or government-imposed lockdowns/orders (as seen during the COVID-19 pandemic).
2. The Four Essential Requisites
For a party to successfully invoke a fortuitous event to be exempt from liability, the Supreme Court (notably in Yobido vs. CA) has laid down four strict requirements:
- Independent of Human Will: The cause of the breach must be independent of the will of the debtor.
- Unforeseeability or Inevitability: The event must be either impossible to foresee or, if it could be foreseen, impossible to avoid.
- Impossible Performance: The event must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner.
- Absence of Negligence: The obligor (debtor) must be free from any participation in, or aggravation of, the injury to the creditor.
Key Distinction: If a party’s negligence contributed to the loss, they cannot claim a fortuitous event. For example, if a ship sinks in a storm, but the captain sailed despite a clear Coast Guard warning, the "fortuitous event" defense fails because of negligence.
3. General Rule and Exceptions
The general rule is clear: No person is liable for fortuitous events. However, there are five critical exceptions where you are still liable even if an earthquake or war destroys the subject matter:
| Exception | Description |
|---|---|
| Expressly Specified by Law | Examples include a debtor who is already in legal delay (mora) or has promised the same thing to two different people. |
| Declared by Stipulation | If the contract specifically states the debtor is liable even in cases of force majeure. |
| Nature of the Obligation | When the obligation requires the "assumption of risk" (e.g., insurance contracts). |
| Generic Obligations | Based on the principle genus nunquam perit (genus never perishes). If you owe "100 sacks of rice," and your specific warehouse burns down, you still owe 100 sacks of rice because rice is generic. |
| Criminal Offenses | When the debt proceeds from a criminal offense (unless the creditor refused to accept the thing without justification). |
4. Effects on Contracts
When a fortuitous event occurs and the requisites are met, the legal consequences generally fall into two categories:
A. Extinguishment of the Obligation
In obligations to give a determinate thing (e.g., a specific car with a specific chassis number), the obligation is extinguished if the thing is lost or destroyed without the fault of the debtor.
B. Suspension of Performance
In many commercial contracts, a force majeure event does not cancel the contract but merely suspends it. Performance is delayed without penalty until the event ceases. If the delay becomes so long that the "basis of the contract" is lost, the parties may seek rescission under Article 1267 (the Doctrine of Unforeseen Events/Service Difficulty).
5. Practical Drafting Tips for Philippine Contracts
Given the strict interpretation of Article 1174, legal practitioners often include a "Force Majeure Clause" to provide clarity. When drafting:
- Be Specific: List specific events (e.g., "pandemics," "government shutdowns," "acts of terrorism") to avoid ambiguity.
- Notice Requirements: Require the affected party to notify the other within a specific timeframe (e.g., 48 hours) to validly invoke the clause.
- Mitigation: Explicitly state that the party invoking force majeure must take reasonable steps to minimize the damage.
- Termination Rights: Define at what point a "suspension" becomes a "termination" (e.g., if the force majeure lasts longer than 90 days).
Would you like me to draft a sample Force Majeure clause tailored for a specific type of contract, such as a lease or a service agreement?