OBLIGATIONS AND

CONTRACTS
LECTURE 5
By: Atty. Wilfred Francis B. Martinez
NATURE AND EFFECTS OF
OBLIGATIONS
Breach of Obligations
FORTUITOUS EVENTS / CASO
FORTUITO
Fortuitous Events
 Article 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.
Fortuitous Events
 What is a fortuitous events?
 Any event which cannot be foreseen, or which, though foreseen,
is inevitable.
 In other words: Any event which is either impossible to foresee or
impossible to avoid.

 What are the general causes of a fortuitous event?

1. Nature (Act of God)
 Storms, Earthquakes, Floods, Epidemics, Lightning, Eruption of
Volcanos, etc.
2. Force Majure (Act of Man)
 Invasion, Rebellion, Government Prohibition, Law, Robbery, etc.
Fortuitous Events
 What are the requisites?
1. The event must be independent of human will or, at the very
least, of the will of the debtor;
2. The event must be unforeseen or unavoidable;
3. The event must render it impossible for the debtor to fulfill
his obligation in a normal manner; and
4. The debtor must be free from any participation in, or
aggravation, of the injury to the creditor.
Fortuitous Events
 Notes:
 Like all other discussions on requisites, the absence of any of the
requisites would not exempt the debtor from liability.
 Mere financial inability or poverty is not an excuse for the non-
fulfillment of an obligation.
 Mere difficulty to foresee the happening of an event is also not an
excuse. Impossibility is a requirement for the exemption from
liability.
Fortuitous Events
 Case Study of the Requisites:
 Mr. Benjamin obligated himself to deliver 1000 sacks of
Vietnamese rice to Mr. Juan Dela Cruz on 1 November 2017. The
rice will be imported from China. Mr. Benjamin’s obligation was to
deliver said rice on or before 1 January 2018.
 On 1 December 2017, due to the fear of fake or counterfeit rice
entering the Philippines, the Food and Drugs Administration issued
a regulation prohibiting the importation of rice from China for 1
year (until 1 December 2018).
 On the date due, Mr. Dela Cruz demanded that Mr. Benjamin
comply with his obligation. Mr. Benjamin refused citing the new
regulation.
 Mr. Dela Cruz claims that Mr. Benjamin is in delay. Mr. Benjamin
claims that he is free from liability due to a fortuitous event. Who
is correct?
Fortuitous Events
 Case Study of the Requisites (cont’d):
1. The event must be independent of human will or, at the very
least, of the will of the debtor;
 The new regulation prohibiting rice from China is outside of the control
of Mr. Benjamin.
2. The event must be unforeseen or unavoidable;
 Neither party was able to foresee the new regulation. Additionally, even
if they were able to predict it, they would not have had any power to
prevent it from happening.
3. The event must render it impossible for the debtor to fulfill his
obligation in a normal manner; and
 Due to the new regulation, Mr. Benjamin cannot legally comply with his
obligation.
4. The debtor must be free from any participation in, or
aggravation, of the injury to the creditor.
 Based on the facts, Mr. Benjamin had nothing to do with the prohibition
of rice importation from China.
Fortuitous Events
 Are there cases wherein the obligor / debtor can still be
held liable even if there was a fortuitous event? YES!
1. Where such liability is expressly provided by law.
 Example: Article 552: A possessor in bad faith will always be liable
for damage or deterioration even if it is due to a fortuitous event;
2. If the parties stipulated that liability will still attached
regardless of whether or not the non-performance was due to a
fortuitous event;
3. Where the nature of the agreement of the parties requires an
assumption of risk.
 Example: X promises to deliver to B a shipment of goods from two
countries with the knowledge that both countries may declare war
from each other due to the political climate.
 Other example: Workmen’s Compensation Act;
Fortuitous Events
 Are there cases wherein the obligor / debtor can still be
held liable even if there was a fortuitous event? YES!
4. Where the object of the obligation is generic or indeterminate;
5. Where the loss of the object of the obligation happened after
the debtor has already incurred in delay;
6. Where the debtor has promised to deliver the same thing to
two or more persons who do not have the same interest; and
7. When the obligation to deliver arises from a criminal offense.
Fortuitous Events
 Can an accident be considered as a fortuitous event?
 Yes but only if: (1) the accident is unavoidable; (2) the
negligence cannot be attributed to the obligor / debtor.

 Case Studies:
 Roberto Sicam vs Lulu Jorge (G.R. No. 159617, 8 August 2007)
 Fil-Estate Properties, Inc. vs Spouses Go (G.R. No. 185798, 13
January 2014)
Fortuitous Events (SW7)
 On the morning of April 1, 1946, X, was a riding the early morning
train of the Railroad Company from Laguna to Manila;
 That when the train reached the Paco Railroad station, Y, a train
guard of the Railroad Company assigned in the Manila-San Fernando,
La Union Line, happened to be in said station waiting for the same
train which would take him to Tutuban Station, where he was going to
report for duty;
 That Y had a long standing personal grudge against X, same dating
back during the Japanese occupation;
 That because of this personal grudge, Y shot X with the carbine
furnished to him by the Railroad Company for his use as such train
guard, upon seeing him inside the train coach. X died instantly;
 The wife of X claims that the Railroad Company is liable for damages.
The Railroad Company counters that they are free from liability
because it was a Fortuitous Event or Caso Fortuito. WHO IS
CORRECT? (4 Points)
Fortuitous Events (SW7)
 ANSWER:
 Cornelia De Gillaco vs Manila Railroad Company (G.R. No. L-
8034, 18 November 1955)
 The Court ruled that the situation can be considered as a
Fortuitous Event, Manila Railroad cannot be held liable since:
1. The Railroad company had no means to ascertain or anticipate that
the two rivals would meet;
2. The Railroad company could not be expected to foresee or would
have known about the personal lives of each of their employees; and
3. The Railroad company could not be expected to foresee any
animosity or rancor between its employees and its thousands of
passengers every single day.
Transmissibility of Rights
Transmissibility of Rights
 Art. 1178. Subject to the laws, all rights acquired in
virtue of an obligation are transmissible, if there has
been no stipulation to the contrary.
Transmissibility of Rights
 General Rule:
 All rights acquired through an obligation is transmissible to
another person.
 Exception:
1. If the parties stipulate in their contract that the rights acquired
by a party (or both parties) is non-transmissible.
2. If the nature of the obligation prevents transmissibility.
 Example: Service of a prison sentence or any other criminal penalty
imposed by a court of law.
3. Where they are non-transmissible by operation of law.
Transmissibility of Rights
 Example of a Right Being Transmitted:
 X lent money to Y in the amount of P1,000.
 X has the right to collect the P1,000.00 from Y as soon as it becomes
due and demandable.
 X, however, owes A and B, P500.00 each.
 X has an obligation to pay back A and B, P500.00 each.
 Thus, X can tell A and B to collect P500.00 each from Y.
 In this situation, X is transmitting his right to collect the debt of Y to A
and B.
Thank you.
 Please prepare for LONG EXAM #1 next meeting.
 100 items.
 Coverage: INTRODUCTION TO LAW until
TRANSMISSIBILITY OF RIGHTS