In a receipt dated Jan 30, 1961, Maria G. Abad received a pendant with diamonds valued at P4,500.00 from Guillermo Austria. The purpose of the pendant was to be sold on commission or returned upon request. However, on Feb 1, 1961, as Ms. Abad was walking home in Mandaluyong, she was attacked by two individuals. One of them hit her, while the other stole her purse containing jewelry and cash before fleeing. Among the stolen items was Guillermo Austria’s pendant. Mr. Austria filed a case seeking the return of the pendant or payment of its value and damages. Ms. Abad claimed that she couldn’t return the jewelry due to the robbery, and couldn’t afford to pay for it. The trial court ruled in favor of Mr. Austria, stating that the robbery was not proven, and even if it happened, Ms. Abad was negligent for walking home alone at night with valuable items. The case eventually reached the Supreme Court, which decided that Ms. Abad was not responsible for the loss of the jewelry due to a fortuitous event. Therefore, she was not required to repay or return its value (Austria v. Court of Appeals, G.R. No. G.R. No. L-29640 June 10, 1971).
More than 30 years later, in 2007, the Supreme Court ruled on another case about a person entrusted with valuable jewelry seeking exemption from returning it due to loss or robbery. In different occasions in 1987, Lulu V. Jorge pawned several pieces of jewelry with Agencia de R. C. Sicam, a pawnshop, as collateral for a loan of P59,500. Later, the pawnshop was robbed by two armed individuals, and Ms. Jorge’s pawned jewelry was among the stolen items. Mr. Sicam, the owner of the pawnshop, informed Ms. Jorge about the loss due to the robbery, but she insisted on the return of her items and filed a case for indemnification and damages. The Supreme Court held Mr. Sicam and the pawnshop liable to pay Ms. Jorge for the jewelry, stating that a robbery does not automatically qualify as a fortuitous event that exempts them from liability (Sicam and Agencia de R.C. Sicam, Inc. G.R. No. G.R. NO. 159617, August 8, 2007).
Mr. Sicam referred to the Austria case to argue that the pawnshop should be excused from returning the jewelry or its value due to a fortuitous event, which is the robbery. However, the court explained that the two cases are different. In the Austria case, the robbery occurred in 1961 when criminality in Manila was not as prevalent as in 1987 when the Sicam case happened. Moreover, Mr. Sicam had anticipated the possibility of robbery but did not take appropriate precautions. The pawnshop did not have a trained security guard, and the vault where the pawned items were stored was open during the day of the robbery.
According to Article 1174 of the Civil Code of the Philippines, a fortuitous event refers to those that could not be foreseen or, if foreseen, were inevitable. It absolves a person from responsibility and exempts them from liability. However, the Supreme Court has established specific criteria for an “act of God” to exempt a party from liability under Article 1174, including the event being independent of the debtor’s will, unforeseeable or unavoidable, rendering fulfillment of the obligation impossible, and no participation in or aggravation of the injury to the creditor, including negligence (Nakpil & Sons v. Court of Appeals, GR No. L- 47851, L-47863, L-47896, October 3, 1986).
While the terms “Act of God,” “Fortuitous Event,” and “Force Majeure” have slight differences in meaning, they are used interchangeably in contract drafting. A fortuitous event under Article 1174 can be an act of God or natural occurrences like floods or typhoons, or acts of man such as riots, strikes, or wars. Parties can also stipulate and define what unforeseen and unavoidable events are, including government orders, labor difficulties, insurrection, riots, emergencies, wars, acts of public enemies, fires, floods, typhoons, or other catastrophes beyond their control. The court has declared that this enumeration aligns with the concept of a fortuitous event under Article 1174 (Philippine Communications Satellite Corporation v. Globe Telecom, Inc., G.R. No. 147324, May 25, 2004).
An obligor is not excused from their obligation when the parties stipulate that the other party remains liable despite a fortuitous event, when the law specifically states liability despite the event, or when the nature of the obligation requires assuming the risk. In these cases, the obligor remains responsible for their actions or damages. Fortuitous events, force majeure, or acts of God can have significant legal implications in cases involving liability for damages or losses. While these events are beyond human control, parties seeking exemption from liability must meet strict criteria, including the absence of negligence and the impossibility to fulfill obligations due to the event.
(The author, Atty. John Philip C. Siao, is a practicing lawyer and founding Partner of Tiongco Siao Bello & Associates Law Offices, an Arbitrator of the Construction Industry Arbitration Commission of the Philippines, and teaches law at the De La Salle University Tañada-Diokno School of Law. He may be contacted at [email protected]. The views expressed in this article belong to the author alone.)
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In a receipt dated Jan 30, 1961, Maria G. Abad received a pendant with diamonds valued at P4,500.00 from Guillermo Austria. The purpose of the pendant was to be sold on commission or returned upon request. However, on Feb 1, 1961, as Ms. Abad was walking home in Mandaluyong, she was attacked by two individuals. One of them hit her, while the other stole her purse containing jewelry and cash before fleeing. Among the stolen items was Guillermo Austria’s pendant. Mr. Austria filed a case seeking the return of the pendant or payment of its value and damages. Ms. Abad claimed that she couldn’t return the jewelry due to the robbery, and couldn’t afford to pay for it. The trial court ruled in favor of Mr. Austria, stating that the robbery was not proven, and even if it happened, Ms. Abad was negligent for walking home alone at night with valuable items. The case eventually reached the Supreme Court, which decided that Ms. Abad was not responsible for the loss of the jewelry due to a fortuitous event. Therefore, she was not required to repay or return its value (Austria v. Court of Appeals, G.R. No. G.R. No. L-29640 June 10, 1971).
More than 30 years later, in 2007, the Supreme Court ruled on another case about a person entrusted with valuable jewelry seeking exemption from returning it due to loss or robbery. In different occasions in 1987, Lulu V. Jorge pawned several pieces of jewelry with Agencia de R. C. Sicam, a pawnshop, as collateral for a loan of P59,500. Later, the pawnshop was robbed by two armed individuals, and Ms. Jorge’s pawned jewelry was among the stolen items. Mr. Sicam, the owner of the pawnshop, informed Ms. Jorge about the loss due to the robbery, but she insisted on the return of her items and filed a case for indemnification and damages. The Supreme Court held Mr. Sicam and the pawnshop liable to pay Ms. Jorge for the jewelry, stating that a robbery does not automatically qualify as a fortuitous event that exempts them from liability (Sicam and Agencia de R.C. Sicam, Inc. G.R. No. G.R. NO. 159617, August 8, 2007).
Mr. Sicam referred to the Austria case to argue that the pawnshop should be excused from returning the jewelry or its value due to a fortuitous event, which is the robbery. However, the court explained that the two cases are different.
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