Is FM recognized in statute? If yes, what is impact of statutory rules on FM clauses in contracts?
Yes. FM is recognized under article 1174 of the Civil Code: "Except in cases 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." If the contract has a specific provision on FM, the contract provision will apply provided that such provision is not deemed contrary to law, morals, good customs, public order or public policy.
FM remedies pursuant to contract?
The FM provision will apply provided that such provision is not deemed contrary to law, morals, good customs, public order or public policy.
Formalities to invoke?
For the FM principle to apply, the following requisites must be present:
- Breach must be independent of the will of the party claiming;
- The event must be either unforeseeable or unavoidable;
- The event must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and
- The party claiming did not participate in, nor aggravate, the injury to the other party.
Any obligation to mitigate?
No express obligation to mitigate damage but this can be implied from the requirement that in order to claim the defense of fortuitous event, the claiming party must not aggravate the injury to the other party. Also, as a general principle, Philippine law provides that every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.
What is the outcome of invoking FM?
The party invoking the defense or relief of fortuitous event is absolved from civil liability regardless of non-performance of all or part of the obligation. A party may seek rescission (i.e., nullifying a contract as if it never became effective) depending on the impact of the FM event.
Any other concepts/remedies?
There are other related principles under Philippine law under which a party may be released from their contractual obligations:
- Legal or physical impossibility, i.e., when the obligation becomes legally or physically impossible without his/her fault (article 1266, Civil Code); and
- Extreme difficulty, i.e., when the service has become so difficult as to be manifestly beyond the contemplation of the parties (article 1267,Civil Code).
Important distinction - FM focuses on the event while the above remedies focus on the contractual objective or obligation.