If failure results directly or directly from force majeure or fortuitous event, neither party shall be held
liable or deemed to be in default for any failure to perform its obligation under this Agreement.
Under this contract, force majeure shall mean circumstances beyong the control of the party
involved/affected including: __________
Force majeure exempts parties from complying with its obligations under the Agreement
Acts, directions or requests of the Government of the Philippines which constitute force majeure. There
were circumstances beyond the control of the parties.
Article 1174 - fortuitous events as events which could not be foreseen, or which, though foreseen,
were inevitable.
Article 1174, which exempts an obligor from liability on account of fortuitous events or force
majeure, refers not only to events that are unforeseeable, but also to those which are
foreseeable, but inevitable:
Art. 1174. 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.
A fortuitous event under Article 1174 may either be an "act of God," or natural occurrences such
as floods or typhoons,24 or an "act of man," such as riots, strikes or wars.
Under the contract, both parties came into an agreement what events shall be deemed events
constituting force majeure: ___________
Clearly, the foregoing are either unforeseeable, or foreseeable but beyond the control of the
parties. There is nothing in the enumeration that runs contrary to, or expands, the concept of a
fortuitous event under Article 1174.
Furthermore, under Article 130626 of the Civil Code, parties to a contract may establish such
stipulations, clauses, terms and conditions as they may deem fit, as long as the same do not run
counter to the law, morals, good customs, public order or public policy. 27
Article 1159 of the Civil Code also provides that "[o]bligations arising from contracts have the
force of law between the contracting parties and should be complied with in good faith." 28 Courts
cannot stipulate for the parties nor amend their agreement where the same does not contravene
law, morals, good customs, public order or public policy, for to do so would be to alter the real
intent of the parties, and would run contrary to the function of the courts to give force and effect
thereto.29
Not being contrary to law, morals, good customs, public order, pr public policy, Clause 13 of the
Agreement which ORMECO and POC freely agreed upon has the force of law between them
For us to be exempt from non-compliance with its obligation to pay rentals under Clause 13, the
concurrence of the following elements must be established: (1) the event must be independent of
the human will; (2) the occurrence must render it impossible for the debtor to fulfill the obligation
in a normal manner; and (3) the obligor must be free of participation in, or aggravation of, the
injury to the creditor.
Obviously, the pending approval of ERC is beyond the control of the parties.
The aforementioned events made impossible the continuation of the Agreement until the end of its term
without fault on the part of either party.
It would be unjust to require POC to continue delivering the obligation even tho we cannot be compelled
to perform the obligation under the Agreement.
It will be grossly unfair and iniquitous to hold us liable for penalty that was not and could not have been
rendered due to an act of the government which was clearly beyond our control.
The binding effect of a contract on both parties is based on the principle that the obligations
arising from contracts have the force of law between the contracting parties, and there must be
mutuality between them based essentially on their equality under which it is repugnant to have
one party bound by the contract while leaving the other party free therefrom
