Lecture on Fortuitous Events and Related Legal Concepts

Fortuitous Events

• Definition: Events that cannot be foreseen or are inevitable.
• Types:
  • Acts of Man: Independent of the will of the debtor but not of other humans. Example: armed robbery.
  • Acts of God (Force Majeure): Independent of human will, e.g., earthquakes and volcanic eruptions.
• Interchangeable Terms: "Fortuitous event" and "force majeure."

General Rule for Fortuitous Events

• A party is not liable for loss/damage caused by a fortuitous event.
  • Example: A debtor not liable if goods are lost in an earthquake.

Exceptions

1. Delay, Default, Fraud, Negligence: Debtor liable if any of these are present.
2. Multiple Obligations: Debtor liable if delivering to multiple parties with different interests.
3. Obligations from Criminal Offenses: Debtor liable if the obligation arises from a crime.
4. Generics: Debtor must deliver another of the same kind/quality.
5. Stipulated Liability: Parties agree debtor is liable even in fortuitous events.

Doctrine of Assumption of Risk

• Volenti Non Fit Injuria: No wrong is done to one who consents.
  • Example: Participants in risky activities assume risk and instructors are not liable.

Requisites for Non-liability in Fortuitous Events

1. Independent of Debtor's Will: Event is not debtor’s fault.
2. Unforeseeable/Inevitable: Event could not be prevented.
3. Renders Performance Impossible: Debtor cannot fulfill obligation.
4. No Debtor Negligence: Debtor must not contribute to the damage.

Usury Law and Interest

• Definition of Usury: Receiving an amount beyond what is allowed by law.
• Current Legal Interest Rate: 6% per annum (Central Bank Circular No. 799).
• Higher Rates by Credit Card Companies: Allowed (e.g., 3.25% per month) due to Central Bank Circular No. 905.
  • Supreme Court's Stance: Can reduce unconscionable interest rates.

Presumptions in Payment

• Interest Presumptions:
  • Receipt of principal without reserving interest implies interest is paid.
  • Receipt of a later installment implies earlier installments are paid.
• Exceptions:
  • Written/oral reservation of rights.
  • Receipt not specifying installment.
  • Partial principal payments.
  • Tax payments.
  • Proven non-payment.

Creditor's Remedies

1. Exhaustion of Assets: Use legal means to exhaust debtor's assets.
2. Action Subrogatoria: Creditor acts in place of debtor to claim from third parties.
   • Requisites: Unsatisfied debt, creditor’s prejudice, exhaustion of debtor's assets.
3. Action Pauliana: Impugn debtor's fraudulent acts to defraud creditor.
   • Requisites: Existing debt, fraudulent transfer, no other legal remedy, third party involvement in fraud.

Transmissibility of Rights

• General Rule: Rights are transmissible.
• Exceptions:
  • Prohibited by law (e.g., personal contracts).
  • Parties' stipulation (e.g., gym memberships).

---

This concludes the lecture on the nature and effect of obligations. Next topic: kinds of obligations.