Republic of the Philippines

NUEVA ECIJA UNIVERSITY OF SCIENCE AND TECHNOLOGY

Cabanatuan, Nueva Ecija

GRADUATE SCHOOL

MASTER OF ENGINEERING MANAGEMENT

COMPILATIONS OF CASE DIGEST

in

EnM 226 – LEGAL ASPECTS OF ENGINEERING MANAGEMENT

Second Semester - AY 2019-2020

Submitted by

ERICA JANE B. AGUSTIN

Submitted to

JOEFIL C. JOCSON, Ph. D.

Subject Professor
 CASE DIGEST # 1

NATIONAL POWER CORPORATION, petitioner, vs. HONORABLE COURT OF APPEALS

and
ENGINEERING CONSTRUCTION, INC., respondents.

G.R. No. L-47379, THIRD DIVISION, May 16, 1988, GUTIERREZ, JR., J.
If upon the happening of a fortuitous event or an act of God, there concurs a corresponding fraud,
negligence, delay or violation or contravention in any manner of the tenor of the obligation as
provided for in Article 1170 of the Civil Code, which results in loss or damage, the obligor cannot
escape liability.
In this case, NPC was undoubtedly negligent because it opened the spillway gates of the Angat
Dam only at the height of typhoon "Welming" when it knew very well that it was safer to have
opened the same gradually and earlier, as it was also undeniable that NPC knew of the coming
typhoon at least four days before it actually struck. Thus, NPC cannot escape liability.

FACTS:
On August 4, 1964, Engineering Construction, Inc. (ECI)executed a contract with the National
Waterworks and Sewerage Authority (NAWASA), whereby ECI undertook to furnish all tools,
labor, equipment, and materials (not furnished by Owner), and to construct the proposed 2nd Ipo-
Bicti Tunnel, Intake and Outlet Structures, and Appurtenant Structures, and Appurtenant Features,
at Norzagaray, Bulacan, and to complete said works within eight hundred (800) calendar days from
the date the Contractor receives the formal notice to proceed.
The project involved two (2) major phases: the first phase comprising the tunnel work covering a
distance of seven (7) kilometers, passing through the mountain, from the Ipo river, a part of
Norzagaray, Bulacan, where the Ipo Dam of the National Power Corporation (NPC) is located, to
Bicti; the other phase consisting of the outworks at both ends of the tunnel.
By September 1967, the ECI already had completed the first major phase of the work, namely, the
tunnel excavation work. As soon as the ECI had finished the tunnel excavation work at the Bicti
site, all the equipment no longer needed there were transferred to the Ipo site where some projects
were yet to be completed.
The record shows that on November 4, 1967, typhoon 'Welming' hit Central Luzon, passing
through
NPC’sAngat Hydro-electric Project and Dam at Ipo, Norzagaray, Bulacan. Strong winds struck
the project area, and heavy rains intermittently fell. Due to the heavy downpour, the water in the
reservoir of the Angat Dam was rising perilously at the rate of sixty (60) centimeters per hour. To
prevent an overflow of water from the dam, NPC caused the opening of the spillway gates.
The appellate court sustained the findings of the trial court that the evidence preponderantly
established the fact that due to the negligent manner with which the spillway gates of the Angat
Dam were opened, an extraordinary large volume of water rushed out of the gates, and hit the
installations and construction works of ECI at the Ipo site with terrific impact, as a result of which
the latter's stockpile of materials and supplies, camp facilities and permanent structures and
accessories were either washed away, lost or destroyed.

ISSUE:

Whether or not the destruction and loss of the ECI's equipment and facilities were due to force
majeure. (NO)
RULING:

It is clear from the appellate court's decision that based on its findings of fact and that of the trial
court's, NPC was undoubtedly negligent because it opened the spillway gates of the Angat Dam
only at the height of typhoon "Welming" when it knew very well that it was safer to have opened
the same gradually and earlier, as it was also undeniable that NPC knew of the coming typhoon at
least four days before it actually struck. And even though the typhoon was an act of God or what
we may call force majeure, NPC cannot escape liability because its negligence was the proximate
cause of the loss and damage. As the SC have ruled in Juan F. Nakpil& Sons v. Court of Appeals:
"Thus, if upon the happening of a fortuitous event or an act of God, there concurs a corresponding
fraud, negligence, delay or violation or contravention in any manner of the tenor of the obligation
as provided for in Article 1170 of the Civil Code, which results in loss or damage, the obligor
cannot escape liability.
"The principle embodied in the act of God doctrine strictly requires that the act must be one
occasioned exclusively by the violence of nature and human agencies are to be excluded from
creating or entering into the cause of the mischief. When the effect, the cause of which is to be
considered, is found to be in part the result of the participation of man, whether it be from active
intervention or neglect, or failure to act, the whole occurrence is thereby
humanized, as it was, and removed from the rules applicable to the acts of God.
"Thus, it has been held that when the negligence of a person concurs with an act of God in
producing a loss, such person is not exempt from liability by showing that the immediate
cause of the damage was the act of God. To be exempt from liability for loss because of an
act of God, he must be free from any previous negligence or misconduct by which the loss or
damage may have been occasioned.”
 CASE DIGEST # 2

PHILIPPINE COMMUNICATIONS SATELLITE CORPORATION, petitioner,

vs
.GLOBE TELECOM, INC. (formerly and Globe Mckay Cable
and Radio Corporation), respondents.

G.R. No. 147324, SECOND DIVISION, May 25, 2004, TINGA, J.

In order that Globe may be exempt from non-compliance with its obligation to pay rentals under
Section 8, 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.
The abovementioned requisites are present in the instant case. Philcomsat and Globe had no control
over the non-renewal of the term of the RP-US Military Bases Agreement when the same expired
in 1991. Neither did the parties have control over the subsequent withdrawal of the US military
forces and personnel from Cubi Point in December 1992.

FACTS:

For several years prior to 1991, Globe Mckay Cable and Radio Corporation, now Globe Telecom,
Inc. (Globe),had been engaged in the coordination of the provision of various communication
facilities for the military bases of the United States of America (US) in Clark Air Base, Angeles,
Pampanga and Subic Naval Base in Cubi Point, Zambales. The said communication facilities were
installed and configured for the exclusive use of the US Defense Communications Agency
(USDCA), and for security reasons, were operated only by its personnel or those of American
companies contracted by it to operate said facilities. The USDCA contracted with said American
companies, and the latter, in turn, contracted with Globe for the use of the communication
facilities. Globe, on the other hand, contracted with local service providers such as the Philippine
Communications Satellite Corporation (Philcomsat) for the provision of the communication
facilities. On 07 May 1991, Philcomsat and Globe entered into an Agreement whereby Philcomsat
obligated itself to establish, operate and provide an IBS Standard B earth station (earth station)
within Cubi Point for the exclusive use of the [Link] term of the contract was for five (5)
years. In turn, Globe promised to pay Philcomsat monthly rentals for each leased circuit involved.
At the time of the execution of the Agreement, both parties knew that the Military Bases
Agreement between the Republic of the Philippines and the US (RP-US Military Bases
Agreement), which was the basis for the occupancy of the Clark Air Base and Subic Naval Base
in Cubi Point, was to expire in 1991.
On 16 September 1991, the Senate passed and adopted Senate Resolution No. 141, expressing its
decision not to concur in the ratification of the Treaty of Friendship, Cooperation and Security and
its Supplementary Agreements that was supposed to extend the term of the use by the US of Subic
Naval Base, among others.
In a letter dated 06 August 1992, Globe notified Philcomsat of its intention to discontinue the use
of the earth station in view of the withdrawal of US military personnel from Subic Naval Base
after the termination of the RP-US Military Bases Agreement.
Philcomsat sent a reply letter to Globe, stating that "we expect [Globe] to know its commitment to
pay the stipulated rentals for the remaining terms of the Agreement even after [Globe] shall have
discontinue[d] the use of the earth station after November 08, 1992."
After the US military forces left Subic Naval Base, Philcomsat sent Globe a letter demanding
payment of its outstanding obligations. However, Globe refused to heed Philcomsat's demand.
Philcomsat insists that since the expiration of the RP-US Military Bases Agreement, the
nonratification of the Treaty of Friendship, Cooperation and Security and the withdrawal of US
military forces and personnel from Cubi Point were not unforeseeable, but were possibilities
known to it and Globe at the time they entered into the Agreement, such events cannot exempt
Globe from performing its obligation of paying rentals for the entire five-year term thereof.

ISSUE:

Whether the termination of the RP-US Military Bases Agreement, the non-ratification of the
Treaty of Friendship, Cooperation and Security, and the consequent withdrawal of US military
forces and personnel from Cubi Point constitute force majeure which would exempt Globe from
complying
with its obligation to pay rentals under its Agreement with Philcomsat. (YES) RULING: 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. Philcomsat and Globe agreed in Section 8 of the Agreement that the following
events shall be deemed events constituting force majeure:
1. Any law, order, regulation, direction or request of the Philippine Government;
2. Strikes or other labor difficulties;
3. Insurrection;
4. Riots;
5. National emergencies;
6. War;
7. Acts of public enemies;
8. Fire, floods, typhoons or other catastrophes or acts of God;
9. Other circumstances beyond the control of the parties.
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.
Article 1159 of the Civil Code also provides that "obligations arising from contracts have the force
of law between the contracting parties and should be complied with in good faith. "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.
Not being contrary to law, morals, good customs, public order, or public policy, Section 8 of the
Agreement which Philcomsat and Globe freely agreed upon has the force of law between them. In
order that Globe may be exempt from non-compliance with its obligation to pay rentals under
Section 8, 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.
The SC agreed with the CA and the trial court that the abovementioned requisites are present in
the
instant case. Philcomsat and Globe had no control over the non-renewal of the term of the RP-US
Military Bases Agreement when the same expired in 1991, because the prerogative to ratify the
treaty extending the life thereof belonged to the Senate. Neither did the parties have control over
the subsequent withdrawal of the US military forces and personnel from Cubi Point in December
1992.
The CA was thus correct in ruling that the happening of such fortuitous events rendered Globe
exempt from payment of rentals for the remainder of the term of the Agreement.
Moreover, it would be unjust to require Globe to continue paying rentals even though Philcomsat
cannot be compelled to perform its corresponding obligation under the Agreement.
 CASE DIGEST #3

NAGA TELEPHONE CO., INC (NATELCO) AND LUCIANO M. MAGGAY, petitioners -

versus-
THE COURT OF APPEALS AND CAMARINES SUR II ELECTRIC COOPERATIVE, INC.
(CASURECO II), respondents.

GR No. 107112, SECOND DIVISION, 24 February 1994, NOCON, J. Article 1267 speaks of
"service" which has become so difficult. Taking into consideration the rationale behind this
provision, the term "service" should be understood as referring to the "performance" of the
obligation. Article 1267 states in our law the doctrine of unforeseen events. This is said to be based
on the discredited theory of rebus sic stantibus in public international law; under this theory, the
parties stipulate in the light of certain prevailing conditions, and once these conditions cease to
exist the contract also ceases to exist. In the present case, the obligation of private respondent
consists in allowing petitioners to use its posts in Naga City, which is the service contemplated in
said article.

FACTS:

Naga Telephone Co., Inc. (NATELCO) entered into a contract with Camarines Sur II Electric
Cooperative, Inc. (CASURECO II) where it is stipulated that NATELCO will use the electric light
posts of CASURECO II for the operation of NATELCO’s telephone service. In return, NATELCO
agreed to install 10 telephone connections for the use by CASURECO II, free of charge. After the
enforcement of the contract for over 10 years, CASURECO II filed against NATELCO for
reformation of the contract with damages on the ground that it is too one-sided in favor of
NATELCO. It argued that after 11 years of NATELCO’s use of the posts, the telephone cables
strung by them became heavier with the increase in the volume of their subscribers, worsened by
the fact that their linemen bore holes through the posts which caused the posts to be destroyed
during typhoons.
The RTC ruled that the contract should be reformed based on equity. Hence, NATELCO should
pay CASURECO II compensation for the use of their posts, while the latter should pay monthly
bills for the use of the telephones.
Before the SC, NATELCO argued that Article 1267 of the New Civil Code is not applicable
because the contract does not involve the rendition of service or a personal prestation and it is not
for future service with future unusual change.

ISSUE:

Whether or not Article 1267 applies in this case to warrant the release of the parties from their
obligations. (YES)

RULING:

Article 1267 speaks of "service" which has become so difficult. Taking into consideration the
rationale behind this provision, the term "service" should be understood as referring to the
"performance" of the obligation. Article 1267 states in our law the doctrine of unforeseen events.
This is said to be based on the discredited theory of rebus sic stantibus in public international law;
under this theory, the parties stipulate in the light of certain prevailing conditions, and once these
conditions cease to exist the contract also ceases to exist.

In the present case, the obligation of private respondent consists in allowing petitioners to use its
posts in Naga City, which is the service contemplated in said article. A bare reading of this article
reveals that it is not a requirement thereunder that the contract be for future service with future
unusual change. The parties are therefore released from their respective obligations, but on the
basis of equity, the RTC’s ruling should be upheld.