VILLAROEL VS.

ESTRADA
71 Phil. 140 (1940)

FACTS

This was originally an action commenced by the plaintiff (respondent)

against the defendant (petitioner) for the purpose of enforcing a contract
entered into on August 9, 1903, by virtue of which the defendant undertook
to pay to the plaintiff a certain debt which his deceased mother had incurred
from the deceased parents of the said plaintiff more than eighteen years
ago. It is submitted that this debt had already prescribed.
ISSUE
Whether or not this action will prosper, considering that the debt incurred by
the defendant's mother had already prescribed.
HELD: YES
RATIO: his action is based on the original obligation contracted by the mother
of the defendant, who has already prescribed,but in which the defendant
contracted the August 9, 1930 (Exhibito B) by assuming thefulfillment of that
obligation, as prescribed. Being the only defendant in the original
herderodebtor eligible successor into his inheritance, that debt brought by
his mother in law,although it lost its effectiveness by prescription, is now,
however, for a moral obligation,that is consideration enough to create and
make effective and enforceable obligationvoluntarily contracted its August 9,
1930 in Exhibito B.The rule that a new promise to pay a debt prrescrita must
be made by the same personobligated or otherwise legally authorized by it,
is not applicable to the present case is notrequired in compliance with the
mandatory obligation orignalmente but which would give itvoluntarily
assumed this obligation.It confirms the judgment appealed from, with costs
against the appellant. IT IS SOORDERED.

ANSAY VS NATIONAL DEVELOPMENT COMPANY G.R No. L-13667 April 29,

1960

FACTS:
On July 25, 1956, Primitivo Ansay et al filed against the Board of Directors of
the National Development Company in the Court of First Instance of Manila a
complaint praying for a 20% Christmas bonus for the years 1954 and 1955.
Appellants contend that there exists a cause of action in their complaint
because their claim rests on moral grounds or what in brief is defined by law
as a natural obligation.
ISSUE: Whether or not the Christmas bonus is demandable.
HELD: No, it is not demandable.
Article 1423 of the New Civil Code classifies obligations into civil or natural.
"Civil obligations are a right of action to compel their performance. Natural
obligations, not being based on positive law but on equity and natural law,
do not grant a right of action to enforce their performance, but after
voluntary fulfillment by the obligor, they authorize the retention of what has
been delivered or rendered by reason thereof".
It is thus readily seen that an element of natural obligation before it can be
cognizable by the court is voluntary fulfillment by the obligor. Certainly
retention can be ordered but only after there has been voluntary
performance. But here there has been no voluntary performance. In fact, the
court cannot order the performance.
At this point, we would like to reiterate what we said in the case of Philippine
Education Co. vs. CIR and the Union of Philippine Education Co., Employees
(NUL) (92 Phil., 381; 48 Off. Gaz., 5278)
xxx

xxx

xxx

From the legal point of view a bonus is not a demandable and enforceable
obligation. It is so when it is made a part of the wage or salary
compensation.
And while it is true that the subsequent case of H. E. Heacock vs. National
Labor Union, et al., 95 Phil., 553; 50 Off. Gaz., 4253, we stated that:
Even if a bonus is not demandable for not forming part of the wage, salary or
compensation of an employee, the same may nevertheless, be granted on
equitable consideration as when it was given in the past, though withheld in
succeeding two years from low salaried employees due to salary increases.

still the facts in said Heacock case are not the same as in the instant one,
and hence the ruling applied in said case cannot be considered in the
present action.
Premises considered, the order appealed from is hereby affirmed, without
pronouncement as to costs.

G.R. No. L-48889 May 11, 1989

DEVELOPMENT BANK OF THE PHILIPPINES (DBP), petitioner,
vs.
THE HONORABLE MIDPAINTAO L. ADIL, Judge of the Second Branch of the
Court of First Instance of Iloilo and SPOUSES PATRICIO CONFESOR and JOVITA
VILLAFUERTE, respondents.
GANCAYCO, J.:
NATURE: The present case is a petition for review on certiorari.
FACTS: Spouses obtained a loan in 1940. Even after the lapse of 10 years, it
remained unpaid. The husband then acknowledged said loan via a
promissory note in 1961. Due to their failure to pay the said loan, the
creditor bank filed a collection suit in 1970.
The lower court ruled in favor of the creditor.
The appellate court reversed the trial court.
The creditor filed a motion for reconsideration but it was denied.

ISSUE: WON the act of acknowledging the loan after it has prescribed has the
force and effect of reviving the enforceability of the said obligation? YES

RATIO:
The right to prescription may be waived or renounced. Article 1112 of Civil
Code provides:
Art. 1112. Persons with capacity to alienate property may renounce
prescription already obtained, but not the right to prescribe in the future.
Prescription is deemed to have been tacitly renounced when the renunciation
results from acts which imply the abandonment of the right acquired.
There is no doubt that prescription has set in as to the first promissory note
of February 10, 1940. However, when respondent Confesor executed the
second promissory note on April 11, 1961 whereby he promised to pay the
amount covered by the previous promissory note on or before June 15, 1961,
and upon failure to do so, agreed to the foreclosure of the mortgage, said
respondent thereby effectively and expressly renounced and waived his right
to the prescription of the action covering the first promissory note.
This Court had ruled in a similar case that

... when a debt is already barred by prescription, it cannot be enforced by the

creditor. But a new contract recognizing and assuming the prescribed debt
would be valid and enforceable ... . 1
Thus, it has been held
Where, therefore, a party acknowledges the correctness of a debt and
promises to pay it after the same has prescribed and with full knowledge of
the prescription he thereby waives the benefit of prescription. 2
This is not a mere case of acknowledgment of a debt that has prescribed but
a new promise to pay the debt. The consideration of the new promissory
note is the pre-existing obligation under the first promissory note. The
statutory limitation bars the remedy but does not discharge the debt.
A new express promise to pay a debt barred ... will take the case from the
operation of the statute of limitations as this proceeds upon the ground that
as a statutory limitation merely bars the remedy and does not discharge the
debt, there is something more than a mere moral obligation to support a
promise, to wit a pre-existing debt which is a sufficient consideration for
the new the new promise; upon this sufficient consideration constitutes, in
fact, a new cause of action. 3
... It is this new promise, either made in express terms or deduced from an
acknowledgement as a legal implication, which is to be regarded as
reanimating the old promise, or as imparting vitality to the remedy (which by
lapse of time had become extinct) and thus enabling the creditor to recover
upon his original contract.

G.R. No. L-23749 April 29, 1977

FAUSTINO CRUZ, plaintiff-appellant,
vs.
J. M. TUASON & COMPANY, INC., and GREGORIO ARANETA, INC., defendantsappellees.
BARREDO, J.:
NATURE: APPEAL from CFI dismissing complaint
Appeal from the order dated August 13, 1964 of the Court of First Instance of
Quezon City in Civil Case No. Q-7751, Faustino Cruz vs. J.M. Tuason & Co.,
Inc., and Gregorio Araneta, Inc., dismissing the complaint of appellant Cruz
for the recovery of improvements he has made on appellees' land and to
compel appellees to convey to him 3,000 square meters of land on three
grounds: (1) failure of the complaint to state a cause of action; (2) the cause
of action of plaintiff is unenforceable under the Statute of Frauds; and (3) the
action of the plaintiff has already prescribed.
Plaintiff filed a complaint alleging two causes of action
1)
Reimbursement for improvements he made on the land of Deudors in
which defendant was benefited.
2)
Compensation for plaintiffs services as an intermediary with the
Deudors to work for the amicable settlement of Civil Case No. Q-135,
notwithstanding his having performed his services, as in fact, a compromise
agreement entered into on March 16, 1963 between the Deudors and the
defendants was approved by the court, the latter have refused to convey to
him the 3,000 square meters of land occupied by him, (a part of the 20
quinones above) which said defendants had promised to do "within ten years
from and after date of signing of the compromise agreement", as
consideration for his services.
Defendants filed a motion to dismiss alleging the following:
1)

Failure to state a cause of action; unjust enrichment not applicable

2)

The compromise agreement is unenforceable

3)

The action has already prescribed

Plaintiff opposed the motion, insisting that Article 2142 of the applicable to
his case; that the Statute of Frauds cannot be invoked by defendants, not
only because Article 1403 of the Civil Code refers only to "sale of real
property or of an interest therein" and not to promises to convey real
property like the one supposedly promised by defendants to him, but also

because, he, the plaintiff has already performed his part of the agreement,
hence the agreement has already been partly executed and not merely
executory within the contemplation of the Statute; and that his action has
not prescribed for the reason that defendants had ten years to comply and
only after the said ten years did his cause of action accrue, that is, ten years
after March 16, 1963, the date of the approval of the compromise
agreement, and his complaint was filed on January 24, 1964.
The trial courts ruling:
On the issue that the complaint insofar as it claims the reimbursement for
the services rendered and expenses incurred by the plaintiff, states no cause
of action, the Court is of the opinion that the same is well-founded. It is found
that the defendants are not parties to the supposed express contract entered
into by and between the plaintiff and the Deudors for the clearing and
improvement of the 50 quinones. Furthermore in order that the alleged
improvement may be considered a lien or charge on the property, the same
should have been made in good faith and under the mistake as to the title.
On the issue of statute of fraud, the Court believes that same is applicable to
the instant case. The allegation in par. 12 of the complaint states that the
defendants promised and agreed to cede, transfer and convey unto the
plaintiff the 3,000 square meters of land in consideration of certain services
to be rendered then. it is clear that the alleged agreement involves an
interest in real property. Under the provisions of See. 2(e) of Article 1403 of
the Civil Code, such agreement is not enforceable as it is not in writing and
subscribed by the party charged.
On the issue of statute of limitations, the Court holds that the plaintiff's
action has prescribed. It is alleged in par. 11 of the complaint that, sometime
in 1952, the defendants approached the plaintiff to prevail upon the Deudors
to enter to a compromise agreement in Civil Case No. Q-135 and allied
cases. Furthermore, par. 13 and 14 of the complaint alleged that the plaintiff
acted as emissary of both parties in conveying their respective proposals and
couter-proposals until the final settlement was effected on March 16, 1953
and approved by Court on April 11, 1953. In the present action, which was
instituted on January 24, 1964, the plaintiff is seeking to enforce the
supposed agreement entered into between him and the defendants in 1952,
which was already prescribed.
Plaintiff filed a motion for reconsideration which was denied. Hence this
present appeal.

ISSUE: WON the statute of frauds is applicable to cases which are not
included in the enumeration set forth in Article 1403 of the civil code? NO

WON the principle of unjust enrichment has application when the claim is
based on a contract between the claimant and the predecessor-in-interest of
the defendant? none
RATIO:
We agree with appellant that the Statute of Frauds was erroneously applied
by the trial court. It is elementary that the Statute refers to specific kinds of
transactions and that it cannot apply to any that is not enumerated therein.
And the only agreements or contracts covered thereby are the following:
(1) Those entered into in the name of another person by one who has been
given no authority or legal representation, or who has acted beyond his
powers;
(2) Those do not comply with the Statute of Frauds as set forth in this
number, In the following cases an agreement hereafter made shall be
unenforceable by action, unless the same, or some note or memorandum
thereof, be in writing, and subscribed by the party charged, or by his agent;
evidence, therefore, of the agreement cannot be received without the
writing, or a secondary evidence of its contents:
(a) An agreement that by its terms is not to be performed within a year from
the making thereof;
(b) A special promise to answer for the debt, default, or miscarriage of
another;
(c) An agreement made in consideration of marriage, other than a mutual
promise to marry;
(d) An agreement for the sale of goods, chattels or things in action, at a price
not less than five hundred pesos, unless the buyer accept and receive part of
such goods and chattels, or the evidences, or some of them of such things in
action, or pay at the time some part of the purchase money; but when a sale
is made by auction and entry is made by the auctioneer in his sales book, at
the time of the sale, of the amount and kind of property sold, terms of sale,
price, names of the purchasers and person on whose account the sale is
made, it is a sufficient memorandum:
(e) An agreement for the leasing for a longer period than one year, or for the
sale of real property or of an interest therein:
(f) a representation as to the credit of a third person.
(3) Those where both parties are incapable of giving consent to a contract.
(Art. 1403, civil Code.)
In the instant case, what appellant is trying to enforce is the delivery to him
of 3,000 square meters of land which he claims defendants promised to do in
consideration of his services as mediator or intermediary in effecting a

compromise of the civil action, Civil Case No. 135, between the defendants
and the Deudors. In no sense may such alleged contract be considered as
being a "sale of real property or of any interest therein." Indeed, not all
dealings involving interest in real property come under the Statute.
Moreover, appellant's complaint clearly alleges that he has already fulfilled
his part of the bargains to induce the Deudors to amicably settle their
differences with defendants as, in fact, on March 16, 1963, through his
efforts, a compromise agreement between these parties was approved by
the court. In other words, the agreement in question has already been
partially consummated, and is no longer merely executory. And it is likewise
a fundamental principle governing the application of the Statute that the
contract in dispute should be purely executory on the part of both parties
thereto.
We cannot, however, escape taking judicial notice, in relation to the
compromise agreement relied upon by appellant, that in several cases We
have decided, We have declared the same rescinded and of no effect. In J. M.
Tuason & Co., Inc. vs. Bienvenido Sanvictores, 4 SCRA 123, the Court held:
It is also worthy of note that the compromise between Deudors and Tuason,
upon which Sanvictores predicates his right to buy the lot he occupies, has
been validly rescinded and set aside, as recognized by this Court in its
decision in G.R. No. L-13768, Deudor vs. Tuason, promulgated on May 30,
1961.
We repeated this observation in J.M. Tuason & Co., Inc. vs. Teodosio
Macalindong, 6 SCRA 938. Thus, viewed from what would be the ultimate
conclusion of appellant's case, We entertain grave doubts as to whether or
not he can successfully maintain his alleged cause of action against
defendants, considering that the compromise agreement that he invokes did
not actually materialize and defendants have not benefited therefrom, not to
mention the undisputed fact that, as pointed out by appellees, appellant's
other attempt to secure the same 3,000 square meters via the judicial
enforcement of the compromise agreement in which they were supposed to
be reserved for him has already been repudiated by the courts.
As regards appellant's third assignment of error, We hold that the allegations
in his complaint do not sufficiently Appellants' reliance. on Article 2142 of
Civil Code is misplaced. Said article provides:
Certain lawful, voluntary and unilateral acts give rise to the juridical relation
of quasi-contract to the end that no one shall be unjustly enriched or
benefited at the expense of another.
From the very language of this provision, it is obvious that a presumed
qauasi-contract cannot emerge as against one party when the subject mater
thereof is already covered by an existing contract with another party.
Predicated on the principle that no one should be allowed to unjustly enrich

himself at the expense of another, Article 2124 creates the legal fiction of a
quasi-contract precisely because of the absence of any actual agreement
between the parties concerned. Corollarily, if the one who claims having
enriched somebody has done so pursuant to a contract with a third party, his
cause of action should be against the latter, who in turn may, if there is any
ground therefor, seek relief against the party benefited. It is essential that
the act by which the defendant is benefited must have been voluntary and
unilateral on the part of the plaintiff. As one distinguished civilian puts it,
"The act is voluntary. because the actor in quasi-contracts is not bound by
any pre-existing obligation to act. It is unilateral, because it arises from the
sole will of the actor who is not previously bound by any reciprocal or
bilateral agreement. The reason why the law creates a juridical relations and
imposes certain obligation is to prevent a situation where a person is able to
benefit or take advantage of such lawful, voluntary and unilateral acts at the
expense of said actor." (Ambrosio Padilla, Civil Law, Vol. VI, p. 748, 1969 ed.)
In the case at bar, since appellant has a clearer and more direct recourse
against the Deudors with whom he had entered into an agreement regarding
the improvements and expenditures made by him on the land of appellees. it
Cannot be said, in the sense contemplated in Article 2142, that appellees
have been enriched at the expense of appellant.
XXX
WHEREFORE, the appeal of Faustino Cruz in this case is dismissed. No costs.
GUTIERREZ HERMANOS vs ORENSE G.R. No. 9188 December 4, 1914

FACTS:

On and before Februaru 14, 1907, Engracio Orense had been the owner of a
parcel of land in Guinobatan, Albay.

On February 14, 1907, Jose Duran, a nephew of Orense, sold the property for
P1,500 to Gutierrez Hermanos, with Orenses knowledge and consent,
executed before a notary a public instrument. The said public instrument
contained a provision giving Duran the right to repurchase it for the same
price within a period of four years from the date of the said instrument.

Orense continued occupying the land by virtue of a contract of lease.

After the lapse of four years, Gutierrez asked Orense to deliver the property
to the company and to pay rentals for the use of the property.

Orense refused to do so. He claimed that the sale was void because it was
done without his authority and that he did not authorize his nephew to enter
into such contract.

During trial, Orense was presented as witness of the defense. He states that
the sale was done with his knowledge and consent. Because of such
testimony, it was ascertained that he did give his nephew, Duran, authority
to convey the land. Duran was acquitted of criminal charges and the
company demanded that Orense execute the proper deed of conveyance of
the property.

ISSUE: Whether or not Orense is bound by Durans act of selling the formers
property
HELD: It having been proven at the trial that he gave his consent to the said
sale, it follows that the defendant conferred verbal, or at least implied, power
of agency upon his nephew Duran, who accepted it in the same way by
selling the said property. The principal must therefore fulfill all the obligations
contracted by the agent, who acted within the scope of his authority. (Civil
Code, arts. 1709, 1710 and 1727.)
Even should it be held that the said consent was granted subsequently to the
sale, it is unquestionable that the defendant, the owner of the property,
approved the action of his nephew, who in this case acted as the manager of
his uncle's business, and Orense'r ratification produced the effect of an
express authorization to make the said sale. (Civil Code, arts. 1888 and
1892.)
Article 1259 of the Civil Code prescribes: "No one can contract in the name of
another without being authorized by him or without his legal representation
according to law.

A contract executed in the name of another by one who has neither his
authorization nor legal representation shall be void, unless it should be
ratified by the person in whose name it was executed before being revoked
by the other contracting party.
The sworn statement made by the defendant, Orense, while testifying as a
witness at the trial of Duran for estafa, virtually confirms and ratifies the sale
of his property effected by his nephew, Duran, and, pursuant to article 1313
of the Civil Code, remedies all defects which the contract may have
contained from the moment of its execution.
The sale of the said property made by Duran to Gutierrez Hermanos was
indeed null and void in the beginning, but afterwards became perfectly valid
and cured of the defect of nullity it bore at its execution by the confirmation
solemnly made by the said owner upon his stating under oath to the judge
that he himself consented to his nephew Jose Duran's making the said sale.
Moreover, pursuant to article 1309 of the Code, the right of action for
nullification that could have been brought became legally extinguished from
the moment the contract was validly confirmed and ratified, and, in the
present case, it is unquestionable that the defendant did confirm the said
contract of sale and consent to its execution.
On the testimony given by Engacio Orense at the trial of Duran for estafa,
the latter was acquitted, and it would not be just that the said testimony,
expressive of his consent to the sale of his property, which determined the
acquittal of his nephew, Jose Duran, who then acted as his business
manager, and which testimony wiped out the deception that in the beginning
appeared to have been practiced by the said Duran, should not now serve in
passing upon the conduct of Engracio Orense in relation to the firm of
Gutierrez Hermanos in order to prove his consent to the sale of his property,
for, had it not been for the consent admitted by the defendant Orense, the
plaintiff would have been the victim of estafa.
If the defendant Orense acknowledged and admitted under oath that he had
consented to Jose Duran's selling the property in litigation to Gutierrez
Hermanos, it is not just nor is it permissible for him afterward to deny that
admission, to the prejudice of the purchaser, who gave P1,500 for the said
property.
The contract of sale of the said property contained in the notarial instrument
of February 14, 1907, is alleged to be invalid, null and void under the
provisions of paragraph 5 of section 335 of the Code of Civil Procedure,

because the authority which Orense may have given to Duran to make the
said contract of sale is not shown to have been in writing and signed by
Orense, but the record discloses satisfactory and conclusive proof that the
defendant Orense gave his consent to the contract of sale executed in a
public instrument by his nephew Jose Duran. Such consent was proven in a
criminal action by the sworn testimony of the principal and presented in this
civil suit by other sworn testimony of the same principal and by other
evidence to which the defendant made no objection. Therefore the principal
is bound to abide by the consequences of his agency as though it had
actually been given in writing (Conlu vs. Araneta and Guanko, 15 Phil. Rep.,
387; Gallemit vs. Tabiliran, 20 Phil. Rep., 241; Kuenzle & Streiff vs. Jiongco, 22
Phil. Rep., 110.)
The repeated and successive statements made by the defendant Orense in
two actions, wherein he affirmed that he had given his consent to the sale of
his property, meet the requirements of the law and legally excuse the lack of
written authority, and, as they are a full ratification of the acts executed by
his nephew Jose Duran, they produce the effects of an express power of
agency.
The judgment appealed from in harmony with the law and the merits of the
case, and the errors assigned thereto have been duly refuted by the
foregoing considerations, so it should be affirmed.
The judgment appealed from is hereby affirmed, with the costs against the
appellant.

Adille vs CA
Facts:

Felisa Alzul owned a certain property in Albay. She was married twice in her
life time. First with Bernabe Adille, with whom she begot a son, Rustico Adille.
Second with Procopio Asejo, with whom she begot Emeteria, Teodorica,
Domingo, Josefa, and Santiago. She sold said property in pacto de retro to
3rd persons but she died before the redemption period expired. Rustico,
representing himself as the only heir and child of Felisa, repurchased the said
property and secured a title in his own name. His siblings then filed a case
for partition on the basis that Rustico was only a trustee on an implied trust
when he redeemed the property.
ISSUE:
The petition raises a purely legal issue: May a co-owner acquire exclusive
ownership over the property held in common?
Essentially, it is the petitioner's contention that the property subject of
dispute devolved upon him upon the failure of his co-heirs to join him in its
redemption within the period required by law. He relies on the provisions of
Article 1515 of the old Civil Article 1613 of the present Code, giving the
vendee a retro the right to demand redemption of the entire property.
ISSUE:
Whether or not a co-owner may acquire exclusive ownership over the
property held in common. NO
Whether or nor Rustico had constituted himself a negotiorum gestor. YES
RATIO: The right of repurchase may be exercised by a co-owner with aspect
to his share alone. 5 While the records show that the petitioner redeemed
the property in its entirety, shouldering the expenses therefor, that did not
make him the owner of all of it. In other words, it did not put to end the
existing state of co-ownership.
Necessary expenses may be incurred by one co-owner, subject to his right to
collect reimbursement from the remaining co-owners. 6 There is no doubt
that redemption of property entails a necessary expense. Under the Civil
Code:

ART. 488. Each co-owner shall have a right to compel the other co-owners to
contribute to the expenses of preservation of the thing or right owned in
common and to the taxes. Any one of the latter may exempt himself from
this obligation by renouncing so much of his undivided interest as may be
equivalent to his share of the expenses and taxes. No such waiver shall be
made if it is prejudicial to the co-ownership.
The result is that the property remains to be in a condition of co-ownership.
While a vendee a retro, under Article 1613 of the Code, "may not be
compelled to consent to a partial redemption," the redemption by one coheir or co-owner of the property in its totality does not vest in him ownership
over it. Failure on the part of all the co-owners to redeem it entitles the
vendee a retro to retain the property and consolidate title thereto in his
name. 7 But the provision does not give to the redeeming co-owner the right
to the entire property. It does not provide for a mode of terminating a coownership.
Neither does the fact that the petitioner had succeeded in securing title over
the parcel in his name terminate the existing co-ownership. While his halfbrothers and sisters are, as we said, liable to him for reimbursement as and
for their shares in redemption expenses, he cannot claim exclusive right to
the property owned in common. Registration of property is not a means of
acquiring ownership. It operates as a mere notice of existing title, that is, if
there is one.
The petitioner must then be said to be a trustee of the property on behalf of
the private respondents. The Civil Code states:
ART. 1456. If property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an implied trust for the
benefit of the person from whom the property comes.
We agree with the respondent Court of Appeals that fraud attended the
registration of the property. The petitioner's pretension that he was the sole
heir to the land in the affidavit of extrajudicial settlement he executed
preliminary to the registration thereof betrays a clear effort on his part to
defraud his brothers and sisters and to exercise sole dominion over the
property. The aforequoted provision therefore applies.
It is the view of the respondent Court that the petitioner, in taking over the
property, did so either on behalf of his co-heirs, in which event, he had
constituted himself a negotiorum gestor under Article 2144 of the Civil Code,

or for his exclusive benefit, in which case, he is guilty of fraud, and must act
as trustee, the private respondents being the beneficiaries, under the Article
1456. The evidence, of course, points to the second alternative the petitioner
having asserted claims of exclusive ownership over the property and having
acted in fraud of his co-heirs. He cannot therefore be said to have assume
the mere management of the property abandoned by his co-heirs, the
situation Article 2144 of the Code contemplates. In any case, as the
respondent Court itself affirms, the result would be the same whether it is
one or the other. The petitioner would remain liable to the Private
respondents, his co-heirs.
This Court is not unaware of the well-established principle that prescription
bars any demand on property (owned in common) held by another (coowner) following the required number of years. In that event, the party in
possession acquires title to the property and the state of co-ownership is
ended . 8 In the case at bar, the property was registered in 1955 by the
petitioner, solely in his name, while the claim of the private respondents was
presented in 1974. Has prescription then, set in?
We hold in the negative. Prescription, as a mode of terminating a relation of
co-ownership, must have been preceded by repudiation (of the coownership). The act of repudiation, in turn is subject to certain conditions: (1)
a co-owner repudiates the co-ownership; (2) such an act of repudiation is
clearly made known to the other co-owners; (3) the evidence thereon is clear
and conclusive, and (4) he has been in possession through open, continuous,
exclusive, and notorious possession of the property for the period required
by law. 9
The instant case shows that the petitioner had not complied with these
requisites. We are not convinced that he had repudiated the co-ownership;
on the contrary, he had deliberately kept the private respondents in the dark
by feigning sole heirship over the estate under dispute. He cannot therefore
be said to have "made known" his efforts to deny the co-ownership.
Moreover, one of the private respondents, Emeteria Asejo, is occupying a
portion of the land up to the present, yet, the petitioner has not taken pains
to eject her therefrom. As a matter of fact, he sought to recover possession
of that portion Emeteria is occupying only as a counterclaim, and only after
the private respondents had first sought judicial relief.
It is true that registration under the Torrens system is constructive notice of
title, 10 but it has likewise been our holding that the Torrens title does not

furnish a shield for fraud. 11 It is therefore no argument to say that the act of
registration is equivalent to notice of repudiation, assuming there was one,
notwithstanding the long-standing rule that registration operates as a
universal notice of title.
For the same reason, we cannot dismiss the private respondents' claims
commenced in 1974 over the estate registered in 1955. While actions to
enforce a constructive trust prescribes in ten years, 12 reckoned from the
date of the registration of the property, 13 we, as we said, are not prepared
to count the period from such a date in this case. We note the petitioner's
sub rosa efforts to get hold of the property exclusively for himself beginning
with his fraudulent misrepresentation in his unilateral affidavit of
extrajudicial settlement that he is "the only heir and child of his mother
Feliza with the consequence that he was able to secure title in his name
also." 14 Accordingly, we hold that the right of the private respondents
commenced from the time they actually discovered the petitioner's act of
defraudation. 15 According to the respondent Court of Appeals, they "came
to know [of it] apparently only during the progress of the litigation." 16
Hence, prescription is not a bar.
Moreover, and as a rule, prescription is an affirmative defense that must be
pleaded either in a motion to dismiss or in the answer otherwise it is deemed
waived, 17 and here, the petitioner never raised that defense. 18 There are
recognized exceptions to this rule, but the petitioner has not shown why they
apply.
WHEREFORE, there being no reversible error committed by the respondent
Court of Appeals, the petition is DENIED. The Decision sought to be reviewed
is hereby AFFIRMED in toto. No pronouncement as to costs.
SO ORDERED,

ANDRES VS MANTRUST G.R. NO.

82670 SEPTEMBER 15, 1989
FACTS:
Andres, using the business name Irenes Wearing Apparel was engaged in
the manufacture of ladies garments, childrens wear, mens apparel and
linens for local and foreign buyers. Among its foreign buyers was Facts of the
United States.
Sometime in August 1980, Facts instructed the First National State Bank
(FNSB) of New Jersey to transfer $10,000 to Irenes Wearing Apparel via
Philippine National Bank (PNB) Sta. Cruz, Manila branch. FNSB instructed
Manufacturers Hanover and Trust Corporation (Mantrust) to effect the
transfer by charging the amount to the account of FNSB with private
respondent.
After Mantrust effected the transfer, the payment was not effected
immediately because the payee designated in the telex was only Wearing
Apparel. Private respondent sent PNB another telex stating that the
payment was to be made to Irenes Wearing Apparel.
On August 28, 1980, petitioner received the remittance of $10,000.
After learning about the delay, Facets informed FNSB about the situation.
Facts, unaware that petitioner had already received the remittance, informed
private respondent and amended its instruction y asking it to effect the
payment to Philippine Commercial and Industrial Bank (PCIB) instead of PNB.
Private respondent, also unaware that petitioner had already received the
remittance, instructed PCIB to pay $10,000 to petitioner. Hence, petitioner
received another $10,000 which was charged again to the account of Facets
with FNSB.
FNSB discovered that private respondent had made a duplication of
remittance. Private respondent asked petitioner to return the second
remittance of $10,000 but the latter refused to do so contending that the
doctrine of solution indebiti does not apply because there was negligence on
the part of the respondents and that they were not unjustly enriched since
Facets still has a balance of $49,324.
ISSUE: Whether or not the private respondent has the right to recover the
second $10,000 remittance it had delivered to petitioner

HELD: Yes.
The resolution of this issue would hinge on the applicability of Art. 2154 of
the New Civil Code which provides that:
Art. 2154. If something received when there is no right to demand it, and it
was unduly delivered through mistake, the obligation to return it arises.
XXX
For this article to apply the following requisites must concur: "(1) that he who
paid was not under obligation to do so; and, (2) that payment was made by
reason of an essential mistake of fact" [City of Cebu v. Piccio, 110 Phil. 558,
563 (1960)].
It is undisputed that private respondent delivered the second $10,000.00
remittance. However, petitioner contends that the doctrine of solutio indebiti,
does not apply because its requisites are absent.
First, it is argued that petitioner had the right to demand and therefore to
retain the second $10,000.00 remittance. It is alleged that even after the two
$10,000.00 remittances are credited to petitioner's receivables from FACETS,
the latter allegedly still had a balance of $49,324.00. Hence, it is argued that
the last $10,000.00 remittance being in payment of a pre-existing debt,
petitioner was not thereby unjustly enriched.
The contention is without merit.
The contract of petitioner, as regards the sale of garments and other textile
products, was with FACETS. It was the latter and not private respondent
which was indebted to petitioner. On the other hand, the contract for the
transmittal of dollars from the United States to petitioner was entered into by
private respondent with FNSB. Petitioner, although named as the payee was
not privy to the contract of remittance of dollars. Neither was private
respondent a party to the contract of sale between petitioner and FACETS.
There being no contractual relation between them, petitioner has no right to
apply the second $10,000.00 remittance delivered by mistake by private
respondent to the outstanding account of FACETS.
Petitioner next contends that the payment by respondent bank of the second
$10,000.00 remittance was not made by mistake but was the result of
negligence of its employees.

X X X There was a mistake, not negligence, in the second remittance. It was

evident by the fact that both remittances have the same reference invoice
number. X X X
Finally, in her attempt to defeat private respondent's claim, petitioner makes
much of the fact that from the time the second $10,000.00 remittance was
made, five hundred and ten days had elapsed before private respondent
demanded the return thereof. Needless to say, private respondent instituted
the complaint for recovery of the second $10,000.00 remittance well within
the six years prescriptive period for actions based upon a quasi-contract [Art.
1145 of the New Civil Code].
WHEREFORE, the petition is DENIED and the decision of the Court of Appeals
is hereby AFFIRMED.
SO ORDERED.

PUYAT & SONS INC vs CITY OF MANILA G.R. No. L-17447 April 30, 1963
FACTS:
Plaintiff Gonzalo Puyat & Sons Inc is engaged in the business of
manufacturing and selling all kinds of furniture.
Acting pursuant to an ordinance, the defendant City Treasurer of Manila
assessed from plaintiff retail dealers tax the sales of furniture manufactured
and sold by it and its factory site.
All assessments were paid by plaintiff without protest in the erroneous belief
that it was liable thereof not knowing that pursuant to an ordinance, it is
exempt from the payment of taxes being a manufacturer of various kinds of
furniture.
After learning about the ordinance, plaintiff filed with defendant City
Treasurer of Manila a formal request for refund of the retail dealers taxes
unduly paid.
The City Treasurer, however, denied the said request for refund.
ISSUE: Whether or not the defendant is obliged to refund the amount which
the plaintiff paid
HELD: Yes
RATIO: Appellants do not dispute the fact that appellee-companyis exempted
from the payment of the tax in question.This is manifest from the reply of
appellant City Treasurer stating that sales of manufactured products at the
factory site are not taxable either under the Wholesalers Ordinance or under
the Retailers' Ordinance. With this admission, it would seem clear that the
taxes collected from appellee were paid, thru an error or mistake, which
places said act of payment within the pale of the new Civil Code provision on
solutio indebiti. The appellant City of Manila, at the very start,
notwithstanding the Ordinance imposing the Retailer's Tax, had no right to
demand payment thereof..
"If something is received when there is no right to demand it, and it was
unduly delivered through mistake, the obligationto retun it arises" (Art. 2154,
NCC)..
Appelle categorically stated that the payment was not voluntarily made, (a
fact found also by the lower court),but on the erronoues belief, that they

were due. Under this circumstance, the amount paid, even without protest is
recoverable. "If the payer was in doubt whether the debt was due, he may
recover if he proves that it was not due" (Art. 2156, NCC). Appellee had duly
proved that taxes were not lawfully due. There is, therefore, no doubt that
the provisions of solutio indebtiti, the new Civil Code, apply to the admitted
facts of the case..
With all, appellant quoted Manresa as saying: "x x x De la misma opinion son
el Sr. Sanchez Roman y el Sr. Galcon, et cual afirma que si la paga se hizo
por error de derecho, ni existe el cuasi-contrato ni esta obligado a la
restitucion el que cobro, aunque no se debiera lo que se pago" (Manresa,
Tomo 12, paginas 611-612). This opinion, however, has already lost its
persuasiveness, in view of the provisions of the Civil Code, recognizing "error
de derecho" as a basis for the quasi-contract, of solutio indebiti. .
"Payment by reason of a mistake in the contruction or application of a
doubtful or difficult question of law may come within the scope of the
preceding article" (Art. 21555)..
There is no gainsaying the fact that the payments made by appellee was due
to a mistake in the construction of a doubtful question of law. The reason
underlying similar provisions, as applied to illegal taxation, in the United
States, is expressed in the case of Newport v. Ringo, 37 Ky. 635, 636; 10 S.W.
2, in the following manner:.
"It is too well settled in this state to need the citation of authority that if
money be paid through a clear mistake of law or fact, essentially affecting
the rights of the parties, and which in law or conscience was not payable,
and should not be retained by the party receiving it, it may be recovered.
Both law and sound morality so dictate. Especially should this be the rule as
to illegal taxation. The taxpayer has no voice in the imposition of the burden.
He has the right to presume that the taxing power has been lawfully
exercised. He should not be required to know more than those in authority
over him, nor should he suffer loss by complying with what he bona fide
believe to be his duty as a good citizen. Upon the contrary, he should be
promoted to its ready performance by refunding to him any legal exaction
paid by him in ignorance of its illegality; and, certainly, in such a case, if be
subject to a penalty for nonpayment, his compliance under belief of its
legality, and without awaitinga resort to judicial proceedings should not be
regrded in law as so far voluntary as to affect his right of recovery.".

"Every person who through an act or performance by another, or any other

means, acquires or comes into possession of something at the expense of
the latter without just or legal grounds, shall return the same to him"(Art. 22,
Civil Code). It would seems unedifying for the government, (here the City of
Manila), that knowing it has no right at all to collect or to receive money for
alleged taxes paid by mistake, it would be reluctant to return the same. No
one should enrich itself unjustly at the expense of another (Art. 2125, Civil
Code).
XXX
The decision appealed from is affirmed, in all other respects. No costs. .

SALUDAGA vs. FAR EASTERN UNIVERSITY

G.R. No. 179337 April 30, 2008
Facts:
Petitioner Joseph Saludaga was a sophomore law student of respondent Far
Eastern University when he was shot by Alejandro Rosete, one of the security
guards on duty at the school premises on August 18, 1996. Rosete was
brought to the police station where he explained that the shooting was
accidental. He was eventually released considering that no formal complaint
was filed against him.
Respondents, in turn, filed a Third-Party Complaint against Galaxy
Development and Management Corporation (Galaxy), the agency contracted
by respondent FEU to provide security services within its premises and
Mariano D. Imperial (Galaxys President), to indemnify them for whatever
would be adjudged in favor of petitioner.
Petitioner is suing respondents for damages based on the alleged breach of
student-school contract for a safe and secure environment and an
atmosphere conducive to learning.
Issue:
WON FEU was not negligent and such shooting was tantamount to a caso
fortuito? NO, it was negligent and such is not a fortuitous case.
Held:
In Philippine School of Business Administration v. Court of Appeals,13 we
held that:
When an academic institution accepts students for enrollment, there is
established a contract between them, resulting in bilateral obligations which
both parties are bound to comply with. For its part, the school undertakes to
provide the student with an education that would presumably suffice to
equip him with the necessary tools and skills to pursue higher education or a
profession. On the other hand, the student covenants to abide by the
school's academic requirements and observe its rules and regulations.
Institutions of learning must also meet the implicit or "built-in" obligation of
providing their students with an atmosphere that promotes or assists in
attaining its primary undertaking of imparting knowledge. Certainly, no

student can absorb the intricacies of physics or higher mathematics or

explore the realm of the arts and other sciences when bullets are flying or
grenades exploding in the air or where there looms around the school
premises a constant threat to life and limb. Necessarily, the school must
ensure that adequate steps are taken to maintain peace and order within the
campus premises and to prevent the breakdown thereof.14
It is undisputed that petitioner was enrolled as a sophomore law student in
respondent FEU. As such, there was created a contractual obligation between
the two parties. On petitioner's part, he was obliged to comply with the rules
and regulations of the school. On the other hand, respondent FEU, as a
learning institution is mandated to impart knowledge and equip its students
with the necessary skills to pursue higher education or a profession. At the
same time, it is obliged to ensure and take adequate steps to maintain peace
and order within the campus.
It is settled that in culpa contractual, the mere proof of the existence of the
contract and the failure of its compliance justify, prima facie, a corresponding
right of relief.15 In the instant case, we find that, when petitioner was shot
inside the campus by no less the security guard who was hired to maintain
peace and secure the premises, there is a prima facie showing that
respondents failed to comply with its obligation to provide a safe and secure
environment to its students.
In order to avoid liability, however, respondents aver that the shooting
incident was a fortuitous event because they could not have reasonably
foreseen nor avoided the accident caused by Rosete as he was not their
employee;16 and that they complied with their obligation to ensure a safe
learning environment for their students by having exercised due diligence in
selecting the security services of Galaxy.
After a thorough review of the records, we find that respondents failed to
discharge the burden of proving that they exercised due diligence in
providing a safe learning environment for their students. They failed to prove
that they ensured that the guards assigned in the campus met the
requirements stipulated in the Security Service Agreement. Indeed, certain
documents about Galaxy were presented during trial; however, no evidence
as to the qualifications of Rosete as a security guard for the university was
offered.
Respondents also failed to show that they undertook steps to ascertain and
confirm that the security guards assigned to them actually possess the

qualifications required in the Security Service Agreement. It was not proven

that they examined the clearances, psychiatric test results, 201 files, and
other vital documents enumerated in its contract with Galaxy. Total reliance
on the security agency about these matters or failure to check the papers
stating the qualifications of the guards is negligence on the part of
respondents. A learning institution should not be allowed to completely
relinquish or abdicate security matters in its premises to the security agency
it hired. To do so would result to contracting away its inherent obligation to
ensure a safe learning environment for its students.
Consequently, respondents' defense of force majeure must fail. In order for
force majeure to be considered, respondents must show that no negligence
or misconduct was committed that may have occasioned the loss. An act of
God cannot be invoked to protect a person who has failed to take steps to
forestall the possible adverse consequences of such a loss. One's negligence
may have concurred with an act of God in producing damage and injury to
another; nonetheless, showing that the immediate or proximate cause of the
damage or injury was a fortuitous event would not exempt one from liability.
When the effect is found to be partly the result of a person's participation whether by active intervention, neglect or failure to act - the whole
occurrence is humanized and removed from the rules applicable to acts of
God.
XXX
On the issue of solidarity:
We agree with the findings of the Court of Appeals that respondents cannot
be held liable for damages under Art. 2180 of the Civil Code because
respondents are not the employers of Rosete. The latter was employed by
Galaxy. The instructions issued by respondents' Security Consultant to
Galaxy and its security guards are ordinarily no more than requests
commonly envisaged in the contract for services entered into by a principal
and a security agency. They cannot be construed as the element of control
as to treat respondents as the employers of Rosete.
XXX
WHEREFORE, the petition is GRANTED. The June 29, 2007 Decision of the
Court of Appeals in CA-G.R. CV No. 87050 nullifying the Decision of the trial
court and dismissing the complaint as well as the August 23, 2007 Resolution
denying the Motion for Reconsideration are REVERSED and SET ASIDE. The

Decision of the Regional Trial Court of Manila, Branch 2, in Civil Case No. 9889483 finding respondent FEU liable for damages for breach of its obligation
to provide students with a safe and secure learning atmosphere, is AFFIRMED
with the following MODIFICATIONS:
a. respondent Far Eastern University (FEU) is ORDERED to pay petitioner
actual damages in the amount of P35,298.25, plus 6% interest per annum
from the filing of the complaint until the finality of this Decision. After this
decision becomes final and executory, the applicable rate shall be twelve
percent (12%) per annum until its satisfaction;
b. respondent FEU is also ORDERED to pay petitioner temperate damages in
the amount of P20,000.00; moral damages in the amount of P100,000.00;
and attorney's fees and litigation expenses in the amount of P50,000.00;
c. the award of exemplary damages is DELETED.
The Complaint against respondent Edilberto C. De Jesus is DISMISSED. The
counterclaims of respondents are likewise DISMISSED.
Galaxy Development and Management Corporation (Galaxy) and its
president, Mariano D. Imperial are ORDERED to jointly and severally pay
respondent FEU damages equivalent to the above-mentioned amounts
awarded to petitioner.
SO ORDERED.

SAGRADA ORDEN VS NACOCO G.R. NO. L-3756 JUNE 30, 1952

FACTS:

The land in question belongs to plaintiff Sagrada Orden in whose name the
title was registered before the war
On January 4, 1943, during the Japanese military occupation, the land was
acquired by a Japanese corporation by the name of Taiwan Tekkosho
After liberation on April 4, 1946, the Alien Property Custodian of the United
States of America took possession, control, and custody of the property
pursuant to the Trading with the Enemy Act
The property was occupied by the Copra Export Management Company
under a custodian agreement with US Alien Property Custodian. When it
vacated the property, it was occupied by defendant National Coconut
Corporation
The plaintiff made claim to the said property before the Alien Property
Custodian. Alien Property Custodian denied such claim
It bought an action in court which resulted to the cancellation of the title
issued in the name of Taiwan Tekkosho which was executed under threats,
duress, and intimidation; reissuance of the title in favor of the plaintiff;
cancellation of the claims, rights, title, interest of the Alien property
Custodian; and occupant National Coconut Corporations ejection from the
property. A right was also vested to the plaintiff to recover from the
defendants rentals for its occupation of the land from the date it vacated.
Defendant contests the rental claims on the defense that it occupied the
property in good faith and under no obligation to pay rentals.
The trial court ordered defendant to pay the back rentals.
ISSUE: Whether or not the defendant is obliged to pay rentals to the plaintiff
HELD: No.
RATIO: We can not understand how the trial court, from the mere fact that
plaintiff-appellee was the owner of the property and the defendant-appellant
the occupant, which used for its own benefit but by the express permission
of the Alien Property Custodian of the United States, so easily jumped to the

conclusion that the occupant is liable for the value of such use and
occupation. If defendant-appellant is liable at all, its obligations, must arise
from any of the four sources of obligations, namley, law, contract or quasicontract, crime, or negligence. (Article 1089, Spanish Civil Code.) Defendantappellant is not guilty of any offense at all, because it entered the premises
and occupied it with the permission of the entity which had the legal control
and administration thereof, the Allien Property Administration. Neither was
there any negligence on its part. There was also no privity (of contract or
obligation) between the Alien Property Custodian and the Taiwan Tekkosho,
which had secured the possession of the property from the plaintiff-appellee
by the use of duress, such that the Alien Property Custodian or its permittee
(defendant-appellant) may be held responsible for the supposed illegality of
the occupation of the property by the said Taiwan Tekkosho. The Allien
Property Administration had the control and administration of the property
not as successor to the interests of the enemy holder of the title, the Taiwan
Tekkosho, but by express provision of law (Trading with the Enemy Act of the
United States, 40 Stat., 411; 50 U.S.C.A., 189). Neither is it a trustee of the
former owner, the plaintiff-appellee herein, but a trustee of then Government
of the United States (32 Op. Atty. Gen. 249; 50 U.S.C.A. 283), in its own right,
to the exclusion of, and against the claim or title of, the enemy owner.
(Youghioheny & Ohio Coal Co. vs. Lasevich [1920], 179 N.W., 355; 171 Wis.,
347; U.S.C.A., 282-283.) From August, 1946, when defendant-appellant took
possession, to the late of judgment on February 28, 1948, Allien Property
Administration had the absolute control of the property as trustee of the
Government of the United States, with power to dispose of it by sale or
otherwise, as though it were the absolute owner. (U.S vs. Chemical
Foundation [C.C.A. Del. 1925], 5 F. [2d], 191; 50 U.S.C.A., 283.) Therefore,
even if defendant-appellant were liable to the Allien Property Administration
for rentals, these would not accrue to the benefit of the plaintiff-appellee, the
owner, but to the United States Government.
But there is another ground why the claim or rentals can not be made
against defendant-appellant. There was no agreement between the Alien
Property Custodian and the defendant-appellant for the latter to pay rentals
on the property. The existence of an implied agreement to that effect is
contrary to the circumstances. The copra Export Management Company,
which preceded the defendant-appellant, in the possession and use of the
property, does not appear to have paid rentals therefor, as it occupied it by
what the parties denominated a "custodianship agreement," and there is no
provision therein for the payment of rentals or of any compensation for its

custody and or occupation and the use. The Trading with the Enemy Act, as
originally enacted, was purely a measure of conversation, hence, it is very
unlikely that rentals were demanded for the use of the property. When the
National coconut Corporation succeeded the Copra Export Management
Company in the possession and use of the property, it must have been also
free from payment of rentals, especially as it was Government corporation,
and steps where then being taken by the Philippine Government to secure
the property for the National Coconut Corporation. So that the circumstances
do not justify the finding that there was an implied agreement that the
defendant-appellant was to pay for the use and occupation of the premises
at all.
The above considerations show that plaintiff-appellee's claim for rentals
before it obtained the judgment annulling the sale of the Taiwan Tekkosho
may not be predicated on any negligence or offense of the defendantappellant, or any contract, express or implied, because the Allien Property
Administration was neither a trustee of plaintiff-appellee, nor a privy to the
obligations of the Taiwan Tekkosho, its title being based by legal provision of
the seizure of enemy property. We have also tried in vain to find a law or
provision thereof, or any principle in quasi contracts or equity, upon which
the claim can be supported. On the contrary, as defendant-appellant entered
into possession without any expectation of liability for such use and
occupation, it is only fair and just that it may not be held liable therefor. And
as to the rents it collected from its lessee, the same should accrue to it as a
possessor in good faith, as this Court has already expressly held. (Resolution,
National Coconut Corporation vs. Geronimo, 83 Phil. 467.)
Lastly, the reservation of this action may not be considered as vesting a new
right; if no right to claim for rentals existed at the time of the reservation, no
rights can arise or accrue from such reservation alone.
Wherefore, the part of the judgment appealed from, which sentences
defendant-appellant to pay rentals from August, 1946, to February 28, 1949,
is hereby reversed. In all other respects the judgment is affirmed. Costs of
this appeal shall be against the plaintiff-appellee.

PEOPLES CAR VS COMMANDO SECURITY G.R. L-36840 MAY 22, 1973

FACTS:
Peoples Car entered into a contract with Commando Security to safeguard
and protect the business premises of the plaintiff from theft, pilferage,
robbery, vandalism, and all other unlawful acts of any person/s prejudicial to
the interest of the plaintiff.
On April 5, 1970, around 1:00am, defendants security guard on duty at
plaintiffs premises, without any authority, consent, approval, or orders of the
plaintiff and/or defendant brought out the compound of the plaintiff a car
belonging to its customer and drove said car to a place or places unknown,
abandoning his post and while driving the car lost control of it causing it to
fall into a ditch.
As a result, the car of plaintiffs customer, which had been left with plaintiff
for servicing and maintenance, suffered extensive damage besides the car
rental value for a car that plaintiff had to rent and make available to its
customer, Joseph Luy, to enable him to pursue his business and occupation.
Plaintiff instituted a claim against defendant for the actual damages it
incurred due to the unlawful act of defendants personnel citing paragraph 5
of the contract wherein defendant accepts sole responsibility for the acts
done during their watch hours.
Defendant claimed that they may be liable but its liability is limited under
paragraph 4 of the contract which provides that its liability shall not exceed
P1,000 per guard post for loss or damage through the negligence of its
guards during the watch hours provided that it is reported within 24 hours of
the incident.
ISSUE: Whether or not the defendant is obliged to indemnify the plaintiff for
the entire costs as result of the incident? YES
HELD: Paragraph 4 of the contract, which limits defendant's liability for the
amount of loss or damage to any property of plaintiff to "P1,000.00 per guard
post," is by its own terms applicable only for loss or damage 'through the
negligence of its guards ... during the watch hours" provided that the same is
duly reported by plaintiff within 24 hours of the occurrence and the guard's
negligence is verified after proper investigation with the attendance of both
contracting parties. Said paragraph is manifestly inapplicable to the
stipulated facts of record, which involve neither property of plaintiff that has

been lost or damaged at its premises nor mere negligence of defendant's

security guard on duty.
Here, instead of defendant, through its assigned security guards, complying
with its contractual undertaking 'to safeguard and protect the business
premises of (plaintiff) from theft, robbery, vandalism and all other unlawful
acts of any person or persons," defendant's own guard on duty unlawfully
and wrongfully drove out of plaintiffs premises a customer's car, lost control
of it on the highway causing it to fall into a ditch, thereby directly causing
plaintiff to incur actual damages in the total amount of P8,489.10.
Defendant is therefore undoubtedly liable to indemnify plaintiff for the entire
damages thus incurred, since under paragraph 5 of their contract it
"assumed the responsibility for the proper performance by the guards
employed of their duties and (contracted to) be solely responsible for the
acts done during their watch hours" and "specifically released (plaintiff) from
any and all liabilities ... to the third parties arising from the acts or omissions
done by the guards during their tour of duty." As plaintiff had duly discharged
its liability to the third party, its customer, Joseph Luy, for the undisputed
damages of P8,489.10 caused said customer, due to the wanton and
unlawful act of defendant's guard, defendant in turn was clearly liable under
the terms of paragraph 5 of their contract to indemnify plaintiff in the same
amount.
The trial court's approach that "had plaintiff understood the liability of the
defendant to fall under paragraph 5, it should have told Joseph Luy, owner of
the car, that under the Guard Service Contract, it was not liable for the
damage but the defendant and had Luy insisted on the liability of the
plaintiff, the latter should have challenged him to bring the matter to court. If
Luy accepted the challenge and instituted an action against the plaintiff, it
should have filed a third-party complaint against the Commando Security
Service Agency. But if Luy instituted the action against the plaintiff and the
defendant, the plaintiff should have filed a crossclaim against the latter," 9
was unduly technical and unrealistic and untenable.
Plaintiff was in law liable to its customer for the damages caused the
customer's car, which had been entrusted into its custody. Plaintiff therefore
was in law justified in making good such damages and relying in turn on
defendant to honor its contract and indemnify it for such undisputed
damages, which had been caused directly by the unlawful and wrongful acts
of defendant's security guard in breach of their contract. As ordained in

Article 1159, Civil Code, "obligations arising from contracts have the force of
law between the contracting parties and should be complied with in good
faith."
Plaintiff in law could not tell its customer, as per the trial court's view, that
"under the Guard Service Contract it was not liable for the damage but the
defendant" since the customer could not hold defendant to account for the
damages as he had no privity of contract with defendant. Such an approach
of telling the adverse party to go to court, notwithstanding his plainly valid
claim, aside from its ethical deficiency among others, could hardly create any
goodwill for plaintiff's business, in the same way that defendant's baseless
attempt to evade fully discharging its contractual liability to plaintiff cannot
be expected to have brought it more business. Worse, the administration of
justice is prejudiced, since the court dockets are unduly burdened with
unnecessary litigation.
ACCORDINGLY, the judgment appealed from is hereby reversed and
judgment is hereby rendered sentencing defendant-appellee to pay plaintiffappellant the sum of P8,489.10 as and by way of reimbursement of the
stipulated actual damages and expenses, as well as the costs of suit in both
instances. It is so ordered.

CANGCO VS MANILA RAILROAD COMPANY G.R. L-12191 OCTOBER 14, 1918

FACTS:
On January 20, 1915, Jose Cangco was riding the train of Manila Railroad
Company where he was an employee. As the train drew near to his
destination, he arose from his seat. When he was about to alight from the
train, Cangco accidentally stepped on a sack of watermelons which he failed
to notice because it was already 7:00pm and it was dim when it happened.
As a result, he slipped and fell violently on the platform. His right arm was
badly crushed and lacerated which was eventually amputated.
Cangco sued Manila Railroad Company on the ground of negligence of its
employees placing the sacks of melons upon the platform and in leaving
them so placed as to be a menace to the security of passenger alighting
from the companys trains.
The companys defense was that granting that its employees were negligent
in placing an obstruction upon the platform, the direct and proximate cause
of the injury suffered by plaintiff was his own contributing negligence.
ISSUE: Whether or not there was a contributing negligence on the part of the
plaintiff.
HELD: It can not be doubted that the employees of the railroad company
were guilty of negligence in piling these sacks on the platform in the manner
above stated; that their presence caused the plaintiff to fall as he alighted
from the train; and that they therefore constituted an effective legal cause of
the injuries sustained by the plaintiff. It necessarily follows that the
defendant company is liable for the damage thereby occasioned unless
recovery is barred by the plaintiff's own contributory negligence. In resolving
this problem it is necessary that each of these conceptions of liability, to-wit,
the primary responsibility of the defendant company and the contributory
negligence of the plaintiff should be separately examined.
It is important to note that the foundation of the legal liability of the
defendant is the contract of carriage, and that the obligation to respond for
the damage which plaintiff has suffered arises, if at all, from the breach of
that contract by reason of the failure of defendant to exercise due care in its
performance. That is to say, its liability is direct and immediate, differing
essentially, in legal viewpoint from that presumptive responsibility for the
negligence of its servants, imposed by article 1903 of the Civil Code, which
can be rebutted by proof of the exercise of due care in their selection and

supervision. Article 1903 of the Civil Code is not applicable to obligations

arising ex contractu, but only to extra-contractual obligations or to use the
technical form of expression, that article relates only to culpa aquiliana and
not to culpa contractual.
XXX
The contract of defendant to transport plaintiff carried with it, by implication,
the duty to carry him in safety and to provide safe means of entering and
leaving its trains (civil code, article 1258). That duty, being contractual, was
direct and immediate, and its non-performance could not be excused by
proof that the fault was morally imputable to defendant's servants.
The railroad company's defense involves the assumption that even granting
that the negligent conduct of its servants in placing an obstruction upon the
platform was a breach of its contractual obligation to maintain safe means of
approaching and leaving its trains, the direct and proximate cause of the
injury suffered by plaintiff was his own contributory negligence in failing to
wait until the train had come to a complete stop before alighting. Under the
doctrine of comparative negligence announced in the Rakes case (supra), if
the accident was caused by plaintiff's own negligence, no liability is imposed
upon defendant's negligence and plaintiff's negligence merely contributed to
his injury, the damages should be apportioned. It is, therefore, important to
ascertain if defendant was in fact guilty of negligence.
It may be admitted that had plaintiff waited until the train had come to a full
stop before alighting, the particular injury suffered by him could not have
occurred. Defendant contends, and cites many authorities in support of the
contention, that it is negligence per se for a passenger to alight from a
moving train. We are not disposed to subscribe to this doctrine in its absolute
form. We are of the opinion that this proposition is too badly stated and is at
variance with the experience of every-day life. In this particular instance,
that the train was barely moving when plaintiff alighted is shown
conclusively by the fact that it came to stop within six meters from the place
where he stepped from it. Thousands of person alight from trains under
these conditions every day of the year, and sustain no injury where the
company has kept its platform free from dangerous obstructions. There is no
reason to believe that plaintiff would have suffered any injury whatever in
alighting as he did had it not been for defendant's negligent failure to
perform its duty to provide a safe alighting place.
XXX

In determining the question of contributory negligence in performing such

act that is to say, whether the passenger acted prudently or recklessly
the age, sex, and physical condition of the passenger are circumstances
necessarily affecting the safety of the passenger, and should be considered.
Women, it has been observed, as a general rule are less capable than men of
alighting with safety under such conditions, as the nature of their wearing
apparel obstructs the free movement of the limbs. Again, it may be noted
that the place was perfectly familiar to the plaintiff as it was his daily custom
to get on and of the train at this station. There could, therefore, be no
uncertainty in his mind with regard either to the length of the step which he
was required to take or the character of the platform where he was alighting.
Our conclusion is that the conduct of the plaintiff in undertaking to alight
while the train was yet slightly under way was not characterized by
imprudence and that therefore he was not guilty of contributory negligence.
The decision of lower court is reversed, and judgment is hereby rendered
plaintiff for the sum of P3,290.25, and for the costs of both instances. So
ordered.
Arellano, C.J., Torres, Street and Avancea, JJ., concur.

Gutierrez vs Gutierrez
Facts:
On February 2, 1930, a passenger truck and an automobile of private
ownership collided while attempting to pass each other on the Talon bridge
on the Manila South Road in the municipality of Las Pias. The driver of the
car is an 18 y/o boy, son of the cars owners. It was found by the trial court
that both the boy and the driver of the auto bus were negligent by which
neither of them were willing to slow up and give the right of way to the other.
Plaintiff is the passenger of the bus who as a result of the incident fractured
his right leg to his damage and prejudice. Thus, plaintiff sued the boy, his
parents as owners of the car, the bus driver and its owner for damages. The
trial court ruled in favor of plaintiff. Hence, this appeal.
Issue: how should the civil liability be imposed upon parties in the case at
bar
HELD: We are dealing with the civil law liability of parties for obligations
which arise from fault or negligence. At the same time, we believe that, as
has been done in other cases, we can take cognizance of the common law
rule on the same subject. In the United States, it is uniformly held that the
head of a house, the owner of an automobile, who maintains it for the
general use of his family is liable for its negligent operation by one of his
children, whom he designates or permits to run it, where the car is occupied
and being used at the time of the injury for the pleasure of other members of
the owner's family than the child driving it. The theory of the law is that the
running of the machine by a child to carry other members of the family is
within the scope of the owner's business, so that he is liable for the
negligence of the child because of the relationship of master and servant.
(Huddy On Automobiles, 6th ed., sec. 660; Missell vs. Hayes [1914], 91 Atl.,
322.) The liability of Saturnino Cortez, the owner of the truck, and of his
chauffeur Abelardo Velasco rests on a different basis, namely, that of
contract which, we think, has been sufficiently demonstrated by the
allegations of the complaint, not controverted, and the evidence. The reason
for this conclusion reaches to the findings of the trial court concerning the
position of the truck on the bridge, the speed in operating the machine, and
the lack of care employed by the chauffeur. While these facts are not as
clearly evidenced as are those which convict the other defendant, we
nevertheless hesitate to disregard the points emphasized by the trial judge.
In its broader aspects, the case is one of two drivers approaching a narrow

bridge from opposite directions, with neither being willing to slow up and
give the right of way to the other, with the inevitable result of a collision and
an accident.
The defendants Velasco and Cortez further contend that there existed
contributory negligence on the part of the plaintiff, consisting principally of
his keeping his foot outside the truck, which occasioned his injury. In this
connection, it is sufficient to state that, aside from the fact that the defense
of contributory negligence was not pleaded, the evidence bearing out this
theory of the case is contradictory in the extreme and leads us far afield into
speculative matters.
XXX

HSBCL-SRP vs SPOUSES BIENVENIDO AND EDITHA BROQUEZA G.R. NO.

178610 NOV. 17, 2010 FACTS: Petitioners Gerong and Editha Broqueza are
employees of Hongkong and Shanghai Banking Corporation (HSBC). They are
also members of HSBC, Ltd. Staff Retirement Plan. The Plan is a retirement
plan established by HSBC through its BOT for the benefit of the employees.
On Oct. 1, 1990, petitioner Broqueza obtained a car loan in the amount of
P175,000.00. On Dec. 12, 1991, she again applied and was granted an
appliance loan in the amount of P24,000.00. Petitioner Gerong, on the
other hand applied and was granted an emergency loan in the amount of
P35,780.00 on June 2, 1993. The loans were paid through automatic salary
deductions. A labor dispute arose between HSBC and its employees.
Majority of HSBCs employees were terminated among them the petitioners.
The employees filed an illegal dismissal case before the NLRC against
HSBC, which is now pending before the CA. Because of the dismissal,
petitioners were not able to pay the monthly amortizations of their
respective loans. They were considered delinquent. Demands to pay were
made. On July 31, 1996, HSBCL-SRP filed a civil case against the spouses.
On Sept. 19, 1996, HSBCL-SRP filed another civil case. Both suits were civil
actions for recovery and collection of sums of money. The MeTC ruled that
the nature of HSBCs demands for payment is civil and has no connection to
the ongoing labor dispute. The loans secured by their future retirement
benefits to which they are no longer entitled are reduced to unsecured and
pure civil obligations. They are immediately demandable. The RTC
reaffirmed the decision but the CA reversed it. On Aug. 6, 2007, HSBCLSRP filed a manifestation withdrawing the petition against Gerong because
she already settled her obligations. ISSUE: W.O.N. the loans of the Sps.
Broqueza is a pure obligation and demandable at once even if they were
dismissed by HSBC. HELD: The RTC is correct in ruling that since the
Promissory Notes do not contain a period, HSBCL-SRP has the right to
demand immediate payment. Art. 1179 of the NCC applies. The spouses
obligation to pay HSBCL-SRP is a pure obligation because they do not contain
a period. Once Editha Broqueza defaulted in her monthly payment, HSBCLSRP made a demand to enforce a pure obligation. Despite the spouses
Broquezas protestations, the payroll deduction is merely a convenient mode
of payment and not the sole source of payment for the loans. HSBCL-SRP
never agreed that the loans will be paid only though salary deductions.
The same never agreed that if Editha Broqueza ceases to be an employee of
HSBC, her obligation to pay the loans will be suspended. HSBCL-SRP can
immediately demand payment of the loans anytime because the obligation
to pay has no period. Moreover, the spouses Broqueza have already

incurred in default in paying the monthly instalments. Finally, the

enforcement of a loan agreement involves debtor-creditor relation founded
on contract and does not in any way concern the employee relations. As such
it should be enforced through a separate civil action in the regular courts and
not before the Labor Arbiter.

Pay v. Palanca [G.R. No. L-29900. June 28, 1974]

20
APR
FACTS

The promissory note indicated payment upon demand. Petitioner relied on

this to mean that prescription would not lie unless there is demand from
them. The petition was filed fifteen years after its issuance.

ISSUE

Whether or not a promissory note to be paid upon demand is immediately

due and demandable.

RULING

YES. Every obligation whose performance does not depend upon a future or
uncertain event, or upon a past event unknown to the parties, is demandable
at once (Art. 1179 of the New Civil Code). The obligation being due and
demandable in this case, it would appear that the filing of the suit after
fifteen years was much too late.

Smith, Bell & Co. v Sotelo Matti (1992)FACTS

Plaintiff Smith, Bell & Co and the defendant Mr. Vicente Sotel entered into a
contract. Plaintiff hasto deliver (1) two steel tanks shipped from New York to
Manila
within three or four months
, (2)two expellers shipped from SanFrancisco in the month of September
1918
or as soon aspossible,
and (3) two electric motors with approximate delivery
within ninety days. This isnot guaranteed.
The tanks arrived at Manila on 27 April 1919; the expellers on 26 October
1918; and the motorson 27 February 1919. Upon notification from plaintiff,
defendant refused to receive any of thegoods or to pay for their price.
Plaintiff alleged that the expellers and motors were in goodcondition.Plaintiff
filed a complaint against the defendant. The defendant, Mr Sotelo and
intervenor, ManilaOil Refining and By-Products Co., Inc., denied the plaintiffs
allegations. They allege that due toplaintiffs delay in the delivery of goods,
the intervenor suffered damages.The lower court absolved the defendants
from the complaint insofar as the tanks and the electricmotors were
concerned, but rendered judgment against them ordering them to receive
expellersand pay the sum of P50,000, with legal interest and cost.Both
parties appealed to the Court.
ISSUEWhat period was fixed for the delivery of the goods? Did the plaintiff
incur delay in thedelivery of goods?HELD
In all these contracts, there is a final clause as follows:
The sellers are not responsible for delays cause by fires, riots on land or on
thesea, strikes or other causes known as force majeure entirely beyond
the control of thesellers or their representatives.
Under these stipulations, it cannot be said that any definite date was fixed
for the delivery of thegoods. xxx. From the record it appears that thee
contracts were executed at the time of the worldwar when there existed rigid
restrictions on the export from the united States xxx; hence clauseswere
inserted in the contracts, regarding Government regulations, railroading

embargoes, lack of vessel space, the exigencies of the requirements of the

United States Government xxx. At thetime of the execution of the contracts,
the parties were not unmindful of the contingency of theUnited States
Government not allowing the export of the goods xxx.We cannot but
conclude that the term which parties attempted to fix is so uncertain that
oncecannot tell just whether, as a matter of fact, those articles could be
brought to manila or not.
Theobligation must be regarded as conditional.
The delivery was subject to a condition thefulfillment of which depended not
only upon the effort of the plaintiff, but upon the will of thirdpersons who
could in no way be compelled to fulfill the condition.It is sufficiently proven in
the record that the plaintiff has made all the efforts it could possibly
beexpected to make under the circumstances, to bring the goods in question
to Manila, as soon aspossible. Xxx
it is obvious that the plaintiff has complied with its obligation.
When the time of delivery is not fixed in the contract, time is regarded
unessential. In such cases,the delivery must be made within a reasonable
time. Xxx Reasonable time for the delivery of thegoods by the seller is to be
determined by circumstances attending the particular transactions.
Whether of not the delivery of the machinery in litigation was offered to the
defendantwithin a reasonable time, is a question to be determined by the
court. Xxx The plaintiff hasnot been guilty of any delay in the fulfillment of its
obligation.

Chavez vs. Gonzales (2008) (Political Law)

Francisco Chavez vs. Raul M. Gonzales and NTC | G.R. No. 168338 | February
15, 2008

Facts: As a consequence of the public release of copies of the Hello Garci

compact disc audiotapes involving a wiretapped mobile phone conversation
between then-President Gloria Arroyo and Comelec Commissioner Virgilio
Garcillano, respondent DOJ Secretary Gonzales warned reporters that those
who had copies of the CD and those broadcasting or publishing its contents
could be held liable under the Anti-Wiretapping Act. He also stated that
persons possessing or airing said tapes were committing a continuing
offense, subject to arrest by anybody. Finally, he stated that he had ordered
the NBI to go after media organizations found to have caused the spread,
the playing and the printing of the contents of a tape. Meanwhile,
respondent NTC warned TV and radio stations that their broadcast/airing of
such false information and/or willful misrepresentation shall be a just cause
for the suspension, revocation and/or cancellation of the licenses or
authorizations issued to the said media establishments. Petitioner Chavez
filed a petition under Rule 65 against respondents Secretary Gonzales and
the NTC directly with the Supreme Court.

Issues: (1) Will a purported violation of law such as the Anti-Wiretapping Law
justify straitjacketing the exercise of freedom of speech and of the press? (2)
Did the mere press statements of respondents DOJ Secretary and the NTC
constitute a form of content-based prior restraint that has transgressed the
Constitution?

Held: (1) No, a purported violation of law such as the Anti-Wiretapping Law
will not justify straitjacketing the exercise of freedom of speech and of the
press. A governmental action that restricts freedom of speech or of the press
based on content is given the strictest scrutiny, with the government having
the burden of overcoming the presumed unconstitutionality by the clear and
present danger rule. This rule applies equally to all kinds of media, including
broadcast media. Respondents, who have the burden to show that these acts
do not abridge freedom of speech and of the press, failed to hurdle the clear
and present danger test. For this failure of the respondents alone to offer

proof to satisfy the clear and present danger test, the Court has no option
but to uphold the exercise of free speech and free press. There is no showing
that the feared violation of the anti-wiretapping law clearly endangers the
national security of the State.

(2) Yes, the mere press statements of respondents DOJ Secretary and the
NTC constituted a form of content-based prior restraint that has transgressed
the Constitution. It is not decisive that the press statements made by
respondents were not reduced in or followed up with formal orders or
circulars. It is sufficient that the press statements were made by respondents
while in the exercise of their official functions. Any act done, such as a
speech uttered, for and on behalf of the government in an official capacity is
covered by the rule on prior restraint. The concept of an act does not limit
itself to acts already converted to a formal order or official circular.
Otherwise, the non formalization of an act into an official order or circular will
result in the easy circumvention of the prohibition on prior restraint.

INGSON ENCARNACION VS. BALDOMAR

77 PHIL 470

FACTS:
Vicente Singson Encarnacion leased his house to
Jacinta Baldomar and her son, Lefrando Fernando upon a
month-to-month basis. After Manila was liberated in the
last war, Singson Encarnacio notified Baldomar and her
son Fernando to vacate the house because he needed it for
his office as a result of the destruction of the building
where he had his office before. Despite the demand, the
Baldomar and Fernando continued their occupancy.

The defense of Baldomar and Fernando was that the

contract with Singson Encarnacion authorized them to
continue occupancy indefinitely while they should
faithfully fulfill their obligation with respect to payment of
rentals. Singson Encarnacion contended that the lease had
always and since the beginning been upon a month-tomonth
basis.

ISSUE:
Was it tenable for Singson Encarnacion to discontinue
the lease of Baldomar and her son?

RULING:
The continuance and fulfillment of the contract of lease
cannot be made to depend solely and exclusively upon the
free and uncontrolled choice of the lessees between
continuing paying the rentals or not, completely depriving
the owner of all say in the matter. The defense of Baldomar
and Fernando would leave to the sole and exclusive will of
one of the contracting parties the validity and fulfillment of
the contract of lease, within the meaning of Article 1256 of
the Civil Code. For if this were allowed, so long as the
lessee elected to continue the lease by continuing the
payment of the rentals the owner would never be able to
discontinue the lease; conversely, although the owner
should desire the lease to continue, the lessee could
effectively thwart his purpose if he should prefer to
terminate the contract by the simple expedient of stopping
payment of the rentals.

Eleizegui v. The Manila Lawn Tennis Club

G.R. No. 967 May 19, 1903

Facts:

A contract of lease was executed on January 25, 1980 over a piece of land
owned by the plaintiffs Eleizegui (Lessor) to the Manila Lawn Tennis Club, an
English association (represented by Mr. Williamson) for a fixed consideration
of P25 per month and accordingly, to last at the will of the lessee. Under the
contract, the lessee can make improvements deemed desirable for the
comfort and amusement of its members. It appeared that the plaintiffs
terminated the lease right on the first month. The defendant is in the belief
that there can be no other mode of terminating the lease than by its own
will, as what they believe has been stipulated.

As a result the plaintiff filed a case for unlawful detainer for the restitution of
the land claiming that article 1569 of the Civil Code provided that a lessor
may judicially dispossess the lessee upon the expiration of the conventional
term or of the legal term; the conventional term that is, the one agreed
upon by the parties; the legal term, in defect of the conventional, fixed for
leases by articles 1577 and 1581. The Plaintiffs argued that the duration of
the lease depends upon the will of the lessor on the basis of Art. 1581 which
provides that, "When the term has not been fixed for the lease, it is
understood to be for years when an annual rental has been fixed, for months
when the rent is monthly. . . ." The second clause of the contract provides as
follows: "The rent of the said land is fixed at 25 pesos per month."

The lower court ruled in favor of the Plaintiffs on the basis of Article 1581 of
the Civil Code, the law which was in force at the time the contract was
entered into. It is of the opinion that the contract of lease was terminated by
the notice given by the plaintiff. The judgment was entered upon the theory
of the expiration of a legal term which does not exist, as the case requires
that a term be fixed by the courts under the provisions of article 1128 with

respect to obligations which, as is the present, are terminable at the will of

the obligee.

ISSUE: a) Whether or not the parties have agreed upon the duration of the
lease
b) Whether or not the lease depends upon the will of the lessee

RULING:

a)
YES, the parties have agreed upon a term hence Art. 1581 is
inapplicable.

The legal term cannot be applied under Art 1581 as it appears that there was
actually an agreement between the parties as to the duration of the lease,
albeit implied that the lease is to be dependent upon the will of the lessee. It
would be absurd to accept the argument of the plaintiff that the contract was
terminated at its notice, given this implication.

Interestingly, the contract should not be understood as one stipulated as a

life tenancy, and still less as a perpetual lease since the terms of the contract
express nothing to this effect, even if they implied this idea. If the lease
could last during such time as the lessee might see fit, because it has been
so stipulated by the lessor, it would last, first, as long as the will of the lessee
that is, all his life; second, during all the time that he may have
succession, inasmuch as he who contracts does so for himself and his heirs.
(Art. 1257 of the Civil Code.) The lease in question does not fall within any of
the cases in which the rights and obligations arising from a contract can not
be transmitted to heirs, either by its nature, by agreement, or by provision of
law. Moreover, being a lease, then it must be for a determinate period. (Art.
1543.) By its very nature it must be temporary, just as by reason of its
nature, an emphyteusis must be perpetual, or for an unlimited period. (Art.
1608.)

B) The duration of the lease does not depend solely upon the will of the
Lessee (defendant).

It cannot be concluded that the termination of the contract is to be left

completely at the will of the lessee simply because it has been stipulated
that its duration is to be left to his will.

The Civil Code has made provision for such a case in all kinds of obligations.
In speaking in general of obligations with a term it has supplied the
deficiency of the former law with respect to the "duration of the term when it
has been left to the will of the debtor," and provides that in this case the
term shall be fixed by the courts. (Art. 1128, sec. 2.) In every contract, as
laid down by the authorities, there is always a creditor who is entitled to
demand the performance, and a debtor upon whom rests the obligation to
perform the undertaking. In bilateral contracts the contracting parties are
mutually creditors and debtors. Thus, in this contract of lease, the lessee is
the creditor with respect to the rights enumerated in article 1554, and is the
debtor with respect to the obligations imposed by articles 1555 and 1561.
The term within which performance of the latter obligation is due is what has
been left to the will of the debtor. This term it is which must be fixed by the
courts.

The only action which can be maintained under the terms of the contract is
that by which it is sought to obtain from the judge the determination of this
period, and not the unlawful detainer action which has been brought an
action which presupposes the expiration of the term and makes it the duty of
the judge to simply decree an eviction. To maintain the latter action it is
sufficient to show the expiration of the term of the contract, whether
conventional or legal; in order to decree the relief to be granted in the former
action it is necessary for the judge to look into the character and conditions
of the mutual undertakings with a view to supplying the lacking element of a
time at which the lease is to expire.

The lower courts judgement is erroneous and therefore reversed and the
case was remanded with directions to enter a judgment of dismissal of the
action in favor of the defendant, the Manila Lawn Tennis Club.

PHILIPPINE
BANKING
CORPORATION,
representing
the
estate
of
JUSTINIASANTOS Y CANON FAUSTINO, deceased, plaintiff-appellant, vs.LUI
SHE, in her own behalf and as administratrix of the intestate estate of
WongHeng, deceased,defendant-appellant.
FACTS:
This is the second motion that the defendant-appellant has filed relativeto
this Court's decision of September 12, 1967. Accepting the nullity of the
other contracts (Plff Exhs. 4-7), the defendant-appellant nevertheless
contended that thelease contract (Plff Exh. 3) is so separable from the rest of
the contracts that itshould be saved from invalidation.In denying the motion,
we pointed to the circumstances

that on November 15,1957, the parties entered into the lease contract (in
favor of Wong Heng) for 50years: that ten days after, they amended the
contract so as to make it cover theentire property of Justina Santos; less than
a month after, they entered into another contract giving Wong Heng the
option to buy the leased premises should his pending petition for
naturalization be granted; that on November 18, 1958, after failing to secure
naturalization and after finding that adoption does not confer thecitizenship
of the adopting parent on the adopted, the parties entered into two other
contracts extending the lease to 99 years and fixing the period of the option
to buyat 50 years which indubitably demonstrate that each of the contracts
in questionwas designed to carry out Justina Santos' expressed wish to give
the land to Wongand thereby in effect place its ownership in alien hands,
that "as the lease contractwas part of a scheme to violate the Constitution it
suffers from the same infirmitythat renders the other contracts void and can
no more be saved from illegality thanthe rest of the contracts."The present
motion is for a new trial and is based on three documents (1 Codiciland 2
wills) executed by Justina Santos which, so it is claimed, constitute newlydiscovered material evidence: Codicil- Justina Santos not only named
TitaYaptinchay LaO the administratrix of her estate with the right to buy the
propertiesof the estate, but also provided that if the said LaO was legally
disqualified from buying she was to be her sole heir.Wills- Justina Santos
enjoined her heirs to respect the lease contract made, and theconditional
option given, in favor of Wong.

ISSUE:
WON the lease contract executed by Santos is valid.
HELD:
This is a misrepresentation of the grossest sort.

Lim vs People
Posted on November 20, 2012
Lim vs People
G.R. No. 130038
Sep.18, 2000

INTRO
The case is an appeal from the decision of the Court of Appeals affirming in
toto that of the Regional Trial Court, Cebu City. Both courts found petitioner
Rosa Lim guilty of twice violating Batas Pambansa Bilang 22 and imposing on
her two one-year imprisonment for each of the two violations and ordered
her to pay two fines, each amounting to P200,000.00.
The trial court also ordered petitioner to return to Maria Antonia Seguan, the
jewelry received or its value with interest, to pay moral damages, attorneys
fees and costs.

FACTS
On August 25, 1990, petitioner bought various kinds of jewelry worth
P300,000.00 from Maria Antonia Seguan. She wrote out a check with the
same amount, dated August 25, 1990, payable to cash drawn on
Metrobank and gave the check to Seguan.
The next day, petitioner again went to Seguans store and purchased jewelry
valued at P241,668.00. Petitioner issued another check payable to cash
dated August 16, 1990 drawn on Metrobank in the amount of P241,668.007
and sent the check to Seguan through a certain Aurelia Nadera.
Seguan deposited the two checks with her bank. The checks were returned
with a notice of dishonor. Petitioners account in the bank from which the
checks were drawn was closed.
Upon demand, petitioner promised to pay Seguan the amounts of the two
dishonored checks, but she never did.

On June 5, 1991, an Assistant City Prosecutor of Cebu filed with the RTC,
Cebu City, Branch 23, two informations against petitioner for violations of BP
No. 22.
After due trial, on December 29, 1992, the trial court rendered a decision in
the two cases convicting petitioner.
Petitioner appealed to the CA, but the same was dismissed by the CA in its
October 15, 1996 Decision wherein it affirmed in toto the RTCs Decision.

ISSUE
WON Lim violated B.P. No. 22.

HELD
The elements of B.P. Blg. 22 are:
(1) The making, drawing and issuance of any check to apply for account or
for value;
(2) The knowledge of the maker, drawer, or issuer that at the time of issue
he does not have sufficient funds in or credit with the drawee bank for the
payment of such check in full upon its presentment; and
(3) The subsequent dishonor of the check by the drawee bank for
insufficiency of funds or credit or dishonor for the same reason had not the
drawer, without any valid cause, ordered the bank to stop payment.
The gravamen of B.P. No. 22 is the act of making and issuing a worthless
check or one that is dishonored upon its presentment for payment. And the
accused failed to satisfy the amount of the check or make arrangement for
its payment within 5 banking days from notice of dishonor. The act is malum
prohibitum, pernicious and inimical to public welfare. Laws are created to
achieve a goal intended and to guide and prevent against an evil or mischief.
Why and to whom the check was issued, and the terms & conditions
surrounding the issuance of the checks, are irrelevant in determining
culpability.
Under BP No. 22, one need not prove that the check was issued in payment
of an obligation, or that there was damage.

It was ruled in United States v. Go Chico, that in acts mala prohibita, the only
inquiry is, has the law been violated? When dealing with acts mala
prohibita it is not necessary that the appellant should have acted with
criminal intent. In many crimes, the intention of the person who commits the
crime is entirely immaterial
This case is a perfect example of an act mala prohibita. The first and last
elements of the offense are admittedly present. B.P. No. 22, Section 2 creates
a presumption juris tantum that the second element prima facie exists when
the first and third elements of the offense are present. If not rebutted, it
suffices to sustain a conviction. To escape liability, she must prove that the
second element was absent. Petitioner failed to rebut this presumption and
she failed to pay the amount of the checks or make arrangement for its
payment within 5 banking days from receipt of notice of dishonor. B.P. No. 22
was clearly violated. Hoc quidem per quam durum est sed ita lex scripta est.
The law may be exceedingly hard but so the law is written.
However, the penalty imposed on petitioner must be modified. In Vaca v.
Court of Appeals [298 SCRA 658 (1998)], it was held that in determining the
penalty to be imposed for violation of B.P. No. 22, the philosophy underlying
the Indeterminate Sentence Law applies. The philosophy is to redeem
valuable human material, and to prevent unnecessary deprivation of
personal liberty and economic usefulness with due regard to the protection
of the social order. The prison sentence imposed on petitioners is deleted,
and imposed on them only a fine double the amount of the check issued.
Consequently, the prison sentences imposed on petitioner are deleted. The
two fines imposed for each violation, each amounting to P200,000.00 are
appropriate and sufficient. The award of moral damages and order to pay
attorneys fees are deleted for lack of sufficient basis.

ARANETA VS PHIL. SUGAR ESTATES

DEVELOPMENT CO.
20 SCRA 330

FACTS:
J. M. Tuason & Co., Inc. is the owner of a big tract
land situated in Quezon City, and on July 28, 1950,
[through Gregorio Araneta, Inc.] sold a portion thereof to
Philippine Sugar Estates Development Co., Ltd.
The parties stipulated, among in the contract of
purchase and sale with mortgage, that the buyer will build
on the said parcel land the Sto. Domingo Church and
Convent while the seller for its part will construct streets.

But the seller, Gregorio Araneta, Inc., which began

constructing the streets, is unable to finish the
construction of the street in the Northeast side because a
certain third-party, by the name of Manuel Abundo, who
has been physically occupying a middle part thereof,
refused to vacate the same;
Both buyer and seller know of the presence of
squatters that may hamper the construction of the streets
by the seller. On May 7, 1958, Philippine Sugar Estates
Development Co., Lt. filed its complaint against J. M.
Tuason & Co., Inc., and instance, seeking to compel the

latter to comply with their obligation, as stipulated in the

above-mentioned deed of sale, and/or to pay damages in
the event they failed or refused to perform said obligation.

The lower court and the appellate court ruled in

favor of Phil. Sugar estates, and gave defendant Gregorio
Araneta, Inc., a period of two (2) years from notice hereof,
within which to comply with its obligation under the
contract, Annex "A".

Gregorio Araneta, Inc. resorted to a petition for

review by certiorari to this Court.

ISSUES:
Was there a period fixed?

RULING:
Yes. The fixing of a period by the courts under
Article 1197 of the Civil Code of the Philippines is sought to
be justified on the basis that petitioner (defendant below)
placed the absence of a period in issue by pleading in its
answer that the contract with respondent Philippine Sugar
Estates Development Co., Ltd. gave petitioner Gregorio
Araneta, Inc. "reasonable time within which to comply
with its obligation to construct and complete the streets."

If the contract so provided, then there was a period fixed, a

"reasonable time;" and all that the court should have done
was to determine if that reasonable time had already
elapsed when suit was filed if it had passed, then the court
should declare that petitioner had breached the contract,
Was it within the powers of the lower court to set the
performance of the obligation in two years time?

NO. Even on the assumption that the court should have

found that no reasonable time or no period at all had been
fixed (and the trial court's amended decision nowhere
declared any such fact) still, the complaint not having
sought that the Court should set a period, the court could
not proceed to do so unless the complaint included it as
first amended;
Granting, however, that it lay within the Court's power to
fix the period of performance, still the amended decision is
defective in that no basis is stated to support the conclusion that the period
should be set at two years after
finality of the judgment. The list paragraph of Article 1197
is clear that the period can not be set arbitrarily. The law
expressly prescribes that the Court shall determine such
period as may under the circumstances been probably
contemplated by the parties.

It must be recalled that Article 1197 of the Civil Code

involves a two-step process. The Court must first
determine that "the obligation does not fix a period" (or
that the period is made to depend upon the will of the
debtor)," but from the nature and the circumstances it can
be inferred that a period was intended" (Art. 1197, pars. 1
and 2). This preliminary point settled, the Court must then
proceed to the second step, and decide what period was
"probably contemplated by the parties" (Do., par. 3). So
that, ultimately, the Court can not fix a period merely
because in its opinion it is or should be reasonable, but
must set the time that the parties are shown to have
intended. As the record stands, the trial Court appears to
have pulled the two-year period set in its decision out of
thin air, since no circumstances are mentioned to support
it. Plainly, this is not warranted by the Civil Code.
Does reasonable time mean that the date of performance
would be indefinite?

The Court of Appeals objected to this conclusion that it

would render the date of performance indefinite. Yet, the
circumstances admit no other reasonable view; and this
very indefiniteness is what explains why the agreement did
not specify any exact periods or dates of performance.

Millare v Hernando
[FULL CASE]

FACTS
Petitioner Pacifica Millare as lessor and private respondent Elsa Co, as lessee
executed a 5-year contract of lease. The parties agreed to rent out a
commercial unit for a monthly rate of P350. Before the expiration of the
lease contract, the lessor informed them that the lessee can continue renting
the unit as they were amenable to paying increased rentals of P1,200.00 a
month. In response, a counteroffer of P700.00 a month was made by the
lessee. At this point, the lessor allegedly stated that the amount of monthly
rentals could be resolved at a later time since "the matter is simple among
us", which alleged remark was supposedly taken by the spouses Co to mean
that the Contract of Lease had been renewed. On 22 July 1980, Mrs. Millare
wrote the Co spouses requesting them to vacate the leased premises as she
had no intention of renewing the Contract of Lease. Lessees responded by
reiterated their unwillingness to pay the Pl,200.00 monthly rentals and by
depositing the P700 monthly rentals in court. on 1 September 1980, Mrs.
Millare filed an ejectment case against the Co spouses in the Municipal Court
of Bangued, Abra. The judge rendered a "Judgment by Default" ordering the
renewal of the lease contract for a term of 5 years counted from the
expiration date of the original lease contract, and fixing monthly rentals
thereunder at P700.00 a month, payable in arrears.
ISSUE
Whether or not private respondents have a valid cause of action against
petitioner?
Whether or not the trial court acquired jurisdiction over Civil Case No. 1434?
RULING
In the instant case, the lessor and the lessee conspicuously failed to reach
agreement both on the amount of the rental to be payable during the
renewal term, and on the term of the renewed contract. The respondent
judge cited Articles 1197 and 1670 of the Civil Code to sustain the "Judgment
by Default" by which he ordered the renewal of the lease for another term of
five years and fixed monthly rentals thereunder at P700.00 a month. The first

paragraph of Article 1197 is clearly inapplicable, since the Contract of Lease

did in fact fix an original period of five years. The second paragraph of Article
1197 is equally clearly inapplicable since the duration of the renewal period
was not left to the will of the lessee alone, but rather to the will of both the
lessor and the lessee. The implied new lease during the continued occupancy
could not possibly have a period of five years, but rather would have been a
month-to-month lease since the rentals (under the original contract) were
payable on a monthly basis. It follows that the respondent judge's decision
requiring renewal of the lease has no basis in law or in fact since courts have
no authority to prescribe the terms and conditions of a contract for the
parties. WHEREFORE, the Petition for Certiorari, Prohibition and mandamus is
granted.
RELEVANT JURISPRUDENCE
Article 1197 of the Civil Code provides as follows:
If the obligation does not fix a period, but from its nature and the
circumstances it can be inferred that a period was intended, the courts may
fix the duration thereof.
The courts shall also fix the duration of the period when it depends upon the
will of the debtor.
In every case, the courts shall determine such period as may, under the
circumstances, have been probably contemplated by the parties. Once fixed
by the courts, the period cannot be changed by them.

Article 1670 of the Civil Code reads thus:

If at the end of the contract the lessee should continue enjoying the thing left
for 15 days with the acquiescence of the lessor and unless a notice to the
contrary by either party has previously been given. It is understood that
there is an implied new lease, not for the period of the original contract but
for the time established in Articles 1682 and 1687. The terms of the original
contract shall be revived.