OBLICON Case Digest

1938
VILLAROEL V. ESTRADA
Nature: Complaint for sum of money

Ponente: AVANCEÑA
Date: December 19, 1940
DOCTRINE: The rule that a new promise to pay a debt must be made by the same person
obligated or otherwise legally authorized by it, is not applicable to this case since there was
voluntarily assumption of the obligation.
FACTS:
Relevant Provision of Law:
On May 9, 1912, Alexandra F. Callao, mother of defendant John F. Villarroel, obtained from the
spouses Mariano Estrada and Severina a loan of P1, 000 payable after seven years. Alexandra
died, leaving as the only heir the defendant. Spouses Mariano Estrada and Severina died too,
leaving as the only heir to the plaintiff Bernardino Estrada. On August 9, 1930, the defendant
signed a document which states in duty to the plaintiff the amount of P1, 000, with an interest of
12 percent per year. This action relates to the collection of this amount.
LC: condemn the defendant to pay the claimed amount of P1, 000 with legal interest of 12 percent
per year from the August 9, 1930 until fully pay.
ISSUE:
RULING:
Although the action to recover the original debt has prescribed and when the lawsuit was filed in
this case. However, this action is based on the original obligation contracted by the mother of the
defendant, who has prescribed, but in which the defendant contracted the August 9, 1930
(Exhibito B) to assume the fulfillment of that obligation, as prescribed. Being the only defendant
of the primitive herdero debtor entitled to succeed him in his inheritance, that debt legally brought
by his mother, but lost its effectiveness by prescription, it is now, however, for a moral
obligation, which is consideration enough to create and effective and enforceable his obligation
voluntarily contracted the August 9, 1930 in Exhibito B.
The rule that a new promise to pay a debt prrescrita must be made by the same person obligated
or otherwise legally authorized by it, is not applicable to this case that does not require compliance
with the mandatory obligation orignalmente but from which they would voluntarily assume the
obligation.
NOTE: The case is in Spanish.
ANSAY V. NDC
Nature: Complaint for 20% Christmas bonus

Ponente: PARAS, C. J.
Date: April 29, 1960
DOCTRINE: 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
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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".
FACTS:
Relevant Provision of Law: Article 1423 of the New Civil Code
On July 25, 1956, appellants filed against appellees in the Court of First Instance of Manila a
complaint praying for a 20% Christmas bonus for the years 1954 and 1955.
TC dismissed the complaint, and held, among others:

the Court does not see how petitioners may have a cause of action to secure such bonus
because:
(a) A bonus is an act of liberality and the court takes it that it is not within its judicial powers
to command respondents to be liberal;
(b) Petitioners admit that respondents are not under legal duty to give such bonus but that
they had only ask that such bonus be given to them because it is a moral obligation of
respondents to give that but as this Court understands, it has no power to compel a party to
comply with a moral obligation (Art. 142, New Civil Code.).
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: W/N a Christmas bonus is a demandable obligation.
RULING:
Generally, a Christmas bonus, being a natural obligation, 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.
Philippine Education Co. vs. CIR: 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.
H. E. Heacock vs. National Labor Union: 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.
DBP V. CONFESOR
1938
Nature: Complaint for payment of loan

Ponente: GANCAYCO, J.
Date: May 11, 1989
DOCTRINE:
FACTS:
Relevant Provision of Law: Art. 165 of the CC
[1st PN] On February 10, 1940 spouses Patricio Confesor and Jovita Villafuerte obtained an
agricultural loan from the Agricultural and Industrial Bank (AIB), now the Development of the
Philippines (DBP), in the sum of P2,000.00, Philippine Currency, as evidenced by a promissory
note of said date whereby they bound themselves jointly and severally to pay the account in ten
(10) equal yearly amortizations.
[2nd PN] As the obligation remained outstanding and unpaid even after the lapse of the aforesaid
ten-year period, Confesor (only the H), who was by then a member of the Congress of the
Philippines, executed a second promissory note on April 11, 1961 expressly acknowledging said
loan and promising to pay the same on or before June 15, 1961. The new promissory note reads as
follows —
I hereby promise to pay the amount covered by my promissory note on or before June 15, 1961.
Upon my failure to do so, I hereby agree to the foreclosure of my mortgage. It is understood
that if I can secure a certificate of indebtedness from the government of my back pay I will be
allowed to pay the amount out of it.
Said spouses not having paid the obligation on the specified date, the DBP filed a complaint
against the spouses for the payment of the loan.
CITY COURT: ordered the defendants Patricio Confesor and Jovita Villafuerte Confesor to pay
the plaintiff Development Bank of the Philippines, jointly and severally the sum of P5,760.96
plus additional daily interest, etc
CFI: reversed; dismissed the complaint

 in signing the promissory note alone, respondent Confesor cannot thereby bind his wife,
respondent Jovita Villafuerte, pursuant to Article 166 of the New Civil Code which
provides:
Art. 166. Unless the wife has been declared a non compos mentis or a spend thrift, or is
under civil interdiction or is confined in a leprosarium, the husband cannot alienate or
encumber any real property of the conjugal partnership without, the wife's consent. If she
ay compel her to refuses unreasonably to give her consent, the court m grant the same.
Petitioner Bank contends,
 that the right to prescription may be renounced or waived; and
 that in signing the second promissory note respondent Patricio Confesor can bind the conjugal
partnership; or otherwise said respondent became liable in his personal capacity.
ISSUE: W/N the right to prescription may be renounced or waived
RULING:
YES. The right to prescription may be waived or renounced.
1938
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 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.
... 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.
ISSUE #2: W/N the debt is chargeable against the conjugal partnership considering that the
husband, alone, signed the 2nd PN
RULING:
YES. The debt in favor of the bank is chargeable to the conjugal partnership.
Under Article 165 of the Civil Code, the husband is the administrator of the conjugal partnership.
As such administrator, all debts and obligations contracted by the husband for the benefit of the
conjugal partnership, are chargeable to the conjugal partnership.
CRUZ V. TUASON AND CO.
Nature: complaint for recovery of improvements and conveyance of land

Ponente: BARREDO, J
DOCTRINE: a presumed qauasi-contract cannot emerge as against one party when the subject
matter thereof is already covered by an existing contract with another party.
FACTS:
Relevant Provision of Law: Art 2141, CC (quasi-contract)
Faustino Cruz filed a complaint for recovery of improvements and conveyance of land. He alleged
two separate causes of action, namely:
(1) that upon request of the Deudors (the family of Telesforo Deudor who laid claim on the
land in question on the strength of an "informacion posesoria" ) plaintiff made permanent
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improvements valued at P30,400.00 on said land having an area of more or less 20

quinones and for which he also incurred expenses in the amount of P7,781.74, and since
defendants-appellees are being benefited by said improvements, he is entitled to
reimbursement from them of said amounts and
(2) that in 1952, defendants availed of plaintiff's services as an intermediary with the Deudors
to work for the amicable settlement of Civil Case No. Q-135, then pending also in the Court
of First Instance of Quezon City, and involving 50 quinones of land, of Which the 20
quinones aforementioned form part, and 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 MD on the following grounds:

(1) As regards that improvements made by plaintiff, that the complaint states no cause of
action, the agreement regarding the same having been made by plaintiff with the Deudors
and not with the defendants, hence the theory of plaintiff based on Article 2142 of the Code
on unjust enrichment is untenable; and
(2) anent the alleged agreement about plaintiffs services as intermediary in consideration of
which, defendants promised to convey to him 3,000 square meters of land, that the same
is unenforceable under the Statute of Frauds, there being nothing in writing about it, and,
in any event,
(3) that the action of plaintiff to compel such conveyance has already prescribed.
CFI: dismissed the complaint on three grounds: (1) failure of the complaint to state a cause of
action (defendant is not privy to the agreement between plaintiff and the Deudors); (2) the cause
of action of plaintiff is unenforceable under the Statute of Frauds; and (3) the action of the plaintiff
has already prescribed.
ISSUE: W/N plaintiff’s claim (2nd COA) is unenforceable under the State of Frauds
RULING:
No. Statute of Frauds is inapplicable. Nevertheless, plaintiff still cannot claim from defendant.
It is elementary that the Statute refers to specific kinds of transactions and that it cannot apply to
any that is not enumerated therein.
The contract is not a sale of real property or any interest therein: 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.
There is already partial execution of the agreement: 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
1938
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. 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
ISSUE #2 (TOPICAL): W/N plaintiff can claim based on a quasi-contract (unjust enrichment).
RULING:
No. Art 2142, CC is not applicable.
Art. 2142 states,

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 matter 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 (Ambrosio Padilla) 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 relation 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."
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.
SIDE ISSUE (Procedural): the impugned main order was issued on August 13, 1964, while the
appeal was made on September 24, 1964 or 42 days later. Clearly, this is beyond the 30-day
reglementary period for appeal. Hence, the subject order of dismissal was already final and
executory when appellant filed his appeal.
GUTIERREZ HERMANOS V. ORENSE

1938
Nature: Complaint to compel defendant to execute an instrument transferring all the right,
interest, title and share which the defendant has in the subject property.
Ponente: TORRES, J.
Date: December 4, 1914
DOCTRINE:
FACTS:
Relevant Provision of Law: Article 1259 of the Civil Code
On March 5, 1913, counsel for Gutierrez Hermanos filed a complaint, afterwards amended, against
Engacio Orense, in which he set forth,
 that on and before February 14, 1907, the defendant Orense had been the owner of a parcel
of land, with the buildings and improvements thereon (masonry house with the nipa roof),
situated in the pueblo of Guinobatan, Albay, xxx;
 hat the said property has up to date been recorded in the new property registry in the name
of the said Orense xxx;
 that, on February 14, 1907, Jose Duran, a nephew of the defendant, with the latter's
knowledge and consent, executed before a notary a public instrument whereby he sold and
conveyed to the plaintiff company, for P1,500, the aforementioned property, the vendor
Duran reserving to himself the right to repurchase it for the same price within a period of
four years from the date of the said instrument;
 that the plaintiff company had not entered into possession of the purchased property,
owing to its continued occupancy by the defendant and his nephew, Jose Duran, by virtue
of a contract of lease executed by the plaintiff to Duran, which contract was in force up to
February 14, 1911;
 that the said instrument of sale of the property, executed by Jose Duran, was publicly and
freely confirmed and ratified by the defendant Orense;
 that, in order to perfect the title to the said property, but that the defendant Orense refused
to do so, without any justifiable cause or reason, wherefore he should be compelled to
execute the said deed by an express order of the court, xxx
 that the defendant had been occupying the said property since February 14, 1911, and
refused to pay the rental thereof, notwithstanding the demand made upon him for its
payment at the rate of P30 per month, the just and reasonable value for the occupancy of
the said property, the possession of which the defendant likewise refused to deliver to the
plaintiff company, in spite of the continuous demands made upon him, the defendant,
with bad faith and to the prejudice of the firm of Gutierrez Hermanos, claiming to have
rights of ownership and possession in the said property.
CFI: ordered the defendant to make immediate delivery of the property in question, through a
public instrument, by transferring and conveying to the plaintiff all his rights in the property
described in the complaint
(FACTS WHICH LED TO THE FILING OF CIVIL CASE) After the lapse of the four years
stipulated for the redemption, the defendant refused to deliver the property to the purchaser, the
firm of Gutierrez Hermanos, and to pay the rental thereof. His refusal was based on the allegations
 that he had not executed any written power of attorney to Jose Duran, nor had he given
the latter any verbal authorization to sell the said property to the plaintiff firm in his name;
and
1938
 that, prior to the execution of the deed of sale, the defendant performed no act such as
might have induced the plaintiff to believe that Jose Duran was empowered and
authorized by the defendant to effect the said sale.
The plaintiff firm, therefore, charged Jose Duran, in the Court of First Instance of the said
province, with estafa (CRIMINAL CASE). CFI acquitted Duran since Orense, when called to the
witness stand, stated that he had consented to the sale of the property. Thus, plaintiff firm filed
the present civil case.
ISSUE: W/N defendant must fulfill the obligation contracted by his nephew.
RULING:
YES. The owner of the property consented to the sale made by the nephew.
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 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.
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.
ADILLE V. CA
Nature: Action for partition with accounting

Ponente: SARMIENTO, J
Date: January 29, 1988
DOCTRINE:
1938
FACTS:
Relevant Provision of Law: Art. 1456, implied trust
The land in question Lot 14694 of Cadastral Survey of Albay located in Legaspi City with an area
of some 11,325 sq. m. originally belonged to one Felisa Alzul as her own private property; she
married twice in her lifetime;
 the first, with one Bernabe Adille, with whom she had as an only child, herein defendant
Rustico Adille;
 in her second marriage with one Procopio Asejo, her children were herein plaintiffs,
[sale] Now, sometime in 1939, said Felisa sold the property in pacto de retro to certain 3rd
persons, period of repurchase being 3 years, but she died in 1942 without being able to redeem
and after her death, but during the period of redemption, herein defendant (child of 1st M)
repurchased, by himself alone, and after that, he executed a deed of extra-judicial partition
representing himself to be the only heir and child of his mother Felisa with the consequence that
he was able to secure title in his name alone also, so that OCT. No. 21137 in the name of his mother
was transferred to his name, that was in 1955.
After some efforts of compromise had failed, his half-brothers and sisters, herein plaintiffs, filed
present case for partition with accounting on the position that he was only a trustee on an
implied trust when he redeemed,-and this is the evidence, but as it also turned out that one of
plaintiffs, Emeteria Asejo was occupying a portion, defendant counterclaimed for her to vacate.
LC: defendant was and became absolute owner, he was not a trustee, and therefore, dismissed
case and also condemned plaintiff occupant, Emeteria to vacate
CA: reversed TC;
Petitioner (defendant) contends,

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: May petitioner, as a co-owner, acquire exclusive ownership over the property held in
common?
If not, whether petitioner acts as a TRUSTEE or a NEGOTIORUM GESTOR.
RULING:
No, petitioner cannot acquire exclusive ownership under the circumstances. Since there is fraud,
petitioner is a mere trustee of the property. The doctrine of negotiorum gestio cannot apply in the
case at bar.
The right of repurchase may be exercised by a co-owner with respect to his share
alone.
Necessary expenses may be incurred by one co-owner, subject to his right to collect
reimbursement from the remaining co-owners. There is no doubt that redemption of property
entails a necessary expense. Under the Civil Code:
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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 co-heir 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. ut 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 co-ownership.
Neither does the fact that the petitioner had succeeded in securing title over the
parcel in his name terminate the existing co-ownership. 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.
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.
RE: negotiorum gestio

It is the view of the CA 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 (TRUST) 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 CA 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.
RE: prescription
This Court is not unaware of the well-established principle that prescription bars any demand on
property (owned in common) held by another (co-owner) 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. 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?
1938
We hold in the negative. Prescription, as a mode of terminating a relation of co-ownership, must

have been preceded by repudiation (of the co-ownership). (No repudiation on the part of the
private respondents/plaintiffs.
ANDRES v. MANTRUST
Ponente: CORTES, J.
Date: September 15, 1989
DOCTRINE: Requisites of solution indebiti:

(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
FACTS:
Relevant Provision of Law: Art. 2154, CC
Petitioner, using the business name "Irene's Wearing Apparel," was engaged in the manufacture
of ladies garments, children's wear, men's apparel and linens for local and foreign buyers. Among
its foreign buyers was Facets Funwear, Inc. (hereinafter referred to as FACETS) of the United
States.
In the course of the business transaction between the two, FACETS from time to time remitted
certain amounts of money to petitioner in payment for the items it had purchased. Sometime in
August 1980, FACETS instructed the First National State Bank of New Jersey, Newark, New
Jersey, U.S.A. (hereinafter referred to as FNSB) to transfer $10,000.00 to petitioner via PNB.
Acting on said instruction, FNSB instructed private respondent Manufacturers Hanover and
Trust Corporation to effect the above- mentioned transfer through its facilities and to charge the
amount to the account of FNSB with private respondent. Although private respondent was able
to send a telex to PNB to pay petitioner $10,000.00 through the Pilipinas Bank, where petitioner
had an account, the payment was not effected immediately because the payee designated in the
telex was only "Wearing Apparel." Upon query by PNB, private respondent sent PNB another telex
dated August 27, 1980 stating that the payment was to be made to "Irene's Wearing Apparel." On
August 28, 1980, petitioner received the remittance of $10,000.00 through Demand Draft No.
225654 of the PNB.
Meanwhile, on August 25, 1980, after learning about the delay in the remittance of the money to
petitioner, FACETS informed FNSB about the situation. On September 8, 1980, unaware that
petitioner had already received the remittance, FACETS informed private respondent about the
delay and at the same time amended its instruction by asking it to effect the payment through the
Philippine Commercial and Industrial Bank (hereinafter referred to as PCIB) instead of PNB.
Accordingly, private respondent, which was also unaware that petitioner had already received the
remittance of $10,000.00 from PNB instructed the PCIB to pay $10,000.00 to petitioner. Hence,
on September 11, 1980, petitioner received a second $10,000.00 remittance.
Private respondent (Mantrust) asked petitioner for the return of the second remittance of
$10,000.00 but the latter refused to pay.
1938
LC: in favor of petitioner as defendant; Art. 2154 of the New Civil Code is not applicable to the
case because the second remittance was made not by mistake but by negligence and petitioner
was not unjustly enriched by virtue thereof
CA: Art 2154 is applicable; reversed CFI
ISSUE: W/N petitioner has an obligation to return the $10,000.
RULING:
Art. 2154 of the New Civil Code 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.
This provision is taken from Art. 1895 of the Spanish Civil Code which provided that:
Art. 1895. If a thing is received when there was no right to claim it and which, through an
error, has been unduly delivered, an obligation to restore it arises.
Article 1895 [now Article 2154] of the Civil Code abovequoted, is therefore
applicable. This legal provision, which determines the quasi-contract of solution indebiti, is
one of the concrete manifestations of the ancient principle that no one shall enrich himself
unjustly at the expense of another.
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)].
Petitioner: he 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.
SC: 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. 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: 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.
SC: The Court holds that the finding by the Court of Appeals that the second $10,000.00
remittance was made by mistake, being based on substantial evidence, is final and conclusive. CA
held:
1938
The fact that Facets sent only one remittance of $10,000.00 is not disputed. In the written
interrogatories sent to the First National State Bank of New Jersey through the Consulate
General of the Philippines in New York, Adelaide C. Schachel, the investigation and
reconciliation clerk in the said bank testified that a request to remit a payment for Facet
Funwear Inc. was made in August, 1980. That there was a mistake in the second remittance
of US $10,000.00 is borne out by the fact that both remittances have the same reference
invoice number which is 263 80.
Petitioner: when one of two innocent persons must suffer by the wrongful act of a third person,
the loss must be borne by the one whose negligence was the proximate cause of the loss.
SC: The rule is that principles of equity cannot be applied if there is a provision of law specifically
applicable to a case.
PUYAT AND SONS V. MANILA
Nature: action for refund

Ponente: PAREDES, J
DOCTRINE: (Citing a US case) 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
FACTS:
On August 11, 1958, the plaintiff Gonzalo Puyat & Sons, Inc., filed an action for refund of Retail
Dealerls Taxes paid by it, corresponding to the first Quarter of 1950 up to the third Quarter of
1956, amounting to P33,785.00, against the City of Manila and its City Treasurer. The case was
submitted on the following stipulation of facts, to wit—
"1. That the plaintiff is a corporation duly organized and existing according to the laws of the
Philippines, with offices at Manila; while defendant City Manila is a Municipal Corporation duly
organized in accordance with the laws of the Philippines, and defendant Marcelino Sarmiento is
the duly qualified incumbent City Treasurer of Manila;
"2. That plaintiff is engaged in the business of manufacturing and selling all kinds of furniture xxx
"3. That acting pursuant to the provisions of Sec. 1. group II, of Ordinance No. 3364, defendant
City Treasurer of Manila assessed from plaintiff retail dealer's tax corresponding to the quarters
hereunder stated on the sales of furniture manufactured and sold by it at its factory site, all of
which assessments plaintiff paid without protest in the erroneous belief that it was liable therefor
xxx
"4. That plaintiff, being a manufacturer of various kinds of furniture, is exempt from the
payment of taxes imposed under the provisions of Sec. 1, Group II, of Ordinance No. 3364,
which took effect on September 24, 1956, on the sale of the various kinds of furniture
manufactured by it pursuant to the provisions of Sec. 18(n) of Republic Act No. 409 (Revised
Charter of Manila), as restated in Section 1 of Ordinance No.3816.
1938
xxx
"6. That on October 30, 1956, the plaintiff filed with defendant City Treasurer of Manila, a formal
request for refund of the retail dealer's taxes unduly paid by it.
"7. That on July 24, 1958, the defendant City Treasurer of Manila definitely denied said
request for refund.
LC: ordered the defendants to refund the amount of P29,824.00; Of the payments made by the
plaintiff, only that made on October 25, 1950 in the amount of P1,250.00 has prescribed Payments
made in 1951 and thereafter are still recoverable since the extra-judicial demand made on October
30, 1956 was well within the six-year prescriptive period of the New Civil Code.
CITY OF MANILA (defendants): the taxes in question were voluntarily paid by appellee
company and since, in this jurisdiction, in order that a legal basis arise for claim of refund of taxes
erroneously assessed, payment thereof must be made under protest, and this being a condition
sine qua non, and no protest having been made, -- verbally or in writing, thereby indicating that
the payment was voluntary, the action must fail.
PUYAT AND SONS: the payments could not have been voluntary. At most, they were paid
"mistakenly and in good faith" and "without protest in the erroneous belief that it was liable
thereof." Voluntariness is incompatible with protest and mistake. It submits that this is a simple
case of "solutio indebiti"
ISSUE: W/N the amounts paid by plaintiff-appelele, as retail dealer's taxes under Ordinance
1925, as amended by Ordinance No. 3364of the City of Manila, without protest, are refundable
RULING:
Plaintiff-Appellee is entitled to the refund.
Appellants do not dispute the fact that appellee-company is exempted from the payment of the
tax in question.
Newport v. Ringo (US case): "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…”
RE: Requirement of protest
In the opinion of the Secretary of Justice (Op. 90,Series of 1957, in a question similar to the case
at bar, it was held that the requiredment of protest refers only to the payment of taxes which are
directly imposed by the charter itself, that is, real estate taxes, which view was sustained by
judicial and administrative precedents, one of which is the case of Medina, et al., v. City of Baguio,
G.R. No. L-4269, Aug. 29, 1952. In other words, protest is not necessary for the recovery of retail
dealer's taxes, like the present, because they are not directly imposed by the charter.
1938
ISSUE #2: IF yes on #1, W/N the claim for refund filed in October 1956, in so far as said claim
refers to taxes paid from 1950 to 1952 has already prescribed
CITY OF MANILA: article 1146 (NCC), which provides for a period of four (4) years (upon injury
to the rights of the plaintiff), apply to the case.
PUYAT AND SONS: provisions of Act 190 (Code of Civ. Procedure) should apply, insofar as
payments made before the effectivity of the New Civil Code on August 30, 1950, the period of
which is ten (10) years, (Sec. 40,Act No. 190; Osorio v. Tan Jongko, 51 O.G. 6211) and article 1145
(NCC), for payments made after said effectivity, providing for a period of six (6) years (upon quasi-
contracts like solutio indebiti).
RULING:
Even if the provisions of Act No. 190 should apply to those payments made before the effectivity
of the new Civil Code, because "prescription already running before the effectivity of of this Code
shall be govern by laws previously in force xxx " (Art. 1116, NCC), Still payments made before
August 30, 1950 are no longer recoverable in view of the second paragraph of said
article (1116), which provides:
"but if since the time this Code took effect the entire period herein required for prescription
should elapse the present Code shall be applicable even though by the former laws a longer
period might be required".
Anent the payments made after August 30, 1950, it is obvious that the action has prescribed with
respect to those made before October 30, 1950 only, considering the fact that the prescription of
action is interrupted xxx when is a written extra-judicial demand x x x" (Art. 1155, NCC), and the
written demand in the case at bar was made on October 30, 1956 (Stipulation of Facts).
MODIFIED in the sense that only payments made on or after October 30, 1950 should be
refunded, the decision appealed from is affirmed, in all other respects.
SALUDAGA V. FEU
Nature: Complaint for damages

Ponente: YNARES-SANTIAGO, J.
DOCTRINE:
FACTS:
Petitioner Joseph Saludaga was a sophomore law student of respondent Far Eastern University
(FEU) when he was shot by Alejandro Rosete (Rosete), one of the security guards on duty at the
school premises on August 18, 1996. Petitioner was rushed to FEU-Dr. Nicanor Reyes Medical
Foundation (FEU-NRMF) due to the wound he sustained. Meanwhile, 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.
1938
Petitioner thereafter filed a complaint for damages against respondents on the ground that
they breached their obligation to provide students with a safe and secure environment and an
atmosphere conducive to learning. 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 (Imperial), Galaxy's President, to indemnify them for whatever would be adjudged in
favor of petitioner, if any; and to pay attorney's fees and cost of the suit. On the other hand, Galaxy
and Imperial filed a Fourth-Party Complaint against AFP General Insurance.
TC: held FEU and GALAXY liable
CA: reversed; dismissed the complaint; shooting was a fortuitous event
ISSUE: W/N FEU is liable based on the contract between it and its student
RULING:
YES. FEU is liable (culpa contractual).
PSBA v CA: 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.
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. 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.
Re: Force majeure
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.
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
1938
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
Re: Damages
Article 1170 of the Civil Code provides that those who are negligent in the performance of their
obligations are liable for damages. Accordingly, for breach of contract due to negligence in
providing a safe learning environment, respondent FEU is liable to petitioner for damages.
DISPOSITIVE:
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 (Prfesident of FEU) is DISMISSED.
The counterclaims of respondents are likewise DISMISSED.
SAGRADA ORDEN VS NACOCO
Nature: Action to recover the possession of a parcel of land and the warehouses, as well as the
rentals for its occupation and use
Ponente: Labrador
Date: June 30, 1952
DOCTRINE: In order for an obligation to exist, it must be created by law, contract,

quasi-contract, delicts, or quasi-delicts.
FACTS:
Old Civil Code Article 1089. Obligations are created by law, by contracts, by quasi-contracts,
and by illicit acts and omissions or by those in which any kind of fault or negligence occur
On January 4, 1942, during the Japanese occupation, a Japanese corporation by the name of
Taiwan Tekkosho acquired a certain parcel of land owned by the plaintiff for the sum of
Php140,000.00, and title was issued in its name. After the end of World War 2, the Alien Property
Custodian of the USA took possession, control and custody thereof for the reason that the land
belonged to an enemy national. Afterwards the property was occupied by the Copra Export
Management Company, which later vacated it in favor of the National Coconut Corporation.
Sagrada Orden made a claim of the property before the Alien Property Custodian but this was
denied, so it brought an action at the CFI of Manila to annul the sale of the property to Taiwan
Tekkosho and to recover its possession.
1938
The case did not come to trial as the parties presented a joint petition where it was claimed that
the sale in favor of Taiwan Tekkosho was null and voide because it was executed under threats,
duress, and intimidation, and it was agreed that the title should be re-issued in favor of Sagrada
Orden. The parties also prayed that NACOCO and the Alien Property Administration be released
from liability, and that NACOCO would pay rentals.
CFI released NACOCO from any liability but denied plaintiff the right to recover reasonable
rentals.
Plaintiff appeals to recover reasonable rentals from August 1946, which as when NACOCO began
occupying the premises, and to vacate it.
Respondent, on the other hand, admits rentals but only starting February 28, 1949, when the
judgment of the CFI was issued. It defends itself by saying it occupied the property in good faith,
and had no obligation whatsoever to pay rentals for the use and occupation of the warehouse.
ISSUE:
Whether or not NACOCO is liable for rentals from the time of its occupancy or from the time of
the judgment of the CFI.
RULING: It is not liable for rentals at all.

If defendant is liable at all, its obligations must arise from any of the four sources of obligations:
law, contract or quasi-contract, crime, or negligence.
NACOCO is not guilty of any offense at all since it entered the premises and occupied the same
with the permission of the Alien Property Administration, which had legal control and
administration. It’s not negligent of anything either. There was no privity of contract or obligation
between the Alien Property Custodian and Taiwan Tekkosho such that the Alien Property
Custodian or its permittee (NACOCO) can be held responsible for the illegal occupation by Taiwan
Takkosho. Note: the Alien Property Custodian did not occupy the property as successor to the
interests of Taiwan Tekkosho, but by expression provision of the law. When NACOCO took
possession of the property, the Alien Property Administration had the absolute control of the
property as the trustee of the US Government; as such, if NACOCO is liable for rentals, it would
accrue to the US Government and not to Sagrada Orden.
Furtehrmore, there was no agreement between the Alien Property Custodian and NACOCO for
the payment of rentals on the property. The predecessor of NACOCO, Copra Export, did not pay
any rentals or had to pay any compensation of any kind. When the NACOCO succeeded Copra
Export, it must have also been free from payment of rentals, especially since it’s a Government
corporation.
As such, there is no basis on any of the sources of obligations to find that NACOCO is liable for
rentals to Sagrada Orden.
PEOPLE’S CAR INC. VS COMMANDO SECURITY SERVICE AGENCY

1938
Nature: Action for damages

Ponente: Teehankee
Date: May 22, 1973
DOCTRINE: Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith
FACTS:
NCC Article 1159. Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.
People’s Car Inc and Commando Security Service Agency entered into a Guard Service Contract
where the latter would safeguard and protect the business premises of People’s Car from theft,
pilferage, robbery, vandalism and all other unlawful acts of any person or persons prejudicial to
the interest of the plaintiff.
On April 5, 1970, at around 1AM, one of the security guards, without any authority or consent
whatsoever, brought out of the compound of the plaintiff a car belonging to Joseph Luy, a
customer, and eventually lost control of the said car, causing the same to fall into a ditch. Plaintiff
filed a complaint of qualified theft against the security guard; plaintiff alleges that it had to suffer
damages by way of payment for the repairs of the car in the amount of Php7,079, as well as car
rental value in the sum of Php1,410 as plaintiff had to loan a car to Joseph Luy for 47 days while
the car was being repaired. As such, plaintiff incurred a total of Php8,489.10 in damages.
Plaintiff claimed that the entire amount is imputable to Commando Security as, under paragraph
5 of their contract, defendant assumed liability for acts done during their watch hours by guards,
while Commando alleges, under paragraph 4 of the contract, that its liability should not exceed
Php1,000.
TC ruled in favor of the interpretation of Commando Security.
ISSUE: What is the extent of the liability of Commando Security in light of the contract that the
parties entered into
RULING: It is liable for the entire Php8,489.10.

The limitation to Php1,000 per guard post is only applicable for loss or damage “through the
negligence of its guards during watch hours” provided that the same is duly reported to the
plaintiff within 24 hours of the occurrence and the negligence is verified after proper investigation
with the attendance of both contracting parties. It’s inapplicable in this case as the property of the
plaintiff was not lost or damaged at its premises, and was there just mere negligence of the security
guard.
Rather, this case involves a security guard who willfully and unlawfully drove out a car and lost
control of the same, causing the plaintiff to incur actual damages in the amount of Php8,489.10.
Consequently, defendant is liable for the entire damages under paragraph 5, where the defendant
assumes “liability for the acts during their watch hours” and that it “releases plaintiff from any
and all liabilities to the third parties arising from acts or omissions done by guards during their
tour of duty.” As the act here is wanton and unlawful, the defendant is liable.
1938
Contrary to TC’s determination, plaintiff was not required to tell Luy that it was not liable under
the Guard Service Contract with Commando, and that it should have brought the action in court.
The TC also required that Luy would file a third-party complaint (rather than dismiss the action
vs. plaintiff) or to have plaintiff file a crossclaim (if Luy did not opt to dismiss the action). The
recommendations of the TC are unduly technical and unrealistic
Plaintiff was in law liable to Luy for the damages caused by the security guard, but it was also
justified in making good such damages and relying in turn on the defendant’s honoring its
contract. Plaintiff couldn’t tell its customer that it was not liable since the customer could not hold
defendant to account for damages as the customer had no privity of contract with the defendant.
CANGCO VS MANILA RAILROAD
Nature: Action for damages based on quasi-delict

Ponente: Fisher
Date: October 4, 1918
DOCTRINE: The liability arising from culpa aquillana is based on a voluntary act or omission,
which, without willful intent but by mere negligence, has caused damage to another. An employer
who exercises all possible care in the selection and direction of his employee would not occur any
liability. For the liability to exist, there should actually be some fault attributable to the defendant
personally.
FACTS:
Civil Code ART. 1903. The obligation imposs=ed by the next preceding articles is enforceable not
only for personal acts and omissions, but also for those of persons for whom another is
responsible..
Jose Cango was an employee of the Mania Railroad Company as a clerk. To travel from his home
to his place of work, he used a pass, as supplied by the company, which entitled him to ride on the
company’s trains for free.
On January 20, 1915, at around 7 to 8PM, Cangco was about to disembark from the slowing train,
when one or both of his feet came in contact with sack of watermelons resulting in him falling
violently on the platform; his body rolled from the platform and was drawn under the moving car
where his right arm was badly crushed and lacerated. The platform was dimly lit so that it was
difficult to discern the objects on the platform.
Pit appears that the sack of melons were on the platform as it was customary season for harvesting
and a large lot had been brought to the station for the shipment to the market. They were
contained in numbers sacks, which had been piled on the platform in a row upon another near
the edge of the platform.
As a result of the accident, Cangco had to undergo two surgeries resulting in the amputation of
his arm until near the shoulder, and he expended actual medical damages in the amount of
Php790.25. He thus filed an action with the CFI of Manila to recover damages based on the
negligence of the employees in leaving the sacks of watermelons at the edge of the platform.
CFI ruled that while negligence was attributable to the defendant, the plaintiff had failed to
exercise due caution in alighting from the train and so was precluded from recovering
1938
ISSUE: Whether or not Cangco is entitled to recover damages from MRR for the
negligent actions of MRR’s employees in placing the sacks of watermelons at the
edge of the platform
RULING: Yes, Manila railroad is liable for damages for breach of contract of
carriage.
It cannot be doubted that the employees of the railroad company were negligent in piling the sacks
on the platform and that their presence caused the plaintiff to suffer his injuries; as such, they
constituted an effective legal cause of the injuries sustained by the plaintiff. However, it must still
be weighed against the contributory negligence of the plaintiff.
The foundation of the legal liability of the defendant is the contract of carriage; the obligation to
respond for the damage arises from the failure of the defendant to exercise due care in its
performance. The liability of is direct and immediate, and differs from the presumptive
responsibility for the negligence of its employees as imposed by Civil Code Article 1903, which
can be rebutted by proof of the exercise of due care in the selection and supervision of employees.
Article 1903 is not applicable to contractual obligations (culpa contractual), but only to extra-
contractual obligations (culpa aquiliana).
Court cites precedent in the Rakes case where the Court stated that Article 1903 of the Civil Code
is inapplicable to acts of negligence which constitute the breach of contract; they would be subject
instead to articles 1101, 1103 and 1104.
The distinction is important as the liability imposed on employers for damages based on the
negligence of the employees is not based on respondeat superior – which would impose the
master liable in every case and unconditionally – but on the principle in Article 1902, which
imposes upon all persons who by their own fault or negligence cause injury to another, the
obligation to indemnify the damages. As such, the employer would not be liable for damages done
by a negligent employee if the employer were not negligent in the selection and direction of the
employee, and the act did not amount to breach of the contract between the third person and the
employer.
The liability arising from culpa aquillana is based on a voluntary act or omission, which, without
willful intent but by mere negligence, has caused damage to another. An employer who exercises
all possible care in the selection and direction of his employee would not occur any liability. For
the liability to exist, there should actually be some fault attributable to the defendant personally.
On the other hand, the liability of masters and employers for the negligent acts or omissions of
their servants or agents, when such acts or omissions cause damages which amount to the breach
of a contact, is not based upon a mere presumption of the master's negligence in their selection
or control, and proof of exercise of the utmost diligence and care in this regard does not relieve
the master of his liability for the breach of his contract.
The Court describes extra-contractual obligations arise from the breach or omission of the mutual
duties which civilized society imposes on its members such that the breach of these will result in
the obligation to indemnify. The viniculum juris is the wrongful or negligent act or omission itself,
while in contractual relations, the viniculum exists independently from the breach of the
voluntary duty.
1938
The positions of parties who have taken a contract with each other versus those who haven’t are
different. The burden of proof is on the plaintiff to show the negligence in culpa aquillana, while
in a contract, it is sufficient to prove the contract and the nonperformance.
Here: the duty was based on a contract of carriage, which is direct and immediate, and its non-
performance could not be excused by proof that the fault was morally imputable to defendant’s
employees.
Defendant’s allegation that the plaintiff should not have gotten off from the train prior to its
slowing down is insufficient to deny damages as it is not negligence per se for a passenger to alight
from a moving train. The train here was “barely moving” and it seems to be a common practice to
do so without any injury. Any contributory negligence on the part of the plaintiff would still be on
the negligence of the defendant as the platform was dark and dimly lit.
Dissent: J. Malcolm
The contributory negligence of the plaintiff, in attempting to alight from a moving train should
absolve defendant from liability.
GUTIERREZ VS. GUTIERREZ
Nature: Action to recover damages from physical injuries from an automobile accident
Ponente: Malcolm
Date: September 23, 1931
DOCTRINE: The head of the house, the owner of an automobile, who maintains it for the general
use of the family, is liable for its negligent operation by one of his children 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.
FACTS:
Spanish Civil Code ART. 1903. The obligation imposed by the next preceding articles is
enforceable not only for personal acts and omissions, but also for those of persons for whom
another is responsible.
The father, and, in case of his death or incapacity, the mother, are liable for any damages
caused by the minor children who live with them.
On February 2, 1930, a passenger truck, and an automobile, driven by Bonifacio Gutierrez and
owned by his parents, Mr. and Mrs. Manuel Gutierrez, collided with one another as they were
passing on the Talon Bridge on the Manila South Road. Narciso was a passenger on the truck, and
he suffered a fracture in his right leg, which required medical attendance and had not yet healed
at the date of the trial.
The parties conceded that the collusion was caused by negligence. However, the plaintiff blames
both sets of drivers, while the truck owner blames the automobile driver, while the automobile
owners blame the truck driver.
ISSUE: Who among the defendants are liable – the truck owner or the automobile owner?
RULING:
1938
Bonifacio, at the time of the accident, was only 18 and was driving at an excessive rate and so
contributed to the accident by his negligence. As such, based on article 1903 of the Civil Code, the
father would be liable for damages caused by the minor.
Citing US cases as precedent, the Court ruled that it has been held that the head of the house, the
owner of an automobile, who maintains it for the general use of the family, is liable for its negligent
operation by one of his children 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.
On the other hand, the liability of Cortez, the owner of the passenger truck, and Velasco, the drier,
rests on a contract, which was sufficiently proven in evidence. The trial court found that the speed
of the truck at the time and lack of care of the driver also contributed to the accident.
Cortez and Velasco’s contention that Narciso contributed to the accident by sticking his leg outside
the truck can’t be counted on as it was not pleaded in court and there was no evidence presented.
NOTES: Villa-Real had a concurring opinion which merely voted for an indemnity of Php7,500.
PAY VS PALANCA
Nature: Action for a sum of money based on a promissory note

Ponente: Fernando
Date: June 28, 1974
DOCTRINE: An obligation that does not depend on a future or uncertain event, or upon a past
event unknown to the parties, is demandable at once. The filing of an action only 15 years after is
too late to enforce.
FACTS:
NCC 1179. 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
George Pay is a creditor of the late Justo Palanca. Pay’s claim is based on a promissory noted dated
January 30, 1952, wherein Justo Palanca and Rosa Palanca promised to pay the amount of
Php26,900.00. Pay comes to the court seeking that Segunda, the widow, be appointed as the
administratrix under the belief that once a certain parcel of land is under her administration, Pay,
as the creditor, could seek his claim against the administratrix.
Palanca denies stating that she had refused to be appointed as the administratrix, that the
property no longer belonged to the deceased, and that the rights of Pay on the instrument had
already prescribe; the note had been executed 15 years prior.
TC ruled in favor of Palanca and dismissed the case
ISSUE: Whether a creditor is barred by prescription in his attempted to collect on a promissory

note executed more than 15 years earlier.
RULING: Yes.
Based on the evidence presented, the only argument that merits the attention of the Court is that
of prescription. As noted by NCC 1179, any obligation that does not depend on a future or
uncertain event, or upon a past event unknown to the parties is demandable at once.
1938
As the obligation was due and demandable, the filing of the suit after 15 years was much too late.
The Civil Code additionally states that the prescriptive period of a written contract is 10 years.
SMITH BELL VS SOTELO MATTI
Nature: Specific Performance – payment of goods and to receive the same

Ponente: Romualdez
Date: March 9, 1922
FACTS:
Civil Code 1125. Obligations for the performance of which a day certain has been fixed shall be
demandable only when the day arrives.
A day certain is understood to be one which must necessarily arrive, even though its date
be unknown.
If the uncertainty should consist in the arrival or non-arrival of the day, the obligation
is conditional and shall be governed by the rules of the next preceding section.
In August 1918, Smith Bell and Sotelo entered into contracts whereby the former obligated itself
to sell to Sotelo two steel tanks for the price of Php21,000, the tanks were to be shipped from New
York and delivered at Manila within 3-4 months; two expellers for the price of Php25,000, which
were to be shipped from San Francisco in the month of September 1918 or as soon as possible;
and two electric motors at the price of Php2,000 each – the delivery stipulation read “approximate
delivery within 90 days – this is not guaranteed.” All of the contracts were subject to contingencies
such as the sellers not being responsible for delays caused by force majeure.
The tanks arrived on April 27, 1919, the expellers on October 26 1918, and the motors on February
27, 1919. Plaintiff notified Sotelo of the arrival of the goods, but he refused to receive and pay for
them.
Smith Bell alleges that it immediately notified Sotelo of the arrival of the goods yet Sotelo has
refused to receive any of them to pay for their price.
Sotelo counters that the he made the contracts as the manager of the Manila Oil Refining and By-
Products Company, and that it was only in May 1919 that he was notified of the arrival of the
goods, which arrived incomplete and long after the dates stipulated. They allege that the delay in
the delivery resulted in suffering damages for the non-delivery of the tanks (P116,783.91) and on
the expellers and motors (P21,250)
TC absolved the defendant from paying for the tanks and motors but ordered that defendant pay
P50,000 for the expellers, which includes legal interest
ISSUE: Whether or not under the contracts entered into and the circumstances established in
record, the plaintiff fulfilled its obligation to bring the goods and in due time.
RULING: Yes, the obligations were conditional.

None of the contracts fixed a specific date for the delivery of goods – they stated “within 3-4
months”, “in September 1918, or as soon as possible” or “approximate delivery within 90 days –
this is not guaranteed” and all of them were subject to the clause that force majeure was a possible
defense in case of delays.
1938
The record discloses that the contracts were executed at the time of World War I, which mean that
there were rigid restrictions on exports from the USA of articles such as machinery in question,
and that transportation was difficult, which was known to the parties.
Considering these contracts in light of civil law, the Court ruled that the term the parties
attempted to fix is so uncertain that one cannot tell whether or not the goods could actually be
brought to Manila, so the obligations must be considered as conditional.
The export of the machinery was contingent on the sellers obtaining certificate of priority and
permission of the US Government, so it was subject to a condition that depended on the effort of
Smith Bell and on the will of third persons who could in no way be compelled to fulfill the
obligation. The obligor is considered as having sufficiently performed his part of the obligation if
he has done all in his power, even if the condition has not been fulfilled.
As such, Soleto is sentenced to accept and receive the machinery and to pay Php96,000.00
including legal interest from the date of the filing of the complaint until fully paid.
CHAVES VS GONZALES

Ponente: Reyes
DOCTRINE: When the time for compliance of an obligation had evidently expired, even if a term
was not properly fixed by the parties, there is a breach of contract by non-performance.
FACTS:
NCC 1167. If a person obliged to do something fails to do it, the same shall be executed at his cost.
The same shall be observed if he does it in contravention of the tenor of the obligation.
Furthermore, it may be decreed that what has been poorly done be undone
NCC 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or
delay, and those who in any manner contravene the tenor thereof, are liable for damages.
NCC 1197. 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.
In July 1963, Chaves delivered to Gonzales a typewriter for routine cleaning and servicing.
Gonzales was unable to finish the job after some time in spite of repeated reminders made by
Chaves. Instead, he constantly gave assurances.
1938
In October 1963, defendant asked from plaintiff the sum of P6.00 for the purchase of spare parts,
which plaintiff gave. On October 26, finally fed up with the delay, plaintiff demanded that the
typewriter be returned. The defendant returned the same in a wrapped package; the plaintiff
discovered that the same was completely in shames with the interior cover and some parts and
screws missing. Plaintiff sent a letter formally demanded the return of the missing parts, the
interior cover and P6.00. The next day, defendant returned some of the missing parts, the interior
cover and P6.00
The plaintiff had his typewriter repaired by Freixas Business Machines, which was successful in
doing so for the cost of P89.85.
Plaintiff commenced an action at the CFI of Manila, asking for P90 as actual damages, P100 as
temperate, P500 for moral, and P500 as attorney’s fees.
TC ruled that the defendant should not be liable for the repairs made by Freixas, but should only
be liable for the value of the missing parts. As such it ordered the defendant to pay the sum of
P31.10, and the costs of the suit.
Plaintiff alleges that based on NCC 1167, he should be entitled to the whole cost of labor and
materials that went into the repair of the machine.
Defendant alleges that it should not be held liable as his contract with the plaintiff did not contain
a period under NCC 1197, such that the plaintiff should have first filed an action to fix the period,
within which he should have complied with the contract before he is liable for breach
ISSUE: Whether or not defendant is liable to plaintiff for the cost of actually repairing the
typewriter, which it had failed to do
RULING:
The Court ruled that there was a perfected contract for cleaning and servicing a typewriter, which
was properly intended that the defendant finish it at a future time though it was not specified.
Furthermore, some time had passed without the work having been finished, and the defendant
returned the typewriter “cannibalized” and unrepaired, which is a breach of his contract, and he
did so without asking for more time to finish the job or for compensation for the work he had
done.
Consequently, the Court rules that the time for compliance had evidently expired and there was
already breach of contract by non-performance. Defendant cannot invoke NCC 1197 as the fixing
of a period would be a mere formality and would only serve as a delay.
Clear that the defendant breached his obligation, so he is liable under NCC 1167 for the cost of the
execution of the obligation in the proper manner, which is P89.85 He is also liable under NCC
1170 for the cost of the missing parts for his negligence in returning the typewriter in the same
condition in which he had received it.
The other damages were correctly rejected as they were not alleged in his complaint.
1938
ENCARNACION VS BALDOMAR
Nature:
Ponente: Hilado
Date: October 4, 1946
DOCTRINE: The validity and fulfillment of a contract of lease cannot be left solely and
exclusively to the will of one of the parties – here the lessees – as it would deprive the owner from
being able discontinue the lease
FACTS:
Encarnacion leased a house to Jacinto Baldomar and her son Lefrado Fernando on a month-to-
month basis for the monthly rental of P35. After the end of World War 2, Encarnacion informed
Baldomar and her son to vacate the house by April 15, 1945 as he needed it for his offices as a
result of the destruction of the building where his office previously was. In spite of his demand,
the defendants insisted on their occupancy.
Baldomar and Fernanco contend that Encarnacion authorized them to continue their occupancy
indefinitely while they are able to faithfully fulfill their obligation with respect to the payment of
rentals.
Encarnacion contends that the lease had always been on a month-to-moth basis.
CFI ruled in favor of Encarnacion
ISSUE: Whether or not Encarnacion is justified in ordering the ejectment of Baldomar and
Fernando from the house that he leased to them
RULING: Yes. The Court puts more credit on the witness of Encarnacion that the lease was for
a month to month basis.
The defense set up by Fernando basically left the validity and fulfillment of the contract of lease
solely and exclusively to the will of one of the parties – whether or not they would continue paying
rentals or not – and would deprive the owner from any say in the matter. If this defense were
allowed, the owner could potentially never be able to discontinue the lease. Conversely, if the
owner wished the lease to continue, the lessees could just stop paying in order to terminate the
lease. The Court states that this is void according to 1256 of the Spanish Civil Code.
1938
ELEIZEGUI VS MANILA LAWN TENNIS CLUB
Nature: Action for ejectment

Ponente: Arellano
Date: May 19, 1903
DOCTRINE:
FACTS:
Art 1128 Should the obligation not fix a period, but it can be inferred from its nature and
circumstances that there was an intention to grant it to the debtor, the courts shall fix the
duration of the same.
The court shall also fix the duration of the period when it may have been left to the will
of the debtor.
Eleizegui leased a parcel of land for a fixed consideration and to endure at the will of the lessee,
who was authorized to make improvements upon the land such as erecting buildings of both
permanent and temporary character, by making fills, laying pipes, and making such other
improvements as may be desirable for the comfort and amusement of the members.
Eleizegui later tried to terminate the lease by sending notice to the Tennis Club but this was
ignored. As such, he filed an action to recover the land. Elezegui contends that, based on Article
1569 of the Spanish Civil Code, the lessor may judicially dispossess the lessee upon the expiration
of the conventional term or of the legal term.
TC ruled in favor of Eleizegui contending that the lease was on a per month basis
ISSUES
(1) Whether or not there was a conventional term
RULING: Yes, so 1581 which imposes a legal term is not applicable
The Court notes that there are clauses, which do stipulate a term, so the legal term as imposed by
1581 cannot be applied.
Clause 3 of the contract states that “Mr. Williamson, or whoever may succeed him as secretary of
the club, may terminate this lease whenever desired without other formality other than that of
giving a month’s notice. The owners of the land undertake to maintain the club as tenant as long
as the latter shall see fit.”
As such, the contract of lease cannot be considered as being one without a conditional term as
there is one, which is dependent on the lessee. As such, the lease could not be considered
terminated by the notice given by Eleizegui as this notice is necessary only when it becomes
necessary to have recourse to the legal term.
It is also evident that the lessors did not intend to reserve to themselves the right to rescind which
they expressly conferred upon the lessee by establishing it exclusively with the latter.
(2) Whether or not the lease depends upon the will of the lessee.
RULING:
However, It cannot be concluded that the termination of the contract is to be left completely at
1938
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 court’s judgment 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.
SEPARATE OPINION: Concurring by J. Willard:

Willard contends that 1128 should apply generally to unilateral contracts – those in which the
credit parted with something of value, leaving it to the debtor to say when it should be returned.
It should not be applied to the contract of lease. But he agrees that 1581 is inapplicable
PHILIPPINE BANKING representing estate of JUSTINA SANTOS v. LUI SHE as
administratrix of WONG HENG
Nature: Annulment of contract

Ponente: Castro
Date: 12 September 1962
DOCTRINE: Contracts at bar cannot be annulled on the ground of 1308 – that “the contract
must bind both contracting parties; its validity or compliance cannot be left to the will of one of
them.” At bar, the contract of lease was not dependent on Wong’s will, as there was a fixed term.
FACTS:
Relevant Provision of Law: 1308, 1416
Santos and her sister Lorenzo both owned a Manila compound. Wong was their lessor. He had
a restaurant on the compound and also lived therein.
When Lorenzo died, Santos exclusively owned the property. It was at this time when she
became close with Wong’s children. Wong himself was the trusted man to whom she delivered
various amounts for safekeeping, including rentals from her property. He also took care of the
1938
payment; in her behalf, of taxes, lawyers' fees, funeral expenses, masses, salaries of maids and
security guard, and her household expenses.
Santos and Wong then entered into several contracts with each other:
1. Contract of lease covering the area already leased to Wong and an additional area for 50 years,
with right to lessee to withdraw. The contract was then amended to include the entire
compound of Santos, including the very house where she loved;
2. An option to buy the leased premises in favor of Wong. This was conditioned on his obtaining
Filipino citizenship;
3. A contract extending the lease to 99 years; and
4. Another fixing the option to buy at 50 years.
Santos then executed two wills where she asked her heirs to respect the contracts made.
However, a codicil later executed said differently: it claimed that the contracts were made only
because of inducement and machination employed by Wong. Santos then filed a case to annul
the above contracts and for collection of unpaid rentals.
CFI ruled for Santos, and annulled all contracts except the first contract of lease. At this point,
the original parties passed away.
ISSUE: W/N contracts should be annulled

RULING: Yes, they should be.
1. But they cannot be annulled on the ground of 1308 – that “the contract must bind both
contracting parties; its validity or compliance cannot be left to the will of one of them.” At bar,
the contract of lease was not dependent on Wong’s will, as there was a fixed term.
2. They cannot also be annulled on the ground that Santos was not the owner. When Lorenzo
died, the entire property became Santos’ therefore she could validly dispose.
3. Neither can they be annulled because a fiduciary relationship existed between Santos and
Wong, with the latter as agent, contrary to article 1646, in relation to article 1941 of the Civil
Code, which disqualifies "agents (from leasing) the property whose administration or sale may
have been entrusted to them." Wong was never an agent of Justina Santos.
4. Cannot annul based on fraud. There was no fraud employed, as Santos dictated the terms of
these contracts to her lawyer with Wong’s aid. The lawyer fully explained the effects of the
contracts.
5. Neither can these contracts be annulled on the grounds that Santos was blind, and that the
contracts were in English, which she did not understand. Nor can they be voided because of an
alleged mistaken belief that Wong rescued Santos and her sister from a fire.
6. But they are invalidated because of an illegal cause! Contracts were executed to circumvent
the constitutional prohibition against alien ownership of land. If an alien is given not only a
lease of, but also an option to buy, a piece of land, by virtue of which the Filipino owner cannot
sell or otherwise dispose of his property, this to last for 50 years, then it becomes clear that the
arrangement is a virtual transfer of ownership.
1938
But pari delicto does not avail at bar because: 1) the parties are dead; and 2) article 1416 of the
Civil Code provides, as an exception to the rule on pari delicto, that "When the agreement is not
illegal per se but is merely prohibited, and the prohibition by law is designed for the protection
of the plaintiff, he may, if public policy is thereby enhanced, recover what he has paid or
delivered."
Further, if the pari delicto rule were to apply and neither party may have recourse against the
other, then this would further defeat the constitutional prohibition.
Since all contracts are annulled, the property is returned to the Santos estate.
LIM V. PEOPLE
Nature: Estafa
Ponente: Relova
Date: 21 November 1984
DOCTRINE: Since the agreement fixed a period, Article 1197 of the New Civil Code, which
provides that the courts may fix the duration of the obligation if it does not fix a period, does not
apply.
FACTS:
Relevant Provision of Law: 1197
Lim was a businesswoman. She went to the home of Maria Ayroso and offered to sell the latter’s
tobacco. They agreed that Lim would receive the overprice for which she would sell the tobacco
for. The product was then loaded in Lim’s jeep. Lim eventually only paid for part of the tobacco
she took. Ayroso demanded payment for the rest.
But Lim alleges that the contract between them was not one of agency but one of sale. She alleged
that since a sale took place, ownership was now vested in her and she is not obligated to remit
anything further to Ayroso.
The CFI found Lim guilty of estafa. CA affirmed, and in doing so stated that the contract contained
a fixed period so the obligation was immediately demandable as soon as the tobacco was sold.
ISSUE: W/N Lim is guilty of estafa
RULING: Yes, Lim is guilty.
From the agreement of Lim and Ayroso, it is clear that the proceeds of the sale of the tobacco
should be turned over to the Ayroso as soon as the same was sold, or, that the obligation was
immediately demandable as soon as the tobacco was disposed of. Hence, Article 1197 of the New
Civil Code, which provides that the courts may fix the duration of the obligation if it does not fix
a period, does not apply.
The fact that appellant received the tobacco to be sold at P1.30 per kilo and the proceeds to be
given to complainant as soon as it was sold, strongly negates transfer of ownership of the goods
1938
to the petitioner. Their agreement constituted Lim as an agent with the obligation to return the
tobacco if the same was not sold.
ARANETA V. PHILIPPINE SUGAR ESTATES DEVT. CO. LTD
Nature: Specific performance

Ponente: Reyes, JBL
Date: 31 May 1967
DOCTRINE: 1197 provides a two-step process:

1. 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."
2. This preliminary point settled, the court must then proceed to the second step, and decide what
period was "probably contemplated by the parties."
FACTS:
Araneta sold part of its Sta. Mesa Hts. Subdivision to Phil. Sugar. The contract included an
obligation on the seller’s end to construct roads on the NE, NW and SW sides of the buyer’s land
within a reasonable time. However, the respondent already finished constructing a church and
convent but the NE street was not yet constructed. They filed action to compel petitioner to fulfill
its end of the deal.
Petitioner attempts to excuse itself by reasoning that such failure is because of a squatter, Abundo
who still refuses to vacate.
The CFI and CA ruled in favor of respondent, even fixing a two-year period for petitioner to
comply with its obligation to construct the NE street. Petitioner questions this ruling.
ISSUE: W/N the lower courts were correct to impose a period
RULING: No.
The contract between petitioner and respondent granted the former “reasonable time within
which to comply” – the lower courts should not have imposed their own period of two years.
Instead, they should have limited themselves to ruling whether or not this “reasonable period”
had lapsed. If it did, then there is breach, if not, then the action should be dismissed for it was
filed prematurely.
Further, the two-year period was arbitrarily set. 1197 provides a two-step process:
1. 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."
2. This preliminary point settled, the court must then proceed to the second step, and decide what
period was "probably contemplated by the parties."
This process was not followed. The two-year period was made out of thin air.
1938
At bar, the parties were both aware that squatters existed. This, the conclusion is that the parties
must have intended to defer the performance of the obligations under the contract until the
squatters were duly evicted.
MILLARE V. HERNANDO
Nature: To order renewal of lease

Ponente: Feliciano
Date: 30 June 1987
DOCTRINE: The first paragraph of Article 1197 is inapplicable when the contract fixes a period.
The second paragraph of Article 1197 is equally inapplicable when the duration of the renewal
period was not left to the will of one party alone.
Relevant Provision of Law: 1197. 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
FACTS:
The Cos were lessees to Millare under a lease contract for a five-year period. In May 1980, Millare
informed the Cos that they could continue leasing so long as they were amenable to paying creased
rentals of P1,200.00 a month. In response, a counteroffer of P700.00 a month was made and to
this, Millare allegedly stated that the amount of monthly rentals could be resolved at a later time
since "the matter is simple among us." This led the spouses Co to think that the lease had been
renewed, but Millare thought otherwise and demanded that they vacate the property.
Paragraph 13 of the lease contract states the following: This contract of lease is subject to the laws
and regulations of the government; and that this contract of lease may be renewed after a period
of five (5) years under the terms and conditions as will be mutually agreed upon by the parties at
the time of renewal.
The Co spouses went to court to ask for the renewal of the lease contract at P700 for 10 years. The
CFI ruled on their behalf. The lower court judge interpreted paragraph 13 to mean that since the
original lease was fixed for five years, it follows, therefore, that the lease contract is renewable for
another five.
ISSUE: W/N the lease was renewed.
RULING: No.
The lease contract (paragraph 13) can only mean that the lessor and lessee may agree to renew
the contract upon their reaching agreement on the terms and conditions. Failure to reach
agreement will of course prevent the contract from being renewed at all. 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, therefore there was no renewal.
1938
The first paragraph of Article 1197 is clearly inapplicable, since the Contract of Lease did in fact
fix an original period of five years, which had expired. 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. Most importantly, Article 1197
applies only where a contract of lease clearly exists. Here, the contract was not renewed at all,
there was in fact no contract at all the period of which could have been fixed.
Even if an implied lease took place, this would not be for an entire five-year period, but only for
month-to-month.
CALANG V. PEOPLE
Nature: Criminal, reckless imprudence

Ponente: Brion
Date: 3 August 2010
DOCTRINE: Since the charge was criminal, it was error for the lower courts to hold Philtranco
jointly and severally liable under Articles 2176 and 2180 on quasi delicts.
FACTS:
Relevant Provision of Law: 2168, 2180, RPC 102, 103
Calang was driving a Philtranco bus when its rear left side hit the front left of a Sarao jeep coming
from the opposite direction. As a result of the collision, the jeep driver Pinohermoso lost control
and bumped and killed bystander Mabansag. Two jeep passengers were also killed and others
injured.
RTC ruled that Calang was guilty of multiple homicide, multiple physical injuries and damage to
property through reckless imprudence. It ordered that Calang be liable jointly and severally with
Philtranco to pay damages. CA affirmed this ruling.
ISSUE: W/N the lower courts were correct in imposing joint and several liability
RULING: No. Philtranco should not be held jointly and severally liable with Calang. The
charge against Calang was criminal, therefore it was error for the lower courts to hold
Philtranco jointly and severally liable under Articles 2176 and 2180 on quasi delicts.
If at all, Philtranco’s liability may only be subsidiary under RPC, Articles 102 and 103. These
liabilities are deemed written into the judgments in cases to which they are applicable. Thus, in
the dispositive portion of its decision, the trial court need not expressly pronounce the subsidiary
liability of the employer.
Nonetheless, before the employers’ subsidiary liability is enforced, adequate evidence must exist
establishing that (1) they are indeed the employers of the convicted employees; (2) they are
engaged in some kind of industry; (3) the crime was committed by the employees in the discharge
of their duties; and (4) the execution against the latter has not been satisfied due to insolvency.
RONQUILLO V. CA and SO
1938
Nature: Collection suit and execution thereof

Ponente: Cuevas
DOCTRINE: The obligation in the case at bar being described as "individually and jointly", the
same is therefore enforceable against one of the numerous obligors.
FACTS:
Relevant Provision of Law: None mentioned
Ronquillo was one of four defendants in a collection case filed by private respondent So. A
compromise agreement was reached between the parties, which stated that the debtors obligated
themselves to pay their obligation “individually and jointly.”
In a motion for modification of the order to execute the compromise, So prayed that the execution
be done against all defendants, jointly and severally.
The writ of execution was then issued for the satisfaction of P 82,500, with debtors (including
petitioner) “singly or jointly liable.”
ISSUE: How should payment be enforced?
RULING: Individually and jointly.
The term "individually" has the same meaning as "collectively", "separately", "distinctively",
respectively or "severally". An agreement to be "individually liable" undoubtedly creates a several
obligation, and a "several obligation is one by which one individual binds himself to perform the
whole obligation. The obligation in the case at bar being described as "individually and jointly",
the same is therefore enforceable against one of the numerous obligors.
MALAYAN INSURANCE V. CA

Ponente: Padilla
DOCTRINE: Direct liability of the insurer under indemnity contracts against third party liability
does not mean that the insurer can be held solidarily liable with the insured and/or the other
parties found at fault. The liability of the insurer is based on contract; that of the insured is based
on tort.
FACTS:
Relevant Provision of Law: 1217, 2180, 2184
Malayan issued an insurance policy for respondent Sio Choy covering a jeep. While the policy was
in effect, the insured jeep, while driven by Campollo (employee of San Leon Rice Mill), collided
with a Pantranco bus, causing injuries to jeep passenger Vallejos and driver Campollo, as well as
damage to the jeep.
1938
Vallejos filed an action for damages against Sio Choy, Malayan, and San Leon Rice Mill, praying
that they be held jointly and severally liable. The RTC and CA ruled in Vallejos’ favor finding all
three solidarily liable.
1st ISSUE: W/N Malayan should be held solidarily liable alongside Sio Choy and San Leon Rice
Mill
RULING: No. Only respondents Sio Choy and San Leon Rice Mill are solidarily liable to
respondent Vallejos for the damages. Respondents Sio Choy and San Leon Rice Mill are the
principal tortfeasors who are primarily liable to respondent Vallejos. The law states that the
responsibility of two or more persons who are liable for a quasi-delict is solidarily (2180, 2184).
While it is true that where the insurance contract provides for indemnity against liability to third
persons, such third persons can directly sue the insurer, however, the direct liability of the insurer
under indemnity contracts against third party liability does not mean that the insurer can be held
solidarily liable with the insured and/or the other parties found at fault. The liability of the insurer
is based on contract; that of the insured is based on tort.
2nd ISSUE: W/N Malayan is entitled to be reimbursed by respondent San Leon Rice Mill, Inc.
even if the latter respondent is not privy to the contract of insurance
RULING: Yes, Malayan is entitled to reimbursement. Since Malayan paid Vallejos, it has become
the subrogee of the insured, the respondent Sio Choy; as such, it is subrogated to whatever rights
the latter has against respondent San Leon Rice Mill. Article 1217 of the Civil Code gives to a
solidary debtor who has paid the entire obligation the right to be reimbursed by his co-debtors for
the share which corresponds to each.
PNB V. INDEPENDENT PLANTERS ASSN.
Nature: Collection suit

Ponente: Plana
Date: 16 May 1983
DOCTRINE: In case of the death of one of the solidary debtors, the creditor may, if he so chooses,
proceed against the surviving solidary debtors without necessity of filing a claim in the estate of
the deceased debtors
FACTS:
PNB filed a complaint with the CFI against several solidary debtors for the collection of a sum of
money. But the CFI dismissed this because one of the defendants (Ceferino Valencia) died. CFI
directed PNB to instead file a money claim in the testate or intestate proceeding for the settlement
of the estate of the deceased.
PNB challenged this decision based on Art. 1216, where the creditor may proceed against
any one, some or all of the solidary debtors.
ISSUE: W/N CFI was correct to dismiss case because of the death of one debtor
RULING: No. CFI was wrong.

1938
The choice is undoubtedly left to the creditor to determine against whom he will enforce
collection. In case of the death of one of the solidary debtors, the creditor may, if he so chooses,
proceed against the surviving solidary debtors without necessity of filing a claim in the estate of
the deceased debtors. It is not mandatory for him to have the case dismissed against the surviving
debtors and file its claim in the estate of the deceased solidary debtor.

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1938

Nature: Complaint for sum of money

NOTE: The case is in Spanish.

Nature: Complaint for 20% Christmas bonus

TC dismissed the complaint, and held, among others:

ISSUE: W/N a Christmas bonus is a demandable obligation.

Nature: Complaint for payment of loan

CFI: reversed; dismissed the complaint

ISSUE: W/N the right to prescription may be renounced or waived

Article 1112 of Civil Code provides:

CRUZ V. TUASON AND CO.

Nature: complaint for recovery of improvements and conveyance of land

improvements valued at P30,400.00 on said land having an area of more or less 20

Defendants filed a MD on the following grounds:

We cannot, however, escape taking judicial notice, in relation to the compromise

Art. 2142 states,

GUTIERREZ HERMANOS V. ORENSE

Nature: Action for partition with accounting

CA: reversed TC;

Petitioner (defendant) contends,

If not, whether petitioner acts as a TRUSTEE or a NEGOTIORUM GESTOR.

RE: negotiorum gestio

We hold in the negative. Prescription, as a mode of terminating a relation of co-ownership, must

DOCTRINE: Requisites of solution indebiti:

CA: Art 2154 is applicable; reversed CFI

ISSUE: W/N petitioner has an obligation to return the $10,000.

For this article to apply the following requisites must concur:

PUYAT AND SONS V. MANILA

Nature: action for refund

Plaintiff-Appellee is entitled to the refund.

RE: Requirement of protest

Nature: Complaint for damages

TC: held FEU and GALAXY liable

CA: reversed; dismissed the complaint; shooting was a fortuitous event

YES. FEU is liable (culpa contractual).

Re: Force majeure

SAGRADA ORDEN VS NACOCO

DOCTRINE: In order for an obligation to exist, it must be created by law, contract,

RULING: It is not liable for rentals at all.

PEOPLE’S CAR INC. VS COMMANDO SECURITY SERVICE AGENCY

Nature: Action for damages

TC ruled in favor of the interpretation of Commando Security.

RULING: It is liable for the entire Php8,489.10.

CANGCO VS MANILA RAILROAD

Nature: Action for damages based on quasi-delict

GUTIERREZ VS. GUTIERREZ

Nature: Action for a sum of money based on a promissory note

TC ruled in favor of Palanca and dismissed the case

ISSUE: Whether a creditor is barred by prescription in his attempted to collect on a promissory

SMITH BELL VS SOTELO MATTI

Nature: Specific Performance – payment of goods and to receive the same

RULING: Yes, the obligations were conditional.

Nature: Action for damages

CFI ruled in favor of Encarnacion

ELEIZEGUI VS MANILA LAWN TENNIS CLUB

Nature: Action for ejectment

SEPARATE OPINION: Concurring by J. Willard:

Nature: Annulment of contract

ISSUE: W/N contracts should be annulled

Relevant Provision of Law: 1197

ISSUE: W/N Lim is guilty of estafa

RULING: Yes, Lim is guilty.

ARANETA V. PHILIPPINE SUGAR ESTATES DEVT. CO. LTD

Nature: Specific performance