2. DEVELOPMENT BANK OF THE PHILIPPINES vs. HON.

ADIL and SPOUSES PATRICIO CONFESSOR

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

FACTS: 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, 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. As the obligation remained outstanding
and unpaid even after the lapse of the aforesaid ten-year period, Confesor, 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 ruled in favor of DBP, ordering the spouses to pay the loan. CFI reversed this order. Hence, this
appeal.

ISSUE: WON the validity of a promissory note which was executed in consideration of a previous
promissory note, the enforcement of which is barred by prescription, may still be demandable?

HELD: YES. The right to prescription may be waived or renounced. Article 1112 of Civil Code provides:

Art. 1112. Persons with capacity to alienate property may renounce prescription already obtained, but
not the right to prescribe in the future.

Prescription is deemed to have been tacitly renounced when the renunciation results from acts which
imply the abandonment of the right acquired. There is no doubt that prescription has set in as to the first
promissory note of February 10, 1940. However, when respondent Confesor executed the second
promissory note on April 11, 1961 whereby he promised to pay the amount covered by the previous
promissory note on or before June 15, 1961, and upon failure to do so, agreed to the foreclosure of the
mortgage, said respondent thereby effectively and expressly renounced and waived his right to the
prescription of the action covering the first promissory note.

This Court had ruled in a similar case that –

... when a debt is already barred by prescription, it cannot be enforced by the creditor. But a new contract
recognizing and assuming the prescribed debt would be valid and enforceable ... .

Thus, it has been held —

Where, therefore, a party acknowledges the correctness of a debt and promises to pay it after the same
has prescribed and with full knowledge of the prescription he thereby waives the benefit of prescription.
This is not a mere case of acknowledgment of a debt that has prescribed but a new promise to pay the
debt. The consideration of the new promissory note is the pre-existing obligation under the first
promissory note. The statutory limitation bars the remedy but does not discharge the debt.

A new express promise to pay a debt barred ... will take the case from the operation of the statute of
limitations as this proceeds upon the ground that as a statutory limitation merely bars the remedy and
does not discharge the debt, there is something more than a mere moral obligation to support a promise,
to wit a – pre-existing debt which is a sufficient consideration for the new the new promise; upon this
sufficient consideration constitutes, in fact, a new cause of action.

... 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.
3. Heirs of Gilberto Roldan v. Heirs of Silvela Roldan and Heirs of Leopoldo Magtulis

G.R. No. 202578, September 27, 2017

SC FIRST DIVISION

SERENO, C.J.

Nature

Before this Court is a Petition for Review on Certiorari assailing the Court of Appeals (CA) Decision and
Resolution,3 which affirmed the Decision of the Regional Trial Court (RTC). The RTC ruled that petitioner
heirs of Gilberto Roldan, respondent heirs of Silvela Roldan,5 and respondent heirs of Leopoldo Magtulis
are co-owners of Lot No. 4696.

Facts

Natalia Magtulis owned Lot No. 4696, an agricultural land in Kalibo, Aklan. Her heirs included Gilberto
Roldan and Silvela Roldan, her two children by her first marriage; and, allegedly, Leopolda Magtulis her
child with another man named Juan Aguirre. After her death in 1961, Natalia left the lot to her children.
However, Gilberta and his heirs took possession of the property to the exclusion of respondents.

On 19 May 2003, respondents (Heirs of Silvela and Heirs of Magtulis) filed before the RTC a Complaint for
Partition and Damages against petitioners (Heirs of Gilberto). The latter refused to yield the property on
these grounds: (1) respondent heirs of Silvela had already sold her share to Gilberto; and (2) respondent
heirs of Leopolda had no cause of action, given that he was not a child of Natalia. (Second cause of action
not relevant)

During trial, petitioners failed to show any document evidencing the sale of Silvela's share to Gilberto.
Thus, in its Decision dated 14 December 2007, the RTC ruled that the heirs of Silvela remained co-owners
of the property they had inherited from Natalia. Consequently, it ordered petitioners to account and
deliver to respondents their equal share to the produce of the land.

Petitioners appealed to the CA. They reiterated that Silvela had sold her share of the property to her
brother Gilberta. CA affirmed the decision of the RTC, and refused to conclude that Silvela had sold her
shares to Gilberto without any document evidencing a sales transaction.

Petitioner heirs of Gilberto moved for reconsideration, additionally contend that respondents lost their
rights over the property, since the action for partition was lodged before the RTC only in 2003, or 42 years
since Gilberto occupied the property in 1961. For the heirs of Gilberto, prescription and laches already
preclude the heirs of Silvela and the heirs of Leopoldo from claiming co-ownership over the lot.

Respondents assert that the arguments raised by petitioners involve questions of fact not cognizable by
this Court. As regards the issue of prescription and laches, they insist that petitioners cannot invoke a new
theory for the first time on appeal.
Issues:

Whether the CA erred in affirming the RTC's finding that Silvela did not sell her share of the property to
Gilberto

Whether prescription and laches bar respondents from claiming co--ownership over the lot

Held/Ratio:

No. Petitioners argue before us that Silvela had a perfected contract of sale with Gilberto over her shares
of Lot No. 4696. That argument is obviously a question of fact,14 as it delves into the truth of whether she
conveyed her rights in favor of her brother.

The assessment of the existence of the sale requires the calibration of the evidence on record and the
probative weight thereof. The RTC, as affirmed by the CA, already performed its function and found that
the heirs of Gilberto had not presented any document or witness to prove the fact of sale.

The factual determination of courts, when adopted and confirmed by the CA, is final and conclusive on
this Court except if unsupported by the evidence on record.15 In this case, the exception does not apply,
as petitioners merely alleged that Silvela "sold, transferred and conveyed her share in the land in question
to Gilberto Roldan for a valuable consideration" without particularizing the details or referring to any
proof of the transaction.16 Therefore, we sustain the conclusion that she remains co-owner of Lot No.
4696.

No. According to petitioners, prescription and laches have clearly set in given their continued occupation
of the property in the last 42 years. Prescription cannot be appreciated against the co-owners of a
property, absent any conclusive act of repudiation made clearly known to the other co-owners.

Here, petitioners merely allege that the purported co-ownership "was already repudiated by one of the
parties" without supporting evidence. Aside from the mere passage of time, there was failure on the part
of petitioners to substantiate their allegation of laches by proving that respondents slept on their rights.
Nevertheless, had they done so, two grounds deter them from successfully claiming the existence of
prescription and laches.

First, as demanded by the repudiation requisite for prescription to be appreciated, there is a need to
determine the veracity of factual matters such as the date when the period to bring the action
commenced to run. In Macababbad, Jr. v. Masirag, we considered that determination as factual in nature.
The same is true in relation to finding the existence of laches. We held in Crisostomo v. Garcia, Jr. that
matters like estoppel, laches, and fraud require the presentation of evidence and the determination of
facts. Since petitions for review on certiorari under Rule 45 of the Rules of Court, as in this case, entertain
questions of law, petitioners claim of prescription and laches fail.

Second, petitioners have alleged prescription and laches only before this Court. Raising a new ground for
the first time on appeal contravenes due process, as that act deprives the adverse party of the opportunity
to contest the assertion of the claimant. Since respondents were not able to refute the issue of
prescription and laches, this Court denies the newly raised contention of petitioners.
4. SAGRADA ORDEN DE PREDICADORES DEL SANTISMO ROSARIO DE FILIPINAS vs. NATIONAL COCONUT
CORPORATION

[G.R. No. L-3756, June 30, 1952]

SC EN BANC

LABRADOR, J

FACTS: This is an action instituted by the pre-war owner, Sagrada Orden, to recover the possession of a
piece of real property in Pandacan Manila, and the rentals for its occupation and use.

On January 4, 1943, during the Japanese military occupation, the land was acquired by a Japanese
corporation by the name of Taiwan Tekkosho and after liberation on April 4, 1946, the Alien Property
Custodian of the United States of America took possession, control, and custody of the property pursuant
to the Trading with the Enemy Act. The property was then occupied by the Copra Export Management
Company (CEMC) under a custodian agreement with US Alien Property Custodian. When CEMC vacated
the property, it was occupied by defendant National Coconut Corporation (NACOCO)

The plaintiff’s claim to the said property before the Alien Property Custodian was denied.

It bought an action in court which resulted to the cancellation of the title issued in the name of Taiwan
Tekkosho which was executed under threats, duress, and intimidation; reissuance of the title in favor of
the plaintiff stating that he had always been the owner; cancellation of the claims, rights, title, interest of
the Alien property Custodian; and occupant NACOCO’s ejection from the property. A right was also vested
to the plaintiff to recover from the defendants rentals for its occupation of the land from the date it
vacated.

NACOCO contests the trial court’s decision on holding them liable for rentals or compensation for the use
and occupation of the property from the date they began to occupy the property to the date they vacated
it (August 1946 to December 1948). They interpose the defense of occupying the property in good faith,
under no obligation whatsoever to pay rentals for the use and occupation of the warehouse.

ISSUE: Whether or not the defendant is obliged to pay rentals to the plaintiff

HELD: No. Nacoco is not liable to pay rentals prior the judgment. If defendant-appellant is liable at all, its
obligations, must arise from any of the four sources of obligations, namley, law, contract or quasi-contract,
crime, or negligence. (Article 1089, Spanish Civil Code.) Defendant-appellant is not guilty of any offense
at all, because it entered the premises and occupied it with the permission of the entity which had the
legal control and administration thereof, the Allien Property Administration. Neither was there any
negligence on its part.
5. THE METROPOLITAN BANK AND TRUST COMPANY , vs. ANA GRACE ROSALES AND YO YUK TO

G.R. No. 183204, Jan 13, 2014

Division: 2nd

Ponente: J. Del Castillo

Nature: Petition for Review on Certiorari assailing the April 2, 2008 Decision and the May 30, 2008
Resolution of the CA

FACTS:

In 2000, respondent Ana Grace Rosales, an owner of a travel agency, and her mother Yo Yuk To opened a
Joint Peso Account10 with petitioner bank. In May 2002, respondent Rosales accompanied her client Liu
Chiu Fang, a Taiwanese National applying for a retiree’s visa from the Philippine Leisure and Retirement
Authority (PLRA), to petitioner’s branch in Escolta to open a savings account.

On 31 July 2003, petitioner issued a "Hold Out" order against respondents’ accounts. On 3 Sept 2003,
petitioner filed a criminal case for Estafa through False Pretences, Misrepresentation, Deceit and Use of
Falsified Documents against the respondent. It was alleged that the respondents are the one responsible
for the unauthorized withdrawal fo $75,000 from Liu Chiu Fang’s account. Petitioner alleged that on 5
Feb 2003, it received from the PLRA a Withdrawal Clearance for the account of Liu Chiu Fang, that in the
afternoon of the same day, respondents went to inform the branch head Gutierrez that Liu Chiu Fang was
going to withdraw her deposits in cash. Gutierrez told respondents to come back the following day for
the bank did not have enough dollars. On 6 Feb, respondents accompanied an unidentified impostor to
the bank with enabled them to withdraw Liu Chiu Fang’s dollar deposit.

On 3 Mar 2003, respondents opened a Joint Dollar Account with petitioner bank with an initial deposit of
$14,000. The bank later discovered that the serial numbers of the dollar notes deposited by respondents
were the same as those withdrawn by the impostor.

On 10 Sept 2004, respondents filed before the RTC of Manila a Complaint for Breach of Obligation and
Contract with Damages, against petitioner. Respondents alleged that they attempted several times to
withdraw their deposits but were unable to because petitioner had placed their accounts under "Hold
Out" status. No explanation, however, was given by petitioner as to why it issued the "Hold Out" order.
Petitioner alleged that respondents have no cause of action because it has a valid reason for issuing the
"Hold Out" order. It averred that due to the fraudulent scheme of respondent Rosales, it was compelled
to reimburse Liu Chiu Fang the amount of US$75,000.0050 and to file a criminal complaint for Estafa
against respondent Rosales.

Issue: Whether or not respondents have an obligation to the bank for the “Hold Out” clause to apply.

Ruling: None. The "Hold Out" clause applies only if there is a valid and existing obligation arising from
any of the sources of obligation enumerated in Article 115779 of the Civil Code, to wit: law, contracts,
quasi-contracts, delict, and quasi-delict. In this case, petitioner failed to show that respondents have an
obligation to it under any law, contract, quasi-contract, delict, or quasi-delict.
6. JOSEPH SALUDAGA, petitioner, vs. FAR EASTERN UNIVERSITY and EDILBERTO C. DE JESUS in his
capacity as President of FEU, respondents.

SUPREME COURT THIRD DIVISION

G.R. No. 179337 April 30, 2008

Nature:

This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assails the June 29, 2007
Decision of the Court of Appeals in CA-G.R. CV No. 87050, nullifying and setting aside the November 10,
2004 Decision of the Regional Trial Court of Manila, Branch 2, in Civil Case No. 98-89483 and dismissing
the complaint filed by petitioner; as well as its August 23, 2007 Resolution denying the Motion for
Reconsideration.

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. Saludaga 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), Galaxys President, to
indemnify them for whatever would be adjudged in favor of petitioner, if any; and to pay attorneys fees
and cost of the suit.

Issue #1: Whether or not there is a contractual obligation between Saludaga and FEU.

Held #1: YES.

It is undisputed that petitioner was enrolled as a sophomore law student in respondent FEU. As such,
there was created a contractual obligation between the two parties. On petitioner’s part, he was obliged
to comply with the rules and regulations of the school. On the other hand, respondent FEU, as a learning
institution is mandated to impart knowledge and equip its students with the necessary skills to pursue
higher education or a profession. At the same time, it is obliged to ensure and take adequate steps to
maintain peace and order within the campus.

Issue #2: Whether or not FEU is guilty of culpa contractual.

Held #2: YES.

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.

Here, 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. Also, respondents failed to prove that
they ensured that the guards assigned in the campus met the requirements stipulated in the Security
Service Agreement. No evidence as to the qualifications of Rosete as security guard was presented.
Respondents also failed to show that they undertook steps to ascertain and confirm that the security
guards assigned to them actually possess the qualifications required in the Security Service Agreement.
7. PEOPLE'S CAR, INC., vs. COMMANDO SECURITY SERVICE AGENCY,

SC Second Division

G.R. No. L-36840 May 22, 1973

FACTS: Appellant People’s Car Inc. filed a complaint against herein appellee Commando Security Agency,
on the ground that the appellee’s security guard while on duty at the appellant’s premises, without any
authority or consent, brought out of the compound a car belonging to the appellant’s customer.

While driving said car, the security guard lost control, causing the same to fall into a ditch, resulting to
damages amounting to P8,498.10

The trial Court rendered its decision and held, without an award for the actual damages incurred, that
herein appellee is only liable for the sum of Php 1,000.00, pursuant to paragraph 4 of their contract, hence
this appeal.

ISSUE: Whether or not the defendant is obliged to indemnify the plaintiff for the entire costs as result of
the incident

HELD: Yes,

Plaintiff was in law liable to its customer for the damages caused the customer's car, which had been
entrusted into its custody. Plaintiff therefore was in law justified in making good such damages and relying
in turn on defendant to honor its contract and indemnify it for such undisputed damages, which had been
caused directly by the unlawful and wrongful acts of defendant's security guard in breach of their contract.
As ordained in Article 1159, Civil Code, "obligations arising from contracts have the force of law between
the contracting parties and should be complied with in good faith."

Plaintiff in law could not tell its customer that under the Guard Service Contract it was not liable for the
damage but the defendant since the customer could not hold defendant to account for the damages as
he had no privity of contract with defendant.
8. FAUSTINO CRUZ, vs. J. M. TUASON & COMPANY, INC., and GREGORIO ARANETA, INC.

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

SC SECOND DIVISION

BARREDO, J

NATURE:

FACTS:

Faustino Cruz has 20 Quinones of land, that 20 quinones formed part of the 50 quinones of the Deudor
Family. Faustino made permanent improvements on the land which was valued at 30,400pesos, and also
incurred expenses amounting to 7,781.74 pesos. In 1952, JM Tuason Co Inc sought the help of Cruz to act
as an intermediary in formulating a compromise agreement between JM Tuason Co Inc and the Deudor
Family in a Civil Case which involved the 50 quinones of land of the Deudors. Cruz succeeded in executing
a compromise agreement between the 2 parties. The agreement was also duly approved by the court.
Cruz alleged that 3,000 sqm. out of 50 quinones of land was promised to him by JM Tuason CIas a form of
consideration of his assistance in the execution of the compromise agreement. This was to be delivered
to him within 10 years from the date of signing of the compromise agreement. Cruz filed an action for the
reason that the land was not delivered to him as promised. Also, Cruz alleged that JM Tuason was unjustly
enriched because of the improvements he made(par. 1, last part), and that JM Tuason enjoyed the
benefits of the improvements on land acquired by JM Tuason

ISSUE

Whether or not JM Tuason was indeed unjustly enriched? – NO

HELD

The court stated that the reliance of Cruz on Art. 2142 is misplaced. The SC states that for this case to fall
under quasi-contracts, there must be an absence of an actual agreement between the parties concerned.
However in this case, there is already an existing contract that covered the subject matter. Furthermore,
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 Article 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.
9. RUSTICO ADILLE vs. COURT OF APPEALS, EMETRIA ASEJO, et. al.

G.R. No. L-44546 January 29, 1988

SC Second Division

SARMIENTO, J

FACTS: Feliza Azul owns a parcel of land. She married twice in her lifetime: the first, with Bernabe Adille,
with whom she had a child, Rustico Adille; the second marriage with Procopio Asejo, her children were
Emetria Asejo, et. al.

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 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; that was why 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 that.

ISSUE: WON Adille can acquire exclusive ownership over the land?

HELD: NO. It is the view of the respondent Court that the petitioner, in taking over the property, did so
either on behalf of his co-heirs, in which event, he had constituted himself a negotiorum gestor under
Article 2144 of the Civil Code, or for his exclusive benefit, in which case, he is guilty of fraud, and must act
as trustee, the private respondents being the beneficiaries, under the Article 1456. The evidence, of
course, points to the second alternative the petitioner having asserted claims of exclusive ownership over
the property and having acted in fraud of his co-heirs. He cannot therefore be said to have assume the
mere management of the property abandoned by his co-heirs, the situation Article 2144 of the Code
contemplates. In any case, as the respondent Court itself affirms, the result would be the same whether
it is one or the other. The petitioner would remain liable to the Private respondents, his co-heirs.
10. DOMETILA M. ANDRES, doing business under the name and style "IRENE'S WEARING APPAREL,", vs.
MANUFACTURERS HANOVER & TRUST CORPORATION and COURT OF APPEALS,

G.R. No. 82670 September 15, 1989

SC THIRD DIVISION

CORTES, J

FACTS: Petitioner Andres, using the business name “Irene’s Wearing Apparel”, transacts with Facets
Funwear, Inc (Facets), one of its foreign buyers.

In one transaction, Facets instructed the First National State Bank of New Jersey (FNSB) to transfer to
herein petitioner, via Philippine National Bank (PNB), the amount of $10,000.00. Acting on the instruction,
FNSB instructed herein private respondent Manufacturers Hanover and Trust Corporation (Mantrust) to
effect the above-mentioned transfer through its facilities and to charge the amount to the account of
FNSB with private respondent. However, due to communication problems, delay and unawareness that
herein petitioner already received the amount remitted, effectuated another delivery to herein petitioner
for the same amount. Thereafter, upon discovery that herein petitioner received the same amount twice,
private respondent demanded herein petitioner the return of the second remittance, but the latter
refused to do so. As such, private respondent filed an action against herein petitioner for the recovery of
the said amount.

The trial Court rendered its decision in favor of herein petitioner. On appeal, respondent appellate Court
reversed the decision of the trial Court, hence this petition.

ISSUE: WON private respondent Mantrust has the right to recover the second $10,000.00 remittance it
had delivered to herein petitioner, on the ground of Article 2154 of the Civil Code?

HELD: Yes, the Court held that herein petitioner has the right to recover the second remittance, as
provided for under Article 2154 of the Civil Code. The resolution of this issue would hinge on the
applicability of Art. 2154 of the New Civil Code which provides that: Art. 2154. If something received when
there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it
arises.

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.”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".

It is undisputed that private respondent delivered the second $10,000.00 remittance. However, petitioner
contends that the doctrine of solutio indebiti, does not apply because its requisites are absent.

The contract of petitioner, as regards the sale of garments and other textile products, was with FACETS.
It was the latter and not private respondent which was indebted to petitioner. On the other hand, the
contract for the transmittal of dollars from the United States to petitioner was entered into by private
respondent with FNSB. Petitioner, although named as the payee was not privy to the contract of
remittance of dollars. Neither was private respondent a party to the contract of sale between petitioner
and FACETS. There being no contractual relation between them, petitioner has no right to apply the
second $10,000.00 remittance delivered by mistake by private respondent to the outstanding account of
FACETS.
11. GONZALO PUYAT & SONS, INC vs. CITY OF MANILA AND MARCELINO SARMIENTO, as City Treasurer
of Manila

G. R. No. L-17447 April 30, 1963

SC EN BANC

PAREDES, J

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: Appellee Puyat & Sons requested for refund of Retail Dealer’s Taxes it paid to appellant City of
Manila, on the ground that it is tax exempt 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. However, such request was denied by herein appellant.

Appellee filed an action for refund with the Court of First Instance, which ruled in its favor, hence this
appeal.

ISSUE: Whether or not appellee Puyat & Sons are entitled to the refund of the taxes paid erroneously, on
the ground that it is tax exempt, pursuant to the Revised Charter of Manila.

HELD: Yes, the Court held that appellee Puyat & Sons are entitled to the refund of the taxes paid
erroneously.

If something is received when there is no right to demand it, and it was unduly delivered through mistake,
the obligation to return it arises.

There is no gainsaying the fact that the payments made by appellee was due to a mistake in the
construction of a doubtful question of law.

Every person who through an act or performance by another, or any other means, acquires or comes into
possession of something at the expense of the latter without just or legal grounds, shall return the same
to him"(Art. 22, Civil Code). It would seems unedifying for the government, (here the City of Manila), that
knowing it has no right at all to collect or to receive money for alleged taxes paid by mistake, it would be
reluctant to return the same. No one should enrich itself unjustly at the expense of another (Art. 2125,
Civil Code)
12. CBK POWER COMPANY LIMITED, vs. COMMISSIONER OF INTERNAL REVENUE,

G.R. Nos. 1982729-30, January 15, 2014

Division: FIRST

Ponente: C.J. Sereno

Nature: consolidated petitions for review on certiorari on the Decision of the CTA En Banc

FACTS:

CBK Power filed an Application for VAT Zero-Rate with the BIR in accordance with Section 108 (B)(3) of
the National Internal Revenue Code (NIRC) of 1997, as amended. It was approved by the BIR. Thus, CBK
Power’s sale of electricity to the NPC from 1 January 2005 to 31 October 2005 was declared to be entitled
to the benefit of effectively zero-rated VAT. CBK filed its administrative claims for the issuance of tax credit
certificates for its alleged unutilized input taxes on its purchase of capital goods and alleged unutilized
input taxes on its local purchases and/or importation of goods and services, other than capital goods, BIR
RDO 55 of Laguna. Alleging inaction of the CIR, CBK filed a Petition for Review with the CTA 2nd division
on 18 April 2007. CT 2nd division A rendered a Decision, applying CIR v. Mirant, CBK timely filed its
administrative claims for the three quarters of 2005, but lately filed the judicial claim for the 1st quarter
was filed on 18 April 2007. Upon appeal, CTA En Banc ruled, relying on CIR v. Aichi that CBK’s judicial claim
for the 3 quarters of 2005 were belatedly filed.

ISSUE

Whether or not the principle of solutio indebiti is applicable in the case, thus entitling petitioner
to its claim. - NO
HELD

Also devoid of merit is the applicability of the principle of solutio indebiti to the present case.
According to this principle, if something is received when there is no right to demand it, and it
was unduly delivered through mistake, the obligation to return it arises. In that situation, a
creditor-debtor relationship is created under a quasi-contract, whereby the payor becomes the
creditor who then has the right to demand the return of payment made by mistake, and the
person who has no right to receive the payment becomes obligated to return it.21 The quasi-
contract of solutio indebiti is based on the ancient principle that no one shall enrich oneself
unjustly at the expense of another.
13. JOSE CANGCO vs. MANILA RAILROAD CO.
G.R. No. L-12191 October 14, 1918
SUPREME COURT EN BANC
FISHER, J.:

Nature:

Assailed in this petition for review on certiorari is the judgment of the Court of Appeals, which, applying
the doctrine of solutio indebiti, reversed the decision of the Regional Trial Court, Branch CV, Quezon City
by deciding in favor of Mantrust.

Facts:

On January 20, 1915, Jose Cangco was riding the train of Manila Railroad Company where he was an
employee. As the train drew near to his destination, he arose from his seat. When he was about to alight
from the train, Cangco accidentally stepped on a sack of watermelons which he failed to notice because
it was already 7:00pm and it was dim when it happened. As a result, he slipped and fell violently on the
platform. His right arm was badly crushed and lacerated which was eventually amputated.

Cangco sued Manila Railroad Company on the ground of negligence of its employees placing the sacks of
melons upon the platform and in leaving them so placed as to be a menace to the security of passenger
alighting from the company’s trains.

The company’s defense was that granting that its employees were negligent in placing an obstruction
upon the platform, the direct and proximate cause of the injury suffered by plaintiff was his own
contributing negligence.

ISSUE: WON appellant is entitled to damages due to the sustained injuries caused by the negligence of
herein appellee Manila Railroad.

HELD: Yes. The Supreme Court reversed the decision of the lower court holding that it was important to
note that the foundation of the legal liability of the defendant was the contract of carriage, and that the
obligation to respond for the damage which plaintiff has suffered arises, if at all, from the breach of that
contract by reason of the failure of defendant to exercise due care in its performance. That was to say, its
liability was direct and immediate, differing essentially, in legal viewpoint from that presumptive
responsibility for the negligence of its servants, imposed by article 1903 of the Civil Code, which can be
rebutted by proof of the exercise of due care in their selection and supervision. Article 1903 of the Civil
Code is not applicable to obligations arising ex contractual, but only to extra-contractual obligations, or to
use the technical form of expression, that article relates only to culpa aquiliana and not to culpa
contractual.

On the railroad company’s defense of contributory negligence on the part of Cangco, the Court held that
the plaintiff was ignorant of the fact that the obstruction which was caused by the sacks of melds piled on
the platform existed. Moreover, the place was dark or dimly lighted. Thus, there was failure on the part
of the defendant to afford to its passengers facilities for safe egress from its trains.
14. NARCISO GUTIERREZ, vs. BONIFACIO GUTIERREZ, MARIA V. DE GUTIERREZ, MANUEL GUTIERREZ,
ABELARDO VELASCO, and SATURNINO CORTEZ

G.R. No. 34840 | September 23, 1931

SC EN BANC

MALCOLM, J

FACTS: A passenger truck, driven by Velasco and Cortez, and an automobile owned by spouses-defendants
Gutierrez and was being driven at that time by their son, Bonifacio who was 18 y/o, collided. At the time
of the collision, the father was not in the car, but the mother, together will several other members of the
Gutierrez family, seven in all, were accommodated therein. As a result of the said incident, herein plaintiff,
a passenger in the autobus, suffered a fracture which required medical attendance, prompting him to sue
herein defendants. It was found by the trial court that both the boy and the driver of the autobus were
negligent by which neither of them were willing to slow up and give the right of way to the other.

ISSUE: How should civil liability be imposed upon the parties in the present case?

HELD: In the United States, it is uniformly held that the head of a house, the owner of an automobile, who
maintains it for the general use of his family is liable for its negligent operation by one of his children,
whom he designates or permits to run it, where the car is occupied and being used at the time of the
injury for the pleasure of other members of the owner's family than the child driving it. The theory of the
law is that the running of the machine by a child to carry other members of the family is within the scope
of the owner's business, so that he is liable for the negligence of the child because of the relationship of
master and servant.

The liability of Saturnino Cortez, the owner of the truck, and of his chauffeur Abelardo Velasco rests on a
different basis, namely, that of contract which, we think, has been sufficiently demonstrated by the
allegations of the complaint, not controverted, and the evidence. The reason for this conclusion reaches
to the findings of the trial court concerning the position of the truck on the bridge, the speed in operating
the machine, and the lack of care employed by the chauffeur. While these facts are not as clearly
evidenced as are those which convict the other defendant, we nevertheless hesitate to disregard the
points emphasized by the trial judge. In its broader aspects, the case is one of two drivers approaching a
narrow bridge from opposite directions, with neither being willing to slow up and give the right of way to
the other, with the inevitable result of a collision and an accident.

The defendants Velasco and Cortez further contend that there existed contributory negligence on the part
of the plaintiff, consisting principally of his keeping his foot outside the truck, which occasioned his injury.
In this connection, it is sufficient to state that, aside from the fact that the defense of contributory
negligence was not pleaded, the evidence bearing out this theory of the case is contradictory in the
extreme and leads us far afield into speculative matters.
15. IN THE MATTER OF THE INTESTATE ESTATE OF JUSTO PALANCA, Deceased, GEORGE PAY vs.
SEGUNDINA CHUA VDA. DE PALANCA
[G.R. No. L-29900 | June 28, 1974
SECOND DIVISION
J. Fernando
FACTS: On January 30, 1952, The late Justo Palanca, together with Rosa Gonzales Vda. De Palanca
executed a promissory note undertaking to pay the amount of P26,900 upon receipt by him of his share
from a certain estate or upon demand.

For value received from time to time since 1947, we [jointly and severally promise to] pay to Mr. [George
Pay] at his office at the China Banking Corporation the sum of [Twenty Six Thousand Nine Hundred Pesos]
(P26,900.00), with interest thereon at the rate of 12% per annum upon receipt by either of the
undersigned of cash payment from the Estate of the late Don Carlos Palanca or upon demand'. . . .

On August 26, 1967, George filed this action before the trial court, asking that Segundina Chua Vda. de
Palanca, surviving spouse of the late Justo Palanca, be appointed as administratrix of a certain property
in order that George Pay, as creditor, can file his claim against the administratrix.

The lower court held that the ten-year period of limitation of actions did apply, the note being
immediately due and demandable, the creditor admitting expressly that he was relying on the wording
"upon demand." Petitioner appealed the lower court’s decision.

ISSUE: WON a creditor is barred by prescription in his attempt to collect on a promissory note executed
more than fifteen years earlier with the debtor sued promising to pay either upon receipt by him of his
share from a certain estate or upon demand, the basis for the action being the latter alternative?

HELD: Yes. From the manner in which the promissory note was executed, it would appear that petitioner
was hopeful that the satisfaction of his credit could be realized either through the debtor sued receiving
cash payment from the estate of the late Carlos Palanca presumptively as one of the heirs, or, as expressed
therein, "upon demand." There is nothing in the record that would indicate whether or not the first
alternative was fulfilled. What is undeniable is that on August 26, 1967, more than fifteen years after the
execution of the promissory note on January 30, 1952, this petition was filed. The defense interposed was
prescription. Its merit is rather obvious. Article 1179 of the Civil Code provides: "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." This used to be Article 1113 of the Spanish Civil Code of 1889. As far back
as Floriano v. Delgado, 5 a 1908 decision, it has been applied according to its express language. The well-
known Spanish commentator, Manresa, on this point, states: "Dejando con acierto, el caracter mas teorico
y grafico del acto, o sea la perfeccion de este, se fija, para determinar el concepto de la obligacion pura,
en el distinctive de esta, y que es consecuencia de aquel: la exigibilidad immediata."

The obligation being due and demandable, it would appear that the filing of the suit after fifteen years
was much too late. For again, according to the Civil Code, which is based on Section 43 of Act No. 190, the
prescriptive period for a written contract is that of ten years. This is another instance where this Court has
consistently adhered to the express language of the applicable norm. There is no necessity therefore of
passing upon the other legal questions as to whether or not it did suffice for the petition to fail just
because the surviving spouse refuses to be made administratrix, or just because the estate was left with
no other property. The decision of the lower court cannot be overturned.
16 SMITH, BELL & CO., LTD. vs. VICENTE SOTELO MATTI

[G.R. No. L-16570 | March 9, 1922 |

En Banc | J. Romualdez]

FACTS: On August 1918, Plaintiff corporation and defendant entered into contracts whereby the former
obligated itself to sell, and the latter to purchase from it, two steel tanks, for the total price of P21,000,
the same to be shipped from New York and delivered at Manila "within three or four months;" two
expellers at the price of P25,000 each, 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 P2,000 each, as to the
delivery of which stipulation was made, couched in these words: "Approximate delivery within ninety
days. — This is not guaranteed."

The tanks arrived at Manila on the 27th of April, 1919: the expellers on the 26th of October, 1918; and
the motors on the 27th of February, 1919.

The plaintiff corporation immediately notified the defendant of the arrival of the goods, but the latter
refused to receive them and to pay the prices stipulated. Consequently, the plaintiff filed an action against
the defendant. The defendant, and the intervenor, the Manila Oil Refining and By-Products Co., Inc.
claimed that the latter suffered damages for the non-delivery of the tanks, and on account of the expellers
and the motors not having arrived in due time.

The lower court absolved the defendants from the complaint insofar as the tanks and the electric motors
were concerned, but rendered judgment against them and ordered them to receive and pay the plaintiff
for the expellers. Both parties appealed to the SC.

ISSUE

Whether the term fixed by the parties is so uncertain that it would be conditional?

Ruling:

Yes, the court held that the stipulations in the contract make the performance of the obligation
not dependent on the will of the obligor, but on that of a third person who can in no way be compelled
to carry it out. As it can be seen, the defendant had done all its part of the contract, which then becomes
incumbent upon a third party (the US government) for the accomplishment of the contract which they
cannot be compelled to do. The obligor will be deemed to have sufficiently performed his part of the
obligation, if he has done all that was in his power, even if the condition has not been fulfilled in reality.
It is to be noted that the obligation which the defendant tried to fulfill was during World War, which is
partly the reason why the US government incurred in delay with regards to the accomplishment of the
logistics of the items.
17. ROSENDO O. CHAVES vs. FRUCTUOSO GONZALES

G.R. No. L-27454 | April 30, 1970.

En Banc

J. Reyes, J.B.L.

FACTS: Plaintiff delivered to the defendant, who is a typewriter repairer, a portable typewriter for routine
cleaning and servicing. Despite repeated reminders made by the plaintiff, defendant was not able to finish
the job after some time. Later, plaintiff gave to the defendant the sum of P6 asked by the latter for the
purchase of spare parts. Exasperated due to the delay, plaintiff asked for the return of the typewriter.
Upon examination by plaintiff, the typewriter was found to be in shambles, with the interior cover and
some parts and screws missing. Plaintiff demanded from defendant the return of the missing parts,
interior cover and the sum of P6. The defendant returned to the plaintiff some of the missing parts, the
interior cover and the P6.

Plaintiff had his typewriter repaired by another, and the repair job cost him a total of P89.85, including
labor and materials.

Plaintiff commenced this action before the City Court of Manila, demanding from the defendant the
payment of P90 as actual and compensatory damages, P100 for temperate damages, P500 for moral
damages, and P500 as attorney’s fees. Defendant claimed that the total cost of P89.95 should be fully
chargeable against him since the repair invoice showed that the missing parts had total value of only
P31.10. The court order the defendant to pay the sum of P31.10.

Plaintiff directly appealed to the SC contending that the court a quo erred when it did not award the whole
cost of labor and materials that went into the repair of the machine, as provided for in Article 1167 CC.

Defendant countered that he is not liable at all, not even for the sum of P31.10, because his contract with
plaintiff did not contain a period, so that plaintiff should have first filed a petition for the court to fix the
period, under Article 1197 of the Civil Code.

ISSUE: WON defendant can invoke Article 1197 CC on the ground that his contract with plaintiff did not
contain a period?

HELD: NO. Based on the facts it was clear that both parties had a perfected contract for cleaning and
servicing a typewriter; that they intended that the defendant was to finish it at some future time although
such time was not specified; and that such time had passed without the work having been accomplished.
The time for compliance having evidently expired, and there being a breach of contract by non-
performance, it was academic for plaintiff to have first petitioned the court to fix a period. Defendant
cannot invoke Article 1197 of the Civil Code for he virtually admitted non-performance by returning the
typewriter that he was obliged to repair in a non-working condition with essential parts missing. For such
contravention, Gonzales is liable under Article 1167 of the Civil Code which makes him liable for the cost
of executing the obligation in a proper manner. In addition, he is likewise liable under Article 1170 of the
Code for cost of the missing parts, in the amount of Php 31.10 for in his obligation to repair the typewriter
he was bound, but failed or neglected to return it in the same condition it was when he received it.
18 VICENTE SINGSON ENCARNACION, plaintiff-appellee, vs. JACINTA BALDOMAR, ET AL., defendants-
appellants.

Enbanc

G.R. No. L-264, October 4, 1946

HILADO, J.

Nature: Appeal from the judgement of the CFI of Manila

FACTS:

Vicente Singson Encarnacion, owner, leased a house to Jacinta Baldomar and her son Lefrando Fernando
upon a month-to-month basis for the monthly rental fee of P35. After Manila was liberated in the last
war, Encarnacion notified defendants to vacate the house on or before April 15, 1945, because plaintiff
needed to use it as his office since the building of his old office had been destroyed.

Despite demand, defendants insisted on continuing their occupancy. Defendants opposed stating that
their contract with Encarnacion authorized them to continue occupancy indefinitely as long as they fulfill
their obligation of paying the monthly rentals. Further stating that this month to month basis of rentals
had been their arrangement from the start.

ISSUE:

Whether the defense of Baldomar is tenable that their occupation of the house is conditioned solely on
their ability to pay the monthly rental.

HELD: No. The defense thus set up by defendant Lefrado Fernando would leave to the sole and exclusive
will of one of the contracting parties, the lessees in this case, the validity and fulfillment of the contract
of lease, within the meaning of article 1256 of the Civil Code, since the continuance and fulfillment of the
contract would then depend solely and exclusively upon their free and uncontrolled choice between
continuing paying the rentals or not which would lead to complete deprivation of the owner the have a
say in the matter.

If this defense were to be allowed, so long as defendants elected to continue the lease by continuing the
payment of the rentals, the owner would never be able to discontinue it; conversely, although the owner
should desire the lease to continue, the lessees could effectively thwart his purpose if they should prefer
to terminate the contract by the simple expedient of stopping payment of the rentals. This, of course, is
prohibited by the aforesaid article of the Civil Code.
19. DARIO AND GAUDENCIO ELEIZEGUI, plaintiffs-appellees, vs. THE MANILA LAWN TENNIS CLUB,
defendant-appellant. G.R. No. 967 May 19, 1903 EN BANC ARELLANO CJ

FACTS: This suit concerns the lease of a piece of land for a fixed consideration of P25 per month and to
endure at the will of the lessee, by plaintiff-appellee to herein defendant-appellant. As a result the plaintiff
filed a case for unlawful detainer for the restitution of the land claiming that article 1569 of the Civil Code
provided that a lessor may judicially dispossess the lessee upon the expiration of the conventional term
or of the legal term; the conventional term — that is, the one agreed upon by the parties; the legal term,
in defect of the conventional, fixed for leases by articles 1577 and 1581. The Plaintiffs argued that the
duration of the lease depends upon the will of the lessor on the basis of Art. 1581 which provides that,
"When the term has not been fixed for the lease, it is understood to be for years when an annual rental
has been fixed, for months when the rent is monthly. . . ." The second clause of the contract provides as
follows: "The rent of the said land is fixed at 25 pesos per month."

The lower court ruled in favor of the plaintiff relying on Art. 1581.

ISSUE: WON there was an agreement as to the term, and hence, Art. 1581 is inapplicable?

HELD: Yes. The legal term cannot be applied, there being a conventional term, this destroys the
assumption that the contract of lease was wholly terminated by the notice given by the plaintiffs, this
notice being necessary only when it becomes necessary to have recourse to the legal term. Nor had the
plaintiffs, under the contract, any right to give such notice. It is evident that they had no intention of
stipulating that they reserved the right to give such notice. Clause 3 begins as follows: "Mr. Williamson,
or whoever may succeed him as secretary of said club, may terminate this lease whenever desired without
other formality 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." The right of the one and the obligation of the others being
thus placed in antithesis, there is something more, much more, than the inclusio unius, exclusio alterius.
It is evident that the lessors did not intend to reserve to themselves the right to rescind that which they
expressly conferred upon the lessee by establishing it exclusively in favor of the latter.

It would be the greatest absurdity to conclude that in a contract by which the lessor has left the
termination of the lease to the will of the lessee, such a lease can or should be terminated at the will of
the lessor.
20. PHILIPPINE BANKING CORPORATION, representing the estate of JUSTINA SANTOS Y CANON
FAUSTINO, deceased, plaintiff-appellant, vs. LUI SHE in her own behalf and as administratrix of the
intestate estate of Wong Heng, deceased, defendant-appellant. G.R. No. L-17587 September 12, 1967

Castro, J.

Nature: Appeal from the judgement of the CFI

Facts: Justina Santos executed on a contract of lease in favor of Wong, covering the portion then already
leased to him and another portion fronting Florentino Torres street. The lease was for 50 years, although
the lessee was given the right to withdraw at any time from the agreement. On December 21 she executed
another contract giving Wong the option to buy the leased premises for P120,000, payable within ten
years at a monthly installment of P1,000. The option, written in Tagalog, imposed on him the obligation
to pay for the food of the dogs and the salaries of the maids in her household, the charge not to exceed
P1,800 a month. The option was conditioned on his obtaining Philippine citizenship, a petition for which
was then pending in the Court of First Instance of Rizal. It appears, however, that this application for
naturalization was withdrawn when it was discovered that he was not a resident of Rizal. On October 28,
1958 she filed a petition to adopt him and his children on the erroneous belief that adoption would confer
on them Philippine citizenship. The error was discovered and the proceedings were abandoned. In two
wills executed on August 24 and 29, 1959, she bade her legatees to respect the contracts she had entered
into with Wong, but in a codicil of a later date (November 4, 1959) she appears to have a change of heart.
Claiming that the various contracts were made by her because of machinations and inducements
practiced by him, she now directed her executor to secure the annulment of the contracts.

ISSUE
Was the insertion in the contract of a resolutory condition, permitting the cancellation of the contract by
one of the parties, valid?

RULING
Yes. In the early case of Taylor vs. Uy Tiong Piao, the Supreme Court said:

Article 1256 [now art. 1308] of the Civil Code in our opinion creates no impediment to the insertion in a
contract for personal service of a resolutory condition permitting the cancellation of the contract by one
of the parties. Such a stipulation, as can be readily seen, does not make either the validity or the fulfillment
of the contract dependent upon the will of the party to whom is conceded the privilege of cancellation;
for where the contracting parties have agreed that such option shall exist, the exercise of the option is as
much in the fulfillment of the contract as any other act which may have been the subject of agreement.
Indeed, the cancellation of a contract in accordance with conditions agreed upon beforehand is fulfillment

Further, in the case at bar, the right of the lessee to continue the lease or to terminate it was so
circumscribed by the term of the contract that it cannot be said that the continuance of the lease depends
upon his will. At any rate, even if no term had been fixed in the agreement, this case would at most justify
the fixing of a period but not the annulment of the contract.
21. LOURDES VALERIO LIM, petitioner, vs. PEOPLE OF THE PHILIPPINES, respondent. G.R. No. L-34338
November 21, 1984

FACTS: Appellant and Maria Ayroso agreed that the former will sell the latter’s tobacco, embodied in a
document, eventually marked Exhibit “A”, which reads:

This is to certify that I have received from Mrs. Maria de Guzman Vda. de Ayroso. of Gapan, Nueva Ecija,
six hundred fifteen kilos of leaf tobacco to be sold at Pl.30 per kilo. The proceed in the amount of Seven
Hundred Ninety Nine Pesos and 50/100 (P 799.50) will be given to her as soon as it was sold.

Appellant obtained the said tobacco leaves but paid only P240. Demands for payment were made upon
appellant by Ayroso, through the latter’s sister Salud Bantug. After receiving some money orders which
failed to cover the full amount, a complaint for estafa was filed.

Peititioner was found guilty. On appeal, the CA affirmed the conviction.

ISSUE: WON Exhibit A was for a “fixed period” and "the obligation was therefore, immediately
demandable as soon as the tobacco was sold"?

HELD: Yes. It is clear in the agreement, Exhibit "A", that the proceeds of the sale of the tobacco should be
turned over to the complainant 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.