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Gabriel with Carlos Dimayuga is expressly
CHAPTER 1
GENERAL PROVISIONS
Art. 1156. An obligation is a juridical
necessity to give, to do or not to do.
1) Elements of an Obligation – from Latin
word “obligare” – to bind (JAPO)
a) Juridical tie or vinculum juris or
efficient cause – reason why
obligation exist
b) Active Subject (Creditor or
Obligee) – he in whose favor the
obligation is constituted.
c) Passive Subject (Debtor or Obligor)
– he who has the duty of giving,
doing, or not doing.
d) Object or Prestation – the subject
matter of the obligation.
2) Concept of Prestation
A prestation is an obligation; more
specifically, it is the subject matter of an
obligation — and may consist of giving a
thing, doing or not doing a certain act.
The law speaks of an obligation as a
juridical necessity to comply with a
prestation. There is a “juridical necessity,”
for non-compliance can result in juridical
or legal sanction.
Mataas na Lupa Tenants
Association vs Carlos Dimayuga
and Juliana Diego Vda.
De Gabriel
(L-32049, June 25, 1984)
FACTS:
Petitioners filed a complaint for the
exercise of preferential rights with the
then Court of First Instance of Manila,
Branch IV alleging that the Contract of
Sale executed by Juliana Diez Vda. De
prohibited by law as it is mandated for
the respondent to execute such sale to
petitioners. Therefore, said contract
should be declared null and void. The
lower court ruled in favour of the
respondents, ordering the dismissal of
the case on the ground that petitioners
failed to state a cause of action. Thus,
petitioners resorted to the petition of
certiorari for the review of the said order
before the SC.
ISSUES:
1. Whether or not the contract of sale is
null and void
2. Whether or not the petitioners may
invoke their preferential rights as tenants
HELD/RULING:
1. Yes. The R.A. 1162 as amended by R.A.
2342 and 3516 set forth the following
conditions that of offering first the sale of
the land to petitioners and the latter' s
renunciation in a public instrument-were
not met when the land was sold to
respondent Dimayuga. Evidently, said
sale is illegal and therefore void. The 1973
Constitution section 6, article II
emphasizes the stewardship concept that
such private property is supposed to be
held by the individual only as trustee for
the people in general, who are its real
owners. As a mere steward, the individual
must exercise his right to the property
not for his own exclusive and selfish
benefit but for the good of the entire
community. P.D. 1157 ―Proclaiming
Urban Land Reform in the Philippines and
providing for the Implementing
Machinery thereof superseded R.A. 1152,
2342, 3516.
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2. Yes. This decree is firmly based on sec.
6 of art. II of the 1973 constitution
undoubtedly adopts and crystallizes the
greater number of people criterion when
it speaks of tenants and residents in
declared urban land reform zones or
areas without mention of the land area
covered by such zones. The focus,
therefore, is on people who would
benefit and not on the size of the land
involved. Under section 6 of which also
states that tenant-families have been
vested the right of first refusal to
purchase of the land within a reasonable
time and reasonable price subject to the
rules and regulations of the Ministry of
Human Settlements. It is further
supported by PD 1967 which evidently
include Mataas na Lupa, the land in
controversy within the Urban Land
Reform Zone.
3) Kinds of Obligations
a) From the viewpoint of “sanction” —
i) civil obligation (or perfect
obligation)
ii) natural obligation
iii) moral obligation (or imperfect
obligation)
b) From the viewpoint of subject matter
— lived with her husband independently and in
i) real obligation — the obligation
to give
ii) personal obligation — the
obligation to do or not to do
c) From the affirmativeness and
negativeness of the obligation
— by the plaintiff upon rendering medical
i) positive or affi rmative obligation
— the obligation to give or to do
ii) negative obligation — the
obligation not to do (which
naturally includes “not to give”)
d) From the viewpoint of persons
obliged —
i) unilateral — where only one of
the parties is bound
NOTE: Every obligation has 2 parties; If only
one of them is bound, we have a unilateral
obligation.
ii) bilateral — where both parties are
bound
NOTE: Bilateral obligations may be:
a) reciprocal: b) non-reciprocal (where
performance by one is nondependent upon
performance by the other).
4) Cases
ARTURO PELAYO VS. MARCELO LAURON
12 Phil 453, January 12, 1909
FACTS: On November 23, 1906, Arturo
Pelayo, a physician, filed a complaint against
Marcelo and Juana Abella. He alleged that on
October 13, 1906 at night, Pelayo was called
to the house of the defendants to assist their
daughter-in-law who was about to give birth
to a child. Unfortunately, the daughter-in-law
died as a consequence of said childbirth.
Thus, the defendant refuses to pay. The
defendants argue that their daughter-in-law
a separate house without any relation, that
her stay there was accidental and due to
fortuitous event.
ISSUE: Whether or not the defendants
should be held liable for the fees demanded
assistance to the defendants’ daughter-in-
law.
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RULING: No. The Court held that the
rendering of medical assistance is one of the
obligations to which spouses are bound by
mutual support, expressly determined by law
and readily demanded. Therefore, there was
no obligation on the part of the in-laws but
rather on the part of the husband who is not
a party.
Poss v. Gottlieb
193 N.Y.S. 418
FACTS: There were two partners engaged in
buying and reselling land. After they had
bought a piece of land, one asked the other
to sell the latter’s share to him for the price
invested by the latter. The first partner, who
now completely owned the land, resold it at
a huge profit to a third person. The second
partner would not have sold his share had he
known that a big offer had been made by
such third person. The first partner alleged
that he should not be blamed on the ground
that he, after all did not make any false
concealment to his partner, that is, he did not
tell the latter that nobody wanted the land.
ISSUE: May the second partner successfully
bring an action for damages against the first
partner?
HELD: Yes, because the first partner is liable.
He had the duty not only to make any false
concealment but also to abstain from all
kinds of concealment insofar as the
partnership was concerned. This is an
obligation to do (to relay all pertinent
information).
Joaquin P. Nemenzo v. Bernabe Sabillano
L-20977, Sept. 7, 1968
FACTS: A municipal mayor, upon assumption
of office, arbitrarily dismissed a corporal (a
civil service eligible) in the police force of the
municipality, without due investigation.
ISSUE: Is the mayor personally liable?
HELD: Yes, because his act of dismissing the
corporal without previous administrative
investigation and without justifiable cause is
clearly an injury to the corporal’s rights. The
mayor cannot hide under the mantle of his
official capacity and pass the liability to the
municipality of which he was mayor. There
are altogether too many cases of this nature,
wherein local elective officials, upon
assumption of office, wield their new-found
power indiscriminately by replacing
employees with their own protegés,
regardless of the laws and regulations
governing the civil service. Victory at the
polls should not be taken as authority for the
commission of such illegal acts.
Leonides Pengson vs CA
(GR L-65622 June 29, 1984)
FACTS: The defendant Pacific Merchandising
Corporation is the owner of shares in the
Aluminum Products (Alpro) to the extent of
96% of its capital (share) holdings. PMC was
indebted to defendant Reynolds Philippines
Corporation, in the sum of more than
P800,000.00, because of which indebtedness
its shares in the Alpro were pledged with
Reynolds as a collateral of its loan. Because
PMC needed some money, it decided to sell
its shares with the Alpro to the herein plaintiff
Leonides C. Pengson', the deed of sale being
evidenced by Exhibit A. Among other things,
the plaintiff assumed the obligation of PMC
to Reynolds, which amount however was
reduced from more than P800,000.00 to only
P500,000.00. Since the certificates covering
the shares were then held by Reynolds in
pledge as security for PMC obligation, the
former's consent to the sale with assumption
had to be obtained. As a security for the
payment to Reynolds of the aforesaid
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P500,000.00 in five (5) annual installments,
the first installment being P125,000.00.
Pengson mortgaged to Reynolds a parcel of
land. While Pengson paid the first installment
in the sum of P125,000.00 in three (3)
installments and a bit late, the next in
installments which fell due were not paid for
in spite of demands. Consequently, Reynolds
foreclosed by considering an unpaid
installments due and demandable.
ISSUE: Whether or not Reynolds Phil.
Corporation is entitled to surrender the said
certificates of stocks to Leonidas Pengson.
HELD/RULING: No. Reynolds was not a
party to the contract of sale between PMC
and the herein plaintiff. This being so, it had
no obligation whatsoever on the strength of
the contract in favor of the plaintiff. Plaintiff,
by the terms of the contract, however, since
plaintiff undertook to pay PMC obligation to
Reynolds, plaintiff was under obligation with
the PMC on account of the said undertaking.
Otherwise, there is absolutely no reciprocal
obligation between the herein plaintiff and
the appellant Reynolds. Otherwise said, the
new debtor of Reynolds was the plaintiff and
no longer PMC to argue now, as the plaintiff
contends, that Reynolds was under an
obligation to return the certificates of stocks
pledged to it by PMC is to put the plaintiff in
a better footing than PMC was with Reynolds.
There is absolutely no agreement by
Reynolds to that effect in the consent it gave
to the sale by PMC of the said shares in favor
of the plaintiff.
Heirs of Luis Bacus et. al vs CA and Spouses
Faustino and Victoriana Duray (GR 127695
Dec. 3, 2001)
FACTS: On 1984 Luis Bacus leased to
Faustino Duray a parcel of agricultural land
with total land area of 3,002 of square
meters, in Cebu. The lease was for six years
ending in 1990, the contract contained an
option to buy clause. Under the said option,
the lessee had the exclusive and irrevocable
right to buy 2,000 square meters 5 years from
a year after the effectivity of the contract, at
P200 per square meter. That rate shall be
proportionately adjusted depending on the
peso rate against the US dollar, which at the
time of the execution of the contract was 14
pesos. Close to the expiration of the contract
Luis Bacus died on 1989, after Duray
informed the heirs of Bacus that they are
willing and ready to purchase the property
under the option to buy clause. The heirs
refused to sell, thus Duray filed a complaint
for specific performance against the heirs of
Bacus. He showed that he is ready and able
to meet his obligations under the contract
with Bacus. The RTC ruled in favor of the
Durays and the CA later affirmed the
decision.
ISSUE: At this point in time,were respondents
already obliged to make actual payment?
HELD/RULING: Yes, Obligations under an
option to buy are reciprocal obligations. The
performance of one obligation is
conditioned on the simultaneous fulfilment
of the other obligation. In other words, in an
option to buy, the payment of the purchase
price by the creditor is contingent upon the
execution and delivery of the deed of sale by
the debtor. When the Duray’s exercised their
option to buy the property their obligation
was to advise the Bacus’ of their decision and
readiness to pay the price, they were not yet
obliged to make the payment. Only upon the
Bacus’ actual execution and delivery of the
deed of sale where they required to pay. The
Durays did not incur in delay when they did
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not yet deliver the payment nor make a
consignation before the expiration of the
contract. In reciprocal obligations, neither
party incurs in delay if the other party does
not comply or is not ready to comply in a
proper manner with what is incumbent upon
him. Only from the moment one of the
parties fulfills his obligation, does delay by
the other begin.
Art. 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law;
and (5) Quasi-delicts.
1) Sources of Obligations
a. Law (obligations ex lege) — like
the duty to pay taxes and to
support one’s family.
b. Contracts (obligations ex
contractu) — like the duty to
repay a loan by virtue of an
agreement.
c. Quasi-contracts (obligations ex
quasi-contractu) — like the duty
to refund an “over change” of
money because of the quasi-
contract of solutio indebiti or
“undue payment.”
d. Crimes or Acts or Omissions
Punished by Law (obligations ex
maleficio or ex delicto) — like the
duty to return a stolen carabao.
e. Quasi-delicts or Torts — least, temporarily.)
(obligation ex quasi-delicto or ex
quasi-malefi cio) — like the duty
to repair damage due to
negligence.
2) Exclusiveness of the Enumeration
The enumeration by the law is
exclusive; hence, no obligation exists if its
source is not one of those enumerated
under Art. 1157. (Navales v. Rias, 8 Phil.
508).
Art. 1158. Obligations derived from
law are not presumed. Only those
expressly determined in this Code or in
special laws are demandable and shall
be regulated by the precepts of the law
which establishes them; and as to what
has not been foreseen, by the
provisions of this Book.
1) Obligations Ex Lege
a. Examples:
i. the duty to support. (Art.
291, Civil Code).
ii. the duty to pay taxes.
(National Internal
Revenue Code).
Canonizado v. Benitez
L-49315, L-60966, Feb. 20, 1984
The obligation of a married couple to
support each other, under the law, generally
subsists all throughout the marriage. If
support which had been suspended is again
invoked, a simple motion in the same
proceeding will suffice. There is no necessity
to fi le a separate action. (Note: that in a very
real sense, a final judgment for support can
never be really final as the amount given may
increase, decrease, or may even cease, at
b. No agreement is necessary before
obligation ex lege can arise, but
of course the law steps in only
because of human actuations. For
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example, one who gambles and
wins can be compelled by the
loser to return the winnings. (Art.
2014). The action by the loser is
called indebitatus assumpsit.
(Leung Ben v. O’Brien, 38 Phil.
182).
Vda. de Recinto v. Inciong
77 SCRA 196
A person who buys another’s
property unaware of the right thereto of
some other party is to be considered a buyer
in good faith. While he is liable, his is the
liability of a person in good faith.
Serrano v. Central Bank
L-30511, Feb. 14, 1980
The Central Bank (now Bangko
Sentral) is NOT OBLIGED to pay the deposit
of a depositor made in an insolvent bank.
(NOTE: The Philippine Deposit Insurance
Corporation — PDIC — pays up to
P100,000.00 per depositor).
Santos v. Court of Appeals
L-60210, Mar. 27, 1984
The right of pre-emption (right of first
refusal) or redemption under PD 1517 refers
only to urban land leased to a person who
constructs his house thereon and who has
leased the land for more than ten (10) years.
The law does not apply if both the land and
the house belong to the lessor. In the latter
case, the lessor has no legal obligation to
allow preemption or redemption.
Gonzales v. Philippine National Bank
GR 33320, May 30, 1983
The PNB is not an ordinary
corporation and therefore not governed by
the Corporation Law but by its own charter.
A stockholder of the PNB cannot, therefore,
insist on the inspection of its books. This can
be done only by the Department of
Supervision and Examination of the Central
Bank (now Bangko Sentral).
Hilario Jaravata v. Sandiganbayan
L-56170, Jan. 31, 1984
A high school principal has no legal
obligation to facilitate the release of the
salary differentials of the teachers under him.
So if he receives reimbursement for his
“expenses” or as “gifts,” he cannot be
adjudged guilty under the Anti-Graft Law, for
after all, he had no duty to do said facilitation.
Art. 1159. Obligations arising from
contracts have the force of law
between the contracting parties and
should be complied with in good faith.
NOTE: “Compliance in good faith” means
that we must interpret “not by the letter that
killeth but by the spirit that giveth life.” (See
William Golangco Construction Corp. v. PCIB,
485 SCRA 203 [2006].).
Martin v. Martin, et al.
L-12439, May 23, 1959
Where the parties to a compromise
agreement signed and executed the same
WILLINGLY and VOLUNTARILY, they are
BOUND by its terms, even if the COURT
before which it was made had NO jurisdiction
over the case. In a regime of law and order,
the repudiation of an agreement validly
entered into cannot be made without any
justifi able reason.
NOTE: The approval of the court here is
immaterial; what is important is the mutual
consent to the compromise.)
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National Marketing Corp. (NAMARCO) v.
Tan, et al.
L-17074, Mar. 31, 1964
FACTS: On August 8, 1959, the Board of
Directors of the FEDERATION of NAMARCO
DISTRIBUTORS requested the President of
the Philippines to allow the NAMARCO to
purchase certain commodities, for
distribution to the members of the
FEDERATION. Upon endorsement by the
President, the NAMARCO authorized the
importation. When the Federation gave
NAMARCO certain cash advances for the cost
of importation, NAMARCO and the
Federation executed a contract, whereby the
former sold to the latter the goods to be
imported. Part of the goods (when they
arrived) was delivered to the Federation, but
when a new Board took charge of the
NAMARCO, the Board refused further
delivery to outsiders.
Issue: Was NAMARCO’s action proper?
HELD: No, because it had entered into a valid
contract with the Federation.
De los Reyes v. Alejado
16 Phil. 499
FACTS: A borrower agreed to pay his debt,
and in case of non-payment, to render free
service as a servant.
Issue: Is the obligation valid?
HELD: The obligation to pay is, of course,
valid and cannot be questioned but the
undertaking to render domestic services for
free is contrary to law and morals, for here,
slavery would result.
NOTE: If, however, the “free” services will be
rendered in satisfaction of the debt, the
stipulation can be given effect, for here the
services will not really be gratuitous. Even in
this case, however, specific performance of
the service will not be a proper remedy for
non-compliance. Instead, an action for
damages of payment of the debt should be
brought.
Molina v. de la Riva
6 Phil. 12
FACTS: The parties in a case agreed to go to
court in Albay, although another Court has
jurisdiction.
HELD: The agreement is null and void, for
jurisdiction is conferred by law, and not by
the will of the parties.
Bachrach v. Golingco
39 Phil. 138
ISSUE: If there is an express written contract
for fees between an attorney and his client,
may the court still disregard the contract?
HELD: Yes, because a contract for attorney’s
fees is different from other contracts. It may
be disregarded if the amount fixed is
unconscionable or unreasonable,
considering the value of the work
accomplished.
NOTE: A claim for attorney’s fees may be
asserted either in the very action in which the
services in question have been rendered, or
in a separate action. If the first alternative is
chosen, the court may pass upon said claim
even if its amount were less than the
minimum prescribed by law for the
jurisdiction of the court over the subject
matter of the case for so long as the main
action is within the jurisdiction of said court,
upon the theory that the right to recover
attorney’s fees is but an INCIDENT of the case
in which the services of counsel have been
rendered. Maria Reyes de Tolentino v.
Godofredo Escalono, et al., L-26556,
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Jan. 24, 1960; see Palanca v. Pecson, 94 Phil.
419 and Dahlke v. Vina, 51 Phil. 707.
Conrado v. Judge Tan
51 O.G. 2923, Jun. 1955
FACTS: In a validly made contract, some
provisions were later on inserted by a falsifier.
Issue: Is the whole contract void?
HELD: Only the additional provision should
be disregarded, and the original terms
should be considered valid and subsisting.
Alcantara v. Alinea
8 Phil. 111
FACTS: A borrowed from B P480 and agreed
that in case of non-payment on the date
stipulated, A’s house and lot would be sold
to B for the amount of P480.
Issue: Is the stipulation valid?
HELD: Yes, and if A does not pay, A should
sell the house and lot for P480. The
agreement is not contrary to law. (See also
Quizana v. Redugerio, 50 O.G. 2444, June,
1954).
NOTE: It seems to the author that the
stipulation may be considered void as being
a pactum commissorium, unless A be
allowed, instead of selling, to select the
option of still being indebted, with
consequential damages or interest.
Ganzon v. Judge Sancho
GR 56450, Jul. 23, 1983
If a mortgage is substituted by a guaranty or
surety bond without the consent of all the
required parties, the contract may be said to
be impaired.
Ollendorf v. Abrahamson
38 Phil. 585
FACTS: Ollendorf, needlework manufacturer,
hired Abrahamson for two years, on the
condition that for five years, the latter should
not engage in competitive needlework
manufacture. After one year, the latter left for
reasons of health. Shortly afterwards, after
regaining his health, he competed with his
former employer, who now seeks to restrain
him from such competition. The defendant
argues that the restriction is void, because it
is an unreasonable restraint of trade.
HELD: The agreement was valid, and is a
reasonable restraint, considering that it was
only for 5 years. Inasmuch as it is enforceable
and has the rule of law between the parties,
the defendant can be properly restricted.
Herminia Goduco v. Court of Appeals, et
al.
L-17647, Feb. 28, 1964
If upon the promise of the son-in-law of a
seller, an agent sells on commission a parcel
of land to a buyer, said buyer, not having
promised to give said commission, is NOT
liable therefor. Payment of the commission
must be sought from whoever made the
promise to pay such amount, namely, the
son-in-law of the seller.
Molave Motor Sales, Inc.
v. Laron and Geminiano
L-65377, May 28, 1984
When an employee in a car repair shop has
his own car repaired therein and purchases
certain spare parts, his liability therefor is
governed by the Civil Code, not the Labor
Code. Therefore, it is the civil courts, not the
Ministry (Department) of Labor, that has
jurisdiction over the case.
Borcena, et al. v. IAC
GR 70099, Jan. 7, 1987
Contracts for attorney’s services stand upon
an entirely different footing from contracts
for the payment of compensation
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for any other services. An attorney is not
entitled, in the absence of express contract,
to recover more than a reasonable
compensation for his services. And even
when an express contract is made, the court
can ignore it and limit the recovery of
reasonable compensation if the amount of
the stipulated fee is found by the court to be
unreasonable. This is a very different rule
from that announced in Sec. 1091 of the Civil
Code of Spain (now Art. 1159, Civil Code)
with reference to the obligation of contracts
in general, where it is said that such
obligation has the force of law between the
contracting parties.
PNB v. Se, Jr.
70 SCAD 323
(1996)
As contracts, warehouse receipts must be
respected by authority of Art. 1159 of the
Civil Code. A prior judgment holding that a
party is a warehouseman obligated to deliver
sugar stocks covered by the Warehouse
Receipts does not necessarily carry with it a
denial of the warehouseman’s lien over the
same sugar stocks. Even in the absence of a
provision in the Warehouse Receipts, law and
equity dictate the payment of the
warehouseman’s lien pursuant to Sections 27
and 31 of the Warehouse Receipts Law. A
party is in estoppel in disclaiming liability for
the payment of storage fees due the
warehouseman while claiming to be entitled
to the sugar stocks covered by the subject
Warehouse Receipts on the basis of which it
anchors its claim for payment or delivery of
the sugar stocks. Imperative is the right of the
warehouseman to demand payment of his
lien because he loses his lien upon goods by
surrendering possession thereof.
Vicente Aldaba v. Court of Appeals, et al.
L-21676, Feb. 28, 1969
FACTS: Dr. Vicente Aldaba and his daughter,
Dr. Jane Aldaba, rendered services to Belen
Aldaba, a rich woman of Malolos, Bulacan for
10 years without receiving any
compensation. It was admitted that for such
services, the two doctors did NOT expect to
be paid.
Issues: Was there a contract, whether express
or implied? Was Belen obliged to
compensate the two doctors?
HELD: There was no contract, whether
express or implied, and therefore Belen was
not obliged to compensate the two doctors;
no express contract, for nothing on this point
was agreed upon; and no implied contract,
for the doctors did not expect to be paid for
their services. When a person does not
expect to be paid for his services, there
cannot be a contract implied in fact to give
compensation for such services. To give rise
to an implied contract to pay for services,
said services must have been rendered by
one party in expectation that the other party
would pay for them and must have been
accepted by the other party with knowledge
of that expectation. (See 58 Am. Jur., p. 512,
and the cases cited therein).
Art. 1160. Obligations derived from
quasi-contracts shall be subject to the
provisions of Chapter 1, Title XVII, of
this Book.
1) ‘Quasi-Contract’ Defined
A quasi-contract is that juridical relation
resulting from a lawful, voluntary, and
unilateral act, and which has for its purpose
the payment of indemnity to the end that no
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one shall be unjustly enriched or benefi ted
at the expense of another. (See Art. 2142,
Civil Code).
2) The 2 Principal Kinds
a. negotiorum gestio (unauthorized
management) - This takes place
when a person voluntarily takes
charge of another’s abandoned
business or property without the
owner’s authority. (Art. 2144, Civil
Code).
b. solutio indebiti (undue payment)
– This takes place when
something is received when there
is no right to demand it, and it
was unduly delivered thru
mistake. The recipient has the
duty to return it. (Example: If I let
a storekeeper changes my P50.00
bill and by error he gives me
P50.60, I have the duty to return
the extra P0.60). (See Art. 2154,
Civil Code).
City of Cebu v. Piccio and Caballero
L-13012 and 14876, Dec. 31, 1960
FACTS: Caballero, an employee of the City of
Cebu who has been illegally dismissed, sued
for back wages by way of mandamus and
made as defendants thereto the City Mayor,
the Municipal Board, the City Treasurer, and
the City Auditor of Cebu City, BUT the City of
Cebu itself was not made a defendant. When
Caballero was later paid, the City of Cebu
brought an action for the REFUND of the
payment on the ground that the payment
was illegal because the City of Cebu had NOT
been made a party to Caballero’s mandamus
case.
who paid was NOT under obligation to do so;
(b) the payment was made by reason of an
essential mistake of fact. These requisites are
NOT present because Caballero has a right to
be paid and no mistake was made. The fact
that the City itself was NOT a party is
immaterial for a judgment against a
municipal officer, sued in his official capacity,
BINDS the City. The acts of the duly
authorized officials bind the principal — the
city.
UST Cooperative Store v. City of Manila,
et al.
L-17133, Dec. 31, 1965
FACTS: The UST Cooperative Store, which is
tax-exempt under RA 2023 (The Philippine
Non-Agricultural Cooperative Act) because
its assets are not more than P500,000 paid
taxes to the City of Manila, not knowing that
it was tax-exempt.
Issue: May it successfully ask for a refund?
HELD: Yes, because the payment is not
considered voluntary in character. Clearly,
the payment was made under a mistake. (See
51 Am. Jur. 1023).
Lirag Textile Mills, Inc. v. Reparations
Commission
79 SCRA 675
If the price of certain goods is determined,
considering the rate of exchange at the time
of its procurement, there is no unjust
enrichment involved.

HELD: The City of Cebu CANNOT recover.

The claim for refund is predicated on “solutio
indebiti.” The requisites for this are: (a) he

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 PEEJAY NOTES | OBLIGATIONS AND CONTRACTS | PARAS | Mon- Thur
Art. 1161. Civil obligations arising
from criminal offenses shall be
governed by the penal laws, subject to
the provisions of Article 2177, and of
the pertinent provisions of Chapter 2,
Preliminary Title, on Human Relations,
and of Title XVIII of this Book,
regulating damages.
1) Obligations Ex Delicto or Ex Malefi cio
Governing rules
a. Pertinent provisions of the
Revised Penal Code and other
penal laws, subject to the
provisions of Art. 2177, Civil Code.
b. Chapter 2, Preliminary Title, on
Human Relations (of the Civil
Code).
c. Title 18 of Book IV of the Civil
Code — on damages.
Badiong v. Judge Apalisok
GR 60151, Jun. 24, 1983
Although the defendant in a criminal case
has already pleaded guilty, and has fi led an
application for probation, the court should
still set the case for hearing to receive the
offended party’s evidence on the civil liability
of the accused. If this would not be done, the
offended party will be denied due process.
Elcano v. Hill
77 SCRA 98
An accused in a criminal case may be sued
CIVILLY whether or not he is found guilty or
is acquitted. But the victim cannot recover
damages in both cases (only in one).
2) Liability of an Insane Criminal
An insane man who commits a crime is
exempted from criminal liability, but his
guardian can be held civilly liable unless
the latter was diligent in his task of taking
care of the insane. If there is no guardian,
or if said guardian (in the proper case) is
insolvent, the property of the insane man
can be made liable. (See Arts. 12 and 101,
R.P.C.).
Sales v. Balce
L-14414, Apr. 27, 1960
FACTS: The son of the plaintiff was killed by
the minor son (below 15) of the defendant.
The son who acted with discernment was
convicted, but had no money.
Issue: Are his parents subsidiarily liable?
HELD: Art. 101 of the Revised Penal Code
prescribes the subsidiary liability of the
parents in case of a minor over 9 but under
15 who DID NOT act with discernment. If he
acted WITH discernment, the Revised Penal
Code is silent because he is criminally liable.
In that case, resort is made to the general law
which is the Civil Code, Art. 2080 of which
applies. Under said Article, the parents would
be held liable unless they can prove due
supervision. To hold that the Civil Code does
not apply because it covers only obligations
arising from negligence or quasi-delicts
would result in an ABSURDITY for, while in a
negligent act, the parents are subsidiarily
liable for the damage caused by their son, no
liability would attach if the damage is caused
with criminal intent. It is clear, therefore, that
applying Art. 2080 of the Civil Code, the
parents would ordinarily be liable.
3) What Civil Liability Arising from a
Crime Includes
a. restitution;
b. reparation of the damage caused;
c. indemnification for consequential
damages. (Art. 104, Rev.
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 PEEJAY NOTES | OBLIGATIONS AND CONTRACTS | PARAS | Mon- Thur
Penal Code).
Buenaventura Belamala v. Marcelino
Polinar
L-24098, Nov. 18, 1967
FACTS: The defendant in a criminal case for
physical injuries died before final judgment.
Issue: Is his civil liability extinguished?
HELD: No, his civil liability is not extinguished
for, after all, in Art. 33 of the Civil Code, there
can, in the case of physical injuries, still be an
independent civil action. The action will be
directed against the administrator of the
estate, the obligation having become the
obligation of the heirs; but of course the
liability cannot exceed the value of the
inheritance. (Art. 774, Civil Code).
Incidentally, as already said, the remedy is an
action against the administrator, and not
merely a claim against the estate. The reason
is because the purpose is to recover damages
for an injury to person or property (hence,
extra-contractual as it arose from either a
crime or a tort). (See Aguas v. Llemos, L-
18107, Aug. 30, 1962). Had the liability been
contractual, a mere claim against the estate
would have sufficed. (See Leung Ben v.
O’Brien, 38 Phil. 182).
Lamberto Torrijos v. Court of Appeals
L-40336, Oct. 24, 1975
FACTS: In 1964, Torrijos purchased a lot from
Diamnuan. Later, Torrijos learned that in
1969, Diamnuan sold the same lot to De Guia.
Torrijos initiated an estafa complaint against
the seller, who was eventually convicted by
the CFI (now RTC). During the pendency of
the case in the Court of Appeals, the accused
Diamnuan died. His lawyer fi led a motion to
dismiss the case alleging that the death of his
client, prior to final judgment,
extinguished both the personal and the
pecuniary penalties.
Issue: Is the civil liability also extinguished?
Should the case be dismissed?
HELD: The civil liability here is not
extinguished, because independently of the
criminal case, the accused was civilly liable to
Torrijos. If after receiving the purchase price
from Torrijos, he failed to deliver the
property (even before selling it again to De
Guia), there would as yet be no estafa, but
there is no question of his civil liability thru
an action by Torrijos either for specific
performance plus damages, or rescission
plus damages. Death is not a valid cause for
the extinguishment of a civil obligation. Had
the only basis been the commission of estafa,
it is clear that the extinguishment of the
criminal responsibility would also extinguish
the civil liability, provided that death comes
before final judgment. Furthermore, under
Arts. 19, 20, and 21 of the Civil Code, the
accused would be civilly liable independently
of the criminal liability for which he can be
held liable. And this civil liability exists
despite death prior to final judgment of
conviction. The case, therefore, cannot as yet
be dismissed.
Co San v. Director of Patents, et al.
L-10563, Feb. 23, 1961
A judgment of acquittal in a criminal action
for fraudulent registration of a trademark in
violation of Sec. 18 of Act No. 666, cannot be
invoked as res judicata in a civil action based
on unfair and malicious competition on the
ground that the facts of the latter are
different and have not been passed upon in
the judgment rendered in the former case.
(See Ogura v. Chua and Confesor, 50 Phil.
471).
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