1. JUAN F.

VILLAROEL
vs.
BERNARDINO ESTRADA
G.R. No. L-47362 December 19, 1940

FACTS: On May 1912, Alexandra Callao, mother of Villaroel, obtained from the Spouses Mariano
Estrada and Severina a loan of P1,000 payable after 7 years. Alexandra died, leaving Villaroel as the only
heir. Severina and Mariano died as well, leaving Estrda as the only heir.
On August 30, 1930, Villaroel signed a document which states that he owed Estrada P1,000 with an
interest of 12% per year, which pertains to the original debt. When the obligation became due, Villaroel
failed to pay. An action was brought in the CFI Laguna to collect the amount. CFI ordered Villaroel to
pay the claimed amount with interest from August 30, 1930 until full payment.

ISSUE: WON the obligation arising from the original contract of loan, having been prescribed, would
still be demandable from the only heir of the original debtor?

HELD: YES. The prescribed debt of the mother of the debtor was held to be sufficient
consideration to make valid and effective the promise of the son to pay the same. Although the action
to recover the original debt has prescribed when the lawsuit was filed, the question that arises in this
appeal is whether, notwithstanding such prescription, the debtor is liable to pay.

This action is based on the original obligation contracted by the mother of Villaroel, which has
prescribed, but in which the defendant assumed liability to fulfil that obligation. Being the only heir of the
debtor, that debt legally contracted by his mother, is now a moral obligation of him which is enough to
create and make effective and enforceable his obligation which he contracted on August 9, 1930.

A promise to perform a natural obligation is as effective as performance itself and converts the
obligation into a civil one. The natural obligation is a valid cause for a civil obligation.

2. PRIMITIVO ANSAY
vs.
NATIONAL DEVELOPMENT COMPANY
G.R. No. L-13667 April 29, 1960
FACTS: On July 25, 1956, appellants filed against appellees in the CFI Manila an action praying for a
20% Christmas Bonus for the years 1954 and 1955. CFI held that they are not entitled to such because:
(a) A bonus is an act of liberality and the court takes it that it is not within its judicial powers to command
respondents to be liberal;
(b) Petitioners admit that respondents are not under legal duty to give such bonus but that they had only
ask that such bonus be given to them because it is a moral obligation of respondents to give that but as
this Court understands, it has no power to compel a party to comply with a moral obligation (Art. 142,
New Civil Code.).

ISSUE: WON the appellees have the legal obligation to give the claimed bonus despite the fact that the
same has been granted from a moral obligation or the natural obligation to do the same?

HELD: NO. Article 1423 of the New Civil Code classifies obligations into civil or natural. "Civil
obligations are a right of action to compel their performance. Natural obligations, not being based on
positive law but on equity and natural law, do not grant a right of action to enforce their performance, but
after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or
rendered by reason thereof".
It is thus readily seen that an element of natural obligation before it can be cognizable by the court is
voluntary fulfillment by the obligor. Certainly retention can be ordered but only after there has been
voluntary performance. But here there has been no voluntary performance. In fact, the court cannot order
the performance.
At this point, we would like to reiterate what we said in the case of Philippine Education Co. vs. CIR and
the Union of Philippine Education Co., Employees:
From the legal point of view a bonus is not a demandable and enforceable obligation. It is so when it
is made a part of the wage or salary compensation.
And while it is true that the subsequent case of H. E. Heacock vs. National Labor Union, et al, we stated
that:
Even if a bonus is not demandable for not forming part of the wage, salary or compensation of an
employee, the same may nevertheless, be granted on equitable consideration as when it was given in the
past, though withheld in succeeding two years from low salaried employees due to salary increases.
Still the facts in said Heacock case are not the same as in the instant one, and hence the ruling applied in
said case cannot be considered in the present action.

3.DBP 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. SOLID HOMES, INC., PETITIONER, v. SPOUSES ARTEMIO JURADO AND CONSUELO O.
JURADO, RESPONDENTS.

The Facts
Facts:
In 1977, Solid Homes entered into a Contract to Sell covering a 1,241 square meter residential lot located
at Loyola Grand Villas Subdivision, Marikina, Rizal (subject property) with spouses Violeta and Jesus
Calica (spouses Calica) for the consideration of P434,350.00. 7 Spouses Calica paid P86,870.00 as
downpayment and the balance was made payable in equal monthly installments of P5,646.55 for a period
of eight years.8

In 1983, by virtue of a Deed of Assignment and Transfer of Rights, spouses Calica assigned and
transferred their rights as vendees in the Contract to Sell to spouses Jurado for the amount of
P130,352.00. Solid Homes prepared the standard printed form of the Deed of Assignment and Transfer of
Rights and its officer, Rita Castillo Dumatay (Dumatay), attested and affixed her signature thereon.
Spouses Jurado paid the transfer fee for which Solid Homes issued a provisional receipt. Solid Homes
also issued to spouses Jurado a credit memorandum indicating that the latter paid P108,001.00. As of
February 22, 1983, spouses Calica and spouses Jurado made the total payment of P480,262.95. 9

Thereafter, spouses Jurado inquired as to the transfer of ownership over the subject property and were
informed by Dumatay that Solid Homes had mortgaged the property and that the mortgage had been
foreclosed.10 Solid Homes undertook to replace the subject property with another lot and for this purpose,
spouses Jurado submitted the required documents. Through letters dated October 23, 1992 and August 7,
1996, spouses Jurado followed-up on the promised substitute property but to no avail. 11
In 2000, spouses Jurado filed a complaint for specific performance and damages before the HLURB. The
HLURB dismissed the complaint without prejudice. 12 Said dismissal was affirmed by the HLURB Board
on April 20, 2005.13

It appears that spouses Jurado no longer pursued any further appeal and instead in 2005, they refiled the
complaint for specific performance and damages before the HLURB. They prayed that Solid Homes be
ordered to replace the lot, or to convey and transfer to them a substitute lot, or in the alternative, to pay
the current value of the lot, or to return the payments made with interests. 14 In answer, Solid Homes
argued that the assignment and transfer was void as it was made without Solid Homes' prior written
consent. Solid Homes further raised the defenses of prescription and laches, res judicata, forum shopping
and estoppel.15 Because the complaint was allegedly unfounded, Solid Homes prayed for the award of
damages and attorney's fees.16

The Issues

Hence, Solid  Homes resorts to the  present  petition raising  the following issues:

Whether or not the Honorable Office of the President as affirmed by the Honorable Court of
Appeals seriously and gravely erred in not holding that prescription and laches have likewise set-
in;

Defenses of res judicata, forum shopping,

estoppel, prescription and laches

Solid Homes also repeatedly invokes the grounds of res judicata, forum shopping, estoppel, prescription
and laches to defeat the claim of spouses Jurado. These arguments are, however, patently without merit.

The 1996 HLURB Rules of Procedure, as amended by Resolution No. R-660, series of 1999, the rules in
force at the time the first complaint was filed, require that documentary evidence supporting the cause of
action must be attached to the complaint and in the absence of which, the complaint shall be dismissed
without prejudice. Dismissal with prejudice disallows and bars the refiling of the complaint; whereas, the
same cannot be said of a dismissal without prejudice. 46

Here, the HLURB Arbiter dismissed the first complaint for lack of documentary evidence and the
dismissal was expressly made to be without prejudice to the refiling thereof. Since spouses Jurado did not
appear to have further appealed from said dismissal as affirmed by the HLURB Board, their remedy was
to refile the complaint, together with their documentary evidence supporting their cause of action, as they
in fact did in 2005. Thus, Solid Homes' contentions that the second complaint was barred by res
judicata,47 that spouses Jurado committed forum shopping, 48 and that  they were estopped from adducing
additional documentary evidence, are erroneous.

There is likewise no reason to hold that the complaint was barred by prescription or by laches. Solid
Homes postulates that the 10-year prescriptive period should be reckoned from September 17, 1977 when
it executed the Contract to Sell with spouses Calica, or at the latest, from January, 1983, when the Deed
of Assignment and Transfer of Rights was executed.

The Civil Code provides that an action based on a written contract, an obligation created by law, and a
judgment must be brought within 10 years from the time the right of action accrues. 49 While the
prescriptive period for bringing an action for specific performance, as in this case, prescribes in 10 years,
the period of prescription is reckoned only from the date the cause of action accrued. 50

A cause of action arises when that which should have been done is not done, or that which should not
have been done is done.51 A right of action does not necessarily accrue on the date of the execution of the
contracts because it is the legal possibility of bringing the action that determines the reckoning point for
the period of prescription.52 Thus, it was only when Solid Homes mortgaged the subject property in
February 1983 that spouses Jurado's cause of action accrued because it was only then that Solid Homes'
obligation to replace the mortgaged property arose.

Congruently, Article 1155 of the Civil Code explicitly provides that the prescriptive period is interrupted
when an action has been filed in court; when there is a written extrajudicial demand made by the
creditors; and when there is any written acknowledgment of the debt by the debtor. Interruption of the
prescriptive period, as distinguished from mere suspension or tolling, by written extrajudicial demand
means that the period would commence anew from the receipt of the demand. 53 In other words, "[a]
written extrajudicial demand wipes out the period that has already elapsed and starts anew the prescriptive
period."54

In this case, the uncontroverted fact is that spouses Jurado made extrajudicial demands upon Solid Homes
to replace the property through letters dated October 23, 1992 and August 7, 1996, and then filed the
complaint in 2000. Resultantly, when Spouses Jurado re-filed their complaint in 2005, their cause of
action had not yet prescribed.

Only in the event that Solid Homes fails to sell an acceptable replacement lot despite full payment of the
purchase price that such may be considered a contractual breach which, under Article 1191 of the New
Civil Code, gives rise to the remedy of rescission. Relatedly, rescission creates the obligation to return the
things which were the object of the contract, together with their fruits, and the price with its
interests.72 While we are aware of our ruling in Solid Homes, Inc. v. Spouses Tan,73 as reiterated in
Gotesco, that for reasons of equity and justice and to prevent unjust enrichment, the injured party should
be paid the market value of the lot, 74 such presupposes that the buyer already paid the purchase price in
full. As held in Gotesco:
On this score, it is apt to mention that it is the intent of PD 957 to protect the buyer against unscrupulous
developers, operators and/or sellers who reneged on their obligations. Thus, in order to achieve this
purpose, equity and justice dictate that the injured party should be afforded full recompense and as such,
be allowed to recover the prevailing market value of the undelivered lot which had been fully paid for.
(Emphasis ours)75
But since in this case, spouses Jurado have yet to fully pay the purchase price, they should be entitled, not
to the entire current market value of the property, but to a refund of the installments they paid with
interest, in the event Solid Homes fails to replace the subject property with an acceptable lot.
4. DOMESTIC PETROLEUM RETAILER CORPORATION v. MANILA INTERNATIONAL
AIRPORT AUTHORITY, GR No. 210641, 2019-03-27
Facts:
[petitioner DPRC] and [respondent MIAA] entered into a Contract of Lease whereby the former
leased from the latter... parcel of land and... building
[Petitioner DPRC] was obliged to pay monthly rentals
[respondent MIAA] passed Resolution No. 98-30... increasing the rentals paid by its
concessionaires and lessees
[Petitioner] DPRC initially refused to pay the increased rentals which was decreed without prior
notice and hearing
[respondent MIAA] demanded its payment of... rental in arrears which was based on the
increase prescribed in Resolution No. 98-30 with 2% interest compounded monthly
[petitioner DPRC] protested in writing to [respondent MIAA] the increased rentals and the
computation[.] [H]owever, it also signified its intention to comply in good faith with the terms and
conditions of the lease contract by paying
In the said case, the Court nullified Resolution Nos. 98-30 and 99-11 issued by respondent
MIAA for non-observance of the notice and hearing requirements for the fixing rates required
[petitioner DPRC] advised [respondent] MIAA of its intention to stop paying the increased rental
rate, and on January 1, 2006, it stopped paying the increased rental rate[,] but continued paying
the original rental rate prescribed in the lease contract
[respondent] MIAA required the payment of P645,216.21 allegedly representing the balance of
the rentals from January up to June 2006
[petitioner DPRC] sent its reply to [respondent] MIAA denying the unpaid obligation, reiterating
that the rental could no longer be computed based on the nullified Resolution No. 98-30
[Respondent] MIAA ignored its demand[,] prompting [petitioner DPRC] to send a final written
demand
[RTC] rendered [its Decision, ruling in favor of petitioner DPRC.
CA affirmed the RTC's Decision holding respondent MIAA liable to petitioner DPR
C
CA found that the liability of respondent MIAA to petitioner DPRC for overpaid monthly rentals
was in the nature of a quasi-contract of solutio indebiti.
CA held that "the claim of refund must be commenced within six (6) years from date of payment
pursuant to Article 1145(2)... of the Civil Code... he CA found that, despite the records showing
that petitioner DPRC made overpayment in monthly rentals from December 11, 1998 up to
December 5, 2005, such claim could not be fully awarded to petitioner DPRC due to
prescription.
the claim for refund must be made within six (6) years from date of payment. Since [petitioner]
DPRC demanded the refund of the increase in monthly rentals mistakenly paid only on July 27,
2006 and filed this case before the [RTC] only on December 23, 2008, it can recover only those
paid during the period from January 9,2003 to December 5, 2005
Hence, the instant Petition.
Issues:
whether the CA was correct in amending the RTC's Decision, modifying the amount of
respondent MIAA's liability from the full amount of P9,593,179.87 to just P3,839,643.05 plus
legal interest at 12% per annum computed from the time of extra-judicial demand on July 27,
2006, on the basis of the application of the six-year prescriptive period governing the quasi-
contract of solutio indebiti.
Ruling:
In the instant case, the Court finds that the essential requisites of solutio indebiti are not
present.
it is undisputed by all parties that respondent MIAA and petitioner DPRC are mutually bound to
each other under a Contract of Lease
Hence, with respondent MIAA and petitioner DPRC having the juridical relationship of a lessor-
lessee, it cannot be said that in the instant case, the overpayment of monthly rentals was made
when there existed no binding juridical tie or relation between the pay or, i.e., petitioner DPRC,
and the person who received the payment, i.e., respondent MIAA.
the Court finds that the cause of action of petitioner DPRC is based on the violation of a
contractual stipulation in the parties' Contract of Lease, and not due to the existence of a quasi-
contract.
Hence, by filing its Complaint, petitioner DPRC invoked the Contract of Lease and alleged that
respondent MIAA violated the aforementioned contractual stipulation, considering that the latter
imposed a price escalation of monthly rentals despite reneging on its contractual obligation to
first issue a valid Administrative Order and give petitioner DPRC prior notice.
Just because the Contract of Lease in itself may be silent as to petitioner DPRC's entitlement to
a refund does not mean that such claim for refund is not provided for in the contract and cannot
be asserted by petitioner DPRC.
It must be stressed that applicable laws form part of, and are read into, contracts without need
for any express reference thereto.
Furthermore, it cannot be said that petitioner DPRC's payments in monthly rentals from
December 11, 1998 up to December 5, 2005 in observance with the subsequently nullified
Resolution No. 98-30 were made due to mistake on the part of petitioner DPRC.
petitioner DPRC deliberately made the payments in accordance with respondent MIAA's
Resolution No. 98-30, albeit under protest.
petitioner DPRC also signified its intention to comply in good faith with the terms and conditions
of the lease contract by paying the amount charged in accordance with Resolution No. 98-30
despite registering its objection to its validity.
Solutio indebiti applies when payment was made on the erroneous belief of facts or law that
such payment is due.[34] In the case at hand, petitioner DPRC's overpayment of rentals from
1998 to 2005 was not made by sheer inadvertence of the facts or the misconstruction and
misapplication of the law. Petitioner DPRC did not make payment because it mistakenly and
inadvertently believed that the increase in rentals instituted by the subsequently voided
Resolution No. 98-30 was indeed due and demandable. From the very beginning, petitioner
DPRC was consistent in its belief that the increased rentals were not due as Resolution No. 98-
30 was, in its view, void.
Therefore, with the absence of the two essential requisites of solutio indebiti in the instant case,
petitioner DPRC's cause of action is not based on the quasi-contract of solutio indebiti.
WHEREFORE, premises considered, the instant Petition is hereby GRANTED. The Decision
dated May 31, 2013 and Resolution dated November 29, 2013 promulgated by the Court of
Appeals, Special Second Division and Former Special Second Division, respectively in CA-G.R.
CV No. 98378 are PARTIALLY REVERSED and SET ASIDE insofar as the Court of Appeals
reduced the total amount of liability of respondent Manila International Airport Authority to
P3,839,643.05, plus legal interest at 12% per annum computed from the time of the extrajudicial
demand on July 27, 2006. Accordingly, the Decision dated August 15, 2011 of the Regional
Trial Court, Pasay City, Branch 119 in Civil Case No. R-PSY-08-08963, as clarified in its Order
dated November 17, 2011, is REINSTATED. SO ORDERED.
Principles:
In order to establish the application of solutio indebiti in a given situation, two conditions must
concur: (1) a payment is made when there exists no binding relation between the payor who has
no duty to pay, and the person who received the payment, and (2) the payment is made through
mistake, and not through liberality or some other cause.