CIVIL LAW REVIEW 2 I. OBLIGATIONS
A. IN GENERAL 1. Definition
Article 1156. An obligation is a juridical necessity to give, to do or not to do.
JURIDICAL NECESSITY: Art. 1423 provides that obligations are either natural or civil. Art. 1156 provides the definition of civil obligations. Under Art. 1423, civil obligations give a right of action to compel their performance or fulfillment. In this sense, there is juridical necessity.
2. Kinds of Obligations as to basis and enforceability
Art. 1423. Obligations are civil or natural. Civil obligations give 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. Some natural obligations are set forth in the following articles.
CIVIL OBLIGATIONS VS. NATURAL OBLIGATIONS:
CIVIL NATURAL
Basis Positive,
man-made law Equity and natural law Enforceability Grants a right of
action to compel performance or fulfillment
Does not grant a right of action for fulfillment.
However, it can still be enforced: 1. If the plaintiff required fulfillment before a court and there is no objection; or
2. if voluntarily fulfilled, creditor can still retain the benefits of fulfillment.
EXAMPLE: If the action for the payment of a debt has already prescribed, the obligation is converted from civil to natural (See Art. 1139 to 1155 for Prescription). Note that what prescribed is the “action” and not the obligation. If still fulfilled after the period has expired, debtor can no longer demand the return of what has been delivered. Art. 1428 provides: Art. 1428. When, after an action to enforce a civil obligation has failed the defendant voluntarily performs the obligation, he cannot demand the return of what he has delivered or the payment of the value of the service he has rendered.
“RETENTION” of the benefits is premised on the fulfillment being voluntary, i.e., the debtor knew that he had no obligation to fulfill the said obligation, but still chose to do so.
Other provisions dealing with natural obligations:
Art. 1424. When a right to sue upon a civil obligation has lapsed by extinctive prescription, the obligor who voluntarily performs the contract cannot recover what he has delivered or the value of the service he has rendered.
Art. 1425. When without the knowledge or against the will of the debtor, a third person pays a debt which the obligor is not legally bound to pay because the action thereon has prescribed, but the debtor later voluntarily reimburses the third person, the obligor cannot recover what he has paid. Art. 1426. When a minor between eighteen and twenty-one years of age who has entered into a contract without the consent of the parent or
guardian, after the annulment of the contract voluntarily returns the whole thing or price received, notwithstanding the fact the he has not been benefited thereby, there is no right to demand the thing or price thus returned.
Art. 1427. When a minor between eighteen and twenty-one years of age, who has entered into a contract without the consent of the parent or guardian, voluntarily pays a sum of money or delivers a fungible thing in fulfillment of the obligation, there shall be no right to recover the same from the obligee who has spent or consumed it in good faith. (1160A) NOT APPLICABLE ANYMORE: since the congress already changed the age of majority from 21 to 18 under RA No. 6809.
Art. 1429. When a testate or intestate heir voluntarily pays a debt of the decedent exceeding the value of the property which he received by will or by the law of intestacy from the estate of the deceased, the payment is valid and cannot be rescinded by the payer.
EXAMPLE: D owes C P10M. Upon the death of D, A and B, heirs of D, paid the full P10M. Later on, they discovered that the value of the estate is only P3M.
a. Is there a natural obligation? Yes. For the P7M;
b. Can A and B compel D to return the P10M? No. voluntary obligation is only upto P7M?
c. Can A and B compel D to return the P7M? Yes. The law requires “voluntary” payment, which means not merely the absence of fraud, violence or intimidation, but also that the payor knew that under the law they cannot be compelled to pay, but they paid.
Under. Art. 1311, last par. “the heir is not liable beyond the value of the property he received from the decedent”.
In this case, payment was not voluntary, since A and B paid at the time that they had no knowledge that the value of the estate was only P3M.
Art. 1430. When a will is declared void because it has not been executed in accordance with the formalities required by law, but one of the intestate heirs, after the settlement of the debts of the deceased, pays a legacy in compliance with a clause in the defective will, the payment is effective and irrevocable. CASES: 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.
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.
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. ESSENTIAL ELEMENTS OF OBLIGATION 1. Active subject (creditor) - obligee
2. Passive subject (debtor) - obligor
3. Prestation – subject matter of the obligation – object.
4. Vinculum (Efficient Cause) – the reason why the obligation exists. – juridical tie.
IN A CONTRACT OF SALE, WHO IS THE PASSIVE SUBJECT? Depending on which obligation you’re referring to. Pay the price – debtor is the buyer. Deliver and transfer ownership – seller.
“OBJECT” not the same as “thing”. As to obligations, it is the prestation ([3] above: to give, to do or not to do); sometimes, it is the purpose, which is not necessarily the subject matter, but in obligations, it is a prestation, not a thing, it is a conduct.
“VINCULUM” – juridical tie, vinculum juris is that which binds the parties to an obligation, without which, no obligation may exists (at least civil). This is the element lacking in natural obligations.
“obligation” is from the root word in latin: obligacio/ obligare/obligamus – tying/binding; at least one person would be bound.
“CONSIDERATION” is not an element of an obligation, it is an essential element of contracts. Obligations may arise from contracts, but they are not contracts. Contracts are not obligations, but is a source of obligation. BAR QUESTION: what is an obligation without agreement?
Answer: Obligations without an agreement are those which would arise even without consent of one of the parties or both parties, which may arise from four sources: law (pay taxes), quasi-contract, quasi-delict, acts or omissions punished by law.
Note that only in contracts are consent of both parties are required. What are those that bind? The sources.
B. SOURCES OF OBLIGATIONS: Art. 1157. Obligations arise from: (1) Law;
(2) Contracts; (3) Quasi-contracts;
(4) Acts or omissions punished by law; and (5) Quasi-delicts.
1. LAW: never presumed:
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.
2. CONTRACTS:
Art. 1159. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.
Art. 1305. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.
3. QUASI-CONTRACTS:
Art. 1160. Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1, Title XVII, of this Book.
Art. 2142. 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.
PROBLEM: A, resident of an island struck by a storm, found a decaying body and buried the same without intention for it to be a gratuitous act. Finding C, aunt of the deceased, demanded reimbursement for the cost of burial.
Is there an obligation to reimburse? Yes. Obligation arose from Art. 2165, which provides:
Art. 2165. When funeral expenses are borne by a third person, without the knowledge of those relatives who were obliged to give support to the deceased, said relatives shall reimburse the third person, should the latter claim reimbursement.
Can A demand reimbursement from C? No. A can only demand reimbursement from those who are obliged to give support to the deceased. An aunt is not required to support nephew/niece. Art. 105 of the Family Code provides:
Art. 105. Subject to the provisions of the succeeding articles, the following are obliged to support each other to the whole extent set forth in the preceding article:
(1) The spouses;
(2) Legitimate ascendants and descendants;
(3) Parents and their legitimate children and the legitimate and illegitimate children of the latter;
(4) Parents and their illegitimate children and the legitimate and illegitimate children of the latter; and
(5) Legitimate brothers and sisters, whether of full or half-blood. NEGOTIORUM GESTIO
Art. 2144. Whoever voluntarily takes charge of the agency or management of the business or property of another, without any power from the latter, is obliged to continue the same until the termination of the affair and its incidents, or to require the person concerned to substitute him, if the owner is in a position to do so. This juridical relation does not arise in either of these instances:
(1) When the property or business is not neglected or abandoned; (2) If in fact the manager has been tacitly authorized by the owner. In the first case, the provisions of Articles 1317, 1403, No. 1, and 1404 regarding unauthorized contracts shall govern.
In the second case, the rules on agency in Title X of this Book shall be applicable.
PROBLEM: In fear of reprisals, X left his fishpond and went to Europe. Y seeing the fishes ready for harvest, harvested the same, and sold them to Z. Y borrowed from W to prepare the fishpond for the next batch.
a. What is the juridical relation between X and Y? Negotiorum gestio: X is owner. Y is gestor or negotiorum gestor.
b. Upon return of X, what are the obligations of Y or X, as regards Y’s contract with:
i. Z: contract of sale – to account for the sale and remit the proceeds
ii. W: loan – X is bound by the contract since it is a contract which refers to the thing pertaining to the owner of the business. (Art. 2152[2])
c. If the owner ratifies the contracts, the rules on agency would apply under Art. 2149, which may include, among others, compensation of the agent.
BAD EXAMPLE OF NEGOTIORUM GESTIO: members of the family went out of town for vacation. On the very night they left the house, the house was burned. The neighbors, however, were able to prevent the total destruction of the house.
Why?
1. A gestor takes charge of a business or property of another. In this case, the neighbors did not take charge of the management of the house, only saved it from total destruction. “Management” may connote repainting, repairs, etc.;
2. House was not “abandoned” since the family went out only for a vacation. In the Family Code, “abandonment” of the father arises only after 90 days, and that’s only a disputable presumption.
3. It is not negotiorum gestin, at most, Art. 2168 of the Civil Code (i.e., Other Quasi Contracts):
Art. 2168. When during a fire, flood, storm, or other calamity, property is saved from destruction by another person without the knowledge of the owner, the latter is bound to pay the former just compensation.
SOLUTIO INDEBITI
Art. 2154. 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.
PROBLEM: BPO asked RRA to go to a store to buy a pack of cigarettes which costs P225, BPO gave RRA P500. Store owner gave RRA the cigarette and P375 as change.
How is this relationship denominated?
a. Solutio indebiti - BPO received something which he does not have the right to demand, i.e., P100. Change should have been P275 only. (Art. 2154)
b. Donation – if the delivery of the excess P100 was not made through mistake.
PROBLEM: A bus accident happened, X tried to help by carrying Z, one of the passengers of the bus and brought her to the hospital.
X incurred costs in cleaning the car which was stained by the blood of Z. a. Is there a quasi-contract between X and Z? Yes. Z is liable to
reimburse for the gasoline expense and cleaning of the car.
b. Can Z, when asked to pay the bill of the hospital, refuse payment on the ground that she did not give her consent? No. Quasi-contract. If she is not allowed to pay, she would be unjustly enriched.
OTHER QUASI-CONTRACTS: see Arts. 2164 to 2175. CASES:
FAUSTINO CRUZ vs.
J.M. TUASON & COMPANY, INC. vs. GREGORIO ARANETA, INC.
G.R. No. L-23749 April 29, 1977
FACTS: Faustino Cruz’ complaint alleged two causes of action, namely: (1) that upon request of the Deudors (the family of Telesforo Deudor who laid claim on the land in question on the strength of an "informacion posesoria" ) plaintiff made permanent improvements valued at P30,400.00 on said land having an area of more or less 20 quinones and for which he
also incurred expenses in the amount of P7,781.74, and since defendants-appellees are being benefited by said improvements, he is entitled to reimbursement from them of said amounts and
(2) that in 1952, defendants availed of plaintiff's services as an intermediary with the Deudors to work for the amicable settlement of Civil Case No. Q-135, then pending also in the Court of First Instance of Quezon City, and involving 50 quinones of land, of Which the 20 quinones aforementioned form part, and notwithstanding his having performed his services, as in fact, a compromise agreement entered into on March 16, 1963 between the Deudors and the defendants was approved by the court, the latter have refused to convey to him the 3,000 square meters of land occupied by him, (a part of the 20 quinones above) which said defendants had promised to do "within ten years from and after date of signing of the compromise agreement", as consideration for his services.
CFI of Quezon City dismissed the complaint on the grounds of unenforceability, lack of cause of action, and prescription.
ISSUE: WON Faustino Cruz can claim reimbursement for the expenses and services rendered?
HELD: No. We hold that the allegations in his complaint do not sufficiently Appellants' reliance on Article 2142 of Civil Code is misplaced. Said article provides:
Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another.
From the very language of this provision, it is obvious that a presumed quasi-contract cannot emerge as against one party when the subject matter thereof is already covered by an existing contract with another party. Predicated on the principle that no one should be allowed to unjustly enrich himself at the expense of another, Article 2124 creates the legal fiction of a quasi-contract precisely because of the absence of any actual agreement between the parties concerned. Corollarily, if the one who claims having enriched somebody has done so pursuant to a contract with a third party, his cause of action should be against the latter, who in turn may, if there is any ground therefor, seek relief against the party benefited. It is essential that the act by which the defendant is benefited must have been voluntary and unilateral on the part of the plaintiff. As one distinguished civilian puts it, "The act is voluntary. because the actor in quasi-contracts is not bound by any pre-existing obligation to act. It is unilateral, because it arises from the sole will of the actor who is not previously bound by any reciprocal or bilateral agreement. The reason why the law creates a juridical relations and imposes certain obligation is to prevent a situation where a person is able to benefit or take advantage of such lawful, voluntary and unilateral acts at the expense of said actor." (Ambrosio Padilla, Civil Law, Vol. VI, p. 748, 1969 ed.) In the case at bar, since appellant has a clearer and more direct recourse against the Deudors with whom he had entered into an agreement regarding the improvements and expenditures made by him on the land of appellees. it Cannot be said, in the sense contemplated in Article 2142, that appellees have been enriched at the expense of appellant.
GUTIEREZ HERMANOS vs.
ENGRACIO ORENSE
G.R. No. L-9188 December 4, 1914
FACTS: Engracio Orense is the owner of a parcel of land, which nephew, Jose Duran, with the former’s consent and knowledge, sold and conveyed the same to Hermano’s company for P1,500 with the reservation of the right to repurchase it for the same price within a period of 4 years. But the same land was not repurchased by Jose Duran due to insolvency. Despite repeated demand upon Duran, the latter never vacated the land.
His refusal was based on allegations that he did not know of said sale and that he remains the owner of the land.
Petitioner filed a complaint for estafa against Jose Duran. However, at the trial of the case Engracio Orense, called as a witness, being interrogated by the fiscal as to whether he had consented to Duran's selling the said property under right of redemption to the firm of Gutierrez Hermanos, replied that he had. In view of this statement by the defendant, the court acquitted Jose Duran of the charge of estafa.
As a result of the acquittal of Jose Duran, based on the explicit testimony of his uncle, Engacio Orense, the owner of the property, to the effect that he had consented to his nephew Duran's selling the property under right of repurchase to Gutierrez Hermanos, counsel for this firm filed a complainant praying, among other remedies, that the defendant Orense be compelled to execute a deed for the transfer and conveyance to the plaintiff company of all the right, title and interest with Orense had in the property sold, and to pay to the same the rental of the property due from February 14, 1911. ISSUE: WON Orense can be compelled to deliver the property to Hermanos as premised above?
HELD: YES. It having been proven at the trial that he gave his consent to the said sale, it follows that the defendant conferred verbal, or at least implied, power of agency upon his nephew Duran, who accepted it in the same way by selling the said property. The principal must therefore fulfill all the obligations contracted by the agent, who acted within the scope of his authority.
Even should it be held that the said consent was granted subsequently to the sale, it is unquestionable that the defendant, the owner of the property, approved the action of his nephew, who in this case acted as the manager of his uncle's business, and Orense's ratification produced the effect of an express authorization to make the said sale.
Article 1259 of the Civil Code prescribes: "No one can contract in the name of another without being authorized by him or without his legal representation according to law.
A contract executed in the name of another by one who has neither his authorization nor legal representation shall be void, unless it should be ratified by the person in whose name it was executed before being revoked by the other contracting party.
The sworn statement made by the defendant, Orense, while testifying as a witness at the trial of Duran for estafa, virtually confirms and ratifies the sale of his property effected by his nephew, Duran, and, pursuant to article 1313 of the Civil Code, remedies all defects which the contract may have contained from the moment of its execution.
On the testimony given by Engacio Orense at the trial of Duran for estafa, the latter was acquitted, and it would not be just that the said testimony, expressive of his consent to the sale of his property, which determined the acquittal of his nephew, Jose Duran, who then acted as his business manager, and which testimony wiped out the deception that in the beginning appeared to have been practiced by the said Duran, should not now serve in passing upon the conduct of Engracio Orense in relation to the firm of Gutierrez Hermanos in order to prove his consent to the sale of his property, for, had it not been for the consent admitted by the defendant Orense, the plaintiff would have been the victim of estafa.
If the defendant Orense acknowledged and admitted under oath that he had consented to Jose Duran's selling the property in litigation to Gutierrez Hermanos, it is not just nor is it permissible for him afterward to deny that admission, to the prejudice of the purchaser, who gave P1,500 for the said property.
The contract of sale of the said property contained in the notarial instrument of February 14, 1907, is alleged to be invalid, null and void under the provisions of paragraph 5 of section 335 of the Code of Civil Procedure, because the authority which Orense may have given to Duran to make the said contract of sale is not shown to have been in writing and signed by Orense, but the record discloses satisfactory and conclusive proof that the defendant Orense gave his consent to the contract of sale executed in a public instrument by his nephew Jose Duran. Such consent was proven
in a criminal action by the sworn testimony of the principal and presented in this civil suit by other sworn testimony of the same principal and by other evidence to which the defendant made no objection. Therefore the principal is bound to abide by the consequences of his agency as though it had actually been given in writing.
The repeated and successive statements made by the defendant Orense in two actions, wherein he affirmed that he had given his consent to the sale of his property, meet the requirements of the law and legally excuse the lack of written authority, and, as they are a full ratification of the acts executed by his nephew Jose Duran, they produce the effects of an express power of agency.
RUSTICO ADILLE vs.
COURT OF APPEALS, EMETRIA ASEJO, et. al.
G.R. No. L-44546 January 29, 1988
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.
Andres vs. Mantrust
G.R. No. 82670 September 15, 1989
Art. 2154 of the Civil Code, which embodies the doctrine of solutio indebiti This legal provision, which determines the quasi-contract of solution indebiti, is one of the concrete manifestations of the ancient principle that no one shall enrich himself unjustly at the expense of another.
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.
In Velez v. Balzarza, 73 Phil. 630 (1942), the Court, speaking through Mr. Justice Bocobo explained the nature of this article thus:
Article 1895 [now Article 2154] of the Civil Code abovequoted, is therefore applicable. This legal provision, which determines the quasi-contract of solution indebiti, is one of the concrete manifestations of the ancient principle that no one shall enrich himself unjustly at the expense of another. In the Roman Law Digest the maxim was formulated thus: "Jure naturae acquum est, neminem cum alterius detrimento et injuria fieri locupletiorem." And the Partidas declared: "Ninguno non deue enriquecerse tortizeramente con dano de otro." Such axiom has grown through the centuries in legislation, in the science of law and in court decisions. The lawmaker has found it one of the helpful guides in framing statutes and codes. Thus, it is unfolded in many articles scattered in the Spanish Civil Code. (See for example, articles, 360, 361, 464, 647, 648, 797, 1158, 1163, 1295, 1303, 1304, 1893 and 1895, Civil Code.) This time-honored aphorism has also been adopted by jurists in their study of the conflict of rights. It has been accepted by the courts, which have not hesitated to apply it when the exigencies of right and equity demanded its assertion. It is a part of that affluent reservoir of justice upon which judicial discretion draws whenever the statutory laws are inadequate because they do not speak or do so with a confused voice. [at p. 632.]
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 contention is without merit.
The contract of petitioner, as regards the sale of garments and other textile products, was with FACETS. It was the latter and not private respondent which was indebted to petitioner. On the other hand, the contract for the transmittal of dollars from the United States to petitioner was entered into by private respondent with FNSB. Petitioner, although named as the payee was not privy to the contract of remittance of dollars. Neither was private respondent a party to the contract of sale between petitioner and FACETS. There being no contractual relation between them, petitioner has no right to apply the second $10,000.00 remittance delivered by mistake by private respondent to the outstanding account of FACETS.
Petitioner invokes the equitable principle that when one of two innocent persons must suffer by the wrongful act of a third person, the loss must be borne by the one whose negligence was the proximate cause of the loss. The rule is that principles of equity cannot be applied if there is a provision of law specifically applicable to a case [Phil. Rabbit Bus Lines, Inc. v. Arciaga, G.R. No. L-29701, March 16, 1987,148 SCRA 433; Zabat, Jr. v. Court of Appeals, G.R. No. L36958, July 10, 1986, 142 SCRA 587; Rural Bank of Paranaque, Inc. v. Remolado, G.R. No. 62051, March 18, 1985, 135 SCRA 409; Cruz v. Pahati, 98 Phil. 788 (1956)]. Hence, the Court in the case of De Garcia v. Court of Appeals, G.R. No. L-20264, January 30, 1971, 37 SCRA 129, citing Aznar v. Yapdiangco, G.R. No. L-18536, March 31, 1965, 13 SCRA 486, held:
The common law principle that where one of two innocent persons must suffer by a fraud perpetrated by another, the law imposes the loss upon the party who, by his misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case which is covered by an express provision of the new Civil Code, specifically Article 559. Between a common law principle and a statutory provision, the latter must prevail in this jurisdiction. [at p. 135.]
Puyat & Sons vs.
City of Manila
G. R. No. L-17447 April 30, 1963
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 erroneosly, 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 obligationto retun 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. The reason underlying similar provisions, as applied to illegal taxation, in the United States, is expressed in the case of Newport v. Ringo, 37 Ky. 635, 636; 10 S.W. 2, in the following manner:
"It is too well settled in this state to need the citation of authority that if money be paid through a clear mistake of law or fact, essentially affecting
the rights of the parties, and which in law or conscience was not payable, and should not be retained by the party receiving it, it may be recovered. Both law and sound morality so dictate. Especially should this be the rule as to illegal taxation. The taxpayer has no voice in the impositionof the burden. He has the right to presume that the taxing power has been lawfully exercised. He should not be required to know more than those in authority over him, nor should he suffer loss by complying with what he bona fide believe to be his duty as a good citizen. Upon the contrary, he should be promoted to its ready performance by refunding to him any legal exaction paid by him in ignorance of its illegality; and, certainly, in such a case, if be subject to a penalty for nonpayment, his compliance under belief of its legality, and without awaitinga resort to judicial proceedings should not be regrded in law as so far voluntary as to affect his right of recovery.". Every person who through an act or performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal grounds, shall return the same to him"(Art. 22, Civil Code). It would seems unedifying for the government, (here the City of Manila), that knowing it has no right at all to collect or to receive money for alleged taxes paid by mistake, it would be reluctant to return the same. No one should enrich itself unjustly at the expense of another (Art. 2125, Civil Code)
4. ACTS OR OMISSIONS PUNISHABLE BY LAW; DELICT
Art. 1167. If a person obliged to do something fails to do it, the same shall be executed at his cost.
This same rule shall be observed if he does it in contravention of the tenor of the obligation. Furthermore, it may be decreed that what has been poorly done be undone.
Revised Penal Code:
Art. 100. Civil liability of a person guilty of felony. — Every person criminally liable for a felony is also civilly liable
Art. 104. What is included in civil liability. — The civil liability established in Articles 100, 101, 102, and 103 of this Code includes: 1. Restitution;
2. Reparation of the damage caused; 3. Indemnification for consequential damages. 5. QUASI-DELICTS
Art. 1162. Obligations derived from quasi-delicts shall be governed by the provisions of Chapter 2, Title XVII of this Book, and by special laws. Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter
QUESTION: From a single act, can there be a basis of a claim under more than one source?
ANSWER: Yes, from delict, quasi-delict and contract.
Note that these require ifferent procedures, requirements, quantim of evidence.
Note still, that no recovery from more than one source is allowed. Example: Art. 2177 “double recovery rule”:
Art. 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the civil liability arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the same act or omission of the defendant. See case of Saludaga vs. FEU
QUESTION: If an act is punishable by law, can there be a basis of a claim under quasi-contract?
ANSWER: NEVER. Art. 2142, quasi contract may only be from acts which are voluntary, lawful and unilateral (all three are required to be present). Absence of one, not a basis of a claim under quasi contract.
CASES: Saludaga vs.
Far Eastern University
G.R. No. 179337 April 30, 2008
When an academic institution accepts students for enrollment, there is established a contract between them, resulting in bilateral obligations which both parties are bound to comply with.
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.
FACTS: Petitioner Saludaga was a sophomore student at private respondent Far Eastern University (FEU), in which private respondent De Jesus was the President. He was shot by Alejandro Rosete (Rosete), one of the security guards on duty at the school premises. He was hospitalized due to the wound he sustained.
Thereafter, herein petitioner filed a complaint for damages against private respondents on the ground that they breached their obligation to provide students with a safe and secure environment and an atmosphere conducive to learning. In turn, private respondent filed a third-party complaint against the Galaxy, the security agency of Rosete.
The trial Court rendered its decision in favor of herein petitioner. On appeal, the appellate Court reversed the decision of the trial Court, hence this petition.
ISSUE: Whether or not the appellate Court erred when it reversed the decision of the trial Court and held that private respondent is not liable for the damages on the ground that the Rosete is not a party to the contract to which the petitioner is suing.
HELD: Yes, the Court held that the appellate Court did err when it reversed the decision of the trial Court.
In Philippine School of Business Administration v. Court of Appeals, we held that:
When an academic institution accepts students for enrollment, there is established a contract between them, resulting in bilateral obligations which both parties are bound to comply with. For its part, the school undertakes to provide the student with an education that would presumably suffice to equip him with the necessary tools and skills to pursue higher education or a profession. On the other hand, the student covenants to abide by the school's academic requirements and observe its rules and regulations. Institutions of learning must also meet the implicit or "built-in" obligation of providing their students with an atmosphere that promotes or assists in attaining its primary undertaking of imparting knowledge. Certainly, no student can absorb the intricacies of physics or higher mathematics or explore the realm of the arts and other sciences when bullets are flying or grenades exploding in the air or where there looms around the school premises a constant threat to life and limb. Necessarily, the school must ensure that adequate steps are taken to maintain peace and order within the campus premises and to prevent the breakdown thereof.
It is undisputed that petitioner was enrolled as a sophomore law student in respondent FEU. As such, there was created a contractual obligation between the two parties. On petitioner's part, he was obliged to comply with the rules and regulations of the school. On the other hand, respondent FEU, as a learning institution is mandated to impart knowledge and equip its
students with the necessary skills to pursue higher education or a profession. At the same time, it is obliged to ensure and take adequate steps to maintain peace and order within the campus.
It is settled that in culpa contractual, the mere proof of the existence of the contract and the failure of its compliance justify, prima facie, a corresponding right of relief. In the instant case, we find that, when petitioner was shot inside the campus by no less the security guard who was hired to maintain peace and secure the premises, there is a prima facie showing that respondents failed to comply with its obligation to provide a safe and secure environment to its students.
In order to avoid liability, however, respondents aver that the shooting incident was a fortuitous event because they could not have reasonably foreseen nor avoided the accident caused by Rosete as he was not their employee; and that they complied with their obligation to ensure a safe learning environment for their students by having exercised due diligence in selecting the security services of Galaxy.
After a thorough review of the records, we find that respondents failed to discharge the burden of proving that they exercised due diligence in providing a safe learning environment for their students. They failed to prove that they ensured that the guards assigned in the campus met the requirements stipulated in the Security Service Agreement. Indeed, certain documents about Galaxy were presented during trial; however, no evidence as to the qualifications of Rosete as a security guard for the university was offered.
Respondents also failed to show that they undertook steps to ascertain and confirm that the security guards assigned to them actually possess the qualifications required in the Security Service Agreement. It was not proven that they examined the clearances, psychiatric test results, 201 files, and other vital documents enumerated in its contract with Galaxy. Total reliance on the security agency about these matters or failure to check the papers stating the qualifications of the guards is negligence on the part of respondents. A learning institution should not be allowed to completely relinquish or abdicate security matters in its premises to the security agency it hired. To do so would result to contracting away its inherent obligation to ensure a safe learning environment for its students.
Consequently, respondents' defense of force majeure must fail. In order for force majeure to be considered, respondents must show that no negligence or misconduct was committed that may have occasioned the loss. An act of God cannot be invoked to protect a person who has failed to take steps to forestall the possible adverse consequences of such a loss. One's negligence may have concurred with an act of God in producing damage and injury to another; nonetheless, showing that the immediate or proximate cause of the damage or injury was a fortuitous event would not exempt one from liability. When the effect is found to be partly the result of a person's participation - whether by active intervention, neglect or failure to act - the whole occurrence is humanized and removed from the rules applicable to acts of God.
Article 1170 of the Civil Code provides that those who are negligent in the performance of their obligations are liable for damages. Accordingly, for breach of contract due to negligence in providing a safe learning environment, respondent FEU is liable to petitioner for damages. It is essential in the award of damages that the claimant must have satisfactorily proven during the trial the existence of the factual basis of the damages and its causal connection to defendant's acts.
In the instant case, it was established that petitioner spent P35,298.25 for his hospitalization and other medical expenses. While the trial court correctly imposed interest on said amount, however, the case at bar involves an obligation arising from a contract and not a loan or forbearance of money. As such, the proper rate of legal interest is six percent (6%) per annum of the amount demanded. Such interest shall continue to run from the filing of the complaint until the finality of this Decision. After this Decision becomes final and executory, the applicable rate shall be twelve percent (12%) per annum until its satisfaction.
The other expenses being claimed by petitioner, such as transportation expenses and those incurred in hiring a personal assistant while recuperating were however not duly supported by receipts. In the absence thereof, no actual damages may be awarded. Nonetheless, temperate damages under Art. 2224 of the Civil Code may be recovered where it has been shown that the claimant suffered some pecuniary loss but the amount thereof cannot be proved with certainty. Hence, the amount of P20,000.00 as temperate damages is awarded to petitioner.
As regards the award of moral damages, there is no hard and fast rule in the determination of what would be a fair amount of moral damages since each case must be governed by its own peculiar circumstances. The testimony of petitioner about his physical suffering, mental anguish, fright, serious anxiety, and moral shock resulting from the shooting incident justify the award of moral damages. However, moral damages are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer. The award is not meant to enrich the complainant at the expense of the defendant, but to enable the injured party to obtain means, diversion, or amusements that will serve to obviate the moral suffering he has undergone. It is aimed at the restoration, within the limits of the possible, of the spiritual status quo ante, and should be proportionate to the suffering inflicted. Trial courts must then guard against the award of exorbitant damages; they should exercise balanced restrained and measured objectivity to avoid suspicion that it was due to passion, prejudice, or corruption on the part of the trial court. We deem it just and reasonable under the circumstances to award petitioner moral damages in the amount of P100,000.00.
Likewise, attorney's fees and litigation expenses in the amount of P50,000.00 as part of damages is reasonable in view of Article 2208 of the Civil Code. However, the award of exemplary damages is deleted considering the absence of proof that respondents acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.
We note that the trial court held respondent De Jesus solidarily liable with respondent FEU. In Powton Conglomerate, Inc. v. Agcolicol, we held that: [A] corporation is invested by law with a personality separate and distinct from those of the persons composing it, such that, save for certain exceptions, corporate officers who entered into contracts in behalf of the corporation cannot be held personally liable for the liabilities of the latter. Personal liability of a corporate director, trustee or officer along (although not necessarily) with the corporation may so validly attach, as a rule, only when - (1) he assents to a patently unlawful act of the corporation, or when he is guilty of bad faith or gross negligence in directing its affairs, or when there is a conflict of interest resulting in damages to the corporation, its stockholders or other persons; (2) he consents to the issuance of watered down stocks or who, having knowledge thereof, does not forthwith file with the corporate secretary his written objection thereto; (3) he agrees to hold himself personally and solidarily liable with the corporation; or (4) he is made by a specific provision of law personally answerable for his corporate action.
None of the foregoing exceptions was established in the instant case; hence, respondent De Jesus should not be held solidarily liable with respondent FEU.
Incidentally, although the main cause of action in the instant case is the breach of the school-student contract, petitioner, in the alternative, also holds respondents vicariously liable under Article 2180 of the Civil Code, which provides:
Art. 2180. The obligation imposed by Article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one is responsible.
x x x x
Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry.
x x x x
The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage.
We agree with the findings of the Court of Appeals that respondents cannot be held liable for damages under Art. 2180 of the Civil Code because respondents are not the employers of Rosete. The latter was employed by Galaxy. The instructions issued by respondents' Security Consultant to Galaxy and its security guards are ordinarily no more than requests commonly envisaged in the contract for services entered into by a principal and a security agency. They cannot be construed as the element of control as to treat respondents as the employers of Rosete.
As held in Mercury Drug Corporation v. Libunao:
In Soliman, Jr. v. Tuazon, we held that where the security agency recruits, hires and assigns the works of its watchmen or security guards to a client, the employer of such guards or watchmen is such agency, and not the client, since the latter has no hand in selecting the security guards. Thus, the duty to observe the diligence of a good father of a family cannot be demanded from the said client:
… [I]t is settled in our jurisdiction that where the security agency, as here, recruits, hires and assigns the work of its watchmen or security guards, the agency is the employer of such guards or watchmen. Liability for illegal or harmful acts committed by the security guards attaches to the employer agency, and not to the clients or customers of such agency. As a general rule, a client or customer of a security agency has no hand in selecting who among the pool of security guards or watchmen employed by the agency shall be assigned to it; the duty to observe the diligence of a good father of a family in the selection of the guards cannot, in the ordinary course of events, be demanded from the client whose premises or property are protected by the security guards.
x x x x
The fact that a client company may give instructions or directions to the security guards assigned to it, does not, by itself, render the client responsible as an employer of the security guards concerned and liable for their wrongful acts or omissions.
Sagada Orden vs.
National Coconut Corporation
G. R. No. L-3756 June 30, 1952
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 Lastly, the reservation of this action may not be considered as vesting a new right; if no right to claim for rentals existed at the time of the reservation, no rights can arise or accrue from such reservation alone. FACTS: A parcel of land belong to herein appellee Sagada Orden, registered before the war, was acquired by a Japanese Corporation during the period of Japanese Military occupation.
After liberation, it was occupied by Copra Export Management Company under a custodianship agreement with United States Alien Property Custodian, and thereafter, occupied by herein appellant National Coconut Corporation. Aside from such occupation, the property in question was also subjected to a contract of sale, which was later on declared null.
Appellee filed an action to recover rentals in arrearage for the use and occupation of its property by herein appellant.
Appellant contends that it occupied the property in good faith, under no obligation whatsoever to pay rentals for the use and occupation of the warehouse.
The trial Court rendered its decision in favor of herein appellee, hence this appeal.
ISSUE: WON appellant National Coconut Corporation is liable for rentals in arrearage for the use and occupation of the parcel of land.
HELD: No, the Court held that herein appellant is not liable for rentals. We can not understand how the trial court, from the mere fact that plaintiff-appellee was the owner of the property and the defendant-appellant the occupant, which used for its own benefit but by the express permission of the Alien Property Custodian of the United States, so easily jumped to the conclusion that the occupant is liable for the value of such use and occupation. If defendant-appellant is liable at all, its obligations, must arise from any of the four sources of obligations, namley, law, contract or 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. There was also no privity (of contract or obligation) between the Alien Property Custodian and the Taiwan Tekkosho, which had secured the possession of the property from the plaintiff-appellee by the use of duress, such that the Alien Property Custodian or its permittee (defendant-appellant) may be held responsible for the supposed illegality of the occupation of the property by the said Taiwan Tekkosho. The Allien Property Administration had the control and administration of the property not as successor to the interests of the enemy holder of the title, the Taiwan Tekkosho, but by express provision of law (Trading with the Enemy Act of the United States, 40 Stat., 411; 50 U.S.C.A., 189). Neither is it a trustee of the former owner, the plaintiff-appellee herein, but a trustee of then Government of the United States (32 Op. Atty. Gen. 249; 50 U.S.C.A. 283), in its own right, to the exclusion of, and against the claim or title of, the enemy owner. (Youghioheny & Ohio Coal Co. vs. Lasevich [1920], 179 N.W., 355; 171 Wis., 347; U.S.C.A., 282-283.) From August, 1946, when defendant-appellant took possession, to the late of judgment on February 28, 1948, Allien Property Administration had the absolute control of the property as trustee of the Government of the United States, with power to dispose of it by sale or otherwise, as though it were the absolute owner. (U.S vs. Chemical Foundation [C.C.A. Del. 1925], 5 F. [2d], 191; 50 U.S.C.A., 283.) Therefore, even if defendant-appellant were liable to the Allien Property Administration for rentals, these would not accrue to the benefit of the plaintiff-appellee, the owner, but to the United States Government.
But there is another ground why the claim or rentals cannot be made against defendant-appellant. There was no agreement between the Alien Property Custodian and the defendant-appellant for the latter to pay rentals on the property. The existence of an implied agreement to that effect is contrary to the circumstances. The copra Export Management Company, which preceded the defendant-appellant, in the possession and use of the property, does not appear to have paid rentals therefor, as it occupied it by what the parties denominated a "custodianship agreement," and there is no provision therein for the payment of rentals or of any compensation for its custody and or occupation and the use. The Trading with the Enemy Act, as originally enacted, was purely a measure of conversation, hence, it is very unlikely that rentals were demanded for the use of the property. When the National coconut Corporation succeeded the Copra Export Management Company in the possession and use of the property, it must have been also free from payment of rentals, especially as it was Government corporation, and steps where then being taken by the Philippine Government to secure the property for the National Coconut Corporation. So that the circumstances do not justify the finding that there was an implied agreement that the defendant-appellant was to pay for the use and occupation of the premises at all.
The above considerations show that plaintiff-appellee's claim for rentals before it obtained the judgment annulling the sale of the Taiwan Tekkosho may not be predicated on any negligence or offense of the defendant-appellant, or any contract, express or implied, because the Allien Property Administration was neither a trustee of plaintiff-appellee, nor a privy to the
