Perdere per Avere

[hermosa-oblicon24]

Article 1410

The action or defense for the declaration of the inexistence of a contract does not prescribe.

The action for the declaration of inexistence or the defense on such is imprescriptible. The mere lapse of time does not validate a void contract, unlike in voidable contracts, which, if not assailed within the specific period provided by law, shall remain valid.

It is not necessary to go to the court to declare the nullity of a void contract if both parties agree that it is void and henceforth, on their own volition, change it. However, to avoid instances where one party refuses to restore what he has received out of a void contract, it is better to go to the court first to avoid inconvenience or to avoid taking the law into his own hands. Taking the law into one’s hands may lead to coercion which is a criminal offense.

The right to have a contract declared void ab initio may be barred by laches although not barred by prescription. It is an application of equity, based upon the grounds of public policy which require for the peace of society, discouraging stale claims. It is however exercised on the discretion of the court, its application controlled by equitable consideration.

Related/Cited Case

Heirs of Ureta v Heirs of Ureta

FACTS: Alfonso Ureta had 14 children, including, Policronio. The children of Policronio (Heirs of Policronio), are opposed to the validity of the Extrajudicial Partition. On October 1969, in order to reduce the inheritance taxes, Alfonso executed four (4) Deeds of Sale in favor of his children including Policronio. Since the sales were only made for taxation purposes and no monetary consideration was given, Alfonso continued to own, possess and enjoy the lands and their produce. On October 11, 1972, Alfonso died and his children acted as the administrator of his father’s estate. on November 22, 1974, Policronio died. The subject land under the deed of sale was never taken possession of by Policronio nor his heirs. On April 19, 1989, Alfonso’s heirs executed a Deed of Extra-Judicial Partition, which included all the lands that were covered by the four (4) deeds of sale that were previously executed by Alfonso for taxation purposes. Conrado, Policronio’s eldest son, representing the Heirs of Policronio, signed the Deed of Extra-Judicial Partition in behalf of his co-heirs.

On July 30, 1995, the Heirs of Policronio allegedly learned about the Deed of Extra-Judicial Partition involving Alfonso’s estate when it was published in the July 19, 1995issue of the Aklan Reporter. Believing that the six parcels of land belonged to their late father, and excluded from the Deed of Extra-Judicial Partition, the Heirs of Policronio sought to amicably settle but despite earnest efforts, the Heirs of Policronio filed a Complaint for Declaration of Ownership, Recovery of Possession over the subject land.

ISSUES:  Whether or not the Deed of Extra-Judicial Partition was valid.

HELD: It is valid. The Deed of Sale entered between Alfonso and Policronio is void for being an absolutely simulated sale. No actual consideration or money was given and there was no actual intent to enter into a sale. It was merely to avoid tax purposes The Deed of Extra-Judicial Partition did not need an SPA because partition among heirs is not legally deemed a conveyance of real property resulting in change of ownership. It is not a transfer of property from one to the other, but rather, it is a confirmation or ratification of title or right of property that an heir is renouncing in favor of another heir who accepts and receives the inheritance. Partition is not an act of strict dominion which requires an SPA. In fact, as between the parties, even an oral partition by the heirs is valid if no creditors are affected. The requirement of a written memorandum under the statute of frauds does not apply to partitions effected by the heirs where no creditors are involved. In the case of Badillo v. Ferrer, the court held a deed of extrajudicial partition is not voidable by lack of parties to give consent but unenforceable as an unauthorized contract in 1403(1). However, the Deed of Extra-Judicial Partition is not unenforceable but, in fact, valid, binding, and enforceable against all the Heirs of Policronio.  because of several circumstances which shows they gave their consent to Conrado to sign on their behalf such as that Extra-Judicial Partition was signed on 1989 but the siblings only came to know about it 1995, 5 years after, and Conrado didn’t inform his siblings during such span; Conrado retained possession of land under the Extra-Judicial Partition; 1 year after the sale, the Heirs of Policronio executed an SPA to have the land under the Extra-Judicial Partition be the subject of mortgage. Such acts shows the Heirs of Policronio were aware of the said Partition and the vitiation of consent is a mere afterthought

[hermosa-oblicon24]

Article 1382

Payments made in a state of insolvency for obligations to whose fulfillment the debtor could not be compelled at the time they were effected, are also rescissible. (1292)

Rescission under Article 1191 is a result of what people usually call as breach of contract. In reciprocal contracts, parties have mutual obligations and the obligation by either party to do, not to do or to give something is actually the cause for the other party to agree to also do, not do or give something in return. So when one does not perform his obligations under his contract, the other party has remedies under the law. Under the said Article 1191, the injured party can choose between fulfillment and rescission, with payment of damages in either case. This means that the injured party can either compel the guilty party to perform his part of the contract and claim for damages as a result of the breach, or it can rescind the contract and also claim for damages.

Illustration:

Question: Juan, an insolvent, owes Pedro P 1,000, but which debt has already been prescribed, Juan nevertheless still paid Pedro the P 1,000. May Pablo, another creditor of Juan rescind the payment made by Juan to Pedro?

Answer: Yes, although the payment should have been valid under the natural obligation (Art 1424), the creditor may rescind the payment made in the state of insolvency for an obligation to whose fulfillment the debtor could be compelled at the time they were effected.

[hermosa-oblicon24]

Article 1356

Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential requisites for their validity are present. However, when the law requires that a contract be in some form in order that it may be valid or enforceable, or that a contract be proved in a certain way, that requirement is absolute and indispensable. In such cases, the right of the parties stated in the following article cannot be exercised. (1278a)

Contracts are binding upon the contracting parties in whatever form they may have been entered into as long as all the essential requisites for their validity are present. However, when can we consider form as essential requisite of a contract?

The form of a contract is essential:

When the law requires that a contract be in certain form for its validity; (refers to solemn or formal contracts).

When the law requires that a contract be in certain form for its enforceability. (refers to the agreements covered by the Statute of Frauds. (Art. 1403, par 2.)

Case Related/Cited

Far Eastern Bank v PDIC

On July 5, 1985, the Central Bank of the Philippines placed Pacific Banking Corporation (PBC) under receivership through Monetary Board (MB) Resolution No. 699.

On October 28, 1985, the Central Bank invited banks to submit proposals for the purchase of PBC's assets and franchise.

FEBTC submitted its bid on November 14, 1985, which included the purchase of both non-fixed and fixed assets of PBC, as described in the Asian Appraisal Report of August 1984.

The Central Bank accepted FEBTC's bid through MB Resolution No. 1234 on November 22, 1985.

On April 16, 1986, a Memorandum of Agreement (MOA) was executed among FEBTC, PBC, and the Central Bank, with PBC represented by Liquidator Renan V. Santos.

The MOA specified that the parties would execute an absolute purchase agreement covering all PBC assets, including non-fixed and fixed assets.

The Purchase Agreement (PA) executed on October 24, 1986, covered only the non-fixed assets.

FEBTC took possession of the fixed assets and sought the execution of deeds of sale, which Liquidator Santos initially supported but failed to finalize.

PDIC, as the new liquidator, contended that the fixed assets should be purchased at their present appraisal value, higher than the sound value.

FEBTC filed a motion before the Regional Trial Court (RTC) to compel the execution of deeds of sale for the fixed assets.

The RTC ruled in favor of FEBTC, directing PDIC to execute the deeds of sale at the sound values stated in the Asian Appraisal Report.

PDIC appealed, and the Court of Appeals (CA) reversed the RTC's decision, leading FEBTC to seek a review from the Supreme Court.

Issue:

WON the FEBTC can validly compel the PDIC to execute the deed of sale over the fixed assets?

Ruling:

The Supreme Court ruled that there was a perfected contract of sale over the disputed fixed assets.

The Supreme Court found that the fixed assets were not submitted as collaterals to the Central Ban...(Unlock)

Ratio:

The Supreme Court emphasized that a contract of sale is perfected upon the meeting of the minds of the parties on the essential elements of the contract, i.e., consent, object, and consideration.

The Court found that these elements were present in the MOA, which incorporated FEBTC's bid to purchase PBC's fixed and non-fixed assets.

The MOA and PA confirmed the essential terms, including the valuation and manner of payment for the fixed assets.

[hermosa-oblicon24]

Article 1329

The incapacity declared in Article 1327 is subject to the modifications determined by law, and is understood to be without prejudice to special disqualifications established in the laws. (1264)

The persons enumerated under Article 1327 incapacitated to give consent to contracts due to their lack of mental capacity to do so.  They are either deaf-mutes, insane or demented.

On the other hand, the special disqualifications mentioned in Article 1329 refer to those explicitly disqualified by law from entering certain contracts:

Persons enumerated in Article 1491 due to fiduciary relationship or dur to public policy;

Husband and wife cannot enter into contract of donation, sale or lease with each other because they are not allowed to donate, sell or lease properties to one another.  This includes those who live as husband and wife without the benefit of marriage;

Insolvents until they are discharged;

Non-Christians inhabitants of Mindanao and Sulu cannot enter into contract involving real estate without the approval of the chairman of the Commission on National Integration.

[hermosa-oblicon24]

Case cited under Art 1302

Metropolitan Bank and Trust Company vs. Rural Bank of Gerona, Inc.

Facts: In the 1970s, RBG agreed with the Central Bank to facilitate loan applications for farmers under the Central Bank-IBRD’s project, necessitating the opening of a special savings account with Metrobank for IBRD loan proceeds. Loans approved for various farmers were credited by the Central Bank to Metrobank’s demand deposit account for RBG’s account; RBG would then withdraw the amounts from its special savings account to disburse the loans. Unexpectedly, on November 3, 1978, the Central Bank issued debit advices, reversing all approved IBRD loans and consequently debiting the equivalent amounts from Metrobank’s demand deposit account.

Metrobank, finding RBG’s special savings account deficient, demanded payment to recover the shortfall, leading to filing a complaint for collection of the sum of money against RBG before the RTC Tarlac in 1980. The RTC in 1994 ruled in favor of Metrobank, deciding on legal subrogation, but this decision was challenged and set aside by the CA, which demanded the remanding of the case to include the Central Bank as a necessary party for a comprehensive resolution.

Issues: The key legal issues revolved around the appropriateness of legal subrogation, the necessity of including the Central Bank as a party to the proceedings, and the determination of actual amounts owed by RBG to Metrobank considering the partial payments made and the amounts debited from RBG’s savings account.

Held: The Supreme Court granted Metrobank’s petition, finding merit in its complaints and arguments: It clarified that RBG and the actual borrowers were primarily liable under the Project Terms and Conditions, and that Metrobank was improperly debited for the reversals of IBRD loans by the Central Bank. The Court acknowledged legal subrogation had occurred when Metrobank’s deposits were used to cover the reversed loans without its consent but with RBG’s tacit approval. It ruled against the necessity of including the Central Bank as a party in the case, stating that the main concern is between Metrobank and RBG after subrogation had been established. However, the Court remanded the case to the RTC for accurate computation of amounts owed by RBG, acknowledging procedural errors in omitting critical financial documentation and the need for precise calculation post-partial payments.

[hermosa-oblicon24]

Article 1302

It is presumed that there is legal subrogation:

(1) When a creditor pays another creditor who is preferred, even without the debtor’s knowledge;

(2) When a third person, not interested in the obligation, pays with the express or tacit approval of the debtor;

(3) When, even without the knowledge of the debtor, a person interested in the fulfillment of the obligation pays, without prejudice to the effects of confusion as to the latter’s share. (1210a)

Subrogation means the substitution of one claim for another, especially the transfer of the right to receive payment of a debt to somebody other than the original. Based on article 1302 the third person may pay the amount the obligation of a debtor to the creditor even without his knowledge, in the Case of Gaysano vs. North American Insurance, Gaysano declined to pay his debt to Levis International due to fortuitous event, but the Levis international supported his claim on the obligation of Gaysano based on the legal subrogation aside from the Article 1302.

Case cited under Art 1302

Metropolitan Bank and Trust Company vs. Rural Bank of Gerona, Inc.

Facts: In the 1970s, RBG agreed with the Central Bank to facilitate loan applications for farmers under the Central Bank-IBRD’s project, necessitating the opening of a special savings account with Metrobank for IBRD loan proceeds. Loans approved for various farmers were credited by the Central Bank to Metrobank’s demand deposit account for RBG’s account; RBG would then withdraw the amounts from its special savings account to disburse the loans. Unexpectedly, on November 3, 1978, the Central Bank issued debit advices, reversing all approved IBRD loans and consequently debiting the equivalent amounts from Metrobank’s demand deposit account.

Metrobank, finding RBG’s special savings account deficient, demanded payment to recover the shortfall, leading to filing a complaint for collection of the sum of money against RBG before the RTC Tarlac in 1980. The RTC in 1994 ruled in favor of Metrobank, deciding on legal subrogation, but this decision was challenged and set aside by the CA, which demanded the remanding of the case to include the Central Bank as a necessary party for a comprehensive resolution.

Issues: The key legal issues revolved around the appropriateness of legal subrogation, the necessity of including the Central Bank as a party to the proceedings, and the determination of actual amounts owed by RBG to Metrobank considering the partial payments made and the amounts debited from RBG’s savings account.

Held: The Supreme Court granted Metrobank’s petition, finding merit in its complaints and arguments: It clarified that RBG and the actual borrowers were primarily liable under the Project Terms and Conditions, and that Metrobank was improperly debited for the reversals of IBRD loans by the Central Bank. The Court acknowledged legal subrogation had occurred when Metrobank’s deposits were used to cover the reversed loans without its consent but with RBG’s tacit approval. It ruled against the necessity of including the Central Bank as a party in the case, stating that the main concern is between Metrobank and RBG after subrogation had been established. However, the Court remanded the case to the RTC for accurate computation of amounts owed by RBG, acknowledging procedural errors in omitting critical financial documentation and the need for precise calculation post-partial payments.

#casedigest#oblicon#Art1302

[hermosa-oblicon24]

Related/Cited Case for Art 1275

BPI v CA

Annabelle A. Salazar filed a complaint against the Bank of the Philippine Islands (BPI) for debiting her account without proper notice.

Salazar claimed that BPI debited the amount of P267,707.70 from her account, which was the value of three checks deposited by her but payable to Julio R. Templonuevo.

BPI argued that Templonuevo demanded payment for the checks, which were deposited without his knowledge and endorsement.

BPI froze Salazar's account and debited the amount to pay Templonuevo.

Issue:

Whether BPI had the authority to debit Salazar's account for the value of the checks deposited by her but payable to Templonuevo.

Ruling:

The Supreme Court partially granted the petition.

BPI had the right to debit Salazar's account for the value of the checks, as Salazar was not a holder in due course of the checks.

However, BPI was negligent in its handling of the situation.

The Court affirmed the award of damages to Salazar for the inconvenience and damage caused by the bounced checks.

Ratio:

BPI had the right to debit Salazar's account for the value of the checks, as Salazar was not a holder in due course.

Possession of a negotiable instrument does not establish the right to receive payment, especially when the instrument is payable to a named payee or their order and has not been indorsed.

[hermosa-oblicon24]

Article 1275

The obligation is extinguished from the time the characters of creditor and debtor are merged in the same person.

Requisites for Confusion or Merger of Right

There is a merger in the same person of the characters of a creditor and a debtor.

The merger must be in the characters of a principal creditor and a principal debtor.

The merger is definite and complete. Partial merger is allowed. It is definite and complete up to the extent of the concurrent amount or value.

Related/Cited Case for Art 1275

BPI v CA

Annabelle A. Salazar filed a complaint against the Bank of the Philippine Islands (BPI) for debiting her account without proper notice.

Salazar claimed that BPI debited the amount of P267,707.70 from her account, which was the value of three checks deposited by her but payable to Julio R. Templonuevo.

BPI argued that Templonuevo demanded payment for the checks, which were deposited without his knowledge and endorsement.

BPI froze Salazar's account and debited the amount to pay Templonuevo.

Issue:

Whether BPI had the authority to debit Salazar's account for the value of the checks deposited by her but payable to Templonuevo.

Ruling:

The Supreme Court partially granted the petition.

BPI had the right to debit Salazar's account for the value of the checks, as Salazar was not a holder in due course of the checks.

However, BPI was negligent in its handling of the situation.

The Court affirmed the award of damages to Salazar for the inconvenience and damage caused by the bounced checks.

Ratio:

BPI had the right to debit Salazar's account for the value of the checks, as Salazar was not a holder in due course.

Possession of a negotiable instrument does not establish the right to receive payment, especially when the instrument is payable to a named payee or their order and has not been indorsed.

#lawstudent#oblicon#casedigest#RelatedCase

[hermosa-oblicon24]

Case Related to Art 1248

Consolidated Industrial Gases, Inc. vs. Alabang Medical Center

Ponente: Reyes, J.

Facts:

The case involves a dispute between Consolidated Industrial Gases, Inc. (CIGI) and Alabang Medical Center (AMC) over the installation of a medical gas pipeline system. CIGI entered into a contract with AMC to provide labor and materials for the installation of the system.

AMC failed to pay the remaining balance of the contract price, claiming that CIGI did not fulfill its obligations under the contract. CIGI filed a collection suit against AMC, seeking payment of the outstanding balance.

Issue:

Whether CIGI's demand for payment from AMC is proper.

Ruling:

The Court of Appeals (CA) reversed the Regional Trial Court's (RTC) decision, ruling that it was CIGI who breached the contract by failing to complete the project and turn over a fully functional system. The Supreme Court upheld the CA's ruling.

Ratio:

The Court found that CIGI had not fulfilled its obligations under the contract, as it failed to conduct the agreed test run and orientation/seminar.

CIGI's obligation was not limited to providing labor and materials, but also included performing a test run and conducting a seminar.

Therefore, CIGI's demand for payment was not proper. The Court rejected AMC's counterclaim for rescission of the contracts, as the breaches committed by CIGI were not substantial enough to warrant rescission.

The Court ordered CIGI to fulfill its obligations under the contracts, including conducting a test run and seminar, and turning over a fully functional system.

[hermosa-oblicon24]

Art 1248

Unless there is an express stipulation to that effect, the creditor cannot be compelled partially to receive the prestations in which the obligation consists. Neither may the debtor be required to make partial payments.

However, when the debt is in part liquidated and in part unliquidated, the creditor may demand and the debtor may effect the payment of the former without waiting for the liquidation of the latter.

Performance Should be generally be complete

Under Art. 1233 of the Civil Code, a debt shall not be understood to have been paid unless the thing or service in which the obligation consists has been completely delivered or rendered, as the case may be. Hence, partial performance is not allowed generally under Art. 1248.

Exceptions

Partial performance is allowed:

When there is stipulation to this effect;

When the different prestations are subject to different conditions or different terms;

(Example: a debt payable in installments)

When a debt is in part liquidated and in part unliquidated, in which case performance of the liquidated part may be insisted upon either by the debtor or the creditor.

Case Related to Art 1248

Consolidated Industrial Gases, Inc. vs. Alabang Medical Center

Ponente: Reyes, J.

Facts:

The case involves a dispute between Consolidated Industrial Gases, Inc. (CIGI) and Alabang Medical Center (AMC) over the installation of a medical gas pipeline system. CIGI entered into a contract with AMC to provide labor and materials for the installation of the system.

AMC failed to pay the remaining balance of the contract price, claiming that CIGI did not fulfill its obligations under the contract. CIGI filed a collection suit against AMC, seeking payment of the outstanding balance.

Issue:

Whether CIGI's demand for payment from AMC is proper.

Ruling:

The Court of Appeals (CA) reversed the Regional Trial Court's (RTC) decision, ruling that it was CIGI who breached the contract by failing to complete the project and turn over a fully functional system. The Supreme Court upheld the CA's ruling.

Ratio:

The Court found that CIGI had not fulfilled its obligations under the contract, as it failed to conduct the agreed test run and orientation/seminar.

CIGI's obligation was not limited to providing labor and materials, but also included performing a test run and conducting a seminar.

Therefore, CIGI's demand for payment was not proper. The Court rejected AMC's counterclaim for rescission of the contracts, as the breaches committed by CIGI were not substantial enough to warrant rescission.

The Court ordered CIGI to fulfill its obligations under the contracts, including conducting a test run and seminar, and turning over a fully functional system.

#lawstudent#oblicon#casedigest#Art1248#LSPULaw

[hermosa-oblicon24]

Art 1221

1221. If the thing has been lost or if the prestation has become impossible without the fault of the solidary debtors, the obligation shall be extinguished.

If there was fault on the part of any one of them, all shall be responsible to the creditor, for the price and the payment of damages and interest, without prejudice to their action against the guilty or negligent debtor.

If through a fortuitous event, the thing is lost or the performance has become impossible after one of the solidary debtors has incurred in delay through the judicial or extrajudicial demand upon him by the creditor, the provisions of the preceding paragraph shall apply.

Loss of the thing or impossibility of prestation –

1. NO FAULT – solidary debtors – obligation is extinguished

2. FAULT of any one of them – all are liable because of their mutual agency

3. FORTUITOUS EVENT – delay on the part of the debtors – all will be liable

If the thing due was not lost, but there is merely a delay, fraud or negligence on the part of one of the solidary debtors, all (including the innocent) debtors will share in the payment of the PRINCIPAL prestation. The damages and interest imposed will be borne by the guilty debtor. Obligation to deliver is converted into an obligation to pay indemnity when there is loss or impossibility of performance.

Related case:

Philippine Philippine Blooming Mills Inc. vs. Court of Appeals; G.R. No. 142381; Oct 15, 2003

Ponente; CARPIO, J

Facts:

Alfredo Ching was the Senior Vice President of PBM. In his personal capacity and not as a corporate officer signed a Deed of Suretyship dated 21 July 1977 binding himself as primary obligor(s) and not as mere guarantor(s), liable for the loan of PBM to Traders Royal Bank.

PBM and Ching filed a suspension of payment with the SEC praying to allow them continue its normal business operations free from the interference of its creditors. 10 months after, the SEC placed PBM under the rehabilitation receivership; here TRB filed with the trial court a complaint for collection against PBM and Ching.

Ching and PBM argued that the court has no jurisdiction over the matter of the case who invokes the jurisdiction of the SEC over all assets and liability of PBM. Ching denied his liability as surety of PBM. Ching argued that the Deed of Suretyship could not cover obligations incurred after its execution.

Issue: WON Ching liable for the credit obligations contracted by PBM after the execution of the Deed of Suretyship?

Ruling: Yes. Ching is liable and can be sued separately to enforce his liability as surety for PBM, as expressly provided by Art 1216 of the civil code. Which states that the creditor may proceed against any one of the solidary debtors of some or all of them simultaneously. The demand made against one shall not be an obstacle to those which may subsequently de directed against the others so long as the debt has not been fully collected.

[hermosa-oblicon24]

Article 1194

ART 1194. . In case of loss, deterioration or improvement of the thing before the arrival of the day certain, the rules in Article 1189 shall be observed.

This Article refers to obligation subject to a period, whether suspensive or resolutory.

Suspensive period (ex die)-when the obligation becomes demandable only upon the arrival of a day certain;

Resolutory period (in diem) - when the obligation is demandable at once, although terminated upon the arrival of a day certain.

A day certain is understood to be that which must necessarily come, although it may not be known when.

The loss deterioration, or improvement of the thing before the arrival of the day certain will be governed by the same rules of Art 1189.

Related Case:  

Josefa vs. San Buenaventura; G.R. No. 163429; Mar 3, 2006

Ponente; CALLEJO, SR., J

Facts:  Lourdes San Buenaventura owns a parcel of land in Pasig City. On July 15, 1990, Johnny Josefa entered into a lease contract with San Buenaventura for the said property. The lease contract stated that the period covered by the agreement is from August 1, 1990, to July 31, 1995, renewable upon agreement of the parties.

After the expiration of the lease contract, San Buenaventura informed Josefa that the lease would no longer be extended but that he may continue with the lease at a rental rate of P30,000.00 a month. Josefa refused to vacate the premises and continued to occupy the property, paying a monthly rental of P15,400.00. San Buenaventura made demands for Josefa to vacate the property, but he still refused to leave.

San Buenaventura filed a complaint for unlawful detainer against Josefa, which was initially dismissed due to a procedural issue. The complaint was refiled and eventually heard by the Metropolitan Trial Court (MeTC) of Pasig City. The MeTC ordered Josefa to vacate the premises and pay reasonable compensation for his continued use and occupation of the property at the old rate of P15,000.00 a month. Josefa appealed the decision to the Regional Trial Court (RTC), which reversed the ruling of the MeTC and dismissed San Buenaventura's complaint. The RTC held that the inclusion of the renewal clause in the lease contract showed the intent of both parties to extend the lease without any condition or requirement of mutual agreement. San Buenaventura appealed to the Court of Appeals (CA), which granted the petition and reinstated the decision of the MeTC. The CA held that after the expiration of the lease contract, the owner of the property had the right not only to terminate the lease but to demand a new rental rate. The CA also ruled that Josefa could not claim to be a builder in good faith since he knew that he was only a lessee.  Josefa filed a petition for review with the Supreme Court.

Issue: Whether Josefa is entitled to reimbursement for his improvements on the property.

Ruling: Josefa is not entitled to reimbursement for his improvements on the property. Josefa, as a lessee, cannot claim to be a builder in good faith because he knew that he was only a lessee and not the owner of the property. Josefa is not entitled to reimbursement for his improvements on the property because he made the improvements knowing that he was only a lessee.

#casedigest#lawstudent#art1194#oblicon

[hermosa-oblicon24]

Case Related to Art 1167

Chavez vs. Gonzales: G.R. No. L-27454; April 30, 1970

Rosendo O. Chavez, plaintiff-appellant vs. Fructuoso Gonzales, defendant-appellee

REYES, J.B.L., J.:

FACTS: 

The plaintiff delivered to the defendant, who is a typewriter repairer, a portable typewriter for routine cleaning and servicing. The defendant was not able to finish the job after some time despite repeated reminders made by the plaintiff. In October, 1963, the defendant asked from the plaintiff the sum of P6.00 for the purchase of spare parts, which amount the plaintiff gave to the defendant.

After getting exasperated with the delay of the repair of the typewriter, the plaintiff went to the house of the defendant and asked for the return of the typewriter. The plaintiff found out that the typewriter was in shambles with some parts missing. Chaves demanded the return of the missing parts and the sum of P6.00, which Gonzales returned. Later on, the plaintiff had his typewriter repaired by Freixas Business Machines, and the repair job cost him a total of P89.85, including labor and materials. 

Chavez then commenced this an action before the City Court of Manila, demanding from the Gonzales the payment of P90.00 as actual and compensatory damages.  The RTC granted the petition and ordered that the defendant pay the plaintiff the amount of P31.10 which is the total value of the missing parts.  Chavez contended that he should be awarded the whole cost of labor and materials as provided for in Article 1167 of the Civil Code. Thus, this petition.

ISSUE:  Whether or not Chavez is entitled to the whole cost of labor and materials that went into the repair of the typewriter?

RULING: YES. Article 1167 of the Civil Code states:  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. 

The inferences derivable from these findings of fact are that the Chavez and the Gonzalez had a perfected contract for cleaning and servicing a typewriter, intended to be completed at some future time although such time was not specified, that such time had passed, and that the typewriter was returned cannibalized and unrepaired, which in itself is a breach of his obligation. The time for compliance had evidently expired and there was a breach of contract by non-performance. The Gonzales-appellee contravened the tenor of his obligation.

The cost of the execution of the obligation in this case should be the cost of the labor or service expended in the repair of the typewriter, which is in the amount of P58.75 because the obligation or contract was to repair it. In addition, Gonzales is likewise liable under Article 1170 of the Code for the cost of the missing parts for in his obligation to repair the typewriter he was bound, but failed or neglected, to return it in the same condition it was when he received it.

The appealed judgment is modified. Gonzales to pay Chavez the sum of P89.85 with interest.

[hermosa-oblicon24]

Obligation and Contract

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. (1098)

Article 1167 refers to an obligation to do, i.e., to perform an act or render a service. It contemplates three situations where the (1) debtor fails to perform an obligation to do, (2) performs an obligation to do but contrary to the terms thereof, and (3) performs an obligation to do but in a poor manner.

Here are the remedies of the creditor in positive personal obligation: (1) if the debtor fails to comply with his obligation, the creditor has the right to have the obligation performed by himself, or by another unless personal considerations are involved, at the debtor’s expense; and (2) to recover damages. 

In case the obligation is done in contravention of the terms of the same or is poorly done, the court may order (upon complaint) that it be undone if it is still possible to undo what was done. If the debtor fails to perform the obligation to do so, note that the creditor could ask someone else   (a third person)   to perform the obligation to do at the expense of the debtor.

Case Related to Art 1167

Chavez vs. Gonzales: G.R. No. L-27454; April 30, 1970

Rosendo O. Chavez, plaintiff-appellant vs. Fructuoso Gonzales, defendant-appellee

REYES, J.B.L., J.:

FACTS: 

The plaintiff delivered to the defendant, who is a typewriter repairer, a portable typewriter for routine cleaning and servicing. The defendant was not able to finish the job after some time despite repeated reminders made by the plaintiff. In October, 1963, the defendant asked from the plaintiff the sum of P6.00 for the purchase of spare parts, which amount the plaintiff gave to the defendant.

After getting exasperated with the delay of the repair of the typewriter, the plaintiff went to the house of the defendant and asked for the return of the typewriter. The plaintiff found out that the typewriter was in shambles with some parts missing. Chaves demanded the return of the missing parts and the sum of P6.00, which Gonzales returned. Later on, the plaintiff had his typewriter repaired by Freixas Business Machines, and the repair job cost him a total of P89.85, including labor and materials. 

Chavez then commenced this an action before the City Court of Manila, demanding from the Gonzales the payment of P90.00 as actual and compensatory damages.  The RTC granted the petition and ordered that the defendant pay the plaintiff the amount of P31.10 which is the total value of the missing parts.  Chavez contended that he should be awarded the whole cost of labor and materials as provided for in Article 1167 of the Civil Code. Thus, this petition.

ISSUE:  Whether or not Chavez is entitled to the whole cost of labor and materials that went into the repair of the typewriter?

RULING: YES. Article 1167 of the Civil Code states:  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. 

The inferences derivable from these findings of fact are that the Chavez and the Gonzalez had a perfected contract for cleaning and servicing a typewriter, intended to be completed at some future time although such time was not specified, that such time had passed, and that the typewriter was returned cannibalized and unrepaired, which in itself is a breach of his obligation. The time for compliance had evidently expired and there was a breach of contract by non-performance. The Gonzales-appellee contravened the tenor of his obligation.

The cost of the execution of the obligation in this case should be the cost of the labor or service expended in the repair of the typewriter, which is in the amount of P58.75 because the obligation or contract was to repair it. In addition, Gonzales is likewise liable under Article 1170 of the Code for the cost of the missing parts for in his obligation to repair the typewriter he was bound, but failed or neglected, to return it in the same condition it was when he received it.

The appealed judgment is modified. Gonzales to pay Chavez the sum of P89.85 with interest.

#casedigest#assignment#lawstudent#oblicon#LSPUCOL#Art1167

[hermosa-oblicon24]

Related Case (Art 149)

Silva vs CA and Gonzales, 275 SCRA 604 [G.R. No. 114742. July 17, 1997]

Ponente: VITUG, J.:

FACTS: Carlitos E. Silva, a married businessman, and Suzanne T. Gonzales, an unmarried local actress, cohabited without the benefit of marriage. The union saw the birth of two children: Ramon Carlos and Rica Natalia. Not very long after, a rift in their relationship surfaced. It began, according to Silva, when Gonzales decided to resume her acting career over his vigorous objections. The assertion was quickly refuted by Gonzales who claimed that she, in fact, had never stopped working throughout their relationship. At any rate, the two eventually parted ways. Gonzales refused to allow Silva, in apparent contravention of a previous understanding, to have the children in his company on weekends. Silva filed a petition for custodial rights over the children before the Regional Trial Court (RTC), Branch 78, of Quezon City. The petition was opposed by Gonzales who averred that Silva often engaged in "gambling and womanizing" which she feared could affect the moral and social values of the children.

The Trial Court judgment is rendered directing the respondent to allow herein petitioner visitorial rights to his children during Saturdays and/or Sundays, but in no case should he take out the children without the written consent of the mother or respondent herein. No pronouncement as to costs. Silva appeared somehow satisfied with the judgment for only Gonzales interposed an appeal from the RTCs order to the Court of Appeals. In the meantime, Gonzales got married to a Dutch national. The newlyweds emigrated to Holland with Ramon Carlos and Rica Natalia.

On 23 September 1993, the appellate tribunal ruled in favor of Gonzales. The RTC decision had been reversed and Petitioner-appellee's petition for visitorial rights was denied as the children concerned are still in their early formative years of life. The molding of the character of the child starts at home. A home with only one parent is more normal than two separate houses.

ISSUE: Whether or not the father is entitled to visitation rights to his children? (The right to access of a noncustodial parent to his or her child/children)

HELD: YES. The biological father has a visitorial right over his illegitimate children given the constitutionally protected inherent and natural right of parents over their children). This right is personal to the father; no other person, like grandparents, can exercise this right for him.

Article 150 of the Family Code expresses that "family relations include those between parents and children; Article 209, in relation to Article 220, of the Code states that it is the natural right and duty of parents and those exercising parental authority to, among other things, keep children in their company and to give them love and affection, advice and counsel, companionship, and understanding. The Constitution itself speaks in terms of the "natural and primary rights of parents in the rearing of the youth.

Although the Supreme Court’s granted Silva (the father) the visitation rights, but this favorable decision did not prevent Suzanne (the mother), in the exercise of her parental authority, from immigrating to Holland with her two children.

[hermosa-oblicon24]

Article 149

Article 149. The family, being the foundation of the nation, is a basic social institution which public policy cherishes and protects. Consequently, family relations are governed by law and no custom, practice, or agreement destructive of the family shall be recognized or given effect. (216a, 218a)

The law has consolidated the provisions of Articles 216 and 218 of the Civil Code. It provides for solidarity of the family, that no less than the Constitution recognizes the importance of the family by providing that:

“The State recognizes the sanctity of family life and shall protect and strengthen the family as a basic autonomous social institution. It shall equally protect the life of the mother and the life of the unborn from conception. The natural and primary right and duty of parents in the rearing of the youth for civic efficiency and the development of moral character shall receive the support of the Government. (Sec. 12, Art. II, 1987 Const.).’’

Implementing the Family Code, expressly provides that the family is the foundation of the nation and a basic social institution that public policy cherishes and protects. As such, no custom, practice, or agreement destructive of the family shall be recognized or given effect. In fact, if there is an action for annulment of marriage or declaration of nullity of the same, the court will always tend to uphold the validity of the marriage. In fact, the law mandates the courts to take all measures to protect it not only from the collusion of the parties, but also from the presentation of fabricated evidence. (Arts. 48 and 60, Family Code). In fact, when legal separation is granted, the parties are at liberty to manifest in the same proceedings that they have already reconciled and that would effect the setting aside of the decree of legal separation.

[hermosa-oblicon24]

Presumptive Legitimes

The concept of "presumptive legitime" is not specifically defined by law. However, it appears to have been derived from Act 2710, the Old Divorce Law, which mandated that the legitimate children should receive an amount equivalent to their legal share if the spouse had died without a will immediately after the dissolution of the community of property.

In the context of the Family Code, presumptive legitime refers to the legitimate children's share, assuming that both spouses passed away immediately after the community of property was dissolved. In situations where the marriage is annulled, declared void ab initio, or when the conjugal partnership or absolute community is dissolved (such as in cases of legal separation), the presumptive legitime must be provided to the children shared by the spouses. Failure to fulfill this obligation can render the subsequent marriage null and void under Article 53 of the Family Code.