Obligation & Contracts

PART 1: OBLIGATIONS
Chapter 1: Concept and Elements

Art. 1156 – An obligation is a juridical necessity to give, to do or not to do

Justice J.B.L. Reyes, Observations on the New Civil Code, XVI L.J., 47

- An obligation is a juridical relation whereby a person (called a creditor) may demand from
another (called the debtor) the observance of a determinative conduct (the giving, doing, or
not doing, and in case of breach, may demand satisfaction from the assets of the latter.

Makati Stock Exchange, Inc. v. Campos, 585 SCRA 120 (2009)

- Respondent used the term Respondent used the terms "right and obligation" in his Petition
from which he concluded that that such Petition sufficiently states a cause of action. Right
and obligation are legal terms with specific legal meaning;

A right is a claim or title to an interest in anything whatsoever that is

enforceable by law, while an obligation is defined in the Civil Code as a juridical
necessity to give, to do or not to do and in the words of Arias Ramos "An
obligation is a juridical relation whereby a person (called the creditor) may
demand from another (called the debtor) the observance of a determinative
conduct (the giving, doing or not doing), and in case of breach, may demand
satisfaction from the assets of the latter."

Ang Yu Asuncion v. CA, 238 SCRA 602 (1994)

- An obligation is a juridical necessity to give, to do or not to do (Art. 1156, Civil Code) and is
constituted upon the concurrence of the essential elements thereof, viz:

(a) The vinculum juris or juridical tie which is the efficient cause established by the various
sources of obligations (law, contracts, quasi-contracts, delicts and quasi-delicts);

(b) the object which is the prestation or conduct; required to be observed (to give, to do or
not to do);

(c) the subject-persons who, viewed from the demandability of the obligation, are the active
(obligee) and the passive (obligor) subjects.

Chapter 2: 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. (1089a)
 Makati Stock Exchange, Inc. v. Campos, 585 SCRA 120 (2009)

- An obligation imposed on a person, and the corresponding right granted to another, must
be rooted in at least one of these five sources. The mere assertion of a right and claim of an
obligation in an initiatory pleading, whether a Complaint or Petition, without identifying the
basis or source thereof, is merely a conclusion of fact and law. A pleading should state the
ultimate facts essential to the rights of action or defense asserted, as distinguished from
mere conclusions of fact or conclusions of law. Thus, a Complaint or Petition filed by a
person claiming a right to the Office of the President of this Republic, but without stating
the source of his purported right, cannot be said to have sufficiently stated a cause of
action. Also, a person claiming to be the owner of a parcel of land cannot merely state that
he has a right to the ownership thereof, but must likewise assert in the Complaint either a
mode of acquisition of ownership or at least a certificate of title in his name.

(1) Law

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) Contract

Art. 1159 – Obligations arising from contracts have the force of law between the contracting parties
and should be complied with in good faith.

- Contractual obligations

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 (Art. 1305)

(De Leon Notes) Thus a contract needs to have the following:

a. Binding force – Obligations arising from contracts have the force of law between
contracting parties.

b. Requirement of a valid contract – There is no contract unless the following requisites

concur: (1) Consent of the contracting parties; (2) Object certain which is the subject
matter of the contract; (3) Cause of the obligation which is established. (Art. 1318)

The contracting parties may establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy. (Art. 1306)
 (3) Quasi-contract

Art. 1160 – The contracting parties may establish such stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public
policy.

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.

Art. 2143 – The provisions for quasi-contracts in this Chapter do not exclude other quasi-contracts
which may come within the purview of the preceding article.

Traders Royal Bank Employees Union-Independent v. NLRC, 269 SCRA 733 (1997)

- Obligations do not emanate only from contracts. 31 One of the sources of extra-
contractual obligations found in our Civil Code is the quasi-contract premised on the
Roman maxim that Nemo cum alterius detrimento locupletari protest (No one shall
enrich himself at the expense of another). As embodied in our law, 32 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.

- A quasi-contract between the parties in the case at bar arose from private respondent's
lawful, voluntary and unilateral prosecution of petitioner's cause without awaiting the
latter's consent and approval. Petitioner cannot deny that it did benefit from private
respondent's efforts as the law firm was able to obtain an award of holiday pay
differential in favor of the union. It cannot even hide behind the cloak of the monthly
retainer of P3,000.00 paid to private respondent because, as demonstrated earlier,
private respondent's actual rendition of legal services is not compensable merely by said
amount.

3.1 – 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.

Art. 2145. The officious manager shall perform his duties with all the diligence of a good father of a
family, and pay the damages which through his fault or negligence may be suffered by the owner of
the property or business under management. The courts may, however, increase or moderate the
indemnity according to the circumstances of each case.
Art. 2146. If the officious manager delegates to another person all or some of his duties, he shall be
liable for the acts of the delegate, without prejudice to the direct obligation of the latter toward the
owner of the business. The responsibility of two or more officious managers shall be solidary, unless
the management was assumed to save the thing or business from imminent danger.

Art. 2147. The officious manager shall be liable for any fortuitous event:

(1) If he undertakes risky operations which the owner was not accustomed to embark upon;
(2) If he has preferred his own interest to that of the owner;
(3) If he fails to return the property or business after demand by the owner;
(4) If he assumed the management in bad faith.

Art. 2148. Except when the management was assumed to save property or business from imminent
danger, the officious manager shall be liable for fortuitous events:
(1) If he is manifestly unfit to carry on the management;
(2) If by his intervention he prevented a more competent person from taking up the
management.

Art. 2149. The ratification of the management by the owner of the business produces the effects of an
express agency, even if the business may not have been successful.

Art. 2150. Although the officious management may not have been expressly ratified, the owner of the
property or business who enjoys the advantages of the same shall be liable for obligations incurred in
his interest, and shall reimburse the officious manager for the necessary and useful expenses and for
the damages which the latter may have suffered in the performance of his duties.

The same obligation shall be incumbent upon him when the management had for its purpose the
prevention of an imminent and manifest loss, although no benefit may have been derived.

Art. 2151. Even though the owner did not derive any benefit and there has been no imminent and
manifest danger to the property or business, the owner is liable as under the first paragraph of the
preceding article, provided:
(1) The officious manager has acted in good faith, and
(2) The property or business is intact, ready to be returned to the owner. (n)

Art. 2152. The officious manager is personally liable for contracts which he has entered into with third
persons, even though he acted in the name of the owner, and there shall be no right of action
between the owner and third persons. These provisions shall not apply:
(1) If the owner has expressly or tacitly ratified the management, or
(2) When the contract refers to things pertaining to the owner of the business.

Art. 2153. The management is extinguished:

(1) When the owner repudiates it or puts an end thereto;
(2) When the officious manager withdraws from the management, subject to the provisions of
article 2144;
(3) By the death, civil interdiction, insanity or insolvency of the owner or the officious
manager.
Sison v. Balgos, 34 Phil. 885 (1916)

- The following are circumstances under which one may undertake to carry out a business
matter for another (gestion de negocios ajenos)" says Manresa, "and complete the juridic
conception which we have just given of such undertaking: (1) That they relate to
determined things or affairs, and that there be no administrator or representative of the
owner who is charged with the management thereof; (2) that it be foreign to all idea of
express or tacit mandate on the part of the owner, for it very often may happen
even without hisknowledge; it is authorized by Law 26, title 12, of the 5th Partida and
continues to be authorized by the Code, which latter, in fulfillment of base 21, aforecited,
of the law of May 18, 1888, maintained the doctrine sanctioned by the old law; and, (3),
that the actor be inspired by the beneficent idea of averting losses and damages to the
owner or to the interested arty through the abandonment of the things that belong to him
or of the business in which he may be interested, that is, that the administrator shall not
undertake the matter in the hope of obtaining profit, or, as stated in Law 29, of the title
and Partida cited, with the avaricious idea of gain. 'Without these circumstances,' says
Sanchez Roman, `the quasi contract with which we are now dealing does not exist; and,
on the contrary, reduced to its just and natural limits, it is of unquestionable utility' (12
Manresa, 547 and 548). And as the law cannot and should not presume that the
administrator undertakes the venture for unlawful and immoral purposes, but simply for
the good of the owner or of the persons who are interested in the things or affairs
affected, it confers upon the administrator the capacity of mandatary, and in such
capacity requires of him that he fulfill his trust under conditions similar to those under
which the mandatory would fulfill his own . . . .

In effect, article 1888 of the Civil Code provides:

A person who voluntarily takes charge of the agency or administration of the business of
another, without authorization, is obliged to continue to manage the same until the business
and its incidents are terminated, or to notify the interested person in order that the latter may
come to substitute him in his management, should he be in a condition to do so for himself.

3.2 – 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.

Art. 2155. Payment by reason of a mistake in the construction or application of a doubtful or difficult
question of law may come within the scope of the preceding article. (n)

Art. 2156. If the payer was in doubt whether the debt was due, he may recover if he proves that it was
not due.

Art. 2157. The responsibility of two or more payees, when there has been payment of what is not due,
is solidary.

Art. 2158. When the property delivered or money paid belongs to a third person, the payee shall
comply with the provisions of article 1984.
Art. 2159. Whoever in bad faith accepts an undue payment, shall pay legal interest if a sum of money
is involved, or shall be liable for fruits received or which should have been received if the thing
produces fruits. He shall furthermore be answerable for any loss or impairment of the thing from any
cause, and for damages to the person who delivered the thing, until it is recovered.

Art. 2160. He who in good faith accepts an undue payment of a thing certain and determinate shall
only be responsible for the impairment or loss of the same or its accessories and accessions insofar as
he has thereby been benefited. If he has alienated it, he shall return the price or assign the action to
collect the sum.

Art. 2161. As regards the reimbursement for improvements and expenses incurred by him who unduly
received the thing, the provisions of Title V of Book II shall govern.

Art. 2162. He shall be exempt from the obligation to restore who, believing in good faith that the
payment was being made of a legitimate and subsisting claim, destroyed the document, or allowed
the action to prescribe, or gave up the pledges, or cancelled the guaranties for his right. He who paid
unduly may proceed only against the true debtor or the guarantors with regard to whom the action is
still effective.

Art. 2163. It is presumed that there was a mistake in the payment if something which had never been
due or had already been paid was delivered; but he from whom the return is claimed may prove that
the delivery was made out of liberality or for any other just cause.

PNB v. CA and B.P. Mata and Co., Inc., 217 SCRA 347 (1993)

- The Civil Code does not confine itself exclusively to the quasi-contracts enumerated from
Articles 2144 to 2175 but is open to the possibility that, absent a pre-existing relationship,
there being neither crime nor quasi-delict, a quasi-contractual relation may be forced upon
the parties to avoid a case of unjust enrichment. There being no express consent, in the
sense of a meeting of minds between the parties, there is no contract to speak of. However,
in view of the peculiar circumstances or factual environment, consent is presumed to the
end that a recipient of benefits or favors resulting from lawful, voluntary and unilateral acts
of another may not be unjustly enriched at the expense of another.

- Undoubtedly, the instant case fulfills the indispensable requisites of solutio indebiti as
defined in Article 2154 that something (in this case money) has been received when there
was no right to demand it and (2) the same was unduly delivered through mistake. There is
a presumption that there was a mistake in the payment "if something which had never been
due or had already been paid was delivered; but he from whom the return is claimed may
prove that the delivery was made out of liberality or for any other just cause."18

- In the case at bar, a payment in the corrected amount of US$1,400 through Cashier's Check
No. 269522 had already been made by PNB for the account of Mata on February 25, 1975.
Strangely, however, fourteen days later, PNB effected another payment through Cashier's
Check No. 270271 in the amount of US$14,000, this time purporting to be another
transmittal of reimbursement from Star Kist, private respondent's foreign principal.
Concept of Solutio Indebiti:

Genova v. De Castro, G.R. No.132076, July 22, 2003,

- The quasi-contract of solutio indebiti is based on the ancient principle that no one shall
enrich himself unjustly at the expense of another. Article 2154 of the Civil Code provides:
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.

- The first element of solutio indebiti is lacking. There can be no mistaken payment in this
case because petitioner made payments to respondent pursuant to an agreement to
repurchase the property. Hence, the principle of solutio indebiti finds no application in this
case. (Andres v. Manufacturers Hanover & Trust Corporation, G.R. No. 82670, Sep. 15,
1989, 177 SCRA 618 and Ramie Textiles, Inc. v. Mathay, Sr., G.R. No. L-32364, April 30,
1979)

Requisites of Solutio indebiti :

Siga-an v. Villanueva, 576 SCRA 696 (2009)

- Under Article 1960 of the Civil Code, if the borrower of loan pays interest when there has
been no stipulation therefor, the provisions of the Civil Code concerning solutio indebiti
shall be applied. Article 2154 of the Civil Code explains the principle of solutio indebiti.

Said provision provides that if something is received when there is no right to demand it,
and it was unduly delivered through mistake, the obligation to return it arises. In such a
case, a creditor-debtor relationship is created under a quasi-contract whereby the payor
becomes the creditor who then has the right to demand the return of payment made by
mistake, and the person who has no right to receive such payment becomes obligated to
return the same. The quasi-contract of solutio indebiti harks back to the ancient principle
that no one shall enrich himself unjustly at the expense of another.The principle of solutio
indebiti applies where (1) a payment is made when there exists no binding relation between
the payor, who has no duty to pay, and the person who received the payment; and (2) the
payment is made through mistake, and not through liberality or some other cause

BPI v. Sarmiento, 484 SCRA 261 (2006);

- The CA finding was supported by the evidence on record. Petitioner contends that
respondent was not reporting for work from October 10, 1987 to June 30, 1988, however,
petitioner failed to show why its España Branch Manager allowed respondent to be absent
or not to do anything during that period if indeed there was no such instruction from AVP
Kimseng for her not to report for work.

It bears stressing that as an Assistant Branch Manager, respondent has some official duties
to perform pertaining to the internal operation of petitioner's branch and yet her Branch
Manager allowed her to be absent for such a long period of time without calling her
attention on such absences. The only plausible explanation is that, as declared by
respondent, which remained unrebutted, she had relayed to her Branch Manager the verbal
 instruction of AVP Kimseng for her not to report for work while the investigation was on-
going. If indeed there was no such instruction, the Branch Manager could have immediately
called respondent's attention regarding her absences and that she should have been
required to perform her official duties inside the branch office.

And if she continued to be absent, she could have been sanctioned or given the
corresponding memorandum. Moreover, there is no evidence to show that such absences, if
unauthorized, were reported by the Branch Manager to higher authorities of petitioner. On
the contrary, without qualification or reservation, respondent's salary and other benefits
were given to her by petitioner during the said period.

Petitioner insists that its payment of respondent's salary was by mistake since respondent
who chose not to report for work was not entitled to it under the principle of "no work, no
pay", thus she has the obligation to return the same. Petitioner based such contention on
the principle of solutio indebiti under Article 2154 of the Civil Code.
There is solutio indebiti where: (1) payment is made when there exists no binding
relation between the payor, who has no duty to pay, and the person who received the
payment; and (2) the payment is made through mistake, and not through liberality or
some other cause. x x x

The quasi-contract of solutio indebiti is based on the ancient principle that no one shall
enrich himself unjustly at the expense of another.

Both elements are lacking in the present case. Mr. Cascarro, the Head of the Branches
Division Investigation Unit, had categorically stated that respondent was only terminated
from service on August 26, 1988. Respondent was not suspended from office. Consequently,
during the period in question, there still existed an employer-employee relationship
between petitioner and respondent which entitled respondent to the payment of her salary
during the said period. Thus, there can be no mistaken payment in this case. Moreover, it
has been shown that the payment of respondent's salary was with the knowledge and
approval of respondent's immediate superior officers. Hence, the principle of solutio
indebiti finds no application in this case.

Moreno-Lentfer v. Wolff, 441 SCRA 584, (2004);

- The quasi-contract of solutio indebiti harks back to the ancient principle that no one shall
enrich himself unjustly at the expense of another. It applies where (1) a payment is made
when there exists no binding relation between the payor, who has no duty to pay, and the
person who received the payment, and (2) the payment is made through mistake, and not
through liberality or some other cause.

- In the instant case, records show that a bank-to-bank payment was made by respondent
Wolff to petitioner Cross in favor of co-petitioner Moreo-Lentfer. Respondent was under no
duty to make such payment for the benefit of Moreo-Lentfer. There was no binding relation
between respondent and the beneficiary, Moreo-Lentfer. The payment was clearly a
mistake. Since Moreo-Lentfer received something when there was no right to demand it,
she had an obligation to return it. Following Article 22 of the New Civil Code, two
 conditions must concur to declare that a person has unjustly enriched himself or herself,
namely: (a) a person is unjustly benefited, and (b) such benefit is derived at the expense
of or to the damage of another. We are convinced petitioner Moreo-Lentfer had been
unjustly enriched at the expense of respondent. She acquired the properties through deceit,
fraud and abuse of confidence. The principle of justice and equity does not work in her favor
but in favor of respondent Wolff. Whatever she may have received by mistake from and at
the expense of respondent should thus be returned to the latter, if the demands of justice
are to be served.
- The Court of Appeals held that respondent was not entitled to the reconveyance of the
properties because, inter alia, of the express prohibition under the Constitution that non-
Filipino citizens cannot acquire land in the Philippines. We note, however, that subject
properties consist of a beach house and the lease right over the land where the beach house
stands. The constitutional prohibition against aliens from owning land in the Philippines has
no actual bearing in this case. A clear distinction exists between the ownership of a piece of
land and the mere lease of the land where the foreigners’ house stands. Thus, we see no
legal reason why reconveyance could not be allowed. Since reconveyance is the proper
remedy, respondents expenses for the maintenance and repair of the beach house is for his
own account as owner thereof. It need not be an issue for now.

Genova v. De Castro, supra;

- Petitioner also argues that the payments he has made to respondent must be returned
based on the principle of solutio indebiti under Article 2154 of the Civil Code. There is
solutio indebiti where: (1) payment is made when there exists no binding relation
between the payor, who has no duty to pay, and the person who received the payment;
and (2) the payment is made through mistake, and not through liberality or some other
cause. (National Commercial Bank of Saudi Arabia v. CA, G.R. No. 124267, Jan. 31, 2003
and PNB v. CA, 217 SCRA 347 ,1993)

- Contrary to the contention of petitioner that a return of the payments it made to PNB is
warranted under Article 2154 of the Code, solutio indebiti does not apply in this case. This
doctrine applies where: (1) a payment is made when there exists no binding relation
between the payor, who has no duty to pay, and the person who received the payment, and
(2) the payment is made through mistake, and not through liberality or some other cause. In
this case, petitioner was under obligation to pay the amortizations on the mortgage under
the contract of sale and the deed of real estate mortgage. Under the deed of sale both
parties agreed to abide by any and all the requirements of PNB in connection with the real
estate mortgage. Petitioner was aware that the deed of mortgage made it solidarily and,
therefore, primarily liable for the mortgage obligation : (e) The Mortgagor shall neither lease
the mortgaged property xxx nor sell or dispose of the same in any manner, without the
written consent of the Mortgagee. However, if not withstanding this stipulation and during
the existence of this mortgage, the property herein mortgaged, or any portion thereof, is
xxx sold, it shall be the obligation of the Mortgagor to impose as a condition of the sale,
alienation or encumbrance that the vendee, or the party in whose favor the alienation or
encumbrance is to be made, should take the property subject to the obligation of this
mortgage in the same terms and condition under which it is constituted, it being understood
that the Mortgagor is not in any manner relieved of his obligation to the Mortgagee under
this mortgage by such sale, alienation or encumbrance; on the contrary both the vendor and
 the vendee, or the party in whose favor the alienation or encumbrance is made shall be
jointly and severally liable for said mortgage obligations.(POWER COMMERCIAL AND
INDUSTRIAL CORPORATION v. CA et.al.)

Includes Mistake of Law:

CIR v. Fortune Tobacco Corp., G.R. Nos. 167274-75, July 21, 2008

- The excise tax on cigarettes should be the higher tax imposed under the specific tax system
and the tax imposed under the ad valorem tax system plus the 12% increase imposed by
paragraph 5, Section 145 of the Tax Code, is an unsuccessful attempt to justify what is
clearly an impermissible incursion into the limits of administrative legislation. Such an
interpretation is not supported by the clear language of the law and is obviously only meant
to validate the OSGs thesis that Section 145 of the Tax Code is ambiguous and admits of
several interpretations.

- The contention that the increase of 12% starting on 1 January 2000 does not apply to the
brands of cigarettes listed under Annex D is likewise unmeritorious, absurd even. Paragraph
8, Section 145 of the Tax Code simply states that, [T]he classification of each brand of
cigarettes based on its average net retail price as of October 1, 1996, as set forth in Annex D,
shall remain in force until revised by Congress. This declaration certainly does not lend itself
to the interpretation given to it by the OSG. As plainly worded, the average net retail prices
of the listed brands under Annex D, which classify cigarettes according to their net retail
price into low, medium or high, obviously remain the bases for the application of the
increase in excise tax rates effective on 1 January 2000.

- A claim for tax refund may be based on statutes granting tax exemption or tax refund. In
such case, the rule of strict interpretation against the taxpayer is applicable as the claim for
refund partakes of the nature of an exemption, a legislative grace, which cannot be allowed
unless granted in the most explicit and categorical language. The taxpayer must show that
the legislature intended to exempt him from the tax by words too plain to be mistaken. Tax
refunds (or tax credits), on the other hand, are not founded principally on legislative grace
but on the legal principle which underlies all quasi-contracts abhorring a persons unjust
enrichment at the expense of another. The dynamic of erroneous payment of tax fits to a
tee the prototypic quasi-contract, solutio indebiti, which covers not only mistake in fact but
also mistake in law.

- The Government is not exempt from the application of solutio indebiti. Indeed, the taxpayer
expects fair dealing from the Government, and the latter has the duty to refund without any
unreasonable delay what it has erroneously collected. If the State expects its taxpayers to
observe fairness and honesty in paying their taxes, it must hold itself against the same
standard in refunding excess (or erroneous) payments of such taxes. It should not unjustly
enrich itself at the expense of taxpayers. And so, given its essence, a claim for tax refund
necessitates only preponderance of evidence for its approbation like in any other ordinary
civil case.
Distinguished From In Rem Verso:

Frenzel v. Catito, G.R. No. 143958, July 11, 2003;

- The provision is expressed in the maxim: MEMO CUM ALTERIUS DETER DETREMENTO
PROTEST (No person should unjustly enrich himself at the expense of another). An action
for recovery of what has been paid without just cause has been designated as an accion in
rem verso. This provision does not apply if, as in this case, the action is proscribed by the
Constitution or by the application of the pari delicto doctrine. It may be unfair and unjust to
bar the petitioner from filing an accion in rem verso over the subject properties, or from
recovering the money he paid for the said properties, but, as Lord Mansfield stated in the
early case of Holman vs. Johnson: The objection that a contract is immoral or illegal as
between the plaintiff and the defendant, sounds at all times very ill in the mouth of the
defendant. It is not for his sake, however, that the objection is ever allowed; but it is
founded in general principles of policy, which the defendant has the advantage of, contrary
to the real justice, as between him and the plaintiff.

Land Bank of the Philippines v. Ong, G.R. No. 190755, Nov. 24, 2010, 636 SCRA 266 (2010);

- The defense of Land Bank Legazpi City Branch Manager Atty. Hingco that it was the banks
Lending Center that should have notified Alfredo of his assumption of mortgage disapproval
is unavailing. The Lending Centers lack of notice of disapproval, the Tabaco Branchs silence
on the disapproval, and the banks subsequent actions show a failure of the bank as a
whole, first, to notify Alfredo that he is not a recognized debtor in the eyes of the bank;
and second, to apprise him of how and when he could collect on the payment that the bank
no longer had a right to keep.

- We turn then on the principle upon which Land Bank must return Alfredos payment. Unjust
enrichment exists when a person unjustly retains a benefit to the loss of another, or when a
person retains money or property of another against the fundamental principles of justice,
equity and good conscience. There is unjust enrichment under Art. 22 of the Civil Code
when (1) a person is unjustly benefited, and (2) such benefit is derived at the expense of or
with damages to another.

- Additionally, unjust enrichment has been applied to actions called accion in rem verso. In
order that the accion in rem verso may prosper, the following conditions must concur: (1)
that the defendant has been enriched; (2) that the plaintiff has suffered a loss; (3) that the
enrichment of the defendant is without just or legal ground; and (4) that the plaintiff has
no other action based on contract, quasi-contract, crime, or quasi-delict. The principle of
unjust enrichment essentially contemplates payment when there is no duty to pay, and the
person who receives the payment has no right to receive it.

- The principle applies to the parties in the instant case, as, Alfredo, having been deemed
disqualified from assuming the loan, had no duty to pay petitioner bank and the latter had
no right to receive it.
 UP v. Philab Industries, Inc., 482 Phil. 693 (2004);

- The respondent sent to the petitioner its bills and statements of accounts for the payments
of the laboratory furniture it delivered to the petitioner which the petitioner, through
Padolina, transmitted to the FEMF for its payment. However, the FEMF failed to pay the last
statement of account of the respondent because of the onset of the EDSA upheaval. It was
only when the respondent lost all hope of collecting its claim from the government and/or
the PCGG did it file the complaint against the petitioner for the collection of the payment of
its last delivery of laboratory furniture.

- We reject the ruling of the CA holding the petitioner liable for the claim of the respondent
based on the maxim that no one should enrich itself at the expense of another. Unjust
enrichment claims do not lie simply because one party benefits from the efforts or
obligations of others, but instead it must be shown that a party was unjustly enriched in the
sense that the term unjustly could mean illegally or unlawfully.

- Moreover, to substantiate a claim for unjust enrichment, the claimant must unequivocally
prove that another party knowingly received something of value to which he was not
entitled and that the state of affairs are such that it would be unjust for the person to keep
the benefit. Unjust enrichment is a term used to depict result or effect of failure to make
remuneration of or for property or benefits received under circumstances that give rise to
legal or equitable obligation to account for them; to be entitled to remuneration, one must
confer benefit by mistake, fraud, coercion, or request. Unjust enrichment is not itself a
theory of reconvey. Rather, it is a prerequisite for the enforcement of the doctrine of
restitution.

- In order that accion in rem verso may prosper, the essential elements must be present: (1)
that the defendant has been enriched, (2) that the plaintiff has suffered a loss, (3) that the
enrichment of the defendant is without just or legal ground, and (4) that the plaintiff has
no other action based on contract, quasi-contract, crime or quasi-delict.

- An accion in rem verso is considered merely an auxiliary action, available only when there is
no other remedy on contract, quasi-contract, crime, and quasi-delict. If there is an
obtainable action under any other institution of positive law, that action must be resorted
to, and the principle of accion in rem verso will not lie.

- The essential requisites for the application of Article 22 of the New Civil Code do not obtain
in this case. The respondent had a remedy against the FEMF via an action based on an
implied-in-fact contract with the FEMF for the payment of its claim. The petitioner legally
acquired the laboratory furniture under the MOA with FEMF; hence, it is entitled to keep
the laboratory furniture.
 Shinryo (Philippines) Company, Inc. v. RRN Incorporated, G.R. No. 172525, Oct. 20, 2010.

- The petition is bereft of merit. Despite petitioner's attempts to make it appear that it is
advancing questions of law, it is quite clear that what petitioner seeks is for this Court to
recalibrate the evidence it has presented before the CIAC. It insists that its evidence
sufficiently proves that it is entitled to payment for respondent's use of its manlift
equipment, and even absent proof of the supposed agreement on the charges petitioner
may impose on respondent for the use of said equipment, respondent should be made to
pay based on the principle of unjust enrichment. Petitioner also questions the amounts
awarded by the CIAC for inventoried materials, and costs incurred by petitioner for
completing the work left unfinished by respondent.

- Petitioner's reliance on the principle of unjust enrichment is likewise misplaced. The ruling
of the Court in University of the Philippines v. Philab Industries, Inc. is highly instructive,
thus: Unjust enrichment claims do not lie simply because one party benefits from the efforts
or obligations of others, but instead it must be shown that a party was unjustly enriched in
the sense that the term unjustly could mean illegally or unlawfully.

- Moreover, to substantiate a claim for unjust enrichment, the claimant must unequivocally
prove that another party knowingly received something of value to which he was not
entitled and that the state of affairs are such that it would be unjust for the person to keep
the benefit. Unjust enrichment is a term used to depict result or effect of failure to make
remuneration of or for property or benefits received under circumstances that give rise to
legal or equitable obligation to account for them; to be entitled to remuneration, one must
confer benefit by mistake, fraud, coercion, or request. Unjust enrichment is not itself a
theory of reconvey. Rather, it is a prerequisite for the enforcement of the doctrine of
restitution.

- As found by both the CIAC and affirmed by the CA, petitioner failed to prove that
respondent's free use of the manlift was without legal ground based on the provisions of
their contract. Thus, the third requisite, i.e., that the enrichment of respondent is without
just or legal ground, is missing. In addition, petitioner's claim is based on contract, hence,
the fourth requisite − that the plaintiff has no other action based on contract, quasi-
contract, crime or quasi-delict − is also absent. Clearly, the principle of unjust enrichment is
not applicable in this case

3.1 – Other quasi – contracts

Art. 2164. When, without the knowledge of the person obliged to give support, it is given by a
stranger, the latter shall have a right to claim the same from the former, unless it appears that he
gave it out of piety and without intention of being repaid. (1894a)

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. (1894a)
Art. 2166. When the person obliged to support an orphan, or an insane or other indigent person
unjustly refuses to give support to the latter, any third person may furnish support to the needy
individual, with right of reimbursement from the person obliged to give support. The provisions of this
article apply when the father or mother of a child under eighteen years of age unjustly refuses to
support him.

Art. 2167. When through an accident or other cause a person is injured or becomes seriously ill, and
he is treated or helped while he is not in a condition to give consent to a contract, he shall be liable to
pay for the services of the physician or other person aiding him, unless the service has been rendered
out of pure generosity.

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.

Art. 2169. When the government, upon the failure of any person to comply with health or safety
regulations concerning property, undertakes to do the necessary work, even over his objection, he
shall be liable to pay the expenses.

Art. 2170. When by accident or other fortuitous event, movables separately pertaining to two or more
persons are commingled or confused, the rules on co-ownership shall be applicable.

Art. 2171. The rights and obligations of the finder of lost personal property shall be governed by
articles 719 and 720.

Art. 2172. The right of every possessor in good faith to reimbursement for necessary and useful
expenses is governed by article 546.

Art. 2173. When a third person, without the knowledge of the debtor, pays the debt, the rights of the
former are governed by articles 1236 and 1237.

Art. 2174. When in a small community a majority of the inhabitants of age decide upon a measure for
protection against lawlessness, fire, flood, storm or other calamity, any one who objects to the plan
and refuses to contribute to the expenses but is benefited by the project as executed shall be liable to
pay his share of said expenses.

Art. 2175. Any person who is constrained to pay the taxes of another shall be entitled to
reimbursement from the latter.

(4) Delicts

Art. 1161. Civil obligations arising from criminal offenses shall be governed by the penal laws, subject
to the provisions of article 2177, and of the pertinent provisions of Chapter 2, Preliminary Title, on
Human Relations, and of Title XVIII of this Book, regulating damages.

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.
RPC Art. 100. Civil Liability of Person Guilty of Felony. — Every person criminally liable for a felony is
also civilly liable.

RPC Art. 101. Rules Regarding Civil Liability in Certain Cases. — The exemption from criminal liability
established in subdivisions 1, 2, 3, 5, and 6 of article 12 and in subdivision 4 of article 11 of this Code
does not include exemption from civil liability, which shall be enforced subject to the following rules:

1. In cases of subdivisions 1, 2, and 3 of article 12, the civil liability for acts committed by an
imbecile or insane person, and by a person under nine years of age, or by one over nine
but under fifteen years of age, who has acted without discernment, shall devolve upon
those having such person under their legal authority or control, unless it appears that
there was no fault or negligence on their part.

Should there be no person having such insane, imbecile or minor under his authority, legal
guardianship, or control, or if such person be insolvent, said insane, imbecile, or minor
shall respond with their own property, excepting property exempt from execution, in
accordance with the civil law.

2. In cases falling within subdivision 4 of article 11, the persons for whose benefit the harm
has been prevented shall be civilly liable in proportion to the benefit which they may have
received. The courts shall determine, in their sound discretion, the proportionate amount
for which each one shall be liable.

When the respective shares can not be equitably determined, even approximately, or
when the liability also attaches to the Government, or to the majority of the inhabitants
of the town, and, in all events, whenever the damage has been caused with the consent of
the authorities or their agents, indemnification shall be made in the manner prescribed by
special laws or regulations.

3. In cases falling within subdivisions 5 and 6 of article 12, the persons using violence or
causing the fears shall be primarily liable and secondarily, or, if there be no such persons,
those doing the act shall be liable, saving always to the latter that part of their property
exempt from execution.

RPC Art. 102. Subsidiary Civil Liability of Innkeepers, Tavernkeepers and Proprietors of Establishments.
— In default of the persons criminally liable, innkeepers, tavernkeepers, and any other persons or
corporations shall be civilly liable for crimes committed in their establishments, in all cases where a
violation of municipal ordinances or some general or special police regulation shall have been
committed by them or their employees.

Innkeepers are also subsidiarily liable for the restitution of goods taken by robbery or theft within
their houses from guests lodging therein, or for the payment of the value thereof, provided that such
guests shall have notified in advance the innkeeper himself, or the person representing him, of the
deposit of such goods within the inn; and shall furthermore have followed the directions which such
innkeeper or his representative may have given them with respect to the care of and vigilance over
such goods. No liability shall attach in case of robbery with violence against or intimidation of persons
unless committed by the innkeeper’s employees.
ARTICLE 103. Subsidiary Civil Liability of Other Persons. — The subsidiary liability established in the
next preceding article shall also apply to employers, teachers, persons, and corporations engaged in
any kind of industry for felonies committed by their servants, pupils, workmen, apprentices, or
employees in the discharge of their duties.

Basis of Civil Liability in Crime:

Occena v. Icamina, 181 SCRA 328 (1990);

- Civil obligations arising from criminal offenses are governed by Article 100 of the Revised
Penal Code which provides that "(E)very person criminally liable for a felony is also civilly
liable," in relation to Article 2177 of the Civil Code on quasi-delict, the provisions for
independent civil actions in the Chapter on Human Relations and the provisions regulating
damages, also found in the Civil Code. Underlying the legal principle that a person who is
criminally liable is also civilly liable is the view that from the standpoint of its effects, a
crime has dual character: (1) as an offense against the state because of the disturbance of
the social order; and (2) as an offense against the private person injured by the crime
unless it involves the crime of treason, rebellion, espionage, contempt and others wherein
no civil liability arises on the part of the offender either because there are no damages to
be compensated or there is no private person injured by the crime. In the ultimate
analysis, what gives rise to the civil liability is really the obligation of everyone to repair or to
make whole the damage caused to another by reason of his act or omission, whether done
intentional or negligently and whether or not punishable by law.

- In the case at bar, private respondent was found guilty of slight oral defamation and
sentenced to a fine of P50.00 with subsidiary imprisonment in case of insolvency, but no
civil liability arising from the felonious act of the accused was adjudged. This is erroneous.
As a general rule, a person who is found to be criminally liable offends two (2) entities: the
state or society in which he lives and the individual member of the society or private person
who was injured or damaged by the punishable act or omission. The offense of which
private respondent was found guilty is not one of those felonies where no civil liability
results because either there is no offended party or no damage was caused to a private
person. There is here an offended party, whose main contention precisely is that he suffered
damages in view of the defamatory words and statements uttered by private respondent, in
the amount of Ten Thousand Pesos (P10,000.00) as moral damages and the further sum of
Ten Thousand Pesos (P10,000) as exemplary damages.

- Article 2219, par. (7) of the Civil Code allows the recovery of moral damages in case of libel,
slander or any other form of defamation This provision of law establishes the right of an
offended party in a case for oral defamation to recover from the guilty party damages for
injury to his feelings and reputation. The offended party is likewise allowed to recover
punitive or exemplary damages.

Banal v. Tadeo, Jr., 156 SCRA 325 (1987)

 - Generally, the basis of civil liability arising from crime is the fundamental postulate of our
law that "Every man criminally liable is also civilly liable" (Art. 100, The Revised Penal Code).
Underlying this legal principle is the traditional theory that when a person commits a crime
he offends two entities namely ( 1) the society in which he lives in or the political entity
called the State whose law he had violated; and (2) the individual member of that society
whose person, right, honor, chastity or property was actually or directly injured or damaged
by the same punishable act or omission.

- While an act or omission is felonious because it is punishable by law, it gives rise to civil
liability not so much because it is a crime but because it caused damage to another.
Viewing things pragmatically, we can readily see that what gives rise to the civil liability is
really the obligation and the moral duty of everyone to repair or make whole the damage
caused to another by reason of his own act or omission, done intentionally or negligently,
whether or not the same be punishable by law. In other words, criminal liability will give
rise to civil liability only if the same felonious act or omission results in damage or injury to
another and is the direct and proximate cause thereof. Damage or injury to another is
evidently the foundation of the civil action. Such is not the case in criminal actions for, to be
criminally liable, it is enough that the act or omission complained of is punishable,
regardless of whether or not it also causes material damage to another.

Effect of Acquittal of Accused:

Art. 29. When the accused in a criminal prosecution is acquitted on the ground that his guilt has not
been proved beyond reasonable doubt, a civil action for damages for the same act or omission may be
instituted. Such action requires only a preponderance of evidence. Upon motion of the defendant, the
court may require the plaintiff to file a bond to answer for damages in case the complaint should be
found to be malicious. If in a criminal case the judgment of acquittal is based upon reasonable doubt,
the court shall so declare. In the absence of any declaration to that effect, it may be inferred from the
text of the decision whether or not the acquittal is due to that ground.

Manantan v. CA, 350 SCRA 387 (2001);

- Petitioner argues that the Court of Appeals erred in awarding damages and indemnity, since
private respondents did not pay the corresponding filing fees for their claims for damages
when the civil case was impliedly instituted with the criminal action. Petitioner submits that
the non-payment of filing fees on the amount of the claim for damages violated the doctrine
in Manchester Development Corporation v. Court of Appeals, 149 SCRA 562 (1987) and
Supreme Court Circular No. 7 dated March 24, 1988. He avers that since Manchester held
that The Court acquires jurisdiction over any case only upon payment of the prescribed
docket fees, the appellate court was without jurisdiction to hear and try CA-G.R. CV No.
19240, much less award indemnity and damages.

- Private respondents argue that the Manchester doctrine is inapplicable to the instant
case. They ask us to note that the criminal case, with which the civil case was impliedly
instituted, was filed on July 1, 1983, while the Manchester requirements as to docket and
filing fees took effect only with the promulgation of Supreme Court Circular No. 7 on March
24, 1988. Moreover, the information filed by the Provincial Prosecutor of Isabela did not
 allege the amount of indemnity to be paid. Since it was not then customarily or legally
required that the civil damages sought be stated in the information, the trial court had no
basis in assessing the filing fees and demanding payment thereof. Moreover, assuming that
the Manchester ruling is applied retroactively, under the Rules of Court, the filing fees for
the damages awarded are a first lien on the judgment. Hence, there is no violation of
the Manchester doctrine to speak of.

- At the time of the filing of the information in 1983, the implied institution of civil actions
with criminal actions was governed by Rule 111, Section 1 of the 1964 Rules of Court. As
correctly pointed out by private respondents, under said rule, it was not required that the
damages sought by the offended party be stated in the complaint or information. With the
adoption of the 1985 Rules of Criminal Procedure, and the amendment of Rule 111, Section
1 of the 1985 Rules of Criminal Procedure by a resolution of this Court dated July 7, 1988, it
is now required that: When the offended party seeks to enforce civil liability against the
accused by way of moral, nominal, temperate or exemplary damages, the filing fees for such
civil action as provided in these Rules shall constitute a first lien on the judgment except in
an award for actual damages.

- In cases where in the amount of damages, other than actual, is alleged in the complaint or
information, the corresponding filing fees shall be paid by the offended party upon the filing
thereof in court for trial.

- Where the civil action is impliedly instituted together with the criminal action, the actual
damages claimed by the offended parties, as in this case, are not included in the
computation of the filing fees. Filing fees are to be paid only if other items of damages
such as moral, nominal, temperate, or exemplary damages are alleged in the complaint or
information, or if they are not so alleged, shall constitute a first lien on the
judgment. Recall that the information in Criminal Case No. 066 contained no specific
allegations of damages. Considering that the Rules of Criminal Procedure effectively
guarantee that the filing fees for the award of damages are a first lien on the judgment, the
effect of the enforcement of said lien must retroact to the institution of the criminal
action. The filing fees are deemed paid from the filing of the criminal complaint or
information. We therefore find no basis for petitioners allegations that the filing fees were
not paid or improperly paid and that the appellate court acquired no jurisdiction.

Manliclic v. Calaunan, 512 SCRA 642 (2007);

- The swerving of Calaunan’s jeep when it tried to overtake the vehicle in front of it was
beyond the control of accused-appellant. Absent evidence of negligence, therefore,
accused-appellant cannot be held liable for Reckless Imprudence Resulting in Damage to
Property with Physical Injuries as defined in Article 365 of the Revised Penal Code.

- From the foregoing declaration of the Court of Appeals, it appears that petitioner Manliclic
was acquitted not on reasonable doubt, but on the ground that he is not the author of the
act complained of which is based on Section 2(b) of Rule 111 of the Rules of Criminal
Procedure which reads: (b) Extinction of the penal action does not carry with it extinction of
 the civil, unless the extinction proceeds from a declaration in a final judgment that the fact
from which the civil might arise did not exist.

- In spite of said ruling, petitioner Manliclic can still be held liable for the mishap. The afore-
quoted section applies only to a civil action arising from crime or ex delicto and not to a civil
action arising from quasi-delict or culpa aquiliana. The extinction of civil liability referred to
in Par. (e) of Section 3, Rule 111 [now Section 2 (b) of Rule 111], refers exclusively to civil
liability founded on Article 100 of the Revised Penal Code, whereas the civil liability for the
same act considered as a quasi-delict only and not as a crime is not extinguished even by a
declaration in the criminal case that the criminal act charged has not happened or has not
been committed by the accused.

- A quasi-delict or culpa aquiliana is a separate legal institution under the Civil Code with a
substantivity all its own, and individuality that is entirely apart and independent from a
delict or crime – a distinction exists between the civil liability arising from a crime and the
responsibility for quasi-delicts or culpa extra-contractual. The same negligence causing
damages may produce civil liability arising from a crime under the Penal Code, or create an
action for quasi-delicts or culpa extra-contractual under the Civil Code. It is now settled that
acquittal of the accused, even if based on a finding that he is not guilty, does not carry with
it the extinction of the civil liability based on quasi delict.

- In other words, if an accused is acquitted based on reasonable doubt on his guilt, his civil
liability arising from the crime may be proved by preponderance of evidence only. However,
if an accused is acquitted on the basis that he was not the author of the act or omission
complained of (or that there is declaration in a final judgment that the fact from which the
civil might arise did not exist), said acquittal closes the door to civil liability based on the
crime or ex delicto. In this second instance, there being no crime or delict to speak of, civil
liability based thereon or ex delicto is not possible. In this case, a civil action, if any, may be
instituted on grounds other than the delict complained of.

- As regards civil liability arising from quasi-delict or culpa aquiliana, same will not be
extinguished by an acquittal, whether it be on ground of reasonable doubt or that accused
was not the author of the act or omission complained of (or that there is declaration in a
final judgment that the fact from which the civil liability might arise did not exist). The
responsibility arising from fault or negligence in a quasi-delict is entirely separate and
distinct from the civil liability arising from negligence under the Penal Code. An acquittal or
conviction in the criminal case is entirely irrelevant in the civil case based on quasi-delict or
culpa aquiliana.
Nuguid v. Nicdao, 502 SCRA 93 (2006);

- Extinction of penal action does not carry with it the eradication of civil liability, unless the
extinction proceeds from a declaration in the final judgment that the fact from which the
civil liability might arise did not exist. On one hand, as regards the criminal aspect of a
violation of BP 22, suffice it to say that: The gravamen of BP 22 is the act of making and
issuing a worthless check or one that is dishonored upon its presentment for payment [and]
the accused failed to satisfy the amount of the check or make arrangement for its payment
within 5 banking days from notice of dishonor.
- The basic principle in civil liability ex delicto is that every person criminally liable is also
civilly liable, crime being one of the five sources of obligations under the Civil Code. A
person acquitted of a criminal charge, however, is not necessarily civilly free because the
quantum of proof required in criminal prosecution (proof beyond reasonable doubt) is
greater than that required for civil liability (mere preponderance of evidence12). In order to
be completely free from civil liability, a person's acquittal must be based on the fact that he
did not commit the offense.13 If the acquittal is based merely on reasonable doubt, the
accused may still be held civilly liable since this does not mean he did not commit the act
complained of.14 It may only be that the facts proved did not constitute the offense
charged.15

- Acquittal will not bar a civil action in the following cases: (1) where the acquittal is based on
reasonable doubt as only preponderance of evidence is required in civil cases; (2) where the
court declared the accused's liability is not criminal but only civil in nature and (3) where the
civil liability does not arise from or is not based upon the criminal act of which the accused
was acquitted.

- In this petition, we find no reason to ascribe any civil liability to respondent. As found by the
CA, her supposed civil liability had already been fully satisfied and extinguished by payment.
The statements of the appellate court leave no doubt that respondent, who was acquitted
from the charges against her, had already been completely relieved of civil liability:
[Petitioner] does not dispute the fact that payments have already been made by petitioner
in [the stated] amounts but argues that the Demand Draft represented payment of a
previous obligation. However, no evidence of whatever nature was presented by the
prosecution to substantiate their claim that there was indeed a previous obligation
involving the same amount for which the demand draft was given. Except for this bare
allegation, which is self-serving, no documentary evidence was ever adduced that there
were previous transactions involving the subject amount.

Padilla v. CA, 129 SCRA 558 (1984).

- Section 1 of Rule 111 of the Rules of Court states the fundamental proposition that when a
criminal action is instituted, the civil action for recovery of civil liability arising from the
offense charged is impliedly instituted with it. There is no implied institution when the
offended party expressly waives the civil action or reserves his right to institute it
separately. (Morte Sr. v. Alvizo, Jr., 101 SCRA 221).

- The extinction of the civil action by reason of acquittal in the criminal case refers exclusively
to civil liability ex delicto founded on Article 100 of the Revised Penal Code. (Elcano v. Hill,
77 SCRA 98; Virata v. Ochoa, 81 SCRA 472). In other words, the civil liability which is also
extinguished upon acquittal of the accused is the civil liability arising from the act as a crime.

- As easily as 1942, the Supreme Court speaking through Justice Jorge Bocobo in Barredo v.
Garcia, et at. 73 Phil. 607 laid down the rule that the same punishable act or omission can
create two kinds of civil liabilities against the accused and, where provided by law, his
employer. There is the civil liability arising from the act as a crime and the liability arising
from the same act as a quasi-delict. Either one of these two types of civil liability may be
enforced against the accused, However, the offended party cannot recover damages
 under both types of liability. For instance, in cases of criminal negligence or crimes due to
reckless imprudence, Article 2177 of the Civil Code provides: 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.

- Section 3 (c) of Rule 111 specifically provides that:

Sec. 3. Other civil actions arising from offenses. — In all cases not included in the
preceding section the following rules shall be observed:
xxx
(c) Extinction of the penal action does not carry with it extinction of the civil, unless the
extinction proceeds from a declaration in a final judgment that the fact from which the
civil might arise did not exist. In other cases, the person entitled to the civil action may
institute it in the Jurisdiction and in the manner provided by law against the person who
may be liable for restitution of the thing and reparation or indemnity for the damage
suffered.

- The judgment of acquittal extinguishes the liability of the accused for damages only when it
includes a declaration that the facts from which the civil might arise did not exist. Thus, the
civil liability is not extinguished by acquittal where the acquittal is based on reasonable
doubt (PNB v. Catipon, 98 Phil. 286) as only preponderance of evidence is required in civil
cases; where the court expressly declares that the liability of the accused is not criminal but
only civil in nature (De Guzman v. Alvia, 96 Phil. 558; People v. Pantig, supra) as, for
instance, in the felonies of estafa, theft, and malicious mischief committed by certain
relatives who thereby incur only civil liability (See Art. 332, Revised Penal Code); and, where
the civil liability does not arise from or is not based upon the criminal act of which the
accused was acquitted (Castro v. Collector of Internal Revenue, 4 SCRA 1093; See Regalado,
Remedial Law Compendium, 1983 ed., p. 623).

Rule of Implied Institution:

RULE 111
Prosecution of Civil Action
Section 1 – Institution of criminal and civil actions. —

(a) When a criminal action is instituted, the civil action for the recovery of civil liability arising from
the offense charged shall be deemed instituted with the criminal action unless the offended party
waives the civil action, reserves the right to institute it separately or institutes the civil action prior to
the criminal action.

The reservation of the right to institute separately the civil action shall be made before the
prosecution starts presenting its evidence and under circumstances affording the offended party a
reasonable opportunity to make such reservation. When the offended party seeks to enforce civil
liability against the accused by way of moral, nominal, temperate, or exemplary damages without
specifying the amount thereof in the complaint or information, the filing fees thereof shall constitute
a first lien on the judgment awarding such damages. Where the amount of damages, other than
actual, is specified in the complaint or information, the corresponding filing fees shall be paid by the
offended party upon the filing thereof in court. Except as otherwise provided in these Rules, no filing
fees shall be required for actual damages. No counterclaim, cross-claim or third-party complaint may
be filed by the accused in the criminal case, but any cause of action which could have been the subject
thereof may be litigated in a separate civil action.

(b) The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to include the
corresponding civil action. No reservation to file such civil action separately shall be allowed. Upon
filing of the aforesaid joint criminal and civil actions, the offended party shall pay in full the filing fees
based on the amount of the check involved, which shall be considered as the actual damages claimed.
Where the complaint or information also seeks to recover liquidated, moral, nominal, temperate or
exemplary damages, the offended party shall pay additional filing fees based on the amounts alleged
therein. If the amounts are not so alleged but any of these damages are subsequently awarded by the
court, the filing fees based on the amount awarded shall constitute a first lien on the judgment.
Where the civil action has been filed separately and trial thereof has not yet commenced, it may be
consolidated with the criminal action upon application with the court trying the latter case. If the
application is granted, the trial of both actions shall proceed in accordance with section 2 of this Rule
governing consolidation of the civil and criminal actions.

Section 2 – When separate civil action is suspended. —

After the criminal action has been commenced, the separate civil action arising there from cannot be
instituted until final judgment has been entered in the criminal action. If the criminal action is filed
after the said civil action has already been instituted, the latter shall be suspended in whatever stage
it may be found before judgment on the merits. The suspension shall last until final judgment is
rendered in the criminal action. Nevertheless, before judgment on the merits is rendered in the civil
action, the same may, upon motion of the offended party, be consolidated with the criminal action in
the court trying the criminal action. In case of consolidation, the evidence already adduced in the civil
action shall be deemed automatically reproduced in the criminal action without prejudice to the right
of the prosecution to cross-examine the witnesses presented by the offended party in the criminal
case and of the parties to present additional evidence. The consolidated criminal and civil actions shall
be tried and decided jointly.

During the pendency of the criminal action, the running of the period of prescription of the civil action
which cannot be instituted separately or whose proceeding has been suspended shall be tolled.
The extinction of the penal action does not carry with it extinction of the civil action. However, the
civil action based on delict shall be deemed extinguished if there is a finding in a final judgment in the
criminal action that the act or omission from which the civil liability may arise did not exist.

Section 3 – When civil action may proceeded independently. —

In the cases provided for in Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines, the
independent civil action may be brought by the offended party. It shall proceed independently of the
criminal action and shall require only a preponderance of evidence. In no case, however, may the
offended party recover damages twice for the same act or omission charged in the criminal action.

Section 4. Effect of death on civil actions. — The death of the accused after arraignment and during
the pendency of the criminal action shall extinguish the civil liability arising from the delict. However,
the independent civil action instituted under section 3 of this Rule or which thereafter is instituted to
enforce liability arising from other sources of obligation may be continued against the estate or legal
representative of the accused after proper substitution or against said estate, as the case may be. The
heirs of the accused may be substituted for the deceased without requiring the appointment of an
executor or administrator and the court may appoint a guardian ad litem for the minor heirs.
The court shall forthwith order said legal representative or representatives to appear and be
substituted within a period of thirty (30) days from notice. A final judgment entered in favor of the
offended party shall be enforced in the manner especially provided in these rules for prosecuting
claims against the estate of the deceased. If the accused dies before arraignment, the case shall be
dismissed without prejudice to any civil action the offended party may file against the estate of the
deceased.

Section 5 – Judgment in civil action not a bar. —

A final judgment rendered in a civil action absolving the defendant from civil liability is not a bar to a
criminal action against the defendant for the same act or omission subject of the civil action.

Section 6 – Suspension by reason of prejudicial question. —

A petition for suspension of the criminal action based upon the pendency of a prejudicial question in a
civil action may be filed in the office of the prosecutor or the court conducting the preliminary
investigation. When the criminal action has been filed in court for trial, the petition to suspend shall
be filed in the same criminal action at any time before the prosecution rests.

Section 7 – Elements of prejudicial question. — The elements of a prejudicial question are: (a) the
previously instituted civil action involves an issue similar or intimately related to the issue raised in
the subsequent criminal action, and (b) the resolution of such issue determines whether or not the
criminal action may proceed.

Casupanan v. Laroya, G.R. No. 145391, Aug. 26, 2002

- Under the present Rule 111, the offended party is still given the option to file a separate civil
action to recover civil liability ex-delicto by reserving such right in the criminal action before
the prosecution presents its evidence. Also, the offended party is deemed to make such
reservation if he files a separate civil action before filing the criminal action. If the civil
action to recover civil liability ex-delicto is filed separately but its trial has not yet
commenced, the civil action may be consolidated with the criminal action. The consolidation
under this Rule does not apply to separate civil actions arising from the same act or
omission filed under Articles 32, 33, 34 and 2176 of the Civil Code.

- Under Section 2, Rule 111 of the amended 1985 Rules, a separate civil action, if reserved in
the criminal action, could not be filed until after final judgment was rendered in the criminal
action. If the separate civil action was filed before the commencement of the criminal
action, the civil action, if still pending, was suspended upon the filing of the criminal action
until final judgment was rendered in the criminal action. This rule applied only to the
separate civil action filed to recover liability ex-delicto. The rule did not apply to
independent civil actions based on Articles 32, 33, 34 and 2176 of the Civil Code, which
could proceed independently regardless of the filing of the criminal action. Nevertheless,
before judgment on the merits is rendered in the civil action, the same may, upon motion of
the offended party, be consolidated with the criminal action in the court trying the criminal
 action. In case of consolidation, the evidence already adduced in the civil action shall be
deemed automatically reproduced in the criminal action without prejudice to the right of
the prosecution to cross-examine the witnesses presented by the offended party in the
criminal case and of the parties to present additional evidence. The consolidated criminal
and civil actions shall be tried and decided jointly. During the pendency of the criminal
action, the running of the period of prescription of the civil action which cannot be
instituted separately or whose proceeding has been suspended shall be tolled.

- Under Section 1 of the present Rule 111, the independent civil action in Articles 32, 33, 34
and 2176 of the Civil Code is not deemed instituted with the criminal action but may be filed
separately by the offended party even without reservation. The commencement of the
criminal action does not suspend the prosecution of the independent civil action under
these articles of the Civil Code. The suspension in Section 2 of the present Rule 111 refers
only to the civil action arising from the crime, if such civil action is reserved or filed before
the commencement of the criminal action. Thus, the offended party can file two separate
suits for the same act or omission. The first a criminal case where the civil action to recover
civil liability ex-delicto is deemed instituted, and the other a civil case for quasi-delict -
without violating the rule on non-forum shopping. The two cases can proceed
simultaneously and independently of each other. The commencement or prosecution of the
criminal action will not suspend the civil action for quasi-delict. The only limitation is that
the offended party cannot recover damages twice for the same act or omission of the
defendant. In most cases, the offended party will have no reason to file a second civil action
since he cannot recover damages twice for the same act or omission of the accused. In some
instances, the accused may be insolvent, necessitating the filing of another case against his
employer or guardians.

- Similarly, the accused can file a civil action for quasi-delict for the same act or omission he is
accused of in the criminal case. This is expressly allowed in paragraph 6, Section 1 of the
present Rule 111 which states that the counterclaim of the accused may be litigated in a
separate civil action. This is only fair for two reasons. First, the accused is prohibited from
setting up any counterclaim in the civil aspect that is deemed instituted in the criminal
case. The accused is therefore forced to litigate separately his counterclaim against the
offended party. If the accused does not file a separate civil action for quasi-delict, the
prescriptive period may set in since the period continues to run until the civil action
for quasi-delict is filed. Second, the accused, who is presumed innocent, has a right to
invoke Article 2177 of the Civil Code, in the same way that the offended party can avail of
this remedy which is independent of the criminal action. To disallow the accused from filing
a separate civil action for quasi-delict, while refusing to recognize his counterclaim in the
criminal case, is to deny him due process of law, access to the courts, and equal protection
of the law. Thus, the civil action based on quasi-delict filed separately by Casupanan and
Capitulo is proper. The order of dismissal by the MCTC of Civil Case No. 2089 on the ground
of forum-shopping is erroneous.

Effect of Death During Appeal:

 People v. Bayotas, 236 SCRA 239 (1994);

- Death of the accused pending appeal of his conviction extinguishes his criminal liability as
well as the civil liability based solely thereon. As opined by Justice Regalado, in this regard,
"the death of the accused prior to final judgment terminates his criminal liability
and only the civil liability directly arising from and based solely on the offense
committed, i.e., civil liability ex delicto in senso strictiore." Corollarily, the claim for civil
liability survives notwithstanding the death of accused, if the same may also be predicated
on a source of obligation other than delict. Article 1157 of the Civil Code enumerates other
sources of obligation from which the civil liability may arise as a result of the same act or
omission

- Where the civil liability survives, as explained in Number 2 above, an action for recovery
therefor may be pursued but only by way of filing a separate civil action and subject to
Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as amended. This separate civil
action may be enforced either against the executor/administrator or the estate of the
accused, depending on the source of obligation upon which the same is based as explained
above.

- Finally, the private offended party need not fear a forfeiture of his right to file this separate
civil action by prescription, in cases where during the prosecution of the criminal action and
prior to its extinction, the private-offended party instituted together therewith the civil
action. In such case, the statute of limitations on the civil liability is deemed interrupted
during the pendency of the criminal case, conformably with provisions of Article 1155 21 of
the Civil Code, that should thereby avoid any apprehension on a possible privation of right
by prescription. Applying this set of rules to the case at bench, we hold that the death of
appellant Bayotas extinguished his criminal liability and the civil liability based solely on the
act complained of, i.e., rape. Consequently, the appeal is hereby dismissed without
qualification.

Villegas v. CA, G.R. No. 82562, April 11, 1997

- the court a quo should have dismissed both actions against Villegas which dismissal will
not,however, bar Raquiza as the private offended party from pursuing his claim for damages
against the executor or administrator of the former's estate, notwithstanding the fact that
he did not reserve the right to institute a separate civil action based on Article 33 of the Civil
Code.

- It cannot be argued either that to follow Bayotas would result in further delay in this
protracted litigation. This is because the resolution of the civil aspect of the case after the
dismissal of the main criminal action by the trial court was technically defective. There was
no proper substitution of parties, as correctly pointed out by the Heirs and repeatedly put in
issue by Atty. Quisumbing. What should have been followed by the court a quo was the
procedure laid down in the Rules of Court, specifically, Section 17, Rule 3, in connection with
Section 1, Rule 87. The pertinent provisions state as follows:
Rule 3 Sec. 17. Death of party. After a party dies and the claim is not thereby
extinguished, the court shall order, upon proper notice, the legal representative
of the deceased to appear and to be substituted for the deceased, within a
 period of thirty (30) days, or within such time as may be granted. x x x The heirs
of the deceased may be allowed to be substituted for the deceased, without
requiring the appointment of an executor or administrator and the court may
appoint guardian ad litem for the minor heirs.

Rule 87 Sec. 1. Actions which may and which may not be brought against
executor or administrator. No action upon a claim for the recovery of money or
debt or interest thereon shall be commenced against the executor or
administrator; but actions to recover real or personal property, or an interest
therein, from the estate, or to enforce a lien thereon, and actions to recover
damages for an injury to person or property, real or personal, may be
commenced against him."

People v. Abungan, G.R. No. 136843, Sep. 28, 2000

- It is clear that, following the above disquisition in Bayotas, the death of appellant
extinguished his criminal liability. Moreover, because he died during the pendency of the
appeal and before the finality of the judgment against him, his civil liability arising from the
crime or delict (civil liability ex delicto) was also extinguished. It must be added, though, that
his civil liability may be based on sources of obligation other than delict. For this reason, the
victims may file a separate civil action against his estate, as may be warranted by law and
procedural rules. Moreover, we hold that the death of Appellant Abungan would result in
the dismissal of the criminal case against him. Necessarily, the lower court's Decision --
finding him guilty and sentencing him to suffer reclusion perpetua and to indemnify the
heirs of the deceased -- becomes ineffectual.

Go v. Looyuko, 537 SCRA 445 (2007)

- Respondent Looyuko died on October 29, 2004. It is an established principle that the death
of the accused pending final adjudication of the criminal case extinguishes the accused’s
criminal liability. If the civil liability directly arose from and is based solely on the offense
committed, then the civil liability is also extinguished.

- In the case at bar, the civil liability for the recovery of the CBC stock certificates covering
41,376 shares of stock or their value does not directly result from or based solely on the
crime of estafa but on an agreement or arrangement between the parties that petitioner Go
would endorse in blank said stock certificates and give said certificates to respondent
Looyuko in trust for petitioner for said respondent to sell the stocks covered by the
certificates. In such a case, the civil liability survives and an action for recovery therefor in a
separate civil action can be instituted either against the executor or administrator or the
estate of the accused. In the light of the foregoing provision, Crim. Case No. 98-1643 has to
be dismissed by reason of the death of respondent Looyuko without prejudice to the filing
of a separate civil action.

People v. Bunay, 630 SCRA 445 (2010)

 - On April 20, 2010, the Court received the letter dated April 15, 2010 from Bureau of
Corrections Assistant Director for Operations Rodrigo A. Mercado, advising that the accused
had died on March 25, 2010 at the New Bilibid Prison Hospital in Muntinlupa City. The
report of Dr. Marylou V. Arbatin, Medical Officer III, revealed that the immediate cause of
death had been cardio-respiratory arrest, with pneumonia as the antecedent cause. Under
the foregoing circumstances, the death of the accused during the pendency of his appeal in
this Court totally extinguished his criminal liability. Such extinction is based on Article 89 of
the Revised Penal Code, which pertinently provides: Article 89. How criminal liability is
totally extinguished. Criminal liability is totally extinguished: (1) By the death of the
convict, as to the personal penalties; and as to pecuniary penalties, liability therefor is
extinguished only when the death of the offender occurs before final judgment xxx.

- The death of the accused likewise extinguished the civil liability that was based exclusively
on the crime for which the accused was convicted (i.e., ex delicto), because no final
judgment of conviction was yet rendered by the time of his death.
Only civil liability predicated on a source of obligation other than the delict survived the
death of the accused, which the offended party can recover by means of a separate civil
action

People v. Ayochok, 629 SCRA 324 (2010) – Murder

- Ayochoks death on January 15, 2010, during the pendency of his appeal, extinguished not
only his criminal liability for the crime of murder committed against Senior Police Officer 1
Claudio N. Caligtan, but also his civil liability solely arising from or based on said crime

- Clearly, in view of a supervening event, it is unnecessary for the Court to rule on Ayochoks
appeal. Whether or not he was guilty of the crime charged has become irrelevant since,
following Article 89(1) of the Revised Penal Code and our disquisition in Bayotas, even
assuming Ayochok had incurred any criminal liability, it was totally extinguished by his
death. Moreover, because Ayochoks appeal was still pending and no final judgment of
conviction had been rendered against him when he died, his civil liability arising from the
crime, being civil liability ex delicto, was likewise extinguished by his death. Consequently,
the appealed Decision dated June 28, 2005 of the Court of Appeals in CA-G.R. CR No. 00949
finding Ayochok guilty of Murder, sentencing him to imprisonment, and ordering him to
indemnify his victim had become ineffectual

(5) Quasi-delict

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.
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.

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.

The father and, in case of his death or incapacity, the mother, are responsible for the damages
caused by the minor children who live in their company.

Guardians are liable for damages caused by the minors or incapacitated persons who are
under their authority and live in their company.

The owners and managers of an establishment or enterprise are likewise responsible for
damages caused by their employees in the service of the branches in which the latter are
employed or on the occasion of their functions.

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.

The State is responsible in like manner when it acts through a special agent; but not when the
damage has been caused by the official to whom the task done properly pertains, in which
case what is provided in article 2176 shall be applicable.

Lastly, teachers or heads of establishments of arts and trades shall be liable for damages
caused by their pupils and students or apprentices, so long as they remain in their custody.

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

Requisites of Quasi – Delicts :

Dy Teban Trading, Inc. v. Ching, 543 SCRA 560 – Damages

- Article 2176 of the Civil Code provides that 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. To sustain a claim based on quasi-delict, the following requisites must concur:
(a) damage suffered by plaintiff; (b) fault or negligence of defendant; and (c) connection of
cause and effect between the fault or negligence of defendant and the damage incurred
by plaintiff.

- The statement of Limbaga that he could not park the prime mover and trailer deeper into
the sand and gravel shoulder of the highway to his right because there were banana plants
is contradicted by the picture marked Exhibit F. The picture shows that there was ample
space on the shoulder.
BPI v. Lifetime Marketing Corp., 555 SCRA 373 – Damages
- In this case, both the trial court and the Court of Appeals found that the reversal of the
transactions in question was unilaterally undertaken by BPIs tellers without following
normal banking procedure which requires them to ensure that all copies of the deposit slips
are surrendered by the depositor. The machine-validated deposit slips do not show that the
transactions have been cancelled, leading LMC to rely on these slips and to consider Alice
Laurels account as already paid.

- Negligence is the omission to do something which a reasonable man, guided by those

considerations which ordinarily regulate the conduct of human affairs, would do, or the
doing of something which a prudent and reasonable man would not do.[ Negligence in this
case lies in the tellers disregard of the validation procedures in place and BPIs utter failure
to supervise its employees. Notably, BPIs managers admitted in several correspondences
with LMC that the deposit transactions were cancelled without LMCs knowledge and
consent and based only upon the request of Alice Laurel and her husband. It is well to
reiterate that the degree of diligence required of banks is more than that of a reasonable
man or a good father of a family. In view of the fiduciary nature of their relationship with
their depositors, banks are duty-bound to treat the accounts of their clients with the highest
degree of care. The damages awarded to it were correctly reduced on account of its own
contributory negligence in accordance with Article 1172 of the Civil Code

Corinthian Gardens Association, Inc. v. Tanjangco, 556 SCRA 154 – Damages

- The perimeter fence of the Cuasos encroached on Lot 69 owned by the Tanjangcos by 87
square meters as duly found by both the RTC and the CA in accordance with the evidence on
record. As a result, the Tanjangcos suffered damage in having been deprived of the use of
that portion of their lot encroached upon. Thus, the primordial issue to be resolved in this
case is whether Corinthian was negligent under the circumstances and, if so, whether such
negligence contributed to the injury suffered by the Tanjangcos.

- A negligent act is an inadvertent act; it may be merely carelessly done from a lack of
ordinary prudence and may be one which creates a situation involving an unreasonable risk
to another because of the expectable action of the other, a third person, an animal, or a
force of nature. A negligent act is one from which an ordinary prudent person in the actor's
position, in the same or similar circumstances, would foresee such an appreciable risk of
harm to others as to cause him not to do the act or to do it in a more careful manner.

- The test to determine the existence of negligence in a particular case may be stated as
follows: Did the defendant in committing the alleged negligent act use that reasonable
care and caution which an ordinary person would have used in the same situation? If not,
then he is guilty of negligence. The law, in effect, adopts the standard supplied by the
imaginary conduct of the discreet paterfamilias in Roman law. The existence of negligence in
a given case is not determined by reference to the personal judgment of the actor in the
situation before him. The law considers what would be reckless, blameworthy, or negligent
in a man of ordinary intelligence and prudence, and determines liability according to that
standard

Ngo Sin Sing v. Li Seng Giap & Sons, Inc., 572 SCRA 625 – Damages
 - The lower courts also found that there was insufficient lateral or subjacent support provided
on the adjoining lot when excavation was done on petitioners land. While there were wood
sheet piles placed along the sides of the excavation, they were not properly braced to
prevent a failure wedge. Such failure can only be accounted to the contractor, which is no
other than Contech. In the Proposal submitted to the petitioners, Contech committed to
undertake the construction of the NSS Building, providing labor and equipment for the
project. Work included excavation for foundation, formworks, steel works, etc. Construction
would be completed after 365 days. It was also provided that the petitioners were released
and relieved of any and all liabilities and responsibilities for any injury to the workers and
laborers employed in the work contracted for, as well as for third-party liabilities.[26] As it
turned out in the course of the construction of the NSS Building, Contech failed to observe
the proper procedure prior to excavation. We quote the trial court:

- Clearly, defendant Contech failed to observe his procedure of providing lateral and
subjacent support prior to excavation. Under the doctrine of supervening negligence which
states that where both parties are negligent but the negligence of one is appreciably later in
time than of the other, or when it is impossible to determine whose fault or negligence
should be attributed to the incident, the one who had the last clear opportunity to avoid the
impending harm and failed to do so is chargeable with the consequences thereof. Stated
differently, the rule would also mean that an antecedent negligence of a person does not
preclude the recovery of damages for the supervening negligence of or bar a defense
against the liability sought by another, if the latter, who had the last fair chance, could have
avoided the impending harm by the exercise of due diligence.

- In the case at bench, the negligence of Contech caused the damages sustained by the
building, which did not discharge its duty of excavating eight (8) inches away from the
boundary line from the lot of plaintiff with insufficient lateral and subjacent support

- These requisites are attendant in the instant case. The tortious act was the excavation done
without observing the proper safeguards. Although the trial court stated that petitioner as
land owner had every right to excavate on his own land, such right is not absolute as to
deprive the adjacent owner sufficient lateral support pursuant to Article 684, New Civil
Code, which states that: No proprietor shall make such excavation upon his land as to
deprive any adjacent land or building of sufficient lateral or subjacent support. For the
damage caused to the respondent, petitioners and Contech are jointly liable as they are
joint tort-feasors.

Scope of Quasi-Delict:

Barredo v. Garcia and Almario, 73 Phil. 60 (1942) – Damages/Negligence

- That delicts are not as broad as quasi-delicts, because the former are punished only if there
is a penal law clearly covering them, while the latter, cuasi-delitos, include all acts in which
"any kind of fault or negligence intervenes." However, it should be noted that not all
violations of the penal law produce civil responsibility, such as begging in contravention of
ordinances, violation of the game laws, infraction of the rules of traffic when nobody is hurt.
- The Revised Penal Code in article 365 punishes not only reckless but also simple negligence.
If we were to hold that articles 1902 to 1910 of the Civil Code refer only to fault or
negligence not punished by law, according to the literal import of article 1093 of the Civil
Code, the legal institution of culpa aquiliana would have very little scope and application in
actual life.

- To find the accused guilty in a criminal case, proof of guilt beyond reasonable doubt is
required, while in a civil case, preponderance of evidence is sufficient to make the
defendant pay in damages. There are numerous cases of criminal negligence which can not
be shown beyond reasonable doubt, but can be proved by a preponderance of evidence. In
such cases, the defendant can and should be made responsible in a civil action under articles
1902 to 1910 of the Civil Code. Otherwise, there would be many instances of unvindicated
civil wrongs. Ubi jus ibi remedium.

Diana v. Batangas Transportation Co., 93 Phil. 392 – Homicide/Reckless Imprudence

- Two actions were filed by the parents, the first, against its owner and the driver for culpa
aquiliana, and the other, against the driver for homicide thru reckless imprudence, the
criminal action having been instituted while the civil case was pending trial.

- Considering the distinguishing characteristics of the two cases, which involve two different
remedies, it can hardly be said that there is identity of reliefs in both actions as to make the
present case fall under the operation of Rule 8, section 1 (d) of the Rules of Court. In other
words, it is a mistake to say that the present action should be dismissed because of the
pendency of another action between the same parties involving the same cause. Evidently,
both cases involve different causes of action. In fact, when the Court of Appeals dismissed
the action based on culpa aquiliana (civil case No. 8022), this distinction was stressed. It was
there said that the negligent act committed by defendant's employee is not a quasi crime,
for such negligence is punished by law. What plaintiffs should have done was to institute an
action under Article 103 of the Revised Penal Code (CA-G.R. No. 3632-R). And this is what
plaintiffs have done. To deprive them now of this remedy, after the conviction of
defendant's employee, would be to deprive them altogether of the indemnity to which they
are entitled by law and by a court decision, which injustice it is our duty to prevent. On the
same principle then, the previous dismissal of the action based on culpa aquiliana could
not be a bar to the enforcement of the subsidiary liability required by Article 103 of the
Revised Penal Code.

Elcano v. Hill, 77 SCRA 89 (1977) – Mistake/ Murder/Damages

- Although, again, this Article 2177 does seem to literally refer to only acts of negligence, the
same argument of Justice Bacobo about construction that upholds "the spirit that giveth lift-
rather than that which is literal that killeth the intent of the lawmaker should be observed in
applying the same. And considering that the preliminary chapter on human relations of the
new Civil Code definitely establishes the separability and independence of liability in a civil
action for acts criminal in character (under Articles 29 to 32) from the civil responsibility
arising from crime fixed by Article 100 of the Revised Penal Code, and, in a sense, the Rules
of Court, under Sections 2 and 3 (c), Rule 111, contemplate also the same separability, it is
"more congruent with the spirit of law, equity and justice, and more in harmony with
 modern progress"- to borrow the felicitous relevant language in Rakes vs. Atlantic. Gulf and
Pacific Co., 7 Phil. 359, to hold, as We do hold, that Article 2176, where it refers to "fault or
negligencia covers not only acts "not punishable by law" but also acts criminal in character,
whether intentional and voluntary or negligent. Consequently, a separate civil action lies
against the offender in a criminal act, whether or not he is criminally prosecuted and found
guilty or acquitted, provided that the offended party is not allowed, if he is actually charged
also criminally, to recover damages on both scores, and would be entitled in such
eventuality only to the bigger award of the two, assuming the awards made in the two cases
vary. In other words, the extinction of civil liability referred to in Par. (e) of Section 3, Rule
111, refers exclusively to civil liability founded on Article 100 of the Revised Penal Code,
whereas the civil liability for the same act considered as a quasi-delict only and not as a
crime is not estinguished even by a declaration in the criminal case that the criminal act
charged has not happened or has not been committed by the accused. Briefly stated, We
here hold, in reiteration of Garcia, that culpa aquiliana includes voluntary and negligent
acts which may be punishable by law

Dulay v. CA, 313 Phil. 8, 20 (1995) – Negligence/Damages

- It is well-settled that the filing of an independent civil action before the prosecution in the
criminal action presents evidence is even far better than a compliance with the requirement
of express reservation (Yakult Philippines v. Court of Appeals, 190 SCRA 357 [1990]). This is
precisely what the petitioners opted to do in this case. However, the private respondents
opposed the civil action on the ground that the same is founded on a delict and not on a
quasi-delict as the shooting was not attended by negligence. What is in dispute therefore is
the nature of the petitioner's cause of action.

- The nature of a cause of action is determined by the facts alleged in the complaint as
constituting the cause of action (Republic v. Estenzo, 158 SCRA 282 [1988]). The purpose of
an action or suit and the law to govern it is to be determined not by the claim of the party
filing the action, made in his argument or brief, but rather by the complaint itself, its
allegations and prayer for relief. (De Tavera v. Philippine Tuberculosis Society, 112 SCRA 243
[1982]). An examination of the complaint in the present case would show that the plaintiffs,
petitioners herein, are invoking their right to recover damages against the private
respondents for their vicarious responsibility for the injury caused by Benigno Torzuela's act
of shooting and killing Napoleon Dulay, as stated in paragraphs 1 and 2 of the complaint.

- Since Article 2176 covers not only acts of negligence but also acts which are intentional and
voluntary, it was therefore erroneous on the part of the trial court to dismiss petitioner's
complaint simply because it failed to make allegations of attendant negligence attributable
to private respondents.

Safeguard Security Agency, Inc. v. Tangco, 511 SCRA 67 (2006) – Negligence/Damages

- The civil action filed by respondents was not derived from the criminal liability of Pajarillo in
the criminal case but one based on culpa aquiliana or quasi-delict which is separate and
distinct from the civil liability arising from crime.The source of the obligation sought to be
enforced in the civil case is a quasi-delict not an act or omission punishable by law.
Prohibition Against Double Recover:

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.

Effect of Pre-Existing Contractual Relations:

American Express International, Inc. v. Cordero, 473 SCRA 42 (2005)

- In order that an obligation based on quasi-delict may arise, there must be no pre-existing
contractual relation between the parties. But there are exceptions. There may be an action
for quasi-delict notwithstanding that there is a subsisting contract between the parties. A
liability for tort may arise even under a contract, where tort is that which breaches the
contract. Stated differently, when an act which constitutes a breach of contract would have
itself constituted the source of a quasi-delictual liability, the contract can be said to have
been breached by tort, thereby allowing the rules on tort to apply.

- Furthermore, to constitute quasi-delict, the fault or negligence must be the proximate

cause of the damage or injury suffered by the plaintiff. Proximate cause is that cause which,
in natural and continuous sequence, unbroken by any efficient intervening cause, produces
the injury and without which the result would not have occurred. Proximate cause is
determined by the facts of each case upon mixed considerations of logic, common sense,
policy and precedent.[12]

Pilipinas Shell Petroleum Corp. v. John Bordman Ltd. Of Iloilo, Inc., 473 SCRA 151 (2005)

- It is elementary that a quasi-delict, as a source of an obligation, occurs only when there is no

preexisting contractual relation between the parties. The action of respondent for specific
performance was founded on short deliveries, which had arisen from its Contract of Sale
with petitioner, and from which resulted the formers obligation in the present case. Any
action to enforce a breach of that Contract prescribes in ten years.

Air France v. Carrascoso, 18 SCRA 155 (1966) – Damages

- Involving an airplane passenger who, despite his first-class ticket, had been illegally ousted
from his first-class accommodation and compelled to take a seat in the tourist
compartment, was held entitled to recover damages from the air-carrier, upon the ground
of tort on the latter's part, for, although the relation between a passenger and a carrier is
"contractual both in origin and nature ... the act that breaks the contract may also be a tort

- In parallel circumstances, we applied the foregoing legal precept; and, we held that upon
the provisions of Article 2219 Civil Code, moral damages are recoverable

- Petitioner's contract with Carrascoso is one attended with public duty. The stress of
Carrascoso's action as we have said, is placed upon his wrongful expulsion. This is a violation
of public duty by the petitioner air carrier — a case of quasi-delict. Damages are proper
 Singson v. BPI, 23 SCRA 1117 (1968)

- The lower court held that plaintiffs' claim for damages cannot be based upon a tort or quasi-
delict, their relation with the defendants being contractual in nature. We have repeatedly
held, however, that the existence of a contract between the parties does not bar the
commission of a tort by the one against the order and the consequent recovery of damages
therefor.

Light Rail Transit Authority v. Navidad, 397 SCRA 75 (2003)

- Liability could only be for tort under the provisions of Article 2176[12] and related
provisions, in conjunction with Article 2180,[13] of the Civil Code. The premise, however, for
the employers liability is negligence or fault on the part of the employee. Once such fault is
established, the employer can then be made liable on the basis of the presumption juris
tantum that the employer failed to exercise diligentissimi patris families in the selection and
supervision of its employees. The liability is primary and can only be negated by showing
due diligence in the selection and supervision of the employee, a factual matter that has not
been shown. Absent such a showing, one might ask further, how then must the liability of
the common carrier, on the one hand, and an independent contractor, on the other hand,
be described? It would be solidary.

- A contractual obligation can be breached by tort and when the same act or omission causes
the injury, one resulting in culpa contractual and the other in culpa aquiliana, Article
2194[14] of the Civil Code can well apply.[15] In fine, a liability for tort may arise even under
a contract, where tort is that which breaches the contract.[ Stated differently, when an act
which constitutes a breach of contract would have itself constituted the source of a quasi-
delictual liability had no contract existed between the parties, the contract can be said to
have been breached by tort, thereby allowing the rules on tort to apply.

- There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of any
culpable act or omission, he must also be absolved from liability. Needless to say, the
contractual tie between the LRT and Navidad is not itself a juridical relation between the
latter and Roman; thus, Roman can be made liable only for his own fault or negligence.

YHT Realty Corp. v. CA, 451 SCRA 638 (2005)

- The management contends, however, that McLoughlin, by his act, made its employees
believe that Tan was his spouse for she was always with him most of the time. The evidence
on record, however, is bereft of any showing that McLoughlin introduced Tan to the
management as his wife. Such an inference from the act of McLoughlin will not exculpate
the petitioners from liability in the absence of any showing that he made the management
believe that Tan was his wife or was duly authorized to have access to the safety deposit
box. Mere close companionship and intimacy are not enough to warrant such conclusion
considering that what is involved in the instant case is the very safety of McLoughlins
deposit. If only petitioners exercised due diligence in taking care of McLoughlins safety
deposit box, they should have confronted him as to his relationship with Tan considering
that the latter had been observed opening McLoughlins safety deposit box a number of
times at the early hours of the morning. Tans acts should have prompted the management
 to investigate her relationship with McLoughlin. Then, petitioners would have exercised due
diligence required of them. Failure to do so warrants the conclusion that the management
had been remiss in complying with the obligations imposed upon hotel-keepers under the
law.

- Under Article 1170 of the New Civil Code, those who, in the performance of their
obligations, are guilty of negligence, are liable for damages. As to who shall bear the burden
of paying damages, Article 2180, paragraph (4) of the same Code provides that the owners
and managers of an establishment or enterprise are likewise responsible for damages
caused by their employees in the service of the branches in which the latter are employed
or on the occasion of their functions. Also, this Court has ruled that if an employee is found
negligent, it is presumed that the employer was negligent in selecting and/or supervising
him for it is hard for the victim to prove the negligence of such employer.[35] Thus, given
the fact that the loss of McLoughlins money was consummated through the negligence of
Tropicanas employees in allowing Tan to open the safety deposit box without the guests
consent, both the assisting employees and YHT Realty Corporation itself, as owner and
operator of Tropicana, should be held solidarily liable pursuant to Article 2193

Schmitz Transport & Brokerage Corp. v. Transport Venture, Inc., 456 SCRA 557 (2005)

- A contractual obligation can be breached by tort and when the same act or omission causes
the injury, one resulting in culpa contractual and the other in culpa aquiliana, Article 2194 of
the Civil Code can well apply. In fine, a liability for tort may arise even under a contract,
where tort is that which breaches the contract. Stated differently, when an act which
constitutes a breach of contract would have itself constituted the source of a quasi-delictual
liability had no contract existed between the parties, the contract can be said to have been
breached by tort, thereby allowing the rules on tort to apply.

- As for Black Sea, its duty as a common carrier extended only from the time the goods were
surrendered or unconditionally placed in its possession and received for transportation until
they were delivered actually or constructively to consignee Little Giant.

- Parties to a contract of carriage may, however, agree upon a definition of delivery that
extends the services rendered by the carrier. In the case at bar, Bill of Lading No. 2 covering
the shipment provides that delivery be made to the port of discharge or so near thereto as
she may safely get, always afloat.[59] The delivery of the goods to the consignee was not
from pier to pier but from the shipside of M/V Alexander Saveliev and into barges, for which
reason the consignee contracted the services of petitioner. Since Black Sea had
constructively delivered the cargoes to Little Giant, through petitioner, it had discharged its
duty. In fine, no liability may thus attach to Black Sea
Distinction Between Culpa Aquiliana and Culpa Contractual:

Calalas v. CA, 332 SCRA 356 (2000)

- The first, quasi-delict, also known as culpa aquiliana or culpa extra contractual, has as its
source the negligence of the tortfeasor. The second, breach of contract or culpa
contractual, is premised upon the negligence in the performance of a contractual
obligation.

- Consequently, in quasi-delict, the negligence or fault should be clearly established because

it is the basis of the action, whereas in breach of contract, the action can be prosecuted
merely by proving the existence of the contract and the fact that the obligor, in this case the
common carrier, failed to transport his passenger safely to his destination.[2] In case of
death or injuries to passengers, Art. 1756 of the Civil Code provides that common carriers
are presumed to have been at fault or to have acted negligently unless they prove that they
observed extraordinary diligence as defined in Arts. 1733 and 1755 of the Code. This
provision necessarily shifts to the common carrier the burden of proof.

- There is, thus, no basis for the contention that the ruling in Civil Case No. 3490, finding Salva
and his driver Verena liable for the damage to petitioners jeepney, should be binding on
Sunga. It is immaterial that the proximate cause of the collision between the jeepney and
the truck was the negligence of the truck driver. The doctrine of proximate cause is
applicable only in actions for quasi-delict, not in actions involving breach of contract. In such
a case, the obligation is created by law itself. But, where there is a pre-existing contractual
relation between the parties, it is the parties themselves who create the obligation, and the
function of the law is merely to regulate the relation thus created. Insofar as contracts of
carriage are concerned, some aspects regulated by the Civil Code are those respecting the
diligence required of common carriers with regard to the safety of passengers as well as the
presumption of negligence in cases of death or injury to passengers

Cangco v. Manila Railroad Co., G.R. No. L-12191, Oct. 14, 1918

- It is important to note that the foundation of the legal liability of the defendant is the
contract of carriage, and that the obligation to respond for the damage which plaintiff has
suffered arises, if at all, from the breach of that contract by reason of the failure of
defendant to exercise due care in its performance. That is to say, its liability is direct and
immediate, differing essentially, in legal viewpoint from that presumptive responsibility for
the negligence of its servants, imposed by article 1903 of the Civil Code, which can be
rebutted by proof of the exercise of due care in their selection and supervision. Article 1903
of the Civil Code is not applicable to obligations arising ex contractu, but only to extra-
contractual obligations — or to use the technical form of expression, that article relates only
to culpa aquiliana and not to culpa contractual.
 FGU Insurance Corp. v. G.P. Sarmiento Trucking Corp., G.R. 141910, Aug. 6, 2002

- In culpa contractual, upon which the action of petitioner rests as being the subrogee of
Concepcion Industries, Inc., the mere proof of the existence of the contract and the failure
of its compliance justify, prima facie, a corresponding right of relief. The law, recognizing the
obligatory force of contracts, will not permit a party to be set free from liability for any kind
of misperformance of the contractual undertaking or a contravention of the tenor
thereof.[13] A breach upon the contract confers upon the injured party a valid cause for
recovering that which may have been lost or suffered. The remedy serves to preserve the
interests of the promisee that may include his expectation interest, which is his interest in
having the benefit of his bargain by being put in as good a position as he would have been in
had the contract been performed, or his reliance interest, which is his interest in being
reimbursed for loss caused by reliance on the contract by being put in as good a position as
he would have been in had the contract not been made; or his restitution interest, which is
his interest in having restored to him any benefit that he has conferred on the other
party.[14] Indeed, agreements can accomplish little, either for their makers or for society,
unless they are made the basis for action. The effect of every infraction is to create a new
duty, that is, to make recompense to the one who has been injured by the failure of another
to observe his contractual obligation unless he can show extenuating circumstances, like
proof of his exercise of due diligence (normally that of the diligence of a good father of a
family or, exceptionally by stipulation or by law such as in the case of common carriers, that
of extraordinary diligence) or of the attendance of fortuitous event, to excuse him from his
ensuing liability.

- Respondent trucking corporation recognizes the existence of a contract of carriage between

it and petitioners assured, and admits that the cargoes it has assumed to deliver have been
lost or damaged while in its custody. In such a situation, a default on, or failure of
compliance with, the obligation in this case, the delivery of the goods in its custody to the
place of destination - gives rise to a presumption of lack of care and corresponding liability
on the part of the contractual obligor the burden being on him to establish otherwise. GPS
has failed to do so.

- Respondent driver, on the other hand, without concrete proof of his negligence or fault,
may not himself be ordered to pay petitioner. The driver, not being a party to the contract
of carriage between petitioners principal and defendant, may not be held liable under the
agreement. A contract can only bind the parties who have entered into it or their successors
who have assumed their personality or their juridical position. Consonantly with the axiom
res inter alios acta aliis neque nocet prodest, such contract can neither favor nor prejudice a
third person. Petitioners civil action against the driver can only be based on culpa aquiliana,
which, unlike culpa contractual, would require the claimant for damages to prove
negligence or fault on the part of the defendant.