D. Quasi-Contracts

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. (Article 2142, Civil Code)

1. Negotiorum Gestio

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. (Article 2142, Ibid.)

a. When not applicable

Negotiorum Gestio 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. (Article 2144, Ibid.)

In the first case, the provisions of Articles 1317, 1403, No. 1, and 1404 regarding unauthorized contracts shall govern.(Paragraph 2, Article 2144, Ibid.)

In the second case, the rules on agency in Title X of this Book shall be applicable. (Paragraph 3, Article 2144, Ibid.)

Cross-referenced article/s
No one may contract in the name of another without being authorized by the latter, or unless he has by law a right to represent him.(Article 1317, Ibid.)
A contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party. (Paragraph 2, Article 1317, Ibid.)
The following contracts are unenforceable, unless they are ratified: … (1) Those entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers…(Article 1403[1], Ibid.)
Unauthorized contracts are governed by Article 1317 and the principles of agency in Title X of this Book.(Article 1404, Ibid.)

b. Officious Manager

Diligence of a good father of a family; Liable for damages for fault or negligence. 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.(Article 2145, Ibid.)

Liable for delegated acts.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. (Article 2146, Ibid.)

Solidary liability of two or more officious managers. –

General Rule: The responsibility of two or more officious managers shall be solidary. (Paragraph 2, Article 2146, Ibid.)
Exception: …unless the management was assumed to save the thing or business from imminent danger. (Paragraph 2, Article 2146, Ibid.)

When liable for fortuitous event. –

General Rule: 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. (Article 2147, Ibid.)
Exceptions: … 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. (Article 2148, Ibid.)

Personal liability. –

General Rule: 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. (Article 2152, Ibid.)
Exceptions: 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. (Ibid.)

c. Ratification

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. (Article 2149, Ibid.)

Effects if not ratified
1) Owner who enjoys advantages
a) Liable for obligations incurred in his interest
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.(Article 2150, Ibid.)
b) When still liable even if no benefit and no imminent and manifest danger: 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 provided:
i) The officious manager has acted in good faith, and
ii) The property or business is intact, ready to be returned to the owner. (Article 2151, Ibid.)
2) Management had for its purpose the prevention of an imminent and manifest loss
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.(Paragraph 2, Article 2150, Ibid.)

d. Grounds for extinguishment

Grounds for extinguishment:
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. (Article 2153, Ibid.)

2. Solutio Indebiti

Examples:
1) Delivery by mistake
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. (Article 2154, Civil Code)
2) Mistake in payment
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. (Article 2155, Ibid.)
Right to recovery by payer. If the payer was in doubt whether the debt was due, he may recover if he proves that it was not due. (Article 2156, Ibid.)
Solidary liability of two or more payees. The responsibility of two or more payees, when there has been payment of what is not due, is solidary. (Article 2157, Ibid.)

a. Property/money belongs to third person

When the property delivered or money paid belongs to a third person, the payee shall comply with the provisions of Article 1984. (Article 2158, Ibid.

Cross-referenced article/s
The depositary cannot demand that the depositor prove his ownership of the thing deposited. (Article 1984, Ibid.)
Nevertheless, should he discover that the thing has been stolen and who its true owner is, he must advise the latter of the deposit. (Paragraph 2, Article 1984, Ibid.)
If the owner, in spite of such information, does not claim it within the period of one month, the depositary shall be relieved of all responsibility by returning the thing deposited to the depositor. (Paragraph 3, Article 1984, Ibid.)
If the depositary has reasonable grounds to believe that the thing has not been lawfully acquired by the depositor, the former may return the same. (Paragraph 4, Article 1984, Ibid.)

b. Bad faith acceptance

Whoever in bad faith accepts an undue payment, shall:
1) Pay legal interest if a sum of money is involved;
2) Be liable for fruits received or which should have been received if the thing produces fruits. (Article 2159, Ibid.)
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. (Paragraph 2, Article 2159, Ibid.)

c. Good faith acceptance

Responsible to the extend that he has been benefited.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. (Article 2160, Ibid.)

If he has alienated it, he shall return the price or assign the action to collect the sum. (Ibid.)

Exempt from restoration.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. (Article 2162, Ibid.)

He who paid unduly may proceed only against the true debtor or the guarantors with regard to whom the action is still effective. (Ibid.

d. Reimbursement for improvements and expenses

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. (Article 2161, Ibid.)

NB: Title V of Book II refers to POSSESSION.  Hence, the rules in possession for reimbursement related to improvements and expenses is applicable to solutio indebiti.

e. Presumption

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. (Article 2163, Ibid.

3. Other Quasi-Contracts

Other quasi-contracts:
1) Support given by a stranger
General Rule: 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.
Exception: … unless it appears that he gave it out of piety and without intention of being repaid. (Article 2164, Ibid.
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. (Article 2166, Ibid.)
2) Funeral expenses paid by a third person
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. (Article 2165, Ibid.)
3) Medical treatment while not in a condition to give consent
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. (Article 2167, Ibid.)
4) Property saved from destruction due to fire, flood, storm, etc.
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. (Article 2168, Ibid.)
5) Government expenses for failure to comply with health or safety regulations
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. (Article 2169, Ibid.)
6) Commingling of movables due to accident or fortuitous event
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. (Article 2170, Ibid.)
7) Finders of lost personal property
The rights and obligations of the finder of lost personal property shall be governed by Articles 719 and 720. (Article 2171, Ibid.)
8) Reimbursement for necessary and useful expenses by possessor in good faith
The right of every possessor in good faith to reimbursement for necessary and useful expenses is governed by Article 546. (Article 2172, Ibid.)
9) Payment of debt without debtor’s knowledge
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. (Article 2173, Ibid.)
10) Mutual protection expenses
When in a small community a nationality 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. (Article 2174, Ibid.)
11) Payment of taxes for another
Any person who is constrained to pay the taxes of another shall be entitled to reimbursement from the latter. (Article 2175, Ibid.)

Disclaimer: All information herein is for educational and general information only intended for those preparing for the bar exam. These should not be taken as professional legal advice or opinion. Please consult a competent lawyer to address your specific concerns. Any statements or opinions of the author are solely his own and do not reflect that of any organization he may be connected.

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