NOEL vs CA

FACTS:
Gregorio Nanaman and Hilaria Tabuclin (Nanaman spouses) were a childless, legally-married
couple. Gregorio, however, had a child named Virgilio Nanaman(IC) by another woman. Since
he was two years old, Virgilio was reared by Gregorio and Hilaria.
During their marriage, Gregorio and Hilaria acquired certain property including a34.7-hectare on
which they planted sugarcane, corn and bananas.
On October 2, 1945,Gregorio died. Hilaria then administered the property with the help of
Virgilio. Through their tenants, Hilaria and Virgilio enjoyed the produce of the land to the
exclusion of Juan Nanaman, the brother of Gregorio, and Esperanza and Caridad Nanaman,
Gregorio's daughters by still another woman.
On November 1, 1952, Hilaria and Virgilio, mortgaged the 34.7-hectare land in favor of private
respondent, Jose Celeste, for P4,800.00 and subsequently sold for P16,000.00 to the same
person.
On May 15, 1954, Hilaria died. On October 27, 1954, Esperanza and Caridad Nanaman filed
intestate estate proceedings concerning the estate of their father, Gregorio. Included in the list of
property of the estate was the 34.7-hectare land. In as much as only Esperanza, Caridad and
Virgilio Nanaman were named as heirs of Gregorio in the petition, Juan Nanaman, Gregorio's
brother, opposed it. On November 26, 1954, the petition was amended to include the estate of
Hilaria with Alejo Tabuclin, Hilaria's brother, and Julio Tabuclin, (nephew)a son of Hilaria's
deceased brother, Jose, as additional petitioners. Having been appointed special administrator of
the estate of the Nanaman couple, Juan Nanaman included the 34.7-hectare land in the list of the
assets of the estate. Juan also reported that Virgilio took the amount of P350.00 from the produce
of the estate without prior permission and that five tenants delivered sugar and palay to private
respondent. Hence Juan prayed that the court cite private respondent and the tenants in contempt
of court. Accordingly, in its Order of January 30, 1956, the probate court required private
respondent and said tenants to appear before it and "show cause why they should not be cited for
contempt for illegally interfering in the land" under special administration. On June 16, 1956,
when Edilberto Noel took over as regular administrator of the estate, he was not able to take
possession of the land in question because it was in the possession of private respondent and
some heirs of Hilaria. Later, Private respondent and the heirs of the Nanaman spouses executed
an amicable settlement of the Nanaman estate. In the document, private respondent agreed "to
relinquish his rights to one-half (1/2) of the entire parcel of land in Tambo, Iligan City, indicated
in item 1 under the Estate, sold to him by Hilaria Tabuclin, in favor of all the heirs of the
abovementioned intestate [estate] for the reason that not all of the heirs of Gregorio Nanaman
have signed and agreed. The court approved the amicable settlement but when it was questioned
by some heirs, the court set aside its approval and declared it null and void. Noel, as regular
administrator, and as ordered by the court filed an action against private respondent for the
reversion of title over the 34.7-hectare land to the Nanaman estate and to order private
respondent to pay the rentals and attorney's fees to the estate

ISSUE: Whether Hilaria and Virgilio could dispose of the entire property sold to private
respondent and assuming that they did not have full ownership thereof, whether the right of
action to recover the share of the collateral heirs of Gregorio had prescribed or been lost through
laches.
HELD
NO. Gregorio died in 1945 long before the effectivity of the Civil Code of the Philippines on
August 30, 1950. Under Article 2263 of the said Code, "rights to the inheritance of a person who
died, with or without a will, before the effectivity of this Code, shall be governed by the Civil
Code of 1889, by other previous laws, and by the rules of Court."
Thus, succession to the estate of Gregorio was governed primarily by the provisions of the
Spanish Civil Code of 1889. Under Article 953 thereof, a spouse like Hilaria, who is survived by
brothers or sisters or children of brothers or sisters of the decedent, as is obtaining in this case,
was entitled to receive in usufruct the part of the inheritance pertaining to said heirs. Hilaria,
however, had full ownership, not merely usufruct, over the undivided half of the estate (Spanish
Civil Code of 1889, Art. 493). It is only this undivided half-interest that she could validly
alienate.
In a contract of sale, it is essential that the seller is the owner of the property he is selling. The
principal obligation of a seller is "to transfer the ownership of" the property sold (Civil Code of
the Philippines, Art. 1458). This law stems from the principle that nobody can dispose of that
which does not belong to him.
While it cannot be said that fraud attended the sale to private respondent, clearly there was a
mistake on the part of Hilaria and Virgilio in selling an undivided interest in the property which
belonged to the collateral heirs of Gregorio.
The sale, having been made in 1954, was governed by the Civil Code of the Philippines. Under
Article 1456 of said Code, an implied trust was created on the one-half undivided interest over
the 34.7-hectare land in favor of the real owners.
Under the law in force in 1945, the surviving spouse was given the management of the conjugal
property until the affairs of the conjugal partnership were terminated. The surviving spouse
became the owner of one-half interest of the conjugal estate in his own right. he also became a
trustee with respect to the other half for the benefit of whoever may be legally entitled to inherit
the said portion. "He could therefore no more acquire a title by prescription against those for
whom he was administering the conjugal estate than could a guardian his ward or a judicial
administrator against the heirs of an estate. . . . The surviving husband as the administrator and
liquidator of the conjugal estate occupies the position of a trustee of the highest order and is not
permitted by the law to hold that estate or any portion thereof adversely to those for whose
benefit the law imposes upon him duty of administration and liquidation"
The possession of Virgilio, his registration of the land in his name for tax purposes, his hiring of
tenants to till the land, and his enjoyment of the produce of the tenants, appear more as acts done

to help Hilaria in managing the conjugal property. There is no evidence to prove indubitably that
Virgilio asserted a claim of ownership over the property in his own right and adverse to all
including Hilaria.
ALLIED BANK vs. CA
GR 124290
FACTS:
Spouses Filemon Tanqueco and Lucia Domingo-Tanqueco owned a lot and leased the property to
petitioner Allied Banking Corporation for a monthly rental of P1,000.00 for the first three (3)
years, adjustable by 25% every three (3) years thereafter. The lease contract specifically states in
its Provision No. 1 that "the term of this lease shall be fourteen (14) years commencing from
April 1, 1978 and may be renewed for a like term at the option of the lessee."
On 13 February 1991, a year before the expiration of the contract of lease, the Tanquecos
notified petitioner ALLIED that they were no longer interested in renewing the lease. ALLIED
replied that it was exercising its option to renew their lease under the same terms with additional
proposals. Respondent Ruben D. Tanqueco, acting in behalf of all the donee-lessors, made a
counter-proposal. ALLIED however rejected the counter-proposal and insisted on Provision No.
1 of their lease contract.
When the lease contract expired in 1992 private respondents demanded that ALLIED vacate the
premises. But the latter asserted its sole option to renew the lease and enclosed in its reply letter
a cashier's check in the amount of P68,400.00 representing the advance rental payments for six
(6) months taking into account the escalation clause. Private respondents however returned the
check to ALLIED, prompting the latter to consign the amount in court.
An action for ejectment was commenced before the Metropolitan Trial Court of Quezon City and
the lower court ruled in favour of spouses and declared the Provision 1 as null and void being
violative of the mutuality of contracts, that the validity of a contract cannot be left at the will of
one of the contracting parties.
ISSUE: Whether a stipulation in a contract of lease to the effect that the contract "may be
renewed for a like term at the option of the lessee" is void for being potestative or violative of the
principle of mutuality of contracts.
HELD:
An express agreement which gives the lessee the sole option to renew the lease is frequent and
subject to statutory restrictions, valid and binding on the parties. This option, which is provided
in the same lease agreement, is fundamentally part of the consideration in the contract and is no
different from any other provision of the lease carrying an undertaking on the part of the lessor to
act conditioned on the performance by the lessee. It is a purely executory contract and at most
confers a right to obtain a renewal if there is compliance with the conditions on which the rights

is made to depend. The right of renewal constitutes a part of the lessee's interest in the land and
forms a substantial and integral part of the agreement.
The fact that such option is binding only on the lessor and can be exercised only by the lessee
does not render it void for lack of mutuality. After all, the lessor is free to give or not to give the
option to the lessee. And while the lessee has a right to elect whether to continue with the lease
or not, once he exercises his option to continue and the lessor accepts, both parties are thereafter
bound by the new lease agreement. Their rights and obligations become mutually fixed, and the
lessee is entitled to retain possession of the property for the duration of the new lease, and the
lessor may hold him liable for the rent therefor. The lessee cannot thereafter escape liability even
if he should subsequently decide to abandon the premises. Mutuality obtains in such a contract
and equality exists between the lessor and the lessee since they remain with the same faculties in
respect to fulfillment.
VELEZ vs Balzarza
FACTS:
On November 16, 1937, plaintiff in an amended complaint prayed for the return of certain
parcels of land which she alleged had been sold by defendants to plaintiffs deceased husband,
Ramon Neri San Jose, with right of repurchase. She further alleged that defendants had remained
in possession of said land under a contract of lease, but that for over two years defendants had
not paid the agreed rentals. In paragraph 4 of the complaint, she stated that "in the distribution of
the estate of the deceased Ramon Neri San Jose who died on November 7, 1932, duly approved
by this Honorable Court, the said lands were adjudicated as share of the herein plaintiff." In their
amended answer, defendants alleged that the real agreement was a loan secured by a mortgage of
those lands; and that whereas the amount borrowed was only P2,400, defendants had however
already paid P4,420.88. Defendants therefore prayed for the return of the excess, or P2,029.88.
At the trial, the parties agreed to the following stipulation of facts: that plaintiff has a right to
bring this suit; that the real question involved is the collection of a debt; that defendants admit
having executed Exhibits A to E; that plaintiff admits defendants have made the payments
according to the receipts marked as Exhibits 1 to 22; and that the lands described in the abovementioned documents have been given as a security for the payment of the obligation of
defendants.
The trial court found that the total amount loaned on various dates by the deceased Neri to the
defendants, was P3,067; that defendants paid P4,429.88, of which P3,997.25 was received by
Neri and P432.63 by plaintiff; that these payments were not made by way of interests or rents,
but as payments for the principal; that defendants overpaid the amount of P1,362.88. The court
below exonerated defendants from the complaint and ordered plaintiff to return to defendants the
sum of P432.63 which she, plaintiff, had received from defendants although said amount was not

due, applying article 1895 of the Civil Code. As for the amount received by deceased Neri, the
court held that the same not having been presented before the committee on appraisal and claims
during the administration of the estate of said Neri, defendants are not entitled to its return.
Plaintiff appealed from the judgment.
ISSUE: Whether the payments were intended to be applied to the principal, as contended by
defendants, or were considered as either rents or interests, upon the theory advanced by plaintiff.
HELD:
The payments could not have been intended as rents because in accordance with a clause
in the contract, Neri took possession of the lands and collected the fruits thereof. The creditor
having enjoyed the beneficial use of the lands delivered as security for the loan, it appears to
have been the intention of the parties that the creditor should be compensated thereby.
Furthermore, in none of the contracts offered in evidence is there any promise made by
defendants to pay rents.
No interest is due unless it is expressly stipulated (article 1755, Civil Code). As under the
contract the lender took possession of the lands and reaped the fruits thereof, it must have been
thought by the parties that it was unfair to make the borrower pay interest in addition.
The liability of plaintiff to return the excess payments is in keeping with article 1895 of
the Civil Code which provides that, "When something is received which there is no right to
collect, and which by mistake has been unduly delivered, the obligation to restore it arises." The
two requisites are present: (1) there is no right to collect these excess sums; and (2) the amounts
have been paid through mistake by defendants. Such mistake is shown by the fact that the parties
in their contracts never intended that either rents or interest should be paid, and by the further
fact that when these payments were made, they were intended by defendants to be applied to the
principal, but they overpaid the amounts loaned to them.
Article 1895 of the Civil Code, which determines the quasi-contract of solutio indebiti, is
one of the concrete manifestations of the ancient principle that no one shall enrich himself
unjustly at the expense of another.
DOMETILA M. ANDRES vs Manufacturers Hanover
FACTS:
Petitioner, using the business name "Irenes Wearing Apparel," was engaged in the manufacture
of ladies garments, childrens wear, mens apparel and linens for local and foreign buyers.
Among its foreign buyers was Facets Funwear, Inc. (hereinafter referred to as FACETS) of the
United States.

In the course of the business transaction between the two, FACETS from time to time remitted
certain amounts of money to petitioner in payment for the items it had purchased. Sometime in
August 1980, FACETS instructed the First National State Bank of New Jersey, Newark, New
Jersey, U.S.A. (hereinafter referred to as FNSB) to transfer $10,000.00 to petitioner via
Philippine National Bank, Sta. Cruz Branch, Manila (hereinafter referred to as PNB).
Acting on said instruction, FNSB instructed private respondent Manufacturers Hanover and Trust
Corporation to effect the above-mentioned transfer through its facilities and to charge the amount
to the account of FNSB with private Respondent. Although private respondent was able to send a
telex to PNB to pay petitioner $10,000.00 through the Pilipinas Bank, where petitioner had an
account, the payment was not effected immediately because the payee designated in the telex
was only "Wearing Apparel." Upon query by PNB, private respondent sent PNB another telex
dated August 27, 1980 stating that the payment was to be made to "Irenes Wearing Apparel." On
August 28, 1980, petitioner received the remittance of $10,000.00 through Demand Draft No.
225654 of the PNB.
Meanwhile, on August 25, 1980, after learning about the delay in the remittance of the money to
petitioner, FACETS informed FNSB about the situation. On September 8, 1980, unaware that
petitioner had already received the remittance, FACETS informed private respondent about the
delay and at the same time amended its instruction by asking it to effect the payment through the
Philippine Commercial and Industrial Bank (hereinafter referred to as PCIB) instead of PNB.
Accordingly, private respondent, which was also unaware that petitioner had already received the
remittance of $10,000.00 from PNB instructed the PCIB to pay $10,000.00 to petitioner. Hence,
on September 11, 1980, petitioner received a second $10,000.00 remittance.
Private respondent debited the account of FNSB for the second $10,000.00 remittance effected
through PCIB. However, when FNSB discovered that private respondent had made a duplication
of the remittance, it asked for a recredit of its account in the amount of $10,000.00. Private
respondent complied with the request. Private respondent asked petitioner for the return of the
second remittance of $10,000.00 but the latter refused to pay.
ISSUE: Whether or not the private respondent has the right to recover the second $10,000.00
remittance it had delivered to petitioner.
HELD:

Yes. Under Article 2154 of the New Civil Code, it states that, If something received
when there is no right to demand it, and it was unduly delivered through mistake, the obligation
to return it arises.
Article 1895 [now Article 2154] of the Civil Code abovequoted, is therefore applicable.
This legal provision, which determines the quasi-contract of solutio indebiti, is one of the
concrete manifestations of the ancient principle that no one shall enrich himself unjustly at the
expense of another.
For Article 2154 of the Civil Code to apply the following requisites must concur: (1) that
he who paid was not under obligation to do so; and (2) that payment was made by reason of an
essential mistake of fact.