Oblicon - Natural Obligations and Estoppel
Oblicon - Natural Obligations and Estoppel
Oblicon - Natural Obligations and Estoppel
Nᴀᴛᴜʀᴀʟ OʙʟɪɢᴀᴛɪᴏɴS
[ART. 1423]
Obligations are civil or natural. Civil obligations give a right of action to compel their
performance. Natural obligations, not being based on positive law but on equity and natural
law, do not grant a right of action to enforce their performance, but after voluntary fulfillment
by the obligor, they authorize the retention of what has been delivered or rendered by reason
thereof. Some natural obligations are set forth in the following articles.
Purpose of Inclusion
Natural obligations cannot be enforced by a civil action, however they have certain
juridical consequences. Their performance is compelled by the principles of equality,
morality and natural justice, which are at the same time the abiding foundations of all
positive law. A broad policy justifies a legal principle that would encourage persons to fulfill
their moral obligations.
Arises from law, contracts, quasi-contracts, Based on equity and natural law
delicts, and quasi-delicts
Gives a right of action in courts of justice to No right of action to enforce its performance
compel their fulfillment or performance
Enforceability
General Rule - Natural obligations are not cognizable by the courts.
Exception - If there has been voluntary fulfillment (i.e. when obligor knew that the obligation
cannot legally be enforced), the court may order the retention of what has been delivered.
→ Eg. In case of payment by mistake, the obligor, believing the obligation to be a civil
one, may recover the payment on the principle of solutio indebiti.
Jurisprudence
Rural Bank of Paranaque, Inc. vs. Remolado
The mortgagor D failed to repurchase the mortgaged property before October 31,
1973. However, after such date, D delivered the repurchase price. Mortgagee B thereafter
sold the property to another. B is not bound to reconvey the property in favor of D since she
had no cause of action because she failed to repurchase the property on October 31, 1973.
As a rule, equity follows the law. There may be a moral obligation, but if there is no
enforceable legal duty, the action must fail.
[ART. 1424]
When a right to sue upon a civil obligation has lapsed by extinctive prescription, the obligor
who voluntarily performs the contract cannot recover what he has delivered or the value of
the service he has rendered.
Prescription
If a debtor, who knows that extinctive prescription has set in, voluntarily pays a debt,
he can no longer demand the recovery of such debt by invoking prescription.
[ART. 1425]
When without the knowledge or against the will of the debtor, a third person pays a debt
which the obligor is not legally bound to pay because the action thereon has prescribed, but
the debtor later voluntarily reimburses the third person, the obligor cannot recover what he
has paid.
[ART. 1426]
When a minor between eighteen and twenty one years of age who has entered into a
contract without the consent of the parent or guardian, after the annulment of the contract
voluntarily returns the whole thing or price received, notwithstanding the fact that he has not
been benefited thereby, there is no right to demand the thing or price thus returned.
No Obligation to Return
General Rule - When a contract is annulled, a minor is not obliged to make any restitution.
Except - The minor shall return the thing or price received insofar as he has been benefited
by the same.
→However, if he voluntarily returns the thing or price received, he cannot recover
what he has returned.
[ART. 1427]
When a minor between eighteen and twenty-one years of age, who has entered into a
contract without the consent of the parent or guardian, voluntarily pays a sum of money or
delivers a fungible thing in fulfillment of the obligation, there shall be no right to recover the
same from the obligee who has spent or consumed it in good faith.
Mutual Restitution
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General Rule - By the decree of annulment, the parties are obliged to make mutual
restitution.
Exception - If obligee spent or consumed in good faith the money or consumable thing
voluntarily paid or delivered by the minor, the former is not bound to make restitution.
Application
1. This article also applies to cases involving non-consumables when the same are lost
without the fault of the debtor.
2. It also applies to cases of alienation by the obligee to a third person who did not act
in bad faith.
[ART. 1428]
When, after an action to enforce a civil obligation has failed, the defendant voluntarily
performs the obligation, he cannot demand the return of what he has delivered or the
payment of the value of the service he has rendered.
Moral Duty
Debtor is deemed to have considered it his moral duty to fulfill his obligation.
[ART. 1429]
When a testate or intestate heir voluntarily pays a debt of the decedent exceeding the value
of the property which he received by will or by the law of intestacy from the estate of the
deceased, the payment is valid and cannot be rescinded by the payer.
Liability of Heirs
General Rule - The heir is not personally liable beyond the value of the property he received
from the decedent.
Exception - If the heir voluntarily pays the difference, the payment is valid and cannot be
rescinded.
Moral Duty
An heir has a moral duty to perform or pay obligations legally contracted by his dead
relatives.
[ART. 1430]
When a will is declared void because it has not been executed in accordance with the
formalities required by law, but one of the intestate heirs, after the settlement of the debts of
the deceased, pays a legacy in compliance with a clause in the defective will, the payment is
effective and irrevocable.
Definition
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Legacy the act of disposition by the testator in separating from the inheritance for
definite purposes, things, rights, or a definite portion of his property
Moral Duty
Since it was the intention of the testator to give the legacy, it is the moral duty of the heir to
carry it out.
ESᴛᴏᴘᴘᴇʟ
[Art. 1431]
Through estoppel an admission or representation is rendered conclusive upon the person
making it, and cannot be denied or disproved as against the person relying thereon.
[Art. 1432]
The principles of estoppel are hereby adopted insofar as they are not in conflict with the
provisions of this Code, the Code of Commerce, the Rules of Court and special laws.
Concept of Estoppel
1. A bar which precludes a person from denying or asserting anything to the contrary of
that which has, in contemplation of law, been established as the truth.
a. Either because of the acts of judicial or legislative officers; or
b. By his own acts, representations, or admissions, express or implied. (De
Leon)
2. A condition or state by virtue of which an admission or representation is rendered
conclusive upon the person making it and cannot be denied or disproved as against
the person relying thereon. (Jurado)
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→ But the fact that it does not definitely recognize estoppel as a
separate and distinct
branch of our legal system has not at all helped in the solution of these
problems.
2. Due to the incorporation of estoppel in the New Civil Code, estoppel has become an
equitable defense that is both substantive and remedial.
a. Hence, its successful invocation can bar a right, a nd not merely its equitable
enforcement.
*Not absolute, as principle must give way to exceptions based on, and in keeping
with, the interest of justice and fairness.
Jurisprudence
La Naval Drug Corp. vs. Court of Appeals
Estoppel is not a rule that should apply prevalently but should apply as a mere
exception from the standard legal norms of general application that can be invoked only in
highly exceptional and justifiable cases. Estoppel is not favored in law being in the nature of
a forfeiture.
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The doctrine of equitable estoppel is one of fundamental justice. It’s applicability
depends to a large extent upon the circumstances of each particular case.
Soriano vs Sahagun
If a party having a right to pursue one of several inconsistent remedies makes his
election, institutes suit, and prosecutes it to final judgement, such election of remedies
constitutes an estoppel to pursue another.
Talisman vs Ofania
Criminal actions for public offenses cannot be waived or condoned, much less barred
by the rules of estoppel.
[Art. 1433]
Estoppel may be in pais or by deed.
Kinds of Estoppel
1. Estoppel by Record
a. It is the preclusion to deny the truth of matters set forth in a record and also
deny the facts adjudicated by a court of competent jurisdiction.
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b. The record may be judicial or legislative.
c. When a right or fact has been judicially tried and determined by a court of
competent jurisdiction, it should be conclusive upon the parties and those in
privity with them.
→ the principle of res judicata and the rule on conclusiveness of
judgement is
applicable
2. Estoppel by Deed
a. Bar which precludes one party to a deed and his privies from asserting as
against the other party and his privies any right or title in derogation of the
deed, or from denying the truth of any material facts asserted in it
3. Estoppel in pais (or by conduct)
a. That which arises from:
→ Acts
→ Representations
→ Admissions
→ Silence
→ Acceptance of benefits derived
b. It applies when the foregoing acts are done intentionally or through culpable
negligence by one who induces another to believe certain facts exist and such
other rightfully relies and acts on such belief.
c. The consequence is that the one who believed will be prejudiced if the one
who induced is permitted to deny the existence of such facts.
d. Estoppel by laches
→ arises from silence of inaction
Jurisprudence
Republic v. Court of Appeals
Principal sought nullification of sale effected by agent seven (7) months after
receiving checks in payment of price.
The agent having acted within his authority, the principal’s retention of the checks for
the aforesaid months without expressing any protest or objection was clear procrastination
and indecision.
As to Reference
As to source
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Regulated by well-settled rules and admit It arises out of the acts or conduct of the
of certain application, party estopped AND NOT from a record or
deed
Jurisprudence
Iriola v. Felices
Vendor invokes estoppel on the part of vendee to deny title of former to the property
(land) sold, but latter’s suit for reconveyance refers to other properties not included in the
sale.
That there were statements in the deed of sale allegedly proving as evidence an
estoppel by record or deed was not accepted by the court — for to be considered as an
estoppel by deed, a distinct and precise assertion of fact is necessary, estoppel should be
certain to every intent; and that estoppel by deed cannot prevent the denial of an equitable
title which is not identical with the legal title, no estoppel can be predicated on the deed of
sale a retro executed by both parties. The subject of complaint was not the parcel of land
bought under the deed, thus, estoppel does not apply.
Jurisprudence
Ramos v. Central Bank
Central bank liquidated a private bank after the latter complied with the conditions for
its rehabilitation imposed by the former.
Promissory estoppel applies as CB cannot renege on its representations (to
rehabilitate bank provided the latter complies with the conditions set by CB) to the detriment
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of its stockholders, depositors, and other creditors. The conduct of CB reveals a calculated
attempt to evade rehabilitation of said bank despite CB’s promises in violation of Art 1159
and 1315 of the Civil Code.
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The Court held the mortgagee-seller not in estoppel to insist its claim on the balance
as when buyer opted return of the truck, it must be shown that when the options were given
to the buyer, the seller already had knowledge of the accident and the consequent damage
to the truck. In addition, the court found it hard to believe that seller, assuming it had
knowledge of the accident, would still give the aforesaid options to the buyer in default.
Cristobal v. Gomez
Estoppel may not be invoked by a person party to the collusion, by reason that he
could not have been misled.An equitable estoppel can only be invoked by one who is in a
position to be misled by the misrepresentation with respect to which the estoppel is invoked
and under circumstances where damage would result to him from the adoption by the
person estopped of a position different from that which has been held out to be true.
Dizon v. Suntay
Not only has the ownership and the origin of the jewels misappropriated been
unquestionably proven but also that Sison, acting fraudulently and in bad faith, disposed of
them and pledged them contrary to agreement with no right of ownership, and to the
prejudice of Suntay, who was illegally deprived of said jewels and who, as the owner, has an
absolute right to recover the jewels from the possession of whosoever holds them, which in
this case is Dizon’s pawnshop. Dizon ought to have been on guard before accepting the
pledge in question, but evidently there was no such precaution availed of and he has no one
to blame but himself. While the activity he is engaged in is no doubt legal, it is not to be lost
sight of that it thrives on taking advantage of the necessities precisely of that element of our
population whose lives are blighted by extreme poverty. From whatever angle the question is
viewed then, estoppel certainly cannot be justly invoked.
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Estoppel without Reliance upon Conduct of Another
1. In technical estoppel, the party to be estopped must have acted knowingly as to
mislead his adversary.
2. The adversary must have placed reliance of the action and acted as he would not
have otherwise done.
3. Some authorities believe that reliance on the part of the adversary is not necessary in
estoppel.
a. This is called ratification or election by acceptance of benefits under Art.
1438.
Waiver is a voluntary and intentional Equitable estoppel may arise even though
abandonment or relinquishment of a known there was no intention on the part of the
right estopped to relinquish or change any
existing right
Does not necessarily imply that the party Prejudice to the other party is one of the
asserting it has been misled to his essential elements
prejudice
As to required conduct
Involves the conduct of only one of the Equitable involves the contract of both
parties. It depends upon what one himself parties, since it is based upon some
intended to do regardless of the attitude misleading conduct or language of one
assumed by the other party person and reliance by another thereon
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Waiver does not carry implication of fraud Frequently carries the implication of fraud
Substance
As to prejudice
Does not rest upon prejudice Applied if the other party would be unjustly
prejudiced
Laches
Laches Failure or neglect, for an unreasonable and unexplained length of time, to do
that which, by exercising due diligence, one could or should have done earlier
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2. Basis - on grounds of public policy which requires, for the peace of society, the
discouragement of stale claims
a. It is not a mere question of time but is a question of inequity or unfairness
b. Operates not really to penalize neglect or failure to assert a right within a
reasonable time but to avoid recognizing a right when to do so would result in
a clearly inequitable situation or in an injustice
c. But it cannot be invoked to defeat justice or to perpetrate fraud or injustice
3. Elements
a. Conduct on the part of the defendant or of one under whom he claims, giving
rise to the situation of which complaint is made
b. Delay in asserting the complainant’s right, the complainant having knowledge
or notice of the defendant’s conduct and having been afforded an opportunity
to sue
i. Actual knowledge is not necessary
ii. Enough that such knowledge may be imputed to the complainant
iii. THIS ELEMENT IS THREE-TIERED
1. Knowledge of defendant’s action
2. Opportunity to sure defendant after obtaining such knowledge
3. Delay in the filing of such suit
c. Lack of knowledge or notice on the part of the defendant that the complainant
would assert the right on which he bases his suit
d. Injury or prejudice to the defendant in the event relief is accorded to the
complainant, or the suit is not held to be barred
4. There is no absolute rule as to what constitutes laches or staleness of demand
a. The question of laches is addressed to the sound discretion of the court, to be
determined according to the circumstances of each case
b. The application of laches is controlled by equitable considerations
5. Rights barred by laches still subsist
a. Unlike estoppel, laches usually bars only the equitable enforcement of a right
but not the right itself
b. It is an affirmative defense and the burden of proving it rests be on the
defendant
c. Laches need not be specifically pleaded and may be considered by the court
in its own initiative in determining the rights of the parties
d. Equitable rights barred by laches still subsist albeit in an empty manner as the
guilty party cannot assert them judicially
i. but they may be revived or activated by the waiver of those whose
rights have ripened due to the laches
ii. and it can be exercised to the extent of the rights waived
6. Laches is not based on a fixed time
a. It does not involve mere lapse or passage of time but is principally an
impediment to the assertion or enforcement of a right which has become
under the circumstances inequitable or unfair to permit
b. Laches can be invoked without reckoning any specific or fixed period
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i.It is sufficient that there be unreasonable and unexplained delay in
bringing the action that its maintenance would already constitute
inequity or injustice to the party invoking
ii. Action for laches may find application even to imprescriptible actions
such as to annul a void or inexistent contract
7. When there is a claim filed within the prescriptive period, the doctrine of laches is not
applicable
a. Delay within the prescriptive period is sanctioned by law- meaning that laches
cannot be applied earlier that the expiration of time limited for the
commencement of actions in law
i. Unless inexcusable delay in asserting a right and acquiescence in
existing conditions are proven (this is a general rule)
ii. Exception: reasons of inequitable proportions are adduced, a delay
within the prescriptive period is sanctioned by law and is not
considered to be delay that would bar relief
Jurisprudence
Miguel v. Catalino
The vendor, and also his heirs could have instituted an action to annul the sale from
the time they knew the invalidity of sale which is a matter of law; they did not have to wait for
34 years to institute suit. The defendant was made to feel secure in the belief that no action
would be filed against him by such passivity which justifies the setting up the equitable
defense of laches.
Cristobal v. Melchor
Principle of equity, need not be bound to a rigid application of the law, but rather its
action should conform to the conditions or exigencies of a given problem or situation in order
to grant a relief that will serve the ends of justice. The doctrine cannot be applied against
Cristobal when defendant is shown to have promised from time to time to grant relief sought.
There was no acquiescence or inaction on the part of Cristobal amounting to abandonment
of his right to reinstatement.
Gayotin v. Tolentino
The defense of laches is an equitable one concerned only with whether or not by
reason of the plaintiffs long inaction or inexcusable neglect, he should be barred from
asserting his claim at all, because to allow him to do so would be inequitable and unjust to
defendant.The facts show no such "long inaction or inexcusable neglect" on respondents'
part. Public policy with regard to homestead law requires that plaintiffs should not be
prevented by reacquiring land given to them by law for home and cultivation. This right
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cannot be waived. It is not within the competence of any, citizen to barter away what public
policy by law seeks to preserve.
[Art. 1434]
When a person who is not the owner of a thing sells or alienates and delivers it, and later the
seller or grantor acquires title thereto, such title passes by operation of law to the buyer or
grantee.
Situation Contemplated
1. Person sells a thing without title (i.e. he does not have ownership of the item he is
selling)
2. After some time, he acquires title over the item
Rule - The seller, who sells an item to which he does not have a title at the time of the
transaction but subsequently acquires the title to such item sold, is estopped from denying
the validity of the sale of the thing sold.
→ Prejudice is not essential
[Art. 1435]
If a person in representation of another sells or alienates a thing, the former cannot
subsequently set up his own title as against the buyer or grantee.
Situation Contemplated
1. An agent for the principal sells or alienates a thing
2. The agent has a title claim over the thing sold
Rule - The agent is estopped from questioning the validity of the sale to the buyer because
he himself facilitated the transaction and acted as an agent.
→ Prejudice is not essential
[Art. 1436]
A lessee or a bailee is estopped from asserting title to the thing leased or received, as
against the lessor or bailor.
Definition
Bailee A person or party to whom goods are delivered for a purpose, such as custody or
repair, without transfer of ownership
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Situation Contemplated, Commodatum, Depositum, Pledge
1. There is an existing contract of commodatum, depositum, or pledge
Rule - The bailee is estopped from asserting title over the thing received, against the bailor.
[Art. 1437]
When in a contract between third persons concerning immovable property, one of them is
misled by a person with respect to the ownership or real right over the real estate, the latter
is precluded from asserting his legal title or interest therein, provided all these requisites are
present:
(1) There must be fraudulent representation or wrongful concealment of facts known to the
party estopped;
(2) The party precluded must intend that the other should act upon the facts as
misrepresented;
(3) The party misled must have been unaware of the true facts; and
(4) The party defrauded must have acted in accordance with the misrepresentation.
Situation Contemplated
1. Two parties contract over an immovable property as buyer and seller
2. The indicated seller in the contract is not the owner of the lot
a. His name was only indicated therein in fraudulent representation
b. Requisites
→ Fraudulent misrepresentation or wrongful concealment or the facts known
to the party estopped
→ Intent of the indicated seller that the buyer should act upon the facts as
misrepresented
→ Unawareness of the buyer of the true facts
→ Action of the buyer in accordance with the representation
Rule - The indicated seller is estopped from asserting legal title or interest over the lot sold
to the buyer.
[Art. 1438]
One who has allowed another to assume apparent ownership of personal property for the
purpose of making any transfer of it, cannot, if he received the sum for which a pledge has
been constituted, set up his own title to defeat the pledge of the property, made by the other
to a pledgee who received the same in good faith and for value.
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understanding that when the obligation is fulfilled, the thing delivered shall be
returned with all its fruits and accessions.
Jurisprudence
Magana v Auditor General
Where an employee had accepted the benefits accruing from the abolition of his
office by enjoying his unused vacation and sick leave and receiving the corresponding
gratuity, he is estopped from questioning its validity or deemed to have waived the right to
contest the same.
Cabiling v Pabualan
In a case, the appointees, having accepted the acting appointments as acting
Mayor, Vice-Mayor, and councilors of a newly created municipality, and having acted
thereunder for a considerable time, the court ruled that they cannot now be heard to say that
such appointments were permanent.
[Art. 1439]
Estoppel is effective only as between the parties thereto or their successors in interest.
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a. This is true notwithstanding that the privies are not personally liable on the
covenants creating the estoppel.
2. Conversely, if anybody may be heard to challenge the application of the doctrine of
estoppel, it is only the party against whom it may be invoked.
a. Thus, a stranger to the transaction is neither bound by, nor in a position to
take advantage of, an estoppel arising therefrom.
b. This is because mutuality is an essential element of estoppel; and estoppel
must bind both parties or neither is bound.
Jurisprudence
Francisco v GSIS
If a private corporation intentionally or negligently clothes its officers or agents with
apparent power to perform acts for it, the corporation will be estopped to deny that such
apparent authority is real as to innocent third persons dealing in good faith such officers or
agents.
Luciano v Estrella
The government is generally NOT estopped by the mistake or error on the part of its
officials or agents.
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