Reviewer: Torts involving Quasi-Contracts

NEGOTIORUM GESTIO

Article 2144

 

What is Negotiorum Gestio?

-    This is a kind of quasi-contract where someone called gestor takes the management of the business or property of another person known as owner without the consent or authority of the latter.

-        In Sison vs Balgos, it was held that a negotiorum gestor may act

1.      when there is no administrator or representative of the owner who is charged with the management of his affairs;

2.      the gestor’s acts are foreign to the idea of express or tacit mandate on the part if the owner, or even without his knowledge, and

3.      the actor is inspired by the beneficient idea of averting losses and damages to the owner or the interested party with no motive of avaricious idea of gain.

What are the requisites of Negotiorum Gestio

The following are the essential requisites of negotiorum gestio:

1.      A business or property has been neglected or abandoned by the owner; 

2.      A concerned person lawfully and voluntarily takes over the management of the business or property of the owner. The said concerned person is referred to as the officious manager or negotiorum gestor;

3.      The owner did not expressly or impliedly authorized the negotiorum gestor to manage the business or property;

4.      The manager has no motive of avarice

-        The juridical relation created is called quasi-contract and not a contract because it lacks the element of consent. In quasi contract, consent is merely a fiction of law. It is deemed provided by law so that no one shall be enriched at the expense of another.

 

Article 2145

-        An officious manager or negotiorum gestor is a person who voluntarily takes charge of the agency or management of the business of property of another person without any authority from the latter whose business or property has been neglected or abandoned.

-       As a rule, the negortiorum gestor’s acts are lawful, voluntary and unilateral. His good intention is to preserve the property or business and not to profit with avarice. 

-   Having voluntarily assumed the management of the business or property of the owner, he is under obligation to manage the same with the diligence of a good father of a family.

-    The negotiorum gestor shall continue the management of the business or property until the termination of the affair and its incidents. He cannot just leave the business or property to the prejudice of the owner.

-    The manager, however, may ask the court to appoint someone as a representative for the owner when the latter’s disappearance has taken a long time. The owner may be presumed dead under Art. 390, if he has been absent for at least seven years, it being unknown whether or not he still lives.

 

What is the Status of Contracts Entered Into By the Negotiorum Gestor?

     Contracts entered into by the negotiorum gestor without the authority of the owner are considered unenforceable contracts.

If the manager is in fact impliedly authorized by the owner, then the actor is considered an agent. The law on agency shall be applicable to the contract or contracts he had entered into.

What are the consequences of Prohibited Management?

 

a.      If despite prohibition by the owner, the manager insisted on the management of the business or property for which acts of management the owner was benefited, it is submitted that the latter must still reimburse the former the extent that the latter (owner) has been benefited.

 

b.      If the owner suffered losses by the acts of the officious manager, it is only fair that the latter shall be answerable therefor. If the officious manager has built anything on the property, he should be treated as builder in bad faith. He can only be reimbursed for necessary expenses to preserve the land.

 

-    Under the present article, the court may now also increase the indemnity if the circumstances so warrant, when by the fault or negligence of the negotiorum gestor, the owner suffered damages.

 

 

Article 2146

-        If the negotiorum gestor delegated his duties to another, and the latter mismanaged the business or property causing damage to the owner, the negotiorum gestor is responsible for the acts of the delegate.

1.      the owner has also the right to directly seek damages against the delegate.

2.    the owner cannot recover damages twice against the negotiorum gestor and the delegate for the same acts.

3.   If the owner has successfully pursued a complaint against the delegate and the latter is insolvent, the gestor must be deemed subsidiarily liable to avoid multiplicity of suits.

 

-        Case of Two Officious Managers

 

a.      If two or more persons took over the management of the business or property of the owner, the liability of the negotiorum gestors in case of their failure to observe the diligence of a good father of a family resulting in damage to the owner is SOLIDARY.

 

b.  If there is an imminent danger to the business or property and the gestors assumed immediate management in their desire to protect the business or property, the gestors shall not be liable if despite good efforts exerted; damage was still unfortunately suffered by the owner.

 

If there was gross recklessness or imprudence in the gestor’s efforts to save the business or property from the imminent danger, they shall be jointly liable according to extent of their individual negligence.

 

Article 2147

1.   G.R.: An obligor is exempted from responsibility when he failed to perform his obligation due to fortuitous event.

         ETR.: The following renders the officious manager 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 of business after demand by the owner; or
4. If he assumed the management in bad faith.

 

Article 2148

-       Exceptions – Even if the above circumstances are present, the negotiorum gestor is free from responsibility, if he assumed the management to save be business or property from imminent or impending danger..

Ratification of Management – Even if the business did not become successful, if the owner has ratified the management of the negotiorum gestor, the same has the effect of creating an express agency (Art. 2149)

 

Article 2150

a.  If the owner has enjoyed or benefited from the officious management of his business or property, even if he did not ratify the management, he is required to reimburse the negotiorum gestor for the latter’s expenses (necessary and useful) and damages suffered in the course of the performance of his duties as such. 

b.   The owner shall also be liable for the obligations incurred for his interest by the negotiorum gestor.

 

Article 2151

-        If the officious manager has acted in good faith and the business or property is intact and ready to be restored to the owner by the negotiorum gestor, the owner is liable to pay the latter for the necessary and useful expenses incurred and for the damages suffered while in the performance of his duties as gestor.

This attaches even if there is no impending danger to be averted by the gestor.

-        Extinguishment of Management

The officious management is extinguished by the following reasons:

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 Art. 2144;
3. By the death, civil interdiction, insanity, or insolvency of the owner or the officious manager (Art. 2153)

SOLUTIO INDEBITI

 

Article 2154

-    Concept.  This is a quasi- contract where a person receives something that is not due to him and there arises by operation of law the corresponding obligation to return the same to avoid unjust enrichment on the part of the recipient.

-        Requisites.

 

1.  The one who paid or delivered was not under any obligation to do so; otherwise stated, the recipient has no right to demand for the payment or delivery of the thing;

2.     The payment was made by reason of essential mistake of fact and not through liberality or another’s cause. It must be noted that without receipt of a thing, there is no solution indebiti. There is nothing to return when nothing has been received by the obligor.

-        Presumption of Mistake

It is presumed that there was a mistake in the payment of 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 (Art. 2163)

-        Examples When there is No Solutio Indebiti

1.    Payment made by coercive process like a writ of execution is not recoverable under the rule of solution indebiti.

2.  The payment made by a joint judgment debtor in excess of what he should pay, for the benefit of a co-debtor and co-surety, cannot be considered as a payment unduly made under Art. 1895 of the Civil Code but as a payment made by a person interested in the performance of the obligation in accordance with provision of Art. 1158 of said Code. (Monte de Piedad vs Fernando Rodrigo)

-        Two or More Payees in Solution Indebiti

If two or more payees have recovered something not due to them, they are solidarily liable to the owner or person entitled thereto.

Article 2159

 -    When undue payment or delivery of something is accepted in bad faith, that is, the recipient is fully aware that the payment or delivery is not due to him yet took advantage of the mistake of the payer or deliverer, he shall be liable:

a.      For payment of legal interest (6% per annum) if money is involved;

b.   For the fruits received or which should have been received if the thing is fruit-producing;

c.   For the loss or impairment of the thing from any cause(including fortuitous event);

d.      For damages suffered by the payer or deliverer.

-        If the recipient acted in good faith, that is, he honestly believed that the payment or delivery of a certain and determinate thing was due to him, he shall only liable:

1.      For the impairment or loss of the thing or its accessories or accessions insofar as he has been benefited;

2.      For the return of the price, if the thing has been alienated; or

3.      For the assignment of the credit or action to collect the said price or sum if the price had not been collected yet (See: Art 2160)

NOTE: A quasi-contract must be filed within 6 years; otherwise, it prescribes.

REFERENCE: Torts and Damages; Dean Ernesto L. Pineda