1. Negotiorum Gestio

A. Negotiorium Gestio (Civil Code, arts. 2144-2153)

A. Negotiorum Gestio (Civil Code, arts. 2144-2153)

Civil Code, arts. 2144-2153

SECTION 1

Negotiorum Gestio

Article 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. (1888a)

Article 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. (1889a)

Article 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. (1890a)

Article 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. (1891a)

Article 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. (n)

Article 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. (1892a)

Article 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. (1893)

Article 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)

Article 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. (n)

Article 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. (n)

When a person voluntarily takes charge of another’s neglected or abandoned business or property without the owner’s authority. (Art. 2144, NCC) It should not be performed for profit. (Sta. Maria, 2017)

Reimbursement must be made to the gestor for necessary and useful expenses, as a rule. (Art. 2150, NCC)

e.g., A abandons his property, a mango plantation, and his business therein. B decides to manage the business and the property so that the business will earn upon harvest time. B does this without any authority from A. B therefore becomes an officious manager without any expectation of any profit or remuneration. B must continue managing the property of the business until it is terminated. He can also require A to have him (B) substituted if A is in a position to do so. If the property or business is neither neglected nor abandoned, B’s unauthorized acts are governed by the Civil Code provisions on unauthorized contracts. If B were authorized, the law on agency shall apply. (Sta. Maria, 2017)

Liability of Officious Manager

He cannot escape liability by stating that there was no obligation on his part to take over the property or business in the first place. Once he takes over, he is charged with the responsibility to take care of it.

If the owner suffers damage due to the negligence or fault of the officious manager, the court can increase or moderate the indemnity according to circumstances. (Ibid.)

The officious manager shall be liable for any fortuitous event

Generally, the happening of a fortuitous event affecting an obligation excuses the person charged from performing the obligation. In negotiorum gestio, the officious manager is liable for fortuitous events in the circumstances specified in Arts. 2147 and 2148, subject to the imminent-danger exception in Art. 2148.

• If he undertakes risky operations which the owner was not accustomed to embark upon; If the business of the owner is simply providing a warehouse for dolls and other toys, and the officious manager decides to allow the storing of highly inflammable materials in the warehouse, the officious manager shall be liable if the warehouse is burned due to a fortuitous event, such as the striking of lightning.
• If he has preferred his own interest to that of the owner; For example, the officious manager takes over the business of the owner of warehousing goods. In the meantime, the officious manager also stores some of his goods in the warehouse. In the event that a flood occurs, and he first saves his goods, before the goods of the owner and the latter's clients, from being destroyed, the officious manager will be liable for the loss due to the fortuitous event. (Sta. Maria, 2017)
• If he fails to return the property or business after demand by the owner; or Once the owner demands the return of the business, the officious manager should readily return it. He has no right to keep it for himself. Hence, if the property is destroyed by fortuitous event, the officious manager will be held liable for his act of unduly retaining what is not his. (Sta. Maria, 2017)
• If he assumed the management in bad faith. (Art. 2147, NCC) For example, the officious manager takes over the warehousing business of the owner so that he can get the clients of the owner for his (officious manager's) own warehousing business. Such officious manager shall be liable for the loss of the warehousing business of the owner caused by a fortuitous event.
• If he is manifestly unfit to carry on the management; and XPN: when the management was assumed to save the property or business from imminent danger. (Sta. Maria, 2017)
• If by his intervention he prevented a more competent person taking up the management. (Art. 2148, NCC) XPN: when the management was assumed to save the property or business from imminent danger. (Sta. Maria, 2017)

NOTE: For Nos. 5 and 6, The officious manager has no business taking over the abandoned property or business of somebody if he has no knowledge or is not competent to undertake the management.

e.g., If a teacher takes on the farming business of another, he shall be liable for any damage caused by a fortuitous event. He should have been prudent enough to know that he cannot possibly undertake something which he has no competence in. If another person who is competent to take over the farming business decides to manage the same and the said teacher prevents him from doing so on the ground that he has been there first, such teacher will be liable if the property is destroyed by a fortuitous event. However, if the said teacher manages the said farming business to save it from imminent danger, he will not be liable for the fortuitous event merely because he was unfit or prevented a more competent person from managing; he may still be liable if a ground under Art. 2147 applies. (Sta. Maria, 2017)

XPNs:

• Contracts containing a stipulation in favor of a third person (pour autrui);
• Contracts containing real rights;
• Contracts entered into to defraud creditors;
• Contracts which have been violated at the inducement of 3rd persons; and
• Quasi-contract or negotiorum gestio.