VICTORIA MOREO-LENTFER, GUNTER LENTFER and JOHN

CRAIGIE YOUNG CROSS, petitioners, vs. HANS

JURGEN WOLFF, respondent.

DECISION
QUISUMBING, J.:

For review on certiorari are the Decision dated June 14, 2001,
and Resolution dated February 22, 2002, of the Court of Appeals in
CA-G.R. CV No. 48272. The decision reversed the judgment of the
Regional Trial Court of Calapan City, Oriental Mindoro, Branch 39, in
Civil Case No. R-4219.
[1]

[2]

[3]

The facts are as follows:

The petitioners are Gunter Lentfer, a German citizen; his Filipina
wife, Victoria Moreo-Lentfer; and John Craigie Young Cross, an
Australian citizen, all residing in Sabang, Puerto Galera, Oriental
Mindoro. Respondent Hans Jurgen Wolff is a German citizen,
residing in San Lorenzo Village, Makati City.
Petitioners alleged that with respondent, on March 6, 1992, they
engaged the notarial services of Atty. Rodrigo C. Dimayacyac for: (1)
the sale of a beach house owned by petitioner Cross in Sabang,
Puerto Galera, Oriental Mindoro, and (2) the assignment of Cross
contract of lease on the land where the house stood. The sale of the
beach house and the assignment of the lease right would be in the
name of petitioner Victoria Moreo-Lentfer, but the total consideration
of 220,000 Deutschmarks (DM) would be paid by respondent Hans
Jurgen Wolff. A promissory note was executed by said respondent in
favor of petitioner Cross.
According to respondent, however, the Lentfer spouses were his
confidants who held in trust for him, a time deposit account in the
amount of DM 200,000 at Solid Bank Corporation. Apprised of his
interest to own a house along a beach, the Lentfer couple urged him
to buy petitioner Cross beach house and lease rights in Puerto
Galera. Respondent agreed and through a bank-to-bank transaction,
he paid Cross the amount of DM 221,700 as total consideration for
the sale and assignment of the lease rights. However, Cross, MoreoLentfer and Atty. Dimayacyac surreptitiously executed a deed of sale
whereby the beach house was made to appear as sold to MoreoLentfer for only P100,000. The assignment of the lease right was
[4]

[5]

[6]

likewise made in favor of Moreo-Lentfer. Upon learning of this,

respondent filed a Complaintdocketed as Civil Case No. R-4219 with
the lower court for annulment of sale and reconveyance of property
with damages and prayer for a writ of attachment.
[7]

After trial, the court a quo dismissed the complaint for failure to
establish a cause of action, thus:
ACCORDINGLY, judgment is hereby rendered in favor of the defendants
and against the plaintiff, dismissing the complaint for the reason that
plaintiff has not established a cause of action against the defendants with
costs against the plaintiff.
SO ORDERED.

[8]

Aggrieved, respondent appealed to the Court of Appeals.

[9]

But in its Decision dated June 14, 2001, the appellate court
reversed the decision of the trial court, thus:
[10]

WHEREFORE, the judgment appealed from is hereby REVERSED and a

new one is hereby rendered, as follows:
1. Defendants-appellees spouses Genter[11] and Victoria Moreno-Lentfer and
John Craigie Young Cross are jointly and severally held liable to pay
plaintiff-appellant the amount of 220,000.00 DM German Currency or its
present peso equivalent plus legal interest starting from March 8, 1993,
the date of the last final demand letter;
2. The above defendants-appellees are jointly and severally held liable to
pay plaintiff-appellant the amount of P200,000.00 Philippine Currency,
representing the amount of expenses incurred in the repairs and
maintenance of the property plus legal interest starting from October 28,
1992, the date the amount was received by defendant-appellee Victoria
Moreno-Lentfer; and
3. The case against defendant-appellee Rodrigo Dimayacyac is dismissed.

SO ORDERED.

[12]

Hence, the instant petition raising the following issues:

1) DOES ARTICLE 1238 OF THE NEW CIVIL CODE APPLY IN THE CASE
AT BAR?[13]
2) DOES THE PRINCIPLE OF SOLUTIO INDEBITI UNDER ARTICLE 2154
OF THE NEW CIVIL CODE, THE PRINCIPLE OF JUSTICE AND
EQUITY, APPLY IN THE CASE AT BAR?[14]

Article 1238 of the New Civil Code provides:

ART. 1238. Payment made by a third person who does not intend to be
reimbursed by the debtor is deemed to be a donation, which requires the
debtors consent. But the payment is in any case valid as to the creditor who
has accepted it.
Petitioners posit that in a contract of sale, the seller is the creditor,
who in this case is Cross, and the buyer is the debtor, namely MoreoLentfer in this case. Respondent is the third person who paid the
consideration on behalf of Moreo-Lentfer, the debtor. Petitioners
insist that respondent did not intend to be reimbursed for said
payment and debtor Moreo-Lentfer consented to it. Thus, by virtue of
Article 1238, payment by respondent is considered a donation.
Respondent counters that Article 1238 bears no relevance to the
case since it applies only to contracts of loan where payment is made
by a third person to a creditor in favor of a debtor of a previously
incurred obligation. The instant case, in contrast, involves a contract
of sale where no real creditor-debtor relationship exists between the
parties. Further, respondent argues his conduct never at any time
intimated any intention to donate in favor of petitioner Moreo-Lentfer.
Moreover, respondent contends that the alleged donation is void
for non-compliance with the formal requirements set by law. Citing
Article 748 of the New Civil Code, respondent avers that since the
amount involved exceeds P5,000, both the donation and its
acceptance must be in writing for the donation to be valid.
Respondent further says there was no simultaneous delivery of the
money as required by Art. 748 for instances of oral donation.
Respondent also calls our attention to the sudden change in
petitioners theory. Previously, before the Court of Appeals, the
petitioners claimed that what was donated were the subject
properties. But before this Court, they insist that what was actually
donated was the money used in the purchase of subject properties.
[15]

On this point, we find petitioners stance without merit. Article

1238 of the New Civil Code is not applicable in this case.
Trying to apply Art. 1238 to the instant case is like forcing a
square peg into a round hole. The absence of intention to be
reimbursed, the qualifying circumstance in Art. 1238, is negated by
the facts of this case. Respondents acts contradict any intention to
donate the properties to petitioner Moreo-Lentfer. When respondent
learned that the sale of the beach house and assignment of the lease

right were in favor of Victoria Moreo-Lentfer, he immediately filed a

complaint for annulment of the sale and reconveyance of the property
with damages and prayer for a writ of attachment. Respondent
Moreo-Lentfer at that time claimed the beach house, together with
the lease right, was donated to her. Noteworthy, she had changed
her theory, to say that it was only the money used in the purchase
that was donated to her. But in any event, respondent actually stayed
in the beach house in the concept of an owner and shouldered the
expenses for its maintenance and repair amounting to P200,000 for
the entire period of his stay for ten weeks. Moreover, the appellate
court found that respondent is not related or even close to the Lentfer
spouses. Obviously, respondent had trusted the Lentfer spouses to
keep a time deposit account for him with Solid Bank for the purpose
of making the purchase of the cited properties.
Petitioner Moreo-Lentfers claim of either cash or property
donation rings hollow. A donation is a simple act of liberality where a
person gives freely of a thing or right in favor of another, who accepts
it. But when a large amount of money is involved, equivalent
to P3,297,800, based on the exchange rate in the year 1992, we are
constrained to take the petitioners claim of liberality of the donor with
more than a grain of salt.
[16]

Petitioners could not brush aside the fact that a donation must
comply with the mandatory formal requirements set forth by law for
its validity. Since the subject of donation is the purchase money, Art.
748 of the New Civil Code is applicable. Accordingly, the donation of
money equivalent to P3,297,800 as well as its acceptance should
have been in writing. It was not. Hence, the donation is invalid for
non-compliance with the formal requisites prescribed by law.
Anent the second issue, petitioners insist that since the deed of
sale in favor of Moreo-Lentfer was neither identified or marked nor
formally offered in evidence, the same cannot be given any
evidentiary value. They add that since it was not annulled, it remains
valid and binding. Hence, petitioners argue, the principle of solutio
indebitiunder Article 2154 of the New Civil Code should be the
applicable provision in the resolution of this controversy. If so, the
parties unjustly enriched would be liable to the other party who
suffered thereby by being correspondingly injured or damaged.
[17]

The quasi-contract of solutio indebiti harks back to the ancient

principle that no one shall enrich himself unjustly at the expense of
another. It applies where (1) a payment is made when there exists
no binding relation between the payor, who has no duty to pay, and
[18]

the person who received the payment, and (2) the payment is made
through mistake, and not through liberality or some other cause.
[19]

In the instant case, records show that a bank-to-bank payment

was made by respondent Wolff to petitioner Cross in favor of copetitioner Moreo-Lentfer. Respondent was under no duty to make
such payment for the benefit of Moreo-Lentfer. There was no binding
relation between respondent and the beneficiary, Moreo-Lentfer. The
payment was clearly a mistake. Since Moreo-Lentfer received
something when there was no right to demand it, she had an
obligation to return it.
[20]

Following Article 22 of the New Civil Code, two conditions must

concur to declare that a person has unjustly enriched himself or
herself, namely: (a) a person is unjustly benefited, and (b) such
benefit is derived at the expense of or to the damage of another.
[21]

[22]

We are convinced petitioner Moreo-Lentfer had been unjustly

enriched at the expense of respondent. She acquired the properties
through deceit, fraud and abuse of confidence. The principle of
justice and equity does not work in her favor but in favor of
respondent Wolff. Whatever she may have received by mistake from
and at the expense of respondent should thus be returned to the
latter, if the demands of justice are to be served.
The Court of Appeals held that respondent was not entitled to the
reconveyance of the properties because, inter alia, of the express
prohibition under the Constitution that non-Filipino citizens cannot
acquire land in the Philippines. We note, however, that subject
properties consist of a beach house and the lease right over the land
where the beach house stands. The constitutional prohibition against
aliens from owning land in the Philippines has no actual bearing in
this case. A clear distinction exists between the ownership of a piece
of land and the mere lease of the land where the foreigners house
stands. Thus, we see no legal reason why reconveyance could not
be allowed.
[23]

Since reconveyance is the proper remedy, respondents expenses

for the maintenance and repair of the beach house is for his own
account as owner thereof. It need not be an issue for now.
However, we deem it just and equitable under the circumstances
to award respondent nominal damages in the amount of P50,000,
pursuant to Articles 2221 and 2222 of the New Civil Code, since
[24]

[25]

[26]

respondents property right has been invaded through defraudation

and abuse of confidence committed by petitioners.
WHEREFORE, the petition is hereby DENIED. The assailed
Decision, dated June 14, 2001 and Resolution dated February 22,
2002, of the Court of Appeals in CA-G.R. CV No. 48272 reversing the
lower courts judgment are AFFIRMED with MODIFICATION.
Petitioners--particularly the spouses Gunter Lentfer and Victoria
Moreo-Lentfer--are hereby ORDERED to:
1. RECONVEY to respondent Hans Jurgen Wolff the beach house and the
lease right over the land on which it is situated; and
2. PAY respondent Wolff nominal damages in the amount of P50,000.00.

Costs against petitioners.

SO ORDERED.