The principle of abuse of rights is found under Articles 19, 20 and 21 of the Civil Code of the Philippines, which

states that: Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due and observe honesty and good faith. Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same. Art. 21. Any person who wilfully causes loss or injury to anot her in manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. The above articles, depart from the classical theory that he who uses a right injures no one. The modern tendency is to dep art from the classical and traditional theory, and to grant indemnity for damages in cases where there is an abuse of rights, even when the act is not illicit. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. Although the requirements of each provision is different, these three (3) articles are all related to each other. As the eminent Civilist Senator Arturo Tolentino puts it: With this article (Article 21), combined with articles 19 and 20, the scope of our law on civil wrongs has been very greatly broadened; it has become much more supple and adaptable than the Anglo-American law on torts. It is now difficult to conceive of any malevolent exercise of a right which could not be checked by the application of these articles (Tolentino, 1 Civil Code of the Philippines 72). There is however, no hard and fast rule which can be applied to determine whether or not the principle of abuse of rights may be invoked. The question of whether or not the principle of abuse of rights has been violated, resulting in damages under Articles 20 and 21 or other applicable provision of law, depends on the circumstances of each case. (Globe Mackay Cable and Radio Corporation vs. Court of Appeals, 176 SCRA 778 [1989]). The elements of an abuse of right under Article 19 are the following: (1) There is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring another. Article 20 speaks of the general sanction for all other provisions of law which do not especially provide for their own sanction (Tolentino, supra, p. 71). Thus, anyone who, whether willfully or negligently, in the exercise of his legal right or duty, causes damage to another, shall indemnify his victim for injuries suffered thereby. Article 21 deals with acts contra bonus mores, and has the following elements: 1) There is an act which is legal; 2) but which is contrary to morals, good custom, public order, or public policy; 3) and it is done with intent to injure. Thus, under any of these three (3) provisions of law, an act which causes injury to another may be made the basis for an award of damages. Of the three articles, Art. 19 was intended to expand the concept of torts by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to provide specifically in statutory law. If mere fault or negligence in ones acts can make him liable for damages for injury caused thereby, with more reason should abuse or bad faith make him liable. The absence of good faith is essential to abuse of right. Good faith is an honest intention to abstain from taking any unconscientious advantage of another, even through the forms or technicalities of the law, together with an absence of all information or belief of fact which would render the transaction unconscientious. In business relations, it means good faith as understood by men of affairs. While Article 19 may have been intended as a mere declaration of principle, the cardinal law on human conduct expressed in said article has given rise to certain rules, e.g. that where a person exercises his rights but does so arbitrarily or unjustly or performs his duties in a manner that is not in keeping with honesty and good faith, he opens himself to liability. Article 19 of the Civil Code, sets certain standards which may be observed not only in the exercise of ones rights but also in the performance of ones duties. These standards are the following: to act with justice; to give everyone his due; and to observe honesty and good faith. The law, therefore, recognizes the primordial limitation on all rights: that in their exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though by itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality. G.R. No. 149241 G.R. No. 160273 January 18, 2008 CEBU COUNTRY CLUB, INC., SABINO R. DAPAT, RUBEN D. ALMENDRAS, JULIUS Z. NERI, DOUGLAS L. LUYM, CESAR T. LIBI, RAMONTITO* E. GARCIA and JOSE B. SALA, petitioners, vs. RICARDO F. ELIZAGAQUE, respondent. DECISION SANDOVAL-GUTIERREZ, J.: For our resolution is the instant Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Decision1 dated January 31, 2003 and Resolution dated October 2, 2003 of the Court of Appeals in CA-G.R. CV No. 71506. The facts are: Cebu Country Club, Inc. (CCCI), petitioner, is a domestic corporation operating as a non-profit and non-stock private membership club, having its principal place of business in Banilad, Cebu City. Petitioners herein are members of its Board of Directors.

Sometime in 1987, San Miguel Corporation, a special company proprietary member of CCCI, designated respondent Ricardo F. Elizagaque, its Senior Vice President and Operations Manager for the Visayas and Mindanao, as a special non-proprietary member. The designation was thereafter approved by the CCCIs Board of Directors. In 1996, respondent filed with CCCI an application for proprietary membership. The application was indorsed by CCCIs two (2) proprietary members, namely: Edmundo T. Misa and Silvano Ludo. As the price of a proprietary share was around the P5 million range, Benito Unchuan, then president of CCCI, offered to sell respondent a share for only P3.5 million. Respondent, however, purchased the share of a certain Dr. Butalid for only P3 million. Consequently, on September 6, 1996, CCCI issued Proprietary Ownership Certificate No. 1446 to respondent. During the meetings dated April 4, 1997 and May 30, 1997 of the CCCI Board of Directors, action on respondents application f or proprietary membership was deferred. In another Board meeting held on July 30, 1997, respondents application was voted upon. Subsequently, or on August 1, 1997, respondent received a letter from Julius Z. Neri, CCCIs corporate secretary, informing h im that the Board disapproved his application for proprietary membership. On August 6, 1997, Edmundo T. Misa, on behalf of respondent, wrote CCCI a letter of reconsideration. As CCCI did not answer, respondent, on October 7, 1997, wrote another letter of reconsideration. Still, CCCI kept silent. On November 5, 1997, respondent again sent CCCI a letter inquiring whether any member of the Board objected to his application. Again, CCCI did not reply. Consequently, on December 23, 1998, respondent filed with the Regional Trial Court (RTC), Branch 71, Pasig City a complaint for damages against petitioners, docketed as Civil Case No. 67190. After trial, the RTC rendered its Decision dated February 14, 2001 in favor of respondent, thus: WHEREFORE, judgment is hereby rendered in favor of plaintiff: 1. Ordering defendants to pay, jointly and severally, plaintiff the amount of P2,340,000.00 as actual or compensatory damages. 2. Ordering defendants to pay, jointly and severally, plaintiff the amount of P5,000,000.00 as moral damages. 3. Ordering defendants to pay, jointly and severally, plaintiff the amount of P1,000,000.00 as exemplary damages. 4. Ordering defendants to pay, jointly and severally, plaintiff the amount of P1,000,000.00 as and by way of attorneys fees and P80,000.00 as litigation expenses. 5. Costs of suit. Counterclaims are hereby DISMISSED for lack of merit. SO ORDERED.2 On appeal by petitioners, the Court of Appeals, in its Decision dated January 31, 2003, affirmed the trial courts Decision with modification, thus: WHEREFORE, premises considered, the assailed Decision dated February 14, 2001 of the Regional Trial Court, Branch 71, Pasig City in Civil Case No. 67190 is hereby AFFIRMED with MODIFICATION as follows: 1. Ordering defendants-appellants to pay, jointly and severally, plaintiff-appellee the amount ofP2,000,000.00 as moral damages; 2. Ordering defendants-appellants to pay, jointly and severally, plaintiff-appellee the amount ofP1,000,000.00 as exemplary damages; 3. Ordering defendants-appellants to pay, jointly and severally, plaintiff-appellee the mount of P500,000.00 as attorneys fees and P50,000.00 as litigation expenses; and 4. Costs of the suit. The counterclaims are DISMISSED for lack of merit. SO ORDERED.3 On March 3, 2003, petitioners filed a motion for reconsideration and motion for leave to set the motion for oral arguments. In its Resolution4 dated October 2, 2003, the appellate court denied the motions for lack of merit. Hence, the present petition. The issue for our resolution is whether in disapproving respondents application for proprietary membership with CCCI, petitioners are liable to respondent for damages, and if so, whether their liability is joint and several. Petitioners contend, inter alia, that the Court of Appeals erred in awarding exorbitant damages to respondent despite the lack of evidence that they acted in bad faith in disapproving the latters application; and in disregarding their defense of damnum absque injuria. For his part, respondent maintains that the petition lacks merit, hence, should be denied. CCCIs Articles of Incorporation provide in part: SEVENTH: That this is a non-stock corporation and membership therein as well as the right of participation in its assets shall be limited to qualified persons who are duly accredited owners of Proprietary Ownership Certificates issued by the corporation in accordance with its By-Laws. Corollary, Section 3, Article 1 of CCCIs Amended By-Laws provides: SECTION 3. HOW MEMBERS ARE ELECTED The procedure for the admission of new members of the Club shall be as follows: (a) Any proprietary member, seconded by another voting proprietary member, shall submit to the Secretary a written proposal for the admission of a candidate to the "Eligible-for-Membership List"; (b) Such proposal shall be posted by the Secretary for a period of thirty (30) days on the Club bulletin board during which time any member may interpose objections to the admission of the applicant by communicating the same to the Board of Directors; (c) After the expiration of the aforesaid thirty (30) days, if no objections have been filed or if there are, the Board considers the objections unmeritorious, the candidate shall be qualified for inclusion in the "Eligible-for-Membership List"; (d) Once included in the "Eligible-for-Membership List" and after the candidate shall have acquired in his name a valid POC duly recorded in the books of the corporation as his own, he shall become a Proprietary Member, upon a non-refundable admission fee of P1,000.00, provided that admission fees will only be collected once from any person. On March 1, 1978, Section 3(c) was amended to read as follows: (c) After the expiration of the aforesaid thirty (30) days, the Board may, by unanimous vote of all directors present at a regular or special meeting, approve the inclusion of the candidate in the "Eligible-for-Membership List".

As shown by the records, the Board adopted a secret balloting known as the "black ball system" of voting wherein each member will drop a ball in the ballot box. A white ball represents conformity to the admission of an applicant, while a black ball means disapproval. Pursuant to Section 3(c), as amended, cited above, a unanimous vote of the directors is required. When responden ts application for proprietary membership was voted upon during the Board meeting on July 30, 1997, the ballot box contained one (1) black ball. Thus, for lack of unanimity, his application was disapproved. Obviously, the CCCI Board of Directors, under its Articles of Incorporation, has the right to approve or disapprove an application for proprietary membership. But such right should not be exercised arbitrarily. Articles 19 and 21 of the Civil Code on the Chapter on Human Relations provide restrictions, thus: Article 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. Article 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. In GF Equity, Inc. v. Valenzona,5 we expounded Article 19 and correlated it with Article 21, thus: This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which must be observed not only in the exercise of one's rights but also in the performance of one's duties. These standards are the following: to act with justice; to give everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a primordial limitation on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though by itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible . But while Article 19 lays down a rule of conduct for the government of human relations and for the maintenance of social order, it does not provide a remedy for its violation. Generally, an action for damages under either Article 20 or Article 21 would be proper. (Emphasis in the original) In rejecting respondents application for proprietary membership, we find that petitioners violated the ru les governing human relations, the basic principles to be observed for the rightful relationship between human beings and for the stability of social order. The trial court and the Court of Appeals aptly held that petitioners committed fraud and evident bad faith in disapproving respondents applications. This is contrary to morals, good custom or public policy. Hence, petitioners are liable for damage s pursuant to Article 19 in relation to Article 21 of the same Code. It bears stressing that the amendment to Section 3(c) of CCCIs Amended By-Laws requiring the unanimous vote of the directors present at a special or regular meeting was not printed on the application form respondent filled and submitted to CCCI. What was printed thereon was the original provision of Section 3(c) which was silent on the required number of votes needed for admission of an applicant as a proprietary member. Petitioners explained that the amendment was not printed on the application form due to economic reasons. We find this excuse flimsy and unconvincing. Such amendment, aside from being extremely significant, was introduced way back in 1978 or almost twenty (20) years before respondent filed his application. We cannot fathom why such a prestigious and exclusive golf country club, like the CCCI, whose members are all affluent, did not have enough money to cause the printing of an updated application form. It is thus clear that respondent was left groping in the dark wondering why his application was disapproved. He was not even informed that a unanimous vote of the Board members was required. When he sent a letter for reconsideration and an inquiry whether there was an objection to his application, petitioners apparently ignored him. Certainly, respondent did not deserve this kind of treatment. Having been designated by San Miguel Corporation as a special non-proprietary member of CCCI, he should have been treated by petitioners with courtesy and civility. At the very least, they should have informed him why his application was disapproved. The exercise of a right, though legal by itself, must nonetheless be in accordance with the proper norm. When the right is exercised arbitrarily, unjustly or excessively and results in damage to another, a legal wrong is committed for which the wrongdoer must be held responsible.6 It bears reiterating that the trial court and the Court of Appeals held that petitioners disapproval of respondents application is characterized by bad faith. As to petitioners reliance on the principle of damnum absque injuria or damage without injury, suffice it to state that the same is misplaced. In Amonoy v. Gutierrez,7 we held that this principle does not apply when there is an abuse of a persons right, as in this case. As to the appellate courts award to respondent of mora l damages, we find the same in order. Under Article 2219 of the New Civil Code, moral damages may be recovered, among others, in acts and actions referred to in Article 21. We believe respondents testimony that he suffered mental anguish, social humiliation and wounded feelings as a result of the arbitrary denial of his application. However, the amount of P2,000,000.00 is excessive. While there is no hard-and-fast rule in determining what would be a fair and reasonable amount of moral damages, the same should not be palpably and scandalously excessive. Moral damages are not intended to impose a penalty to the wrongdoer, neither to enrich the claimant at the expense of the defendant. 8 Taking into consideration the attending circumstances here, we hold that an award to respondent of P50,000.00, instead of P2,000,000.00, as moral damages is reasonable. Anent the award of exemplary damages, Article 2229 allows it by way of example or correction for the public good. Nonetheless, since exemplary damages are imposed not to enrich one party or impoverish another but to serve as a deterrent against or as a negative incentive to curb socially deleterious actions,9 we reduce the amount fromP1,000,000.00 to P25,000.00 only. On the matter of attorneys fees and litigation expenses, Article 2208 of the same Code provides, among others, that attorneys fees and expenses of litigation may be recovered in cases when exemplary damages are awarded and where the court deems it just and equitable that attorneys fees and expenses of litigation should be recovered, as in this case. In any event, however, such award must be reasonable, just and equitable. Thus, we reduce the amount of attorneys fees ( P500,000.00) and litigation expenses (P50,000.00) to P50,000.00 andP25,000.00, respectively. Lastly, petitioners argument that they could not be held jointly and severally liable for damages because only one (1) voted for the disapproval of respondents application lacks merit. Section 31 of the Corporation Code provides:

SEC. 31. Liability of directors, trustees or officers. Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faithin directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors, or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons. (Emphasis ours) WHEREFORE, we DENY the petition. The challenged Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 71506 are AFFIRMED with modification in the sense that (a) the award of moral damages is reduced fromP2,000,000.00 to P50,000.00; (b) the award of exemplary damages is reduced from P1,000,000.00 to P25,000.00; and (c) the award of attorneys fees and litigation expenses is reduced from P500,000.00 and P50,000.00 toP50,000.00 and P25,000.00, respectively. Costs against petitioners. SO ORDERED.

DECISION QUISUMBING, J.: For review on certiorari is the Decision[1] dated April 30, 2003 of the Court of Appeals in CA-G.R. CV No. 56082, which had affirmed the Decision[2] dated July 8, 1996 of the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 9 in Civil Case No. 745-M-93. The Court of Appeals, after applying the doctrine of piercing the veil of corporate fiction, held petitioners ASJ Corporation (ASJ Corp.) and Antonio San Juan solidarily liable to respondents Efren and Maura Evangelista for the unjustified retention of the chicks and egg by-products covered by Setting Report Nos. 108 to 113.[3] The pertinent facts, as found by the RTC and the Court of Appeals, are as follows: Respondents, under the name and style of R.M. Sy Chicks, are engaged in the large-scale business of buying broiler eggs, hatching them, and selling their hatchlings (chicks) and egg by-products[4] in Bulacan and Nueva Ecija. For the incubation and hatching of these eggs, respondents availed of the hatchery services of ASJ Corp., a corporation duly registered in the name of San Juan and his family. Sometime in 1991, respondents delivered to petitioners various quantities of eggs at an agreed service fee of 80 centavos per egg, whether successfully hatched or not. Each delivery was reflected in a Setting Report indicating the following: the number of eggs delivered; the date of setting or the date the eggs were delivered and laid out in the incubators; the date of candling or the date the eggs, through a lighting system, were inspected and determined if viable or capable of being hatched into chicks; and the date of hatching, which is also the date respondents would pick-up the chicks and by-products. Initially, the service fees were paid upon release of the eggs and by-products to respondents. But as their business went along, respondents delays on their payments were tolerated by San Juan, who just carried over the balance, as there may be, into the next delivery, out of keeping goodwill with respondents. From January 13 to February 3, 1993, respondents had delivered to San Juan a total of 101,3[50][5] eggs, detailed as follows:[6] Date Set SR Number No. of eggs delivered Date hatched/Pick-up date 1/13/1993 SR 108 32,566 eggs February 3, 1993 1/20/1993 SR 109 21,485 eggs February 10, 1993 1/22/1993 SR 110 7,213 eggs February 12, 1993 1/28/1993 SR 111 14,495 eggs February 18, 1993 1/30/1993 SR 112 15,346 eggs February 20, 1993 2/3/1993 SR 113 10,24[5][7] eggs February 24, 1993 TOTAL 101,350 eggs On February 3, 1993, respondent Efren went to the hatchery to pick up the chicks and by-products covered by Setting Report No. 108, but San Juan refused to release the same due to respondents failure to settle accrued service fees on several setting reports starting from Setting Report No. 90. Nevertheless, San Juan accepted from Efren 10,245 eggs covered by Setting Report No. 113 and P15,000.00[8] in cash as partial payment for the accrued service fees. On February 10, 1993, Efren returned to the hatchery to pick up the chicks and by-products covered by Setting Report No. 109, but San Juan again refused to release the same unless respondents fully settle their accounts. In the afternoon of the same day, respondent Maura, with her son Anselmo, tendered P15,000.00[9] to San Juan, and tried to claim the chicks and by-products. She explained that she was unable to pay their balance because she was hospitalized for an undisclosed ailment. San Juan accepted theP15,000.00, but insisted on the full settlement of respondents accounts before releasing the chicks and by -products. Believing firmly that the total value of the eggs delivered was more than sufficient to cover the outstanding balance, Maura promised to settle their accounts only upon proper accounting by San Juan. San Juan disliked the idea and threatened to impound their vehicle and detain them at the hatchery compound if they should come back unprepared to fully settle their accounts with him. On February 11, 1993, respondents directed their errand boy, Allan Blanco, to pick up the chicks and by-products covered by Setting Report No. 110 and also to ascertain if San Juan was still willing to settle amicably their differences. Unfortunately, San Juan was firm in his refusal and reiterated his threats on respondents. Fearing San Juans threats, respondents never went back to the hatchery. The parties tried to settle amicably their differences before police authorities, but to no avail. Thus, respondents filed with the RTC an action for damages based on petitioners retention of the chicks and by -products covered by Setting Report Nos. 108 to 113. On July 8, 1996, the RTC ruled in favor of respondents and made the following findings: (1) as of Setting Report No. 107, respondents owed petitioners P102,336.80;[10](2) petitioners withheld the release of the chicks and by-products covered by Setting Report Nos. 108-113;[11] and (3) the retention of the chicks and by-products was unjustified and accompanied by threats and intimidations on respondents.[12] The RTC disregarded the corporate fiction of ASJ Corp.,[13] and held it and San Juan solidarily liable to respondents

for P529,644.80 as actual damages, P100,000.00 as moral damages, P50,000.00 as attorneys fees, plus interests and costs of suit. The decretal portion of the decision reads: WHEREFORE, based on the evidence on record and the laws/jurisprudence applicable thereon, judgment is hereby rendered ordering the defendants to pay, jointly and severally, unto the plaintiffs the amounts of P529,644.80, representing the value of the hatched chicks and by-products which the plaintiffs on the average expected to derive under Setting Reports Nos. 108 to 113, inclusive, with legal interest thereon from the date of this judgment until the same shall have been fully paid, P100,000.00 as moral damages and P50,000.00 as attorneys fees, plus the costs of suit. SO ORDERED.[14] Both parties appealed to the Court of Appeals. Respondents prayed for an additional award of P76,139.00 as actual damages for the cost of other unreturned by-products and P1,727,687.52 as unrealized profits, while petitioners prayed for the reversal of the trial courts entire decision. On April 30, 2003, the Court of Appeals denied both appeals for lack of merit and affirmed the trial courts decision, with the s light modification of including an award of exemplary damages of P10,000.00 in favor of respondents. The Court of Appeals, applying the doctrine of piercing the veil of corporate fiction, considered ASJ Corp. and San Juan as one entity, after finding that there was no bona fide intention to treat the corporation as separate and distinct from San Juan and his wife Iluminada. The fallo of the Court of Appeals decision reads: WHEREFORE, in view of the foregoing, the Decision appealed from is hereby AFFIRMED, with the slight modification that exemplary damages in the amount of P10,000.00 are awarded to plaintiffs. Costs against defendants. SO ORDERED.[15] Hence, the instant petition, assigning the following errors: I. THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN HOLDING, AS DID THE COURT A QUO, THAT PETITIONERS WITHHELD/OR FAILED TO RELEASE THE CHICKS AND BY-PRODUCTS COVERED BY SETTING REPORT NOS. 108 AND 109. II. THE HONORABLE COURT OF APPEALS ERRED IN ADMITTING THE HEARSAY TESTIMONY OF MAURA EVANGELISTA SUPPORTIVE OF ITS FINDINGS THAT PETITIONERS WITHHELD/OR FAILED TO RELEASE THE CHICKS AND BY-PRODUCTS COVERED BY SETTING REPORT NOS. 108 AND 109. III. THE HONORABLE COURT OF APPEALS, AS DID THE COURT A QUO, ERRED IN NOT FINDING THAT RESPONDENTS FAILED TO RETURN TO THE PLANT TO GET THE CHICKS AND BY-PRODUCTS COVERED BY SETTING REPORT NOS. 110, 111, 112 AND 113. IV. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING, AS DID THE COURT A QUO, THAT THE PIERCING OF THE VEIL OF CORPORATE ENTITY IS JUSTIFIED, AND CONSEQUENTLY HOLDING PETITIONERS JOINTLY AND SEVERALLY LIABLE TO PAY RESPONDENTS THE SUM OF P529,644.[80]. V. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONERS HAVE VIOLATED THE PRINCIPLES ENUNCIATED IN ART. 19 OF THE NEW CIVIL CODE AND CONSEQUENTLY IN AWARDING MORAL DAMAGES, EXEMPLARY DAMAGES AND ATTORNEYS FEES. VI. THE HONORABLE COURT OF APPEALS ERRED IN NOT AWARDING PETITIONERS COUNTERCLAIM. [16] Plainly, the issues submitted for resolution are: First, did the Court of Appeals err when (a) it ruled that petitioners withheld or failed to release the chicks and by-products covered by Setting Report Nos. 108 and 109; (b) it admitted the testimony of Maura; (c) it did not find that it was respondents who failed to return to the hatchery to pick up the chicks and by-products covered by Setting Report Nos. 110 to 113; and (d) it pierced the veil of corporate fiction and held ASJ Corp. and Antonio San Juan as one entity?Second, was it proper to hold petitioners solidarily liable to respondents for the payment of P529,644.80 and other damages? In our view, there are two sets of issues that the petitioners have raised. The first set is factual. Petitioners seek to establish a set of facts contrary to the factual findings of the trial and appellate courts. However, as well established in our jurisprudence, only errors of law are reviewable by this Court in a petition for review under Rule 45.[17] The trial court, having had the opportunity to personally observe and analyze the demeanor of the witnesses while testifying, is in a better position to pass judgment on their credibility.[18] More importantly, factual findings of the trial court, when amply supported by evidence on record and affirmed by the appellate court, are binding upon this Court and will not be disturbed on appeal.[19] While there are exceptional circumstances[20] when these findings may be set aside, none of them is present in this case. Based on the records, as well as the parties own admissions, the following facts were uncontroverted: (1) As of Setting Report No. 107, respondents were indebted to petitioners for P102,336.80 as accrued service fees for Setting Report Nos. 90 to 107;[21] (2) Petitioners, based on San Juans own admission,[22] did not release the chicks and by-products covered by Setting Report Nos. 108 and 109 for failure of respondents to fully settle their previous accounts; and (3) Due to San Juans threats, respondents never returned to the hatchery to pick up those covered by Setting Report Nos. 110 to 113. [23] Furthermore, although no hard and fast rule can be accurately laid down under which the juridical personality of a corporate entity may be disregarded, the following probative factors of identity justify the application of the doctrine of piercing the veil of corporate fiction[24] in this case: (1) San Juan and his wife own the bulk of shares of ASJ Corp.; (2) The lot where the hatchery plant is located is owned by the San Juan spouses; (3) ASJ Corp. had no other properties or assets, except for the hatchery plant and the lot where it is located; (4) San Juan is in complete control of the corporation; (5) There is no bona fide intention to treat ASJ Corp. as a different entity from San Juan; and (6) The corporate fiction of ASJ Corp. was used by San Juan to insulate himself from the legitimate claims of respondents, defeat public convenience, justify wrong, defend crime, and evade a corporations subsidiary liability for damages.[25] These findings, being purely one of fact,[26] should be respected. We need not assess and evaluate the evidence all over again where the findings of both courts on these matters coincide.

On the second set of issues, petitioners contend that the retention was justified and did not constitute an abuse of rights since it was respondents who failed to comply with their obligation. Respondents, for their part, aver that all the elements on abuse of rights were present. They further state that despite their offer to partially satisfy the accrued service fees, and the fact that the value of the chicks and by-products was more than sufficient to cover their unpaid obligations, petitioners still chose to withhold the delivery. The crux of the controversy, in our considered view, is simple enough. Was petitioners retention of the chicks and by-products on account of respondents failure to pay the corresponding service fees unjustified? While the trial and appellate courts had the same decisions on the matter, suffice it to say that a modification is proper. Worth stressing, petitioners act of withholding the chicks and by-products is entirely different from petitioners unjustifiable acts of threatening respondents. The retention had legal basis; the threats had none. To begin with, petitioners obligation to deliver the chicks and by -products corresponds to three dates: the date of hatching, the delivery/pick-up date and the date of respondents payment. On several setting reports, respondents made delays on their payments, but petitioners tolerated such delay. When respondents accounts accumulated because of their successive failure to pay on several setting reports, petitioners opted to demand the full settlement of respondents accounts as a condition precedent to the delivery. However, respondents were unable to fully settle their accounts. Respondents offer to partially satisfy their accounts is not enough to extinguish their obligation. Under Article 1248[27] of the Civil Code, the creditor cannot be compelled to accept partial payments from the debtor, unless there is an express stipulation to that effect. More so, respondents cannot substitute or apply as their payment the value of the chicks and by-products they expect to derive because it is necessary that all the debts be for the same kind, generally of a monetary character. Needless to say, there was no valid application of payment in this case. Furthermore, it was respondents who violated the very essence of reciprocity in contracts, consequently giving rise to petitioners right of retention. This case is clearly one among the species of non-performance of a reciprocal obligation. Reciprocal obligations are those which arise from the same cause, wherein each party is a debtor and a creditor of the other, such that the performance of one is conditioned upon the simultaneous fulfillment of the other. [28] From the moment one of the parties fulfills his obligation, delay by the other party begins.[29] Since respondents are guilty of delay in the performance of their obligations, they are liable to pay petitioners actual damages of P183,416.80, computed as follows: From respondents outstanding balance of P102,336.80, as of Setting Report No. 107, we add the corresponding services fees of P81,080.00[30] for Setting Report Nos. 108 to 113 which had remain unpaid. Nonetheless, San Juans subsequent acts of threatening respondents should not remain among those treated with impunity. Under Article 19[31] of the Civil Code, an act constitutes an abuse of right if the following elements are present: (a) the existence of a legal right or duty; (b) which is exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another. [32] Here, while petitioners had the right to withhold delivery, the high-handed and oppressive acts of petitioners, as aptly found by the two courts below, had no legal leg to stand on. We need not weigh the corresponding pieces of evidence all over again because factual findings of the trial court, when adopted and confirmed by the appellate court, are binding and conclusive and will not be disturbed on appeal.[33] Since it was established that respondents suffered some pecuniary loss anchored on petitioners abuse of rights, although the exact amount of actual damages cannot be ascertained, temperate damages are recoverable. In arriving at a reasonable level of temperate damages of P408,852.10, which is equivalent to the value of the chicks and by-products, which respondents, on the average, are expected to derive, this Court was guided by the following factors: (a) award of temperate damages will cover only Setting Report Nos. 109 to 113 since the threats started only on February 10 and 11, 1993, which are the pick-up dates for Setting Report Nos. 109 and 110; the rates of (b) 41% and (c)17%, representing the average rates of conversion of broiler eggs into hatched chicks and egg by-products as tabulated by the trial court based on available statistical data which was unrebutted by petitioners; (d) 68,784 eggs,[34] or the total number of broiler eggs under Setting Report Nos. 109 to 113; and (e) P14.00 and (f) P1.20, or the then unit market price of the chicks and by-products, respectively. Thus, the temperate damages of P408,852.10 is computed as follows: [b X (d X e) + c X (d X f)] = Temperate Damages 41% X (68,784 eggs X P14) = P394,820.16 17% X (68,784 eggs X P1.20) = P 14,031.94 [P394,820.16 + P14,031.94] = P408,852.10 At bottom, we agree that petitioners conduct flouts the norms of civil society and justifies the award of moral and exemplary damages. As enshrined in civil law jurisprudence: Honeste vivere, non alterum laedere et jus suum cuique tribuere. To live virtuously, not to injure others and to give everyone his due.[35] Since exemplary damages are awarded, attorneys fees are also proper. Article 2208 of the Civil Code provides that: In the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs, cannot be recovered, excep t: (1) When exemplary damages are awarded; xxxx WHEREFORE, the petition is PARTLY GRANTED. The Decision dated April 30, 2003 of the Court of Appeals in CA-G.R. CV No. 56082 is hereby MODIFIED as follows: a. Respondents are ORDERED to pay petitioners P183,416.80 as actual damages, with interest of 6% from the date of filing of the complaint until fully paid, plus legal interest of 12% from the finality of this decision until fully paid. b. The award of actual damages of P529,644.80 in favor of respondents is hereby REDUCED to P408,852.10, with legal interest of 12% from the date of finality of this judgment until fully paid. c. The award of moral damages, exemplary damages and attorneys fees of P100,000.00, P10,000.00, P50,000.00, respectively, in favor of respondents is herebyAFFIRMED. d. All other claims are hereby DENIED. No pronouncement as to costs. SO ORDERED.

2. Heirs of Purisima Nala vs. Cabansag, G.R. No. 161188, June 13, 2008 DECISION AUSTRIA-MARTINEZ, J.:
[1]

This is a petition for review under Rule 45 of the Rules of Court assailing the Court of Appeals (CA) Decision dated December 19, [2] 2002 and Resolution datedOctober 28, 2003, dismissing petitioners' appeal and affirming with modification the Regional Trial Court (RTC) Decision dated August 10, 1994 rendered in Civil Case No. Q-91-10541. The facts of the case are as follows: Artemio Cabansag (respondent) filed Civil Case No. Q-91-10541 for damages in October 1991. According to respondent, he bought a 50-square meter property from spouses Eugenio Gomez, Jr. and Felisa Duyan Gomez on July 23, 1990. Said property is part of a 400square meter lot registered in the name of the Gomez spouses. In October 1991, he received a demand letter from Atty. Alexander del Prado (Atty. Del Prado), in behalf of Purisima Nala (Nala), asking for the payment of rentals from 1987 to 1991 until he leaves the premises, as said property is owned by Nala, failing which criminal and civil actions will be filed against him. Another demand letter was sent on May 14, 1991. Because of such demands, respondent suffered damages and was constrained to file the case [3] against Nala and Atty. Del Prado. Atty. Del Prado claimed that he sent the demand letters in good faith and that he was merely acting in behalf of his client, Nala, who disputed respondent's claim of ownership. Nala alleged that said property is part of an 800-square meter property owned by her late husband, Eulogio Duyan, which was subsequently divided into two parts. The 400-square meter property was conveyed to spouses Gomez in a fictitious deed of sale, with the agreement that it will be merely held by them in trust for the Duyan'schildren. Said property is covered by Transfer Certificate of Title (TCT) No. 281115 in the name of spouses [4] Gomez. Nala also claimed that respondent is only renting the property which he occupies. After trial, the RTC of Quezon City, Branch 93, rendered its Decision on August 10, 1994, in favor of respondent. The dispositive portion of the Decision provides: WHEREFORE, premises considered, by preponderance of evidence, the Court finds in favor of the plaintiff and hereby orders the defendants, jointly and severally, to pay plaintiff the following: 1. P150,000.00 by way of moral damages; 2. P30,000.00 by way of exemplary damages; 3. P20,000.00 as and for reasonable attorney's fees and other 4. to pay the costs. SO ORDERED.
[5]

litigation expenses; and

Nala and Atty. Del Prado appealed to the CA. The herein assailed CA Decision dated December 19, 2002 affirmed the RTC Decision with modification, thus: WHEREFORE, premises considered, the instant appeal is hereby DISMISSED. The assailed decision of the Regional Trial Court, Branch 93, Quezon City, in Civil Case No. Q-91-10541 is heretofore AFFIRMED with MODIFICATION. Defendants-appellants are ordered to pay, jointly and severally, plaintiff-appellee the amount of P30,000.00 by way of moral damages. It is further ordered to pay him exemplary damages in the amount of P10,000.00 and P10,000.00, attorney's fees. SO ORDERED.
[6]

In affirming the RTC Decision, the CA took note of the Decision dated September 5, 1994 rendered by the RTC of Quezon City, Branch 80, dismissing Civil Case No. 91-8821, an action for reconveyance of real property and cancellation of TCT No. 281115 with [7] damages, filed by Nala against spouses Gomez. Hence, herein petition by the heirs of Nala (petitioners) with the following assignment of errors:
[8]

a) Respondent Court of Appeals erred in not considering the right of Purisima Nala to assert her rights and interest over the property. b) Respondent Court of Appeals erred in not considering the Decision rendered by the Court of Appeals in the case for reconveyance which upheld the rights and interest of Purisima Nala and her children over a certain parcel of land, a portion of which is subject of the present case. [9] c) Respondent Court of Appeals erred in awarding damages and attorney's fees without any basis. Atty. Del Prado filed a motion for extension of time to file his separate petition but it was denied by the Court per its Resolution dated January 19, 2004 issued in G.R. No. 160829.

Petitioners argue that their predecessor-in-interest had every right to protect and assert her interests over the property. Nala had no knowledge that the property was sold by spouses Gomez to respondent when the demand letters were sent. What she was aware of was the fact that spouses Gomez were managing the rentals on the property by virtue of the implied trust created between them and Eulogio Duyan. When spouses Gomez failed to remit the rentals and claimed ownership of the property, it was then that Nala decided to procure the services of legal counsel to protect their rights over the property. Petitioners also contend that it was error for the CA to take note of the RTC Decision in Civil Case No. 91-8821 without further noting that the CA had already reversed and set aside said RTC Decision and ordered reconveyance of the property to Nala and her children in a Decision dated March 8, 2000 rendered in CA-G.R. CV No. 49163. Petitioners also argue that respondent did not substantiate his claim for damages. Preliminarily, the Court notes that both the RTC and the CA failed to indicate the particular provision of law under which it held petitioners liable for damages. Nevertheless, based on the allegations in respondent's complaint, it may be gathered that the basis for his claim for damages is Article 19 of the Civil Code, which provides: Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. The foregoing provision sets the standards which may be observed not only in the exerci se of ones rights but also in the performance of ones duties. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. But a right, though by itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality. A person should be protected only when he acts in the legitimate exercise of his right; that is, when he acts with prudence and in good faith, but not when he acts with negligence or abuse. There is an abuse of right when it is exercised only for the purpose of prejudicing or injuring another. The exercise of a right must be in accordance with the purpose for which it was established, and [10] must not be excessive or unduly harsh; there must be no intention to injure another. In order to be liable for damages under the abuse of rights principle, the following requisites must concur: (a) the existence of a legal [11] right or duty; (b) which is exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another. It should be stressed that malice or bad faith is at the core of Article 19 of the Civil Code. Good faith is presumed, and he who [12] alleges bad faith has the duty to prove the same. Bad faith, on the other hand, does not simply connote bad judgment to simple negligence, dishonest purpose or some moral obloquy and conscious doing of a wrong, or a breach of known duty due to some motives or interest or ill will that partakes of the nature of fraud. Malice connotes ill will or spite and speaks not in response to duty. [13] It implies an intention to do ulterior and unjustifiable harm. In the present case, there is nothing on record which will prove that Nala and her counsel, Atty. Del Prado, acted in bad faith or malice in sending the demand letters to respondent. In the first place, there was ground for Nala's actions since she believed that the property was owned by her husband Eulogio Duyan and that respondent was illegally occupying the same. She had no knowledge that spouses Gomez violated the trust imposed on them by Eulogio and surreptitiously sold a portion of the property to respondent. It was only after respondent filed the case for damages against Nala that she learned of such sale. The bare fact that respondent claims ownership over the property does not give rise to the conclusion that the sending of the demand letters by Nala was done in bad faith. Absent any evidence presented by respondent, bad faith or malice could not be attributed to petitioner since Nala was only trying to protect their interests over the property. Moreover, respondent failed to show that Nala and Atty. Del Prado's acts were done with the sole intention of prejudicing and injuring him. It may be true that respondent suffered mental anguish, serious anxiety and sleepless nights when he received the demand letters; however, there is a material distinction between damages and injury. Injury is the legal invasion of a legal right [14] while damage is the hurt, loss or harm which results from the injury. Thus, there can be damage without injury in those instances in which the loss or harm was not the result of a violation of a legal duty. In such cases, the consequences must be borne by the injured person alone; the law affords no remedy for damages resulting from an act which does not amount to a legal injury or [15] wrong. These situations are often called damnum absque injuria. Nala was acting well within her rights when she instructed Atty. Del Prado to send the demand letters. She had to take all the necessary legal steps to enforce her legal/equitable rights over the property occupied by respondent. One who makes use of his [16] own legal right does no injury. Thus, whatever damages are suffered by respondent should be borne solely by him. Nala's acts in protecting her rights over the property find further solid ground in the fact that the property has already been ordered reconveyed to her and her heirs. In itsDecision dated March 8, 2000 in CA-G.R. CV No. 49163, the CA reversed and set aside the RTC's Decision and ordered the reconveyance of the property to petitioners, and TCT No. 281115 was declared canceled. Said CA Decision was affirmed by this Court in its Decision dated March 18, 2005 in G.R. No. 144148, which became final andexecutory on July 27, 2005. WHEREFORE, the petition is GRANTED. The Decision dated December 19, 2002 and Resolution dated October 28, 2003 rendered by the Court of Appeals in CA-G.R. CV No. 48580 are NULLIFIED. Civil Case No. Q-91-10541 is DISMISSED for lack of merit. Costs against respondent.

SO ORDERED. Land bank of the philippines DECISION

VELASCO, JR., J.:

This is an appeal from the October 20, 2009 Decision of the Court of Appeals (CA) in CA-G.R. CR-CV No. 84445 entitled Alfredo Ong v. Land Bank of the Philippines,which affirmed the Decision of the Regional Trial Court (RTC), Branch 17 in Tabaco City. The Facts On March 18, 1996, spouses Johnson and Evangeline Sy secured a loan from Land Bank Legazpi City in the amount of PhP 16 million. The loan was secured by three (3) residential lots, five (5) cargo trucks, and a warehouse. Under the loan agreement, PhP 6 million of the loan would be short-term and would mature on February 28, 1997, while the balance of PhP 10 million would be payable in seven (7) years. The Notice of Loan Approval dated February 22, 1996 contained an acceleration clause wherein any default in [1] payment of amortizations or other charges would accelerate the maturity of the loan. Subsequently, however, the Spouses Sy found they could no longer pay their loan. On December 9, 1996, they sold three (3) of their mortgaged parcels of land for PhP 150,000 to Angelina Gloria Ong, Evangelines mother, under a Deed of Sale with Assumption of [2] Mortgage. The relevant portion of the document is quoted as follows: WHEREAS, we are no longer in a position to settle our obligation with the bank; NOW THEREFORE, for and in consideration of the sum of ONE HUNDRED FIFTY THOUSAND PESOS (P150,000.00) Philippine Currency, we hereby these presents SELL, CEDE, TRANSFER and CONVEY, by way of sale unto ANGELINA GLORIA ONG, also of legal age, Filipino citizen, married to Alfredo Ong, and also a resident of Tabaco, Albay, Philippines, their heirs and assigns, the above-mentioned debt with the said LAND BANK OF THE PHILIPPINES, and by reason hereof they can make the necessary representation with the bank for the proper restructuring of the loan with the said bank in their favor; That as soon as our obligation has been duly settled, the bank is authorized to release the mortgage in favor of the vendees and for this purpose VENDEES can register this instrument with the Register of Deeds for the issuance of the titles already in their names. IN WITNESS WHEREOF, we have hereunto affixed our signatures this 9 day of December 1996 at Tabaco, Albay, Philippines. (signed) EVANGELINE O. SY Vendor (signed) JOHNSON B. SY Vendor
[3] th

Evangelines father, petitioner Alfredo Ong, later went to Land Bank to inform it about the sale and assumption of mortgage. Atty. Edna Hingco, the Legazpi City Land Bank Branch Head, told Alfredo and his counsel Atty. Ireneo de Lumen that there was nothing wrong with the agreement with the Spouses Sy but provided them with requirements for the assumption of mortgage. They were also told that Alfredo should pay part of the principal which was computed at PhP 750,000 and to update due or accrued interests on the promissory notes so that Atty. Hingco could easily approve the assumption of mortgage. Two weeks later, Alfredo issued a check for PhP 750,000 and personally gave it to Atty. Hingco. A receipt was issued for his payment. He also submitted the other documents required by Land Bank, such as financial statements for 1994 and 1995. Atty. Hingco then informed Alfredo that the certificate of title of the Spouses Sy would be transferred in his name but this never materialized. No notice of transfer was sent to [4] him. Alfredo later found out that his application for assumption of mortgage was not approved by Land Bank. The bank learned from its credit investigation report that the Ongs had a real estate mortgage in the amount of PhP 18,300,000 with another bank that was past due. Alfredo claimed that this was fully paid later on. Nonetheless, Land Bank foreclosed the mortgage of the Spouses Sy after several months. Alfredo only learned of the foreclosure when he saw the subject mortgage properties included in a Notice of Foreclosure of Mortgage and Auction Sale at the RTC in Tabaco, Albay. Alfredos other counsel, Atty. Madrilejos, subsequently talked [5] to Land Banks lawyer and was told that the PhP 750,000 he paid would be returned to him. On December 12, 1997, Alfredo initiated an action for recovery of sum of money with damages against Land Bank in Civil Case No. T1941, as Alfredos payment was not returned by Land Bank. Alfredo maintained that Land Banks foreclosure without informing h im of the denial of his assumption of the mortgage was done in bad faith. He argued that he was lured into believing that his payment of PhP 750,000 would cause Land Bank to approve his assumption of the loan of the Spouses Sy and the transfer of the mortgaged [6] properties in his and his wifes name. He also claimed incurring expenses for attorneys fees of PhP 150,000, filing fee of PhP [7] 15,000, and PhP 250,000 in moral damages.

Testifying for Land Bank, Atty. Hingco claimed during trial that as branch manager she had no authority to approve loans and could not assure anybody that their assumption of mortgage would be approved. She testified that the breakdown of Alfredos payment was as follows: PhP 101,409.59 applied to principal 216,246.56 accrued interests receivable 396,571.77 interests 18,766.10 penalties 16,805.98 accounts receivable ---------------Total: 750,000.00 According to Atty. Hingco, the bank processes an assumption of mortgage as a new loan, since the new borrower is considered a new client. They used character, capacity, capital, collateral, and conditions in determining who can qualify to assume a [8] loan. Alfredos proposal to assume the loan, she explained, was referred to a separate office, the Lending Center. During cross-examination, Atty. Hingco testified that several months after Alfredo made the tender of payment, she received word that the Lending Center rejected Alfredos loan application. She stated that it was the Lending Center and not her that should have informed Alfredo about the denial of his and his wifes assumption of mortgage. She added that although she told Alfredo that the agreement between the spouses Sy and Alfredo was valid between them and that the bank would accept payments from him, Alfredo did not pay any further amount so the foreclosure of the loan collaterals ensued. She admitted that Alfredo demanded the return of the PhP 750,000 but said that there was no written demand before the case against the bank was filed in court. She said that Alfredo had made the payment of PhP 750,000 even before he applied for the assumption of mortgage and that the bank received the said amount because the subject account was past due and demandable; and the Deed of Assumption of Mortgage was [9] not used as the basis for the payment. The Ruling of the Trial Court The RTC held that the contract approving the assumption of mortgage was not perfected as a result of the credit investigation conducted on Alfredo. It noted that Alfredo was not even informed of the disapproval of the assumption of mortgage but was just told that the accounts of the spouses Sy had matured and gone unpaid. It ruled that under the principle of equity and justice, the bank should return the amount Alfredo had paid with interest at 12% per annum computed from the filing of the complaint. The RTC [10] further held that Alfredo was entitled to attorneys fees and litigation expenses for being compelled to litigate. The dispositive portion of the RTC Decision reads: WHEREFORE, premises considered, a decision is rendered, ordering defendant bank to pay plaintiff, Alfredo Ong the amount of P750,000.00 with interest at 12% per annum computed from Dec. 12, 1997 and attorneys fees and litigation expenses of P50,000.00. Costs against defendant bank. SO ORDERED.
[11]

The Ruling of the Appellate Court On appeal, Land Bank faulted the trial court for (1) holding that the payment of PhP 750,000 made by Ong was one of the requirements for the approval of his proposal to assume the mortgage of the Sy spouses; (2) erroneously ordering Land Bank to return the amount of PhP 750,000 to Ong on the ground of its failure to effect novation; and (3) erroneously affirming the award of PhP 50,000 to Ong as attorneys fees and litigation expenses. The CA affirmed the RTC Decision. It held that Alfredos recourse is not against the Sy spouses. According to the appellate court, the payment of PhP 750,000 was for the approval of his assumption of mortgage and not for payment of arrears incurred by the Sy spouses. As such, it ruled that it would be incorrect to consider Alfredo a third person with no interest in the fulfillment of the obligation under Article 1236 of the Civil Code. Although Land Bank was not bound by the Deed between Alfredo and the Spouses Sy, the appellate court found that Alfredo and Land Bank s active preparations for Alfredos assumption of mortgage essentially novated the agreement. On January 5, 2010, the CA denied Land Banks motion for reconsideration for lack of merit. Hence, Land Bank appealed to us. The Issues I
[12]

Whether the Court of Appeals erred in holding that Art. 1236 of the Civil Code does not apply and in finding that there is no novation. Whether the Court of Appeals misconstrued the evidence and the law when it affirmed the trial court decisions ordering Land Bank to pay Ong the amount of Php750,000.00 with interest at 12% annum. Whether the Court of Appeals committed reversible error when it affirmed the award of Php50,000.00 to Ong as attorneys fees and expenses of litigation. The Ruling of this Court We affirm with modification the appealed decision. Recourse is against Land Bank Land Bank contends that Art. 1236 of the Civil Code backs their claim that Alfredo should have sought recourse against the Spouses Sy instead of Land Bank. Art. 1236 provides: The creditor is not bound to accept payment or performance by a third person who has no interest in the fulfillment of the obligation, unless there is a stipulation to the contrary. Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor.

We agree with Land Bank on this point as to the first part of paragraph 1 of Art. 1236. Land Bank was not bound to accept Alfredos payment, since as far as the former was concerned, he did not have an interest in the payment of the loan of the Spouses Sy. However, in the context of the second part of said paragraph, Alfredo was not making payment to fulfill the obligation of the Spouses Sy. Alfredo made a conditional payment so that the properties subject of the Deed of Sale with Assumption of Mortgage would be titled in his name. It is clear from the records that Land Bank required Alfredo to make payment before his assumption of mortgage would be approved. He was informed that the certificate of title would be transferred accordingly. He, thus, made payment not as a debtor but as a prospective mortgagor. But the trial court stated:

[T]he contract was not perfected or consummated because of the adverse finding in the credit investigation which led to the disapproval of the proposed assumption. There was no evidence presented that plaintiff was informed of the disapproval. What he received was a letter dated May 22, 1997 informing him that the account of spouses Sy had matured but there [were] no payments. This was sent even before the conduct of the credit investigation on June 20, 1997 which led to the disapproval of the proposed [13] assumption of the loans of spouses Sy.

Alfredo, as a third person, did not, therefore, have an interest in the fulfillment of the obligation of the Spouses Sy, since his interest hinged on Land Banks approval of his application, which was denied. The circumstances of the instant case show that the second paragraph of Art. 1236 does not apply. As Alfredo made the payment for his own interest and not on behalf of the Spouses Sy, recourse is not against the latter. And as Alfredo was not paying for another, he cannot demand from the debtors, the Spouses Sy, what he has paid. Novation of the loan agreement Land Bank also faults the CA for finding that novation applies to the instant case. It reasons that a substitution of debtors was made without its consent; thus, it was not bound to recognize the substitution under the rules on novation. On the matter of novation, Spouses Benjamin and Agrifina Lim v. M.B. Finance Corporation
[14]

provides the following discussion:

Novation, in its broad concept, may either be extinctive or modificatory. It is extinctive when an old obligation is terminated by the creation of a new obligation that takes the place of the former; it is merely modificatory when the old obligation subsists to the extent it remains compatible with the amendatory agreement. An extinctive novation results either by changing the object or principal conditions (objective or real), or by substituting the person of the debtor or subrogating a third person in the rights of the creditor (subjective or personal). Under this mode, novation would have dual functions one to extinguish an existing obliga tion, the other to substitute a new one in its place requiring a conflux of four essential requisites: (1) a previous valid obligation; (2) an agreement of all parties concerned to a new contract; (3) the extinguishment of the old obligation; and (4) the birth of a valid new obligation. x x x In order that an obligation may be extinguished by another which substitutes the same, it is imperative that it be so declared in unequivocal terms, or that the old and the new obligations be on every point incompatible with each other. The test of incompatibility is whether or not the two obligations can stand together, each one having its independent existence. x x x (Emphasis supplied.)

Furthermore, Art. 1293 of the Civil Code states: Novation which consists in substituting a new debtor in the place of the original one, may be made even without the knowledge or against the will of the latter, but not without the consent of the creditor. Payment by the new debtor gives him rights mentioned in articles 1236 and 1237.

We do not agree, then, with the CA in holding that there was a novation in the contract between the parties. Not all the elements of novation were present. Novation must be expressly consented to. Moreover, the conflicting intention and acts of the parties underscore the absence of any express disclosure or circumstances with which to deduce a clear and unequivocal intent by [15] the parties to novate the old agreement. Land Bank is thus correct when it argues that there was no novation in the following: [W]hether or not Alfredo Ong has an interest in the obligation and payment was made with the knowledge or consent of Spouses Sy, he may still pay the obligation for the reason that even before he paid the amount of P750,000.00 on January 31, 1997, the substitution of debtors was already perfected by and between Spouses Sy and Spouses Ong as evidenced by a Deed of Sale with Assumption of Mortgage executed by them on December 9, 1996. And since the substitution of debtors was made without the consent of Land Bank a requirement which is indispensable in order to effect a novation of the obligation, it is therefore not bound to recognize the substitution of debtors. Land Bank did not intervene in the contract between Spouses Sy and Spouses Ong and did [16] not expressly give its consent to this substitution.

Unjust enrichment Land Bank maintains that the trial court erroneously applied the principle of equity and justice in ordering it to return the PhP 750,000 paid by Alfredo. Alfredo was allegedly in bad faith and in estoppel. Land Bank contends that it enjoyed the presumption of regularity and was in good faith when it accepted Alfredos tender of PhP 750,000. It reasons that it did not unduly enrich itself at Alfredos expense during the foreclosure of the mortgaged properties, since it tendered its bid by subtracting PhP 750,000 fr om the Spouses Sys outstanding loan obligation. Alfredos recourse then, according to Land Bank, is to have his payment reimbursed by the Spouses Sy. We rule that Land Bank is still liable for the return of the PhP 750,000 based on the principle of unjust enrichment. Land Bank is correct in arguing that it has no obligation as creditor to recognize Alfredo as a person with interest in the fulfillment of the obligation. But while Land Bank is not bound to accept the substitution of debtors in the subject real estate mortgage, it is estopped by its action of accepting Alfredos payment from arguing that it does not have to recognize Alfredo as the new debtor. The elements of estoppel are: First, the actor who usually must have knowledge, notice or suspicion of the true facts, communicates something to another in a misleading way, either by words, conduct or silence; second, the other in fact relies, and relies reasonably or justifiably, upon that communication; third, the other would be harmed materially if the actor is later permitted to assert any claim inconsistent with his earlier conduct; and fourth, the actor knows, expects or foresees that the other would act upon the information given or that a [17] reasonable person in the actors position would expect or foresee such action. By accepting Alfredos payment and keeping silent on the status of Alfredos application, Land Bank misled Alfredo to believe that he had for all intents and purposes stepped into the shoes of the Spouses Sy. The defense of Land Bank Legazpi City Branch Manager Atty. Hingco that it was the banks Lending Center that should have noti fied Alfredo of his assumption of mortgage disapproval is unavailing. The Lending Centers lac k of notice of disapproval, the Tabaco Branchs silence on the disapproval, and the banks subsequent actions show a failure of the bank as a whole, first, to notify Alfredo that he is not a recognized debtor in the eyes of the bank; and second, to apprise him of how and when he could collect on the payment that the bank no longer had a right to keep. We turn then on the principle upon which Land Bank must return Alfredos payment. Unjust enrichment exists when a person unjustly retains a benefit to the loss of another, or when a person retains money or property of another against the fundamental [18] principles of justice, equity and good conscience. There is unjust enrichment under Art. 22 of the Civil Code when (1) a person is [19] unjustly benefited, and (2) such benefit is derived at the expense of or with damages to another. Additionally, unjust enrichment has been applied to actions called accion in rem verso. In order that the accion in rem verso may prosper, the following conditions must concur: (1) that the defendant has been enriched; (2) that the plaintiff has suffered a loss; (3) that the enrichment of the defendant is without just or legal ground; and (4) that the plaintiff has no other action based on contract, [20] quasi-contract, crime, or quasi-delict. The principle of unjust enrichment essentially contemplates payment when there is no duty [21] to pay, and the person who receives the payment has no right to receive it. The principle applies to the parties in the instant case, as, Alfredo, having been deemed disqualified from assuming the loan, had no duty to pay petitioner bank and the latter had no right to receive it.

Moreover, the Civil Code likewise requires under Art. 19 that *e+very person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and g ood faith. Land Bank, however, did not even bother to inform Alfredo that it was no longer approving his assumption of the Spouses Sys mortgage. Yet it acknowl edged [22] his interest in the loan when the branch head of the bank wrote to tell him that his dau ghters loan had not been paid. Land Bank made Alfredo believe that with the payment of PhP 750,000, he would be able to assume the mortgage of the Spouses Sy. The act of receiving payment without returning it when demanded is contrary to the adage of giving someone what is due to him. The outcome of the application would have been different had Land Bank first conducted the credit investigation before acce pting Alfredos payment. He would have been notified that his assumption of mortgage had been disapproved; and he would not have taken the futile action of paying PhP 750,000. The procedure Land Bank took in acting on Alfredos application cannot be said t o have been fair and proper. As to the claim that the trial court erred in applying equity to Alfredos case, we hold that Alfredo had no other remedy to recover from Land Bank and the lower court properly exercised its equity jurisdiction in resolving the collection suit. As we have held in one case: Equity, as the complement of legal jurisdiction, seeks to reach and complete justice where courts of law, through the inflexibility of their rules and want of power to adapt their judgments to the special circumstances of cases, are incompetent to do so. Equity regards the spirit and not the letter, the intent and not the form, the substance rather than the circumstance, as it is [23] variously expressed by different courts.

Another claim made by Land Bank is the presumption of regularity it enjoys and that it was in good faith when it accepted Alf redos tender of PhP 750,000. The defense of good faith fails to convince given Land Banks actions. Alfredo was not treated as a mere prospective borrower. After he had paid PhP 750,000, he was made to sign bank documents including a promissory note and real estate mortgage. He was assured by Atty. Hingco that the titles to the properties covered by the Spouses Sys real estate mortgage would be transferred in his name, and upon payment of the PhP 750,000, the account would be considered current and renewed in his [24] name. Land Bank posits as a defense that it did not unduly enrich itself at Alfredos expense during the foreclosure of the mortgag ed properties, since it tendered its bid by subtracting PhP 750,000 from the Spouses Sys outstanding loan obligation. It is observed that this is the first time Land Bank is revealing this defense. However, issues, arguments, theories, and causes not raised below may no [25] longer be posed on appeal. Land Banks contention, thus, cannot be entertained at this point. Land Bank further questions the lower courts decision on the basis of the inconsistencies made by Alfredo on the witness stand. It argues that Alfredo was not a credible witness and his testimony failed to overcome the presumption of regularity in the performance of regular duties on the part of Land Bank. This claim, however, touches on factual findings by the trial court, and we defer to these findings of the trial court as sustained by the appellate court. These are generally binding on us. While there are exceptions to this rule, Land Bank has not [26] satisfactorily shown that any of them is applicable to this issue. Hence, the rule that the trial court is in a unique position to [27] observe the demeanor of witnesses should be applied and respected in the instant case. In sum, we hold that Land Bank may not keep the PhP 750,000 paid by Alfredo as it had already foreclosed on the mortgaged lands. Interest and attorneys fees As to the applicable interest rate, we reiterate the guidelines found in Eastern Shipping Lines, Inc. v. Court of Appeals:
[28]

II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows: 1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. 2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be

deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged. 3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit. No evidence was presented by Alfredo that he had sent a written demand to Land Bank before he filed the collection suit. Only [29] the verbal agreement between the lawyers of the parties on the return of the payment was mentioned. Consequently, the obligation of Land Bank to return the payment made by Alfredo upon the formers denial of the latters application for assump tion of mortgage must be reckoned from the date of judicial demand on December 12, 1997, as correctly determined by the trial court and affirmed by the appellate court. The next question is the propriety of the imposition of interest and the proper imposable rate of applicable interest. The RTC granted the rate of 12% per annum which was affirmed by the CA. From the above-quoted guidelines, however, the proper imposable interest rate is 6% per annum pursuant to Art. 2209 of the Civil Code. Sunga-Chan v. Court of Appeals is illuminating in this regard: In Reformina v. Tomol, Jr., the Court held that the legal interest at 12% per annum under Central Bank (CB) Circular No. 416 shall be adjudged only in cases involving the loan or forbearance of money. And for transactions involving payment of indemnities in the concept of damages arising from default in the performance of obligations in general and/or for money judgment not involving a loan or forbearance of money, goods, or credit, the governing provision is Art. 2209 of the Civil Code prescribing a yearly 6% interest. Art. 2209 pertinently provides: Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay , the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six per cent per annum. The term forbearance, within the context of usury law, has been described as a contractual obligation of a lender or credit or to refrain, during a given period of time, from requiring the borrower or debtor to repay the loan or debt then due and payable. Eastern Shipping Lines, Inc. synthesized the rules on the imposition of interest, if proper, and the applicable rate, as follows: The 12% per annum rate under CB Circular No. 416 shall apply only to loans or forbearance of money, goods, or credits, as well as to judgments involving such loan or forbearance of money, goods, or credit, while the 6% per annum under Art. 2209 of the Civil Code applies when the transaction involves the payment of indemnities in the concept of damage arising from the breach or a delay in the performance of obligations in general, with the application of both rates reckoned from the time the complaint was fil ed until the *adjudged+ amount is fully paid. In either instance, the reckoning period for the commencement of the running of the leg al interest shall be subject to the condition that the courts are vested with discretion, depending on the equities of ea ch case, on the [30] award of interest. (Emphasis supplied.)

Based on our ruling above, forbearance of money refers to the contractual obligation of the lender or creditor to desist for a fixed period from requiring the borrower or debtor to repay the loan or debt then due and for which 12% per annum is imposed as interest in the absence of a stipulated rate. In the instant case, Alfredos conditional payment to Land Bank does not constitute forbearance of money, since there was no agreement or obligation for Alfredo to pay Land Bank the amount of PhP 750,000, and the obligation of Land Bank to return what Alfredo has conditionally paid is still in dispute and has not yet been determined. Thus, it cannot be said that Land Banks alleged obligation has become a forbearance of money. On the award of attorneys fees, attorneys fees and expenses of litigation were awarded because Alfredo was compell ed to litigate due to the unjust refusal of Land Bank to refund the amount he paid. There are instances when it is just and equitable to award [31] attorneys fees and expenses of litigation. Art. 2208 of the Civil Code pertinently states: In the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs, cannot be recovered, ex cept: xxxx (2) When the defendants act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest.

Given that Alfredo was indeed compelled to litigate against Land Bank and incur expenses to protect his interest, we find that the award falls under the exception above and is, thus, proper given the circumstances. On a final note. The instant case would not have been litigated had Land Bank been more circumspect in dealing with Alfredo. The bank chose to accept payment from Alfredo even before a credit investigation was underway, a procedure worsened by the failure to even inform him of his credit standings impact on his assumption of mortgage. It was, therefore, negligent to a certain degree in handling the transaction with Alfredo. It should be remembered that the business of a bank is affected with public interest [32] and it should observe a higher standard of diligence when dealing with the public.

WHEREFORE, the appeal is DENIED. The CA Decision in CA-G.R. CR-CV No. 84445 is AFFIRMED with MODIFICATION in that the amount of PhP 750,000 will earn interest at 6% per annum reckoned from December 12, 1997, and the total aggregate monetary awards will in turn earn 12% per annum from the finality of this Decision until fully paid. DENNIS R. MANZANAL and BAGUIO COUNTRY CLUB CORPORATION, Petitioners, vs. RAMON K. ILUSORIO, Respondent. DECISION CARPIO MORALES, J.: The only issue presented in this case is whether the complaint for damages filed by Ramon K. Ilusorio (respondent) against petitioners Dennis R. Manzanal and Baguio Country Club Corporation (BCCC) states a cause of action. On July 7, 1994, a penthouse unit (PH-1) at the BCCC building in Baguio was assigned to respondent by one Felix Adolfo B. Lopez, Jr., with the conformity of BCCC. By respondents claim, he, for a period of five (5) years since the assignment, enjoyed the use of the unit and the clubs fa cilities, along with his business colleagues and friends but that when conflict within the family arose in 1998 and escalated to great proportions, he was barred from using the unit and was almost expelled as member of the club. Hence, spawned his filing of multiple suits against BCCC before the courts and SEC. Respondent sent a May 31, 2001 letter to BCCC requesting for his current statement of account. Replying, BCCC charged him the amount of P102,076.74 which he paid under protest. He, however, requested a breakdown of the amount which BCCC, thru Manzanal, complied with, via letter of November 26, 2001 to which was attached respondents Statement of Account itemizing th e amount which in fact totaled P2,928,223.26. The letter reads: Attached herewith please find Statement of Account with total amount of P2,928,223.26. Our records also show that from April 1995 to July 1999, you sponsored an estimated ninety-seven guests, many of whom are Multinational Investment Bancorporation partners and personnel, Club charges for which amount to Two Million Four Hundred Thirty One thousand Pesos (P2,431,000.00) for guest room charges exclusive of interest, guest fees and penalties. This is also to follow-up payment due from you regarding our letter of December 20, 2000 1, copy attached herewith for your reference. In light of the foregoing, please remit in full the amount of P2,928,223.26. to BCC within seven (7) days from receipt hereof, otherwise we shall be constrained to take the appropriate action and remedies to enforce payment of your obligation. 2 BCCC subsequently sent a final demand letter dated December 19, 2001 to respondent for the immediate payment of the unpaid charges, failing which, BCCC stated, it "shall be constrained to take the necessary action available under the clubs rules t o protect the interests of the club." Respondent questioned, by reply letter of January 18, 2002, Manzanals authority as an Assistant Vice President, as well as the b illing for P2,431,000 and P599,300 as bereft of bases, thus: I understand you are one of the lawyers of my estranged siblings (Sylvia, Lin, and Max) and now you claim to be the Assistant VicePresident of Baguio Country Club. Under what authority are you holding the said position in the Club? Please present the proof of your authority. You claim that I have incurred charges from April 1995 to July 1999 amounting to P2,431,000.00. There is no basis for your claim. It is highly irregular for a member to be billed for charges allegedly incurred 6 years ago. 1avvphi1 With regard to your claim pertaining to the alleged Penthouse rectification works amounting to P599,300.00, the same has no basis in fact and in law. It is obvious that you and your principals are using the Club to harass me. Please refrain from dragging the Club into the family feud.3 Taking the demand letters letter as a form of harassment from his family who was utilizing Manzanal and BCCC (petitioners) for that purpose, respondent filed in 2002 a complaint for damages against petitioners before the Makati Regional Trial Court (RTC), alleging: xxxx FIRST CAUSE OF ACTION 20. The recent act of BCCC and MANZANAL to collect the amount of P2,928,223.26 is another form of harassment against the plaintiff. To be precise, it is part of the series of harassment, characterized with bad faith and malice, being done by BCCC, MANZANAL, and plaintiffs estranged siblings. 21. Plaintiff has no obligation to pay the amount of P2,928,223.26 to BCCC. It bears to note that under Article 1157 of the Civil Code of the Philippines, obligations arise from law; contracts; quasi-contracts; acts or omissions punished by law; and quasi-delicts. In the present case, it is quite clear that the collection of the amount of P2,928,223.26 is clearly without legal or factual basis. Corollary thereto, BCCC and MANZANAL have no right to collect the amount of P2,928,223.26 from the plaintiff. 22. Collecting room charges purportedly incurred as far as six (6) years ago, aside from the fact that it is baseless, is also dubious and scheming. As owner of the subject UNIT, plaintiff should not be held liable for its use and enjoyment considering that use and enjoyment of the UNIT are incidence of ownership. 23. Assuming without conceding that BCCC has the right to collect the amount of P2,928,223.26 from the plaintiff the same had already prescribed. 24. Assuming without conceding that BCC has the right to collect the amount P2,928,223.26 from the plaintiff, the latter is already guilty of laches and estoppel to effect collection thereof. 25. Moreover, it is improper for BCCC and MANZANAL to collect the amount pertaining to the rectification works regarding a purported encroachment on BCCC common areas because the matter is still subject of a pending case before the Regional Trial Court of Baguio City entitled "Baguio Country Club vs. Ramon K. Ilusorio" docketed as Civil Case No. 4750-R. 26. Under the foregoing circumstances, BCCC and MANZANAL should be enjoined from collecting from the plaintiff or in any way extra-judicially enforcing the payment of said claim or imposing any sanction against the plaintiff on account of said claim. SECOND CAUSE OF ACTION

27. As a consequence of the unlawful act of MANZANAL and BCCC in initiating collection of the amount of P2,928,223.26 from the plaintiff, characterized with utter malice and gross and evident bad faith, plaintiff has suffered moral damages, consisting of mental anguish, social humiliation, anxiety and the like, which, considering his business and social standing in the community, is reasonably estimated in the amount of One Million Pesos (P1,000,000.00). 4 x x x x (emphasis and underscoring in the original) Respondent averred that, inter alia, he should not be charged for the use of the unit as he, as owner, is entitled to its use and enjoyment. And he cast doubt on billing him for charges dating back to 1995. In lieu of an Answer, Manzanal filed a Motion to Dismiss the complaint for failure to state a cause of action, he alleging that being merely an officer who signed on behalf of BCCC, he should not be personally liable. He explained that the act of sending a demand letter does not constitute a cause of action against the obligee/creditor. Alternatively, Manzanal claimed that respondents asseverations against him and BCCC should be ventilated as a matter of defense in the collection suit filed against him. BCCC also filed a Motion to Dismiss on the ground of litis pendentia, it having filed a collection suit against respondent before the RTC of Baguio City docketed as Civil Case No. 4750-R,5 to recover the cost of removing illegal structures in his unit. Branch 145 of RTC Makati to which respondents complaint was raffled, dismissed the complaint, by Order of October 10, 2002 i n this wise: x x x To sustain plaintiff ILUSORIOs assertions that this Complaint states a cause of action would be to rule that the act of se nding a demand letter by itself constitutes a cause of action. When a creditor sends a demand letter to a debtor, according to plaintiff ILUSORIOs theory, that is already an actionable wrong, a cause of action. x x x 6 On appeal, the Court of Appeals, by Decision of November 26, 2008, 7 reversed the RTC Makati and ordered the reinstatement of respondents complaint, holding as follows. x x x In this case, if the allegations in the complaint that (1) the plaintiff-appellant [Ilusorio] is a member of the Baguio Country Club and an owner of one of the units of the Clubs House Building, thereby entitling him to the possession and use of such unit s ubject to reasonable membership charges. (2) the defendants-appellees had been unreasonably charging him charges and bills for the use of his unit without factual and legal basis, and (3) despite his objections to the amount charges billed in his name, the defendants-appellees had threatened to enforce the said charges in the manner provided under the Clubs rules are assumed to be true, then the plaintiff-appellant would be entitled to the relief demanded in his complaint.8 (underscoring supplied) Petitioners motion for reconsideration was denied by Resolution of August 24, 2009. Hence, the filing of the present petitio n for review. The petition is meritorious. A cause of action is the act or omission by which a party violates the right of another, entitling the injured party to relief. Its existence is determined from the allegations in the complaint.9 The Court finds from the tenor of the demand letters, which respondent annexed to his complaint, that it did not deviate from the standard practice of pursuing the satisfaction of a club members obligations. Respondent did not indicate in his complaint how tenuous petitioners claim for unpaid charges is.10 In his reply to petitioners final letter of demand, he in fact did not contradict petitioners statement that his work partners and employees used his unit, thereby admitting that he welched on his undertaki ng in the contract that only family members are allowed free usage. As an exclusive organization which primarily derives life from membership fees and charges, BCCC is expected to enforce claims from members in default of their contractual obligations. Even under the principle of abuse of rights, Cebu Country Club, Inc. v. Elizagaque11 which expounds as follows: In GF Equity, Inc. v. Valenzona, we expounded Article 19 and correlated it with Article 21, thus: This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which must be observed not only in the exercise of ones rights but also in the performance of ones duties. These standards are the following: to act with justice; to give everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a primordial limitation on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though by itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. But while Article 19 lays down a rule of conduct for the government of human relations and for the maintenance of social order, it does not provide a remedy for its violation. Generally, an action for damages under Article 20 or Article 21 would be proper. (citation omitted, underscoring supplied), respondent cannot seek refuge. In fine, the RTC did not err in ordering the dismissal of the complaint against petitioners for lack of cause of action. It was thus error for the appellate court to set aside the RTC decision. WHEREFORE, the petition is GRANTED. The Court of Appeals Decision of November 26, 2008 is REVERSED andSET ASIDE. The Order of the Regional Trial Court of Makati City, Branch 145 dated October 10, 2002 is REINSTATED.