Doctrine:

Article 1423 of the New Civil Code classifies obligations into civil or natural. "Civil obligations are a
right of action to compel their performance. Natural obligations, not being based on positive law but
on equity and natural law, do not grant a right of action to enforce their performance, but after
voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or
rendered by reason thereof

ANSAY vs. THE BOARD OF DIRECTORS OF THE NATIONAL DEVELOPMENT COMPANY

G.R. No. L-13667, April 29, 1960
Paras, C.J.

Facts:

Appellants filed against appellees in the Court a complaint praying for a 20% Christmas
bonus for the years 1954 and 1955. The Court does not see how petitioners may have a cause of
action to secure such bonus because: (a) A bonus is an act of liberality and the court takes it that it
is not within its judicial powers to command respondents to be liberal;(b) Petitioners admit that
respondents are not under legal duty to give such bonus but that they had only ask that such bonus
be given to them because it is a moral obligation of respondents to give that but as this Court
understands, it has no power to compel a party to comply with a moral obligation.

However, Appellants contend that there exists a cause of action in their complaint because
their claim rests on moral grounds or what in brief is defined by law as a natural obligation .Since
appellants admit that appellees are not under legal obligation to give such claimed bonus; that the
grant arises only from a moral obligation or the natural obligation.

Issue:

Whether or not the appellants have cause of action to secure such bonus

Ruling:

No, because according to Article 1423 of the New Civil Code classifies obligations into civil
or natural. "Civil obligations are a right of action to compel their performance. Natural obligations, not
being based on positive law but on equity and natural law, do not grant a right of action to enforce
their performance, but after voluntary fulfillment by the obligor, they authorize the retention of what
has been delivered or rendered by reason thereof".

It is thus readily seen that an element of natural obligation before it can be cognizable by the court is
voluntary fulfillment by the obligor. Certainly retention can be ordered but only after there has been
voluntary performance. But here there has been no voluntary performance. In fact, the court cannot
order the performance.
Doctrine:

Art. 1112. Persons with capacity to alienate property may renounce prescription already
obtained, but not the right to prescribe in the future.

Prescription is deemed to have been tacitly renounced when the renunciation results from
acts which imply the abandonment of the right acquired

DBP vs. Confessor

GR No. L-48889, May 11, 1989
Gangayco, J.

Facts:
Spouses Patricio Confesor and Jovita Villafuerte obtained an agricultural loan from
Development of the Philippines (DBP), in the sum of P2,000.00. Whereby they bound themselves
jointly and severally to pay the account in ten (10) equal yearly amortizations. As the obligation
remained outstanding and unpaid even after the lapse of the aforesaid ten-year period, Confesor
executed a second promissory note on April 11, 1961 expressly acknowledging said loan and
promising to pay the same on or before June 15, 1961.

Said spouses not having paid the obligation on the specified date, the DBP filed a complaint .
Court renders judgment, ordering the defendants Patricio Confesor and Jovita Villafuerte Confesor
to pay the plaintiff Development Bank of the Philippines. On the other hand, spouses appealed, the
Court reversed the appealed decision and dismissed the complaint and counter-claim of the
petitioner.

Petitioner alleges that the decision of respondent judge is contrary to law and runs counter to
decisions of this Court when respondent judge (a) refused to recognize the law that the right to
prescription may be renounced or waived; and (b) that in signing the second promissory note
respondent Patricio Confesor can bind the conjugal partnership; or otherwise said respondent
became liable in his personal capacity.

Issue:

Whether the respondents effectively and expressly renounced and waived his right to the
prescription of the action covering the first promissory note

Ruling:

Yes, because according to Article 1112 of Civil Code provides:

Art. 1112. Persons with capacity to alienate property may renounce prescription
already obtained, but not the right to prescribe in the future.

Prescription is deemed to have been tacitly renounced when the renunciation results
from acts which imply the abandonment of the right acquired.

There is no doubt that prescription has set in as to the first promissory note of February 10,
1940. However, when respondent Confesor executed the second promissory note on April 11, 1961
whereby he promised to pay the amount covered by the previous promissory note on or before June
15, 1961, and upon failure to do so, agreed to the foreclosure of the mortgage, said respondent
thereby effectively and expressly renounced and waived his right to the prescription of the action
covering the first promissory note.
Doctrine:

Article 2220 of the Civil Code provides:

Willful injury to property may be a legal ground for awarding moral damages if the court
should find that, under the circumstances, such damages are justly due. The same rule applies to
breaches of contract where the defendant acted fraudulently or in bad faith.

Meralco vs. Ramos

GR No. 158911, March 4, 2008
Autria-Martinez, J.

Facts:
National Power Corporation (NPC) filed with the MTC Quezon City a case for ejectment
against several persons allegedly illegally occupying its properties in Baesa, Quezon City. MTC
rendered judgment for the plaintiff NPC.

NPC wrote Meralco requesting for the "immediate disconnection of electric power supply to
all residential and commercial establishments beneath the NPC transmission lines along Baesa,
Quezon City. Attached to the letter was a list of establishments affected which included plaintiffs
Leoncio and Matilde Ramoy. In due time, the electric service connection of the plaintiffs [herein
respondents] was disconnected. Leoncio Ramoy objected by informing the Meralco foreman that his
property was outside the NPC, he was threatened and told not to interfere. After the electric power in
Ramoy's apartment was cut off and his lessees left the premises.

During the ocular inspection ordered by the Court and attended by the parties, it was found out that
the residence of spouses Leoncio and Matilde Ramoy was indeed outside the NPC property . The
RTC dismissed respondents' claim for moral damages, exemplary damages and attorney's fees.

Respondents then appealed to the CA and held MERALCO liable for moral and exemplary damages
and attorney's fees. MERALCO's motion for reconsideration of the Decision was denied. Now,
MERALCO filed a petition for Review on Certiorari on CA’s decision and argued that it admits6 that
respondents are its customers under a Service Contract whereby it is obliged to supply respondents
with electricity. Nevertheless, upon request of the NPC and upon the Decision of MTC, MERALCO
disconnected its power supply to respondents on the ground that they were illegally occupying the
NPC's right of way and was justified in cutting off service to respondents.

Issue:

Are respondents entitled to moral and exemplary damages and attorney's fees?

Ruling:
Yes, because according to Article 2220 of Civil Code. Willful injury to property may be a legal
ground for awarding moral damages if the court should find that, under the circumstances, such
damages are justly due. The same rule applies to breaches of contract where the defendant acted
fraudulently or in bad faith
 In order that moral damages may be awarded, there must be pleading and proof of moral
suffering, mental anguish, fright and the like. No other person could have proven such
damages except the respondent himself as they were extremely personal to him. Leoncio
Ramoy, the lone witness for respondents, was the only one who testified regarding the effects on
him of MERALCO's electric service disconnection. His co-respondents Matilde Ramoy, Rosemarie
Ramoy, Ofelia Durian and Cyrene Panado did not present any evidence of damages they suffered .
Thus, only respondent Leoncio Ramoy, who testified as to his wounded feelings, may be awarded
moral damages

With regard to exemplary damages, Article 2232 of the Civil Code provides that in contracts and
quasi-contracts, the court may award exemplary damages if the defendant, in this case MERALCO,
acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner, while Article 2233 of the
same Code provides that such damages cannot be recovered as a matter of right and the
adjudication of the same is within the discretion of the court.

The Court finds that MERALCO fell short of exercising the due diligence required, but its
actions cannot be considered wanton, fraudulent, reckless, oppressive or malevolent

Article 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other than
judicial costs, cannot be recovered, except:

(1) When exemplary damages are awarded;

(2) When the defendant’s act or omission has compelled the plaintiff to litigate with third
persons or to incur expenses to protect his interest;

(3) In criminal cases of malicious prosecution against the plaintiff;

(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;

(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiff’s plainly valid, just and demandable claim;

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;

(8) In actions for indemnity under workmen’s compensation and employer’s liability laws;

(9) In a separate civil action to recover civil liability arising from a crime;

(10) When at least double judicial costs are awarded;

(11) In any other case where the court deems it just and equitable that attorney’s fees and
expenses of litigation should be recovered.

Since the Court does not deem it proper to award exemplary damages in this case, then the CA's
award for attorney's fees should likewise be deleted
FAUSTINO CRUZ, plaintiff-appellant,
vs.
J. M. TUASON & COMPANY, INC., and GREGORIO ARANETA, INC., defendants-appellees.
Doctrine:

ART. 1456 of Civil Code. If property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person
from whom the property comes.

Adille vs. CA
GR No. L-44546 January 29,1988
Sarmiento, J.

Facts:
T]he land in question Lot 14694 of Cadastral Survey of Albay located in Legaspi City was
originally belonged to one Felisa Alzul as her own private property. Felisa sold the property in pacto
de retro to certain 3rd persons, period of repurchase being 3 years, but she died in 1942 without
being able to redeem and after her death, but during the period of redemption, herein defendant
repurchased, by himself alone, and after that, he executed a deed of extra-judicial partition
representing himself to be the only heir and child of his mother Felisa.

Petitioner’s half-brothers and sisters, herein plaintiffs, filed present case for partition with
accounting on the position that he was only a trustee on an implied trust when he redeemed,-and
this is the evidence, but as it also turned out that one of plaintiffs, Emeteria Asejo was occupying a
portion, defendant counterclaimed for her to vacate that.

Trial Judge sustained defendant in his position that he was and became absolute owner, he
was not a trustee, and therefore, dismissed case and also condemned plaintiff occupant, Emeteria to
vacate.

Issue:

Whether the defendant in this case was only a trustee and not the owner of subject land

Ruling:

Yes, the defendant was only a trustee.

The Civil Code states in ART. 1456. If property is acquired through mistake or fraud, the
person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the
person from whom the property comes.

We agree with the respondent Court of Appeals that fraud attended the registration of the property.
The petitioner's pretension that he was the sole heir to the land .

It, he had constituted the petitioner as negotiorum gestor under Article 2144 of the Civil Code, as the
petitioner having asserted claims of exclusive ownership over the property and having acted in fraud
of his co-heirs.
Doctrine:

Art. 2154 of the New Civil Code which provides that: If something received when there is no
right to demand it, and it was unduly delivered through mistake, the obligation to return it arises

Andres vs. Manufacturers Hanover & Trust Corporation

GR No. 82670 September 15, 1989
CORTES, J.

Facts:

Petitioner, using the business name "Irene's Wearing Apparel," was engaged in the
manufacture of ladies garments, children's wear, men's apparel and linens for local and foreign
buyers. Among its foreign buyers was Facets Funwear, Inc. (FACETS).

FACETS instructed FNSB to transfer $10,000.00 to petitioner via Philippine National Bank.
FNSB instructed private respondent Manufacturers Hanover and Trust Corporation to effect the
above- mentioned transfer through its facilities and to charge the amount to the account of FNSB
with private respondent. Although private respondent was able to send a telex to PNB to pay
petitioner $10,000.00 through the Pilipinas Bank, where petitioner had an account, the payment was
not effected immediately because the payee designated in the telex was only "Wearing Apparel.

Upon query by PNB, private respondent sent PNB another telex dated August 27, 1980
stating that the payment was to be made to "Irene's Wearing Apparel." On August 28, 1980,
petitioner received the remittance of $10,000.00

Unaware that petitioner had already received the remittance, FACETS informed private
respondent about the delay and at the same time amended its instruction by asking it to effect the
payment through the Philippine Commercial and Industrial Bank (hereinafter referred to as PCIB)
instead of PNB. Accordingly, private respondent, which was also unaware that petitioner had already
received the remittance of $10,000.00 from PNB instructed the PCIB to pay $10,000.00 to petitioner.
Hence, on September 11, 1980, petitioner received a second $10,000.00 remittance.

Private respondent asked petitioner for the return of the second remittance of $10,000.00 but
the latter refused to pay. On May 12, 1982 a complaint was filed with the Regional Trial Court, in
favor of petitioner as defendant. The trial court ruled that Art. 2154 of the New Civil Code is not
applicable to the case because the second remittance was made not by mistake but by negligence
and petitioner was not unjustly enriched by virtue thereof.

Issue:

Whether or not the private respondent has the right to recover the second $10,000.00
remittance it had delivered to petitioner.

Ruling:

Yes, because according to Art. 2154 of the New Civil Code which provides that: If something
received when there is no right to demand it, and it was unduly delivered through mistake, the
obligation to return it arises. For this article to apply the following requisites must concur: "(1) that he
who paid was not under obligation to do so; and, (2) that payment was made by reason of an
essential mistake of fact
 In the written interrogatories sent to the First National State Bank of New Jersey through the
Consulate General of the Philippines in New York, Adelaide C. Schachel, the investigation and
reconciliation clerk in the said bank testified that a request to remit a payment for Facet Funwear Inc.
was made in August, 1980. The total amount which the First National State Bank of New Jersey
actually requested the plaintiff-appellant Manufacturers Hanover & Trust Corporation to remit to
Irene's Wearing Apparel was US $10,000.00. Only one remittance was requested by First National
State Bank of New Jersey as per instruction of Facets Funwear.

That there was a mistake in the second remittance of US $10,000.00 is borne out by the fact
that both remittances have the same reference invoice number which is 263 80 Plaintiff-appellant
made the second remittance on the wrong assumption that defendant-appellee did not receive the
first remittance of US $10,000.00.
Doctrine:

Article 2176 of the New Civil Code provides that "whoever by act or omission causes
damage to another, there being fault or negligence, is obliged to pay for the damage done.

Napocor vs. CA
GR No. 124378 March 8, 2005
Chico-Nazario, J.

Facts:

Office of the President of the Philippines issued Memorandum Order No. 398." Said decree
instructed the NPC to build the Agus Regulation Dam at the mouth of Agus River in Lanao del Sur,
at a normal maximum water level of Lake Lanao at 702 meters elevation.8 Pursuant thereto,
petitioner built and operated the said dam

Private respondents were owners of fishponds and were sited along the Lake Lanao shore.
Private respondents have spent substantial amounts to construct, maintain, and stock their
respective fishponds. Later, all the improvements were washed away when the water level of the
lake escalated and the subject lakeshore area was flooded. Private respondents blamed the
inundation on the Agus Regulation Dam built and operated by the NPC and theorized that NPC
failed to increase the outflow of water even as the water level of the lake rose due to the heavy rains.

Private respondents filed a complaint for damages before the RTC. They alleged that the
negligence and inexperience of NPC’s employees assigned to operate the Agus Regulation Dam
were the proximate causes of the damage caused to their properties and livelihood. They prayed for
damages corresponding to the cost of their lost fishes plus the value of their destroyed fishpond and
the expenses and the fishes thereof.

NPC denied the private respondents’ allegations, and tossed back the disputations that the
water level of Lake Lanao never went beyond 702 meters and NPC employees were never remiss in
the performance of their duties.

Issue:

Whether NPC committed negligence making them liable for damages towards washed away
properties of the respondent due to flood.

Ruling:

Yes because according to Article 2176 of the New Civil Code provides that "whoever by act
or omission causes damage to another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing contractual relation between the
parties, is called a quasi-delict." In crimes and quasi-delicts, the defendant shall be liable for all
damages, which are the natural and probable consequences of the act or omission complained of. It
is not necessary that such damages have been foreseen or could have reasonably been foreseen by
the defendant.30

In the case at bar, both the appellate court and the trial court uniformly found that it was such
negligence on the part of NPC which directly caused the damage to the fishponds of private
respondents. The degree of damages suffered by the latter remains unrebutted and there exists
adequate documentary evidence that the private respondents did have fishponds in their respective
locations and that these were inundated and damaged when the water level escalated in October
1986

Doctrine:

"ART. 1479 of Civil Code

 A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.

An accepted unilateral promise to buy or sell a determinate thing for a price certain is binding
upon the promisor if the promise is supported by a consideration distinct from the price."

Sanchez vs. Rigos

GR No. L-25494 June 14, 1972
Concepcion, C.J.

Facts:
The record shows that, on April 3, 1961, plaintiff Nicolas Sanchez and defendant Severina
Rigos executed an instrument entitled "Option to Purchase," whereby Mrs. Rigos "agreed, promised
and committed ... to sell" to Sanchez the sum of P1,510.00, a parcel of land situated in province of
Nueva Ecija, that within two (2) years from said date with the understanding that said option shall be
deemed "terminated and elapsed," if "Sanchez shall fail to exercise his right to buy the property"
within the stipulated period. Inasmuch as several tenders of payment of the sum of Pl,510.00, made
by Sanchez within said period, were rejected by Mrs. Rigos, on March 12, 1963, the former
deposited said amount with the Court of First Instance of Nueva Ecija and commenced against the
latter the present action, for specific performance and damages.

Defendants allege that the contract between the parties "is a unilateral promise to sell, and
the same being unsupported by any valuable consideration, by force of the New Civil Code, is null
and void. However, the lower court rendered judgment for Sanchez, ordering Mrs. Rigos to accept
the sum. Plaintiff alleges that, by virtue of the option under consideration, "defendant agreed and
committed to sell" and "the plaintiff agreed and committed to buy" the land.  Hence, plaintiff
1

maintains that the promise contained in the contract is "reciprocally demandable,

Appellee contends that, even granting that the "offer of option" is not supported by any
consideration, that option became binding on appellant when the appellee gave notice to it of its
acceptance, and that having accepted it within the period of option, the offer can no longer be
withdrawn and in any event such withdrawal is ineffective

Issue:

Whether Mr, Rigos’ agreed promise to sell the parcel land to Sanchez is a unilateral promse

Ruling:

Yes, because according to "ART. 1479 of Civil Code.

A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.

An accepted unilateral promise to buy or sell a determinate thing for a price certain is binding
upon the promisor if the promise is supported by a consideration distinct from the price."

"an accepted unilateral promise can only have a binding effect if supported by a
consideration which means that the option can still be withdrawn, even if accepted, if the same is not
supported by any consideration. It is not disputed that the option is without consideration.  It can
therefore be withdrawn notwithstanding the acceptance of it by appellee.
Doctrine:
 Under Article 1263 of the Civil Code, "[i]n an obligation to deliver a generic thing, the loss or
destruction of anything of the same kind does not extinguish the obligation."

Gaisano Cagayan Inc. vs. Insurance Company

GR No. 147839, June 8, 2006
Austria-Martine, J.

Facts:

Doctrine:
 According to Civil Code, those who in the performance of their obligation are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor thereof, are liable in
damages

Arrieta vs. NARIC

GR No. L-15645 January 31, 1964
Regala, J.

Facts:
Plaintiff-appellee participated in the public bidding called by the NARIC for the supply of
20,000 metric tons of Burmese rice. As her bid of $203.00 per metric ton was the lowest, she was
awarded the contract for the same. Accordingly, on July 1, 1952, plaintiff-appellee Paz P. Arrieta and
the appellant corporation entered into a Contract of Sale of Rice, under the terms of which the
former obligated herself to deliver to the latter 20,000 metric tons of Burmess Rice at $203.00 per
metric ton, CIF Manila. In turn, the defendant corporation committed itself to pay for the imported rice
"by means of an irrevocable, confirmed and assignable letter of credit in U.S. currency in favor of the
plaintiff-appellee and/or supplier in Burma, immediately

Defendant corporation, thru its general manager, took the first to open a letter of credit by
forwarding to the Philippine National Bank its Application for Commercial Letter Credit . Mrs. Paz P.
Arrieta thru counsel, advised the appellant corporation of the extreme necessity for the immediate
opening of the letter credit since she had by then made a tender to her supplier in Rangoon, Burma,
"equivalent to 5% of the F.O.B. price of 20,000 tons at $180.70 and in compliance with the
regulations in Rangoon this 5% will be confiscated if the required letter of credit is not received by
them before August 4, 1952.

Philippine National Bank informed the appellant corporation that its application, "for a letter of
credit has been approved with the condition that marginal cash deposit be paid and that drafts are to
be paid upon presentment. But as it turned out, however, the appellant corporation not in any
financial position to meet the condition

Consequently, the credit instrument applied for was opened only on September 8, 1952. As
a result of the delay, the allocation of appellee's supplier in Rangoon was cancelled and the 5%
deposit, amounting to 524,000 kyats or approximately P200,000.00 was forfeited.

On the foregoing, the appellee sent a letter to the appellant, demanding compensation for
the damages caused her.

Issue:

Whether NARIC is liable for damages upon failure to open immediately the letter of credit

Ruling:

Yes, because the Civil Code provides that, Those who in the performance of their
obligation are guilty of fraud, negligence, or delay, and those who in any manner contravene
the tenor thereof, are liable in damages.
 Under this provision, not only debtors guilty of fraud, negligence or default in the
performance of obligations a decreed liable; in general, every debtor who fails in performance of his
obligations is bound to indemnify for the losses and damages caused thereby.