ALCANAR, Bernalyn D.

Civil Law Review I

Case Digests No. 2

DOCTRINE: Human Relations; Under Article 2219 of the Civil Code, moral damages are recoverable for
acts referred to in Article 21 of the Civil Code. Article 21 of the Civil Code, in conjunction with Article 19 of
the Civil Code, is part of the cause of action known in this jurisdiction as "abuse of rights." The elements of
abuse of rights are: (a) there is a legal right or duty; (b) exercised in bad faith; and (c) for the sole intent of
prejudicing or injuring another.

Spouses Godfrey and Gerardina Serfino vs. Far East Bank; GR. No. 171845; October 10, 2012

FACTS:
Spouses Serfino instituted an action for collection of sum of money against the spouses Cortez. By way
of settlement, the spouses Serfino and the spouses Cortez executed a compromise agreement on
October 20, 1995, in which the spouses Cortez acknowledged their indebtedness to the spouses Serfino
in the amount of ₱ 108,245.71. To satisfy the debt, Magdalena bound herself "to pay in full the judgment
debt out of her retirement benefits[.]" Payment of the debt shall be made one (1) week after Magdalena
has received her retirement benefits from the Government Service Insurance System (GSIS). In case of
default, the debt may be executed against any of the properties of the spouses Cortez that is subject to
execution, upon motion of the spouses Serfino. After finding that the compromise agreement was not
contrary to law, morals, good custom, public order or public policy, the RTC approved the entirety of the
parties’ agreement and issued a compromise judgment based thereon. The debt was later reduced to ₱
155,000.00 from ₱ 197,000.00 (including interest), with the promise that the spouses Cortez would pay
in full the judgment debt not later than April 23, 1996.

No payment was made as promised. Instead, Godfrey discovered that Magdalena deposited her
retirement benefits in the savings account of her daughter-in-law, Grace Cortez, with the respondent, Far
East Bank and Trust Company, Inc. (FEBTC). As of April 23, 1996, Grace’s savings account with FEBTC
amounted to ₱ 245,830.37, the entire deposit coming from Magdalena’s retirement benefits. That same
day, the spouses Serfino’s counsel sent two letters to FEBTC informing the bank that the deposit
in Grace’s name was owned by the spouses Serfino by virtue of an assignment made in their favor
by the spouses Cortez. The letter requested FEBTC to prevent the delivery of the deposit to either Grace
or the spouses Cortez until its actual ownership has been resolved in court.

On April 25, 1996, the spouses Serfino instituted Civil Case No. 95- 9344 against the spouses Cortez,
Grace and her husband, Dante Cortez, and FEBTC for the recovery of money on deposit and the
payment of damages, with a prayer for preliminary attachment.

On April 26, 1996, Grace withdrew ₱ 150,000.00 from her savings account with FEBTC. On the same
day, the spouses Serfino sent another letter to FEBTC informing it of the pending action; attached to the
letter was a copy of the complaint filed as Civil Case No. 95-9344.
During the pendency of Civil Case No. 95-9344, the spouses Cortez manifested that they were turning
over the balance of the deposit in FEBTC (amounting to ₱ 54,534.00) to the spouses Serfino as partial
payment of their obligation under the compromise judgment. The RTC issued an order dated July 30,
1997, authorizing FEBTC to turn over the balance of the deposit to the spouses Serfino.

On February 23, 2006, the RTC issued the assailed decision (a) finding the spouses Cortez, Grace and
Dante liable for fraudulently diverting the amount due the spouses Serfino, but (b) absolving FEBTC
from any liability for allowing Grace to withdraw the deposit. The RTC declared that FEBTC was not
a party to the compromise judgment; FEBTC was thus not chargeable with notice of the parties’
agreement, as there was no valid court order or processes requiring it to withhold payment of the deposit.
Given the nature of bank deposits, FEBTC was primarily bound by its contract of loan with Grace. There
was, therefore, no legal justification for the bank to refuse payment of the account, notwithstanding the
claim of the spouses Serfino as stated in their three letters.

The spouses Serfino appealed the RTC’s ruling absolving FEBTC from liability for allowing the withdrawal
of the deposit. They allege that the RTC cited no legal basis for declaring that only a court order or process
can justify the withholding of the deposit in Grace’s name. Since FEBTC was informed of their adverse
claim after they sent three letters.

Aside from the three letters, FEBTC should be deemed bound by the compromise judgment, since Article
1625 of the Civil Code states that an assignment of credit binds third persons if it appears in a public
instrument. They conclude that FEBTC, having been notified of their adverse claim, should not have
allowed Grace to withdraw the deposit.

By allowing Grace to withdraw the deposit that is due them under the compromise judgment, the spouses
Serfino claim that FEBTC committed an actionable wrong that entitles them to the payment of actual and
moral damages.

ISSUE:
Whether or not the claim for moral damages is meritorious.

HELD:
The claim for moral damages is not meritorious because no duty exists on the part of the bank to protect
interest of third person claiming deposit in the name of another.

Under Article 2219 of the Civil Code, moral damages are recoverable for acts referred to in Article 21 of
the Civil Code. Article 21 of the Civil Code, in conjunction with Article 19 of the Civil Code, is part of the
cause of action known in this jurisdiction as "abuse of rights." The elements of abuse of rights are: ( a)
there is a legal right or duty; (b) exercised in bad faith; and (c) for the sole intent of prejudicing or injuring
another.
The spouses Serfino invoke American common law that imposes a duty upon a bank receiving a notice
of adverse claim to the fund in a depositor’s account to freeze the account for a reasonable length of time,
sufficient to allow the adverse claimant to institute legal proceedings to enforce his right to the fund. In
other words, the bank has a duty not to release the deposits unreasonably early after a third party makes
known his adverse claim to the bank deposit. Acknowledging that no such duty is imposed by law in this
jurisdiction, the spouses Serfino ask the Court to adopt this foreign rule.

To adopt the foreign rule, however, goes beyond the power of this Court to promulgate rules governing
pleading, practice and procedure in all courts. The rule reflects a matter of policy that is better addressed
by the other branches of government, particularly, the Bangko Sentral ng Pilipinas, which is the agency
that supervises the operations and activities of banks, and which has the power to issue "rules of conduct
or the establishment of standards of operation for uniform application to all institutions or functions
covered[.]" To adopt this rule will have significant implications on the banking industry and practices, as
the American experience has shown. Recognizing that the rule imposing duty on banks to freeze the
deposit upon notice of adverse claim adopts a policy adverse to the bank and its functions, and opens it
to liability to both the depositor and the adverse claimant, many American states have since adopted
adverse claim statutes that shifted or, at least, equalized the burden. Essentially, these statutes do not
impose a duty on banks to freeze the deposit upon a mere notice of adverse claim; they first require either
a court order or an indemnity bond.

In the absence of a law or a rule binding on the Court, it has no option but to uphold the existing policy
that recognizes the fiduciary nature of banking. It likewise rejects the adoption of a judicially-imposed rule
giving third parties with unverified claims against the deposit of another a better right over the deposit. As
current laws provide, the bank’s contractual relations are with its depositor, not with the third party; "a
bank is under obligation to treat the accounts of its depositors with meticulous care and always to have
in mind the fiduciary nature of its relationship with them." In the absence of any positive duty of the bank
to an adverse claimant, there could be no breach that entitles the latter to moral damages.
DOCTRINE: Human Relations; Under the abuse of right principle found in Article 19 of the Civil Code, a
person must, in the exercise of his legal right or duty, act in good faith. He would be liable if he instead acts
in bad faith, with intent to prejudice another. Complementing this principle are Articles 20 and 21 of the Civil
Code which grant the latter indemnity for the injury he suffers because of such abuse of right or duty.

Titus B. Villanueva vs. Emma M. Rosqueta; GR. No. 180764; January 19, 2010

FACTS:
Respondent Rosqueta, formerly Deputy Commissioner of the Revenue Collection and Monitoring Group of
the Bureau of Customs, tendered her courtesy resignation from that post on January 23, 2001, shortly after
President Gloria Macapagal-Arroyo assumed office. But five months later, on June 5, 2001, she withdrew her
resignation, claiming that she enjoyed security of tenure and that she had resigned against her will on orders
of her superior.
On July 13, 2001 President Arroyo appointed Gil Valera to respondent Rosqueta’s position. Challenging such
appointment, Rosqueta filed a petition for prohibition, quo warranto, and injunction against petitioner Titus B.
Villanueva (Villanueva), then Commissioner of Customs, the Secretary of Finance, and Valera with the
Regional Trial Court (RTC) of Manila. On August 27, 2001 the RTC issued a temporary restraining order
(TRO), enjoining Villanueva and the Finance Secretary from implementing Valera’s appointment. On August
28, 2001 the trial court superseded the TRO with a writ of preliminary injunction.
Petitioner Villanueva, Valera, and the Secretary of Finance challenged the injunction order before the Court
of Appeals (CA) in CA-G.R. SP 66070. On September 14, 2001 the CA issued its own TRO, enjoining the
implementation of the RTC’s injunction order. But the TRO lapsed after 60 days and the CA eventually
dismissed the petition before it.
On November 22, 2001, while the preliminary injunction in the quo warranto case was again in force,
petitioner Villanueva issued Customs Memorandum Order 40-2001, authorizing Valera to exercise the
powers and functions of the Deputy Commissioner.
On February 28, 2002 respondent Rosqueta filed a complaint for damages before the RTC of Quezon City
against petitioner Villanueva in Civil Case Q-02-46256, alleging that the latter maliciously excluded her from
the centennial anniversary memorabilia. Further, she claimed that he prevented her from performing her
duties as Deputy Commissioner, withheld her salaries, and refused to act on her leave applications. Thus,
she asked the RTC to award her ₱1,000,000.00 in moral damages, ₱500,000.00 in exemplary damages,
and ₱300,000.00 in attorney’s fees and costs of suit.
But the RTC dismissed respondent Rosqueta’s complaint, stating that petitioner Villanueva committed no
wrong and incurred no omission that entitled her to damages. The RTC found that Villanueva had validly and
legally replaced her as Deputy Commissioner seven months before the Bureau’s centennial anniversary.
But the CA reversed the RTC’s decision, holding instead that petitioner Villanueva’s refusal to comply with
the preliminary injunction order issued in the quo warranto case earned for Rosqueta the right to recover
moral damages from him.8 Citing the abuse of right principle, the RTC said that Villanueva acted maliciously
when he prevented Rosqueta from performing her duties, deprived her of salaries and leaves, and denied
her official recognition as Deputy Commissioner by excluding her from the centennial anniversary
memorabilia. Thus, the appellate court ordered Villanueva to pay ₱500,000.00 in moral damages,
₱200,000.00 in exemplary damages and ₱100,000.00 in attorney’s fees and litigation expenses. With the
denial of his motion for reconsideration, Villanueva filed this petition for review on certiorari under Rule 45.
ISSUE:
Whether or not the CA erred in holding petitioner Villanueva liable in damages to respondent Rosqueta for
ignoring the preliminary injunction order that the RTC issued in the quo warranto case, thus denying her of
the right to do her job as Deputy Commissioner of the Bureau and to be officially recognized as such public
officer.

HELD:
The CA correctly awarded moral damages to respondent Rosqueta. Such damages may be awarded when
the defendant’s transgression is the immediate cause of the plaintiff’s anguish in the cases specified in Article
2219 of the Civil Code.

Under the abuse of right principle found in Article 19 of the Civil Code, a person must, in the exercise of his
legal right or duty, act in good faith. He would be liable if he instead acts in bad faith, with intent to prejudice
another. Complementing this principle are Articles 20 and 21 of the Civil Code which grant the latter indemnity
for the injury he suffers because of such abuse of right or duty.

Here, respondent Rosqueta’s colleagues and friends testified that she suffered severe anxiety on account of
the speculation over her employment status. She had to endure being referred to as a "squatter" in her
workplace. She had to face inquiries from family and friends about her exclusion from the Bureau’s centennial
anniversary memorabilia. She did not have to endure all these affronts and the angst and depression they
produced had Villanueva abided in good faith by the court’s order in her favor. Clearly, she is entitled to moral
damages.

Petitioner Villanueva claims that he merely acted on advice of the Office of the Solicitor General (OSG) when
he allowed Valera to assume the office as Deputy Commissioner since respondent Rosqueta held the
position merely in a temporary capacity and since she lacked the Career Executive Service eligibility required
for the job.

But petitioner Villanueva cannot seek shelter in the alleged advice that the OSG gave him. Surely, a
government official of his rank must know that a preliminary injunction order issued by a court of law had to
be obeyed, especially since the question of Valera’s right to replace respondent Rosqueta had not yet been
properly resolved.

That petitioner Villanueva ignored the injunction shows bad faith and intent to spite Rosqueta who remained
in the eyes of the law the Deputy Commissioner. His exclusion of her from the centennial anniversary
memorabilia was not an honest mistake by any reckoning. Indeed, he withheld her salary and prevented her
from assuming the duties of the position. As the Court said in Amonoy v. Spouses Gutierrez, a party’s refusal
to abide by a court order enjoining him from doing an act, otherwise lawful, constitutes an abuse and an
unlawful exercise of right.
DOCTRINE: Human Relations; Where a man's promise to marry is in fact the proximate cause of the
acceptance of his love by a woman and his representation to fulfill that promise thereafter becomes the
proximate cause of the giving of herself unto him in a sexual congress, proof that he had, in reality, no
intention of marrying her and that the promise was only a subtle scheme or deceptive device to entice or
inveigle her to accept him and to obtain her consent to the sexual act, could justify the award of damages
pursuant to Article 21 not because of such promise to marry but because of the fraud and deceit behind it
and the willful injury to her honor and reputation which followed thereafter. It is essential, however, that such
injury should have been committed in a manner contrary to morals, good customs or public policy.

Gashem Shookat Baksh vs. Court of Appeals; GR. No. 97336; February 19, 1993

FACTS:
On 27 October 1987, private respondent, without the assistance of counsel, filed with the aforesaid trial court
a complaint for damages against the petitioner for the alleged violation of their agreement to get married. She
alleges in said complaint that: she is twenty-two (22) years old, single, Filipino and a pretty lass of good moral
character and reputation duly respected in her community; petitioner, on the other hand, is an Iranian citizen
residing at the Lozano Apartments, Guilig, Dagupan City, and is an exchange student taking a medical course
at the Lyceum Northwestern Colleges in Dagupan City; before 20 August 1987, the latter courted and
proposed to marry her; she accepted his love on the condition that they would get married; they therefore
agreed to get married after the end of the school semester, which was in October of that year; petitioner then
visited the private respondent's parents in Bañaga, Bugallon, Pangasinan to secure their approval to the
marriage; sometime in 20 August 1987, the petitioner forced her to live with him in the Lozano Apartments;
she was a virgin before she began living with him; a week before the filing of the complaint, petitioner's
attitude towards her started to change; he maltreated and threatened to kill her; as a result of such
maltreatment, she sustained injuries; during a confrontation with a representative of the barangay captain of
Guilig a day before the filing of the complaint, petitioner repudiated their marriage agreement and asked her
not to live with him anymore and; the petitioner is already married to someone living in Bacolod City. Private
respondent then prayed for judgment ordering the petitioner to pay her damages in the amount of not less
than P45,000.00, reimbursement for actual expenses amounting to P600.00, attorney's fees and costs, and
granting her such other relief and remedies as may be just and equitable.

After trial on the merits, the lower court, applying Article 21 of the Civil Code, rendered on 16 October 1989
a decision favoring the private respondent. The petitioner was thus ordered to pay the latter damages and
attorney's fees.

The decision is anchored on the trial court's findings and conclusions that (a) petitioner and private
respondent were lovers, (b) private respondent is not a woman of loose morals or questionable virtue who
readily submits to sexual advances, (c) petitioner, through machinations, deceit and false pretenses,
promised to marry private respondent, d) because of his persuasive promise to marry her, she allowed herself
to be deflowered by him, (e) by reason of that deceitful promise, private respondent and her parents — in
accordance with Filipino customs and traditions — made some preparations for the wedding that was to be
held at the end of October 1987 by looking for pigs and chickens, inviting friends and relatives and contracting
sponsors, (f) petitioner did not fulfill his promise to marry her and (g) such acts of the petitioner, who is a
foreigner and who has abused Philippine hospitality, have offended our sense of morality, good customs,
culture and traditions. The trial court gave full credit to the private respondent's testimony because, inter alia,
she would not have had the temerity and courage to come to court and expose her honor and reputation to
public scrutiny and ridicule if her claim was false.

Plaintiff's father, a tricycle driver, also claimed that after defendant had informed them of his desire to marry
Marilou, he already looked for sponsors for the wedding, started preparing for the reception by looking for
pigs and chickens, and even already invited many relatives and friends to the forthcoming wedding.

Petitioner appealed the trial court's decision to the respondent Court of Appeals which docketed the case as
CA-G.R. CV No. 24256. In his Brief, he contended that the trial court erred (a) in not dismissing the case for
lack of factual and legal basis and (b) in ordering him to pay moral damages, attorney's fees, litigation
expenses and costs.

On 18 February 1991, respondent Court promulgated the challenged decision affirming in toto the trial court's
ruling of 16 October 1989.

Unfazed by his second defeat, petitioner filed the instant petition on 26 March 1991.

ISSUE:
Whether or not Article 21 of the Civil Code applies to the case at bar.

HELD:
Yes, Article 21 of the Civil Code applies to the case at bar.

The existing rule is that a breach of promise to marry per se is not an actionable wrong. Congress deliberately
eliminated from the draft of the New Civil Code the provisions that would have made it so.

This notwithstanding, the said Code contains a provision, Article 21, which is designed to expand the concept
of torts or quasi-delict in this jurisdiction by granting adequate legal remedy for the untold number of moral
wrongs which is impossible for human foresight to specifically enumerate and punish in the statute books.

In the light of the laudable purpose of Article 21, We are of the opinion, and so hold, that where a man's
promise to marry is in fact the proximate cause of the acceptance of his love by a woman and his
representation to fulfill that promise thereafter becomes the proximate cause of the giving of herself unto him
in a sexual congress, proof that he had, in reality, no intention of marrying her and that the promise was only
a subtle scheme or deceptive device to entice or inveigle her to accept him and to obtain her consent to the
sexual act, could justify the award of damages pursuant to Article 21 not because of such promise to marry
but because of the fraud and deceit behind it and the willful injury to her honor and reputation which followed
thereafter. It is essential, however, that such injury should have been committed in a manner contrary to
morals, good customs or public policy.
In the instant case, respondent Court found that it was the petitioner's "fraudulent and deceptive protestations
of love for and promise to marry plaintiff that made her surrender her virtue and womanhood to him and to
live with him on the honest and sincere belief that he would keep said promise, and it was likewise these
fraud and deception on appellant's part that made plaintiff's parents agree to their daughter's living-in with
him preparatory to their supposed marriage." In short, the private respondent surrendered her virginity, the
cherished possession of every single Filipina, not because of lust but because of moral seduction — the kind
illustrated by the Code Commission in its example earlier adverted to. The petitioner could not be held liable
for criminal seduction punished under either Article 337 or Article 338 of the Revised Penal Code because
the private respondent was above eighteen (18) years of age at the time of the seduction.

Prior decisions of this Court clearly suggest that Article 21 may be applied in a breach of promise to marry
where the woman is a victim of moral seduction.
DOCTRINE: Human Relations; 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 principles of
justice, equity and good conscience." There is unjust enrichment under Art. 22 of the Civil Code when (1) a
person is 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, quasi-contract, crime, or quasi-delict. The
principle of unjust enrichment essentially contemplates payment when there is no duty to pay, and the person
who receives the payment has no right to receive it.

Landbank of the Philippines vs. Alfredo Ong; GR No. 190755; November 24, 2010

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 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, Evangeline’s
mother, under a Deed of Sale with Assumption of Mortgage.

Evangeline’s 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 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. Alfredo’s other counsel, Atty. Madrilejos,
subsequently talked to Land Bank’s 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, as Alfredo’s payment was not returned by Land Bank. Alfredo maintained that Land Bank’s foreclosure
without informing him 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 properties in his and his wife’s
name. He also claimed incurring expenses for attorney’s fees of Php 150,000, filing fee of Php 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.

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 loan. Alfredo’s 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 Alfredo’s 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 wife’s
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 not used as the basis for the
payment.

The RTC held that the contract approving the assumption of mortgage was not perfected as a result of the
credit investigation conducted on Alfredo.

The CA affirmed the RTC Decision. It held that Alfredo’s 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 Alfredo’s assumption of mortgage essentially
novated the agreement.

On January 5, 2010, the CA denied Land Bank’s motion for reconsideration for lack of merit.
ISSUE:
Whether or not the trial court erroneously applied the principle of equity and justice in ordering it to return the
PhP 750,000 paid by Alfredo.

HELD:
No, the trial court did not erroneously applied the principle of equity and justice in ordering it to return the
PhP 750,000 paid by Alfredo.
`
Land Bank is still liable for the return of the PhP 750,000 based on the principle of unjust enrichment.

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 principles of justice, equity and good
conscience." There is unjust enrichment under Art. 22 of the Civil Code when (1) a person is 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, quasi-contract, crime, or quasi-delict.20 The
principle of unjust enrichment essentially contemplates payment when there is no duty 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 good
faith." Land Bank, however, did not even bother to inform Alfredo that it was no longer approving his
assumption of the Spouses Sy’s mortgage. Yet it acknowledged his interest in the loan when the branch head
of the bank wrote to tell him that his daughter’s 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 accepting Alfredo’s 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 Alfredo’s application cannot be said to have been fair and proper.

As to the claim that the trial court erred in applying equity to Alfredo’s 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 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 Alfredo’s tender of Php 750,000.

The defense of good faith fails to convince given Land Bank’s 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 Sy’s 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 name.

Land Bank posits as a defense that it did not unduly enrich itself at Alfredo’s expense during the foreclosure
of the mortgaged properties, since it tendered its bid by subtracting Php 750,000 from the Spouses Sy’s
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 longer be posed on appeal. Land
Bank’s contention, thus, cannot be entertained at this point.
DOCTRINE: Human Relations; The concept of "unfair competition" under Article 28 is very much broader
than that covered by intellectual property laws. Under the present article, which follows the extended concept
of "unfair competition" in American jurisdictions, the term covers even cases of discovery of trade secrets of
a competitor, bribery of his employees, misrepresentation of all kinds, interference with the fulfillment of a
competitor’s contracts, or any malicious interference with the latter’s business.

Willaware Products Corporation vs. Jesichris Manufacturing Corp.; GR. No. 195549; September 3,
2014

FACTS:
Respondent Jesichris Manufacturing Company filed this present complaint for damages for unfair competition
with prayer for permanent injunction to enjoin petitioner Willaware Products Corporation from manufacturing
and distributing plastic-made automotive parts similar to those of respondent.

Respondent alleged that it is a duly registered partnership engaged in the manufacture and distribution of
plastic and metal products, with principal office at No. 100 Mithi Street, Sampalukan, Caloocan City. Since
its registration in 1992, respondent has been manufacturing in its Caloocan plant and distributing throughout
the Philippines plastic-made automotive parts. Petitioner, on the other hand, which is engaged in the
manufacture and distribution of kitchenware items made of plastic and metal has its office near that of
respondent. Respondent further alleged that in view of the physical proximity of petitioner’s office to
respondent’s office, and in view of the fact that some of the respondent’s employees had transferred to
petitioner, petitioner had developed familiarity with respondent’s products, especially its plastic-made
automotive parts.

That sometime in November 2000, respondent discovered that petitioner had been manufacturing and
distributing the same automotive parts with exactly similar design, same material and colors but was selling
these products at a lower price as [respondent’s] plastic-made automotive parts and to the same customers.

Respondent alleged that it had originated the use of plastic in place of rubber in the manufacture of
automotive under chassis parts such as spring eye bushing, stabilizer bushing, shock absorber bushing,
center bearing cushions, among others. Petitioner’s manufacture of the same automotive parts with plastic
material was taken from [respondent’s] idea of using plastic for automotive parts. Also, petitioner deliberately
copied respondent’s products all of which acts constitute unfair competition, is and are contrary to law,
morals, good customs and public policy and have caused respondent damages in terms of lost and unrealized
profits in the amount of TWO MILLION PESOS as of the date of respondent’s complaint.

Furthermore, petitioner’s tortuous conduct compelled respondent to institute this action and thereby to incur
expenses in the way of attorney’s fees and other litigation expenses in the amount of FIVE HUNDRED
THOUSAND PESOS (₱500,000.00).

After trial on the merits, the RTC ruled in favor of respondent. It ruled that petitioner clearly invaded the rights
or interest of respondent by deliberately copying and performing acts amounting to unfair competition. The
RTC further opined that under the circumstances, in order for respondent’s property rights to be preserved,
petitioner’s acts of manufacturing similar plastic-made automotive parts such as those of respondent’s and
the selling of the same products to respondent’s customers, which it cultivated over the years, will have to be
enjoined.

The CA affirmed with modification the ruling of the RTC.

Dissatisfied, petitioner moved for reconsideration. However, the same was denied for lack of merit by the CA
in a Resolution dated February 10, 2011.

ISSUE:
Whether or not petitioner committed acts amounting to unfair competition under Article 28 of the Civil Code.

HELD:
Article 28 of the Civil Code provides that "unfair competition in agricultural, commercial or industrial
enterprises or in labor through the use of force, intimidation, deceit, machination or any other unjust,
oppressive or high-handed method shall give rise to a right of action by the person who thereby suffers
damage."

From the foregoing, it is clear that what is being sought to be prevented is not competition per se but the use
of unjust, oppressive or high-handed methods which may deprive others of a fair chance to engage in
business or to earn a living. Plainly, what the law prohibits is unfair competition and not competition where
the means used are fair and legitimate.

In order to qualify the competition as "unfair," it must have two characteristics: (1) it must involve an injury to
a competitor or trade rival, and (2) it must involve acts which are characterized as "contrary to good
conscience," or "shocking to judicial sensibilities," or otherwise unlawful; in the language of our law, these
include force, intimidation, deceit, machination or any other unjust, oppressive or high-handed method. The
public injury or interest is a minor factor; the essence of the matter appears to be a private wrong perpetrated
by unconscionable means.

Here, both characteristics are present.

First, both parties are competitors or trade rivals, both being engaged in the manufacture of plastic-made
automotive parts. Second, the acts of the petitioner were clearly "contrary to good conscience" as petitioner
admitted having employed respondent’s former employees, deliberately copied respondent’s products and
even went to the extent of selling these products to respondent’s customers.

Another point we observe is that Yabut, who used to be a warehouse and delivery man of [respondent], was
fired because he was blamed of spying in favor of [petitioner]. Despite this accusation, he did not get angry.
Later on, he applied for and was hired by [petitioner] for the same position he occupied with [respondent].
These sequence of events relating to his employment by [petitioner] is suspect too like the situation with De
Guzman.
Thus, it is evident that petitioner is engaged in unfair competition as shown by his act of suddenly shifting his
business from manufacturing kitchenware to plastic-made automotive parts; his luring the employees of the
respondent to transfer to his employ and trying to discover the trade secrets of the respondent.

Moreover, when a person starts an opposing place of business, not for the sake of profit to himself, but
regardless of loss and for the sole purpose of driving his competitor out of business so that later on he can
take advantage of the effects of his malevolent purpose, he is guilty of wanton wrong. As aptly observed by
the courta quo, the testimony of petitioner’s witnesses indicate that it acted in bad faith in competing with the
business of respondent, to wit: Petitioner, thru its General Manager, William Salinas, Jr., admitted that it was
never engaged in the business of plastic-made automotive parts until recently, year 2000.
DOCTRINE: Human Relations; "The principle of unjust enrichment requires two conditions: (1) that a person
is benefited without a valid basis or justification, and (2) that such benefit is derived at the expense of
another."

Spouses Alejandro Manzanilla and Remedios Velasco vs. Waterfields Industries Corporation; GR.
No. 177484; July 18, 2014

FACTS:
The spouses Manzanilla are the owners of a 25,000-square meter parcel of land in Barangay San Miguel,
Sto. Tomas, Batangas, covered by Transfer of Certificate of Title No. T-35205. On May 24, 1994, they leased
a 6,000-square meter portion of the above-mentioned property to Waterfields, as represented by its President
Aliza R. Ma.

The parties executed on June 6, 1994 an Amendment to the Contract of Lease. Save for the commencement
of the lease which they reckoned on the date of the execution of the amendment and the undertaking of the
spouses Manzanilla to register the agreements, the parties agreed therein that all other terms and conditions
in the original Contract of Lease shall remain in full force and effect.

Beginning April 1997, however, Waterfields failed to pay the monthly rental. Hence, Ma sent the spouses
Manzanilla a letter dated July 7, 1997 wherein the former promised to pay the rentals in arrears by way of
check payment.

On July 30, 1998, the spouses Manzanilla filed before the MTC a Complaint for Ejectment against
Waterfields. They alleged in paragraph 4 thereof that they entered into a Contract of Lease with Waterfields
on May 24, 1994, and in paragraph 5, that the same was amended on June 6, 1994 and July 9, 1997.
However, Waterfields had committed violations of the lease agreement by not paying the rentals on time.
And in yet another violation, it failed to pay the ₱18,000.00 monthly rental for the past six months prior to the
filing of the Complaint, that is, from December 1997 to May 1998 or in the total amount of ₱108,000.00.
Demands upon Waterfields to pay the accrued rentals and vacate the property were unheededso the spouses
Manzanilla considered the contract terminated and/or rescinded. And since Waterfields still failed to comply
with their final demand to pay and vacate, the spouses filed the Complaint and prayed therein that the former
be ordered to (1) vacate the subject property and, (2) pay the accrued rentals of ₱108,000.00 as of May
1998, the succeeding rentals of ₱18,000.00 a month until the property is vacated, the interest due thereon,
attorney’s fees, and cost of suit.

In its Decision, the MTC found Ma’s letter of July 9, 1997 to have amended the Contract of Lease. In
particular, Section 4 of the Contract of Lease which provides that the rental deposit shall answer for any
unpaid rentals, damages, penalties and unpaid utility charges was superseded by the portion in Ma’s July 9,
1997 letter which states that "the deposit stipulated in our lease contract shall be used exclusively for the
payment of unpaid utilities, if any, and other incidental expenses only and applied at the termination of the
lease". Hence, the MTC found no merit in Waterfield’s claim that it did not fail or refuse to pay the monthly
rentals as it was applying the rental deposit to its payment of the same. Consequently, the MTC declared
that Waterfields violated the lease agreement due to non-payment of rentals.
Before the RTC, Waterfields questioned the MTC’s ruling that Ma’s letter of July 9, 1997 effectively amended
the Contract of Lease. It argued that the said letter is unenforceable under the Statute of Frauds since the
same was merely in the handwriting of Ma, unsubscribed by both parties, and unacknowledged before a
notary public. Hence, the rental deposit should have been applied as payment for monthly rentals pursuant
to the original Contract of Lease.

The RTC, however, was unimpressed. It noted in its Decision dated July 14, 2000 that in its Answer,
Waterfields admitted paragraph 5 of the Complaint which states that the Contract of Lease was amended on
June 6, 1994 and July 9, 1997. Further, the very existence of Ma’s July 9, 1997 letter negated the applicability
of the Statute of Frauds. The RTC thus affirmed the judgment of the trial court in toto.

The CA, however, had a different take. In its Decision, it gave weight to the spouses Manzanilla’s allegation
that they terminated the Contract of Lease. Upon such termination, it held that the rental deposit should have
been applied as payment for unpaid utilities and other incidental expenses, if any.

The CA thereafter concluded that the spouses Manzanilla have no cause of action against Waterfields,
thereby reversing the decision of the MeTC as affirmed by the RTC.

The spouses Manzanilla filed a Motion for Reconsideration, which was denied by the CA in a Resolution
dated April 12, 2007. Hence, this Petition for Review on Certiorari.

ISSUE:
Whether or not sustaining the trial courts’ ruling would amount to unjust enrichment since it would be
constrained to hand over to the spouses Manzanilla, even before the expiration of the lease, the subject
premises for which it had already spent substantial amounts in terms of improvements.

HELD:
No, sustaining the trial courts’ ruling would not amount to unjust enrichment.

The principle of unjust enrichment requires two conditions: (1) that a person is benefited without a valid basis
or justification,and (2) that such benefit is derived at the expense of another. It does not, however, apply in
this case since any benefit that the spouses Manzanilla may obtain from the subject premises cannot be said
to be without any valid basis or justification. It is well to remind Waterfields that they violated the contract of
lease and that they failed to vacate the premises upon demand. Hence, the spouses Manzanilla are justified
in recovering the physical possession thereof and consequently, in making use of the property. Besides, in
violating the lease by failing to pay the rent, Waterfields took the risk of losing the improvements it introduced
thereon in favor of the spouses Manzanilla. This is because despite the fact that the lease contract provides
that in case of termination of the lease agreement all permanent improvements and structures found in the
subject premises shall belong to the lessors, it still violated the lease.

All told, the Court sustains the RTC in affirming the MTC's grant of the spouses Manzanilla's Complaint for
ejectment against Waterfields.
DOCTRINE: Human Relations; Although the act is not illegal, liability for damages may arise should there
be an abuse of rights, like when the act is performed without prudence or in bad faith. In order for that liability
to attach under the concept of abuse of rights, the following elements must be present, to wit: (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. There is no hard and fast rule that can be applied to ascertain whether or not the principle of abuse
of rights is to be invoked. The resolution of the issue depends on the circumstances of each case.

Raul Sesbreno vs. Court of Appeals; GR. No. 160689; March 26, 2014

FACTS:
At the time material to the petition, VECO was a public utility corporation organized and existing under the
laws of the Philippines. VECO engaged in the sale and distribution of electricity within Metropolitan Cebu.
Sesbreño was one of VECO’s customers under the metered service contract they had entered into on March
2, 1982. Respondent Vicente E. Garcia was VECO’s President, General Manager and Chairman of its Board
of Directors. Respondent Jose E. Garcia was VECO’s Vice-President, Treasurer and a Member of its Board
of Directors. Respondent Angelita Lhuillier was another Member of VECO’s Board of Directors. Respondent
Juan Coromina was VECO’s Assistant Treasurer, while respondent Norberto Abellana was the Head of
VECO’s Billing Section whose main function was to compute back billings of customers found to have violated
their contracts.

To ensure that its electric meters were properly functioning, and that none of it meters had been tampered
with, VECO employed respondents Engr. Felipe Constantino and Ronald Arcilla as violation of contract
(VOC) inspectors. Respondent Sgt. Demetrio Balicha, who belonged to the 341st Constabulary Company,
Cebu Metropolitan Command, Camp Sotero Cabahug, Cebu City, accompanied and escorted the VOC
inspectors during their inspection of the households of its customers on May 11, 1989 pursuant to a mission
order issued to him.

It all has to do with an incident that occurred at around 4:00 o’clock in the afternoon of May 11, 1989. On that
day, the Violation of Contracts (VOC) Team of defendants-appellees Constantino and Arcilla and their PC
escort, Balicha, conducted a routine inspection of the houses at La Paloma Village, Labangon, Cebu City,
including that of plaintiff-appellant Sesbreño, for illegal connections, meter tampering, seals, conduit pipes,
jumpers, wiring connections, and meter installations. After Bebe Baledio, plaintiff-appellant Sesbreño’s maid,
unlocked the gate, they inspected the electric meter and found that it had been turned upside down.
Defendant-appellant Arcilla took photographs of the upturned electric meter. With Chuchie Garcia, Peter
Sesbreño and one of the maids present, they removed said meter and replaced it with a new one. At that
time, plaintiff-appellant Sesbreño was in his office and no one called to inform him of the inspection. The
VOC Team then asked for and received Chuchie Garcia’s permission to enter the house itself to examine
the kind and number of appliances and light fixtures in the household and determine its electrical load.
Afterwards, Chuchie Garcia signed the Inspection Division Report, which showed the condition of the electric
meter on May 11, 1989 when the VOC Team inspected it, with notice that it would be subjected to a laboratory
test. She also signed a Load Survey Sheet that showed the electrical load of plaintiff-appellant Sesbreño.
But according to plaintiff-appellant Sesbreño there was nothing routine or proper at all with what the VOC
Team did on May 11, 1989 in his house. Their entry to his house and the surrounding premises was effected
without his permission and over the objections of his maids. They threatened, forced or coerced their way
into his house. They unscrewed the electric meter, turned it upside down and took photographs thereof. They
then replaced it with a new electric meter. They searched the house and its rooms without his permission or
a search warrant. They forced a visitor to sign two documents, making her appear to be his representative
or agent. Afterwards, he found that some of his personal effects were missing, apparently stolen by the VOC
Team when they searched the house.

On August 19, 1994, the RTC rendered judgment dismissing the complaint. Sesbreño appealed, but the CA
affirmed the RTC on March 10, 2003.

Upon denial of his motion for reconsideration, Sesbreño appealed.

ISSUE:
Was Sesbreño entitled to recover damages for abuse of rights?

HELD:
Clearly, Sesbreño did not establish his claim for damages if the respondents were not guilty of abuse of
rights. To stress, the concept of abuse of rights prescribes that a person should not use his right unjustly or
in bad faith; otherwise, he may be liable to another who suffers injury. The rationale for the concept is to
present some basic principles to be followed for the rightful relationship between human beings and the
stability of social order. Moreover, according to a commentator, "the exercise of right ends when the right
disappears, and it disappears when it is abused, especially to the prejudice of others[;] [i]t cannot be said that
a person exercises a right when he unnecessarily prejudices another." Article 19 of the Civil Code sets the
standards to be observed in the exercise of one’s rights and in the performance of one’s duties, namely: (a)
to act with justice; (b) to give everyone his due; and (c) to observe honesty and good faith. The law thereby
recognizes the primordial limitation on all rights – that in the exercise of the rights, the standards under Article
19 must be observed.

Although the act is not illegal, liability for damages may arise should there be an abuse of rights, like when
the act is performed without prudence or in bad faith. In order that liability may attach under the concept of
abuse of rights, the following elements must be present, to wit: (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. There is no hard
and fast rule that can be applied to ascertain whether or not the principle of abuse of rights is to be invoked.
The resolution of the issue depends on the circumstances of each case.
DOCTRINE: Human Relations; The principle of unjust enrichment has two conditions. First, a person must
have been benefited without a real or valid basis or justification. Second, the benefit was derived at another
person’s expense or damage.

Carlos A. Loria vs. Ludolfo P. Muñoz; GR. No. 187240, October 15, 2014

FACTS:
Ludolfo P. Muñoz, Jr. (Muñoz) filed a complaint for sum of money and damages with an application for
issuance of a writ of preliminary attachment against Carlos A. Loria with the Regional Trial Court of Legazpi
City.

In his complaint, Muñoz alleged that he has been engaged in construction under the name, "Ludolfo P.
Muñoz, Jr. Construction." In August 2000, Loria visited Muñoz in his office in Doña Maria Subdivision in
Daraga, Albay. He invited Muñoz to advance ₱2,000,000.00 for a subcontract of a ₱50,000,000.00 river-
dredging project in Guinobatan.

Loria represented that he would make arrangements such that Elizaldy Co, owner of Sunwest Construction
and Development Corporation, would turn out to be the lowest bidder for the project. Elizaldy Co would pay
₱8,000,000.00 to ensure the project’s award to Sunwest. After the award to Sunwest, Sunwest would
subcontract 20% or ₱10,000,000.00 worth of the project to Muñoz.

On October 2, 2000, Muñoz requested Allied Bank to release ₱3,000,000.00 from his joint account withhis
business partner, Christopher Co, to a certain Grace delos Santos. Loria then obtained the money from delos
Santos.

Four days later, ₱1,800,000.00 of the ₱3,000,000.00 was returned to Muñoz.

On January 10, 2001, Loria collected Muñoz’s ₱800,000.00 balance. After deducting Loria’s personal loans
from Muñoz, Muñoz issued a check to Loria for ₱481,800.00. Loria acknowledged receiving this amount from
Muñoz.

The project to dredge the Masarawag and San Francisco Rivers in Guinobatan was subjected to public
bidding. The project was awarded to the lowest bidder, Sunwest Construction and Development Corporation.

Sunwest allegedly finished dredging the Masarawag and San Francisco Rivers without subcontracting
Muñoz. With the project allegedly finished, Muñozdemanded Loria to return his ₱2,000,000.00. Loria,
however, did not return the money.

The trial court ordered Loria to return the ₱2,000,000.00 toMuñoz as actual damages with 12% interest from
the filing of the complaint until the amount’s full payment. The trial court likewise ordered Loria to pay Muñoz
₱100,000.00 in attorney’s fees, ₱25,000.00 in litigation expenses, and ₱25,000.00 in exemplary damages
with costs against Loria.
Loria appealed to the Court of Appeals, arguing that Muñoz failed to establish his receipt of the
₱2,000,000.00. The CA affirmed the trial court’s decision but deleted the award of exemplary damages and
attorney’s fees. The appellate court likewise denied Loria’s motion for reconsideration in the resolution33
dated March 12, 2009.

In the resolution dated June 3, 2009, this court ordered Muñoz to comment on Loria’s petition. This court
denied the joint motion for lack of merit in the resolution dated December 15, 2010.

ISSUE:
Whether or not Loria should return Munoz’s ₱2,000,000.00 under the principle of unjust enrichment.

HELD:
Loria must return Munoz’s ₱2,000,000.00 under the principle of unjust enrichment

Under Article 22 of the Civil Codeof the Philippines, "every person who through an act of performance by
another, or any other means, acquires or comes into possession of something at the expense of the latter
without just or legal ground, shall return the same to him." There is unjust enrichment "when a person unjustly
retains a benefit to the loss of another, or when a person retains money orproperty of another against the
fundamental principles of justice, equity and good conscience."

The principle of unjust enrichment has two conditions. First, a person must have been benefited without a
real or valid basis or justification. Second, the benefit was derived at another person’s expense or damage.

In this case, Loria received ₱2,000,000.00 from Muñoz for a subcontract of a government projectto dredge
the Masarawag and San Francisco Rivers in Guinobatan, Albay. However, contrary to the parties’ agreement,
Muñoz was not subcontracted for the project. Nevertheless, Loria retained the ₱2,000,000.00.

Thus, Loria was unjustly enriched. He retained Muñoz’s money without valid basis or justification. Under
Article 22 of the Civil Code of the Philippines, Loria must return the ₱2,000,000.00 to Muñoz.
DOCTRINE: Human Relations; To substantiate a claim for unjust enrichment, the claimant must
unequivocally prove that another party knowingly received something of value to which he was not entitled
and that the state of affairs are such that it would be unjust for the person to keep the benefit. Unjust
enrichment is a term used to depict result or effect of failure to make remuneration of or for property or
benefits received under circumstances that give rise to legal or equitable obligation to account for them; to
be entitled to remuneration, one must confer benefit by mistake, fraud, coercion, or request. Unjust
enrichment is not itself a theory of reconvey. Rather, it is a prerequisite for the enforcement of the doctrine of
restitution.

University of the Philippines vs. Philab Industries Inc.; GR. No. 152411; September 29, 2004

FACTS:

ISSUE:
Sometime in 1979, the University of the Philippines (UP) decided to construct an integrated system of
research organization known as the Research Complex. As part of the project, laboratory equipment and
furniture were purchased for the National Institute of Biotechnology and Applied Microbiology (BIOTECH) at
the UP Los Baños. Providentially, the Ferdinand E. Marcos Foundation (FEMF) came forward and agreed to
fund the acquisition of the laboratory furniture, including the fabrication thereof.

Renato E. Lirio, the Executive Assistant of the FEMF, gave the go-signal to BIOTECH to contact a corporation
to accomplish the project. On July 23, 1982, Dr. William Padolina, the Executive Deputy Director of BIOTECH,
arranged for Philippine Laboratory Industries, Inc. (PHILAB), to fabricate the laboratory furniture and deliver
the same to BIOTECH for the BIOTECH Building Project, for the account of the FEMF. Lirio directed Padolina
to give the go-signal to PHILAB to proceed with the fabrication of the laboratory furniture, and requested
Padolina to forward the contract of the project to FEMF for its approval.

In a Letter dated July 23, 1982, Padolina informed Hector Navasero, the President of PHILAB, to proceed
with the fabrication of the laboratory furniture, per the directive of FEMF Executive Assistant Lirio. Padolina
also requested for copies of the shop drawings and a sample contract5 for the project, and that such contract
and drawings had to be finalized before the down payment could be remitted to the PHILAB the following
week. However, PHILAB failed to forward any sample contract.

Subsequently, PHILAB made partial deliveries of office and laboratory furniture to BIOTECH after having
been duly inspected by their representatives and FEMF Executive Assistant Lirio.

On August 24, 1982, FEMF remitted ₱600,000 to PHILAB as downpayment for the laboratory furniture for
the BIOTECH project, for which PHILAB issued Official Receipt No. 253 to FEMF. On October 22, 1982,
FEMF made another partial payment of ₱800,000 to PHILAB, for which the latter issued Official Receipt No.
256 to FEMF. The remittances were in the form of checks drawn by FEMF and delivered to PHILAB, through
Padolina.
On October 16, 1982, UP, through Emil Q. Javier, the Chancellor of UP Los Baños and FEMF, represented
by its Executive Officer, Rolando Gapud, executed a Memorandum of Agreement (MOA) in which FEMF
agreed to grant financial support and donate sums of money to UP for the construction of buildings,
installation of laboratory and other capitalization for the project, not to exceed ₱29,000,000.00.

In the meantime, Navasero promised to submit the contract for the installation of laboratory furniture to
BIOTECH, by January 12, 1983. However, Navasero failed to do so. In a Letter dated February 1, 1983,
BIOTECH reminded Navasero of the need to submit the contract so that it could be submitted to FEMF for
its evaluation and approval.8 Instead of submitting the said contract, PHILAB submitted to BIOTECH an
accomplishment report on the project as of February 28, 1983, and requested payment thereon.9 By May
1983, PHILAB had completed 78% of the project, amounting to ₱2,288,573.74 out of the total cost of
₱2,934,068.90. The FEMF had already paid forty percent (40%) of the total cost of the project. On May 12,
1983, Padolina wrote Lirio and furnished him the progress billing from PHILAB.10 On August 11, 1983, the
FEMF made another partial payment of ₱836,119.52 representing the already delivered laboratory and office
furniture after the requisite inspection and verification thereof by representatives from the BIOTECH, FEMF,
and PHILAB. The payment was made in the form of a check, for which PHILAB issued Official Receipt No.
202 to FEMF through Padolina.

On July 1, 1984, PHILAB submitted to BIOTECH Invoice No. 01643 in the amount of ₱702,939.40 for the
final payment of laboratory furniture. Representatives from BIOTECH, PHILAB, and Lirio for the FEMF,
conducted a verification of the accomplishment of the work and confirmed the same.

President Marcos was ousted from office during the February 1986 EDSA Revolution. On March 26, 1986,
Navasero wrote BIOTECH requesting for its much-needed assistance for the payment of the balance already
due plus interest of ₱295,234.55 for its fabrication and supply of laboratory furniture.

On April 22, 1986, PHILAB wrote President Corazon C. Aquino asking her help to secure the payment of the
amount due from the FEMF. The letter was referred to then Budget Minister Alberto Romulo, who referred
the letter to then UP President Edgardo Angara on June 9, 1986. On September 30, 1986, Raul P. de
Guzman, the Chancellor of UP Los Baños, wrote then Chairman of the Presidential Commission on Good
Government (PCGG) Jovito Salonga, submitting PHILAB’s claim to be officially entered as "accounts
payable" as soon as the assets of FEMF were liquidated by the PCGG.

In the meantime, the PCGG wrote UP requesting for a copy of the relevant contract and the MOA for its
perusal.

Chancellor De Guzman wrote Navasero requesting for a copy of the contract executed between PHILAB and
FEMF. In a Letter dated October 20, 1987, Navasero informed De Guzman that PHILAB and FEMF did not
execute any contract regarding the fabrication and delivery of laboratory furniture to BIOTECH.

Exasperated, PHILAB filed a complaint for sum of money and damages against UP.
In its answer, UP denied liability and alleged that PHILAB had no cause of action against it because it was
merely the donee/beneficiary of the laboratory furniture in the BIOTECH; and that the FEMF, which funded
the project, was liable to the PHILAB for the purchase price of the laboratory furniture. UP specifically denied
obliging itself to pay for the laboratory furniture supplied by PHILAB.

After due proceedings, the trial court rendered judgment dismissing the complaint without prejudice to
PHILAB’s recourse against the FEMF.

Undaunted, PHILAB appealed to the Court of Appeals (CA). The CA reversed and set aside the decision of
the RTC and held that there was never a contract between FEMF and PHILAB. Consequently, PHILAB could
not be bound by the MOA between the FEMF and UP since it was never a party thereto. The appellate court
ruled that, although UP did not bind itself to pay for the laboratory furniture; nevertheless, it is liable to PHILAB
under the maxim: "No one should unjustly enrich himself at the expense of another."

ISSUE:
Did the CA err applying the principle legal unjust enrichment when it held the university, and not Marcos
Foundation, is liable to PHILAB?

HELD:
Yes, the CA err applying the principle legal unjust enrichment when it held the university, and not Marcos
Foundation, is liable to PHILAB.

Unjust enrichment claims do not lie simply because one party benefits from the efforts or obligations of others,
but instead it must be shown that a party was unjustly enriched in the sense that the term unjustly could mean
illegally or unlawfully.

Moreover, to substantiate a claim for unjust enrichment, the claimant must unequivocally prove that another
party knowingly received something of value to which he was not entitled and that the state of affairs are
such that it would be unjust for the person to keep the benefit. Unjust enrichment is a term used to depict
result or effect of failure to make remuneration of or for property or benefits received under circumstances
that give rise to legal or equitable obligation to account for them; to be entitled to remuneration, one must
confer benefit by mistake, fraud, coercion, or request. Unjust enrichment is not itself a theory of reconvey.
Rather, it is a prerequisite for the enforcement of the doctrine of restitution.

In order that accion in rem verso may prosper, the essential elements must be present: (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, quasi-contract, crime or
quasi-delict.

An accion in rem verso is considered merely an auxiliary action, available only when there is no other remedy
on contract, quasi-contract, crime, and quasi-delict. If there is an obtainable action under any other institution
of positive law, that action must be resorted to, and the principle of accion in rem verso will not lie.44
The essential requisites for the application of Article 22 of the New Civil Code do not obtain in this case. The
respondent had a remedy against the FEMF via an action based on an implied-in-fact contract with the FEMF
for the payment of its claim. The petitioner legally acquired the laboratory furniture under the MOA with FEMF;
hence, it is entitled to keep the laboratory furniture.
DOCTRINE: Human Relations; A prejudicial question is one which arises in a case the resolution of which
is a logical antecedent of the issue involved therein. It is a question based on a fact distinct and separate
from the crime but so intimately connected with it that it determines the guilt or innocence of the accused. It
must appear not only that the civil case involves facts upon which the criminal action is based, but also that
the resolution of the issues raised in the civil action would necessarily be determinative of the criminal case.
Consequently, the defense must involve an issue similar or intimately related to the same issue raised in the
criminal action and its resolution determinative of whether or not the latter action may proceed. Its two
essential elements are:
(a) the civil action involves an issue similar or intimately related to the issue raised in the criminal
action; and
(b) the resolution of such issue determines whether or not the criminal action may proceed.

Imelda Marbella-Bobis vs. Isagani D. Bobis; GR No. 138509; July 31, 2000

FACTS:
On October 21, 1985, respondent contracted a first marriage with one Maria Dulce B. Javier. Without said
marriage having been annulled, nullified or terminated, the same respondent contracted a second marriage
with petitioner Imelda Marbella-Bobis on January 25, 1996 and allegedly a third marriage with a certain Julia
Sally Hernandez. Based on petitioner's complaint-affidavit, an information for bigamy was filed against
respondent on February 25, 1998, which was docketed as Criminal Case No. Q98-75611 of the Regional
Trial Court, Branch 226, Quezon City. Sometime thereafter, respondent initiated a civil action for the judicial
declaration of absolute nullity of his first marriage on the ground that it was celebrated without a marriage
license. Respondent then filed a motion to suspend the proceedings in the criminal case for bigamy invoking
the pending civil case for nullity of the first marriage as a prejudicial question to the criminal case. The trial
judge granted the motion to suspend the criminal case in an Order dated December 29, 1998. Petitioner filed
a motion for reconsideration, but the same was denied.

Hence, this petition for review on certiorari. Petitioner argues that respondent should have first obtained a
judicial declaration of nullity of his first marriage before entering into the second marriage, inasmuch as the
alleged prejudicial question justifying suspension of the bigamy case is no longer a legal truism pursuant to
Article 40 of the Family Code.

ISSUE:
Whether the subsequent filing of a civil action for declaration of nullity of a previous marriage constitutes a
prejudicial question to a criminal case for bigamy.

HELD:
A prejudicial question is one which arises in a case the resolution of which is a logical antecedent of the issue
involved therein. It is a question based on a fact distinct and separate from the crime but so intimately
connected with it that it determines the guilt or innocence of the accused. It must appear not only that the
civil case involves facts upon which the criminal action is based, but also that the resolution of the issues
raised in the civil action would necessarily be determinative of the criminal case. Consequently, the defense
must involve an issue similar or intimately related to the same issue raised in the criminal action and its
resolution determinative of whether or not the latter action may proceed. Its two essential elements are:

(a) the civil action involves an issue similar or intimately related to the issue raised in the criminal
action; and
(b) the resolution of such issue determines whether or not the criminal action may proceed.

A prejudicial question does not conclusively resolve the guilt or innocence of the accused but simply tests
the sufficiency of the allegations in the information in order to sustain the further prosecution of the criminal
case. A party who raises a prejudicial question is deemed to have hypothetically admitted that all the essential
elements of a crime have been adequately alleged in the information, considering that the prosecution has
not yet presented single evidence on the indictment or may not yet have rested its case. A challenge of the
allegations in the information on the ground of prejudicial question is in effect a question on the merits of the
criminal charge through a non-criminal suit.

Article 40 of the Family Code, which was effective at the time of celebration of the second marriage, requires
a prior judicial declaration of nullity of a previous marriage before a party may remarry. The clear implication
of this is that it is not for the parties, particularly the accused, to determine the validity or invalidity of the
marriage. Whether or not the first marriage was void for lack of a license is a matter of defense because there
is still no judicial declaration of its nullity at the time the second marriage was contracted. It should be
remembered that bigamy can successfully be prosecuted provided all its elements concur – two of which are
a previous marriage and a subsequent marriage which would have been valid had it not been for the
existence at the material time of the first marriage.

In the case at bar, respondent's clear intent is to obtain a judicial declaration of nullity of his first marriage
and thereafter to invoke that very same judgment to prevent his prosecution for bigamy. He cannot have his
cake and eat it too. Otherwise, all that an adventurous bigamist has to do is to disregard Article 40 of the
Family Code, contract a subsequent marriage and escape a bigamy charge by simply claiming that the first
marriage is void and that the subsequent marriage is equally void for lack of a prior judicial declaration of
nullity of the first. A party may even enter into a marriage aware of the absence of a requisite - usually the
marriage license - and thereafter contract a subsequent marriage without obtaining a declaration of nullity of
the first on the assumption that the first marriage is void. Such scenario would render nugatory the provisions
on bigamy.

Respondent alleges that the first marriage in the case before us was void for lack of a marriage license.
Petitioner, on the other hand, argues that her marriage to respondent was exempt from the requirement of a
marriage license. More specifically, petitioner claims that prior to their marriage, they had already attained
the age of majority and had been living together as husband and wife for at least five years. The issue in this
case is limited to the existence of a prejudicial question, and we are not called upon to resolve the validity of
the first marriage. Be that as it may, suffice it to state that the Civil Code, under which the first marriage was
celebrated, provides that "every intendment of law or fact leans toward the validity of marriage, the
indissolubility of the marriage bonds." Hence, parties should not be permitted to judge for themselves the
nullity of their marriage, for the same must be submitted to the determination of competent courts. Only when
the nullity of the marriage is so declared can it be held as void, and so long as there is no such declaration
the presumption is that the marriage exists. No matter how obvious, manifest or patent the absence of an
element is, the intervention of the courts must always be resorted to. That is why Article 40 of the Family
Code requires a "final judgment," which only the courts can render. Thus, as ruled in Landicho v. Relova, he
who contracts a second marriage before the judicial declaration of nullity of the first marriage assumes the
risk of being prosecuted for bigamy, and in such a case the criminal case may not be suspended on the
ground of the pendency of a civil case for declaration of nullity. In a recent case for concubinage, we held
that the pendency of a civil case for declaration of nullity of marriage is not a prejudicial question. This ruling
applies here by analogy since both crimes presuppose the subsistence of a marriage.

Ignorance of the existence of Article 40 of the Family Code cannot even be successfully invoked as an
excuse. The contracting of a marriage knowing that the requirements of the law have not been complied with
or that the marriage is in disregard of a legal impediment is an act penalized by the Revised Penal Code.
The legality of a marriage is a matter of law and every person is presumed to know the law. As respondent
did not obtain the judicial declaration of nullity when he entered into the second marriage, why should he be
allowed to belatedly obtain that judicial declaration in order to delay his criminal prosecution and subsequently
defeat it by his own disobedience of the law? If he wants to raise the nullity of the previous marriage, he can
do it as a matter of defense when he presents his evidence during the trial proper in the criminal case.

The burden of proof to show the dissolution of the first marriage before the second marriage was contracted
rests upon the defense, but that is a matter that can be raised in the trial of the bigamy case. In the meantime,
it should be stressed that not every defense raised in the civil action may be used as a prejudicial question
to obtain the suspension of the criminal action. The lower court, therefore, erred in suspending the criminal
case for bigamy. Moreover, when respondent was indicted for bigamy, the fact that he entered into two
marriage ceremonies appeared indubitable. It was only after he was sued by petitioner for bigamy that he
thought of seeking a judicial declaration of nullity of his first marriage. The obvious intent, therefore, is that
respondent merely resorted to the civil action as a potential prejudicial question for the purpose of frustrating
or delaying his criminal prosecution. As has been discussed above, this cannot be done.

In the light of Article 40 of the Family Code, respondent, without first having obtained the judicial declaration
of nullity of the first marriage, can not be said to have validly entered into the second marriage. Per current
jurisprudence, a marriage though void still needs a judicial declaration of such fact before any party can marry
again; otherwise the second marriage will also be void. The reason is that, without a judicial declaration of its
nullity, the first marriage is presumed to be subsisting. In the case at bar, respondent was for all legal intents
and purposes regarded as a married man at the time he contracted his second marriage with petitioner.
Against this legal backdrop, any decision in the civil action for nullity would not erase the fact that respondent
entered into a second marriage during the subsistence of a first marriage.

Thus, a decision in the civil case is not essential to the determination of the criminal charge. It is, therefore,
not a prejudicial question. As stated above, respondent cannot be permitted to use his own malfeasance to
defeat the criminal action against him.
DOCTRINE: Persons; Since an action for pecuniary damages on account of personal injury or death pertains
primarily to the one injured, it is easy to see that if no action for such damages could be instituted on behalf
of the unborn child on account of the injuries it received, no such right of action could derivatively accrue to
its parents or heirs. In fact, even if a cause of action did accrue on behalf of the unborn child, the same was
extinguished by its pre-natal death, since no transmission to anyone can take place from on that lacked
juridical personality (or juridical capacity as distinguished from capacity to act). It is no answer to invoke the
provisional personality of a conceived child (conceptus pro nato habetur) under Article 40 of the Civil Code,
because that same article expressly limits such provisional personality by imposing the condition that the
child should be subsequently born alive: "provided it be born later with the condition specified in the following
article". In the present case, there is no dispute that the child was dead when separated from its mother's
womb.

Antonio Geluz vs. Court of Appeals, GR. No. L-16439; July 20, 1961

FACTS:
Nita Villanueva came to know Antonio Geluz for the first time in 1948 — through her aunt Paula Yambot. In
1950 she became pregnant by her present husband before they were legally married. Desiring to conceal
her pregnancy from her parent, and acting on the advice of her aunt, she had herself aborted by the
defendant. After her marriage with the plaintiff, she again became pregnant. As she was then employed in
the Commission on Elections and her pregnancy proved to be inconvenient, she had herself aborted again
by the defendant in October 1953. Less than two years later, she again became pregnant. On February 21,
1955, accompanied by her sister Purificacion and the latter's daughter Lucida, she again repaired to the
defendant's clinic on Carriedo and P. Gomez streets in Manila, where the three met the defendant and his
wife. Nita was again aborted, of a two-month old fetus, in consideration of the sum of fifty pesos, Philippine
currency. The plaintiff was at this time in the province of Cagayan, campaigning for his election to the
provincial board; he did not know of, nor gave his consent, to the abortion.

The litigation was commenced in the Court of First Instance of Manila by respondent Oscar Lazo, the of Nita
Villanueva, against petitioner Antonio Geluz, a physician. Convinced of the merits of the complaint upon the
evidence adduced, the trial court rendered judgment favor of plaintiff Lazo and against defendant Geluz,
ordering the latter to pay P3,000.00 as damages, P700.00 attorney's fees and the costs of the suit. On appeal,
Court of Appeals, in a special division of five, sustained the award by a majority vote of three justices as
against two, who rendered a separate dissenting opinion.

It is the third and last abortion that constitutes plaintiff's basis in filing this action and award of damages. Upon
application of the defendant Geluz we granted certiorari.

The Court of Appeals and the trial court predicated the award of damages in the sum of P3,000.06 upon the
provisions of the initial paragraph of Article 2206 of the Civil Code of the Philippines.

ISSUE:
Whether the CA correctly predicated the award of damages in the sum of P3,000.06 upon the provisions of
the initial paragraph of Article 2206 of the Civil Code of the Philippines.
HELD:
This we believe to be error, for the said article, in fixing a minimum award of P3,000.00 for the death of a
person, does not cover the case of an unborn foetus that is not endowed with personality. Under the system
of our Civil Code, "la criatura abortiva no alcanza la categoria de persona natural y en consscuencia es un
ser no nacido a la vida del Derecho" (Casso-Cervera, "Diccionario de Derecho Privado", Vol. 1, p. 49), being
incapable of having rights and obligations.

Since an action for pecuniary damages on account of personal injury or death pertains primarily to the one
injured, it is easy to see that if no action for such damages could be instituted on behalf of the unborn child
on account of the injuries it received, no such right of action could derivatively accrue to its parents or heirs.
In fact, even if a cause of action did accrue on behalf of the unborn child, the same was extinguished by its
pre-natal death, since no transmission to anyone can take place from on that lacked juridical personality (or
juridical capacity as distinguished from capacity to act). It is no answer to invoke the provisional personality
of a conceived child (conceptus pro nato habetur) under Article 40 of the Civil Code, because that same
article expressly limits such provisional personality by imposing the condition that the child should be
subsequently born alive: "provided it be born later with the condition specified in the following article". In the
present case, there is no dispute that the child was dead when separated from its mother's womb.

The prevailing American jurisprudence is to the same effect; and it is generally held that recovery can not
had for the death of an unborn child (Stafford vs. Roadway Transit Co., 70 F. Supp. 555; Dietrich vs.
Northampton, 52 Am. Rep. 242; and numerous cases collated in the editorial note, 10 ALR, (2d) 639).

This is not to say that the parents are not entitled to collect any damages at all. But such damages must be
those inflicted directly upon them, as distinguished from the injury or violation of the rights of the deceased,
his right to life and physical integrity. Because the parents can not expect either help, support or services
from an unborn child, they would normally be limited to moral damages for the illegal arrest of the normal
development of the spes hominis that was the foetus, i.e., on account of distress and anguish attendant to
its loss, and the disappointment of their parental expectations (Civ. Code Art. 2217), as well as to exemplary
damages, if the circumstances should warrant them (Art. 2230). But in the case before us, both the trial court
and the Court of Appeals have not found any basis for an award of moral damages, evidently because the
appellee's indifference to the previous abortions of his wife, also caused by the appellant herein, clearly
indicates that he was unconcerned with the frustration of his parental hopes and affections. The lower court
expressly found, and the majority opinion of the Court of Appeals did not contradict it, that the appellee was
aware of the second abortion; and the probabilities are that he was likewise aware of the first. Yet despite
the suspicious repetition of the event, he appeared to have taken no steps to investigate or pinpoint the
causes thereof, and secure the punishment of the responsible practitioner. Even after learning of the third
abortion, the appellee does not seem to have taken interest in the administrative and criminal cases against
the appellant. His only concern appears to have been directed at obtaining from the doctor a large money
payment, since he sued for P50,000.00 damages and P3,000.00 attorney's fees, an "indemnity" claim that,
under the circumstances of record, was clearly exaggerated.
It is unquestionable that the appellant's act in provoking the abortion of appellee's wife, without medical
necessity to warrant it, was a criminal and morally reprehensible act, that cannot be too severely condemned;
and the consent of the woman or that of her husband does not excuse it. But the immorality or illegality of
the act does not justify an award of damage that, under the circumstances on record, have no factual or legal
basis.
DOCTRINE: Persons; A conceived child, although yet unborn, is given by law a provisional personality of its
own for all purposes favorable to it, as explicitly provided in Article 40 of the Civil Code of the Philippines.
The unborn child, therefore, has a right to support from its progenitors, particularly of the defendant-appellee,
even if the said child is only "en ventre de sa mere;" just as a conceived child, even if as yet unborn, may
receive donations as prescribed by Article 742 of the same Code, and its being ignored by the parent in his
testament may result in preterition of a forced heir that annuls the institution of the testamentary heir, even if
such child should be born after the death of the testator (Article 854, Civil Code).

Carmen Quimiguing vs. Felix Icao, GR. No. 26795; July 31, 1970

FACTS:
Appellant, Carmen Quimiguing, assisted by her parents, sued Felix Icao in the court below. In her complaint
it was averred that the parties were neighbors in Dapitan City, and had close and confidential relations; that
defendant Icao, although married, succeeded in having carnal intercourse with plaintiff several times by force
and intimidation, and without her consent; that as a result she became pregnant, despite efforts and drugs
supplied by defendant, and plaintiff had to stop studying. Hence, she claimed support at P120.00 per month,
damages and attorney's fees.

Duly summoned, defendant Icao moved to dismiss for lack of cause of action since the complaint did not
allege that the child had been born; and after hearing arguments, the trial judge sustained defendant's motion
and dismissed the complaint.

Thereafter, plaintiff moved to amend the complaint to allege that as a result of the intercourse, plaintiff had
later given birth to a baby girl; but the court, sustaining defendant's objection, ruled that no amendment was
allowable, since the original complaint averred no cause of action. Wherefore, the plaintiff appealed directly
to this Court.

ISSUE:
Whether the trial court erred in sustaining the defendant's motion and dismissing the complaint.

HELD:
Yes. We find the appealed orders of the court below to be untenable. A conceived child, although as yet
unborn, is given by law a provisional personality of its own for all purposes favorable to it, as explicitly provided
in Article 40 of the Civil Code of the Philippines. The unborn child, therefore, has a right to support from its
progenitors, particularly of the defendant-appellee (whose paternity is deemed admitted for the purpose of
the motion to dismiss), even if the said child is only "en ventre de sa mere;" just as a conceived child, even if
as yet unborn, may receive donations as prescribed by Article 742 of the same Code, and its being ignored
by the parent in his testament may result in preterition of a forced heir that annuls the institution of the
testamentary heir, even if such child should be born after the death of the testator Article 854, Civil Code).

It is thus clear that the lower court's theory that Article 291 of the Civil Code declaring that support is an
obligation of parents and illegitimate children "does not contemplate support to children as yet unborn,"
violates Article 40 aforesaid, besides imposing a condition that nowhere appears in the text of Article 291. It
is true that Article 40 prescribing that "the conceived child shall be considered born for all purposes that are
favorable to it" adds further "provided it be born later with the conditions specified in the following article" (i.e.,
that the fetus be alive at the time it is completely delivered from the mother's womb). This proviso, however,
is not a condition precedent to the right of the conceived child; for if it were, the first part of Article 40 would
become entirely useless and ineffective.

A second reason for reversing the orders appealed from is that for a married man to force a woman not his
wife to yield to his lust (as averred in the original complaint in this case) constitutes a clear violation of the
rights of his victim that entitles her to claim compensation for the damage caused.

Thus, independently of the right to Support of the child she was carrying, plaintiff herself had a cause of
action for damages under the terms of the complaint; and the order dismissing it for failure to state a cause
of action was doubly in error.
DOCTRINE: Persons; Death has been defined as the cessation of life. Life is not synonymous with civil
personality. One need not acquire civil personality first before he/she could die. Even a child inside the womb
already has life. No less than the Constitution recognizes the life of the unborn from conception, that the
State must protect equally with the life of the mother. If the unborn already has life, then the cessation thereof
even prior to the child being delivered, qualifies as death.

Continental Steel vs. Montaño, GR. No. 182836; October 13, 2009

FACTS:
Hortillano, an employee of petitioner Continental Steel Manufacturing Corporation (Continental Steel) and a
member of respondent Nagkakaisang Manggagawa ng Centro Steel Corporation-Solidarity of Trade Unions
in the Philippines for Empowerment and Reforms (Union) filed on 9 January 2006, a claim for Paternity Leave,
Bereavement Leave and Death and Accident Insurance for dependent, pursuant to the Collective Bargaining
Agreement (CBA) concluded between Continental and the Union.

The claim was based on the death of Hortillano’s unborn child. Hortillano’s wife, Marife V. Hortillano, had a
premature delivery on 5 January 2006 while she was in the 38th week of pregnancy. According to the
Certificate of Fetal Death dated 7 January 2006, the female fetus died during labor due to fetal Anoxia
secondary to uteroplacental insufficiency.

Continental Steel immediately granted Hortillano’s claim for paternity leave but denied his claims for
bereavement leave and other death benefits, consisting of the death and accident insurance.

Seeking the reversal of the denial by Continental Steel of Hortillano’s claims for bereavement and other death
benefits, the Union resorted to the grievance machinery provided in the CBA. Despite the series of
conferences held, the parties still failed to settle their dispute, prompting the Union to file a Notice to Arbitrate
before the National Conciliation and Mediation Board (NCMB) of the Department of Labor and Employment
(DOLE), National Capital Region (NCR).

When the preliminary conferences again proved futile in amicably settling the dispute, the parties proceeded
to submit their respective Position Papers, Replies, and Rejoinders to Atty. Montaño.

The Union argued that Hortillano was entitled to bereavement leave and other death benefits pursuant to the
CBA. The Union maintained that Article X, Section 2 and Article XVIII, Section 4.3 of the CBA did not
specifically state that the dependent should have first been born alive or must have acquired juridical
personality so that his/her subsequent death could be covered by the CBA death benefits. The Union cited
cases wherein employees of MKK Steel Corporation (MKK Steel) and Mayer Steel Pipe Corporation (Mayer
Steel), sister companies of Continental Steel, in similar situations as Hortillano were able to receive death
benefits under similar provisions of their CBAs.

On 20 November 2007, Atty. Montaño, the appointed Accredited Voluntary Arbitrator, issued a Resolution
ruling that Hortillano was entitled to bereavement leave with pay and death benefits.
Aggrieved, Continental Steel filed with the Court of Appeals a Petition for Review on Certiorari.

The Court of Appeals, in its Decision dated 27 February 2008, affirmed Atty. Montaño’s Resolution.

In a Resolution, the Court of Appeals denied the Motion for Reconsideration of Continental Steel.

Hence, this Petition, in which Continental Steel persistently argues that the CBA is clear and unambiguous,
so that the literal and legal meaning of death should be applied. Only one with juridical personality can die
and a dead fetus never acquired a juridical personality.

ISSUE:
Is Hortillano entitled to bereavement leave?

HELD:
Yes.

The reliance of Continental Steel on Articles 40, 41 and 42 of the Civil Code for the legal definition of death
is misplaced. Article 40 provides that a conceived child acquires personality only when it is born, and Article
41 defines when a child is considered born. Article 42 plainly states that civil personality is extinguished by
death.

First, the issue of civil personality is not relevant herein. Articles 40, 41 and 42 of the Civil Code on natural
persons, must be applied in relation to Article 37 of the same Code, the very first of the general provisions
on civil personality, which reads:

Art. 37. Juridical capacity, which is the fitness to be the subject of legal relations, is inherent in every
natural person and is lost only through death. Capacity to act, which is the power to do acts with
legal effect, is acquired and may be lost.

We need not establish civil personality of the unborn child herein since his/her juridical capacity and capacity
to act as a person are not in issue. It is not a question before us whether the unborn child acquired any rights
or incurred any obligations prior to his/her death that were passed on to or assumed by the child’s parents.
The rights to bereavement leave and other death benefits in the instant case pertain directly to the parents
of the unborn child upon the latter’s death.

Second, Sections 40, 41 and 42 of the Civil Code do not provide at all a definition of death. Moreover, while
the Civil Code expressly provides that civil personality may be extinguished by death, it does not explicitly
state that only those who have acquired juridical personality could die.

And third, death has been defined as the cessation of life. Life is not synonymous with civil personality. One
need not acquire civil personality first before he/she could die. Even a child inside the womb already has life.
No less than the Constitution recognizes the life of the unborn from conception, that the State must protect
equally with the life of the mother. If the unborn already has life, then the cessation thereof even prior to the
child being delivered, qualifies as death.

Likewise, the unborn child can be considered a dependent under the CBA. As Continental Steel itself defines,
a dependent is "one who relies on another for support; one not able to exist or sustain oneself without the
power or aid of someone else." Under said general definition, even an unborn child is a dependent of its
parents. Hortillano’s child could not have reached 38-39 weeks of its gestational life without depending upon
its mother, Hortillano’s wife, for sustenance. Additionally, it is explicit in the CBA provisions in question that
the dependent may be the parent, spouse, or child of a married employee; or the parent, brother, or sister of
a single employee. The CBA did not provide a qualification for the child dependent, such that the child must
have been born or must have acquired civil personality, as Continental Steel avers. Without such qualification,
then child shall be understood in its more general sense, which includes the unborn fetus in the mother’s
womb.