ANSAY ET AL. V.

NATIONAL DEVELOPMENT COMPANY (NDC)

107 PHIL 997

FACTS:

Ansay et al. filed against NDC a complaint praying for a 20% Christmas bonus for the years 1954 and 1955. The trial court
dismissed the complaint ratiocinating that a bonus is an act of liberality and the court takes it that it is not within its judicial powers to
command respondents to be liberal and that Ansay et al. admitted that NDC is not under legal duty to give such bonus and that the
court has no power to compel a party to comply with a moral obligation (Art. 142, New Civil Code.). Ansay et al. appealed and argued
that there exists a cause of action in their complaint because their claim rests on moral grounds or what in brief is defined by law as
a natural obligation.

ISSUE:

Whether the grant of Christmas bonus for the years 1954 and 1955 demandable based on natural or moral obligation?

RULING: NO

Article 1423 of the New Civil Code classifies obligations into civil or natural. “Civil obligations are a right of action to compel their
performance. Natural obligations, not being based on positive law but on equity and natural law, do not grant a right of action to
enforce their performance, but after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or
rendered by reason thereof”. It is thus readily seen that an element of natural obligation before it can be cognizable by the court is
voluntary fulfillment by the obligor. Certainly retention can be ordered but only after there has been voluntary performance. But here
there has been no voluntary performance. In fact, the court cannot order the performance.
MERALCO V. RAMOY
G.R. NO. 158911

FACTS:

This is a Petition for Review on Certiorari on CA‘s decision of ordering petitioner Manila Electric Company (MERALCO) to
pay Leoncio Ramoy moral and exemplary damages and attorney's fees. The evidence on record has established that in the year
1987 the National Power Corporation (NPC) filed with the MTC Quezon City a case for ejectment against several persons allegedly
illegally occupying its properties in Baesa, Quezon City. Among the defendants in the ejectment case was Leoncio Ramoy, one of
the plaintiffs in the case at bar. The MTC rendered judgment for the plaintiff [MERALCO] and "ordering the defendants to demolish
or remove the building and structures they built on the land of the plaintiff and to vacate the premises. On June 20, 1990 NPC wrote
Meralco requesting for the immediate disconnection of electric power supply to all residential and commercial establishments beneath
the NPC transmission lines.
Meralco requested NPC for a joint survey to determine all the establishments which are considered under NPC property in
view of the fact that "the houses in the area are very close to each other. In due time, the electric service connection of the plaintiffs
[herein respondents] was disconnected. After the electric power in Ramoy's apartment was cut off, the plaintiffs-lessees left the
premises. During the ocular inspection ordered by the Court and attended by the parties, it was found out that the residence of
plaintiffs-spouses Leoncio and Matilde Ramoy was indeed outside the NPC property.The RTC decided in favor of MERALCO by
dismissing herein respondents' claim for moral damages, exemplary damages and attorney's fees. However, the RTC ordered
MERALCO to restore the electric power supply of respondents.

ISSUE:

Whether Meralco acted negligently when it disconnected the subject electric service of respondents

RULING: Yes.

MERALCO admits that respondents are its customers under a Service Contract whereby it is obliged to supply respondents with
electricity. Clearly, respondents' cause of action against MERALCO is anchored on culpa contractual or breach of contract for the
latter's discontinuance of its service to respondents under Article 1170 of the Civil Code. In culpa contractual, the mere proof of the
existence of the contract and the failure of its compliance justify, prima facie, a corresponding right of relief. The law, recognizing the
obligatory force of contracts, will not permit a party to be set free from liability for any kind of misperformance of the contractual
undertaking or a contravention of the tenor thereof. The Court agrees with the CA that under the factual milieu of the present case,
MERALCO failed to exercise the utmost degree of care and diligence required of it. To repeat, it was not enough for MERALCO to
merely rely on the Decision of the MTC without ascertaining whether it had become final and executory.
FILIPINO PIPE V. NAWASA
G.R. No. L-43446 May 3, 1988

FACTS:

NAWASA entered into a contract with the plaintiff FPFC for the latter to supply iron pressure pipes worth P270,187.50 to be
used in the construction of the Anonoy Waterworks in Masbate and the Barrio San Andres-Villareal Waterworks in Samar. NAWASA
paid in installments on various dates, a total of P134,680.00 leaving a balance of P135,507.50 excluding interest. FPFC demanded
payment from NAWASA of the unpaid balance of the price with interest in accordance with the terms of their contract. NAWASA
failed to pay, plaintiff filed a collection suit. RTC rendered judgment ordered NAWASA to pay the unpaid balance in NAWASA
negotiable bonds. NAWASA did not deliver the bonds to the judgment creditor. FPFC filed another complaint seeking an adjustment
of the unpaid balance in accordance with the value of the Philippine peso. FPFC presented voluminous records and statistics showing
that a spiraling inflation has marked the progress of the country from 1962 up to the present. There is no denying that the price index
of commodities, which is the usual evidence of the value of the currency has been rising.

ISSUE:

Whether there exists an extraordinary inflation of the currency justifying an adjustment of NAWASA's unpaid judgment obligation to
FPFC.

RULING:

Article 1250 of the Civil Code provides:

In case an extraordinary inflation or deflation of the currency stipulated should supervene, the value of the currency at the time of the
establishment of the obligation shall be the basis of payment, unless there is an agreement to the contrary. Extraordinary inflation
exists "when there is a decrease or increase in the purchasing power of the Philippine currency which is unusual or beyond the
common fluctuation in the value said currency, and such decrease or increase could not have reasonably foreseen or was manifestly
beyond contemplation the parties at the time of the establishment of the obligation. While appellant's voluminous records and
statistics proved that there has been a decline in the purchasing power of the Philippine peso, this downward fall of the currency
cannot be considered "extraordinary." It is simply a universal trend that has not spared our country.
RODRIGUEZ V. REYES
37 SCRA 195

FACTS:

The petitioners filed with the respondent court a complaint against their brother, respondent Alberto D. Benipayo, for the partition of
the properties held by them in common as heirs of the late spouses, Donato D. Benipayo and Pura Disonglo (Civil Case No. 52188).
After respondent Benipayo had answered the complaint, the court set the case for a pre-trial conference, and in the course thereof
the parties agreed to have the properties in litigation sold at public auction to the highest bidder. Pursuant to an order issued by the
respondent judge, the parties submitted to the court a list of the properties to be sold, among which were some lots in Albay, and the
following parcels of land, with their improvements, that were at the time mortgaged to the Development Bank of the Philippines. The
petitioners seek to apply the doctrine of caveat emptor to the successful bidder Dualan, and contend that under said rule Dualan
bought at his own peril and, having purchased the property with knowledge of the encumbrance he should assume payment of the
indebtedness secured thereby.

ISSUE:

Whether the doctrine of caveat emptor is applicable

RULING: NO.

The maxim "caveat emptor" applies only to execution sales, and this was not one such. 5 The mere fact that the purchaser of an
immovable has notice that the required realty is encumbered with a mortgage does not render him liable for the payment of the debt
guaranteed by the mortgage, in the absence of stipulation or condition that he is to assume payment of the mortgage debt. The
reason is plain: the mortgage is merely an encumbrance on the property, entitling the mortgagee to have the property foreclosed,
i.e., sold, in case the principal obligor does not pay the mortgage debt, and apply the proceeds of the sale to the satisfaction of his
credit. Mortgage is merely an accessory undertaking for the convenience and security of the mortgage creditor, and exists
independently of the obligation to pay the debt secured by it. The mortgagee, if he is so minded, can waive the mortgage security
and proceed to collect the principal debt by personal action against the original mortgagor.

By buying the property covered by TCT No. 48979 with notice that it was mortgaged, respondent Dualan only undertook either to pay
or else allow the land's being sold if the mortgage creditor could not or did no obtain payment from the principal debtor when the debt
matured. 6 Nothing else. Certainly the buyer did not obligate himself to replace the debtor in the principal obligation, and he could
not do so in law without the creditor's consent. Our Civil Code, Article 1293, explicitly provides:

ART. 1293. Novation which consists in substituting a new debtor in the place of the original one, may be made
even without the knowledge or against the will of the latter, but not without the consent of the creditor. Payment by
the new debtor gives him the rights mentioned in articles 1236 and 1237.
C & C COMMERCIAL CORPORATION V. MENOR
120 SCRA 112

FACTS:

This case is about the requirement of a tax clearance certificate as a prerequisite for taking part in public biddings or contracts to sell
supplies to any government agency. Judge Cloribel of the Court of First Instance of Manila in his decision dated March 1, 1967 in
Civil Case No. 66750, a mandamus case, ordered the Acting General Manager of the National Waterworks and Sewerage Authority
and the members of the Committee on Pre-Qualification to allow C & C Commercial Corporation to participate as a qualified bidder
in the public bidding for the supply of asbestos cement pressure pipes to the Nawasa in spite of the fact that it had a pending tax
case and had no tax clearance certificate. It may be argued that the issue had become moot because the contract had already been
awarded to Regal Trading Corporation in 1968 and at this late hour it can be presumed that the contract had been fully performed
and implemented. Nevertheless, a ruling on the contentions of C & C Commercial Corporation is necessary, according to the
Government Corporate Counsel, "if only to make the appellee-corporation stop playing around with our courts" (p. 70, Rollo). For the
guidance of the bench and bar, we have to resolve the legal issues raised by the Nawasa.

ISSUE:

Whether C & C Commercial Corporation should be allowed to take part in the bidding even if it had no tax clearance certificate.

RULING:
We hold that Judge Cloribel acted without jurisdiction and with grave abuse of discretion in issuing his erroneous order, directing that
the Nawasa officials should award the contract to C & C Commercial Corporation. The order is erroneous and void for the following
reasons:

1. The said order was an amendment of a judgment that had already been satisfied. The case was closed and terminated. Judge
Cloribel had no right and authority to issue such an order after he had lost jurisdiction over the case. The award of the contract to C
& C Commercial Corporation was not the lis mota in the mandamus case before Judge Cloribel. It was an extraneous matter that
could not have been injected into that case nor resolved therein. What was in issue was whether C & C Commercial Corporation
should be allowed to take part in the bidding even if it had no tax clearance certificate.

2. The Nawasa was justified in not awarding the contract- to C & C Commercial Corporation because it had no tax clearance
certificate. It had a pending tax case in the Bureau of Internal Revenue. The award to C & C Commercial Corporation would be in
gross contravention of Administrative Order No. 66.

It should be noted that "advertisements for bidders are simply invitations to make proposals, and the advertiser is not bound to accept
the highest or lowest bidder, unless the contrary appears" (Art. 1326, Civil Code). No such contrary intention appears in this case.
PORTUGAL V IAC
159 SCRA 178

FACTS:

Petitioner Cornelia Clanor and her late husband Pascual Portugal, during the lifetime of the latter, were able to accumulate several
parcels of real property. Hugo Portugal, a son of the spouses, borrowed from his mother, Cornelia, the certificates of title to the above-
mentioned parcels of land on the pretext that he had to use them in securing a loan that he was negotiating. Cornelia, the loving and
helpful mother that she was, assented and delivered the titles to her son. The matter was never again brought up until after Pascual
Portugal died on November 17, 1974. (Cornelia herself died on November 12, 1987.) When the other heirs of the deceased Pascual
Portugal, the petitioners herein, for the purposes of executing an extra-judicial partition of Pascual's estate, wished to have all the
properties of the spouses collated, Cornelia asked the private respondent for the return of the two titles she previously loaned, Hugo
manifested that the said titles no longer exist. When further questioned, Hugo showed the petitioners Transfer Certificate of Title
T.C.T. No. 23539 registered in his and his brother Emiliano Portugal's names, and which new T.C.T. cancelled the two previous ones.
This falsification was triggered by a deed of sale by which the spouses Pascual Portugal and Cornelia Clanor purportedly sold for
P8,000.00 the two parcels of land adverted to earlier to their two sons, Hugo and Emiliano. Confronted by his mother of this fraud,
Emiliano denied any participation. And to show his good faith, Emiliano caused the reconveyance of Lot No. 2337 previously covered
by TCT No. RT-9356 and which was conveyed to him in the void deed of sale. Hugo, on the other hand, refused to make the
necessary restitution thus compelling the petitioners, his mother and his other brothers and sisters, to institute an action for the
annulment of the controversial deed of sale and the reconveyance of the title over Lot No. 3201 (the residential land).

ISSUE:

Whether the present action has prescribed

RULING:

We find the petition meritorious.

There is really nothing novel in this case as an the issues raised had been, on several occasions, ruled upon by the Court. Apropos
the first issue, which is the timeliness of the action, the trial court correctly ruled that the action instituted by the petitioners has not
yet prescribed. Be that as it may, the conclusion was reached through an erroneous rationalization, i.e., the case is purely for
reconveyance based on an implied or constructive trust. Obviously, the trial court failed to consider the lack of consideration or cause
in the purported deed of sale by which the residential lot was allegedly transferred to the private respondent by his parents. On the
other hand, the respondent Intermediate Appellate Court held that since the action for reconveyance was fathered by a fraudulent
deed of sale, Article 1391 of the Civil Code which lays down the rule that an action to annul a contract based on fraud prescribes in
four years, applies. Hence, according to the respondent court, as more than four years had elapsed from January 23, 1967 when the
assailed deed was registered and the petitioners' cause of action supposedly accrued, the suit has already become stale when it was
commenced on October 26, 1976, in the Court of First Instance of Cavite. For reasons shortly to be shown, we cannot give our
imprimatur to either view.

The case at bar is not purely an action for reconveyance based on an implied or constructive trust. Neither is it one for the annulment
of a fraudulent contract. A closer scrutiny of the records of the case readily supports a finding that fraud and mistake are not the only
vices present in the assailed contract of sale as held by the trial court. More than these, the alleged contract of sale is vitiated by the
total absence of a valid cause or consideration. Applying the provisions of Articles 1350, 1352, and 1409 of the new Civil Code in
relation to the indispensable requisite of a valid cause or consideration in any contract, and what constitutes a void or inexistent
contract, we rule that the disputed deed of sale is void ab initio or inexistent, not merely voidable. And it is provided in Article 1410 of
the Civil Code, that 'The action or defense for the declaration of the inexistence of a contract does not prescribe.
AVILA V. CA
145 SCRA 541

FACTS:

Marciana Avila, a teacher, acquired in a public bidding a certain parcel of land. Despite the provision of Section 579 of the Revised
Administrative Code prohibiting public school teachers from buying delinquent properties, nobody, not even the government
questioned her participation in said auction sale.

Sometime later, those lots were issued in favor of Paz Chavez. In opposition thereto, private respondents filed a petition for review
of the decrees. Final decision of CA ruled against the validity of the transfer to Avila.

Hence, this petition.

ISSUE:

Whether the acquisition of land is valid.

RULING: NO.

Petitioners claim that ownership and possession are separated in aforesaid CA decision, so that they assert that they are entitled to
the possession of Lot 594, although they are not entitled to its registration in their names.

Such contention is without merit.

While it is true that Marciana Avila, their mother and predecessor-in-interest, purchased the questioned property at a public auction
conducted by the government; paid the purchase price; and was issued a final bill of sale after the expiration of the redemption period,
it is however undisputed that such purchase was prohibited under Section 579 of the Revised Administrative Code, as amended,
which provides:

Section 579. Inhibition against purchase of property at tax sale.-Official and employees of the Government of the Republic of the
Philippines are prohibited from purchasing, directly or indirectly, from the Government, any property sold by the Government for the
non-payment of any public tax. Any such purchase by a public official or employee shall be void.

Thus, the sale to her of Lot 594 is void. Under Article 1409 of the Civil Code, a void contract is inexistent from the beginning. It cannot
be ratified neither can the right to set up the defense of its illegality be waived. (Arsenal, et al. vs, The Intermediate Appellate Court.
et al., G.R. No. 66696, July 14, 1986). Moreover, Marciana Avila was a party to an illegal transaction, and therefore, under Art. 1412
of the Civil Code, she cannot recover what she has given by reason of the contract or ask for the fulfillment of what has been promised
her.

Furthermore, in a registration case, the judgment confirming the title of the applicant and ordering its registration in his name
necessarily carries with it the delivery of possession which is an inherent element of the right of ownership. (Abulocion et al. v. CFI
of Iloilo, et al., 100 Phil. 553 [1956]). Hence, a writ of possession may be issued not only against the person who has been defeated
in a registration case but also against anyone unlawfully and adversely occupying the land or any portion thereof during the land
registration proceedings up to the issuance of the final decree. Under the circumstances, possession cannot be claimed by petitioners,
because their predecessor-in-interest besides being at fault is not the successful claimant in the registration proceedings and hence
not entitled to a writ of possession.
MORES V YU-GO
G.R. NO. 1722292

FACTS:

Plaintiffs-appellants Shirley M. Yu-Go, Ma. Victoria M. Yu-Lim and Ma. Estrella M. Yu ("appellants") filed a Complaint for Injunction
and Damages with Prayer for Issuance of a Temporary Restraining Order and Preliminary Injunction before... the Regional Trial
Court... against defendants-appellees, spouses Antonio and Alida Mores ("appellees"). Appellants alleged that they co-owned a
parcel of land on which a building was built. Appellees pleaded to appellants that they be allowed to stay in the subject property in
the meantime that they did not own a house yet. Since appellee Antonio Mores used to be an errand boy of appellants' family, they
readily agreed without asking for any rental but subject only to the condition that the said stay would last until anyone of appellants
would need the subject property. Forthwith, appellees and their children occupied the same as agreed upon. In November 1997,
appellants made known to appellees that they were already in need of the subject property. Yet, appellees begged that they be given
a 6-month extension to stay thereat or until May 1998. However, even after May 1998, appellees failed to make good their promise
and even further asked that they be allowed to stay therein until October 1998, which was again extended until the end of the same
year.

The appellate court believed that the relationship between the Yu siblings and the spouses Mores is one between a lessor and a
lessee, making Article 1678 of the Civil Code applicable to the present case.

ISSUE:

Whether the decision of the appellate court awarding the Yu siblings moral damages in the amount of P100,000 is rendered with
grave abuse of discretion and is not in accord with the decisions of this Court.

RULING:

The petition has merit. The good faith referred to by Alida Mores was about the building of the improvements on the leased subject
property. However, tenants like the spouses Mores cannot be said to be builders in good faith as they have no pretension to be
owners of the property. Full reimbursement of useful improvements and retention of the premises until reimbursement is made applies
only to a possessor in good faith, i.e., one who builds on land with the belief that he is the owner thereof. It does not apply where
one's only interest is that of a lessee under a rental contract; otherwise, it would always be in the power of the tenant to "improve" his
landlord out of his property.

Article 1678 of the Civil Code should apply in the present case.

Article 1678 reads:

If the lessee makes, in good faith, useful improvements which are suitable to the use for which the lease is intended, without altering
the form or substance of the property leased, the lessor upon the termination of the lease shall pay the lessee one-half of the value
of the improvements at that time. Should the lessor refuse to reimburse said amount, the lessee may remove the improvements,
even though the principal thing may suffer damage thereby. He shall not, however, cause any more impairment upon the property
leased than is necessary.

With regard to the ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may remove the ornamental
objects, provided no damage is caused to the principal thing, and the lessor does not choose to retain them by paying their value at
the time the lease is extinguished. We agree with the trial court's finding that the spouses Mores "removed only the improvements
they introduced without destroying the principal building, after the [Yu siblings] refused to pay them the reasonable value of the
improvements." When the spouses Mores demanded reimbursement, the Yu siblings should have offered to pay the spouses Mores
one-half of the value of the improvements. Since the Yu siblings failed to make such offer, the spouses Mores had the right to remove
the improvements. PETITION GRANTED.