Spouses Carbonell v. Metropolitan Bank & Trust Co. G.R. No.

178467, April 26,

2017
FACTS: The petitioners initiated against the respondent an action for damages, alleging
that they had experienced emotional shock, mental anguish, public ridicule, humiliation,
insults and embarrassment during their trip to Thailand because of the respondent’s
release to them of several US$100 bills that later on turned out to be counterfeit.
Upon their return to the Philippines, they had confronted the manager of the
respondent’s Pateros branch on the fake dollar bills, but the latter had insisted that the
dollar bills she had released to them were genuine inasmuch as the bills had come from
the head office; that in order to put the issue to rest, the counsel of the petitioners had
submitted the subject US$100 bills to the Bangko Sentral ng Pilipinas (BSP) for
examination; that the BSP had certified that the four US$100 bills were near perfect
genuine notes; and that their counsel had explained by letter their unfortunate
experience caused by the respondent’s release of the fake US dollar bills to them, and
had demanded moral damages of P10 Million and exemplary damages.
The petitioners then sent a written notice to the respondent, attaching the BSP
certification and informing the latter that they were giving it five days within which to
comply with their demand, or face court action. In response, the respondent’s counsel
wrote to the petitioners expressing sympathy with them on their experience but
stressing that the respondent could not absolutely guarantee the genuineness of each
and every foreign currency note that passed through its system; that it had also been a
victim like them; and that it had exercised the diligence required in dealing with foreign
currency notes and in the selection and supervision of its employees.
RTC then dismissed the plaintiff’s complaint for lack of merit. CA affirmed. Hence, this
petition.
Petitioners insist that inasmuch as the business of banking was imbued with public
interest, the respondent’s failure to exercise the degree of diligence required in handling
the affairs of its clients showed that it was liable not just for simple negligence but for
misrepresentation and bad faith amounting to fraud.
ISSUE: W/N Respondent bank shall be held liable?
HELD: No, Respondent bank shall not be held liable. The General Banking Act of 2000
demands of banks the highest standards of integrity and performance. As such, the
banks are under obligation to treat the accounts of their depositors with meticulous care.
However, the banks’ compliance with this degree of diligence is to be determined in
accordance with the particular circumstances of each case.
Gross negligence connotes want of care in the performance of one’s duties; it is a
negligence characterized by the want of even slight care, acting or omitting to act in a
situation where there is duty to act, not inadvertently but wilfully and intentionally, with a
conscious indifference to consequences insofar as other persons may be affected. It
evinces a thoughtless disregard of consequences without exerting any effort to avoid
them.
It is true that the petitioners suffered embarrassment and humiliation in Bangkok. Yet,
we should distinguish between damage and injury. Injury is the illegal invasion of a legal
right, damage is the loss, hurt, or harm which results from the injury; and damages are
the recompense or compensation awarded for the damage suffered. Thus, there can be
damage without injury in those instances in which the loss or harm was not the result of
a violation of a legal duty. These situations are often called dmimum absque injuria
Herein, the characteristics of the subject dollar notes had made it difficult even for the
BSP itself as the country’s own currency note expert to identify the counterfeiting with
ease despite adhering to all the properly laid out standard operating procedure and
precautions in the handling of US dollar bills, holding it liable for damages in favor of the
petitioners would be highly unwarranted in the absence of proof of bad faith, malice or
fraud on its part.
Although the petitioners suffered humiliation resulting from their unwitting use of the
counterfeit US dollar bills, the respondent, by virtue of its having observed the proper
protocols and procedure in handling the US dollar bills involved, did not violate any legal
duty towards them. Being neither guilty of negligence nor remiss in its exercise of the
degree of diligence required by law or the nature of its obligation as a banking
institution, the latter was not liable for damages

Hermosisima v. Court of Appeals G.R. No. L-14628, September 30,1960

FACTS: In 1950, Soledad Cagigas then a teacher in the Sibonga Provincial High School
in Cebu, and petitioner Francisco Hermosisima, who was almost ten (10) years younger
than she, used to go around together and were regarded as engaged, although he had
made no promise of marriage prior thereto. In 1951, she gave up teaching and became
a life insurance underwriter in Cebu City, where intimacy developed among her and the
petitioner, since one evening in 1953, when after coming from the movies, they had
sexual intercourse in his cabin on board M/V "Escaño," to which he was then attached
as apprentice pilot. In February 1954, Soledad advised petitioner that she was
pregnant, whereupon he promised to marry her. Their child, Chris Hermosisima, was
born on June 17, 1954. However, on July 24, 1954, defendant married one Romanita
Perez.
On October 4, 1954, Soledad filed with the court an action against Francisco for
recognition of paternity of their child, Chris Hermosisima, and for moral damages for
alleged breach of promise to marry. Petitioner admitted the paternity of child and
expressed willingness to support the latter, but denied having ever promised to marry
the complainant. The trial court ruled in favor of Soledad which was affirmed by the
Court of Appeals and even increasing the award for damages. The Court of Appeals
reasoned that Francisco is liable for damages because he seduced Soledad. He
exploited the love of Soledad for him in order to satisfy his sexual desires – that being
said, the award for moral damages is proper.
ISSUE: Whether or not moral damages are recoverable, under our laws, for breach of
promise to marry.
HELD: No. Breach of promise to marry is not actionable wrong as has been definitely
decided in the case of De Jesus vs. Syquia, 58 Phil., 866. Further, in the light of the
clear and manifest intent of our law-making body not to sanction actions for breach of
promise to marry, the award of moral damages made by the lower courts is,
accordingly, untenable.
The Court of Appeals, rely its decision on the award of moral damages on paragraph 3
of Article 2219 of the Civil Code: . . . Moral damages may be recovered in the following
and analogous cases: xxx (3) Seduction, abduction, rape or other lascivious acts.
However, the language used in said paragraph strongly indicates that the "seduction"
therein contemplated is the crime punished as such in Article 337 and 338 of the
Revised Penal Code, which does not exist in the present case. The Court was unable to
say that petitioner is morally guilty of seduction, not only because he is approximately
ten (10) years younger than the complainant — who around thirty-six (36) years of age,
and as highly enlightened as a former high school teacher and a life insurance agent
are supposed to be — when she became intimate with petitioner, then a mere
apprentice pilot, but also because, the court of first instance found that, complainant
"surrendered herself" to petitioner because, she was "overwhelmed by her love" for him,
and she "wanted to bind" "by having a fruit of their engagement even before they had
the benefit of clergy."
Note: Articles 43 and 44 of the Civil Code of 1889 refer to the promise of marriage. But
these articles are not in force in the Philippines. The subject is regulated in the
proposed Civil Code not only as to the aspects treated of in said articles but also in
other particulars.

Wassmer v. Velez G.R. No. L-20089, December 26, 1964

FACTS: Beatriz Wassmer and Francisco Velez decided to get married and set the date
on September 4, 1954. Preparations were made including the following: obtaining a
marriage license;; printing and distribution of invitations to relatives, friends, and
acquaintances;; purchasing the bride-to-be’s trousseau;; preparing the dresses of those
who are part of the entourage;; and buying a matrimonial bed and its accessories,
among others. Bridal showers were given and gifts were also received.
On September 2 or two days before the wedding, Velez went to his home city in
Mindanao and left a note for Wassmer postponing the wedding saying that his mother
opposes it. The next day, September 3, he sent her a telegram saying that nothing has
changed and assuring her of his return soon. Thereafter, Velez was never heard from
again.
Wassmer sued Velez for damages and won the suit by default. Almost two months later,
Velez filed a petition for relief from orders, judgment, and proceedings and motion for
new trial and reconsideration. Velez lost in his petition so he elevated the same to the
Supreme Court. He argues that there is no provision in the Civil Code authorizing an
action for breach of promise to marry.
ISSUE: May a person be held liable even in the absence of a provision authorizing an
action for breach of promise to marry?
HELD: Yes. Although mere breach of promise to marry is not an actionable wrong, it
must not be overlooked, that the extent to which acts not contrary to law may be
perpetrated with impunity, is not limitless. Article 21 provides that “any person who
willfully causes loss or injury to another in a manner that is contrary to morals, good
customs or public policy shall compensate the latter for the damage.”
In this case, to formally set a wedding and go through all the above-described
preparation and publicity, only to walk out of it when the matrimony is about to be
solemnized, is quite different. This is palpably and unjustifiably contrary to good
customs for which defendant must be held answerable in damages in accordance with
Article 21. Therefore, Velez should be held liable.

Gashem Shookat Baksh v. Court of Appeals G.R. No. 97336, February 19, 1993
FACTS: Private respondent is a 22-year-old Filipino citizen residing in Dagupan CIty.
Petitioner is an Iranian medical exchange student at the Lyceum Northwestern Colleges
in Dagupan City. Petitioner allegedly courted and proposed to marry her. Thereafter,
private respondent began living with him. She allegedly was a virgin before such
arrangement.
A week before the filing of private respondent’s complaint, petitioner’s attitude towards
her started to change; he maltreated and threatened to kill her. As a result, she
sustained injuries. Petitioner repudiated their marriage agreement and asked not to live
with her anymore.
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. Petitioner denied the claims of private
respondent. Accordingly, he never proposed marriage to or agreed to be married with
the private respondent nor he forced her to live with him.
The lower court, applying Article 21 of the Civil Code, rendered a decision favoring the
private respondent. The CA affirmed in toto the trial court’s decision.
ISSUE: W/N a breach of promise to marry in the case at Bar is actionable, under Article
21 of the Civil Code?
HELD: Yes. Despite the elimination of breach of promise to marry chapter in the New
Civil Code, the said Code also 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. The existing rule is that a
breach of promise to marry per se is not an actionable wrong. However, 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 it was Gashem's fraudulent and deceptive protestations of love for
and promise to marry Marilou 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
Petitoner’s profession of love and promise to marry were empty words directly intended
to fool, dupe, entice, beguile and deceive the poor woman into believing that indeed, he
loved her and would want her to be his life’s partner. His was nothing but pure lust
which he wanted satisfied by a Filipina who honestly believed that by accepting his
proffer of love and proposal of marriage, she would be able to enjoy a life of ease and
security. Petitioner clearly violated the Filipino’s concept of morality and brazenly defied
the traditional respect Filipinos have for their women. It can even be said that the
petitioner committed such deplorable acts in blatant disregard of Article 19 of the Civil
Code which directs every person to act with justice, give everyone his due and observe
honesty and good faith in the exercise of his rights and in the performance of his
obligations.

Pe v. Pe G.R. No. L-17396, May 30, 1962

FACTS: Alfonso Pe, defendant, is a married man while Lolita Pe, at the time of her
disappearance, was 24 years old and unmarried. Defendant was an adopted son of a
Chinaman named Pe Beco, a collateral relative of Lolita's father. Because of such fact
and the similarity in their family name, defendant became close to Lolita’s family who
regarded him as a member of their family. Sometime in 1952, defendant frequented the
house of Lolita on the pretext that he wanted her to teach him how to pray the rosary.
The two eventually fell in love with each other. The rumors about their love affairs
reached the ears of Lolita's parents sometime in 1955, and since then Alfonso was
forbidden from going to their house and from further seeing Lolita. However, the affair
between defendant and Lolita continued. Sometime in April, 1957, Lolita stayed with her
brothers and sisters at their residence at 54-B España Extension, Quezon City. On April
14, 1957, Lolita disappeared from said house. After she left, her brothers and sisters
checked up her things and found that Lolita's clothes were gone. They found a note on
a crumpled piece of paper inside Lolita's aparador which was in a handwriting
recognized to be that of Alfonso’s. Then Lolita’s parents and siblings brought this action
before the CFI of Manila to recover moral, compensatory, exemplary and corrective
damages based on Article 21 of the Civil Code which states that any person who wilfully
causes loss or injury to another in a manner which is contrary to morals, good customs
or public policy shall compensate the latter for the damage. The CFI dismissed the
case.
ISSUE: Whether or not Alfonso Pe should be held civilly liable.
RULING: Yes. The circumstances under which Alfonso tried to win Lolita's affection
cannot lead to any other conclusion than that it was he who, thru an ingenious scheme
or trickery, seduced the latter to the extent of making her fall in love with him. This is
shown by the fact that he frequented the house of Lolita on the pretext that he wanted
her to teach him how to pray the rosary. Because of the frequency of his visits to the
latter's family Alfonso was allowed free access because he was a collateral relative and
was considered as a member of her family, the two eventually fell in love with each
other and conducted clandestine love affairs not only in Gasan but also in Boac where
Lolita used to teach in a barrio school. When the rumors about their illicit affairs reached
the knowledge of her parents, defendant was forbidden from going to their house and
even from seeing Lolita. Nevertheless, defendant continued his love affairs with Lolita
until she disappeared from the parental home. Indeed, no other conclusion can be
drawn from this chain of events than that defendant not only deliberately, but through a
clever strategy, succeeded in winning the affection and love of Lolita to the extent of
having illicit relations with her. The wrong he has caused her and her family is indeed
immeasurable considering the fact that he is a married man. Verily, he has committed
an injury to Lolita's family in a manner contrary to morals, good customs and public
policy as contemplated in Article 21 of the New Civil Code.

On September 27, 2006, respondent, through his wife, Alma Fudalan, applied for
electrical service from BOHECO I Electric Cooperative Inc. (BOHECO I) to illuminate
their farmhouse located in Cambanac, Baclayon, Bohol. At the pre-membership
seminar, respondent paid the amount of P48.12 as membership fee and was advised to
employ the services of an authorized electrician from BOHECO I.[5] Accordingly, on
October 7, 2006, respondent employed the services of Sabino Albelda Sr. (Albelda), a
BOHECO I authorized electrician, who informed him that the electrical connection could
only be installed in his farmhouse if he procures a certification from Raso, the Barangay
Power Association (BAPA)[6] Chairperson. Respondent then instructed his farmhand to
get a certification from Raso but despite efforts to reach Raso, the latter was
unavailable. Thus, respondent consented to the tapping of his electrical line to that of
BAPA upon the assurance of Albelda that he would not be charged with pilferage of
electricity because his electric usage shall be determined by the check meter of
BOHECO I at the base of the drop line and shall be billed accordingly.[7]
In the morning of October 8, 2006, respondent still tried again to obtain Raso's
certification. However, during their meeting, Raso allegedly got mad, vowed to never
issue the said certification, and eventually then reported the matter to BOHECO I for
disconnection.[8]
Feeling aggrieved, respondent and his wife went to BOHECO I on October 17, 2006 to
complain about Raso's malicious actuations. They were attended to by the receiving
clerk, petitioner Lomarda, who, after reviewing their documents, told them that he would
conduct an ocular inspection of their farmhouse. The next day, respondent, together
with his farmhand, went looking for Raso and confronted her about the latter's threat of
disconnection. To appease them, Raso guaranteed not to order the disconnection of
respondent's electricity; nevertheless, she still refused to issue the certification on the
premise that respondent's farmhouse already had electricity. In the course of their
conversation, Raso uttered, "Sabut sabuton lang ni nato," which translates to "let us just
settle this."[9]
On November 5, 2006, respondent and his wife once more went to Raso to follow up on
the issuance of such certification. They met at the purok center, where Raso was
conducting a meeting with several purok members. Thereat, Raso asked why
respondent's electricity has not yet been installed. Respondent took this to be a
sarcastic and rhetorical remark because Raso was, in fact, the one withholding the
issuance of the BAPA certification which was precisely the cause of the delay of the
aforesaid installation.[10]
In another confrontation, Raso explained that she was about to issue the certification
but was prevented by Lomarda, who allegedly apprised her of a pending complaint for
premature tapping against respondent. To settle the misunderstanding, Raso directed
respondent to discuss the matter with Lomarda at his house, and again uttered "Sabut
sabuton lang ni nato." During their conversation, Lomarda told respondent that he
earlier received a disconnection order issued a long time ago but misplaced the
document, and that an ocular inspection of respondent's farmhouse will be conducted
on November 6, 2006. When respondent informed Raso of the date of inspection, the
latter once again remarked, "Sabut sabuton lang ni nato."[11]
On the day of inspection, or on November 6, 2006, respondent was assured that his
electricity will not be disconnected and that Raso will issue the certification, provided he
would pay the amount of P1,750.00 or sign a promissory note. Respondent, however,
refused to comply with the said conditions, reasoning that there was no official order
from the concerned office. After respondent refused to pay, Lomarda allegedly posed in
front of a camera and while pointing at the slot provided for the electric meter, shouted,
"This is an illegal tapping." Thereafter, Lomarda, in the presence of policemen, the
barangay treasurer, and other several passersby, ordered his linemen to cut off
respondent's electricity.[12]
On November 9, 2006, respondent communicated with BOHECO I, through phone, and
inquired about his electric dues. He was informed that there was no system loss or
excess billed to the cooperative, and that his electric usage amounted only to P20.00.
Claiming that petitioners' acts tarnished his image, besmirched his reputation, and
defamed his honor and dignity, respondent filed a complaint for damages before the
RTC. Respondent alleged that petitioners confederated with one another to purposely
delay the approval of his application for electric connection by: (a) withholding the
issuance of the BAPA certification; (b) falsely accusing him of premature tapping and
pilferage of electricity; and (c) demanding the payment of P1,750.00, when what was
due him was only P20.00.[13]
For their part, petitioners contended that respondent committed premature tapping of
electricity, when the latter consented to the tapping of his line to the service line of
BAPA without a "turn-on" order from BOHECO I. Moreover, they claim that they cannot
be faulted for the disconnection, since they gave respondent the option to pay the
penalty or sign a promissory note, which the latter refused.

Lomarda v. Fudalan, G.R. No. 246012, June 17, 2020

FACTS: Respondent, through his wife, Alma Fudalan, applied for electrical service from
BOHECO I Electric Cooperative Inc. (BOHECO I) to illuminate their farmhouse.
Respondent employed the services of Sabino Albelda Sr. (Albelda), a BOHECO I
authorized electrician, who informed him that the electrical connection could only be
installed in his farmhouse if he procures a certification from Raso, the Barangay Power
Association (BAPA) Chairperson. Respondent then instructed his farmhand to get a
certification from Raso but despite efforts to reach Raso, the latter was unavailable.
Thus, respondent consented to the tapping of his electrical line to that of BAPA upon
the assurance of Albelda that he would not be charged with pilferage of electricity
because his electric usage shall be determined by the check meter of BOHECO I at the
base of the drop line and shall be billed accordingly.
Respondent still tried again to obtain Raso’s certification. However, during their
meeting, Raso allegedly got mad, vowed to never issue the said certification, and
eventually then reported the matter to BOHECO I for disconnection. Feeling aggrieved,
respondent and his wife went to BOHECO I to complain about Raso’s malicious
actuations. To appease them, Raso guaranteed not to order the disconnection of
respondent’s electricity; nevertheless, she still refused to issue the certification on the
premise that respondent’s farmhouse already had electricity. In the course of their
conversation, Raso uttered words to settle.
In another confrontation, Raso explained that she was about to issue the certification
but was prevented by Lomarda, who allegedly apprised her of a pending complaint for
premature tapping against respondent. To settle the misunderstanding, Raso directed
respondent to discuss the matter with Lomarda at his house. During their conversation,
Lomarda told respondent that an ocular inspection of respondent’s farmhouse will be
conducted.
On the day of inspection, respondent was assured that his electricity will not be
disconnected and that Raso will issue the certification, provided he would pay or sign a
promissory note. Respondent, however, refused to comply with the said conditions,
reasoning that there was no official order from the concerned office. Lomarda in the
presence of policemen, the barangay treasurer, and other several passersby, ordered
his linemen to cut off respondent’s electricity.
Claiming that petitioners’ acts tarnished his image, besmirched his reputation, and
defamed his honor and dignity, respondent filed a complaint for damages before the
RTC. The RTC found petitioners liable for damages.
Issues:
Whether or not petitioners are liable under Article 21 of the Civil Code
Whether or not respondents are entitled to award of damages.
HELD: In this case, petitioners were found liable by both the RTC and CA for abuse of
rights under Article 19, in relation to Article 21, of the Civil Code.
“Article 19, known to contain what is commonly referred to as the principle of abuse of
rights, sets certain standards which may be observed not only in the exercise of one’s
rights but also in the performance of one’s duties.” In this regard, case law states that
“[a] right, though by itself legal because [it is] recognized or granted by law as such,
may nevertheless become the source of some illegality. When a right is exercised in a
manner which does not conform with the norms enshrined in Article 19 and results in
damage to another, a legal wrong is thereby committed for which the wrongdoer must
be held responsible.”
Article 19 is the general rule which governs the conduct of human relations. By itself, it
is not the basis of an actionable tort. Article 19 describes the degree of care required so
that an actionable tort may arise when it is alleged together with Article 20 or Article 21.”
In Saudi Arabian Airlines v. CA, the Court explained the relation of Article 19 and Article
21 of the Civil Code:
On one hand, Article 19 of the New Civil Code provides:
Art. 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith.
On the other hand, Article 21 of the New Civil Code provides:
Art. 21. Any person who willfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for
damages.
Thus, in Philippine National Bank vs. CA, this Court held that:
The aforecited provisions on human relations were intended to expand the concept of
torts in this jurisdiction by granting adequate legal remedy for the untold number of
moral wrongs which is impossible for human foresight to specifically provide in the
statutes.
Although Article 19 merely declares a principle of law, Article 21 gives flesh to its
provisions. Thus, we agree with private respondent’s assertion that violations of Articles
19 and 21 are actionable, with judicially enforceable remedies in the municipal forum.
In Mata v. Agravante, the Court pointed out that Article 21 of the Civil Code “refers to
acts contra bonos mores and has the following elements: (1) an act which is legal; (2)
but which is contrary to morals, good customs, public order or public policy; and (3) is
done with intent to injure.
Under the foregoing circumstances, it is clear that petitioners should be held liable for
damages under Article 19, in relation to Article 21, of the Civil Code. While it appears
that petitioners were engaged in a legal act, i.e., exacting compliance with the
requirements for the installation of respondent’s electricity in his farmhouse, the
circumstances of this case show that the same was conducted contrary to morals and
good customs, and were in fact done with the intent to cause injury to respondent.
Petitioners did not only fail to apprise respondent of the proper procedure to expedite
compliance with the requirements, they also misled him to believe that everything can
be settled, extorted money from him when only a meager amount was due, and worse,
publicly humiliated him in front of many people which ended up in the disconnection of
his electricity altogether. To be sure, the clean hands doctrine – which was invoked by
petitioners herein – should not apply in their favor, considering that while respondent
may have technically failed to procure the required BAPA certification and proceeded
with the tapping, the same was not due to his lack of effort or intention in complying with
the rules in good faith. As exhibited above, it was, in fact, petitioners’ own acts which
made compliance with the rules impossible. Hence, respondent was actually free from
fault, negating the application of the clean hands doctrine
Parties who do not come to court with clean hands cannot be allowed to profit from their
own wrongdoing.1avvphi1 The action (or inaction) of the party seeking equity must be
"free from fault, and he must have done nothing to lull his adversary into repose,
thereby obstructing and preventing vigilance on the part of the latter."

Buenaventura v. CA GR 127358, March 31, 2005

FACTS: Noel Buenaventura filed a position for the declaration of nullity of marriage on
the ground that both he and his wife were psychologically incapacitated.
The RTC in its decision, declared the marriage entered into between petitioner and
respondent null and void ab initio, ordered the liquidation of the assets of the conjugal
partnership property; ordered petitioner a regular support in favor of his son in the
amount of 15,000 monthly, subject to modification as the necessity arises, and awarded
the care and custody of the minor to his mother.
Petitioner appealed before the CA. While the appeal was pending, the CA, upon
respondent’s motion issued a resolution increasing the support pendente lite to P20,
000.
The CA dismissal petitioner appeal for lack of merit and affirmed in to the RTC decision.
Petitioner motion for reconsideration was denied, hence this petition.
ISSUE: Is the aggrieved spouse in a marriage declared void by reason of psychological
incapacity of the other spouse entitled to moral and exemplary damages under article
21 of the New Civil Code?
HELD: It must be noted that Article 21 states that the individual must willfully cause loss
or injury to another. There is a need that the act is willful and hence done in complete
freedom.
Psychological incapacity has been defined, thus:
. . . no less than a mental (not physical) incapacity that causes a party to be truly
incognitive of the basic marital covenants that concomitantly must be assumed and
discharged by the parties to the marriage which, as so expressed by Article 68 of the
Family Code, include their mutual obligations to live together, observe love, respect and
fidelity and render help and support. There is hardly any doubt that the intendment of
the law has been to confine the meaning of "psychological incapacity" to the most
serious cases of personality disorders clearly demonstrative of an utter insensitivity or
inability to give meaning and significance to the marriage. . . .
It is contradictory to characterize acts as a product of psychological incapacity, and
hence beyond the control of the party because of an innate inability, while at the same
time considering the same set of acts as willful.
By declaring Noel as psychologically incapacitated, the possibility of awarding moral
damages on the same set of facts was negated.
The award of moral damages should be predicated, not on the mere act of entering into
the marriage, but on specific evidence that it was done deliberately and with malice by a
party who had knowledge of his/her disability and yet willfully concealed the same.
Since the grant of moral damages was not proper, it follows that the grant of exemplary
damages cannot stand since the Civil Code provides that exemplary damages are
imposed in addition to moral, temperate, liquidated or compensatory damages.

Jhonna Guevarra et. al. v. Jan Banach GR214016 , November 24, 2021
FACTS: Jan, a German citizen, met Jhonna, a Filipina, thru a common friend. In due
time, he courted her, and they agreed to marry. The two agreed to get married, and Jan
sent P500,000.0 for the purpose of buying a lot for their conjugal home. Jhonna, soon
discovered, however, that Jan is still married to his third wife, despite telling her that he
was already divorced. He also made Jhonna believe that his real name is Roger Braw
ner. Jhonna called off the marriage, and refused to return the money given to her by
Jan, calling it a gift. On the other hand, Jan sought the return of the money, filing a case
for damages under Articles 20 and 21 of the New Civil Code. He argued that Jhonna
had repeatedly assured him that she would marry him, so that he would send her
money, only to break up with him after sending the money. These acts amounted to
fraud, or at the very least, unjust enrichment.
The RTC found Jhonna and her parents liable for damages, and ordered them to pay
Jan moral damages and attorneys fees.
The CA affirmed the RTC judgment.
ISSUE:
Whether or not a breach of promise to marry is actionable:
Whether or not a party who acted in bad faith may file an action for damages under Art.
21 of the New Civil Code on human relations.
HELD: A breach of promise to marry is not actionable. While the Court in Wassmer v.
Velez allowed the recovery of damages as a result of a canceled marriage, it did so only
because in that case, preparations for the wedding had already been made, and the
bride canceled the wedding two days before the wedding. The award in Wassmer is not
because of the breach of promise to marry, but on Article 21 of the Civil Code. It ruled
that, while a breach of promise to marry is not actionable, walking out of a wedding, two
days prior to the event, after all had been prepared, was quite different. The defendant’s
act was deemed palpably and unjustifiably contrary to good customs”, for which the
award of damages was proper.
“What respondent fails to consider however, is that the human relations provisions in
the New Civil Code presupposes that the party seeking damages must have acted in
good faith. In Wassmer, this Court awarded damages because the party who sought
damages-the-bride-to-be-did not perpetrate lies, fraud, or deception, which would have
barred discovery. This is the reason why the groom-to-be’s conduct in Wassmer was
considered unjust and contrary to good customs. Had the bride-to-be been in bad faith,
the human relations provisions would not have applied.
This case is different. Here, petitioner called off the engagement after she had
discovered respondent’s lies and deception. As the Court of Appeals found,
respondent’s actions were tainted with fraud and deceit; he did not have the purest
intentions in marrying petitioner. He lied about about his marital status, and even hid his
true name from the petitioner. These acts suffice to justify the wedding’s cancellation.
Finding out that one’s betrothed is still married another person, and that they are not
who they say they are, are enough reasons to conclude bad faith.
Since respondent himself did not act in bad faith, he cannot claim damages under the
New Civil Code. The unjust enrichment principle under Article 22 only applies if the
property is acquired without legal grounds. Here, respondent gave petitioner
P500,000.00 as a gift to help her and her family with their possible eviction from their
home. The money being a gift, petitioner is correct to say she cannot be compelled to
return the P500,000.00 given to her.
Note: The Supreme Court also added that “Beyond this public policy, however, is the
recognition that the right to marry is a fundamental human right. Marriage is a social
institution that creates a permanent bond between individuals, and the law grants them
rights and obligations unique to married couples. The choice of whether to marry-and
necessarily, whom to marry-is a personal decision that a person makes for himself. This
individual choice must be made, as much as possible, completely free from any external
pressures. After all, marriage can and will change a person’s life.
Thus, choosing a person to marry is intimately connected to a person’s autonomy. Any
State interest in the institution of marriage must not lead to an unjustified intrusion into
one individual’s autonomy and human dignity. It must only be done when public interest
is imperiled. It is not within the courts’ competence to reach too far into intimate
relations. Courts, through litigation, should not dictate on or even pressure a person into
accepting a life of marriage with a person they reject. Courts must, as much as possible,
refrain meddling in these personal affairs.
Navarro-Banaria v. Banaria, G.R. No. 217806, July 28, 2020
FACTS: The action for damages of respondents stemmed from the alleged bad faith,
malice, and deliberate failure of petitioner Adelaida to keep her word and honor her
promise to bring Pascasio to his 90th birthday celebration. Such special event was
prepared by the respondents and the non-appearance of Pascasio during the event
allegedly caused loss and injury to the respondents.
Respondents alleged that the planning of the event started as early as February 2003 or
a year before the planned 90th birthday celebration. Respondents were in continuous
contact with Adelaida to remind her of the upcoming event. Adelaida, for her part,
confirmed Pascasio’s attendance during the event although it coincides with the death
anniversary of Adelaida’s mother. However, much to the dismay of the Banaria siblings
as well as their guests, Pascasio was nowhere to be found in his 90th birthday
celebration. Respondents continuously called Adelaida but they were not able to contact
her.
Marcelino, Pascasio’s brother, told the other respondents that Pascasio and Adelaida
were at their residence in Quezon City. Respondents went to the said place to ask
Adelaida her reason why Pascasio was not able to attend the birthday celebration.
Adelaida reasoned that Pascasio did not want to go to the party. When asked why
Adelaida broke her commitment to bring Pascasio to the party, Adelaida uttered the
words, “I am the wife.”
Thus, the Complaint for Damages filed by respondents against Adelaida. In response,
Adelaida rebutted the allegations of the respondents by saying that she was not privy to
the respondents’ planned birthday celebration for Pascasio.
The RTC rendered its Decision, which ordered petitioner to pay the respondents’ travel
expenses, actual damages, moral damages, exemplary damages, and attorney’s fees.
Aggrieved, petitioner elevated the case to the CA. However, it was denied.
ISSUE: Whether or not petitioner violated Articles 19 and 21 of the Civil Code
HELD: Article 19 of the Civil Code provides that every person in the exercise of his
rights and in the performance of his duties must act with justice, give everyone his due,
and observe honesty and good faith. The principle embodied in this provision is more
commonly known as the “abuse of right principle.” The legal consequence should
anyone violate this fundamental provision is found in Articles 20 and 21 of the Civil
Code. The correlation between the two provisions are showed in the case of GF
EQUITY, Inc. v. Valenzona, to wit:
Article 19, known to contain what is commonly referred to as the principle of abuse of
rights, sets certain standards which must be observed not only in the exercise of one’s
rights but also in the performance of one’s duties. These standards are the following: to
act with justice; to give everyone his due; and to observe honesty and good faith. The
law, therefore, recognizes a primordial limitation on all rights; that in their exercise, the
norms of human conduct set forth in Article 19 must be observed. A right, though by
itself legal because recognized or granted by law as such, may nevertheless become
the source of some illegality. When a right is exercised in a manner which does not
conform with the norms enshrined in Article 19 and results in damage to another, a legal
wrong is thereby committed for which the wrongdoer must be held responsible. But
while Article 19 lays down a rule of conduct for the government of human relations and
for the maintenance of social order, it does not provide a remedy for its violation.
Generally, an action for damages under either Article 20 or Article 21 would be proper.
While Article 19 of the New Civil Code may have been intended as a mere declaration
of principle, the “cardinal law on human conduct” expressed in said article has given rise
to certain rules, e.g., that where a person exercises his rights but does so arbitrarily or
unjustly or performs his duties in a manner that is not in keeping with honesty and good
faith, he opens himself to liability. The elements of an abuse of rights under Article 19
are: (1) there is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole
intent of prejudicing or injuring another.
Consequently, when Article 19 is violated, an action for damages is proper under Article
20 and 21 of the New Civil Code. Article 20 pertains to damages arising from a violation
of law.
For starters, there is no question that as legal wife and guardian of Pascasio, who is
physically and mentally infirm, Adelaida has the principal and overriding decision when
it comes to the affairs of her husband including the celebration of the latter’s 90th
birthday.
However, it must be noted Adelaida’s right, as with any rights, cannot be exercised
without limitation. The exercise of this right must conform to the exacting standards of
conduct enunciated in Article 19. Adelaida was clearly remiss in this aspect.
Glaring is the fact that long before the scheduled date of Pascasio’s 90th birthday
celebration, Adelaida was already informed about the event. As early as February 2003
or a year before the scheduled event, Adelaida was already reminded of the event by
the respondents to which she confirmed Pascasio’s attendance. Even though Adelaida
alleges that she was not privy to any birthday celebration for Pascasio, the fact remains
that she was continuously informed and reminded about the scheduled event.
All in all, the foregoing shows that Adelaida intentionally failed to bring Pascasio to the
birthday celebration prepared by the respondents thus violating Article 19 of the Civil
Code on the principle of abuse of right. Her failure to observe good faith in the exercise
of her right as the wife of Pascasio caused loss and injury on the part of the
respondents, for which they must be compensated by way of damages pursuant to
Article 21 of the Civil Code.
Cabasal v. BPI GR No. 233846, Nov 18, 2020
Further, it cannot even be established from petitioners' evidence whether Eloisa backed
out of the agreement because of the very words spoken by respondent. Eloisa was not
presented in court; hence, petitioners' asseveration is merely self-serving,
unsubstantiated, and conjectural. It is a fundamental rule that bare allegations,
unsubstantiated by evidence, are not equivalent to proof. Charges based on mere
suspicion and speculation cannot be given credence. When the complainant relies on
mere conjectures and suppositions, and fails to substantiate his allegations, the
complaint must be dismissed for lack of merit.

Mercado v. Ongpin GR207324, Sept 20, 2020

FACTS: On February 5, 1972, Ongpin married Alma Mantaring. Later Mantaring
obtained a divorce decree in USA. Ongpin then married Mercado in USA in belief that
his first marriage was already divorced. However, the two had separated. He then
obtained a judicial declaration of the nullity of his first marriage with Mantaring.
Subsequently he filed a petition for declaration of his marriage with Mercado in RTC
Cavite based on Article 35 (4) of the Family Code, void marriage for being bigamous.
He claimed that after his marriage with Mercado, he discovered that Mantaring was still
a Filipino Citizen when she obtained a divorce decree. Mercado on the other hand
argued it is just Ongpin’s scheme to evade liability in a separate civil case for separation
of property to deprive her of her share, she also claimed moral and exemplary
damages.
The RTC rendered a judgement finding the marriage between Mercado and Ongpin null
and void on the ground that Ongpin was incapacitated to marry at the time he married
Mercado and found Ongpin liable for moral damages for contracting marriage despite
his first marriage not yet being annulled. The CA reversed the award of moral and
exemplary damages.
ISSUE: Whether or not moral and exemplary damages may be awarded in the case at
Bar
HELD: No. As a general rule, moral and exemplary damages may be awarded in cases
of bigamy. But the case at Bar falls under an exception. Moral damages are awarded
when: (1) there is a physical, mental or psychological injury clearly sustained by the
claimant; (2) a wrongful act or omission is factually established; (3) the act or omission
is the proximate cause of the injury; and (4) the award of damages is based on any of
the cases stated in Article 221952 of the Civil Code.
As correctly stressed by the Court of Appeals, the bad faith, or deliberate intent to do a
wrongful act, of the bigamous spouse must be established:
Here, it was not convincingly shown that appellant deliberately contracted a
second marriage despite knowledge of the subsistence of his first marriage. He
believed in good faith that the divorce decree given to his first wife was valid and
 binding in the Philippines because he thought all along that [his] first wife at that
time was already an [American] citizen. Thus, he and Mercado, both consenting
adults, freely married each other, both believing that the final divorce decree was
valid and binding in the Philippines. Indeed, both appellant and Mercado would
not have married each other under pain of indictment for bigamy had they known
that appellant's first marriage was still in existence, because it later turned out
that Mercado was still a Filipino when the divorce decree was issued. So how
could appellant be held liable for damages when he was not shown to have acted
in bad faith when he married appellee? It has been consistently held that bad
faith does not simply mean negligence or bad judgment. It involves a state of
mind dominated by ill-will or motive. It implies a conscious and intentional design
to do a wrongful act for a dishonest purpose or some moral obliquity. The person
claiming moral damages must prove the existence of bad faith by clear and
convincing evidence for the law always presumes good faith. Here, appellee
failed to overcome the legal presumption of good faith. Thus, the award of moral
damages must be deleted.
Petitioner has not been able to prove that, at the time she and respondent married,
respondent knew that his divorce from his first spouse was invalid. There is no proof
that, upon the first spouse's confirmation of her Philippine citizenship at the time she
obtained the divorce decree, respondent concealed this knowledge from petitioner or
allowed her to continue believing that their marriage was valid. The malice or bad faith
necessary to sustain an action based on Article 19 of the Civil Code has not been
shown in this case. There being no entitlement to moral damages, no exemplary
damages can likewise be awarded to petitioner.

Spouses Villalva v. RCBC Savings Bank G.R. No. 165661, August 28, 2006
FACTS: Petitioner spouses issued forty-eight (48) checks to cover installment payments
for a '93 Toyota Corolla which were secured by a Deed of Chattel Mortgage. Under the
Deed, the spouses were to insure the vehicle against loss or damage by accident, theft
and fire, and endorse and deliver the policies to the mortgagor. The promissory notes
and chattel mortgage are ultimately assigned and encashed by RCBC. The evidence
shows that the spouses procured the necessary insurance. They however failed to
timely deliver the same to respondent until much later. As a consequence, RCBC had
the mortgaged vehicle insured in the meantime. The insurance policy obtained by
RCBC was later cancelled due to the insurance policy secured by the Spouses. The
premium paid by respondent exceeded the reimbursed amount paid by insurer.
RCBC demanded that the spouses surrender the mortgaged vehicle within five days
from notice by reason of unpaid obligations on the promissory notes and mortgage. The
petitioner spouses ignored the demand letter and asserted that they insured the
mortgaged vehicle in compliance with the Deed of Chattel Mortgage. The MTC ruled in
favor of the spouses. Such was affirmed by the RTC, but subsequently reversed by the
CA. RCBC contends that to set aside its decision would result in the unjust enrichment
of the petitioners on the ground that its payment of insurance premiums on behalf of the
petitioners unjustly enriched the latter.
ISSUE: Is the mortgagee who obtained insurance policy but did not deliver said policy to
the mortgagor as required by the terms of a chattel mortgage unjustly enriched when
the mortgagor paid for the premiums to obtain insurance policy covering the same
chattel and the same period?
HELD: NO. He is not unjustly enriched since the spouses were able to secure the
necessary insurance and only delayed the furnishing thereof to RCBC.
In the case at bar, the respondent failed to demand that petitioners comply with their
obligation to secure insurance coverage for the mortgaged vehicle. Following settled
jurisprudence, we rule that the petitioners had not defaulted on their obligation to insure
the mortgaged vehicle and the condition sine qua non (without which not) for
respondent to exercise its right to pay the insurance premiums over the subject vehicle
has not been established.
Enrichment consists of every patrimonial, physical or moral advantage, so long as it is
appreciable in money. It may also take the form of avoidance of expenses and other
indispensable reductions in the patrimony of a person. It may also include the
prevention of a loss or injury. In the case at bar, petitioner spouses were not enriched
when respondent obtained insurance coverage for the mortgaged vehicle as the
petitioner spouses had already obtained the required insurance coverage for the
vehicle.
Hence, the mortgagee who obtained insurance policy but did not deliver said policy to
the mortgagor as required by the terms of a chattel mortgage is not unjustly enriched
when the mortgagor paid for the premiums to obtain insurance policy covering the same
chattel and the same period.

Loria v. Muñoz, Jr. G.R. No. 187240, October 15, 2014

Loria never denied that he failed to fulfill his agreement with Muñoz. Throughout the
case’s proceedings, Loria failed to justify why he has the right to retain Muñoz’s
₱2,000,000.00. As the Court of Appeals ruled, "it was not shown that [Muñoz] benefited
from the delivery of the amount of ₱2,000,000.00 to [Loria]
Note: Generally, parties to an illegal contract may not recover what they gave under the
contract. Under the doctrine of in pari delicto, "no action arises, in equity or at law, from
an illegal contract. No suit can be maintained for its specific performance, or to recover
the property agreed to be sold or delivered, or the money agreed to be paid, or
damages for its violation. the application of the doctrine of in pari delicto is not always
rigid. An accepted exception arises when its application contravenes well-established
public policy (such as unjust enrichment in this case).

Frenzel v. Catito G.R. No. 143958, July 11, 2003

SUMMARY: Petitioner Alfred Frenzel, an Australian citizen, had a common-law
relationship with Ederlina Catito. They were both married during their relationship.
During their amorous relationship, Alfred Frenzel acquired several real properties in the
Philippines. In the Deed of Sale and Title of those properties, only Ederlina Catito was
indicated as the vendee (buyer) with Alfred knowing the Constitutional prohibition
against foreigners from buying real properties in the Philippines. Their relationship
eventually turned sour, and Alfred wanted to recover the money paid to purchase for the
properties citing Art. 1416 of the NCC. Court held that the purchase of real properties by
Alfred were void because they violate the Constitution. Hence, Alfred could not recover
since Art. 1416 does not apply to void contracts.
ISSUE:
a) Whether the Court of Appeals erred in applying the rule of In Pari Delicto since both
parties are not equally guilty but rather it was the respondent who employed fraud when
she did not inform petitioner that she was already married?
b) Whether the intention of the petitioner is not to own real properties in the Philippines
but to sell them as public auction to be able to recover his money used in purchasing
them?
HELD: The trial court ruled that based on documentary evidence, the purchaser of the
three parcels of land subject of the complaint was Ederlina. The court further stated that
even if Alfred was the buyer of the properties, he had no cause of action against
Ederlina for the recovery of the same because as an alien, he was disqualified from
acquiring and owning lands in the Philippines.
The sale of the three parcels of land to the petitioner was null and void ab initio.
Applying the pari delicto doctrine, the petitioner was precluded from recovering the
properties from the respondent.
Alfred appealed the decision to the Court of Appeals in which the petitioner posited the
view that although he prayed in his complaint in the court a quo that he be declared the
owner of the three parcels of land, he had no intention of owning the same permanently.
His principal intention therein was to be declared the transient owner for the purpose of
selling the properties at public auction, ultimately enabling him to recover the money he
had spent for the purchase thereof.
On March 8, 2000, the CA rendered a decision affirming in toto the decision of the RTC.
The appellate court ruled that the petitioner knowingly violated the Constitution; hence,
was barred from recovering the money used in the purchase of the three parcels of
land. It held that to allow the petitioner to recover the money used for the purchase of
the properties would embolden aliens to violate the Constitution, and defeat, rather than
enhance, the public policy.
Even if, as claimed by the petitioner, the sales in question were entered into by him as
the real vendee, the said transactions are in violation of the Constitution; hence, are null
and void ab initio.
A contract that violates the Constitution and the law, is null and void and vests no rights
and creates no obligations. It produces no legal effect at all. The petitioner, being a
party to an illegal contract, cannot come into a court of law and ask to have his illegal
objective carried out. One who loses his money or property by knowingly engaging in a
contract or transaction which involves his own moral turpitude may not maintain an
action for his losses. To him who moves in deliberation and premeditation, the law is
unyielding. The law will not aid either party to an illegal contract or agreement; it leaves
the parties where it finds them.
Under Article 1412 of the New Civil Code, the petitioner cannot have the subject
properties deeded to him or allow him to recover the money he had spent for the
purchase thereof. Equity as a rule will follow the law and will not permit that to be done
indirectly which, because of public policy, cannot be done directly. Where the wrong of
one party equals that of the other, the defendant is in the stronger position ... it signifies
that in such a situation, neither a court of equity nor a court of law will administer a
remedy. The rule is expressed in the maxims: EX DOLO MALO NON ORITUR ACTIO
(An action does not arise from fraud. When an action has its origin in fraud or deceit, it
cannot be supported; thus, a court of law will not assist a man who bases his course of
action on an immoral or illegal act.) and IN PARI DELICTO POTIOR EST CONDITIO
DEFENDENTIS (The principle that the courts will refuse to enforce an illegal agreement
at the instance of the person who is himself a party to the illegality or fraud is expressed
in this maxim).
Futile, too, is petitioner’s reliance on Article 22 of the New Civil Code which reads:
Art. 22. 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.
The provision is expressed in the maxim: “MEMO CUM ALTERIUS DETER
DETREMENTO PROTEST” (No person should unjustly enrich himself at the expense of
another). An action for recovery of what has been paid without just cause has been
designated as an accion in rem verso. This provision does not apply if, as in this case,
the action is proscribed by the Constitution or by the application of the pari delicto
doctrine. It may be unfair and unjust to bar the petitioner from filing an accion in rem
verso over the subject properties, or from recovering the money he paid for the said
properties, but, as Lord Mansfield stated in the early case of Holman vs. Johnson: “The
objection that a contract is immoral or illegal as between the plaintiff and the defendant,
sounds at all times very ill in the mouth of the defendant. It is not for his sake, however,
that the objection is ever allowed; but it is founded in general principles of policy, which
the defendant has the advantage of, contrary to the real justice, as between him and the
plaintiff.”

Yon Mitori International Industries v. Union Bank, G.R. No. 225538, October 14,
2020
Tan deposited in Union Bank account through Bank of the Philippine Islands (BPI)
Check drawn against the account of Angli Lumber & Hardware, Inc., one of Tan’s
alleged clients.
Tan withdrew from the said account the amount of P480,000.00. Later that day, the BPI
Check was returned to Union Bank as the account against which it was drawn had been
closed. It was then that Union Bank discovered that Tan’s account had been mistakenly
credited. Thus, the branch manager of Union Bank immediately called Tan to recover
the funds mistakenly released. However, Tan refused to return the funds, claiming that
the BPI Check proceeded from a valid transaction between Angli Lumber and Yon
Mitori.
During the course of its investigation, Union Bank discovered that Tan previously
deposited five BPI checks drawn by Angli Lumber against the same BPI account, and
that these five checks were all previously dishonored.
Thereafter, Union Bank through the bank manager of its Commonwealth branch, sent
Tan a letter demanding reimbursement of the amount of P420,000.00, by reason of the
fact that the “funds against said deposit was inadvertently allowed due to technical error
on the system prior to actual return of your check deposit which was not yet clear on
withdrawal date,” it appearing that the BPI Check was dishonored by BPI for being
drawn against a closed account. Tan refused to return the said amount. Union Bank
then debited the available balance reflected in Tan’s account amounting to
P34,700.6013 and thereafter instituted a Complaint for Sum of Money before the RTC,
for the recovery of the remaining balance amounting to P385,299.40.
The RTC rendered judgment in favor of Union Bank. The RTC found all the requisites
for the application of solutio indebiti under Article 2154 of the Civil Code present. It held
that since Union Bank mistakenly released the amount of P480,000.00 in favor of Tan
without being obligated to do so, Tan must be ordered to return said amount to preclude
unjust enrichment at Union Bank’s expense.
The CA affirmed the decision of RTC stressing that the fact of dishonor of the BPI
Check for the reason “Account Closed” is undisputed. On this basis, the CA affirmed the
RTC’s findings and held that Tan would be unjustly enriched at Union Bank’s expense if
he were permitted to derive benefit from the funds erroneously credited to his account.
ISSUE: Whether or not Tan is bound to return the proceeds of the BPI Check based on
the principle of unjust enrichment
Ruling: Yes. As correctly observed by the CA, the dishonor of the BPI Check is not
disputed. Evidently, Union Bank was under no obligation to effect payment in favor of
Tan precisely because the BPI Check which Tan deposited for collection had been
dishonored. Allowing Tan to retain the proceeds of the dishonored BPI Check despite
not being entitled thereto would therefore permit unjust enrichment at Union Bank’s
expense.
The principle of unjust enrichment is codified under Article 22 of the Civil Code. It states:
ART. 22. 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 or property of another against the
fundamental principles of justice, equity, and good conscience.
For the principle to apply, the following requisites must concur: (i) a person is unjustly
benefited; and (ii) such benefit is derived at the expense of or with damages to another.
Expounding on these requisites, the Court, in University of the Philippines v. Philab
Industries, Inc., held:
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.
The requisites for the application of the principle of unjust enrichment are clearly
present in this case. Here, it was unequivocally established that Tan withdrew and
utilized the proceeds of the BPI Check fully knowing that he was not entitled thereto.