NATURAL OBLIGATION

A.O. FISHER, plaintiff-appellee, vs. JOHN C. ROBB, defendant-appellant.

Facts: John C. Robb met A.O. Fisher in a business trip in Shanghai. The two became acquainted through friends and exchanged
knowledge regarding dog racing. Plaintiff as manager of a dog racing course, became interested with the business of the Philippine
Greyhound Club, Inc., in Manila and later informed defendant of his interest to subscribe and be a stockholder of said business. He
sent his first installment via Manila telegram. Later, said business was later change to The Philippine Racing Club, and upon asking for
the second installment from plaintiff, he said he already did send the second installment. The defendant endeavored to save the
investment of those who had subscribed to the Philippine Greyhound Club, Inc., by having the Philippine Racing Club acquire the
remaining assets of the Philippine Greyhound Club, Inc. Through exchange of letters, the plaintiff-appellee wrote the defendant-
appellant requiring him to return the entire amount paid by him to the Philippine Greyhound Club, Inc., Upon receiving this letter,
the defendant-appellant answered the plaintiff-appellee for any loss which he might have suffered in connection with the Philippine
Greyhound Club, Inc., in the same way that he could not expect anyone to reimburse him for his own losses which were much more
than those of the plaintiff-appellee
Issues: Whether a moral obligation will sustain an express executory promise?
Held: No. Defendant although was morally responsible because of the failure of the enterprise, is not the consideration required by
article 1261 of the Civil Code as an essential element for the legal existence of an onerous contract which would bind the promisor
to comply with his promise. Judgment is reversed and the costs to the plaintiff.
Ruling: The first essential requisite, therefore, required by the cited article 1261 of the Civil Code for the existence of a contract,
does not exists. As to the third essential requisite, namely, "A consideration for the obligation established," article1274 of the same
Code provides: (lawphi1.net)
In onerous contracts the consideration as to each of the parties is the delivery or performance or the promise of delivery or
performance of a thing or service by the other party; in remuneratory contracts the consideration is the service or benefit
for which the remuneration is given, and in contracts of pure beneficence the consideration is the liberality of the
benefactors. And article 1275 of the same Code provides:
ART. 1275. Contracts without consideration or with an illicit consideration produce no effect whatsoever. A consideration is
illicit when it is contrary to law or morality.

From lawphil.net 

The defendant John C. Robb appeals to this Court from the judgment of the Court of First Instance of Manila, the dispositive part of
which reads:
Judgment is hereby rendered in favor of the plaintiff and against the defendant, who is ordered to pay to the former the
sum of P2,000, with interest at the legal rate from March 11, 1938, until paid, plus costs.

The facts established at the trial without discussion are the following:
In September, 1935, the board of directors of the Philippine Greyhound Club, Inc., told the herein defendant-appellant John C. Robb,
to make a business trip to Shanghai to study the operation of a dog racing course. In Shanghai, the defendant-appellant stayed at the
American Club where be became acquainted with the plaintiff-appellee, A. O. Fisher, through their mutual friends. In the course of a
conversation, the defendant-appellant came to know that the plaintiff-appellee was the manager of a dog racing course. Upon
knowing the purpose of the defendant-appellant's trip, the plaintiff-appellee showed great interest and invited him to his
establishment and for several days gave him information about the business. It seems that the plaintiff became interested in the
Philippine Greyhound Club, Inc., and asked the defendant if he could have a part therein as a stockholder. As the defendant-
appellant answered in the affirmative, the plaintiff-appellee thereupon filled a subscription blank and, through his bank in Shanghai,
sent to the Philippine Greyhound Club, Inc., in Manila telegraphic transfer for P3,000 in payment of the first installment of his
subscription. Later on the defendant-appellant returned to Manila from Shanghai.
Some months thereafter, when the board of directors of the Philippine Greyhound Club, Inc., issued a call for the payment of the
second installment of the subscriptions, the defendant-appellant sent a radiogram to the plaintiff-appellee did so and sent P2,000
directly to the Philippine Greyhound Club, Inc., in payment of the said installment. Due to the manipulations of those who controlled
the Philippine Greyhound Club, Inc., during the absence of the defendant-appellant undertook the organization of a company called
The Philippine Racing Club, which now manages the race track of the Santa Ana park. The defendant immediately endeavored to
save the investment of those who had subscribed to the Philippine Greyhound Club, Inc., by having the Philippine Racing Club
acquire the remaining assets of the Philippine Greyhound Club, Inc. The defendant-appellant wrote a letter to the plaintiff-appellee
in Shanghai explaining in detail the critical condition of the Philippine Greyhound Club, Inc., and outlining his plans to save the
properties and assets of the plaintiff-appellee that he felt morally responsible to the stockholders who had paid their second
installment (Exh. C). In answer to said letter, the plaintiff-appellee wrote the defendant-appellant requiring him to return the entire
amount paid by him to the Philippine Greyhound Club, Inc., (exhibit E). Upon receiving this letter, the defendant-appellant answered
the plaintiff-appellee for any loss which he might have suffered in connection with the Philippine Greyhound Club, Inc., in the same
way that he could not expect anyone to reimburse him for his own losses which were much more than those of the plaintiff-appellee
(Exh. B).
The principal question to be decided in this appeal is whether or not the trial court erred in holding that there was sufficient
consideration to justify the promise made by the defendant-appellant in his letters Exhibits B and C.
In the fifth paragraph of the letter Exhibit B, dated March 16, 1936, addressed by the defendant-appellant to the plaintiff-appellee,
the former said: "I feel a moral responsibility for these second payments, which were made in order to carry out my plan (not the
first payments, as you have it in your letter), and Mr. Hilscher and I will see to it that stockholders who made second payments
receive these amounts back as soon as possible, out of our own personal funds. "As it is, I have had to take my loss along with
everyone else here, and so far as I can see that is what all of us must do. The corporation is finally flat, so it is out of the question to
receive back any of your investment from that source; the only salvage will be the second payment that you made, and that will
come from Hilscher and me personally, as I say, not because of any obligation, but simply because we have taken it on ourselves to
do that. (And I wish I could find someone who would undertake to repay a part of my own losses in the enterprise!)" And in the
seventh paragraph of the letter Exhibit C, dated February 21, 1936, addressed by the same defendant-appellant to the same
plaintiff-appellee the former said the following:
However, Mr. Fischer and I feel a personal responsibility to those few stockholders who made their second payments, including
yourself, and it is our intention to personally repay the amounts of the second payments made by those few.
. . . And, finally, paragraph 8 of the same letter Exhibit C states: "We are to receive a certain share of the new Philippine Racing Club
for our services as promoters of that organization, and as soon as this is received by us, we will be in a position to compensate you
and the few others who made the second payments. That, as T have said, will come from us personally, in an effort to make things
easier for those who were sportsmen enough to try to save the Greyhound organization by making second payments.

Article 1254 of the Civil Code provides as follows:

A contract exists from the moment one or more persons consent to be bound with respect to another or others to deliver
something or to render some services.
And article 1261 of the same Civil Code provides the following:

ART. 1261. There is no contract unless the following requisites exists:

1. The consent of the contracting parties;
2. A definite object which is the subject-matter of the contract;
3. A consideration for the obligation established.
In the present case, while the defendant-appellant told the plaintiff-appellee that he felt morally responsible for the second
payments which had been made to carry out his plan, and that Mr. Hilscher and he would do everything possible so that the
stockholders who had made second payments may receive the amount paid by them from their personal funds because they
voluntarily assumed the responsibility to make such payment as soon as they receive from the Philippine racing Club certain shares
for their services as promoters of said organization, it does not appear that the plaintiff-appellee had consented to said form of
reimbursement of the P2,000 which he had directly paid to the Philippine Greyhound Club, Inc., in satisfaction of the second
installment.
The first essential requisite, therefore, required by the cited article 1261 of the Civil Code for the existence of a contract, does not
exists.
As to the third essential requisite, namely, "A consideration for the obligation established," article 1274 of the same Code
provides:lawphi1.net
In onerous contracts the consideration as to each of the parties is the delivery or performance or the promise of delivery or
performance of a thing or service by the other party; in remuneratory contracts the consideration is the service or benefit for which
the remuneration is given, and in contracts of pure beneficence the consideration is the liberality of the benefactors.
And article 1275 of the same Code provides:
ART. 1275. Contracts without consideration or with an illicit consideration produce no effect whatsoever. A consideration is illicit
when it is contrary to law or morality.
Manresa, in volume 8, 4rth edition, pages 618-619 of his Commentaries on the Civil Code, has this to say:
Considering the concept of the consideration as the explanation and motive of the contract, it is related to the latter's object and
even more to its motives with which it is often confused. It is differentiated from them, however, in that the former is the essential
reason for the contract, while the latter are the particular reasons of a contracting party which do not affect the other party and
which do not preclude the existence of a different consideration. To clarify by an example: A thing purchased constitutes the
consideration for the purchaser and not the motives which have influenced his mind, like its usefulness, its perfection, its relation to
another, the use thereof which he may have in mind, etc., a very important distinction, which precludes the annulment of the
contract by the sole influence of the motives, unless the efficacy of the former had been subordinated to compliance with the latter
as conditions.
The jurisprudence shows some cases wherein this important distinction is established. The consideration of contracts, states the
decision of February 24, 1904, is distinct from the motive which may prompt the parties in executing them. The inaccuracies
committed in expressing its accidental or secondary details do not imply lack of consideration or false consideration, wherefore, they
do not affect the essence and validity of the contract. In a loan the consideration in its essence is, for the borrower the acquisition of
the amount, and for the lender the power to demand its return, whether the money be for the former or for another person and
whether it be invested as stated or otherwise.
The same distinction between the consideration and the motive is found in the decisions of November 23, 1920 and March 5, 1924.
The contract sought to be judicially enforced by the plaintiff-appellee against the defendant-appellant is onerous in character,
because it supposes the deprivation of the latter of an amount of money which impairs his property, which is a burden, and for it to
be legally valid it is necessary that it should have a consideration consisting in the lending or or promise of a thing or service by such
party. The defendant-appellant is required to give a thing, namely, the payment of the sum of P2,000, but the plaintiff-appellee has
not given or promised anything or service to the former which may compel him to make such payment. The promise which said
defendant-appellant has made to the plaintiff-appellee to return to him P2,000 which he had paid to the Philippine Greyhound Club,
Inc., as second installment of the payment of the amount of the shares for which he has subscribed, was prompted by a feeling of
pity which said defendant-appellant had for the plaintiff-appellee as a result of the loss which the latter had suffered because of the
failure of the enterprise. The obligation which the said defendant-appellant had contracted with the plaintiff-appellee is, therefore,
purely moral and, as such, is not demandable in law but only in conscience, over which human judges have no
jurisdiction.1awphi1.net
As to whether a moral obligation is a sufficient consideration, read in volume 12 of the American Jurisprudence, pages 589-590,
paragraphs 96, 67, the following:
SEC. 96. Moral obligation. — Although there is authority in support of the board proposition that a moral obligation is sufficient
consideration, such proposition is usually denied. . . . .
The case presenting the question whether a moral obligation will sustain an express executory promise may be divided into five
classes: (1) Cases in which the moral obligation arose wholly from ethical considerations, unconnected with any legal obligations,
perfect or imperfect, and without the receipt of actual pecuniary or material benefit by the promisor prior to the subsequent
promise; (2) cases in which the moral obligation arose from a legal liability already performed or still enforceable; (3) cases in which
the moral obligation arose out of, or was connected with, a previous request or promise creating originally an enforceable legal
liability, which, however, at the time of the subsequent express promise had become discharged or barred by operation of a positive
rule of law, so that at that time there was no enforceable legal liability; (4) cases in which the moral obligation arose from, or was
connected with, a previous request or promise which, however, never created any enforceable legal liability, because of a rule of law
which rendered the original agreement void, or at least unenforceable; and (5) cases in which the moral obligation arose out of, or
was connected with, the receipt of actual material or pecuniary benefit by the promisor, without, however, any previous request or
promise on his part, express or implied, and therefore, of course, without any original legal liability, perfect or imperfect.
SEC. 97. Moral obligation unconnected with legal liability or legal benefit. — Although, as subsequently shown was formerly some
doubt as to the point, it is now well established that a mere moral obligation or conscience duty arising wholly from ethical motives
or a mere conscientious duty unconnected with any legal obligation, perfect or imperfect, or with the receipt of benefit by the
promisor of a material or pecuniary nature will not furnish a consideration for an executory promise. . . . .
In view of the foregoing considerations, we are of the opinion and so hold, that the promise made by an organizer of a dog racing
course to a stockholder to return to him certain amounts paid by the latter in satisfaction of his subscription upon the belief of said
organizer that he was morally responsible because of the failure of the enterprise, is not the consideration rquired by article 1261 of
the Civil Code as an essential element for the legal existence of an onerous contract which would bind the promisor to comply with
his promise.
Wherefore, the appealed judgment is reversed and the costs to the plaintiff.
Avanceña, C.J., Imperial, Diaz, Laurel, Concepcion, and Moran, JJ., concur.
Villarroel vs. Estrada, 71 Phil. 140, No. 47362 December 19, 1940 GR No. L-47362 December 19, 1940
JOHN F. VILLARROEL, appellant-appellant,vs.. BERNARDINO ESTRADA, turned-appellee.
D. Felipe Agoncillo in representation of the appellant-appelante.
D. Crispin Oben in representation of the defendant-appellee.

AVANCEÑA, Pres :On May 9, 1912, Alejandro F. Callao, mother of defendant John F. Villarroel, obtained from the spouses Mariano
Estrada and Severina a loan of P1, 000 payable after seven years (Exhibito A). Alejandra died, leaving as sole heir to the defendant.
Spouses Mariano Estrada and Severina also died, leaving as sole heir to the plaintiff Bernardino Estrada. On August 9, 1930, the
defendant signed a document (Exhibito B) by which the applicant must declare in the amount of P1, 000, with an interest of 12
percent per year. This action relates to the recovery of this amount. The Court of First Instance of Laguna, which was filed in this
action, condemn the defendant to pay the claimed amount of P1, 000 with legal interest of 12 percent per year since the August 9,
1930 until full pay. He appealed the sentence. It will be noted that the parties in the present case are, respectively, the only heirs
and creditors of the original debtor. This action is brought under the defendant's liability as the only son of the original debtor in
favor of the plaintiff contracted, sole heir of primitive loan creditors. It is recognized that the amount of P1, 000 to which contracts
this obligation is the same debt of the mother's parents sued the plaintiff. Although the action to recover the original debt has
prescribed and when the lawsuit was filed in this case, the question raised in this appeal is primarily whether, notwithstanding such
requirement, the action taken is appropriate. However, this action is based on the original obligation contracted by the mother of
the defendant, who has already prescribed, but in which the defendant contracted the August 9, 1930 (Exhibito B) by assuming the
fulfillment of that obligation, as prescribed. Being the only defendant in the original herdero debtor eligible successor into his
inheritance, that debt brought by his mother in law, although it lost its effectiveness by prescription, is now, however, for a moral
obligation, that is consideration enough to create and make effective and enforceable obligation voluntarily contracted its August 9,
1930 in Exhibito B. The rule that a new promise to pay a debt prrescrita must be made by the same person obligated or otherwise
legally authorized by it, is not applicable to the present case is not required in compliance with the mandatory obligation
orignalmente but which would give it voluntarily assumed this obligation. It confirms the judgment appealed from, with costs against
the appellant. IT IS SO ORDERED. Imperial, Diaz, Laurel, and Horrilleno, MM., Concur

VILLAROEL VS. ESTRADA

71 Phil. 140 (1940)

FACTS

This was originally an action commenced by the plaintiff

(respondent) against the defendant (petitioner) for the purpose of
enforcing a contract entered into on August 9, 1903, by virtue of
which the defendant undertook to pay to the plaintiff a certain debt
which his deceased mother had incurred from the deceased parents of
the said plaintiff more than eighteen years ago. It is submitted
that this debt had already prescribed.

ISSUE

Whether or not this action will prosper, considering that

the debt incurred by the defendant's mother had already prescribed.

HELD

The Supreme Court held that the present action is not

founded on the original obligation contracted by the mother of the
defendant, which had already prescribed, but on that contracted by
the defendant on August 9, 1930, in assuming the obligation which
had already prescribed. The defendant being the only heir of the
original debtor with the right to succeed in her inheritance, that
debt lawfully contracted by his mother, although it lost its
efficacy by prescription, is nevertheless now a moral obligation as
far as he is concerned, a moral obligation which is a sufficient
consideration to create and make effective and demandable the
obligation which he had voluntarily contracted on August 9, 1930.
Barredo vs. Garcia, 73 Phil 607

Facts: On May 3, 1936, there was a head-on collision between a taxi of the Malate taxicab driven by Fontanilla and a carretela
guided by Dimapilis. The carretela was over-turned, and a passenger, a 16-year old boy, Garcia, suffered injuries from which he died.
A criminal action was filed against Fontanilla, and he was convicted. The court in the criminal case granted the petition to reserve the
civil action. Garcia and Almario, parents of the deceased, on March 7, 1939, filed a civil action against Barredo, the proprietor of the
Malate Taxicab and employer of Fontanilla, making him primarily and directly responsible under culpa acquiliana of Article 2180 of
the Civil Code of the Philippines. It is undisputed that Fontanilla’s negligence was the cause of the accident, as he was driving on the
wrong side of the road at high speed, and there was no showing that Barredo exercised the diligence of a good father of a family, a
defense to Article 2180 of the said Code. Barredo’s theory of defense is that Fontanilla’s negligence being punished by the Revised
Penal Code, his liability as employer is only subsidiary, but Fontanilla, was not sued for civil liability. Hence, Barredo claims that he
cannot be held liable.

Issue: Whether or not Barredo, as employer is civilly liable for the acts of Fontanilla, his employee.

Held: Quasi-delict or culpa acquiliana is a separate legal institution under the Civil Code of the Philippines is entirely distinct and
independent from a delict or crime under the Revised Penal Code. In this jurisdiction, the same negligent act causing damage may
produce civil liability (subsidiary) arising from a crime under Article 103 of the Revised Penal Code of the Philippines; or create an
action for quasi-delicto or culpa aquiliana under Articles 2179 and 2180 of the Civil Code and the parties are free to choose which
course to take. And in the instant case, the negligent act of Fontanilla produces two (2) liabilities of Barredo: First, a subsidiary one
because of the civil liability of Fontanilla arising from the latter’s criminal negligence under Article 103 of the Revised Penal Code,
and second, Barredo’s primary and direct responsibility arising from his presumed negligence as an employer under Article 2180 of
the Civil Code. Since the plaintiffs are free to choose what remedy to take, they preferred the second, which is within their rights.
This is the more expedious and effective method of relief because Fontanilla was either in prison or just been released or had no
property. Barredo was held liable for damages.

Barredo vs. Garcia and Almario

73 Phil. 607

Facts: A head-on collision between a taxicab owned by Barredo and a carretela occurred. The carretela was overturned and one of
its passengers, a 16-year old boy, the son of Garcia and Almario, died as a result of the injuries which he received. The driver of the
taxicab, a employee of Barredo, was prosecuted for the crime and was convicted. When the criminal case was instituted, Garcia and
Almario reserved their right to institute a separate civil action for damages. Subsequently, Garcia and Almario instituted a civil action
for damages against Barredo, the employer of the taxicab driver.

Held: “The pivotal question in this case is whether the plaintiffs may bring this separate civil action against Fausto Barredo thus
making him primarily and directly responsible under Article 1903 of the Civil Code as an employer of Pedro Fontanilla. The defendant
maintains that Fontanilla’s negligence being punishable by the Penal Code, his (defendant’s) liability as an employer is only
subsidiary, according to said Penal Code, but Fontanilla has not been sued in a civil action and his property has not been exhausted.
To decide the main issue, we must cut thru the tangle that has, in the minds of many, confused and jumbled together delitos and
cuasi delitos, or crimes under the Penal Code and fault or negligence under Articles 1902-1910 of the Civil Code. This should be done
because justice may be lost in a labyrinth, unless principles and remedies are distinctly envisaged. Fortunately, we are aided in our
inquiry by the luminous presentation of this perplexing subject by renowned jurists and we are likewise guided by the decisions of
this Court in previous cases as well as by the solemn clarity of the considerations in several sentences of the Supreme Tribunal of
Spain.

“Authorities support the proposition that a quasi-delict or ‘culpa aquiliana’ is a separate legal institution under the Civil Code,
with a substantivity all its own, and individuality that is entirely apart and independent from a delict or crime. Upon this principle,
and on the wording and spirit of Article 1903 of the Civil Code, the primary and direct responsibility of employers may be safely
anchored.

xxxxx

“It will thus be seen that while the terms of Article 1902 of the Civil Code seem to be broad enough to cover the driver’s
negligence in the instant case, nevertheless Article 1903 limits cuasi-delitos TO ACTS OR OMISSIONS ‘NOT PUNISHABLE BY
LAW.’ But inasmuch as Article 365 of the Revised Penal Code punishes not only reckless but even simple imprudence or
negligence, the fault or negligence under Article 1902 of the Civil Code has apparently been crowded out. It is this overlapping that
makes the “confusion worse confounded.’ However, a closer study shows that such a concurrence of scope in regard to negligent
acts does not destroy the distinction between the civil liability arising from a crime and the responsibility for cuasi-delitos or culpa
extra-contractual. The same negligent act causing damages may produce civil liability arising from a crime under Article 100 of the
Revised Penal Code; or create an action for cuasi-delito or culpa extra-contractual under Articles 1902-1910 of the Civil Code.

“The individuality of cuasi-delito or culpa extra-contractual looms clear and uamistakable [sic] unmistakable. This legal institution is
of ancient lineage, one of its early ancestors being the Lex Aquilia in Roman Law. In fact, in Spanish legal terminology, this
responsibility is often referred to as culpa aquiliana. The Partidas also contributed to the genealogy of the present fault or negligence
under the Civil Code: x x x .

“The distinctive nature of cuasi-delitos survives in the Civil Code. According to Article 1089, one of the five sources of obligations is
the legal institution of cuasi-delito or culpa extra-contractual: ‘ los actos . . . . en que intervenga cualqier genero de culpa or
negligencia.’ Then Article 1093 provides that this kind of obligation shall be governed by Chapter 11 of Title XVI of Book IV ,
meaning Articles 1902-1910. This portion of the civil Code is exclusively devoted to the legal institution of culpa aquiliana.

“Some of the differences between crimes under the Penal Code are:

“1. That crimes affect the public interest, while quasi-delitos are only of private concern.

“2. That consequently, the Penal Code punishes or corrects the criminal act, while the Civil Code, by means of indemnification,
merely repairs the damage.

“3. That delicts are not as broad as quasi-delicts, because for the former are punished only if there is a penal law clearly covering
them, while the latter, cuasi-delitos, include all acts in which ‘ any kind of fault or negligence intervenes.’ However, it should
be noted that not all violations of the penal law produce civil responsibility, such as begging in contravention of ordinances, violation
of the game laws, infraction of the rules of traffic when nobody is hurt.

xxxxx

“The foregoing authorities clearly demonstrate the separate individuality of cuasi-delitos or culpa aquiliana under the Civil Code.
Specifically they show that there is a distinction between civil liability arising from criminal negligence (governed by the Penal Code)
and responsibility for fault or negligence under Articles 1902 to 1910 of the Civil Code, and that the same negligent act may produce
either a civil liability arising from a crime under the Penal Code, or a separate responsibility for fault or negligence under Articles
1902 to 1910 of the Civil Code, and that the same negligent act may produce either a civil liability arising from a crime under the
penal Code, or a separate responsibility for fault or negligence under Articles 1902 to 1910 of the Civil Code. Still more concretely
the authorities above cited render it inescapable to conclude that the employer – in this case the defendant-petitioner – is
primarily and directly liable under Article 1903 of the Civil Code.”
The Barredo case was decided by the Supreme Court prior to the present Civil Code. However, the principle enunciated in said case,
that responsibility for fault or negligence as quasi-delict is distinct and separate from negligence penalized under the Revised Penal
Code, is now specifically embodied in Art. 2177 of the Civil Code.