Fisher v.

Robb, 69 Phil 101 (1939)

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

DECISION

November 2, 1939

G.R. No. 46274

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

Marcial P. Lichauco and Manuel M. Mejia for appellant.

Wolfson, Barrion and Baradi and Ignacio Ycaza for appellee.

VILLA-REAL, J.:

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 (robb) John C. Robb, to make a business trip to Shanghai to study the operation of a dog racing
course. In Shanghai, the defendant-appellant (robb) 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 (robb) came to know that the plaintiff-appellee (fischer)was the
manager of a dog racing course. Upon knowing the purpose of the defendant-appellant (robb)’s trip, the
plaintiff-appellee (fischer)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 (robb) answered in the affirmative, the plaintiff-appellee (fischer)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 (robb) 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 (robb) sent a
radiogram to the plaintiff-appellee (fischer)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 (robb) 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 (robb) wrote a letter to the plaintiff-appellee (fischer)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 (fischer)that he felt morally responsible to the
stockholders who had paid their second installment (Exh. C). In answer to said letter, the plaintiff-appellee
(fischer)wrote the defendant-appellant (robb) 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 (robb)
answered the plaintiff-appellee (fischer)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 (fischer)(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 (robb) 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
(robb) 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.
Fisher v. Robb, 69 Phil 101 (1939)

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 (robb) to the
same plaintiff-appellee (fischer)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 (robb) told the plaintiff-appellee (fischer)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 (fischer)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:

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
Fisher v. Robb, 69 Phil 101 (1939)

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. (em, read and understand this par.)

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 (fischer) against

the defendant-appellant (robb) 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 promise of a thing or service by such party. The defendant-
appellant (robb) is required to give a thing, namely, the payment of the sum of P2,000,
but the plaintiff-appellee (fischer) 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 (robb) has made to the plaintiff-appellee (fischer) 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 (robb) had for the plaintiff-appellee
(fischer)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 (robb) had contracted
with the plaintiff-appellee (fischer)is, therefore, purely moral and, as such, is not
demandable in law but only in conscience, over which human judges have no
jurisdiction.

As to whether a moral obligation is a sufficient consideration, read in volume 12 of the American

Jurisprudence, pages 589-5190, 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
Fisher v. Robb, 69 Phil 101 (1939)

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 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.

Wherefore, the appealed judgment is reversed and the costs to the plaintiff.

Avanceña, C.J., Imperial, Diaz, Laurel, Concepcion, and Moran, JJ., concur.