VIII: INTENTIONAL TORTS

A. ABUSE OF RIGHTS
Art. 19, CC. 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. VELAYO V SHELL CO OF THE PHILS 100 PHIL 186 FELIX; October 31, 1956 NATURE: Appeal from a judgment of CFI Manila FACTS - Since the start of Commercial Air Line, Incs (CALI) operations, its fuel needs were all supplied by Shell Company of the P.I., Ltd, (Shell). Desmond Fitzgerald, Shells Credit Manager was in charge of collecting payment. Any extensions of term of payment, however, had to be decided by Stephen Crawford and later by Wildred Wooding - As of August 1948, Shells books showed a balance of P170,162.58 in its favor for goods it sold and delivered to CALI. Shell had reasons to believe that the financial condition of Shell was far from being satisfactory. Alfonso Sycip, CALIs President of Board of Directors, offered to Fitzgerald CALIs Douglas C-54 plane, which was then in California. The offer was declined by Crawford. - Aug 6, 1948, management of CALI informally convened its principal creditors in a luncheon, and informed them that CALI was in a state of insolvency and had to stop operation. Alexander Sycip, Secretary of the Board of Directors of CALI, explained the memorandum agreement executed by CALI with Phil Air Lines Inc on Aug 4, regarding the proposed sale to PAL of the aviation equipment of CALI. Alfredo Velayo, Auditor of CALI, discussed the balance sheets of CALI. The balance sheet made mention of the Douglas C-54 plane. - There was a general understanding among all creditors present on the desirability of consummating the sale in favor of PAL. Then followed a discussion on the payment of claims of creditors and the preferences claimed for the accounts due to employees, the Government, and the National Airports Corp. The other creditors disputed such contention of preference. No understanding was reached on the matter of preference of payment and it was then generally agreed that the matter be further studied by a working committee to be formed. Mr. Fitzgerald of Shell, Atty. Agcaoili of National Airports Corp., and Atty. Alexander Sycip were appointed to the working committee. - Those present in the meeting were of the unanimous opinion that it would be advantageous not to present suits against CALI but to strive for a fair pro-rata division of its assets. The management of CALI announced that in case of nonagreement of the creditors, it would file insolvency proceedings. - Aug 9, 1948, working committee discussed methods of achieving objectives, which were to preserve the assets of CALI and to study the way of making a fair division of all the assets among the creditors. However, negotiation on the division of assets was left pending. - On the same day (Aug 9), Shell effected a telegraphic transfer of all its credit against CALI to the American Corporation Shell Oil Co., Inc., assigning its credit amounting to $79,440. This was followed on Aug 10 by a deed of assignment of credit amounting to $85,081.29. - Aug 12, 1948 American Shell Oil Co filed a complaint against CALI in the Superior Court of the State of California, USA, for the collection of assigned credit of $79,440, and a writ of attachment was applied for and issued against a C-54 plane.

Sept 17, 1948 an amended complaint was filed to recover assigned credit of $85,081.29 and a supplemental attachment for a higher sum against the C-54 plane, plus miscellaneous personal properties. - Unaware of Shells assignment of credit, CALI on Aug 12, 1948 approved the memorandum agreement of sale to PAL, and noted that the Board had been trying to reach an agreement with creditors to prevent insolvency proceedings, but so far no definite agreement had been reached. - First week of Sept 1948, National Airports Corp learned of Shells action in the US and hastened to file its own complaint with attachment against CALI in the CFI of Manila. - Oct 7, 1948 CALI filed a petition for voluntary insolvency. An order of insolvency was issued by the court on the same day. Mr. Alfredo Velayo was appointed Assignee in the proceedings. - Velayo instituted case against Shell for the purpose of securing writ of injunction restraining Shell from prosecuting against CALI, and as an alternative, that Shell be ordered to pay damages double the value of the plane if the case in the US will defeat the procurement of CALI of its plane. - Dec 22, 1948, Court denied petition because whether the conveyance of Shells credit was fraudulent or not, the Phil court would not be in a position to enforce its orders as against the American corporation Shell Oil Co., Inc., which is outside the jurisdiction of the Phils. - Plaintiff confined his action to the recovery of damages against Shell. Lower court dismissed the case. Defendants Comments > Assignment of credit in favor of American Shell was for valuable consideration and made in accordance with established commercial practices > It has no interest in the case instituted by American Shell, as they are separate and distinct corporations. > Fitzgerald was merely invited to the luncheon-meeting, without knowing the purpose for which it was called. Fitzgerald could not have officially represented Shell because authority resides on Crawford. ISSUES 1. WON Shell Co., of the P.I. Ltd, taking advantage of its knowledge of the existence of CALIs airplane C-54 at California, USA, acted in bad faith and betrayed the confidence and trust of other creditors of CALI present in said meeting by affecting a hasty telegraphic transfer of its credit to the American corporation Shell Oil Company, Inc., thus defeating the purpose of the informal meetings of CALIs principal creditors and depriving the plaintiff of the means of obtaining the plane, or its value, to the detriment and prejudice of other CALI creditors who were consequently deprived of their share in the distribution of said value 2. WON by reason of said betrayal of confidence and trust, Shell may be made to answer for the damages, and if so, the amount of such damages HELD 1. YES, Shell acted in bad faith. - It is evident that Shell, upon learning the precarious economic situation of CALI and that will all probability, it could not get much of its outstanding credit because of the preferred claims of other creditors, entirely disregarded all moral inhibitory tenets. - The telegraphic transfer made without knowledge and at the back of other creditors of CALI may be a shrewd and surprise move that enabled Shell to collect almost all if not the entire amount of its credit, but the Court of Justice (SC) cannot countenance such attitude at all, and much less from a foreign corporation to the detriment of Philippine Government and local business.

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- Shells transfer of credit would have been justified only if Fitzgerald had declined to take part in the working committee and frankly and honestly informed the other creditors present that he had no authority to bind his principal and that the latter was to be left free to collect its credit from CALI by whatever means his principal deemed wise and were available to it. But then, such information would have dissolved all attempts to come to an amicable conciliation and would have precipitated the filing of CALIs voluntary insolvency proceedings and nullified the intended transfer of Shells credit to American Shell. 2. YES, Shell must answer for damages. - Section 37 of the Insolvency Law states Sec 37. If any person, before the assignment is made, having notice of the commencement of the proceedings in insolvency, or having reason to believe that insolvency proceedings are about to be commenced, embezzles or disposes of ay money, goods, chattels, or effects of the insolvent, he is chargeable therewith, and liable to an action by the assignee for double the value of the property sought to be embezzled or disposed of, to be received for the benefit of the insolvent estate. - There are doubts, however, as to the applicability of this provision, as it is contented that what Shell really disposed of was its own credit and not CALIs property, although this was practically the effect and result of the scheme. The same result, however, may be achieved in applying the provisions of the Civil Code. Article 19 of the Civil Code provides Art 19. Any 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. - While Art 19 contains a mere declaration of principles, such declaration is implemented by Article 21 of the Civil Code, which states 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 the damage. - Code Commission on Article 21: (it) would vouchsafe adequate legal remedy for that untold numbers of moral wrongs which is impossible for human foresight to provide for specifically in the statutes. (It) is a prudent earnest of justice in the face of the impossibility of enumerating, one by one, all wrongs which cause damage. - If Article 23 of Civil Code goes as far as to provide that Even if an act or event causing damage to anothers property was not due to the fault or negligence of the defendant, the latter shall be liable for indemnity if through the act or event he was benefited., with much more reason that Shell should be liable for indemnity for acts it committed in bad faith and with betrayal of confidence. - Anent the argument that Civil Code provisions cannot be applicable as they came into effect only on Aug 30, 1950, Art 2252 of Civil Code provides by implication that when new provisions of the Code does not prejudice or impair vested or acquired rights in accordance with the old legislation, they may be given retroactive effect. Shell did not have any vested or acquired right to betray confidence of CALI or of its creditors. Moreover, according to Art 2254 of Civil Code, no vested or acquired right can arise from acts or omissions which are against the law or which infringe upon the right of others. Disposition Shell is liable to pay plaintiff, for the benefit of CALI and its creditors, compensatory damages a sum equivalent to the value of the plane at the time Shell assigned its credit to American Shell, and another equal sum as exemplary damages.

VELAYO V SHELL CO OF THE PHILS RESOLUTION 100 PHIL 207 FELIX; July 30, 1957 Defendant-appellees contentions - It is not guilty of bad faith, it having done nothing but to protect legitimately its own interest or credit against the bad faith of its debtor, the insolvent CALI, under the control of the latters president Alfonso Sycip - The transfer of credit to its sister corporation in the US did not prejudice the Government, because its claims were fully paid, not caused any loss or injury to other creditors, except the entities and groups controlled by Alfonso Sycip. It is not liable for exemplary damages because the provisions of the new Civil Code on the matter are not applicable to this case - Plaintiff-appellant has no cause of action against it and is not the real party in interest - Plaintiffs right of action was based and prosecuted in the lower court under the provisions of the Insolvency Law and consequently he is stopped from pursuing another theory and is not entitled to damages under the provisions of the new Civil Code. HELD - The facts on which Court based its conclusion that Shell acted in bad faith are not and cannot be denied or contradicted by defendant. - There is no sensible reason for disturbing the finding that Shell is liable for exemplary damages. The amount of the award, however, may be modified. - According to the Civil Code, exemplary or corrective damages are imposed by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages, and that the amount of the exemplary damages need not be proved, for it is left to the sound discretion of the Court. - Majority of the Court is of the opinion that the value of the C54 plane might result too high, and that exemplary damages should not be left to speculation but properly determined by a certain and fixed amount. The amount of exemplary damages is thus modified, and fixed at P25,000. SAUDI ARABIAN AIRLINES V CA (MORADA) 297 SCRA 469 QUISUMBING; October 8, 1998 NATURE Petition for certiorari to annul and set aside CA resolution and decision FACTS - Private respondent Milagros Morada was a flight attendant of Petitioner Company. During a stop-over in Jakarta, she went to a disco with 2 of her fellow crew members Thamer and Allah (both surnamed Al-Gazzawi) and had breakfast in their hotel room. While there, Allah left and Thamer attempted to rape her. She was saved by hotel security personnel who heard her cries for help. She later filed a case against them. The two were arrested and detained by Jakarta police. When Morada returned to Jeddah (the base of operations of petitioner), she was asked to go to Jakarta to arrange for the release of the two men. She proceeded to Jakarta but she refused to cooperate. She was eventually allowed to return to Jeddah but barred from Jakarta flights. The Indonesian authorities eventually deported the 2 men, through the intercession of the Saudi govt., after 2 weeks of detention. They were put back in service while respondent Morada was transferred to Manila. - 2 years later, she was asked by her superiors to see Mr. Miniewy, the Chief Legal Officer of Saudia, in Jeddah. When

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they met, he brought her to the police station where her passport was taken and she was questioned about the Jakarta incident. Miniewy merely stood as the police put pressure on her to drop the case against the two men. Not until she agreed to do so did the police return her passport and allowed her to catch a later flight out of Jeddah. - A year and a half later, she was again asked to go to Jeddah to see Miniewy. When she did, a certain Khalid of Saudia brought her to a Saudi court where she was asked to sign a document written in Arabic. She was told that it was necessary to close the case against Thamer and Allah. As it turned out, she signed a document to appear before the court a week later. When the date of appearance came, she complied but only after being assured by Saudias Manila manager that the investigation was routinary and posed no danger to her. She was brought before the court and was interrogated by a Saudi judge and let go, however, just as she was about to board a plane home, she was told that she had been forbidden to take flight. She was later told to remain in Jeddah and her passport was again confiscated. A few days later, she was again brought before the same court where the Saudi judge, to her astonishment and shock, sentenced her to 5 months imprisonment and 286 lashes. Only then did she realize that the Saudi court had tried her, together with Thamer and Allah for what happened in Jakarta. The court found her guilty of adultery; going to a disco, dancing and listening to music in violation of Islamic laws; and socializing with the male crew, in contravention of Islamic tradition. - Facing conviction, she sought help from her employer, petitioner Saudia but she was denied assistance of any kind. She asked the Phil. Embassy to help her. Because she was wrongfully convicted, the Prince of Makkah dismissed the case against her and allowed her to leave Saudi Arabia. Shortly before her return to Manila, she was terminated from the service by Saudia without being informed of the cause. - She then filed a complaint for damages against Saudia and Mr. Al-Balawi, its country manager. Saudia filed a motion to dismiss raising the issues of lack of cause of action and lack of jurisdiction. The RTC denied the motion to dismiss by Saudia, as well as the subsequent MFR. Saudia then filed petition for certiorari and prohibition with prayer for issuance of writ of preliminary injunction and/or TRO with the CA. The CA issued a TRO prohibiting respondent judge from conducting any proceeding unless otherwise directed. The CA, however, in another resolution, denied Saudias prayer for issuance of writ of preliminary injunction. Saudia then filed to the SC this instant petition. However, during the pendency of this petition, respondent CA rendered a decision that the Philippines is an appropriate forum considering that the Amended Complaint's basis for recovery of damages is Art.21 CC, thus, clearly within the jurisdiction of respondent Court. ISSUES 1. WON Morada had a cause of action 2. Which law should govern (Phil. Law or Saudi Law) HELD 1. YES - She aptly predicated her cause of action on Art.19 and Art.21 of the CC. As held in PNB v CA, 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 no. of moral wrongs which is impossible for human foresight to specifically provide in the statutes. Although Art.19 merely declares a principle of law, Art.21 gives flesh to its provisions. Reasoning - After a careful study of the pleadings, We are convinced that there is reasonable basis for private respondents assertion that although she was already working in Manila, petitioner brought her to Jeddah on the pretense that she would merely

testify in an investigation of the charges she made against the two crew members for the attack on her person. As it turned out, she was the one made to face trial for very serious charges, including adultery and violation of Islamic laws and tradition. - There is likewise logical basis on record for the claim that in handing over or turning over the person of private respondent to Jeddah officials, petitioner may have acted beyond its duties as employer. Petitioners purported act contributed to and amplified or even proximately caused additional humiliation, misery and suffering of private respondent. Petitioner thereby allegedly facilitated the arrest, detention and prosecution of private respondent under the guise of petitioners authority as employer, taking advantage of the trust, confidence and faith she reposed upon it. As purportedly found by the Prince of Makkah, the alleged conviction and imprisonment of Morada was wrongful. But these capped the injury or harm allegedly inflicted upon her person and reputation, for which petitioner could be liable as claimed, to provide compensation or redress for the wrongs done, once duly proven. 2. Philippine Law Ratio Choice of law rules invariably consist of a factual relationship (such as property right, contract claim) and a connecting factor or point of contact, such as the situs of the res, the place of celebration, the place of performance, or the place of wrongdoing. Reasoning - Considering that the complaint in the court a quo is one involving torts, the connecting factor or point of contact could be the place or places where the tortious conduct or lex loci actus occurred. And applying the torts principle in a conflicts case, we find that the Philippines could be said as a situs of the tort (the place where the alleged tortious conduct took place). This is because it is in the Philippines where petitioner allegedly deceived private respondent, a Filipina residing and working here. According to her, she had honestly believed that petitioner would, in the exercise of its rights and in the performance of its duties, act with justice, give her due and observe honesty and good faith. Instead, petitioner failed to protect her, she claimed. That certain acts or parts of the injury allegedly occurred in another country is of no moment. For in our view, what is important here is the place where the over-all harm or the totality of the alleged injury to the person, reputation, social standing and human rights of complainant, had lodged according to the private respondent. All told, it is not without basis to identify the Phil. as the situs of the alleged tort. - In keeping abreast with the modern theories on tort liability, We find here an occasion to apply the State of the most significant relationship rule, which should be appropriate to apply now, given the factual context of the case. In applying said principle to determine the State which has the most significant relationship, the following contacts are to be taken into account and evaluated according to their relative importance with respect to the particular issue: (A) the place where the injury occurred; (B) the place where the conduct causing the injury occurred; (C) the domicile, residence, nationality, place of incorporation and place of business of the parties, and; (D) the place where the relationship, if any, between the parties is centered. - As already discussed, there is basis for the claim that the over-all injury occurred and lodged in the Phils. There is likewise no question that private respondent is a resident Filipina national, working with petitioner, a resident foreign corporation engaged in international air carriage business here. Thus, the relationship between the parties was centered here.

Disposition petition for certiorari is DISMISSED. Civil case entitled Milagros Morada v Saudi Arabia Airlines REMANDED to RTC

GLOBE MACKAY V CA 176 SCRA 778 CORTES; August 25, 1989 NATURE: An appeal from the decision of CA FACTS - Private respondent Restituto M. Tobias was employed by petitioner Globe Mackay Cable and Radio Corporation as a purchasing agent and administrative assistant to the engineering operations manager. - GLOBE MACKAY discovered fictitious purchases and other fraudulent transactions for which it lost several thousands of pesos. According to private respondent it was he who actually discovered the anomalies and reported them to his immediate superior Eduardo T. Ferraren and to petitioner Herbert C. Hendry who was then the Executive VP and General Manager of GLOBE MACKAY. - one day after Tobias made the report, Hendry confronted him by stating that he was the number one suspect, and ordered him to take a one week forced leave, not to communicate with the office, to leave his table drawers open, and to leave the office keys. - when Tobias returned to work after the forced leave, Hendry went up to him and called him a "crook" and a "swindler." Tobias was then ordered to take a lie detector test. He was also instructed to submit specimen of his handwriting, signature, and initials for examination by the police investigators to determine his complicity in the anomalies. - the Manila police investigators cleared Tobias of participation in the anomalies. - Not satisfied with the police report, petitioners hired a private investigator who submitted a report finding Tobias guilty. This report however expressly stated that further investigation was still to be conducted. - Nevertheless, Hendry issued a memo suspending Tobias from work preparatory to the filing of criminal charges against him. - the Police Chief Document Examiner, after investigating other documents pertaining to the alleged anomalous transactions, submitted a second laboratory crime report reiterating his previous finding that the handwritings, signatures, and initials appearing in the checks and other documents involved in the fraudulent transactions were not those of Tobias. The lie detector tests conducted on Tobias also yielded negative results. - Notwithstanding the two police reports exculpating Tobias from the anomalies petitioners filed a complaint for estafa through falsification of commercial documents, later amended to just estafa. - Subsequently five other criminal complaints were filed against Tobias, four of which were for estafa while the fifth was for of Art.290 of' RPC (Discovering Secrets Through Seizure of Correspondence). - All of the 6 criminal complaints were dismissed by the fiscal. - In the meantime, Tobias received a notice from petitioners that his employment has been terminated. Whereupon, Tobias filed a complaint for illegal dismissal. - Secretary of Labor, acting on petitioners' appeal from the NLRC ruling, reinstated the labor arbiter's decision and dismissed the complaint. Tobias appealed the Secretary of Labor's order with the Office of the President. - Unemployed, Tobias sought employment with the Republic Telephone Company. However, petitioner Hendry, without being asked by RETELCO, wrote a letter to the latter stating

that Tobias was dismissed by GLOBE MACKAY due to dishonesty. - Tobias filed a civil case for damages anchored on alleged unlawful, malicious, oppressive, and abusive acts of petitioners. - Petitioner Hendry, claiming illness, did not testify during the hearings. - The RTC rendered judgment in favor of Tobias by ordering petitioners to pay him P80,000.00 as actual damages, P200,000.00 as moral damages, P20,000.00 as exemplary damages, P30,000.00 as attorney's fees, and costs. - CA affirmed the RTC decision in toto. ISSUE WON petitioners are liable for damages to private respondent HELD YES Ratio Art.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. Reasoning - One of the more notable innovations of the New Civil Code is the codification of "some basic principles that are to be observed for the rightful relationship between human beings and for the stability of the social order." Foremost among these principles is that pronounced in Article 19 which 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. - But while Art.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. - Article 20, which pertains to damage arising from a violation of law, provides that: Art. 20. Every person who contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same. - However, in the case at bar, petitioners claim that they did not violate any provision of law since they were merely exercising their legal right to dismiss private respondent. This does not, however, leave private respondent with no relief because Article 21 of the Civil Code provides that: Art. 21. Any person who wilfully 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 determining whether or not the principle of abuse of rights may be invoked, there is no rigid test which can be applied. The question of whether or not the principle of abuse of rights has been violated resulting in damages under Article 20 or Article 21 or other applicable provision of law, depends on the circumstances of each case. - the Court, after examining the record and considering certain significant circumstances, finds that all petitioners have indeed

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abused the right that they invoke, causing damage to private respondent and for which the latter must now be indemnified. - An employer who harbors suspicions that an employee has committed dishonesty might be justified in taking the appropriate action such as ordering an investigation and directing the employee to go on a leave. Firmness and the resolve to uncover the truth would also be expected from such employer. But the high-handed treatment accorded Tobias by petitioners was certainly uncalled for. - The imputation of guilt without basis and the pattern of harassment during the investigations of Tobias transgress the standards of human conduct set forth in Article 19 of the Civil Code. The Court has already ruled that the right of the employer to dismiss an employee should not be confused with the manner in which the right is exercised and the effects flowing therefrom. If the dismissal is done abusively, then the employer is liable for damages to the employee. - Several other tortious acts were committed by petitioners against Tobias after the latter's termination from work: Hendry cut short Tobias' protestations by telling him to just confess or else the company would file a hundred more cases against him until he landed in jail. Hendry added that, "You Filipinos cannot be trusted." - The threat unmasked petitioner's bad faith in the various actions taken against Tobias. On the other hand, the scornful remark about Filipinos as well as Hendry's earlier statements about Tobias being a "crook" and "swindler" are clear violations of 'Tobias' personal dignity - The next tortious act committed by petitioners was the writing of a letter to RETELCO sometime in October 1974, stating that Tobias had been dismissed by GLOBE MACKAY due to dishonesty. Tobias remained unemployed for a longer period of time. For this further damage suffered by Tobias, petitioners must likewise be held liable for damages consistent with Article 2176 of the Civil Code. - Finally, there is the matter of the filing by petitioners of six criminal complaints against Tobias. While sound principles of justice and public policy dictate that persons shall have free resort to the courts for redress of wrongs and vindication of their rights, the right to institute criminal prosecutions can not be exercised maliciously and in bad faith. Considering the haste in which the criminal complaints were filed, the fact that they were filed during the pendency of the illegal dismissal case against petitioners, the threat made by Hendry, the fact that the cases were filed notwithstanding the two police reports exculpating Tobias from involvement in the anomalies committed against GLOBE MACKAY, coupled by the eventual dismissal of all the cases, the Court is led into no other conclusion than that petitioners were motivated by malicious intent in filing the six criminal complaints against Tobias. - It must be underscored that petitioners have been guilty of committing several actionable tortious acts. Considering the extent of the damage wrought on Tobias, the Court finds that, contrary to petitioners' contention, the amount of damages awarded to Tobias was reasonable under the circumstances. - Petitioners still insist that the award of damages was improper, invoking the principle of damnum absque injuria. It is argued that "[t]he only probable actual damage that private respondent could have suffered was a direct result of his having been dismissed from his employment, which was a valid and legal act of the defendants-appellants. According to the principle of damnum absque injuria, damage or loss which does not constitute a violation of a legal right or amount to a legal wrong is not actionable. This principle finds no application in this case. It bears repeating that even granting that petitioners might have had the right to dismiss Tobias from work, the abusive manner in which that right was exercised amounted to a legal wrong for which petitioners must now be held liable. Moreover, the damage incurred by Tobias was not

only in connection with the abusive manner in which he was dismissed but was also the result of several other quasidelictual acts committed by petitioners. - Petitioners next question the award of moral damages. However, the Court has already ruled that moral damages are recoverable in the cases mentioned in Article 21 of said Code. - Lastly, the award of exemplary damages is impugned by petitioners. The nature of the wrongful acts shown to have been committed by petitioners against Tobias is sufficient basis for the award of exemplary damages to the latter. Disposition petition is hereby DENIED and the decision of the CA is AFFIRMED.

ALBENSON V CA BIDIN; January 11, 1993 NATURE Petition assailing the decision of respondent CA which modified the judgment of the RTC and ordered petitioner to pay private respondent moral damages and attorney's fees. FACTS - Petitioner Albenson Enterprises Corporation delivered to Guaranteed Industries, Inc. the mild steel plates which the latter ordered. As part payment thereof, Albenson was given a check in the amount of P2,575.00 and drawn against the account of E.L. Woodworks. When presented for payment, the check was dishonored for the reason "Account Closed." - From the records of the SEC, Albenson discovered that the president of Guaranteed, the recipient of the unpaid mild steel plates, was one "Eugenio S. Baltao." Upon further inquiry, Albenson was informed by the Ministry of Trade and Industry that E.L. Woodworks, a single proprietorship business, was registered in the name of one "Eugenio Baltao". In addition, upon verification with the drawee bank, Albenson was advised that the signature appearing on the subject check belonged to one "Eugenio Baltao." After obtaining the foregoing information, Albenson made an extrajudicial demand upon private respondent Eugenio S. Baltao to replace and/or make good the dishonored check. However, private respondent has a namesake, his son Eugenio Baltao III, who manages a business establishment, E.L. Woodworks, with the very same business address as Guaranteed. - Assistant Fiscal Ricardo Sumaway filed an information against Eugenio S. Baltao for Violation of BP 22. In filing said information, Fiscal Sumaway claimed that he had given Eugenio S. Baltao opportunity to submit controverting evidence, but the latter failed to do so and therefore, was deemed to have waived his right. Baltao, claiming ignorance of the complaint against him, immediately filed with the Provincial Fiscal of Rizal a motion for reinvestigation. Provincial Fiscal Mauro M. Castro of Rizal reversed the finding of Fiscal Sumaway and exonerated respondent Baltao. He found that the signature on the check is not the signature of Eugenio S. Baltao. - Because of the alleged unjust filing of a criminal case against him, respondent Baltao filed before the RTC a complaint for damages against herein petitioners Albenson Enterprises, Jesse Yap, its owner, and Benjamin Mendiona, its employee. In its decision, the lower court observed that "the check is drawn against the account of "E.L. Woodworks," not of Guaranteed Industries of which plaintiff used to be President. Guaranteed Industries had been inactive and had ceased to exist as a corporation since 1975. . . The possibility is that it was with Gene Baltao or Eugenio Baltao III, a son of plaintiff, that the defendants may have been dealing with . . ."

ISSUE WON private respondent's cause of action is not one based on malicious prosecution but one for abuse of rights under Article 21 of the CC HELD NO Ratio The question of whether or not the principle of abuse of rights has been violated, resulting in damages under Articles 20 and 21 or other applicable provision of law, depends on the circumstances of each case. The elements of an abuse of right under Article 19 are the following: (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. Article 20 speaks of the general sanction for all other provisions of law which do not especially provide for their own sanction. Thus, anyone who, whether willfully or negligently, in the exercise of his legal right or duty, causes damage to another, shall indemnify his victim for injuries suffered thereby. Article 21 deals with acts contra bonus mores, and has the following elements: 1) There is an act which is legal; 2) but which is contrary to morals, good custom, public order, or public policy; 3) and it is done with intent to injure. There is a common element under Articles 19 and 21, and that is, the act must be intentional. Reasoning - Petitioners could not be said to have violated the principle of abuse of right. What prompted petitioners to file the case for violation of BP 22 against private respondent was their failure to collect the amountdue on a bounced check which they honestly believed was issued to them by private respondent. Private respondent, however, did nothing to clarify the case of mistaken identity at first hand. In the absence of a wrongful act or omission or of fraud or bad faith, moral damages cannot be awarded and that the adverse result of an action does not per se make the action wrongful and subject the actor to the payment of damages, for the law could not have meant to impose a penalty on the right to litigate. Considering that Guaranteed, which received the goods in payment of which the bouncing check was issued is owned by respondent, petitioner acted in good faith and probable cause in filing the complaint before the provincial fiscal. The presence of probable cause signifies, as a legal consequence, the absence of malice. Disposition petition is GRANTED and the decision of the CA is hereby REVERSED and SET ASIDE.

- They failed to pay. On 6 February 1973, the said lots were foreclosed. Amonoy was the highest bidder in the foreclosure sale. The heirs sought the annulment of the auction sale. The case was dismissed by the CFI on 7 November 1977, and this was affirmed by the Court of Appeals on 22 July 1981. Thereafter, the CFI on 25 July 1985 issued a Writ of Possession and pursuant to which a notice to vacate was made on 26 August 1985. On Amonoys motion of 24 April 1986, the Orders of 25 April 1986 and 6 May 1986 were issued for the demolition of structures in the said lots, including the house of the Gutierrez spouses. - The Gutierrez spouses sought a restraining order from the Supreme Court, which was granted by the same. Upon a judgment on merits later on, Amonoy was ordered to return said properties to the rightful owners. But by the time the Supreme Court promulgated the above-mentioned Decision, respondents house had already been destroyed, supposedly in accordance with a Writ of Demolition ordered by the lower court. - Thus, a Complaint for damages in connection with the destruction of their house was filed by respondents against petitioner before the RTC on December 15, 1989. In its January 27, 1993 Decision, the RTC dismissed respondents suit. On appeal, the CA set aside the lower courts ruling and ordered petitioner to pay respondents P250,000 as actual damages. Petitioner then filed a Motion for Reconsideration, which was also denied. Hence, this recourse. ISSUE WON Amonoy may properly invoke damnum absque injuria in this case since at the time of the demolition he had color of authority over said properties HELD NO Ratio Damnum absque injuria may not be invoked by a person who claims to exercise a right but does so in an abusive manner violative of Article 19 of the Civil Code. Indeed, in the availment of ones rights, one must Reasoning - Petitioner invokes this legal precept in arguing that he is not liable for the demolition of respondents house. He maintains that he was merely acting in accordance with the Writ of Demolition ordered by the RTC. - We reject this submission. Damnum absque injuria finds no application to this case.True, petitioner commenced the demolition of respondents house on May 30, 1986 under the authority of a Writ of Demolition issued by the RTC. But the records show that a Temporary Restraining Order (TRO), enjoining the demolition of respondents house, was issued by the Supreme Court on June 2, 1986. The CA also found, based on the Certificate of Service of the Supreme Court process server, that a copy of the TRO was served on petitioner himself on June 4, 1986. - Petitioner, however, did not heed the TRO of this Court. We agree with the CA that he unlawfully pursued the demolition of respondents house well until the middle of 1987. Although the acts of petitioner may have been legally justified at the outset, their continuation after the issuance of the TRO amounted to an insidious abuse of his right. Indubitably, his actions were tainted with bad faith. Had he not insisted on completing the demolition, respondents would not have suffered the loss that engendered the suit before the RTC. Verily, his acts constituted not only an abuse of a right, but an invalid exercise of a right that had been suspended when he received the TRO from this Court on June 4, 1986. By then, he was no longer entitled to proceed with the demolition. - A commentator on this topic explains:

AMONOY V GUTIERREZ 351 SCRA 731 PANGANIBAN; 2001 FACTS - Amonoy was the counsel of therein Francisca Catolos, Agnes Catolos, Asuncion Pasamba and Alfonso Formilda. He won the case for them and charged P27600 as attorneys fees. As they were not able to pay, his clients executed real estate mortgages on their lands and the house thereon. Asuncion Pasamba died on 24 February 1969 while Alfonso Fornilda passed away on 2 July 1969. Among the heirs of the latter was his daughter, plaintiff-appellant Angela Gutierrez. - Because his attorneys fees thus secured by the two lots were not paid, on 21 January 1970 Amonoy filed for their foreclosure before the CFI of Pasig, Rizal. The heirs opposed, contending that the attorneys fees charged were unconscionable and that the agreed sum was only P11,695.92. But on 28 September 1972 judgment was rendered in favor of Amonoy requiring the heirs to pay within 90 days the P27,600.00 secured by the mortgage, P11,880.00 as value of the harvests, and P9,645.00 as another round of attorneys fees. Failing in that, the two (2) lots would be sold at public auction.

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The exercise of a right ends when the right disappears, and it disappears when it is abused, especially to the prejudice of others. The mask of a right without the spirit of justice which gives it life, is repugnant to the modern concept of social law. It cannot be said that a person exercises a right when he unnecessarily prejudices another x x x. Over and above the specific precepts of positive law are the supreme norms of justice x x x; and he who violates them violates the law. For this reason, it is not permissible to abuse our rights to prejudice others. - 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 ones rights but also in the performance of ones 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 the 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 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 UE V JADER 325 SCRA 804 YNARES-SANTIAGO; February 17, 2000 FACTS - Jader was enrolled in the UE College of Law from 1984 up to 1988. He failed to take the regular final examination in Practice Court I for which he was given an incomplete grade .He enrolled for the second semester as fourth year law student .He filed an application for the removal of the incomplete grade but got a grade of five (5). - In the mean time, his name appeared in the Tentative List of Candidates for graduation with an annotation regarding his deficiencies. His name also appeared in the invitation for the graduation as one of the candidates for graduation. At the foot of the list of the names of the candidates there appeared however an annotation saying that it was a tentative list and that degrees will be conferred upon these candidates who satisfactorily complete requirements as stated in the University Bulletin . Jader attended the graduation and brought his family with him. He thereafter prepared himself for the bar examination. He took a leave of absence without pay from his job and enrolled at the pre-bar review class. Jader later learned of the deficiency and he dropped his review class and was not able to take the bar examination. Consequently, he sued UE for damages. - UE denied liability arguing that it never led respondent to believe that he completed the requirements for a Bachelor of Laws degree when his name was included in the tentative list of graduating students. - TC rendered judgment in favor of the Jader and ordered UE to pay Jader P35,470.00 - CA Affirmed and added an award of P50,000.00 for moral damages - UE elevated the case to this Court on a petition for review arguing that it has no liability to respondent Romeo A. Jader, considering that the proximate and immediate cause of the alleged damages incurred by the latter arose out of his own negligence in not verifying from the professor concerned the result of his removal exam.

ISSUE WON an educational institution may be held liable for damages for misleading a student into believing that the latter had satisfied all the requirements for graduation when such is not the case HELD YES - UE had a contractual obligation to inform his students as to whether or not they have met all the requirements for the conferment of a degree. Thus, UE in belatedly informing respondent of the result of the removal examination, particularly at a time when he had already commenced preparing for the bar exams, cannot be said to have acted in good faith. Absence of good faith must be sufficiently established for a successful prosecution by the aggrieved party in a suit for abuse of right under Article 19 of the Civil Code. Good faith connotes an honest intention to abstain from taking undue advantage of another, even though the forms and technicalities of the law, together with the absence of all information or belief of facts, would render the transaction unconscientious. - Considering that the institution of learning involved herein is a university which is engaged in legal education, it should have practiced what it inculcates in its students, more specifically the principle of good dealings enshrined in Articles 19 and 20 of the Civil Code which states: 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. Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same. - Article 19 was intended to expand the concept of torts by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to provide specifically in statutory law. - In civilized society, men must be able to assume that others will do them no intended injury that others will commit no internal aggressions upon them; that their fellowmen, when they act affirmatively will do so with due care which the ordinary understanding and moral sense of the community exacts and that those with whom they deal in the general course of society will act in good faith. The ultimate thing in the theory of liability is justifiable reliance under conditions of civilized society. Schools and professors cannot just take students for granted and be indifferent to them, for without the latter, the former are useless. - Educational institutions are duty-bound to inform the students of their academic status and not wait for the latter to inquire from the former. The conscious indifference of a person to the rights or welfare of the person/persons who may be affected by his act or omission can support a claim for damages. Want of care to the conscious disregard of civil obligations coupled with a conscious knowledge of the cause naturally calculated to produce them would make the erring party liable. Petitioner ought to have known that time was of the essence in the performance of its obligation to inform respondent of his grade. It cannot feign ignorance that respondent will not prepare himself for the bar exams since that is precisely the immediate concern after graduation of an LL.B. graduate. It failed to act seasonably. Petitioner cannot just give out its students grades at any time because a student has to comply with certain deadlines set by the Supreme Court on the submission of requirements for taking the bar. Petitioners liability arose from its failure to promptly inform respondent of the result of an examination and in misleading the latter into believing that he had satisfied all requirements for the course.

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- Petitioner cannot pass on its blame to the professors to justify its own negligence that led to the delayed relay of information to respondent. When one of two innocent parties must suffer, he through whose agency the loss occurred must bear it. The modern tendency is to grant indemnity for damages in cases where there is abuse of right, even when the act is not illicit. If mere fault or negligence in ones acts can make him liable for damages for injury caused thereby, with more reason should abuse or bad faith make him liable. A person should be protected only when he acts in the legitimate exercise of his right, that is, when he acts with prudence and in good faith, but not when he acts with negligence or abuse. GARCIANO V CA 212 SCRA 436 GRIO-AQUINO; August 10, 1992 NATURE Petition for review of the decision of the Court of Appeals dismissing the complaint for damages filed by the petitioner against the private respondents. FACTS - The petitioner was hired to teach during the 1981-82 school year in the Immaculate Concepcion Institute in the Island of Camotes. On January 13, 1982, or before the school year ended, she applied for an indefinite leave of absence because her daughter was taking her to Austria where her daughter was employed. The application was recommended for approval by the school principal, Emerito O. Labajo, and approved by the President of the school's Board of Directors. - On June 1, 1982, Emerito Labajo addressed a letter to the petitioner through her husband, Sotero Garciano (for she was still abroad), informing her of the decision of Fr. Joseph Wiertz, the school's founder, concurred in by the president of the Parent-Teachers Association and the school faculty, to terminate her services as a member of the teaching staff because of: (1) the absence of any written contract of employment between her and the school due to her refusal to sign one; and (2) the difficulty of getting a substitute for her on a temporary basis as no one would accept the position without a written contract. Upon her return from Austria in the later part of June, 1982, she received the letter informing her that her services at the Immaculate Concepcion Institute had been terminated. She made inquiries from the school about the matter and, on July 7, 1982, the members of the Board of Directors of the school, with the exception of Fr. Joseph Wiertz, signed a letter notifying her that she was "reinstated to report and do your usual duties as Classroom Teacher . . . effective July 5, 1982," and that "any letter or notice of termination received by you before this date has no sanction or authority by the Board of Directors of this Institution, therefore it is declared null and void." - On July 9, 1982, the president, vice president, secretary, and three members of the Board of Directors, out of a membership of nine (9), resigned their positions from the Board "for the reason that the ICI Faculty, has reacted acidly to the Board's deliberations for the reinstatement of Mrs. Esteria F. Garciano, thereby questioning the integrity of the Board's decision". - On September 3, 1982, petitioner filed a complaint for damages in the Regional Trial Court, Cebu, Branch XI, against Fr. Wiertz, Emerito Labajo, and some members of the faculty of the school for discrimination and unjust and illegal dismissal. ISSUE WON the defendants prevented the petitioner from reporting to the school and thus making them liable for damages HELD: NO

- The Court of Appeals was correct in finding that petitioner's discontinuance from teaching was her own choice. While the respondents admittedly wanted her service terminated, they actually did nothing to physically prevent her from reassuming her post, as ordered by the school's Board of Directors. That the school principal and Fr. Wiertz disagreed with the Board's decision to retain her, and some teachers allegedly threatened to resign en masse, even if true, did not make them liable to her for damages. They were simply exercising their right of free speech or their right to dissent from the Board's decision. Their acts were not contrary to law, morals, good customs or public policy. They did not "illegally dismiss" her for the Board's decision to retain her prevailed. She was ordered to report for work on July 5, 1982, but she did not comply with that order. Consequently, whatever loss she may have incurred in the form of lost earnings was self-inflicted. Volenti non fit injuria. Ratio Liability for damages under Articles 19, 20 and 21 of the Civil Code arises only from unlawful, willful or negligent acts that are contrary to law, or morals, good customs or public policy.

BARONS MARKETING V CA (PHELPS DODGE PHILS) 286 SCRA 96 KAPUNAN; February 9, 1998 NATURE: Petition for review decision of CA FACTS - Phelps Dodge appointed Barons Marketing as one of its dealers of electrical wires and cables. As such dealer, Barons was given 60 days credit for its purchases of Phelps products. - From Dec1986 to Aug1987, Barons purchased on credit wires and cables worth P4.1m, which it in turn supplied to MERALCO. In the sales invoice, it was stipulated that an interest of 12% would be imposed, plus 25% for attys fees and collection. On Sept1987, Barons paid P300k (thereby leaving an unpaid account of P3.8m). Phelps sent several demands, but Barons still did not pay. It instead wrote Phelps requesting if it could pay the outstanding account in monthly installments of P500k plus 1% interest. - Phelps, instead of responding to the request of Barons, filed a complaint for recovery of the P3.8m plus interest, and prayed for attys fees of 25% of the amt, and exemplary damages amounting to P100k. - Barons admitted the purchase of the wires and cables, but disputed the amt claimed by Phelps. The RTC rendered decision in favor of Phelps, ordering Barons to pay the debt and interest of 12% and awarding 25% as attys fees. CA affirmed (with modification, reducing attys fees to 5%) Barons now assail the CA decision, alleging that Phelps should have been held guilty of creditors abuse of rights, and Barons should not be liable for attys fees. *note: Barons contends that Phelps abused its rights when it rejected Barons offer to settle the debt in installments **right involved: right of a creditor to refuse partial fulfillment of a prestation due to him ISSUES 1. WON there was creditors abuse of rights in this case 2. WON Barons should be liable for interest and attys fees HELD 1. NO Ratio there is no abuse of rights when there is no bad faith nor intent to prejudice another. Also, the mere exercise of a right cannot be said to be an abuse of right. Reasoning - the law prescribes a "primordial limitation on all rights" by setting certain standards that must be observed in the exercise

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thereof. Thus, the inclusion of Art.19 in the CC: 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. - To constitute abuse of rights, there must be bad faith or intent to prejudice the plaintiff. Citing Tolentino: There is undoubtedly an abuse of right when it is exercised for the only purpose of prejudicing or injuring another. When the objective of the actor is illegitimate, the illicit act cannot be concealed under the guise of exercising a right. xxx The exercise of a right must be in accordance with the purpose for which it was established, and must not be excessive or unduly harsh; there must be no intention to injure another. - In this case, bad faith on the part of Phelps was not proved. More importantly, Phelps was driven by legitimate reasons for rejecting Barons offer. It merely wanted to avoid a situation wherein its cash position would be compromised, making it harder for them to pay its own obligations. Clearly, this (the request of Barons) would be inimical to the interests of any enterprise, especially a profit-oriented one like Phelps. It is plain to see that what we have here is a mere exercise of rights, not an abuse thereof. 2. YES Ratio the penal clause included in the contract should be complied with in the event of breach. Reasoning - the contract expressly provided for the imposition of the 12% interest plus 25% for attorneys fees and collection, by way of penal clause. Thus, Barons is bound to pay the said amounts. - However, since 25% if P4.1m is almost P2m, this should be reduced to 10% for being manifestly exorbitant. Thus, attys fees should be reduced to 10% Disposition CA decision modified WRT attys fees but AFFIRMED in other respects

BPI EXPRESS CARD CORPORATION V CA (MARASIGAN) 296 SCRA 260 KAPUNAN; September 25, 1998 FACTS - December 8, 1989 - Atty. Ricardo J. Marasigans credit card was dishonored, the bill amounting to P735.32, by Caf Adriatico when the he entertained some guests. One of his guests, Mary Ellen Ringler, paid the bill by using her own credit card a Unibankard - MARASIGAN was a complimentary member of BECC from February 1988 to February 1989 and was issued Credit Card with a credit limit of P3,000.00 and with a monthly billing every 27th of the month His membership was renewed for another year or until February 1990 and the credit limit was increased to P5,000.00. - MARASIGAN oftentimes exceeded his credit limits but this was never taken against him by BPI and even his mode of paying his monthly bills in check was tolerated. - October 1989 statement amounting to P8,987.84 was not paid in due time. MARASIGAN admitted having failed to pay his account because he was in Quezon attending to some professional and personal commitments. He was informed that bpi was demanding immediate payment of his outstanding account, was requiring him to issue a check for P15,000.00 which would include his future bills, and was threatening to suspend his credit card. - MARASIGAN issued Far East Bank Check of P15,000.00, postdated December 15, 1989 which was received on November 23, 1989 by Tess Lorenzo, an employee of the defendant who in turn gave to Jeng Angeles, a co-employee who handles the account of the plaintiff. The check remained in the custody of Jeng Angeles. Mr. Roberto Maniquiz, head of

the collection department of defendant was formally informed of the postdated check about a week later. - November 28, 2989 - BPI served MARASIGAN a letter by ordinary mail informing him of the temporary suspension of the privileges of his credit card and the inclusion of his account number in their Caution List. He was also told to refrain from further use of his credit card to avoid any inconvenience/embarrassment and that unless he settles his outstanding account with the defendant within 5 days from receipt of the letter, his membership will be permanently cancelled - There is no showing that the plaintiff received this letter before December 8, 1989. - December 12, 1989 MARASIGAN requested that he be sent the exact billing due him as of December 15, 1989, to withhold the deposit of his postdated check and that said check be returned to him because he had already instructed his bank to stop the payment because BPI violated their agreement that when MARASIGAN issued the check to cover his account amounting to only P8,987.84 on the condition that BPI will not suspend the effectivity of the card - December 16, 1989 MARASIGAN sent letter to the manager of FEBTC requesting the bank to stop the payment of the check - March 12, 1990 MARASIGAN sent another letter reminding the manager of FEBTC that he had long rescinded and cancelled whatever arrangement he entered into with BPI and requesting for his correct billing, less the improper charges and penalties, and for an explanation within five (5) days from receipt thereof why his card was dishonored on December 8, 1989 despite assurance to the contrary by defendant's personnel-in-charge, otherwise the necessary court action shall be filed to hold defendant responsible for the humiliation and embarrassment suffered by him - March 21, 1990 - final demand by BPI requiring him to pay in full his overdue account, including stipulated fees and charges, within 5 days from receipt thereof or face court action and also to replace the postdated check with cash within the same period or face criminal suit for violation of Bouncing Check Law - April 5, 1990 MARASIGAN demanded BPI compliance with his request in his first letter dated March 12, 1990 within three (3) days from receipt, otherwise the plaintiff will file a case against them - May 7, 1990 - MARASIGAN filed a complaint for damages against petitioner before the RTC Makati - TC: ruled for MARASIGAN finding that BPI abused its right in contravention of A19 CC ordering BPI to pay P 100,000.00 as moral damages; P 50,000.00 as exemplary damages; and P 20,000.00 by way of attorney's fees. - CA: AFFIRMED with the MODIFICATION P50,000.00 as moral damages: P25,000.00 as exemplary damages; and P10,000.00 by way of attorney's fees. ISSUES 1. WON BPI abused its right to suspend the credit card 2. WON MARASIGAN can recover moral damages arising from the cancellation of his credit card by BPI HELD 1. NO Ratio The agreement was for the immediate payment of the outstanding account. A check is not considered as cash especially when it is postdated sent to BPI. Thus, the issuance of the postdated check was not effective payment. BPI was therefore justified in suspending his credit card. BPI did not capriciously and arbitrarily canceled the use of the card. Reasoning - Under the terms and conditions of the credit card, signed by MARASIGAN, any card with outstanding balances after thirty

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(30) days from original billing/statement shall automatically be suspended, Any CARD with outstanding balances unpaid after thirty (30) days from original billing/statement date shall automatically be suspended and those with accounts unpaid after sixty (60) days from said original billing/statement date shall automatically be cancelled without prejudice to BECC's right to suspend or cancel any CARD any time and for whatever reason. - By his own admission MARASIGAN made no payment within 30 days for his billing/statement dated 27 September 1989. Neither did he make payment for his original billing/statement dated 27 October 1989. Consequently as early as 28 October 1989 thirty days from the non-payment of his billing dated 27 September 1989, BPI could automatically suspend his credit card. Ratio To find the existence of an abuse of right A19 the following elements must be present (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. Reasoning - Good faith is presumed and the burden of proving bad faith is on the party alleging it. As early as 28 October 1989, BPI could have suspended MARASIGANS card outright. Instead, BPI allowed him to use his card for several weeks. Ratio The underlying basis for the award of tort damages is the premise that an individual was injured in contemplation of law. Thus, there must first be a breach of some duty and the imposition of liability for that breach before damages may be awarded; and the breach of such duty should be the proximate cause of the injury. Reasoning - 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 results of a violation of a legal duty. In such cases, the consequences must be borne by the injured person alone, the law affords no remedy for damages resulting from an act which does not amount to a legal injury or wrong. These situations are often called damnum absque injuria - It was petitioner's failure to settle his obligation which caused the suspension of his credit card and subsequent dishonor at Caf Adriatico. He can not now pass the blame to the petitioner for not notifying him of the suspension of his card. As quoted earlier, the application contained the stipulation that the petitioner could automatically suspend a card whose billing has not been paid for more than thirty days. Nowhere is it stated in the terms and conditions of the application that there is a need of notice before suspension may be affected as private respondent claims. 2. NO - MARASIGANS own negligence was the proximate cause of his embarrassing and humiliating experience in not reading the letter of notice of cancellation. The award of damages by the CA is clearly unjustified.

B. ACTS CONTRA BONUS MORES

Art. 21, CC. Any person who wilfully 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.

1. ELEMENTS
RUIZ V SECRETARY PAREDES; 1966 NATURE: Appeal from an order of the Manila CFI FACTS - Enrique Ruiz and Jose Herrera, both shareholders of Allied Technilogists, Inc. filed an action against the Secretary of National Defense and also against their own company (together with Pablo Panlilio who is also a shareholder of the company) in connection with the 15% retention fund withheld by the DND relating to the construction of the Veterans Hospital. It turned out that said retention was already released by the DND to the Company. The Court then proceeded with the other cause of action which was deemed to be the controversy between Ruiz and Panlilio over the said 15%. - As it turned out, the real issue was the credit as to the architects of the building were. Under the contract and all other documents relating to the construction of the Veterans Hospital, the named architect was only Panlilio. Ruiz and Herrera want to be recognized as architects of the building also citing Article 21 of the Civil Code as their base for he cause of action. - The amended complaint of appellants claimed that the non inclusion of their names as architects resulted in their professional prestige and standing being seriously impaired. Hence, they claim that even if the retention fund was in act released, their pleas for recognition as architects should have been heard by the lower court. ISSUE WON the lower court erred in dismissing the case HELD NO - The sole object of the appellants was to secure for themselves recognition that they were co-architects of the Veterans Hospital, together with Panlilio, so as to enhance their standing and prestige. If this is so, there is no need or necessity for a judicial declaration. Prestige and recognition are bestowed on the deserving even if there is no judicial declaration. On the other hand no amount of declaration will help an incompetent person achieve prestige and recognition. Article 21, which was used as basis of the action, states; 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. - While the word injury may also refer to honor or credit, the article envisions a situation where a person has a legal right which was violated by another in a manner contrary to morals, good custom, or public policy. Hence it presupposes losses or injuries which are suffered as a result of said violation. The pleadings in this case do not show damages were ever asked or alleged. - And under the facts and circumstances obtaining, one cannot sustain the contention that the failure or refusal to extend recognition was an act contrary to morals, good custom, or public policy. Disposition Petition denied. Order appealed from is affirmed. he modified award of attorneys fees.

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2. EXAMPLES a. BREACH OF PROMISE TO MARRY, SEDUCTION AND ASSAULT

WASSMER V VELEZ 12 SCRA 648 BENGZON; December 24, 1964 FACTS - Francisco X. Velez and Beatriz P. Wassmer, following their mutual promise of love, decided to get married and set September 4, 1954 as the big day. On September 2, Velez left a note for Wassmer saying that he has to postpone the wedding because his mother opposes it. - But the next day, he sent a telegram assuring Wassmer that nothing has changed and he will return soon. But Velez did not appear nor was he heard from again. - Sued by Beatriz for damages, Velez filed no answer and was declared in default. Plaintiff adduced evidence before the clerk of court as commissioner Judgment was rendered ordering defendant to pay plaintiff P2,000 as actual damages; P25,000 as moral and exemplary damages; P2,500 as attorney's fees; and the costs. ISSUE WON Velez is liable for the cost of wedding preparations spent by Wassmer HELD YES - While mere breach of contract is not an actionable wrong, Article 21 of the Civil Code says that when the person willfully causes loss or injury contrary to good custom, he shall compensate the latter for damages. It is the abuse of right which can be a cause for moral and material damages. - The record reveals that on August 23, 1954 plaintiff and defendant applied for a license to contract marriage, which was subsequently issued. Their wedding was set. Invitations were printed and distributed to relatives, friends and acquaintances. The bride-to-be's trousseau, party dresses and other apparel for the important occasion were purchased. Dresses for the maid of honor and the flower girl were prepared. A matrimonial bed, with accessories, was bought. Bridal showers were given and gifts received. - This is not a case of mere breach of promise to marry. 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 aforesaid. - Per express provision of Article 2219 (10) of the New Civil Code, moral damages are recoverable in the cases mentioned in Article 21 of said Code. As to exemplary damages, defendant contends that the same could not be adjudged against him because under Article 2232 of the New Civil Code the condition precedent is that "the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner." The argument is devoid of merit as under the abovenarrated circumstances of this case defendant clearly acted in a "wanton ... , reckless [and] oppressive manner." P15,000.00 as moral and exemplary damages is deemed to be a reasonable award.

TANJANCO V SANTOS REYES; December 17, 1966 NATURE Appeal from a decision of the Court of Appeals revoking an order of the CFI dismissing appellant's action for support and damages. FACTS - Apolonio Tanjanco courted Araceli Santos, both being of adult age; that he expressed and professed his undying love and affection for her who also in due time reciprocated the tender feelings"; that in consideration of his promise of marriage Araceli consented and acceded to Tanjancos pleas for carnal knowledge. Regularly until December 1959, through his protestations of love and promises of marriage, Tanjanco succeeded in having carnal access to Araceli, as a result of which she conceived a child. Due to her pregnant condition, to avoid embarrassment and social humiliation, Araceli had to resign her job as secretary in IBM Philippines, Inc. She became unable to support herself and her baby and duer to Tanjanco's refusal to marry her as promised, she suffered mental anguish, besmirched reputation, wounded feelings, moral shock, and social humiliation. The prayer was for a decree compelling the defendant to recognize the unborn child that plaintiff was bearing; to pay her not less than P430.00 a month for her support and that of her baby, plus P100,000.00 in moral and exemplary damages, plus P10,000.00 attorney's fees. CFI dismissed the complaint. The Court of Appeals, entered judgment setting aside the dismissal and directing the court of origin to proceed with the case. ISSUE WON CS erred in reversing the CFI decision HELD YES - In holding that the complaint stated a cause of action for damages, under Article 21, the Court of Appeals relied upon and quoted from the memorandum submitted by the Code Commission where it stated, but the Code Commission has gone farther than the sphere of wrongs defined or determined by positive law. Fully sensible that there are countless gaps in the statutes, which leave so many victims of moral wrongs helpless, even though they have actually suffered material and moral injury, the Commission has deemed it necessary, in the interest of justice, to incorporate in the proposed Civil Code the following rule: ART. 23. Any person who wilfully 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." They gave an example "A" seduces the nineteenyear old daughter of "X". A promise of marriage either has not been made, or can not be proved. The girl becomes pregnant. Under the present laws, there is no crime, as the girl is above eighteen years of age. Neither can any civil action for breach of promise of marriage be filed. Therefore, though the grievous moral wrong has been committed, and though the girl and her family have suffered incalculable moral damage, she and her parents cannot bring any action for damages. But under the proposed article, she and her parents would have such a right of action. The Court of Appeals seems to have overlooked that the example set forth in the Code Commission's memorandum refers to a tort upon a minor who has been seduced. The essential feature is seduction, that in law it is more than mere sexual intercourse, or a breach of a promise of marriage; it connotes essentially the idea of deceit, enticement, superior power or abuse of confidence on the part of the seducer to which the woman has yielded. To constitute seduction there must in all cases be some sufficient promise or inducement

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and the woman must yield because of the promise or other inducement. If she consents merely from carnal lust and the intercourse is from mutual desire, there is no seduction. She must be induced to depart from the path of virtue by the use of some species of arts, persuasions and wiles, which are calculated to have and do have that effect, and which result in her ultimately submitting her person to the sexual embraces of her seducer. - And in American Jurisprudence: On the other hand, in an action by the woman, the enticement, persuasion or deception is the essence of the injury; and a mere proof of intercourse is insufficient to warrant a recover. Accordingly it is not seduction where the willingness arises out of sexual desire or curiosity of the female, and the defendant merely affords her the needed opportunity for the commission of the act. It has been emphasized that to allow a recovery in all such cases would tend to the demoralization of the female sex, and would be a reward for unchastity by which a class of adventuresses would be swift to profit. - Bearing these principles in mind, let us examine the complaint. Over and above the partisan allegations, the facts stand out that for one whole year, from 1958 to 1959, Araceli Santos, a woman of adult age, maintained intimate sexual relations with Tanjanco, with repeated acts of intercourse. Such conduct is incompatible with the idea of seduction. Plainly there is here voluntariness and mutual passion; for had Araceli been deceived, had she surrendered exclusively because of the deceit, artful persuasions and wiles of the defendant, she would not have again yielded to his embraces, much less for one year, without exacting early fulfillment of the alleged promises of marriage, and would have cut chart all sexual relations upon finding that defendant did not intend to fulfill his promises. Hence, we conclude that no case is made under Article 21 of the Civil Code, and no other cause of action being alleged, no error was committed by the Court of First Instance in dismissing the complaint. Disposition the decision of the Court of Appeals is reversed, and that of the Court of First Instance is affirmed..

were married, so much so that she promised not to make any scandal and to marry him. they proceeded to Bunags grandmothers house. That night, Bunag Sr arrived and assured them that they would apply for the ML the next day. - After filing for the ML, they lived as husband and wife for 21 days. Bunag then left and never returned. Cirilo was ashamed when she went home and could not sleep and eat because of the deception done against her by Bunag, Jr. - A complaint fro breach of promise to marry was filed against Bunag Sr and Bunag Jr. The RTC upon finding that she was forcibly abducted and raped Bunag Jr was ordered to pay for P80K for moral damages, P20K for exemplary damage, P20K by way of temperate damage, and P10K for attys fees. Bunag Sr was absolved from liability. - Cirilo appealed on the disculpation of Bunag Srs liability. While the Bunags assigned several errors in the TC decision. CA dismissed the petitions and affirmed judgment of RTC in toto. - Bunag filed for the petition for review claiming that CA failed to consider vital exhibits and testimonies and error in the proper application of the law. ISSUE WON lower courts erred in granting damages for the breach of promise to marry HELD Ratio A breach of promise to marry is not actionable per se, except where the plaintiff incurred expenses for the wedding and the necessary incidents therrof. However, the award for moral damages is allowed in cases specified and analogous to those provided in Art 2219 CC. Under Art 21 CC, in relation to Art 2219, par10, 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. Reasoning - The court is constrained with the factual findings of the lower courts. - A breach of promise to marry has no standing in the civil law, apart from the right to recover for money or property advanced by the plaintiff upon the faith of such promise. - Under the circumstances in the case at bar, the petitioners promising to marry Cirilo to evade criminal liability constitutes acts contrary to morals and good customs. These are grossly insensate and reprehensible transgressions which warrant and justify the award of moral and exemplary damages, pursuant to Art 21 in relation to par 3 and 10, Art 2219, and Art 2229 and 2234 CC. - Although TC granted damages on the basis of the forcible abduction and rape even after the criminal complaints dismissal, the extinction of the criminal liability does not extinguish civil liability unless there is a declaration of a final judgment that the fact from which the civil case may arise did not exist. In the case, only the fiscal made such dismissal of the criminal complaint. Disposition petition is hereby DENIED for lack of merit, and the assailedjudgment and resolution are hereby AFFIRMED.

BUNAG V CA (CIRILO) 211 SCRA 441 REGALADO; July 10, 1992 NATURE: Petition for review from the decision of CA FACTS - Conrado Bunag, Jr brought Zenaida Cirilo to a hotel where they had sex. Later that evening, Bunag brough her to his grandmothers house in Las Pinas where they liver together as husband and wife for 21 days. During that time, Bunag, Jr. and Cirilo applied for their respective Marriage Licenses, but after leaving, Bunag Jr withdrew his application. Cirilo contends that she was abducted by Bunag Jr along with unidentified man and brought her to the motel where she was raped. The Court a quo adopted her evidence. - The Court found that Cirilo and Bunag Jr were sweethearts but for 2eeks before the alleged rape, they had a quarrel. On the day of the said rape, Bunag jr invited her for merienda to talk things over. Bunag Jr came riding in a car with an unidentified man. Cirilo rode in the passengers seat while Bunag Jr was driving. When she noticed they were going the wrong way, Cirilo protested but Bunag threatened her that he would bump the car against the post if she made any noise. They never got to the restaurant where they were supposed to eat. - She was then dragged by the 2 men in the hotel where Bunag Jr deflowered her against her will and consent. - Bunag initially allowed her to go home but later refused to consent and stated that he would only let her go after they

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CONSTANTINO V MENDEZ BIDIN; May 14, 1992 NATURE: Petition for review on certiorari FACTS - Petitioner Amelita Constantino filed an action for acknowledgment, support and damages against private respondent Ivan Mendez. - In her complaint, Amelita Constantino alleges that she met Ivan Mendez at Tony's Restaurant located at Sta. Cruz, Manila, where she worked as a waitress; that the day following their first meeting, Ivan invited Amelita to dine with him at Hotel Enrico where he was billeted; that while dining, Ivan professed his love and courted Amelita; that Amelita asked for time to think about Ivan's proposal; that at about 11:00 o'clock in the evening, Amelita asked Ivan to bring her home to which the latter agreed, that on the pretext of getting something, Ivan brought Amelita inside his hotel room and through a promise of marriage succeeded in having sexual intercourse with the latter; that after the sexual contact, Ivan confessed to Amelita that he is a married man; that they repeated their sexual contact in the months of September and November, 1974, whenever Ivan is in Manila, as a result of which Amelita got pregnant; that her pleas for help and support fell on deaf ears; that Amelita had no sexual relations with any other man except Ivan who is the father of the child yet to be born at the time of the filing of the complaint; that because of her pregnancy, Amelita was forced to leave her work as a waitress; that Ivan is a prosperous businessman of Davao City with a monthly income of P5,000 to P8,000.00. As relief, Amelita prayed for the recognition of the unborn child, the payment of actual, moral and exemplary damages, attorney's fees plus costs. ISSUE WON Amelita can claim for damages which is based on Articles 19 3 & 21 4 of the Civil Code on the theory that through Ivan's promise of marriage, she surrendered her virginity HELD NO Ratio Mere sexual intercourse is not by itself a basis for recovery. Damages could only be awarded if sexual intercourse is not a product of voluntariness and mutual desire. Reasoning - Her attraction to Ivan is the reason why she surrendered her womanhood. Had she been induced or deceived because of a promise of marriage, she could have immediately severed her relation with Ivan when she was informed after their first sexual contact sometime in August, 1974, that he was a married man. Repeated sexual intercourse only indicates that passion and not the alleged promise of marriage was the moving force that made her submit herself to Ivan. QUIMIGUING V ICAO 34 SCRA 132 REYES; July 31, 1970 NATURE: Appeal on points of law from an order of the CFI FACTS - Appellant, Quimiguing, assisted by her parents, sued her neighbor Icao with whom she had close and confidential relations. The latter, although married, succeeded in having sex with plaintiff several times by force and intimidation and without her consent. She became pregnant and despite efforts and drugs (abortion pills?) supplied by defendant, she had to stop studying. Hence, she claimed support of P120/mo.

- Icao moved to dismiss for lack of cause of action as the complaint did not allege the child had been bornthe motion was sustained. Plaintiff amended the complaint but the TC ruled such was not allowable as the original complaint averred no cause of action. ISSUES 1. WON Quimiguing had a right to the support of the child 2. WON Quimiguing is entitled to damages HELD 1. YES - A conceived, unborn child is given a provisional personality by law and therefore has a right to support from its progenitors, particularly Icao (Art. 40) and may receive donations (Art. 742). Its being ignored by the parent in his testament may result in preterition of a forced heir that annuls the institution of the testamentary heir, even if such child should be born after the death of the testator (Art. 854) 2. YES - For a married man to force a woman not his wife to yield to his lust (as averred in the original complaint) constitutes a clear violation of the rights of his victim that entitles her to claim compensation for damages caused. As stated in 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 damage. This is furthered by Art. 2219 which provides compensation in cases of seduction, abduction, rape or other lascivious acts. - Hence, independent of the right to support of the child, plaintiff herself had a cause of action for damages; thus the order dismissing it for failure to state a cause of action was doubly in error. Disposition the orders under appeal are reversed and set aside

PE V PE 5 SCRA 200 1962 FACTS - Plaintiffs are parents, brothers and sisters of Lolita PE, an unmarried woman 24 years of age. Defendant, a married man, frequently visited Lolitas house on the pretext that he wanted her to teach him to pray the rosary. They fell in love and conducted clandestine trysts. When the parents learned about this, they prohibited defendant from going to their house. The affair continued just the same. On april 14, 1957, Lolita disappeared from her brothers house where she was living. A note in the handwriting of the defendant was found inside Lolitas aparador. The present action was instituted under Article 21 of the Civil Code. The lower court dismissed the action. Hence, this appeal by the plaintiffs ISSUE WON the defendant can be held liable under Article 21 HELD YES - The circumstances under which the defendant tried to win Lolitas affection cannot lead to any other conclusion than that it was he who, through 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 defendant 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 latters family who allowed free access because he was a collateral relative and was considered as a member of the family, the two eventually fell in love with each other and

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conducted clandestine love affairs. 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 the 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 had caused her and her family is indeed immeasurable considering the fact that he is a married man. Verily, he has committed an injury to Lolitas family in a manner contrary to morals, good customs and public policy as contemplated in Article 21 of the New Civil Code

b. MALICIOUS PROSECUTION
Art. 2219, CC. Moral damages may be recovered in the following and analogous cases: (1) A criminal offense resulting in physical injuries; (2) Quasi-delicts causing physical injuries; (3) Seduction, abduction, rape, or other lascivious acts; (4) Adultery or concubinage; (5) Illegal or arbitrary detention or arrest; (6) Illegal search; (7) Libel, slander or any other form of defamation; (8) Malicious prosecution; (9) Acts mentioned in Article 309; (10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also recover moral damages. The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of this article, in the order named. AQUINO, PP. 384 391

Andres Lao vs. Court of Appeals, et al G.R. 606958-59 Feb 17, 2000 PURISIMA 325 SCRA 694 FACTS: The Associated Anglo-American Tobacco Corporation entered into a Contract of Sales Agent with Andres Lao. Under the contract, Lao agrees to sell cigarettes manufactured and shipped by the corporation to his business address in Tacloban City. Lao would in turn remit the sales. Esteban Co, the Vice president and general manager of the Corporation summoned Lao for accounting. It was then established that there was Laos liability. Lao encountered difficulties in complying with these obligations. The corporation sent Ngo Kheng to supervise Laos sales operation. Ngo Kheng discovered that contrary to Laos allegation that he still had huge collectibles from his customers, nothing was due the Corporation from Laos clients. From then on, Lao no longer received shipments. Lao brought a complaint for accounting and damages against the corporation. During the pendency of the said civil case, Esteban co, representing the corporation as its new vice-president filed an estafe case against Lao. Without awaiting the termination of the criminal case, Lao lodged a complaint for malicious prosecution. AAMTC contends that the complaint for malicious prosecution brought by Lao during the pendency of subject criminal case for estafa, states no cause of action as it was prematurely filed when the criminal case that resulted in the acquittal of Lao was not yet terminated. Lao countered that the elements supportive of an action for malicious prosecution are evidentiary in nature and their existence or non-existence cannot be the subject of evaluation and conclusion upon the filing of the complaint. ISSUE: W/N there was malicious prosecution HELD: NO Malicious prosecution has been defined as an action for damages brought by one against whom a criminal prosecution, civil suit or other legal proceeding has been instituted maliciously and without probable cause, after the termination of such prosecution, suit or other proceeding in favor of the defendant therein. As thus defined, the fact of termination of the criminal prosecution, civil suit or legal proceeding maliciously filed and without probable cause, should precede the complaint for malicious prosecution. Such a complaint states a cause of action if it alleges: (a) that the defendant was himself the prosecutor or at least instigated the prosecution; (b) that the prosecution finally terminated in the acquittal of the plaintiff; (c) that in bringing the action the prosecutor acted without probable cause, and (d) that the prosecutor was actuated by malice, i.e., by improper and sinister motives. The contention of Lao that the elements of an action for malicious prosecution are evidentiary in nature and should be determined at the time the plaintiff offers evidence and rests his case, is untenable. To rule otherwise would, in effect, sanction the filing of actions without a cause of action. The existence of a cause of action is determined solely by the facts alleged in the complaint. Consideration of other facts is proscribed and any attempt to prove extraneous circumstances is not allowed. As this Court said inSurigao Mine Exploration Co., Inc. v. Harris, unless the plaintiff has a valid and subsisting cause of action at the time his action is commenced, the defect cannot be cured or remedied by the acquisition or accrual of one while the action is pending, and a supplemental complaint or an amendment setting up such after-accrued cause of action is not permissible." Thus, the circumstance that the estafa case concluded in respondent Lao's acquittal during the pendency of the complaint for malicious prosecution

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did not cure the defect of lack of cause of action at the time of filing of the complaint. Neither does the Court find merit in respondent Lao's submission that the complaint for malicious prosecution is viable inasmuch as it is also anchored on Articles 20 and 21 of the Civil Code. This may appear to be a persuasive argument since there is no hard and fast rule which can be applied in the determination of whether or not the principle of abuse of rights has been violated, resulting in damages under the said articles of the Civil Code on Human Relations. Indeed, a party injured by the filing of a court case against him, even if he is later on absolved, may file a case for damages grounded either on the principle of abuse of rights or on malicious prosecution. However, whether based on the principle of abuse of rights or malicious prosecution, a reading of the complaint here reveals that it is founded on the mere filing of the estafa charge against respondent Lao. As such, it was prematurely filed and it failed to allege a cause of action. Should the action for malicious prosecution be entertained and the estafa charge would result in respondent Lao's conviction during the pendency of the damage suit, even if it is based on Articles 20 and 21, such suit would nonetheless become groundless and unfounded. To repeat; that the estafa case, in fact, resulted in respondent Lao's acquittal would not infuse a cause of action on the malicious prosecution case already commenced and pending resolution. The complaint for damages based on malicious prosecution and/or on Articles 20 and 21 should have been dismissed for lack of cause of action and therefore, the Court of Appeals erred in affirming the decision of the trial court of origin. It should be stressed, however, that the dismissal of subject complaint should not be taken as an adjudication on the merits, the same being merely grounded on the failure of the complaint to state a cause of action. DISPOSITION: the Decision in CA-G.R. No. 61925-R is REVERSED AND SET ASIDE; the respondent corporation is adjudged not liable for malicious prosecution due to the prematurity of the action.

Ratio. One cannot be held liable in damages for maliciously instituting a prosecution where he acted with probable cause. Reasoning -. 'Under the Spanish Law, the element of probable cause was not treated separately from that of malice, as under the American Law. When a complaint was laid and there was probable cause to believe that the person charged had committed the acts complained of, although, as a matter of fact, he had not, the complainant was fully protected, but not so much on the theory of probable cause as on the ground that, under such circumstances, there was no intent to accuse falsely. If the charge, although false, was made with an honest belief in its truth and justice, and there were reasonable grounds on which such a belief could be founded, the accusation could not be held to have been false in the legal sense. - To constitute malicious prosecution, there must be proof that the prosecution was prompted by a sinister design to vex and humiliate a person that it was initiated deliberately by the defendant knowing that his charges were false and groundless. Concededly, the mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution (Manila Gas Corporation v. Court of Appeals, 100 SCRA 602) - Nicolas issued 5 checks which Que cannot encash, inspite of demands by the latter. Also, the goods which were allegedly defective were not yet returned to Que before the filing of the estafa case. Instead, Nicolas kept the goods, did not demand for its repair. He just stopped payment, without Que knowing that there were defects in the goods he delivered. Therefore, from Ques point of view, the circumstances presented the possibility that Nicolas might cheat him. Disposition decision of the respondent court dated March 12, 1984, is SET ASIDE and the amended decision of the trial court dated February 21, 1979, is REINSTATED as above modified. This decision is immediately executory. DRILON V CA (ADAZA) 270 SCRA 211 HERMOSISIMA JR; March 20, 1997 NATURE: Petition to reverse CAs Resolutions FACTS - Gen Renato DE VILLA, Chief of Staff of the AFP, requested the DOJ (headed by Sec Franklin DRILON) to order the investigation of several individuals, including private respondent ADAZA for their alleged participation in the failed Dec 1989 coup detat. - This was then referred for preliminary inquiry to the Special Composite Team of Prosecutors who issued a subpoena to the said individuals after finding sufficient basis to continue the inquiry. The panel assigned to conduct prelim investigation found that there was probable cause to hold them for trial for the crime of REBELLION WITH MURDER AND FRUSTRATED MURDER. Information was filed before RTC QC, with no recommendation as to bail. - Feeling aggrieved by the institution of these proceedings against him, ADAZA filed a complaint for damages and charged petitioners with engaging in a deliberate, willful and malicious experimentation by filing against him a charge of rebellion complexed with murder and frustrated murder when petitioners were fully aware of the non-existence of such crime in the statute books. - Petitioners filed MD since there was no valid cause of action for this complaint for damages. - RTC denied MD. MFR for Order of Denial was also denied. - CA also dismissed petition for certiorari and ordered RTC judge to proceed with the trial of civil case filed by ADAZA.

QUE V IAC (NICOLAS) 169 SCRA 137 CRUZ; January 13, 1989 NATURE: Petition for review FACTS - Magtanggol Que is a dealer of canvass strollers while Antonio Nicolas orders from him. The two had an amicable business relation until 1975, when Nicolas ordered strollers from Que, which were delivered, and then issued 5 postdated checks in favor of Que. The checks were dishonored, in accordance with Nicolas order to stop payment. After making demands for payment, which Nicolas allegedly ignored. Que filed an estafa case against Nicolas. The case was dismissed for lack of merit. - Nicolas then filed a case against Que for malicious prosecution. He allegedly ordered that payment be stopped because the goods delivered to him by Que were defective and that Que allegedly refused to replace them. Que on his part alleged that the said defective products were only returned after he filed an estafa case. TC ruled in favor of Que, IAC reversed. ISSUE WON Que had instituted a malicious prosecution of the private respondent (WON the reversal made by IAC was correct) HELD NO - It is evident that the petitioner was not motivated by ill feeling but only by an anxiety to protect his his rights when he filed the criminal complaint for estafa with the fiscal's office.

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(In Adazas latest Comment, he maintained that his claim before the trial court was merely a suit for damages based on tort and NOT a suit for malicious prosecution.) ISSUES 1. WON complaint was a suit for damages for malicious prosecution 2. WON petitioners are liable for malicious prosecution HELD 1. YES Definition of Malicious Prosecution: - In American jurisdiction, it has been defined asOne begun in malice without probable cause to believe the charges can be sustained. Instituted with intention of injuring defendant and without probable cause, and which terminates in favor of the person prosecuted. For this injury an action on the case lies, called the action of malicious prosecution. - In Philippine jurisdiction, it has been defined asAn action for damages brought by one against whom a criminal prosecution, civil suit, or other legal proceeding has been instituted maliciously and without probable cause, after the termination of such prosecution, suit, or other proceeding in favor of the defendant therein. The gist of the action is the putting of legal process in force, regularly, for the mere purpose of vexation or injury. Reasoning - Nowhere in his complaint filed with the trial court did respondent Adaza allege that his action is one based on tort. (Sec 3e of RA 3019) An examination of the records would show that this latest posture as to the nature of his cause of action is only being raised for the first time on appeal. Such a change of theory cannot be allowed. 2. NO Ratio In order for a malicious prosecution suit to prosper, the plaintiff must prove these elements: (a) The fact of the prosecution and the further fact that the defendant was himself the prosecutor and that the action finally terminated with an acquittal; (b) That in bringing the action, the prosecutor acted without probable cause; and (c) That the prosecutor was actuated or impelled by legal malice, that is by improper or sinister motive. - The statutory basis for a civil action for damages for malicious prosecution are found in the provisions of the NCC [Art 19, 20, 21, 26, 29, 32, 33, 35, 2217 and 2219 (8)]. Reasoning - Judging from the face of the complaint itself filed by Adaza, NONE of these requisites have been alleged, thus rendering the complaint dismissible on the ground of failure to state a cause of action. (a) Insofar as Adazas Criminal Case is concerned, what appears clear from the records only is that respondent has been discharged on a writ of habeas corpus and granted bail. This is not considered the termination of the action contemplated under Philippine jurisdiction to warrant the institution of a malicious prosecution suit against those responsible for the filing of the information against him. (b) It is well-settled that one cannot be held liable for maliciously instituting a prosecution where one has acted with probable cause. The petitioners were of the honest conviction that there was probable cause to hold Adaza for trial. (c) Suffice it to state that the presence of probable cause signifies, as a legal consequence, the absence of malice. Disposition Petition is GRANTED. Respondent Judge is DIRECTED to take no further action on civil case except to DISMISS it.

c. PUBLIC HUMILIATION
PATRICIO V LEVISTE PADILLA; April 26, 1989 FACTS - Rafael Patricio, an ordained Catholic priest, and actively engaged in social and civic affairs in Pilar, Capiz, where he is residing, was appointed Director General of the 1976 Religious and Municipal Town Fiesta of Pilar, Capiz. While a benefit dance was on-going in connection with the celebration of the town fiesta, petitioner together with two (2) policemen were posted near the gate of the public auditorium to check on the assigned watchers of the gate. Private respondent Bienvenido Bacalocos, President of the Association of Barangay Captains of Pilar, Capiz and a member of the Sangguniang Bayan, who was in a state of drunkenness and standing near the same gate together with his companions, struck a bottle of beer on the table causing an injury on his hand which started to bleed. Then, he approached petitioner in a hostile manner and asked the latter if he had seen his wounded hand, and before petitioner could respond, private respondent, without provocation, hit petitioner's face with his bloodied hand. As a consequence, a commotion ensued and private respondent was brought by the policemen to the municipal building. As a result, Patricio filed a complaint for Slander by Deed. the court ruled in favor of herein petitioner (as complainant), holding private respondent liable to the former for moral damages as a result of the physical suffering, moral shock and social humiliation caused by private respondent's act of hitting petitioner on the face in public. ISSUE WON Patricio is entitled to damages for the humiliation he experienced during the town fiesta HELD YES - As to moral damages, An award of moral damages is allowed in cases specified or analogous to those provided in Article 2219 of the Civil Code, to wit: "ART. 2219. Moral damages may be recovered in the following and analogous cases: (1) A criminal offense resulting in physical injuries; (2) Quasi-delicts causing physical injuries; (3) Seduction, abduction, rape, or other lascivious acts. (4) Adultery or concubinage; (5) Illegal or arbitrary detention or arrest; (6) Illegal search; (7) Libel, slander or any other form of defamation; (8) Malicious prosecution; (9) Acts mentioned in article 309; (10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30 32, 34, and 35. - Private respondent's contention that there was no bad faith on his part in slapping petitioner on the face and that the incident was merely accidental is not tenable. It was established before the court a quo that there was an existing feud between the families of both petitioner and private respondent and that private respondent slapped the petitioner without provocation in the presence of several persons. - The act of private respondent in hitting petitioner on the face is contrary to morals and good customs and caused the petitioner mental anguish, moral shock, wounded feelings and social humiliation. Pursuant to Art. 21 of the Civil Code in relation to par. (10) of Art. 2219 of the same Code, "any person who wilfully 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 addition to the award of moral damages, exemplary or corrective damages may be imposed upon herein private

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respondent by way of example or correction for the public good. The amount of exemplary damages need not be proved where it is shown that plaintiff is entitled to either moral, temperate or compensatory damages Disposition Decision in favor of Patricio.

GRAND UNION SUPERMARKET INC V ESPINO GUERRERO; December 28, 1979 NATURE Certiorari from CAs decision to grant P75k, P25k and P5k to Espino for moral damages, exemplary damages and attys fees. FACTS - Espino is a graduate Mechanical Engineer from U.P. Class 1950, employed as an executive of Proctor & Gamble Phils., Inc., a corporate manager incharge of motoring and warehousing therein; honorably discharged from the Philippine Army in 1946; a Philippine government pensionado of the United States for six months; member of the Philippine Veterans Legion; author of articles published in the Manila Sunday Times and Philippines Free Press; member of the Knights of Columbus, Council No. 3713; son of the late Jose Maria Espino, retired Minister, Department of Foreign Affairs at the Philippine Embassy, Washington. - One morning in 1970, he and his wife and their two daughters went to shop at South Supermarket (owned by Grand Union) in Makati. While his wife was shopping for groceries, he went around the store and found a cylindrical rat-tail file that he had wanted to buy for his hobby. Because it was small, he didnt put it in the grocery cart because it might fall and get lost. He instead held it in his hand. While still shopping, he and his wife ran into his aunts maid. While they were talking he stuck the file in his breast pocket, with a good part of the merchandise exposed. - He paid for the items in his wifes cart; but he forgot about the file in his pocket. On their way out, the guard stopped him and told him he hadnt paid for the file. He apologized and said he had forgotten. He started towards the cashier to pay; but the guard stopped him and said they were to go to the back of the supermarket. There, a report was made, where Espino said that he just forgot that he placed it in his pocket while talking to the maid and his wife. He was then brought to the front of the grocery, near the cashiers to a Mrs. Fandino. It was around 9am and the many people were at the store. - Fandino read the report and remarked: Ano,nakaw na naman ito. Espino said he was going to pay for it. Fandino replied: That is all they say, the people whom we cause not paying for the goods say . . . They all intended to pay for the things that are found to them. Espino objected, saying he was a regular customer of the supermarket. Espino took out a P5 bill to pay for the P3.85 file. Fandino reached over and took the P5 bill and said it was a fine. Espino and wife objected and said that he was not a common criminal. Fandino said it was a reward for guards who apprehend pilferers. People started milling around and stared at Espino. He was directed to get in line at the cashier to pay for the file. All the time the people were staring at him. He was totally embarrassed. - After paying he and his wife walked out quickly. He thought about going back that night to throw stones at the supermarket; but decided to file a case. The CFI dismissed. CA awarded him damages. ISSUE WON Espino is entitled to damages for the humiliation he experienced at the supermarket HELD: YES

- The false accusation charged against the private respondent after detaining and interrogating him by the uniformed guards and the mode and manner in which he was subjected, shouting at him, imposing upon him a fine, threatening to call the police and in the presence and hearing of many people at the Supermarket which brought and caused him humiliation and embarrassment, sufficiently rendered the petitioners liable for damages under Articles 19 and 21 in relation to Article 2219 of the Civil Code. Petitioners wilfully caused loss or injury to private respondent in a manner that was contrary to morals, good customs or public policy. It is against morals, good customs and public policy to humiliate, embarrass and degrade the dignity of a person. Everyone must respect the dignity, personality, privacy and peace of mind of his neighbors and other persons (Article 26, Civil Code). And one must act with justice, give everyone his due and observe honesty and good faith (Article 19, Civil Code). - While no proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or exemplary damages may be adjudicated, the assessment of such damages, except liquidated ones, is left to the discretion of the court, according to the circumstances of each case (Art. 2216, New Civil Code). The whole incident that befell respondent had arisen in such a manner that was created unwittingly by his own act of forgetting to pay for the file. It was his forgetfulness in checking out the item and paying for it that started the chain of events which led to his embarrassment and humiliation, thereby causing him mental anguish, wounded feelings and serious anxiety. Yet, private respondent's act of omission contributed to the occurrence of his injury or loss and such contributory negligence is a factor which may reduce the damages that private respondent may recover (Art. 2214, New Civil Code). Moreover, that many people were present and they saw and heard the ensuing interrogation and altercation appears to be simply a matter of coincidence in a supermarket which is a public place and the crowd of onlookers, hearers or bystanders was not deliberately sought or called by management to witness private respondent's predicament. The Court does not believe that private respondent was intentionally paraded in order to humiliate or embarrass him because petitioner's business depended for its success and patronage the good will of the buying public which can only be preserved and promoted by good public relations. Disposition Petition denied. CA modified: moral damages = P5k; attys fees = P2k. no exemplary damages.

d. UNJUST DISMISSAL
SINGAPORE AIRLINES VS HON. PANO 122 SCRA 671 MELENCIO-HERRERA, J JUN 22, 1983 FACTS: On August 21, 1974, private respondent Carlos E. Cruz was offered employment by petitioner as Engineer Officer with the opportunity to undergo a B-707 conversion training course, which he accepted on August 30, 1974. There was an express stipulation in the letter-offer which states that as he will be provided with conversion training he is required to enter into a bond with SIA for a period of 6 years. October 26, 1974, Cruz entered into an Agreement for a Course of Conversion Training at the Expense of Singapore Airlines Limited wherein it was stipulated among others that the Engineer Officer shall agree to remain in the service of the Company for a period of five years from the date of commencement of such aforesaid conversion training if so required by the Company. That in

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the event that he leaves the service of the company during the period of five years referred above, or Being dismissed or having his services terminated by the company for misconduct, he and the Sureties hereby bind themselves jointly and severally to pay to the Company as liquidated damages such sums of money. Cruz signed the Agreement with his co-respondent, B. E. Villanueva, as surety. Cruz had applied for leave without pay and had gone on leave without approval of the application during the second year of the period of five years. Petitioner filed suit for damages against Cruz and his surety, Villanueva, for violation of the terms and conditions of the aforesaid Agreement. Respondent Judge dismissed the complaint, counterclaim and cross claim for lack of jurisdiction stating that the present case involves a money claim arising from an employer-employee relation or at the very least a case arising from employer-employee relations, which under Art. 216 of the Labor Code is vested exclusively with the Labor Arbiters of the National Labor Relations Commission.

MEDINA V CASTRO-BARTOLOME ABAD SANTOS; September 11, 1982 FACTS - This is a civil case filed by Medina and Ong against Cosme de Aboitiz and Pepsi-cola Bottling. Medina was the former Plant General Manager and Ong was the former Plant Comptroller. De Aboitiz is President and CEO of Pepsi-cola Bottling. - Without provocation, De Aboitiz shouted at plaintiffs in the presence of the plaintiffs subordinates, GOD DAMN IT. YOU FUCKED ME UP. YOU SHUT UP! FUCK YOU! YOU ARE BOTH SHIT TO ME! YOU ARE FIRED! (Medina) YOU TOO ARE FIRED! (Ong) - Plaintiffs filed joint criminal complaint for oral defamation. But after preliminary investigation, complaint was dismissed allegedly because the expression was not intended to slander but to express anger. Deputy Minister of Justice issued resolution sustaining complaint, reversing the resolution of the Provincial Fiscal. - It was alleged that the defendants dismissed the plaintiffs because of an alleged delay in the use of promotional crowns when such delay was true with respect to the other plants. - The dismissal was effected on the very day that plaintiffs were awarded rings of loyalty to the Company, five days before Christmas and on the day when the employees' Christmas party was held in the Muntinlupa Plant, when plaintiffs went home that day and found their wives and children already dressed up for the party, they didn't know what to do and so they cried. - Motion to dismiss the complaint on the ground of lack of jurisdiction was filed by the defendants. The trial court denied the motion because civil damage complaint is not based on employer-employee relationship but on manner of dismissal. PD 1367 provides that Regional Directors shall not indorse and Labor Arbiters shall not entertain claims for moral or other forms of damages, now under courts jurisdiction. - Defendants filed second motion to dismiss because of amendments to the Labor Code and PD No 1691. They said the case arose from such employer-employee relationship, which under PD No 1691, is under exclusive original jurisdiction of labor arbiter. The ruling with respect to defendants' first motion to dismiss, therefore, no longer holds. - Motion to reconsider was filed but was denied. ISSUE WON Labor Code has any relevance to the reliefs sought by the plaintiffs HELD NO - Plaintiffs have not alleged any unfair labor practice. Theirs is a simple action for damages for tortuous acts allegedly committed by defendants. Governing statute is Civil Code and not Labor Code. SEPARATE OPINION AQUINO [dissent] - In my opinion the dismissal of the civil action for damages is correct because the claims of Medina and Ong were within the exclusive jurisdiction of the Labor Arbiter and the NLRC. - Medina and Ong should not split their cause of action against Aboitiz and Pepsi-Cola.

ISSUE: Whether protection sought by the petitioner is under the civil laws or benefits under the Labor Code. HELD: The primary relief sought is for liquidated damages for breach of a contractual obligation. The other items demanded are not labor benefits demanded by workers generally taken cognizance of in labor disputes, such as payment of wages, overtime compensation or separation pay. The items claimed are the natural consequences flowing from breach of an obligation, intrinsically a civil dispute. PARA LANG MAISINGIT ANG ART 21, CC (hehehehe) Squarely in point is the ruling enunciated in the case of Quisaba vs. Sta. Ines Melale Veneer & Plywood, Inc.,[4] the pertinent portion of which reads: Although the acts complained of seemingly appear to constitute matter involving employeeemployer relations as Quisabas dismissal was the severance of a pre-existing employee-employer relations, his complaint is grounded not on his dismissal per se, as in fact he does not ask for reinstatement or back wages, but on the manner of his dismissal and the consequent effects of such dismissal. Civil law consists of that mass of precepts that determine or regulate the relations that exist between members of a society for the protection of private interest (1 Sanchez Roman 3). The right of the respondents to dismiss Quisaba should not be confused with the manner in which the right was exercised and the effects flowing therefrom. If the dismissal was done anti-socially or oppressively, as the complaint alleges, then the respondents violated article 1701 of the Civil Code which prohibits acts of oppression by either capital or labor against the other, and article 21, which makes a person liable for damages if he wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy, the sanction for which, by way of moral damages, is provided in article 2219, No. 10 (Cf., Philippine Refining Co. vs. Garcia, L-21962, Sept. 27, 1966, 18 SCRA 107). DISPOSITION: the assailed Orders of respondent Judge are hereby set aside. The records are hereby ordered remanded to the proper Branch of the Regional Trial Court of Quezon City, to which this case belongs, for further proceedings.

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