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ALBENSON ENTERPRISES CORP. v. CA

FACTS:

In September, October, and November 1980, petitioner Albenson Enterprises Corporation (Albenson) delivered mild steel plates to Guaranteed Industries, Inc. as part of the latter's order. Albenson was given a check drawn against the account of E.L. Woodworks as partial payment. However, the check was dishonored because the account was closed. Albenson then traced the origin of the dishonored check and discovered that the president of Guaranteed, Eugenio S. Baltao, was the registered owner of E.L. Woodworks. Albenson made a demand for payment, but Baltao denied issuing the check or having any transaction with Albenson. Albenson filed a complaint for violation of Batas Pambansa Bilang 22 against Baltao, but Baltao claimed innocence and requested for reinvestigation. The Provincial Fiscal reversed the finding and exonerated Baltao. Baltao then filed a complaint for damages against Albenson, its owner, and employee. The trial court ruled in favor of Baltao and ordered Albenson to pay actual damages, moral damages, exemplary damages, attorney's fees, and costs.

In this case, petitioners Albenson Enterprises Corp., Jesse Yap, and Benjamin Mendiona filed a Petition after the Court of Appeals modified the trial court's decision in a civil case for damages. The trial court dismissed the case for lack of merit but the appellate court reduced the amount of damages awarded. Petitioners argued that the civil case was one for malicious prosecution, while respondent relied on Articles 19, 20, and 21 of the Civil Code as the basis for his complaint. The court discussed the principles of abuse of rights, stating that a right, even if legal, may become a source of illegality when it is exercised in a manner inconsistent with the norms of human conduct. The court noted that the question of whether the principle of abuse of rights has been violated depends on the circumstances of each case. The court explained the elements of an abuse of right under Article 19, the general sanction under Article 20, and acts contra bonus mores under Article 21. The court emphasized that an act causing injury to another may be the basis for an award of damages under any of these provisions. The court also clarified that Articles 19 and 21 require intentionality, while Article 20 does not make a distinction between willful or negligent acts.

A civil case was filed by the petitioner against the respondent for the recovery of damages due to the latter's negligent acts. The petitioner alleged that he suffered physical injuries and incurred medical expenses as a result of the respondent's negligence. The petitioner presented two witnesses who testified to the incident and the injuries sustained. The trial court ruled in favor of the petitioner and awarded him damages based on Articles 2219, 2220, and 2224 of the Civil Code. The respondent appealed the decision, arguing that the trial court erred in awarding damages under these articles. The Court of Appeals affirmed the trial court's decision and held that the said articles were applicable in the case. Both the trial court and the appellate court failed to properly distinguish these articles and cited them collectively as the basis for the award of damages.

ISSUES:

  1. Whether the act of the petitioners in filing a criminal complaint for violation of Batas Pambansa Bilang 22 against the respondent constitutes an abuse of right.

  2. Whether the elements of abuse of right under Articles 19, 20, and 21 of the Civil Code are present in this case.

  3. Whether or not the petitioner is entitled to moral damages for the alleged malicious prosecution against the respondent.

  4. Whether or not the petitioner is liable for damages for malicious prosecution under Articles 19, 20, and 21 of the Civil Code.

  5. Whether the act of filing a complaint resulting in its dismissal constitutes wrongful act subjecting the actor to the payment of moral damages.

  6. Whether an adverse decision justifies the award of attorney's fees to the winning party.

  7. Whether an award of damages and attorney's fees is warranted if the action was filed in good faith.

  8. Whether actual or compensatory damages should be awarded without proof of the actual loss suffered.

  9. Whether exemplary damages may be awarded in the absence of evidence that the other party acted in a wanton, fraudulent, reckless, or oppressive manner.

  10. Whether attorney's fees can be awarded if there was no malicious prosecution.

  11. Whether the petitioners can be held liable for damages in the absence of proof of fraud and bad faith.

RULING:

  1. The Supreme Court ruled in favor of the petitioners and held that they did not commit an abuse of right. The court emphasized that the filing of the criminal complaint against the respondent was a sincere attempt on the part of the petitioners to collect the amount due to them. The court also found that the elements of abuse of right under Articles 19, 20, and 21 were not present in this case.

  2. The petitioner is not entitled to moral damages for the alleged malicious prosecution against the respondent. Moral damages cannot be awarded in the absence of a wrongful act or omission, fraud, or bad faith. The mere adverse result of an action does not per se make the action wrongful and subject the actor to the payment of damages.

  3. The petitioner is not liable for damages for malicious prosecution under Articles 19, 20, and 21 of the Civil Code. In order for a civil action for damages for malicious prosecution to prosper, the elements of prosecution with acquittal, lack of probable cause, and legal malice must be present. In this case, the prosecution was not shown to be without probable cause or actuated by legal malice. Probable cause signifies the absence of malice, and in this case, it is evident that the petitioner was motivated by the well-founded anxiety to protect their rights when they filed the criminal complaint against the respondent.

  4. The adverse result of an action does not per se make the act wrongful and subject the actor to the payment of moral damages. The right to litigate is precious, and moral damages cannot be charged to those who exercise it erroneously. Thus, an award of moral damages is unwarranted when the action was filed in good faith.

  5. An adverse decision does not automatically justify the award of attorney's fees to the winning party.

  6. An award of damages and attorney's fees is unwarranted when the action was filed in good faith.

  7. Actual or compensatory damages must be supported by proof of pecuniary loss. Without actual proof of loss, the award of actual damages is erroneous.

  8. Exemplary damages may only be awarded when there is evidence that the other party acted in a wanton, fraudulent, reckless, or oppressive manner.

  9. Attorney's fees should not be awarded if there was no malicious prosecution.

  10. In the absence of proof of fraud and bad faith, the petitioners cannot be held liable for damages.

PRINCIPLES:

  • Abuse of right under Article 19 of the Civil Code requires the presence of a legal right or duty exercised in bad faith with the sole intent to prejudice or injure another.

  • Article 20 of the Civil Code provides for the general sanction for all other provisions of law that do not specifically provide for their own sanction, and requires an indemnification for damages caused by a person who, willfully or negligently, causes damage to another in the exercise of his legal right or duty.

  • Article 21 of the Civil Code deals with acts contrary to morals, good custom, public order, or public policy, and requires an act done with the intent to injure. It contains similar elements to Article 19 but does not require intentionality.

  • Under any of the three provisions – Articles 19, 20, and 21 – an act that causes injury to another may be the basis for an award of damages.

  • The act must be intentional for Articles 19 and 21, but Article 20 does not distinguish between willful or negligent acts.

  • Moral damages cannot be awarded in the absence of a wrongful act or omission, fraud, or bad faith.

  • The adverse result of an action does not per se make the action wrongful and subject the actor to the payment of damages.

  • A party can file a case for damages grounded on the principle of abuse of rights or malicious prosecution.

  • Malicious prosecution requires proof that the prosecution was prompted by a sinister design to vex and humiliate a person, that it was initiated deliberately by the defendant, and that the charges were false and groundless.

  • Probable cause signifies the absence of malice. A suit for malicious prosecution will only lie in cases where a legal prosecution has been carried on without probable cause.

  • The adverse result of an action does not make the act wrongful and subject the actor to the payment of moral damages.

  • The right to litigate is precious, and moral damages cannot be charged to those who exercise it erroneously.

  • An award of attorney's fees is the exception rather than the general rule.

  • Actual or compensatory damages must be supported by proof of pecuniary loss.

  • Exemplary damages may only be awarded when there is evidence of wanton, fraudulent, reckless, or oppressive conduct.

  • Attorney's fees should not be awarded if there was no malicious prosecution.

  • In the absence of proof of fraud and bad faith, a party cannot be held liable for damages.