FACTS:

The petitioner, Stanley J. Fortich, worked as an area salesman for San Miguel Corporation in Dipolog City. In his role, he collected money from retailers and buyers along his designated route. In June 1979, the petitioner received a Memorandum from respondent Felipe T. Carreon, the District Sales Supervisor, instructing him to stop his route and collecting sums owed by customers. This was due to an alleged non-issuance of change refund or official receipt for empties retrieved from outlets with temporary credit sales. The Memorandum also directed the petitioner to report to the sales office every working day.

Shortly after, Carreon submitted a second memorandum accusing the petitioner of misappropriating funds amounting to P1,605.00 from his collections. The memorandum also claimed that the petitioner was involved in avid mahjong playing and cockfighting. Subsequently, the company conducted an investigation, which found the petitioner guilty of misappropriation. As a result, the petitioner was preventively suspended and eventually dismissed upon clearance from the Ministry of Labor.

In response, the petitioner filed a complaint for damages arising from libel against Carreon. He argued that the second memorandum was maliciously made and done in bad faith. The Regional Trial Court ruled in favor of the petitioner and ordered Carreon to pay moral and exemplary damages, attorney's fees, and litigation expenses.

However, the Court of Appeals later reversed the trial court's decision. They found that the memorandum was within the scope of privileged communication, and therefore, Carreon was not liable for damages.

ISSUES:

1. Whether the second memorandum issued by the private respondent constitutes libel.

2. Whether the second memorandum is protected by the privileged communication rule.

RULING:

1. Yes, the second memorandum issued by the private respondent constitutes libel. The memorandum imputes the crime of misappropriation of company funds to the petitioner, as well as vices such as being an avid mahjong player and a cockfighting enthusiast. These imputations tend to cause dishonor, discredit, and contempt to the petitioner.

2. No, the second memorandum is not protected by the privileged communication rule. The privileged communication rule applies to statements made in good faith and for legitimate purposes such as the protection of one's rights or interests. In this case, the imputations in the memorandum were not made in good faith but were done with malice, as they were found to be false and malicious.

PRINCIPLES:

• Libel is a public and malicious imputation of a crime, vice, or defect that tends to cause dishonor, discredit, or contempt to a person.

• Every defamatory imputation is presumed to be malicious, even if true, if no good intention and justifiable motive for making it is shown.

• The privileged communication rule applies to statements made in good faith and for legitimate purposes.