FACTS:

The case revolves around the Farm Management Contract (FMC) entered into by Liborio Africa and Alfonso Yuchengco for the development and management of Africa's banana plantation. Yuchengco assigned his rights as farm manager to Checkered Farms, Inc., which later entered into an Exclusive Purchasing Agreement with petitioner Standard (Philippines) Fruit Corporation (Stanfiico). Stanfiico agreed to purchase all acceptable bananas produced by Checkered Farms. Over the years, Stanfiico introduced various improvements on the land. Africa eventually ceded and assigned the land to Reynaldo Rodriguez. Rodriguez allowed Stanfiico to temporarily manage the banana plantation, but disputes arose regarding the accounting of harvested fruits and the dismantling of improvements on the land. Stanfiico dismantled and removed the improvements.

The dispute between Stanfiico and respondents revolved around a banana plantation. Respondents filed a complaint against Stanfiico claiming the value of the bananas harvested during Stanfiico's interim administration, damages for the alleged destruction of the plantation, indemnity for damages suffered due to the removal of water facilities, and damages for operating and harvesting within their premises. Petitioner admitted the contractual relationship but claimed it was misled into believing that the land was owned by another party and that it had the right to remove the irrigation system. The trial court ruled in favor of respondents, and the Court of Appeals modified the decision.

In the case, Stanfiico was given authority by Rodriguez to supervise and operate the plantation while waiting for Rodriguez's application for a corporate grower's contract. Stanfiico harvested bananas from the plantation but incurred expenses. The Court of Appeals upheld Rodriguez's legal standing as the assignee of Africa, ruling that Stanfiico was estopped from denying Rodriguez's equitable ownership of the plantation. The CA also determined that Stanfiico still owed respondents a certain amount and upheld Stanfiico's right to dismantle facilities and improvements installed on the property. The CA exempted Stanfiico's officers from liability and ordered Stanfiico to pay damages, temperate damages for the felled plants, moral and exemplary damages, litigation expenses, and attorney's fees to Rodriguez.

ISSUES:

1. Whether petitioner is liable to respondents for damages.

2. What is the amount of petitioner's liability to respondents.

3. Whether respondents are entitled to the value of the bananas harvested during petitioner's interim management of the plantation.

4. Whether petitioner can be made liable for the value of the bananas harvested on the portion mistakenly believed to belong to the Aparente family.

5. Whether respondents are entitled to damages resulting from the dismantling and removal of the facilities and improvements introduced by petitioner on the plantation.

6. Whether or not the petitioner abused its right to remove the improvements and facilities in the plantation.

7. Whether or not the petitioner should be held liable for damages.

8. Whether the award of temperate damages is proper.

9. Whether the award of exemplary damages is proper.

10. Whether the award of attorney's fees and litigation expenses is proper.

11. Whether the petition should be denied or not.

RULING:

1. Yes, petitioner is liable to respondents for damages.

2. The Court of Appeals (CA) awarded temperate damages in the amount of P200,000.00, and also awarded moral damages in the amount of P50,000.00 and exemplary damages in the amount of P50,000.00. The CA further modified the decision to deduct the sum of P58,562.11 representing the expenses incurred during the interim period from the award given to respondents.

3. The Court affirms that respondents are entitled to the value of the bananas harvested during petitioner's interim management of the plantation. However, the value should be reduced by the expenses incurred by petitioner during their management. Consequently, respondents are indebted to petitioner in the total amount of P58,562.11.

4. Petitioner cannot be made liable for the value of the bananas harvested on the portion mistakenly believed to belong to the Aparente family since the proceeds from those bananas went to the Aparente family and not to petitioner.

5. The Court sustains the conclusion of the Court of Appeals (CA) that respondents are entitled to damages resulting from the dismantling and removal of the facilities and improvements introduced by petitioner on the plantation. However, the amounts awarded by the CA are modified to be in accordance with the damages suffered by respondents.

6. Yes, the petitioner abused its right to remove the improvements and facilities in the plantation. It had the responsibility to exercise its right with caution and due regard to the other structures in the plantation, especially the banana plants. The petitioner failed to consider the destruction of the banana plants in removing the pipelines and did not take necessary precautions to prevent damage to the plantation.

7. Yes, the petitioner should be held liable for damages. The act of removing the pipes with knowledge of its injurious effect, which is the destruction of the banana plants, and the failure to cover the diggings that caused ground destruction were willful acts contrary to morals, good customs, or public policy. Thus, the petitioner should compensate the respondents for the damages caused.

8. The Court affirmed the award of temperate damages, but reduced the amount from P200,000.00 to P100,000.00.

9. The Court sustained the award of exemplary damages.

10. The Court sustained the award of attorney's fees and litigation expenses.

11. The petition was denied.

PRINCIPLES:

• Damnum absque injuria - The removal and dismantling of installations and improvements in exercise of a contractual right does not give rise to a cause of action for damages. (Issue 1)

• Estoppel - A party is estopped from impugning the equitable ownership of another party if it was the former who gave the latter authority in relation to the property. (Issue 1)

• Right to dismantle facilities and improvements - The owner has the right to dismantle facilities and improvements installed by a tenant. (Issue 1)

• Liability of officers following orders - Officers who merely followed orders of their superiors are exempt from liability. (Issue 1)

• Principle of damnum absque injuria - The legitimate exercise of a person's rights, even if it causes loss to another, does not automatically result in an actionable injury. However, this principle does not apply when there is an abuse of a person's right.

• Abuse of right under Article 19 of the New Civil Code - 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. When a right is exercised in a manner that does not conform to the norms enshrined in Article 19 and causes damage to another, a legal wrong is committed for which the wrongdoer must be held responsible.

• Abuse of rights - Petitioner abused its right to remove the improvements and facilities in the plantation by failing to exercise caution and due regard to other structures, resulting in the destruction of banana plants.

• Article 19 of the Civil Code - Lays down a rule of conduct for the government of human relations and for the maintenance of social order.

• Article 20 of the Civil Code - Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same.

• Article 21 of the Civil Code - 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.

• Temperate damages - Awarded when there is absence of competent proof on the actual damages suffered. It is more than nominal but less than compensatory.

• Moral damages - May be awarded in cases referred to in the chapter on human relations of the Civil Code without the need for proof of physical injury.

• The responsibility arising from abuse of rights has a mixed character because it implies a reconciliation between an act, which is the result of an individual juridical will, and the social function of right.

• The exercise of a right, which is recognized by some specific provision of law, may nevertheless be contrary to law in the general and more abstract sense.

• Article 2229 of the Civil Code allows the award of exemplary damages by way of example or correction for the public good.

• Article 2208 of the Civil Code provides that attorney's fees and expenses of litigation should be recovered in certain cases.