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Article 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.
Article 20. Every person who, contrary to law, willfully or negligently causes damage to another,
shall indemnify the latter for the same.
Article 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.
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ALBENSON vs. COURT OF APPEALS
G.R. No. 88694, January 11, 1993, 217 SCRA 16
Bidin, J.
FACTS:
In September, October and November 1980, Petitioner Albenson Enterprises
Corporation delivered mild steel plates to Guaranteed Industries Inc. . A Pacific
Banking Corporation Check was paid and drawn against the account of EL Woodworks.
When presented for payment, c heck was dishonored for the reason Account Closed.
Albenson traced the source of check and later discovered that the signature belonged
to one Eugenio Baltao. Albenson made an
extrajudicial demand upon
Baltao but latter denied that he issued the check or that the signature was his. Company
filed a complaint against Baltao for violation of BP 22. It was later discovered that
private respondent had son: Eugene Baltao III, who manages the business establishment,
EL Woodworks. No effort from the father to inform Albenson of such information. Rather the father
filed complaint for damages against Albenson.
ISSUE:
Whether or Not there is indeed cause for the damages against Albenson Enterprise.
RULING:
No. Based on the common element of Articles 19, 20, 21 of the civil code, the act must be
intentional. The petitioners didnt have the intent to cause damage to Eugenio Baltao or enrich
themselves but just to collect what was due to them. There was no abuse of right on the part of
Albenson on accusing Baltao of BP 22. Albenson Corp. honestly believed that it was private
respondent who issued check based on the following inquiries:
A. SEC records showed that president to Guaranteed was Eugene Baltao.
B. Bank said signature belonged to Eugenio Baltao.
C. Ministry of Trade and Industry informed Albenson that E.L. Woodworks was registered in the
name of Eugenio Baltao.
In the inquiries made it shows that in good faith Albenson believed that there is only one Eugenio
Baltao. On the other hand, Eugenio Baltao did not do his part in clarifying that there were in fact 3

Eugenio Baltaos, Jr., Sr. and the III. And so, there was no malicious prosecution on the part
of Albenson.

And it is to be noted that, a person who has not been paid an obligation
o w e d t o h i m w i l l n a t u r a l l y s e e k w a y s t o c ompel the debtor to pay him. It was normal
for petitioners to find means to make the issuer of the check pay the amount thereof. 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 person to the payment of damages, for the law could not have meant
to impose a penalty on the right to litigate.
The petition is GRANTED and the decision of the Court of Appeals in C.A. G.R.C.V. No.
14948 dated May 13, 1989, is hereby REVERSED and SET ASIDE. Costs against
respondent Baltao.

PNB vs CA
GR no. L-27155, May 18, 1978, 83 SCRA 237

FACTS:
Rita Tapnio was indebted to the PNB in the sum of P 2,000.00
plus accumulated interests unpaid. The said debt was paid by the
Philippine American General Insurance Company Inc and in turn
the said insurance company demands from Rita Tapnio for the
payment made. According to Tapnio she did not consider herself to
be indebted to the bank because had the bank approved the lease
contract with Mr Jacobo Tuazon, her debts should have been paid.
The story started when the bank agreed with the lease proposed by
Tapnio with the other party Jacobo Tuazon, consequently the bank
requested the raise of rental from P 2.50 to 2.80 per picul and was
accepted by Tuazon, but however when it was being approved to
the Board of Directors, the latter requested to raise for P 3.00 per
picul which Tuazon no longer agreed, the said lease contract was
left unapproved until Tuazon no longer interested to pursue the
contract.

Now, the Philippine American General Insurance Company Inc


filed a complaint against Tapnio, and the latter made PNB third
party defendant pursuant to an indemnity agreement on the theory
that her failure to pay the debts was due to fault and negligence of
the bank. The court of first instance issued a judgment in favor
Tapnio and the insurance company and was affirmed by the Court
of Appeal.
ISSUE:
Whether or not the petitioner is liable for the damaged caused.
HELD:
Yes. The petitioner bank is liable for the damaged caused.
While the petitioner has the authority to approve or disapproved
the propose lease, they also have the responsibility to consider the
position of the herein private respondent Tapnio, the fact that the
quota was mortgaged to the bank. How can the private respondent
able to pay when in fact the lease which is used to settle her
account has been thwarted for unjustifiable reason. As the law
makes it imperative that every person must in the exercise of his
right and in the performance of his duties, act with justice, give
everyone his due and observe honesty and good faith. And under
Article 21, when any person who willfully causes loss or injury to
another in a manner contrary to morals, good customs or public
policy shall compensate the latter for the damage.
AGAPITO MAGBANUA, INENIAS MARTIZANO,
CARLITO HERRERA, SR., PAQUITO LOPEZ, AND
FRANCISCO HERRERA, petitioners,
vs.
HON. INTERMEDIATE APPELLATE COURT (SECOND

SPECIAL CASES DIVISION), EDUARDO, BUTCH, DIEGO


AND NENA All Surnamed PEREZ, respondents.
G.R. Nos. L-66870-72, June 29, 1985, 137 SCRA 329
ABAD SANTOS, J.:

FACTS:
The six plaintiffs who are the petitioners at bar all alleged
that they are share tenants of the defendants; that the defendants
diverted the free flow of water from their farm lots which caused
portions of their landholdings to dry up to their great damage and
prejudice: and that they were told by the defendants' overseer to
vacate their respective areas for they could not plant palay any
longer due to lack of water. They prayed that they be declared as
leasehold tenants and that the defendants be ordered to pay
attorney's fees and different kinds of damages.
The trial court rendered judgment in favor of the
plaintiffs and thus, ordered the defendants to pay all the plaintiffs
individually with moral and exemplary damages in the sum of
TEN THOUSAND (P10,000.00) PESOS, each; and to pay the
attorney's fees in the amount of P5,000.00;
The defendants appealed to the Intermediate Appellate Court,
which affirmed the decision appealed with modifications, deleting
the award of moral and exemplary damages and attorney's fees.
In this petition of the plaintiffs-petitioner, the prayer is for the
reinstatement of the moral and exemplary damages and the
attorney's fees which had been awarded by the trial court.
ISSUE:
Whether or not the plaintiffs-appellants are entitled to moral

and exemplary damages and attorneys fees.


RULING:
Yes. The plaintiffs-petitioes are entitle to moral and exemplary
damages and attorneys fees. It appears that the petitioners were
denied irrigation water for their farm lots in order to make them
vacate their landholdings. The defendants violated the plaintiffs'
rights and caused prejudice to the latter by the unjustified diversion
of the water. Article 2219 of the Civil Code permits the award of
moral damages for acts mentioned in Article 21 of the same code
and the latter stipulates that: "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. The petitioners are also entitled to exemplary damages
because the defendants acted in an oppressive manner. (See Art.
2232. Civil Code.) It follows from the foregoing that the
petitioners are also entitled to attorney's fees but the size of the fees
as well as the damages is subject to the sound discretion of the
court.
Cogeo-Cubao Operators and Drivers Association v CA
GR No. 100727, March 18, 1992, 207 SCRA 343
Facts:
Lungsod ng Silangan was issued a certificate of public
convenience to operate a jeepney service plying the route of
Cogeo-Cubao in 1983 on the justification that public necessity and
convenience will best be served and in the absence of existing
authorized operators on the line applied for. On November 11,
1985, the Cogeo-Cubao Operators and Drivers Association, led by
Ramon Olivia, formed a human barricade and assumed the

dispatching of passenger jeepneys. Petitioners argue that in


organizing the association, the members are merely exercising their
freedom or right to redress their grievances.
Issue:
Wether or Not CCODA usurped the property right of Lungsod
ng Silangan by taking over the dispatching of passenger jeeps
plying the Cogeo-Cubao route.
Ruling:
Under the Public Service Law, certificate of convenience can be
sold by the holder because it has a considerable material value and
is considered as valuable asset. The court ruled that the certificate
is considered as a property in so far as it concerns other persons or
other public utilities. It represents the right and authority to operate
its facilities for public service. It is different in the interest of the
State, where it certificate does not give the holder any propriety
right or interest or franchise in the covered route, Cogeo-Cubao,
and in public highways. Therefore, it cannot be taken or interfered
with without due process of law. In the case at bar, CCODA
formed a barricade and forcibly took over the legal right of
respondent to operate its facilities in clear violation of Art. 21 of
the Civil Code which states that 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