FAR EAST BANK VS PACILAN

FACTS:

Respondent Pacilan opened a current account with petitioner bank’s Bacolod Branch on May 23, 1980.
His account was denominated as Current Account No. 53208 (0052-00407-4). The respondent had since
then issued several postdated checks to different payees drawn against the said account. Sometime in
March 1988, the respondent issued Check No. 2434886 in the amount of ₱680.00 and the same was
presented for payment to petitioner bank on April 4, 1988.

Upon its presentment on the said date, Check No. 2434886 was dishonored by petitioner bank. The next
day, or on April 5, 1988, the respondent deposited to his current account the amount of ₱800.00. The
said amount was accepted by petitioner bank; hence, increasing the balance of the respondent’s deposit
to ₱1,051.43.

Subsequently, when the respondent verified with petitioner bank about the dishonor of Check No.
2434866, he discovered that his current account was closed on the ground that it was "improperly
handled." The records of petitioner bank disclosed that between the period of March 30,

1988 and April 5, 1988, the respondent issued four checks, to wit: Check No. 2480416 for ₱6,000.00;
Check No. 2480419 for ₱50.00; Check No. 2434880 for ₱680.00 and; Check No. 2434886 for ₱680.00, or
a total amount of ₱7,410.00. At the time, however, the respondent’s current account with petitioner
bank only had a deposit of ₱6,981.43. Thus, the total amount of the checks presented for payment on
April 4, 1988 exceeded the balance of the respondent’s deposit in his account. For this reason,
petitioner bank, through its branch accountant, Villadelgado, closed the respondent’s current account
effective the evening of April 4, 1988 as it then had an overdraft of ₱428.57. As a consequence of the
overdraft, Check No. 2434886 was dishonored.

On April 18, 1988, the respondent wrote to petitioner bank complaining that the closure of his account
was unjustified. When he did not receive a reply from petitioner bank, the respondent filed with the RTC
of Negros Occidental, Bacolod City, Branch 54, a complaint for damages against petitioner bank and
Villadelgado.

According to the respondent, the indecent haste that attended the closure of his account was patently
malicious and intended to embarrass him. He claimed that he is a Cashier of Prudential Bank and Trust
Company, whose branch office is located just across that of petitioner bank, and a prominent and
respected leader both in the civic and banking communities. The alleged malicious acts of petitioner
bank besmirched the respondent’s reputation and caused him "social humiliation, wounded feelings,
insurmountable worries and sleepless nights" entitling him to an award of damages.

petitioner bank and Villadelgado maintained that the respondent’s current account was subject to
petitioner bank’s Rules and Regulations Governing the Establishment and Operation of Regular Demand

Deposits which provide that "the Bank reserves the right to close an account if the depositor frequently
draws checks against insufficient funds and/or uncollected deposits" and that "the Bank reserves the
right at any time to return checks of the depositor which are drawn against insufficient funds or for any
reason."

They showed that the respondent had improperly and irregularly handled his current account. For
example, in 1986, the respondent’s account was overdrawn 156 times, in 1987, 117 times and in 1988,
26 times. In all these instances, the account was overdrawn due to the issuance of checks against
insufficient funds. The respondent had also signed several checks with a different signature from the
specimen on file for dubious reasons.

ISSUE:
RULING:

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.

The elements of abuse of rights are the following: (a) the existence of a legal right or duty; (b) which is
exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another.7 Malice or bad faith
is at the core of the said provision.8 The law always presumes good faith and any person who seeks to
be awarded damages due to acts of another has the burden of proving that the latter acted in bad faith
or with ill-motive.9 Good faith refers to the state of the mind which is manifested by the acts of the
individual concerned. It consists of the intention to abstain from taking an unconscionable and
unscrupulous advantage of another.10 Bad faith does not simply connote bad judgment or simple
negligence, dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of
known duty due to some motives or interest or ill-will that partakes of the nature of fraud.11 Malice
connotes ill-will or spite and speaks not in response to duty. It implies an intention to do ulterior and
unjustifiable harm. Malice is bad faith or bad motive.12

Undoubtedly, petitioner bank has the right to close the account of the respondent based on the
following provisions of its Rules and Regulations Governing the Establishment and Operation of Regular
Demand Deposits:

10) The Bank reserves the right to close an account if the depositor frequently draws checks against
insufficient funds and/or uncollected deposits.

12) …

However, it is clearly understood that the depositor is not entitled, as a matter of right, to overdraw on
this deposit and the bank reserves the right at any time to return checks of the depositor which are
drawn against insufficient funds or for any other reason.

The facts, as found by the court a quo and the appellate court, do not establish that, in the exercise of
this right, petitioner bank committed an abuse thereof. Specifically, the second and third elements for
abuse of rights are not attendant in the present case. The evidence presented by petitioner bank
negates the existence of bad faith or malice on its part in closing the respondent’s account on April 4,
1988 because on the said date the same was already overdrawn. The respondent issued four checks, all
due on April 4, 1988, amounting to ₱7,410.00 when the balance of his current account deposit was only
₱6,981.43. Thus, he incurred an overdraft of ₱428.57 which resulted in the dishonor of his Check No.
2434886. Further, petitioner bank showed that in 1986, the current account of the respondent was
overdrawn 156 times due to his issuance of checks against insufficient funds.13 In 1987, the said
account was overdrawn 117 times for the same reason.14 Again, in 1988, 26 times.15 There were also
several instances when the respondent issued checks deliberately using a signature different from his
specimen signature on file with petitioner bank.16 All these circumstances taken together justified the
petitioner bank’s closure of the respondent’s account on April 4, 1988 for "improper handling."

It is observed that nowhere under its rules and regulations is petitioner bank required to notify the
respondent, or any depositor for that matter, of the closure of the account for frequently drawing
checks against insufficient funds. No malice or bad faith could be imputed on petitioner bank for so
acting since the records bear out that the respondent had indeed been improperly and irregularly
handling his account not just a few times but hundreds of times. Under the circumstances, petitioner
bank could not be faulted for exercising its right in accordance with the express rules and regulations
governing the current accounts of its depositors. Upon the opening of his account, the respondent had
agreed to be bound by these terms and conditions.

Neither the fact that petitioner bank accepted the deposit made by the respondent the day following
the closure of his account constitutes bad faith or malice on the part of petitioner bank. The same could
be characterized as simple negligence by its personnel. Said act, by itself, is not constitutive of bad faith.

Further, it has not been shown that these acts were done by petitioner bank with the sole intention of
prejudicing and injuring the respondent. It is conceded that the respondent may have suffered damages
as a result of the closure of his current account. However, there is a material distinction between
damages and injury. The Court had the occasion to explain the distinction between damages and injury
in this wise:

… 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 result 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.

UYPITCHING vs QUIAMCO

FACTS:

In 1982, respondent Ernesto C. Quiamco was approached by Juan Davalan,2 Josefino Gabutero and Raul
Generoso to amicably settle the civil aspect of a criminal case for robbery3 filed by Quiamco against
them. They surrendered to him a red Honda XL-100 motorcycle and a photocopy of its certificate of
registration. Respondent asked for the original certificate of registration but the three accused never
came to see him again. Meanwhile, the motorcycle was parked in an open space inside respondent’s
business establishment, Avesco-AVNE Enterprises, where it was visible and accessible to the public.

It turned out that, in October 1981, the motorcycle had been sold on installment basis to Gabutero by
petitioner Ramas Uypitching Sons, Inc., a family-owned corporation managed by petitioner Atty. Ernesto
Ramas Uypitching. To secure its payment, the motorcycle was mortgaged to petitioner corporation.4

When Gabutero could no longer pay the installments, Davalan assumed the obligation and continued
the payments. In September 1982, however, Davalan stopped paying the remaining installments and
told petitioner corporation’s collector, Wilfredo Veraño, that the motorcycle had allegedly been "taken
by respondent’s men."

Nine years later, on January 26, 1991, petitioner Uypitching, accompanied by policemen,5 went to
Avesco-AVNE Enterprises to recover the motorcycle. The leader of the police team, P/Lt. Arturo
Vendiola, talked to the clerk in charge and asked for respondent. While P/Lt. Vendiola and the clerk
were talking, petitioner Uypitching paced back and forth inside the establishment uttering "Quiamco is a
thief of a motorcycle."

On learning that respondent was not in Avesco-AVNE Enterprises, the policemen left to look for
respondent in his residence while petitioner Uypitching stayed in the establishment to take photographs
of the motorcycle. Unable to find respondent, the policemen went back to Avesco-AVNE Enterprises
and, on petitioner Uypitching’s instruction and over the clerk’s objection, took the motorcycle.

On February 18, 1991, petitioner Uypitching filed a criminal complaint for qualified theft and/or violation
of the Anti-Fencing Law6 against respondent in the Office of the City Prosecutor of Dumaguete City.7
Respondent moved for dismissal because the complaint did not charge an offense as he had neither
stolen nor bought the motorcycle. The Office of the City Prosecutor dismissed the complaint8 and
denied petitioner Uypitching’s subsequent motion for reconsideration.

Respondent filed an action for damages against petitioners in the RTC of Dumaguete City, Negros
Oriental, Branch 37.9 He sought to hold the petitioners liable for the following: (1) unlawful taking of the
motorcycle; (2) utterance of a defamatory remark (that respondent was a thief) and (3) precipitate filing
of a baseless and malicious complaint. These acts humiliated and embarrassed the respondent and
injured his reputation and integrity.

ISSUE:

Whether or not petitioners’ acts violated the law as well as public morals, and transgressed the proper
norms of human relations

RULING:
True, a mortgagee may take steps to recover the mortgaged property to enable it to enforce or protect
its foreclosure right thereon. There is, however, a well-defined procedure for the recovery of possession
of mortgaged property: if a mortgagee is unable to obtain possession of a mortgaged property for its
sale on foreclosure, he must bring a civil action either to recover such possession as a preliminary step
to the sale, or to obtain judicial foreclosure.18

Petitioner corporation failed to bring the proper civil action necessary to acquire legal possession of the
motorcycle. Instead, petitioner Uypitching descended on respondent’s establishment with his policemen
and ordered the seizure of the motorcycle without a search warrant or court order. Worse, in the course
of the illegal seizure of the motorcycle, petitioner Uypitching even mouthed a slanderous statement.

No doubt, petitioner corporation, acting through its co-petitioner Uypitching, blatantly disregarded the
lawful procedure for the enforcement of its right, to the prejudice of respondent. Petitioners’ acts
violated the law as well as public morals, and transgressed the proper norms of human relations.

The basic principle of human relations, embodied in Article 19 of the Civil Code, provides:

Art. 19. Every person must in the exercise of his rights and in the performance of his duties, act with
justice, give every one his due, and observe honesty and good faith.

Article 19, also known as the "principle of abuse of right," prescribes that a person should not use his
right unjustly or contrary to honesty and good faith, otherwise he opens himself to liability.19 It seeks to
preclude the use of, or the tendency to use, a legal right (or duty) as a means to unjust ends.

There is an abuse of right when it is exercised solely to prejudice or injure another.20 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 harm another.21 Otherwise, liability for damages to the
injured party will attach.

In this case, the manner by which the motorcycle was taken at petitioners’ instance was not only
attended by bad faith but also contrary to the procedure laid down by law. Considered in conjunction
with the defamatory statement, petitioners’ exercise of the right to recover the mortgaged vehicle was
utterly prejudicial and injurious to respondent. On the other hand, the precipitate act of filing an
unfounded complaint could not in any way be considered to be in accordance with the purpose for
which the right to prosecute a crime was established. Thus, the totality of petitioners’ actions showed a
calculated design to embarrass, humiliate and publicly ridicule respondent. Petitioners acted in an
excessively harsh fashion to the prejudice of respondent. Contrary to law, petitioners willfully caused
damage to respondent. Hence, they should indemnify him.22

CEBU COUNTRY CLUB VS ELIZAGAQUE

FACTS:

Cebu Country Club, Inc. (CCCI), petitioner, is a domestic corporation operating as a non-profit and non-
stock private membership club, having its principal place of business in Banilad, Cebu City. Petitioners
herein are members of its Board of Directors.

Sometime in 1987, San Miguel Corporation, a special company proprietary member of CCCI, designated
respondent Ricardo F. Elizagaque, its Senior Vice President and Operations Manager for the Visayas and
Mindanao, as a special non-proprietary member. The designation was thereafter approved by the CCCI’s
Board of Directors.

In 1996, respondent filed with CCCI an application for proprietary membership. The application was
indorsed by CCCI’s two (2) proprietary members, namely: Edmundo T. Misa and Silvano Ludo.

As the price of a proprietary share was around the P5 million range, Benito Unchuan, then president of
CCCI, offered to sell respondent a share for only P3.5 million. Respondent, however, purchased the
share of a certain Dr. Butalid for only P3 million. Consequently, on September 6, 1996, CCCI issued
Proprietary Ownership Certificate No. 1446 to respondent.
During the meetings dated April 4, 1997 and May 30, 1997 of the CCCI Board of Directors, action on
respondent’s application for proprietary membership was deferred. In another Board meeting held on
July 30, 1997, respondent’s application was voted upon. Subsequently, or on August 1, 1997,
respondent received a letter from Julius Z. Neri, CCCI’s corporate secretary, informing him that the
Board disapproved his application for proprietary membership.

On August 6, 1997, Edmundo T. Misa, on behalf of respondent, wrote CCCI a letter of reconsideration.
As CCCI did not answer, respondent, on October 7, 1997, wrote another letter of reconsideration. Still,
CCCI kept silent. On November 5, 1997, respondent again sent CCCI a letter inquiring whether any
member of the Board objected to his application. Again, CCCI did not reply.

Consequently, on December 23, 1998, respondent filed with the Regional Trial Court (RTC), Branch 71,
Pasig City a complaint for damages against petitioners,

ISSUE:

Whether or not in disapproving respondent’s application for proprietary membership with CCCI,
petitioners are liable to respondent for damages.

RULING:

Obviously, the CCCI Board of Directors, under its Articles of Incorporation, has the right to approve or
disapprove an application for proprietary membership. But such right should not be exercised
arbitrarily. Articles 19 and 21 of the Civil Code on the Chapter on Human Relations provide restrictions,
thus:

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 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.

In GF Equity, Inc. v. Valenzona,5 we expounded Article 19 and correlated it with Article 21, thus:

This article, 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. But while Article 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.
(Emphasis in the original)

In rejecting respondent’s application for proprietary membership, we find that petitioners violated the
rules governing human relations, the basic principles to be observed for the rightful relationship
between human beings and for the stability of social order. The trial court and the Court of Appeals
aptly held that petitioners committed fraud and evident bad faith in disapproving respondent’s
applications. This is contrary to morals, good custom or public policy. Hence, petitioners are liable for
damages pursuant to Article 19 in relation to Article 21 of the same Code.

It bears stressing that the amendment to Section 3(c) of CCCI’s Amended By-Laws requiring the
unanimous vote of the directors present at a special or regular meeting was not printed on the
application form respondent filled and submitted to CCCI. What was printed thereon was the original
provision of Section 3(c) which was silent on the required number of votes needed for admission of an
applicant as a proprietary member.

Petitioners explained that the amendment was not printed on the application form due to economic
reasons. We find this excuse flimsy and unconvincing. Such amendment, aside from being extremely
significant, was introduced way back in 1978 or almost twenty (20) years before respondent filed his
application. We cannot fathom why such a prestigious and exclusive golf country club, like the CCCI,
whose members are all affluent, did not have enough money to cause the printing of an updated
application form.

It is thus clear that respondent was left groping in the dark wondering why his application was
disapproved. He was not even informed that a unanimous vote of the Board members was required.
When he sent a letter for reconsideration and an inquiry whether there was an objection to his
application, petitioners apparently ignored him. Certainly, respondent did not deserve this kind of
treatment. Having been designated by San Miguel Corporation as a special non-proprietary member of
CCCI, he should have been treated by petitioners with courtesy and civility. At the very least, they should
have informed him why his application was disapproved.

The exercise of a right, though legal by itself, must nonetheless be in accordance with the proper norm.
When the right is exercised arbitrarily, unjustly or excessively and results in damage to another, a legal
wrong is committed for which the wrongdoer must be held responsible.6 It bears reiterating that the
trial court and the Court of Appeals held that petitioners’ disapproval of respondent’s application is
characterized by bad faith.

As to petitioners’ reliance on the principle of damnum absque injuria or damage without injury, suffice it
to state that the same is misplaced. In Amonoy v. Gutierrez,7 we held that this principle does not apply
when there is an abuse of a person’s right, as in this case.

CALATAGAN GOLF CLUB VS CLEMENTE, JR

FACTS:

Clemente applied to purchase one share of stock of Calatagan, indicating in his application for
membership his mailing address at "Phimco Industries, Inc. – P.O. Box 240, MCC," complete residential
address, office and residence telephone numbers, as well as the company (Phimco) with which he was
connected, Calatagan issued to him Certificate of Stock No. A-01295 on 2 May 1990 after paying
₱120,000.00 for the share.2

Calatagan charges monthly dues on its members to meet expenses for general operations, as well as
costs for upkeep and improvement of the grounds and facilities. The provision on monthly dues is
incorporated in Calatagan’s Articles of Incorporation and By-Laws. It is also reproduced at the back of
each certificate of stock.3 As reproduced in the dorsal side of Certificate of Stock No. A-01295, the
provision reads:

5. The owners of shares of stock shall be subject to the payment of monthly dues in an amount as may
be prescribed in the by-laws or by the Board of Directors which shall in no case be less that [sic] ₱50.00
to meet the expenses for the general operations of the club, and the maintenance and improvement of
its premises and facilities, in addition to such fees as may be charged for the actual use of the facilities x
xx

When Clemente became a member the monthly charge stood at ₱400.00. He paid ₱3,000.00 for his
monthly dues on 21 March 1991 and another ₱5,400.00 on 9 December 1991. Then he ceased paying
the dues. At that point, his balance amounted to ₱400.00.4

Ten (10) months later, Calatagan made the initial step to collect Clemente’s back accounts by sending a
demand letter dated 21 September 1992. It was followed by a second letter dated 22 October 1992.
Both letters were sent to Clemente’s mailing address as indicated in his membership application but
were sent back to sender with the postal note that the address had been closed.5
Calatagan declared Clemente delinquent for having failed to pay his monthly dues for more than sixty
(60) days, specifically ₱5,600.00 as of 31 October 1992. Calatagan also included Clemente’s name in the
list of delinquent members posted on the club’s bulletin board. On 1 December 1992, Calatagan’s board
of directors adopted a resolution authorizing the foreclosure of shares of delinquent members, including
Clemente’s; and the public auction of these shares.

On 7 December 1992, Calatagan sent a third and final letter to Clemente, this time signed by its
Corporate Secretary, Atty. Benjamin Tanedo, Jr. The letter contains a warning that unless Clemente
settles his outstanding dues, his share would be included among the delinquent shares to be sold at
public auction on 15 January 1993. Again, this letter was sent to Clemente’s mailing address that had
already been closed.6

On 5 January 1993, a notice of auction sale was posted on the Club’s bulletin board, as well as on the
club’s premises. The auction sale took place as scheduled on 15 January 1993, and Clemente’s share sold
for ₱64,000.7 According to the Certificate of Sale issued by Calatagan after the sale, Clemente’s share
was purchased by a Nestor A. Virata.8 At the time of the sale, Clemente’s accrued monthly dues
amounted to ₱5,200.00.9 A notice of foreclosure of Clemente’s share was published in the 26 May 1993
issue of the Business World.10

Clemente learned of the sale of his share only in November of 1997.11 He filed a claim with the
Securities and Exchange Commission (SEC) seeking the restoration of his shareholding in Calatagan with
damages

ISSUE:

W/N Calatagan is liable for damages under Art. 19 of the Civil Code.

RULING:

we cannot label as due diligence Calatagan’s act of sending the December 7, 1992 letter to Clemente’s
mailing address knowing fully well that the P.O. Box had been closed. Due diligence or good faith
imposes upon the Corporate Secretary – the chief repository of all corporate records – the obligation to
check Clemente’s other address which, under the By-Laws, have to be kept on file and are in fact on file.
One obvious purpose of giving the Corporate Secretary the duty to keep the addresses of members on
file is specifically for matters of this kind, when the member cannot be reached through his or her
mailing address. Significantly, the Corporate Secretary does not have to do the actual verification of
other addressees on record; a mere clerk can do the very simple task of checking the files as in fact
clerks actually undertake these tasks. In fact, one telephone call to Clemente’s phone numbers on file
would have alerted him of his impending loss.

Ultimately, the petition must fail because Calatagan had failed to duly observe both the spirit and letter
of its own by-laws. The by-law provisions was clearly conceived to afford due notice to the delinquent
member of the impending sale, and not just to provide an intricate façade that would facilitate
Calatagan’s sale of the share. But then, the bad faith on Calatagan’s part is palpable. As found by the
Court of Appeals, Calatagan very well knew that Clemente’s postal box to which it sent its previous
letters had already been closed, yet it persisted in sending that final letter to the same postal box. What
for? Just for the exercise, it appears, as it had known very well that the letter would never actually reach
Clemente.1avvphi1

It is noteworthy that Clemente in his membership application had provided his residential address along
with his residence and office telephone numbers. Nothing in Section 32 of Calatagan’s By-Laws requires
that the final notice prior to the sale be made solely through the member’s mailing address. Clemente
cites our aphorism-like pronouncement in Rizal Commercial Banking Corporation v. Court of Appeals15
that "[a] simple telephone call and an ounce of good faith x x x could have prevented this present
controversy." That memorable observation is quite apt in this case.
Calatagan’s bad faith and failure to observe its own By-Laws had resulted not merely in the loss of
Clemente’s privilege to play golf at its golf course and avail of its amenities, but also in significant
pecuniary damage to him. For that loss, the only blame that could be thrown Clemente’s way was his
failure to notify Calatagan of the closure of the P.O. Box. That lapse, if we uphold Calatagan would cost
Clemente a lot. But, in the first place, does he deserve answerability for failing to notify the club of the
closure of the postal box? Indeed, knowing as he did that Calatagan was in possession of his home
address as well as residence and office telephone numbers, he had every reason to assume that the club
would not be at a loss should it need to contact him. In addition, according to Clemente, he was not
even aware of the closure of the postal box, the maintenance of which was not his responsibility but his
employer Phimco’s.

The utter bad faith exhibited by Calatagan brings into operation Articles 19, 20 and 21 of the Civil
Code,16 under the Chapter on Human Relations. These provisions, which the Court of Appeals did apply,
enunciate a general obligation under law for every person to act fairly and in good faith towards one
another. A non-stock corporation like Calatagan is not exempt from that obligation in its treatment of its
members. The obligation of a corporation to treat every person honestly and in good faith extends even
to its shareholders or members, even if the latter find themselves contractually bound to perform
certain obligations to the corporation. A certificate of stock cannot be a charter of dehumanization.

The Court of Appeals cited Calatagan for violation of Article 32 of the Civil Code, which allows recovery
of damages from any private individual "who directly or indirectly obstructs, defeats, violates or in any
manner impedes or impairs" the right "against deprivation of property without due process of laws."
The plain letter of the provision squarely entitles Clemente to damages from Calatagan. Even without
Article 32 itself, Calatagan will still be bound to pay moral and exemplary damages to Clemente. The
latter was able to duly prove that he had sustained mental anguish, serious anxiety and wounded
feelings by reason of Calatagan’s acts, thereby entitling him to moral damages under Article 2217 of the
Civil Code. Moreover, it is evident that Calatagan’s bad faith as exhibited in the course of its corporate
actions warrants correction for the public good, thereby justifying exemplary damages under Article
2229 of the Civil Code.

ARDIENTE VS JAVIER

FACTS:

[Herein petitioner] Joyce V. Ardiente and her husband Dr. Roberto S. Ardiente are owners of a housing
unit at Emily Homes, Balulang, Cagayan de Oro City with a lot area of one hundred fifty-three (153)
square meters and covered by Transfer Certificate of Title No. 69905.

On June 2, 1994, Joyce Ardiente entered into a Memorandum of Agreement (Exh. "B", pp. 470-473,
Records) selling, transferring and conveying in favor of [respondent] Ma. Theresa Pastorfide all their
rights and interests in the housing unit at Emily Homes in consideration of ₱70,000.00. The
Memorandum of Agreement carries a stipulation:

"4. That the water and power bill of the subject property shall be for the account of the Second Party
(Ma. Theresa Pastorfide) effective June 1, 1994." (Records, p. 47)

vis-a-vis Ma. Theresa Pastorfide's assumption of the payment of the mortgage loan secured by Joyce
Ardiente from the National Home Mortgage (Records, Exh. "A", pp. 468-469)

For four (4) years, Ma. Theresa's use of the water connection in the name of Joyce Ardiente was never
questioned nor perturbed (T.S.N., October 31, 2000, pp. 7-8) until on March 12, 1999, without notice,
the water connection of Ma. Theresa was cut off. Proceeding to the office of the Cagayan de Oro Water
District (COWD) to complain, a certain Mrs. Madjos told Ma. Theresa that she was delinquent for three
(3) months corresponding to the months of December 1998, January 1999, and February 1999. Ma.
Theresa argued that the due date of her payment was March 18, 1999 yet (T.S.N., October 31, 2000, pp.
11-12). Mrs. Madjos later told her that it was at the instance of Joyce Ardiente that the water line was
cut off (T.S.N., February 5, 2001, p. 31).
On March 15, 1999, Ma. Theresa paid the delinquent bills (T.S.N., October 31, 2000, p. 12). On the same
date, through her lawyer, Ma. Theresa wrote a letter to the COWD to explain who authorized the cutting
of the water line (Records, p. 160).

On March 18, 1999, COWD, through the general manager, [respondent] Gaspar Gonzalez, Jr., answered
the letter dated March 15, 1999 and reiterated that it was at the instance of Joyce Ardiente that the
water line was cut off (Records, p. 161).

Aggrieved, on April 14, 1999, Ma. Theresa Pastorfide [and her husband] filed [a] complaint for damages
[against petitioner, COWD and its manager Gaspar Gonzalez] (Records, pp. 2-6).

In the meantime, Ma. Theresa Pastorfide's water line was only restored and reconnected when the
[trial] court issued a writ of preliminary mandatory injunction on December 14, 1999 (Records, p.

Before disconnecting the water supply, defendants COWD and Engr. Gaspar Gonzales did not even send
a disconnection notice to plaintiffs as testified to by Engr. Bienvenido Batar, in-charge of the Commercial
Department of defendant COWD. There was one though, but only three (3) days after the actual
disconnection on March 12, 1999. The due date for payment was yet on March 15. Clearly, they did not
act with justice. Neither did they observe honesty.

ISSUE:

Whether or not Ardiente acted in bad faith

RULING:

YES.It is true that it is within petitioner's right to ask and even require the Spouses Pastorfide to cause
the transfer of the former's account with COWD to the latter's name pursuant to their Memorandum of
Agreement. However, the remedy to enforce such right is not to cause the disconnection of the
respondent spouses' water supply. 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 harm
another.15 Otherwise, liability for damages to the injured party will attach.16 In the present case,
intention to harm was evident on the part of petitioner when she requested for the disconnection of
respondent spouses’ water supply without warning or informing the latter of such request. Petitioner
claims that her request for disconnection was based on the advise of COWD personnel and that her
intention was just to compel the Spouses Pastorfide to comply with their agreement that petitioner's
account with COWD be transferred in respondent spouses' name. If such was petitioner's only intention,
then she should have advised respondent spouses before or immediately after submitting her request
for disconnection, telling them that her request was simply to force them to comply with their obligation
under their Memorandum of Agreement. But she did not. What made matters worse is the fact that
COWD undertook the disconnection also without prior notice and even failed to reconnect the Spouses
Pastorfide’s water supply despite payment of their arrears. There was clearly an abuse of right on the
part of petitioner, COWD and Gonzalez. They are guilty of bad faith.

The principle of abuse of rights as enshrined in Article 19 of the Civil Code provides that 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.

This article, 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. But while Article 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.
Corollarilly, Article 20 provides that "every person who, contrary to law, willfully or negligently causes
damage to another shall indemnify the latter for the same." It speaks of the general sanctions of all
other provisions of law which do not especially provide for its own sanction. When a right is exercised in
a manner which does not conform to the standards set forth in the said provision and results in damage
to another, a legal wrong is thereby committed for which the wrongdoer must be responsible. Thus, if
the provision does not provide a remedy for its violation, an action for damages under either Article 20
or Article 21 of the Civil Code would be proper.

The question of whether or not the principle of abuse of rights has been violated resulting in damages
under Article 20 or other applicable provision of law, depends on the circumstances of each case. x x x18

To recapitulate, petitioner's acts which violated the abovementioned provisions of law is her
unjustifiable act of having the respondent spouses' water supply disconnected, coupled with her failure
to warn or at least notify respondent spouses of such intention. On the part of COWD and Gonzalez, it is
their failure to give prior notice of the impending disconnection and their subsequent neglect to
reconnect respondent spouses' water supply despite the latter's settlement of their delinquent account.

The Spouses Pastorfide are entitled to moral damages based on the provisions of Article 2219,19 in
connection with Articles 2020 and 2121 of the Civil Code.

SESBRENO VS CA, VECO

FACTS:

To ensure that its electric meters were properly functioning, and that none of it meters had been
tampered with, VECO employed respondents Engr. Felipe Constantino and Ronald Arcilla as violation of
contract (VOC) inspectors.4 Respondent Sgt. Demetrio Balicha, who belonged to the 341st Constabulary
Company, Cebu Metropolitan Command, Camp Sotero Cabahug, Cebu City, accompanied and escorted
the VOC inspectors during their inspection of the households of its customers on May 11, 1989 pursuant
to a mission order issued to him.

It all has to do with an incident that occurred at around 4:00 o’clock in the afternoon of May 11, 1989.
On that day, the Violation of Contracts (VOC) Team of defendants-appellees Constantino and Arcilla and
their PC escort, Balicha, conducted a routine inspection of the houses at La Paloma Village, Labangon,
Cebu City, including that of plaintiff-appellant Sesbreño, for illegal connections, meter tampering, seals,
conduit pipes, jumpers, wiring connections, and meter installations. After Bebe Baledio, plaintiff-
appellant Sesbreño’s maid, unlocked the gate, they inspected the electric meter and found that it had
been turned upside down. Defendant-appellant Arcilla took photographs of the upturned electric meter.
With Chuchie Garcia, Peter Sesbreño and one of the maids present, they removed said meter and
replaced it with a new one. At that time, plaintiff-appellant Sesbreño was in his office and no one called
to inform him of the inspection. The VOC Team then asked for and received Chuchie Garcia’s permission
to enter the house itself to examine the kind and number of appliances and light fixtures in the
household and determine its electrical load. Afterwards, Chuchie Garcia signed the Inspection Division
Report, which showed the condition of the electric meter on May 11, 1989 when the VOC Team
inspected it, with notice that it would be subjected to a laboratory test. She also signed a Load Survey
Sheet that showed the electrical load of plaintiff-appellant Sesbreño.

But according to plaintiff-appellant Sesbreño there was nothing routine or proper at all with what the
VOC Team did on May 11, 1989 in his house. Their entry to his house and the surrounding premises was
effected without his permission and over the objections of his maids. They threatened, forced or
coerced their way into his house. They unscrewed the electric meter, turned it upside down and took
photographs thereof. They then replaced it with a new electric meter. They searched the house and its
rooms without his permission or a search warrant. They forced a visitor to sign two documents, making
her appear to be his representative or agent. Afterwards, he found that some of his personal effects
were missing, apparently stolen by the VOC Team when they searched the house.6

ISSUE:
Whether or not Sesbreño was entitled to recover damages for abuse of rights.

RULING:

NO. Paragraph 9 clothed the entire VOC team with unquestioned authority to enter the garage to
inspect the meter. The members of the team obviously met the conditions imposed by paragraph 9 for
an authorized entry. Firstly, their entry had the objective of conducting the routine inspection of the
meter.13 Secondly, the entry and inspection were confined to the garage where the meter was
installed.14 Thirdly, the entry was effected at around 4 o’clock p.m., a reasonable hour.15 And, fourthly,
the persons who inspected the meter were duly authorized for the purpose by VECO.

The constitutional guaranty against unlawful searches and seizures is intended as a restraint against the
Government and its agents tasked with law enforcement. It is to be invoked only to ensure freedom
from arbitrary and unreasonable exercise of State power. The Court has made this clear in its
pronouncements, including that made in People v. Marti,17 viz:

If the search is made upon the request of law enforcers, a warrant must generally be first secured if it is
to pass the test of constitutionality. However, if the search is made at the behest or initiative of the
proprietor of a private establishment for its own and private purposes, as in the case at bar, and without
the intervention of police authorities, the right against unreasonable search and seizure cannot be
invoked for only the act of private individual, not the law enforcers, is involved. In sum, the protection
against unreasonable searches and seizures cannot be extended to acts committed by private individuals
so as to bring it within the ambit of alleged unlawful intrusion by the government.18

It is worth noting that the VOC inspectors decided to enter the main premises only after finding the
meter of Sesbreño turned upside down, hanging and its disc not rotating. Their doing so would enable
them to determine the unbilled electricity consumed by his household. The circumstances justified their
decision, and their inspection of the main premises was a continuation of the authorized entry. There
was no question then that their ability to determine the unbilled electricity called for them to see for
themselves the usage of electricity inside. Not being agents of the State, they did not have to first obtain
a search warrant to do so.

Balicha’s presence participation in the entry did not make the inspection a search by an agent of the
State within the ambit of the guaranty. As already mentioned, Balicha was part of the team by virtue of
his mission order authorizing him to assist and escort the team during its routine inspection.19
Consequently, the entry into the main premises of the house by the VOC team did not constitute a
violation of the guaranty.

SALADAGA VS ASTORGA

FACTS:

Complainant Saldaga and respondent Atty. Astorga entered into a deed of sale with right to repurchase
on December 2, 1981. Atty. Astorga sold to the complainant a parcel of coconut land located in Baybay,
Leyte for 15,000.00. Under the deed, Saldaga represented that it has “the perfect right to dispose as
owner in fee simple” the subject property, and that the property is “free from all liens and
encumbrances”. The deed also provided that Atty. Astorga, as vendor a retro, had two years within
which to repurchase the property, and if not repurchased, “the parties shall renew the instrument or
agreement”.

Atty. Astorga failed to exercise his right to repurchase within the period stipulated in the deed, and no
renewal of contract was made when Saldaga made a final demand. Saldaga remained in peaceful
possession of the property until December 1989, he received letters from Rural Bank of Albuera (Leyte)
informing him that the property is mortgaged by Atty. Astorga to it. That the bank had foreclosed the
property and Saldaga should vacate the property.

Saldaga was dispossessed of the property, so it filed a case of estafa against the respondent. The
complainant likewise instituted an administrative case which was then referred to the IBP for
investigation, report and recommendation, where it found Atty. Astorga guilty of Bad Faith when he
dealt with Saldaga misrepresenting him that the property was covered with TCT No. T-662 when the said
TCT was already cancelled earlier and transferred to her wife’s name without informing Saldaga.
It likewise held that Atty. Astorga shall be suspended from the practice of law for two years and ordered
to return the sum of 15,000 with interest.

ISSUE:

WoN the investigating commissioner correctly ruled that the respondent acted in bad faith

RULING:

YES. Regardless of whether the written contract between respondent and complainant is actually one of
sale with pacto de retroor of equitable mortgage, respondent’s actuations in his transaction with
complainant, as well as in the present administrative cases, clearly show a disregard for the highest
standards of legal proficiency, morality, honesty, integrity, and fair dealing required from lawyers, for
which respondent should be held administratively liable.

When respondent was admitted to the legal profession, he took an oath where he undertook to "obey
the laws," "do no falsehood," and "conduct [him]self as a lawyer according to the best of [his]
knowledge and discretion."18 He gravely violated his oath.

The Investigating Commissioner correctly found, and the IBP Board of Governors rightly agreed, that
respondent caused the ambiguity or vagueness in the "Deed of Sale with Right to Repurchase" as he was
the one who prepared or drafted the said instrument. Respondent could have simply denominated the
instrument as a deed of mortgage and referred to himself and complainant as "mortgagor" and
"mortgagee," respectively, rather than as "vendor a retro" and "vendee a retro." If only respondent had
been more circumspect and careful in the drafting and preparation of the deed, then the controversy
between him and complainant could havebeen avoided or, at the very least, easily resolved. His
imprecise and misleading wording of the said deed on its face betrayed lack oflegal competence on his
part. He thereby fell short of his oath to "conduct [him]self as a lawyer according to the best of [his]
knowledge and discretion."

More significantly, respondent transgressed the laws and the fundamental tenet of human relations
asembodied in Article 19 of the Civil Code:

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.

Respondent, as owner of the property, had the right to mortgage it to complainant but, as a lawyer, he
should have seen to it that his agreement with complainant is embodied in an instrument that clearly
expresses the intent of the contracting parties. A lawyer who drafts a contract must see to it that the
agreement faithfully and clearly reflects the intention of the contracting parties. Otherwise, the
respective rights and obligations of the contracting parties will be uncertain, which opens the door to
legal disputes between the said parties. Indeed, the uncertainty caused by respondent’s poor
formulation of the "Deed of Sale with Right to Repurchase" was a significant factor in the legal
controversy between respondent and complainant. Such poor formulation reflects at the very least
negatively on the legal competence of respondent.

[Having] the proclivity for fraudulent and deceptive misrepresentation, artifice or device that is used
upon another who is ignorant of the true facts, to the prejudice and damage of the party imposed upon.
In order to be deceitful, the person must either have knowledge of the falsity or acted in reckless and
conscious ignorance thereof, especially if the parties are not on equal terms, and was done with the
intent that the aggrieved party act thereon, and the latter indeed acted in reliance of the false
statement or deed in the manner contemplated to his injury.24 The actions of respondent in connection
with the execution of the "Deed of Sale with Right to Repurchase" clearly fall within the concept of
unlawful, dishonest, and deceitful conduct. They violate Article 19 of the Civil Code. They show a
disregard for Section 63 of the Land Registration Act. They also reflect bad faith, dishonesty, and deceit
on respondent’s part. Thus, respondent deserves to be sanctioned.
COCA-COLA BOTTLERS VS BERNARDO

FACTS:

Petitioner is a domestic corporation engaged in the large-scale manufacture, sale, and distribution of
beverages around the country.6 On the other hand, respondents, doing business under the name "Jolly
Beverage Enterprises," are wholesalers of softdrinks in Quezon City, particularly in the vicinities of
Bulacan Street, V. Luna Road, Katipunan Avenue, and Timog Avenue.7

The business relationship between the parties commenced in 1987 when petitioner designated
respondents as its distributor.8 On 22 March 1994, the parties formally entered into an exclusive
dealership contract for three years.9 Under the Agreement,10 petitioner would extend developmental
assistance to respondents in the form of cash assistance and trade discount incentives. For their part,
respondents undertook to sell petitioner's products exclusively, meet the sales quota of 7,000 cases per
month, and assist petitioner in its marketing efforts.11

On 1 March 1997, the parties executed a similar agreement tor another two years, or until 28 February
1999.12 This time, petitioner gave respondents complimentary cases of its products instead of cash
assistance, and increased the latter's sales quota to 8,000 cases per month.

For 13 years, the parties enjoyed a good and harmonious business partnership.13 While the contracts
contained a clause for breach, it was never enforced.14

Sometime in late 1998 or early 1999, before the contract expired, petitioner required respondents to
submit a list of their customers on the pretext that it would formulate a policy defining its territorial
dealership in Quezon City.15 It assured respondents that their contract would be renewed for a longer
period, provided that they would submit the list.16 However, despite their compliance, the promise did
not materialize.17

Respondents discovered that in February 1999, petitioner started to reach out to the persons whose
names were on the list.18 Respondents also received reports that their delivery trucks were being
trailed by petitioner's agents; and that as soon as the trucks left, the latter would approach the former's
customers.19 Further, respondents found out that petitioner had employed a different pricing scheme,
such that the price given to distributors was significantly higher than that given to supermarkets.20 It
also enticed direct buyers and sari-sari store owners in the area with its "Coke Alok" promo, in which it
gave away one free bottle for every case purchased.21 It further engaged a store adjacent to
respondents' warehouse to sell the former's products at a substantially lower price.22

Respondents claimed that because of these schemes, they lost not only their major customers - such as
Peach Blossoms, May Flower Restaurant, Saisaki Restaurant, and Kim Hong Restaurant but also small
stores, such as the canteen in the hospital where respondent Jose Bernardo worked.23 They admitted
that they were unable to pay deliveries worth P449,154.24

Respondents filed a Complaint25 for damages, alleging that the acts of petitioner constituted
dishonesty, bad faith, gross negligence, fraud, and unfair competition in commercial enterprise.

ISSUE:

Whether or not Coca-cola Bottlers violate Articles 19,20,21 or 28, hence award for damages were
improper.

RULING:

No. that petitioner was liable for temperate, moral and exemplary damages, as well as attorney's fees,
tor abuse of rights and unfair competition.

petitioner had employed oppressive and high-handed schemes to unjustly limit the market coverage and
diminish the investment returns of respondents.49 The CA summarized its findings as
follows:50chanroblesvirtuallawlibrary
This [cut-throat competition] is precisely what appellant did in order to take over the market: directly
sell its products to or deal them off to competing stores at a price substantially lower than those
imposed on its wholesalers. As a result, the wholesalers suffered losses, and in [respondents'] case, laid
ofT a number of employees and alienated the patronage of its major customers including small-scale
stores.

It must be emphasized that petitioner is not only a beverage giant, but also the manufacturer of the
products; hence, it sets the price. In addition, it took advantage of the infonnation provided by
respondents to facilitate its takeover of the latter's usual business area. Distributors like respondents,
who had assisted petitioner in its marketing efforts, suddenly found themselves with fewer customers.
Other distributors were left with no choice but to fold.51

Articles 19, 20, and 21 of the Civil Code provide the legal bedrock for the award of damages to a party
who suffers damage whenever another person commits an act in violation of some legal provision; or an
act which, though not con'itituting a transgression of positive law, nevertheless violates certain
rudimentary rights of the party aggrieved.52 The provisions read:chanRoblesvirtualLawlibrary

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.

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 Albenson Enterprises Corp. v. CA,53 this Court held that under any of the above provisions of law, an
act that causes injury to another may be made the basis for an award of damages. As explained by this
Court in GF Equity, Inc. v. Valenzona:54chanroblesvirtuallawlibrary

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 or offends morals or good customs. Over and above the specific
precepts of positive law are the supreme norms of justice which the law develops and which are
expressed in three principles: honeste vivere, alterum non laedere and jus suum quique tribuere; and he
who violates them violates the law. For this reason, it is not permissible to abuse our rights to prejudice
others.

Meanwhile, the use of unjust, oppressive, or high-handed business methods resulting in unfair
competition also gives a right of action to the injured party. Article 28 of the Civil Code
provides:chanRoblesvirtualLawlibrary

Art. 28. Unfair competition in agricultural, commercial or industrial enterprises or in labor through the
use of force, intimidation, deceit, machination or any other unjust, oppressive or highhanded method
shall give rise to a right of action by the person who thereby sutlers damage.

Petitioner cites Tolentino, who in turn cited Colin and Capitant. According to the latter, the act of "a
merchant [who] puts up a store near the store of another and in this way attracts some of the latter's
patrons" is not an abuse of a right.55 The scenario in the present case is vastly different: the merchant
was also the producer who, with the use of a list provided by its distributor, knocked on the doors of the
latter's customers and offered the products at a substantially lower price. Unsatisfied, the merchant
even sold its products at a preferential rate to another store within the vicinity. Jurisprudence holds that
when a person starts an opposing place of business, not for the sake of profit, but regardless of Joss and
for the sole purpose of driving a competitor out of business, in order to take advantage of the effects of
a malevolent purpose, that person is guilty of a wanton wrong.56

ST. MARTIN POLYCLINIC INC VS LWV CONSTRUCTION

FACTS:

Respondent is engaged in the business of recruiting Filipino workers for deployment to Saudi Arabia.5
On the other hand, petitioner is an accredited member of the Gulf Cooperative Council Approved
Medical Centers Association (GAMCA) and as such, authorized to conduct medical examinations of
prospective applicants for overseas employment.6

On January 10, 2008, respondent referred prospective applicant Jonathan V. Raguindin (Raguindin) to
petitioner for a pre-deployment medical examination in accordance with the instructions from GAMCA.7
After undergoing the required examinations, petitioner cleared Raguindin and found him "fit for
employment," as evidenced by a Medical Report8 dated January 11, 2008 (Medical Report).9

Based on the foregoing, respondent deployed Raguindin to Saudi Arabia, allegedly incurring expenses in
the amount of P84,373.41.10 Unfortunately, when Raguindin underwent another medical examination
with the General Care Dispensary of Saudi Arabia (General Care Dispensary) on March 24, 2008, he
purportedly tested positive for HCV or the hepatitis C virus. The Ministry of Health of the Kingdom of
Saudi Arabia (Ministry of Health) required a re-examination of Raguindin, which the General Care
Dispensary conducted on April 28, 2008.11 However, the results of the re-examination remained the
same, i.e., Raguindin was positive for HCV, which results were reflected in a Certification12 dated April
28, 2008 (Certification). An undated HCV Confirmatory Test Report13 likewise conducted by the Ministry
of Health affirmed such finding, thereby leading to Raguindin's repatriation to the Philippines.14

Claiming that petitioner was reckless in issuing its Medical Report stating that Raguindin is "fit for
employment" when a subsequent finding in Saudi Arabia revealed that he was positive for HCV,
respondent filed a Complaint15 for sum of money and damages against petitioner before the
Metropolitan Trial Court of Mandaluyong City, Branch 60 (MeTC). Respondent essentially averred that it
relied on petitioner's declaration and incurred expenses as a consequence. Thus, respondent prayed for
the award of damages in the amount of P84,373.41 representing the expenses it incurred in deploying
Raguindin

ISSUE:

Whether or not petitioner was negligent in issuing the Medical Report declaring Raguindin "fit for
employment" and hence, should be held liable for damages.

RULING:

An action for damages due to the negligence of another may be instituted on the basis of Article 2176 of
the Civil Code, which defines a quasi-delict:

Article 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.

The elements of a quasi-delict are: (1) an act or omission; (2) the presence of fault or negligence in the
performance or non-performance of the act; (3) injury; (4) a causal connection between the negligent
act and the injury; and (5) no pre-existing contractual relation.44

As a general rule, any act or omission coming under the purview of Article 2176 gives rise to a cause of
action under quasi-delict. This, in turn, gives the basis for a claim of damages.45 Notably, quasi-delict is
one among several sources of obligation. Article 1157 of the Civil Code states:

Article 1157. Obligations arise from:

(1) Law;

(2) Contracts;

(3) Quasi-contracts;

(4) Acts or omissions punished by law; and

(5) Quasi-delicts.

However, as explained by Associate Justice Marvic M.V.F. Leonen (Justice Leonen) in his opinion in Alano
v. Magud-Logmao46 (Alano), "Article 2176 is not an all-encompassing enumeration of all actionable
wrongs which can give rise to the liability for damages. Under the Civil Code, acts done in violation of
Articles 19, 20, and 21 will also give rise to damages."47 These provisions - which were cited as bases by
the MTC, RTC and CA in their respective rulings in this case - read as follows:

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.

"[Article 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."48 Case law states that "[w]hen 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. But while Article 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 [then] be proper."49 Between these two provisions as worded, it is Article 20 which
applies to both willful and negligent acts that are done contrary to law. On the other hand, Article 21
applies only to willful acts done contra bonos mores.

In the Alano case, Justice Leonen aptly elaborated on the distinctive applications of Articles 19, 20 and
21, which are general provisions on human relations, vis-a-vis Article 2176, which particularly governs
quasi-delicts:

Article 19 is the general rule which governs the conduct of human relations. By itself, it is not the basis
of an actionable tort. Article 19 describes the degree of care required so that an actionable tort may
arise when it is alleged together with Article 20 or Article 21.

Article 20 concerns violations of existing law as basis for an injury. It allows recovery should the act have
been willful or negligent. Willful may refer to the intention to do the act and the desire to achieve the
outcome which is considered by the plaintiff in tort action as injurious. Negligence may refer to a
situation where the act was consciously done but without intending the result which the plaintiff
considers as injurious.

Article 21, on the other hand, concerns injuries that may be caused by acts which are not necessarily
proscribed by law. This article requires that the act be willful, that is, that there was an intention to do
the act and a desire to achieve the outcome. In cases under Article 21, the legal issues revolve around
whether such outcome should be considered a legal injury on the part of the plaintiff or whether the
commission of the act was done in violation of the standards of care required in Article 19.

Article 2176 covers situations where an injury happens through an act or omission of the defendant.
When it involves a positive act, the intention to commit the outcome is irrelevant. The act itself must
not be a breach of an existing law or a pre-existing contractual obligation. What will be considered is
whether there is "fault or negligence” attending the commission of the act which necessarily leads to
the outcome considered as injurious by the plaintiff. The required degree of diligence will then be
assessed in relation to the circumstances of each and every case.51 (Emphases and underscoring
supplied)

Thus, with respect to negligent acts or omissions, it should therefore be discerned that Article 20 of the
Civil Code concerns "violations of existing law as basis for an injury", whereas Article 2176 applies when
the negligent act causing damage to another does not constitute "a breach of an existing law or a pre-
existing contractual obligation."

In this case, the courts a quo erroneously anchored their respective rulings on the provisions of Articles
19, 20, and 21 of the Civil Code. This is because respondent did not proffer (nor have these courts
mentioned) any law as basis for which damages may be recovered due to petitioner's alleged negligent
act. In its amended complaint, respondent mainly avers that had petitioner not issue a "fit for
employment" Medical Report to Raguindin, respondent would not have processed his documents,
deployed him to Saudi Arabia, and later on - in view of the subsequent findings that Raguindin was
positive for HCV and hence, unfit to work - suffered actual damages in the amount of P84,373.41.52
Thus, as the claimed negligent act of petitioner was not premised on the breach of any law, and not to
mention the incontestable fact that no pre-existing contractual relation was averred to exist between
the parties, Article 2176 - instead of Articles 19, 20 and 21 - of the Civil Code should govern.

In this regard, it was therefore incumbent upon respondent to show that there was already negligence
at the time the Medical Report was issued, may it be through evidence that show that standard medical
procedures were not carefully observed or that there were already palpable signs that exhibited
Raguindin's unfitness for deployment at that time. All told, there being no negligence proven by
respondent through credible and admissible evidence, petitioner cannot be held liable for damages
under Article 2176 of the Civil Code as above-discussed.

The records of this case show that the pieces of evidence mainly relied upon by respondent to establish
petitioner's negligence are: (a) the Certification61 dated April 28, 2008; and (b) the HCV Confirmatory
Test Report.62 However, these issuances only indicate the results of the General Care Dispensary and
Ministry of Health's own medical examination of Raguindin finding him to be positive for HCV. Notably,
the examination conducted by the General Care Dispensary, which was later affirmed by the Ministry of
Health, was conducted only on March 24, 2008, or at least two (2) months after petitioner issued its
Medical Report on January 11, 2008. Hence, even assuming that Raguindin's diagnosis for HCV was
correct, the fact that he later tested positive for the same does not convincingly prove that he was
already under the same medical state at the time petitioner issued the Medical Report on January 11,
2008. In this regard, it was therefore incumbent upon respondent to show that there was already
negligence at the time the Medical Report was issued, may it be through evidence that show that
standard medical procedures were not carefully observed or that there were already palpable signs that
exhibited Raguindin's unfitness for deployment at that time. This is hardly the case when respondent
only proffered evidence which demonstrate that months after petitioner's Medical Report was issued,
Raguindin, who had already been deployed to Saudi Arabia, tested positive for HCV and as such, was no
longer "fit for employment".

LOMARDA VS FUDALAN

FACTS:

ISSUE:

whether or not the CA correctly upheld the award of damages under Article 21 of the Civil Code.

RULING:

Under the foregoing circumstances, it is clear that petitioners should be held liable for damages under
Article 19, in relation to Article 21, of the Civil Code. While it appears that petitioners were engaged in a
legal act, i.e., exacting compliance with the requirements for the installation of respondent's electricity
in his farmhouse, the circumstances of this case show that the same was conducted contrary to morals
and good customs, and were in fact done with the intent to cause injury to respondent. Petitioners did
not only fail to apprise respondent of the proper procedure to expedite compliance with the
requirements, they also misled him to believe that everything can be settled, extorted money from him
when only a meager amount was due, and worse, publicly humiliated him in front of many people which
ended up in the disconnection of his electricity altogether. To be sure, the clean hands doctrine - which
was invoked by petitioners herein - should not apply in their favor, considering that while respondent
may have technically failed to procure the required BAPA certification and proceeded with the tapping,
the same was not due to his lack of effort or intention in complying with the rules in good faith. As
exhibited above, it was, in fact, petitioners' own acts which made compliance with the rules impossible.
Hence, respondent was actually free from fault, negating the application of the clean hands doctrine, to
wit:34

Parties who do not come to court with clean hands cannot be allowed to profit from their own
wrongdoing. The action (or inaction) of the party seeking equity must be "free from fault, and he must
have done nothing to lull his adversary into repose, thereby obstructing and preventing vigilance on the
part of the latter."35

That being said, the awards of damages in favor of respondent are therefore warranted. In this case,
both the RTC and the CA awarded actual, moral, and exemplary damages, including attorney's fees and
litigation expenses.

Actual damages are such compensation or damages for an injury that will put the injured party in the
position in which he had been before he was injured. They pertain to such injuries or losses that are
actually sustained and susceptible of measurement. To justify an award of actual damages, there must
be competent proof of the actual amount of loss.36 In this case, the award of actual damages in the
amount of P451.65 was based on the evidence presented as found by both the RTC and CA. Hence,
finding no cogent reason to the contrary, and given that the same was supported by receipts,37 the said
award is sustained.

However, the Court finds otherwise with respect to the awards of moral and exemplary damages, as
well as attorney's fees and litigation expenses (in the amounts of P200,000.00, P100,000.00, P50,000.00,
and P20,000.00, respectively) which appear to be excessive considering the circumstances of this case.
Notably, the amounts of moral and exemplary damages may be discretionary upon the court depending
on the attendant circumstances of the case.38

Under Article 221939 of the Civil Code, moral damages may be recovered, among others, in acts and
actions referred to in Article 21 of the same Code. "[A]n award of moral damages must be anchored on a
clear showing that the party claiming the same actually experienced mental anguish, besmirched
reputation, sleepless nights, wounded feelings, or similar injury."40 In this case, the aforementioned
malicious acts, as proven through the evidence presented by respondent, clearly caused moral suffering
to the latter, for which petitioners should be made liable. As intimated in one case,41 although mental
anguish and emotional sufferings of a person are not quantifiable with mathematical precision, the
Court must nonetheless strive to set an amount that would restore respondent to his moral status quo
ante.42 In this regard, the Court finds it reasonable to award the amount of P50,000.00 as moral
damages, considering the meager amount of actual damages awarded despite the public humiliation
and distress suffered by respondent throughout his ordeal.

Meanwhile, case law states that "exemplary or corrective damages are imposed by way of example or
correction for the public good, in addition to moral, temperate, liquidated, or compensatory damages.
The award of exemplary damages is allowed by law as a warning to the public and as a deterrent against
the repetition of socially deleterious actions." In this case, the Court finds the award of exemplary
damages in the amount of P50,000.00 reasonable in order to serve as a reminder against unscrupulous
persons - as herein petitioners - who take undue advantage of their positions to the detriment of the
consuming public.

LOMARDA VS FUDALAN

FACTS:

On September 27, 2006, respondent, through his wife, Alma Fudalan, applied for electrical service from
BOHECO I Electric Cooperative Inc. (BOHECO I) to illuminate their farmhouse located in Cambanac,
Baclayon, Bohol. At the pre-membership seminar, respondent paid the amount of P48.12 as
membership fee and was advised to employ the services of an authorized electrician from BOHECO I.5
Accordingly, on October 7, 2006, respondent employed the services of Sabino Albelda Sr. (Albelda), a
BOHECO I authorized electrician, who informed him that the electrical connection could only be
installed in his farmhouse if he procures a certification from Raso, the Barangay Power Association
(BAPA)6 Chairperson. Respondent then instructed his farmhand to get a certification from Raso but
despite efforts to reach Raso, the latter was unavailable. Thus, respondent consented to the tapping of
his electrical line to that of BAPA upon the assurance of Albelda that he would not be charged with
pilferage of electricity because his electric usage shall be determined by the check meter of BOHECO I at
the base of the drop line and shall be billed accordingly.7

In the morning of October 8, 2006, respondent still tried again to obtain Raso's certification. However,
during their meeting, Raso allegedly got mad, vowed to never issue the said certification, and eventually
then reported the matter to BOHECO I for disconnection.8

Feeling aggrieved, respondent and his wife went to BOHECO I on October 17, 2006 to complain about
Raso's malicious actuations. They were attended to by the receiving clerk, petitioner Lomarda, who,
after reviewing their documents, told them that he would conduct an ocular inspection of their
farmhouse. The next day, respondent, together with his farmhand, went looking for Raso and
confronted her about the latter's threat of disconnection. To appease them, Raso guaranteed not to
order the disconnection of respondent's electricity; nevertheless, she still refused to issue the
certification on the premise that respondent's farmhouse already had electricity. In the course of their
conversation, Raso uttered, "Sabut sabuton lang ni nato," which translates to "let us just settle this."9

On November 5, 2006, respondent and his wife once more went to Raso to follow up on the issuance of
such certification. They met at the purok center, where Raso was conducting a meeting with several
purok members. Thereat, Raso asked why respondent's electricity has not yet been installed.
Respondent took this to be a sarcastic and rhetorical remark because Raso was, in fact, the one
withholding the issuance of the BAPA certification which was precisely the cause of the delay of the
aforesaid installation.10

In another confrontation, Raso explained that she was about to issue the certification but was prevented
by Lomarda, who allegedly apprised her of a pending complaint for premature tapping against
respondent. To settle the misunderstanding, Raso directed respondent to discuss the matter with
Lomarda at his house, and again uttered "Sabut sabuton lang ni nato." During their conversation,
Lomarda told respondent that he earlier received a disconnection order issued a long time ago but
misplaced the document, and that an ocular inspection of respondent's farmhouse will be conducted on
November 6, 2006. When respondent informed Raso of the date of inspection, the latter once again
remarked, "Sabut sabuton lang ni nato."11

On the day of inspection, or on November 6, 2006, respondent was assured that his electricity will not
be disconnected and that Raso will issue the certification, provided he would pay the amount of
P1,750.00 or sign a promissory note. Respondent, however, refused to comply with the said conditions,
reasoning that there was no official order from the concerned office. After respondent refused to pay,
Lomarda allegedly posed in front of a camera and while pointing at the slot provided for the electric
meter, shouted, "This is an illegal tapping." Thereafter, Lomarda, in the presence of policemen, the
barangay treasurer, and other several passersby, ordered his linemen to cut off respondent's
electricity.12

On November 9, 2006, respondent communicated with BOHECO I, through phone, and inquired about
his electric dues. He was informed that there was no system loss or excess billed to the cooperative, and
that his electric usage amounted only to P20.00.

Claiming that petitioners' acts tarnished his image, besmirched his reputation, and defamed his honor
and dignity, respondent filed a complaint for damages before the RTC. Respondent alleged that
petitioners confederated with one another to purposely delay the approval of his application for electric
connection by: (a) withholding the issuance of the BAPA certification; (b) falsely accusing him of
premature tapping and pilferage of electricity; and (c) demanding the payment of P1,750.00, when what
was due him was only P20.00.13
For their part, petitioners contended that respondent committed premature tapping of electricity, when
the latter consented to the tapping of his line to the service line of BAPA without a "turn-on" order from
BOHECO I. Moreover, they claim that they cannot be faulted for the disconnection, since they gave
respondent the option to pay the penalty or sign a promissory note, which the latter
refused.14cralawred

ISSUE:

Whether or not the CA correctly upheld the award of damages under Article 21 of the Civil Code.

RULING:

petitioners were found liable by both the RTC and CA for abuse of rights under Article 19, in relation to
Article 21, of the Civil Code.

"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 one's rights but also in the
performance of one's duties." In this regard, case law states that "[a] right, though by itself legal because
[it is] 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."24

"Article 19 is the general rule which governs the conduct of human relations. By itself, it is not the basis
of an actionable tort. Article 19 describes the degree of care required so that an actionable tort may
arise when it is alleged together with Article 20 or Article 21."25 In Saudi Arabian Airlines v. CA,26 the
Court explained the relation of Article 19 and Article 21 of the Civil Code: ChanRoblesVirtualawlibrary

On one hand, Article 19 of the New Civil Code 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.

On the other hand, Article 21 of the New Civil Code provides:

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 damages.

Thus, in Philippine National Bank vs. CA, this Court held that:

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 number of moral wrongs which is
impossible for human foresight to specifically provide in the statutes.

Although Article 19 merely declares a principle of law, Article 21 gives flesh to its provisions. Thus, we
agree with private respondent's assertion that violations of Articles 19 and 21 are actionable, with
judicially enforceable remedies in the municipal forum.27cralawlawlibrary

In Mata v. Agravante,28 the Court pointed out that Article 21 of the Civil Code "refers to acts contra
bonos mores and has the following elements: (1) an act which is legal; (2) but which is contrary to
morals, good customs, public order or public policy; and (3) is done with intent to injure."29

In this case, records show that respondent had consistently pursued all reasonable efforts to comply
with the prescribed requirements for the installation of electrical connection at his farmhouse.

it is clear that petitioners should be held liable for damages under Article 19, in relation to Article 21, of
the Civil Code. While it appears that petitioners were engaged in a legal act, i.e., exacting compliance
with the requirements for the installation of respondent's electricity in his farmhouse, the circumstances
of this case show that the same was conducted contrary to morals and good customs, and were in fact
done with the intent to cause injury to respondent. Petitioners did not only fail to apprise respondent of
the proper procedure to expedite compliance with the requirements, they also misled him to believe
that everything can be settled, extorted money from him when only a meager amount was due, and
worse, publicly humiliated him in front of many people which ended up in the disconnection of his
electricity altogether. To be sure, the clean hands doctrine - which was invoked by petitioners herein -
should not apply in their favor, considering that while respondent may have technically failed to procure
the required BAPA certification and proceeded with the tapping, the same was not due to his lack of
effort or intention in complying with the rules in good faith. As exhibited above, it was, in fact,
petitioners' own acts which made compliance with the rules impossible. Hence, respondent was actually
free from fault, negating the application of the clean hands doctrine, to wit:34

Parties who do not come to court with clean hands cannot be allowed to profit from their own
wrongdoing. The action (or inaction) of the party seeking equity must be "free from fault, and he must
have done nothing to lull his adversary into repose, thereby obstructing and preventing vigilance on the
part of the latter."35

That being said, the awards of damages in favor of respondent are therefore warranted. In this case,
both the RTC and the CA awarded actual, moral, and exemplary damages, including attorney's fees and
litigation expenses.

NAVARRO-BANARIA VS BANARIA

FACTS:

respondents are brother (Marcelino S. Banaria), sister (Paulina Banaria-Gelido), sons (Ernesto A. Banaria
and Panfilo A. Banaria), daughters (Gracia Severa Banaria-Espiritu and Reina Clara Banaria-Magtoto),
granddaughters (Gracia Isabelita Banaria-Espiritu, Anne Marie Espiritu-Pappania, Maria Lourdes Divine
Banaria-Duran), and grandsons (Geoffrey Banaria-Espiritu and Justin Banaria-Espiritu) of the late
Pasacasio S. Banaria, Sr. (Pascasio), while petitioner Adelaida C. Navarro-Banaria (Adelaida) is the legal
wife of Pascasio and stepmother of the Banaria siblings.5

Pascasio, the family patriarch, at the time of the filing of the complaint, was already frail and suffering
from physical and mental infirmity incapacitating him to fully functioning on his own without any
assistance.6

The action for damages of respondents stemmed from the alleged bad faith, malice, and deliberate
failure of Adelaida to keep her word and honor her promise to bring Pascasio to his 90th birthday
celebration held on February 22, 2004. Such special event was prepared by the respondents and the
non-appearance of Pascasio during the event allegedly caused loss and injury to the respondents.7

Respondents alleged that the planning of the event started as early as February 2003 or a year before
the planned 90th birthday celebration to be held on February 22, 2004. Between November 2003 and
January 2004, respondents were in continuous contact with Adelaida to remind her of the upcoming
event. Adelaida, for her part, confirmed Pascasio's attendance during the event although it coincides
with the death anniversary of Adelaida's mother. The plan was to bring Pascasio to the venue in the
early morning of February 22, 2004 before proceeding to her hometown in Tarlac. Adelaida promised
respondents that she will try her best to attend the birthday celebration in the evening after going to
Tarlac.8

On February 13, 2004, Reina and Gracia Severa, who are both residing in the United States, arrived in
the country to attend the birthday celebration of their father. They were able to visit their father and
Adelaida in their home on February 14 and 15, 2004. Adelaida promised them during their visit that
Pascasio would be present in his scheduled 90n birthday celebration.9

However, much to the dismay of the Banaria siblings as well as their guests, Pascasio was nowhere to be
found in his 90th birthday celebration. Respondents continuously called Adelaida but they were not able
to contact her. Almost 200 guests were at the venue waiting for Pascasio to come. The siblings deemed
it proper to continue the celebration even without the birthday celebrant himself. Worried that there
might be something untoward that happened to their father, respondents went to the nearest police
station to report Pascasio as a missing person. However, they were advised by the police officers that
before a person can be considered missing, there should be a 24-hour waiting period. Thus, respondents
just entered their concern in the police blotter. The next day, the missing person report was officially
made after Pascasio and Adelaida have not been seen or heard for more than 24 hours.10

Respondents called and went to the Securities and Exchange Commission (SEC), where Adelaida works
but they failed to see her there. Afterwards, respondent Paulina was able to talk to one of Adelaida's
maids named Kit. Kit told Paulina that she went to Tarlac with Pascasio and Adelaida in the morning of
February 21, 2004 but went their separate ways upon reaching said province. However, when asked
about the whereabouts of Pascasio and Adelaida, she said that she did not know where they were.11

In the evening of February 23, 2004, Marcelino, Pascasio's brother, told the other respondents that
Pascasio and Adelaida were at their residence then at 7-B Sigma Drive, Alpha village, Quezon City.
Respondents went to the said place to ask Adelaida her reason why Pascasio was not able to attend the
birthday celebration. Adelaida reasoned that Pascasio did not want to go to the party. When asked why
Adelaida broke her commitment to bring Pascasio to the party, Adelaida uttered the words, "I am the
wife."12

Thus, the Complaint for Damages filed by respondents against Adelaida.

ISSUE:

Whether or not petitioner violated Articles 19 and 21 of the Civil Code regarding Human Relations

RULING:

Article 19 of the Civil Code provides that every person in the exercise of his rights and in the
performance of his duties must act with justice, give everyone his due, and observe honesty and good
faith. The principle embodied in this provision is more commonly known as the "abuse of right
principle." The legal consequence should anyone violate this fundamental provision is found in Articles
20 and 21 of the Civil Code. The correlation between the two provisions are showed in the case of GF
EQUITY, Inc. v. Valenzona, to wit:

[Article 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. But while Article 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.16 (Emphasis supplied)

While Article 19 of the New Civil Code may have been intended as a mere declaration of principle, the
"cardinal law on human conduct" expressed in said article has given rise to certain rules, e.g., that where
a person exercises his rights but does so arbitrarily or unjustly or performs his duties in a manner that is
not in keeping with honesty and good faith, he opens himself to liability. The elements of an abuse of
rights under Article 19 are: (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.17

Consequently, when Article 19 is violated, an action for damages is proper under Article 20 and 21 of the
New Civil Code. Article 20 pertains to damages arising from a violation of law.18

For starters, there is no question that as legal wife and guardian of Pascasio, who is physically and
mentally infirm, Adelaida has the principal and overriding decision when it comes to the affairs of her
husband including the celebration of the latter's 90th birthday.
However, it must be noted Adelaida's right, as with any rights, cannot be exercised without limitation.
The exercise of this right must conform to the exacting standards of conduct enunciated in Article 19.
Adelaida was clearly remiss in this aspect.

Glaring is the fact that long before the scheduled date of Pascasio's 90th birthday celebration, Adelaida
was already informed about the event. As early as February 2003 or a year before the scheduled event,
Adelaida was already reminded of the event by the respondents to which she confirmed Pascasio's
attendance. Even though Adelaida alleges that she was not privy to any birthday celebration for
Pascasio, the fact remains that she was continuously informed and reminded about the scheduled
event. She even contributed P5,000.00 for the costs.

Following Adelaida's testimony that Pascasio had already decided not to attend his birthday celebration
a day before such event, she should have contacted the respondents immediately for the respondents
to be able to take appropriate action. Adelaida knew fully well that the respondents already spent a
considerable amount of money and earnest efforts were already made to ensure the success of the
event. The least that Adelaida could have done was to inform the respondents immediately of any
unforeseen circumstance that would hinder its success and to avert any further damage or injury to the
respondents. Moreover, considering that numerous guests were invited and have confirmed their
attendance, she placed the respondents in a very embarrassing situation.

Instead of making good on her prior commitment, Adelaida allegedly followed Pascasio's wish of going
to Tarlac and arrived thereat in the afternoon of February 21, 2004. At that time, Adelaida still had the
opportunity to contact the respondents and inform them that they will not be able to come, but she did
not. Her excuse, that Pascasio grabbed her cellular phone and caused damage to it, is feeble and
unrealistic. We find incredulous that Pascasio, who was allegedly infirm, would be able to grab the
cellphone from Adelaida and throw it away, when he cannot even move on his own without any
assistance. And even if true, there are certainly other means of communication aside from her cellphone
if she really wanted to call the respondents.

Adelaida also neglected to contact the respondents immediately after their return to Manila on
February 23, 2004. If she was sincere in bringing Pascasio to his birthday celebration, then she would
have immediately called the respondents upon returning to Manila to inform them of their whereabouts
and to state the reason for Pascasio non-attendance.

We find it dubious that Pascasio would refuse to attend his birthday celebration. Respondents have
sufficiently established that it was an annual tradition for the family to celebrate the birthday of their
father Pascasio. Besides, the allegation that Pascasio refused to attend his birthday celebration because
of an alleged misunderstanding with his two sons was not duly proven. Common sense dictates that he
should have conveyed about the matter to Reina and Gracia Severa when they visited him on February
14 and 15, 2004, but he did not.

All in all, the foregoing shows that Adelaida intentionally failed to bring Pascasio to the birthday
celebration prepared by the respondents thus violating Article 19 of the Civil Code on the principle of
abuse of right. Her failure to observe good faith in the exercise of her right as the wife of Pascasio
caused loss and injury on the part of the respondents, for which they must be compensated by way of
damages pursuant to Article 21 of the Civil Code.

BUENAVENTURA VS CA

FACTS:

involve a petition for the declaration of nullity of marriage, which was filed by petitioner Noel
Buenaventura on July 12, 1992, on the ground of the alleged psychological incapacity of his wife, Isabel
Singh Buenaventura, herein respondent. After respondent filed her answer, petitioner, with leave of
court, amended his petition by stating that both he and his wife were psychologically incapacitated to
comply with the essential obligations of marriage. In response, respondent filed an amended answer
denying the allegation that she was psychologically incapacitated.
the lower court found that plaintiff-appellant deceived the defendant-appellee into marrying him by
professing true love instead of revealing to her that he was under heavy parental pressure to marry and
that because of pride he married defendant-appellee; that he was not ready to enter into marriage as in
fact his career was and always would be his first priority; that he was unable to relate not only to
defendant-appellee as a husband but also to his son, Javy, as a father; that he had no inclination to make
the marriage work such that in times of trouble, he chose the easiest way out, that of leaving
defendant–appellee and their son; that he had no desire to keep defendant-appellee and their son as
proved by his reluctance and later, refusal to reconcile after their separation; that the aforementioned
caused defendant-appellee to suffer mental anguish, anxiety, besmirched reputation, sleepless nights
not only in those years the parties were together but also after and throughout their separation.

ISSUE:

Whether or not it was proper to award moral damages based on psychological incapacity.

RULING:

ART. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though
incapable of pecuniary computation, moral damages may be recovered if they are the proximate result
of the defendant’s wrongful act or omission.

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.

The trial court referred to Article 21 because Article 221917 of the Civil Code enumerates the cases in
which moral damages may be recovered and it mentions Article 21 as one of the instances. It must be
noted that Article 21 states that the individual must willfully cause loss or injury to another. There is a
need that the act is willful and hence done in complete freedom. In granting moral damages, therefore,
the trial court and the Court of Appeals could not but have assumed that the acts on which the moral
damages were based were done willfully and freely, otherwise the grant of moral damages would have
no leg to stand on.

On the other hand, the trial court declared the marriage of the parties null and void based on Article 36
of the Family Code, due to psychological incapacity of the petitioner, Noel Buenaventura. Article 36 of
the Family Code states:

A marriage contracted by any party who, at the time of the celebration, was psychologically
incapacitated to comply with the essential marital obligations of marriage, shall likewise be void even if
such incapacity becomes manifest only after its solemnization.

Psychological incapacity has been defined, thus:

. . . no less than a mental (not physical) incapacity that causes a party to be truly incognitive of the basic
marital covenants that concomitantly must be assumed and discharged by the parties to the marriage
which, as so expressed by Article 68 of the Family Code, include their mutual obligations to live together,
observe love, respect and fidelity and render help and support. There is hardly any doubt that the
intendment of the law has been to confine the meaning of "psychological incapacity" to the most
serious cases of personality disorders clearly demonstrative of an utter insensitivity or inability to give
meaning and significance to the marriage. . . .18

The Court of Appeals and the trial court considered the acts of the petitioner after the marriage as proof
of his psychological incapacity, and therefore a product of his incapacity or inability to comply with the
essential obligations of marriage. Nevertheless, said courts considered these acts as willful and hence as
grounds for granting moral damages. It is contradictory to characterize acts as a product of psychological
incapacity, and hence beyond the control of the party because of an innate inability, while at the same
time considering the same set of acts as willful. By declaring the petitioner as psychologically
incapacitated, the possibility of awarding moral damages on the same set of facts was negated. The
award of moral damages should be predicated, not on the mere act of entering into the marriage, but
on specific evidence that it was done deliberately and with malice by a party who had knowledge of his
or her disability and yet willfully concealed the same. No such evidence appears to have been adduced
in this case.

For the same reason, since psychological incapacity means that one is truly incognitive of the basic
marital covenants that one must assume and discharge as a consequence of marriage, it removes the
basis for the contention that the petitioner purposely deceived the private respondent. If the private
respondent was deceived, it was not due to a willful act on the part of the petitioner. Therefore, the
award of moral damages was without basis in law and in fact.