Facts: In 1973, Dodge selected Barons Marketing Corporation to sell electrical wires and cables.

The
corporation purchased P4,102,483.30 of these products on credit, selling them to MERALCO. The
company paid P300,000, leaving an unpaid account of P3,802,478.20. Phelps Dodge demanded
payment of its remaining obligations, and Barons Marketing offered to pay the outstanding account in
monthly installments of P500,000 plus 1% interest per month until full payment. However, Dodge
rejected this request and demanded full payment.

Dodge filed a complaint for recovering P3,802,478.20, an attorney's fee, exemplary damages,
litigation expenses, and suit costs. The court ruled in favor of Dodge, awarding exemplary damages of
P10,000 and recovery of P3,108,000.

Issue: Whether the private respondent is guilty of abuse of right

Ruling: : No. The petitioner invokes Article 19 and Article 21[8] of the Civil Code, claiming that the
private respondent abused its rights when it rejected the petitioner's settlement offer . It is an
elementary rule that good faith is presumed and that the burden of proving bad faith rests upon the
party alleging it. In the case at bar, the petitioner has failed to prove bad faith on the part of the
private respondent.

The SC found that the private respondent was driven by legitimate reasons for rejecting the
petitioner's offer and instituting the action for collection before the trial court. As pointed out by the
private respondent, the corporation had its own "cash position to protect for it to pay its obligations."
This is not such "a lame and poor rationalization" as the petitioner claim it to be.

If the private respondents were required to accept the petitioner's offer, there would be no reason
for the latter to reject similar offers from its other debtors. Clearly, this would be adverse to the
interests of any enterprise, especially a profit-oriented one like a private respondent. It is plain to see
that what we have here is a mere exercise of rights, not abuse. Under these circumstances, the SC did
not deem the private respondent to have acted contrary to morals, good customs, or public policy as
to violate the provisions of Article 21 of the Civil Code.