ALBENSON ENTERPRISES CORP.

, JESSE YAP, AND BENJAMIN MENDIONA, petitioners,

vs.

THE COURT OF APPEALS AND EUGENIO S. BALTAO, respondents.

G.R. No. 88694 January 11, 1993

FACTS:

This petition assails the decision of respondent Court of Appeals in CA-GR CV No. 14948 (Eugenio S.
Baltao vs. Albenson Enterprises Corporation), which modified the judgment of the RTC - Quezon City, in
Civil Case No. Q-40920 and ordered petitioner to pay private respondent, the sum of P500,000.00 as
moral damages and attorney's fees in the amount of P50,000.00.

Guaranteed Inc. ordered mild steel plates with Albenson Corp. Guranteed, as part of payment issued a
check amounting 2,575.00 and drawn against E.L woods. The check was dishonored for the reason that
“Account Closed”. Upon investigation, Albenson found out that the recipient of the mild steel plates,
president of Guaranteed, and the signatory of the check was one Eugenio Baltao. Albenson demand
Eugenio Baltao to replace and or make good the dishonored check. Eugenio Baltao denied the issued
check, and the signature appearing therein and alleged that he could have not transacted with
Albenson.

Albensn filed a complaint against guaranteed for violation of Batas Pambansa Bilang 22.

It appears, however, that private respondent has a namesake, his son Eugenio Baltao III, who manages a
business establishment, E.L. Woodworks, on the ground floor of the Baltao Building, 3267 V. Mapa
Street, Sta. Mesa, Manila, the very same business address of Guaranteed.

On September 5, 1983, Assistant Fiscal Ricardo Sumaway filed an information against Eugenio S. Baltao
for Violation of Batas Pambansa Bilang 22. In filing said information, Fiscal Sumaway claimed that he had
given Eugenio S. Baltao opportunity to submit controverting evidence, but the latter failed to do so and
therefore, was deemed to have waived his right.

Respondent Baltao, claiming ignorance of the complaint against him, immediately filed with the
Provincial Fiscal of Rizal a motion for reinvestigation, alleging that it was not true that he had been given
an opportunity to be heard in the preliminary investigation conducted by Fiscal Sumaway, and that he
never had any dealings with Albenson or Benjamin Mendiona, consequently, the check for which he has
been accused of having issued without funds was not issued by him and the signature in said check was
not his.

On January 30, 1984, Provincial Fiscal Mauro M. Castro of Rizal reversed the finding of Fiscal Sumaway
and exonerated respondent Baltao. He also instructed the Trial Fiscal to move for dismissal of the
information filed against Eugenio S. Baltao.

Albenson then filed an appeal and the CA ruled that: decision of RTC is MODIFIED by reducing the moral
damages awarded therein from P1,000,000.00 to P500,000.00 and the attorney's fees from P100,000.00
to P50,000.00, said decision being hereby affirmed in all its other aspects. With costs against appellants.
ISSUE:

Whether or not the principle of abuse of rights has been violated, resulting in damages under Articles 20
and 21 or other applicable provision of law.

HELD:

No. the principle of abuse of rights has not been violated when the petitioner filed case against private
respondent.

WHEREFORE, the petition is GRANTED and the decision of the Court of Appeals in C.A. G.R. C.V. No.
14948 dated May 13, 1989, is hereby REVERSED and SET ASIDE. Costs against respondent Baltao.

REASON:

In the case at bar, there is no proof of a sinister design on the part of petitioners to vex or humiliate
private respondent by instituting the criminal case against him. While petitioners may have been
negligent to some extent in determining the liability of private respondent for the dishonored check, the
same is not so gross or reckless as to amount to bad faith warranting an award of damages.

The root of the controversy in this case is founded on a case of mistaken identity. It is possible that with
a more assiduous investigation, petitioners would have eventually discovered that private respondent
Eugenio S. Baltao is not the "Eugenio Baltao" responsible for the dishonored check.

In the final analysis, there is no proof or showing that petitioners acted maliciously or in bad faith in the
filing of the case against private respondent. Consequently, in the absence of proof of fraud and bad
faith committed by petitioners, they cannot be held liable for damages (Escritor, Jr. vs. Intermediate
Appellate Court, 155 SCRA 577 [1987]). No damages can be awarded in the instant case, whether based
on the principle of abuse of rights, or for malicious prosecution. The questioned judgment in the instant
case attests to the propensity of trial judges to award damages without basis. Lower courts are hereby
cautioned anew against awarding unconscionable sums as damages without bases therefor.

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. 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 the 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.

The elements of an abuse of right under Article 19 are the following: (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. Article 20 speaks
of the general sanction for all other provisions of law which do not especially provide for their own
sanction (Tolentino, supra, p. 71). Thus, anyone who, whether willfully or negligently, in the exercise of
his legal right or duty, causes damage to another, shall indemnify his victim for injuries suffered thereby.
Article 21 deals with acts contra bonus mores, and has the following elements: 1) There is an act which
is legal; 2) but which is contrary to morals, good custom, public order, or public policy; 3) and it is done
with intent to injure.

Thus, under any of these three (3) provisions of law, an act which causes injury to another may be made
the basis for an award of damages.

There is a common element under Articles 19 and 21, and that is, the act must be intentional. However,
Article 20 does not distinguish: the act may be done either "willfully", or "negligently". The trial court as
well as the respondent appellate court mistakenly lumped these three (3) articles together, and cited
the same as the bases for the award of damages in the civil complaint filed against petitioners, thus:

With the foregoing legal provisions (Articles 19, 20, and 21) in focus, there is not much difficulty in
ascertaining the means by which appellants' first assigned error should be resolved, given the admitted
fact that when there was an attempt to collect the amount of P2,575.00, the defendants were explicitly
warned that plaintiff Eugenio S. Baltao is not the Eugenio Baltao defendants had been dealing with
(supra, p. 5). When the defendants nevertheless insisted and persisted in filing a case — a criminal case
no less — against plaintiff, said defendants ran afoul of the legal provisions (Articles 19, 20, and 21 of
the Civil Code) cited by the lower court and heretofore quoted (supra).

Defendants, not having been paid the amount of P2,575.00, certainly had the right to complain. But that
right is limited by certain constraints. Beyond that limit is the area of excess, of abuse of rights. (Rollo,
pp.

44-45).

Assuming, arguendo, that all the three (3) articles, together and not independently of each one, could
be validly made the bases for an award of damages based on the principle of "abuse of right", under the
circumstances, We see no cogent reason for such an award of damages to be made in favor of private
respondent.

Certainly, petitioners could not be said to have violated the aforestated principle of abuse of right. What
prompted petitioners to file the case for violation of Batas Pambansa Bilang 22 against private
respondent was their failure to collect the amount of P2,575.00 due on a bounced check which they
honestly believed was issued to them by private respondent. Petitioners had conducted inquiries
regarding the origin of the check, and yielded the following results: from the records of the Securities
and Exchange Commission, it was discovered that the President of Guaranteed (the recipient of the
unpaid mild steel plates), was one "Eugenio S. Baltao"; an inquiry with the Ministry of Trade and
Industry revealed that E.L. Woodworks, against whose account the check was drawn, was registered in
the name of one "Eugenio Baltao"; verification with the drawee bank, the Pacific Banking Corporation,
revealed that the signature appearing on the check belonged to one "Eugenio Baltao".