ALBENSON V.

CA
GR No. 88694
January 11, 1993
Ponentia: Justice Bidin
 
FACTS:
 Petitioners: Albenson Enterprises Corp., Jesse Yap, Ben-hamin Mendiona
 Respondents: CA, Eugenio S. Baltao
 
BACKGROUND FACTS
 Sept., Oct., and Nov. 1980 - Albenson delivered to Guaranteed Industries, Inc. mild steel
plates which the latter ordered
o Albenson was given Pacific Banking Corporation Check No. 136361 in the amount of
P2,575.00 and drawn against the account of E.L. Woodworks
When presented for payment, the check was dishonored for the
reason “Account Closed.”
 Thereafter, petitioner Albenson, through counsel, traced the origin of the dishonored check.
From the record of the Securities and Exchange Commission (SEC), Albenson discovered that
the president of Guaranteed, the recipient of the unpaid mild steel plates, was one “Eugenio S.
Baltao.” Upon further inquiry, Albenson was informed by the Ministry of Trade and Industry
that E.L. Woodworks, a single proprietorship business, was registered in the name of one
“Eugenio Baltao”.
 
PROCEDURAL HISTORY
o Albenson made an extrajudicial demand upon private respondent Eugenio S. Baltao
(Pres. Of Gauranteed) to replace/or make good the dishonored check.
o On February 14, 1983, Albenson filed with the Office of the Provincial Fiscal of Rizal a
complaint against Eugenio S. Baltao for violation of Batas Pambansa Bilang 22.
Submitted to support said charges was an affidavit of petitioner Benjamin Men-diona, an
employee of Albenson. In said affidavit, the above-mentioned circumstances were
stated. It appears, however, that private respondent has namesake, his son Eugenio
Baltao III, who manages a business establishment, E.L. Woodworks

o Sept. 5, 1983 - Assistant Fiscal filed an information against Eugenio Baltao for violation
of Batas Pambansa Bilang 22. In filing, Fiscal claimed he had given Baltao opportunity to
submit controverting evidence, but the latter failed to do so thus is deemed to have
waived his right.
 Baltao: complaining of ignorance of the complaint; filed motion for reinvestigation;
claiming: had not been heard in the prelim. Investigation never had dealings with
Albenson or Benjamin, check was not issued by him.

o Jan. 30, 1984 - Provincial Fiscal reversed the finding of the Assistant Fiscal and
exonerated Baltao.
 Instructed Trial Fiscal to move for dismissal of information against Baltao; found that
the signature on the check was not Baltao's, no showing in the records of prelim
investigation that Baltao received notice of the said investigation
 Castigated Assistant Fiscal for failing to exercise care and prudence in the
performance of his duties, causing injustice to the respondent
o Baltao filed a complaint for damages against Albenson, Jesse Yap (owner) and Benjamin
Mendiona (employee) - RTC Quezon City
  RTC: check was drawn against the account of EL Woodworks of Guaranteed (inactive
and ceased to exist since 1975)
 rendered judgment in favor of the plaintiff. Ordering defendants to pay plaintiff
jointly and severally:
 P133,350.00 (actual or compensatory damages)
 P1M (moral damages)
 P2000,000 (exemplary damages)
 P100,000 (attorney's fees)
o On appeal, CA modified RTC decision as follows:
 Reducing the moral damages forom 1M to P500,000
 Attorney's fees from P100,000 to P50,000
 Affirmed RTC decision in all other aspects
o Albenson, Yap and Mendiona filed instant petition against CA
 Contends that the civil case filed in the lower court was one for malicious
prosecution. Absence of malice on their part absolves them from any liability for
malicious prosecution
o Baltao anchored his complaint for damages on Articles 19, 20, 21 of the Civil Code
 
ISSUE: Whether or not the respondent has the cause of action to claim damages based on the
principle of abuse of rights. (Art. 19)
 
HOLDING/RATIONALE:
 No
 No damages can be awarded in this instant case whether based on the principle of abuse of
rights, or for malicious prosecution.
 Questioned judgment attests to the propensity of trial judges to award damages without
basis; lower courts cautioned anew against awarding unconscious able sums and damages
without bases thereof.
 
JUDGMENT:
 Judgment is GRANTED
 CA judgment hereby REVERSED and SET ASIDE.
 Costs against respondent Baltao.
 
HOLDING/RATIONALE
 Petitioners could not be said to have had violated aforestated principle of abuse of rights.
o Petitioners were prompted to file a case against Baltao under Batas Pambansa due
to his failure to pay said amount which the petitioners honestly believed was issued to
them by respondent.
o Petitioners conducted inquiries regarding the origin of the check
o Respondent did not clear himself from baseless accusation and did not mention the
fact that there are three persons with the same name: Eugenio Baltao Sr., Eugenio S.
Baltao, Jr. (private respondent) and Eugenio Baltao III (PR's son, who as it turned out
later issued the check)
o Petitioners had every reason to believe that PR was the one who issues the check.
 Petitioners were not motivated by malicious intent or by sinister design to unduly harass
private respondent
o There is no proof of a sinister design on the part of petitioners to vex/humiliate
private respondent by instituting criminal case against him
 While petitioners may have been negligent to some extent in determining liability of
respondent for the dishonored check, it is not so gross or reckless to amount to bad faith
  Case is founded on case of mistaken identity: assiduous investigation could have prevented
such
 Error in the proceeding against wrong individual was an innocent mistake; cannot be
characterized as bad faith
 The law could not have meant to impose a penalty on the right to litigate, such right is so
precious that moral damages may not be charged on those who may even exercise it
erroneously.
 Adverse decision does not ipso facto justify the award of attorney's fees to winning party
o Award of damages and attorney's fees is unwarranted where the action was filed in
good faith.
o If damage results from a person's exercising his legal rights, it is damnum absque
injuria.
 On respondent's claim for compensatory damages: no proof of the cost of the medical
treatment he claimed to have undergone as a result of a nervous breakdown; no proof of the
actual loss of earnings caused by unjust litigation against him.
 No evidence of the other party having acted in wanton, fraudulent or recklessness, or
oppressive manner, neither may exemplary damages be awarded.
o No malicious prosecution against private respondent, attorney's fees cannot be
awarded him on that ground.
 No proof or showing petitioners acted maliciously or in bad faith in the filing of the case
against private respondent.
o Absence of proof of fraud and bad faith committed by petitioners cannot hold them
liable for damages
 
DICTA:
 Art. 19 - "principle of abuse of rights"
 Standards which may be observed not only in the exercise of one's rights but also in the
performance of his duties: act with justice, give everyone his due, and observe honesty and
good faith.

 Art. 19, 20, 21 all related to each other

o An act which causes injury to another may be made the basis for an award of
damages
o Common element: act must be intentional
o Art. 20 - does not distinguish, the act may be done willfully or negligently

 Elements of abuse of right under article 19:

o There is a legal right or duty
o Which is exercised in bad faith
o For the sole intent of prejudicing or injuring another

 Article 21: deals with acts contra bonus mores. Elements:

o There is an act which is legal
o But which is contrary to morals, good custom, public order, public policy
o It is done with intent to injure

 To constitute a malicious prosecution:

o there must be proof that the prosecution was prompted by a sinister design to vex
and humiliate a person,
 o and that it was initiated deliberately by the defendant knowing that his charges
were false and groundless.
o The mere act of submitting a case to the authorities for prosecution does not make
one liable for malicious prosecution.

 A civil action for damages for malicious prosecution is allowed under the New Civil Code
(specifically Art. 19, 20, 26, 29, 32, 33, 35 and 2219(8). But the case must have the following
elements:
o The fact of the prosecution and the further fact that the defendant was himself the
prosecutor, and that the action was finally terminated with an acquittal.
o That, in brining the action, the prosecutor acted without probable cause;
o The prosecutor was actuated or impelled by legal malice.
 A party injured by the filing of a court case against him, even if he later on absolved, may file
a case of damages on grounded either on the principle of abuse of rights, or on malicious
prosecution.

 It is well-settled that one cannot be held liable for maliciously instituting a prosecution
where one has acted with probable cause.

 Probable cause is the existence of such facts and circumstances as would excite the belief, in
a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the
person charged was guilty of the crime for which he was prosecuted. In other words, a suit will
lie only in cases where a legal prosecution has been carried on without probable cause. The
reason for this rule is that it would be a very great discouragement to public justice, if
prosecutors, who had tolerable ground of suspicion, were liable to be sued at law when their
indictment miscarried”

 The presence of probable cause signifies, as a legal consequence, the absence of malice.
 The law could not have meant to impose a penalty on the right to litigate, such right is so
precious that moral damages may not be charged on those who may even exercise it
erroneously.

 In determining actual damages, the court cannot rely on speculation, conjectures or

guesswork as to the amount. Without the actual proof of loss, the award for damages
becomes erroneous.
 Actual and compensatory damages are those recoverable because of pecuniary loss -- in
business, trade, property, profession, job or occupation -- and the same must be proved.
o If proof is flimsy and unsubstantiated, no damages will be given.

 Award of attorney's fees must be disallowed where he awards of exemplary damages is

eliminated.

 In the absence of malice and bad faith, moral damages cannot be awarded.

 (Damnum absque injuria literally means damage without wrongful act. It means that a loss
or harm incurred from something other than a wrongful act does not warrant a legal remedy.
For example, a person may harm another in due exercise of his right. However, the injured
person cannot sue the person who exercised his rights).