G.R. No.

175822 October 23, 2013

CALIFORNIA CLOTHING INC. and MICHELLE S. YBAEZ, Petitioners,

vs.
SHIRLEY G. QUIONES, Respondent.

DECISION

PERALTA, J.:

Assailed in this petition for review on certiorari under Rule 45 of the ; Rules
of Court are the Court of Appeals Decision1 dated August 3, 2006 and
Resolution2 dated November 14, 2006 in CA-G.R. CV No. 80309. The
assailed decision reversed and set aside the June 20, 2003 Decision3 of
the Regional Trial Court of Cebu City (RTC), Branch 58, in Civil Case No.
CEB-26984; while the assailed resolution denied the motion for
reconsideration filed by petitioner Michelle Ybaez (Ybaez).

The facts of the case, as culled from the records, are as follows:

On July 25, 2001, respondent Shirley G. Quiones, a Reservation Ticketing

Agent of Cebu Pacific Air in Lapu Lapu City, went inside the Guess USA
Boutique at the second floor of Robinsons Department Store (Robinsons)
in Cebu City. She fitted four items: two jeans, a blouse and a shorts, then
decided to purchase the black jeans worth P2,098.00.4 Respondent
allegedly paid to the cashier evidenced by a receipt5 issued by the store.6

While she was walking through the skywalk connecting Robinsons and
Mercury Drug Store (Mercury) where she was heading next, a Guess
employee approached and informed her that she failed to pay the item she
got. She, however, insisted that she paid and showed the employee the
receipt issued in her favor.7 She then suggested that they talk about it at
the Cebu Pacific Office located at the basement of the mall. She first went
to Mercury then met the Guess employees as agreed upon.8

When she arrived at the Cebu Pacific Office, the Guess employees
allegedly subjected her to humiliation in front of the clients of Cebu Pacific
and repeatedly demanded payment for the black jeans.9 They supposedly
even searched her wallet to check how much money she had, followed by
another argument. Respondent, thereafter, went home.10
On the same day, the Guess employees allegedly gave a letter to the
Director of Cebu Pacific Air narrating the incident, but the latter refused to
receive it as it did not concern the office and the same took place while
respondent was off duty.11 Another letter was allegedly prepared and was
supposed to be sent to the Cebu Pacific Office in Robinsons, but the latter
again refused to receive it.12 Respondent also claimed that the Human
Resource Department (HRD) of Robinsons was furnished said letter and
the latter in fact conducted an investigation for purposes of canceling
respondents Robinsons credit card. Respondent further claimed that she
was not given a copy of said damaging letter.13 With the above experience,
respondent claimed to have suffered physical anxiety, sleepless nights,
mental anguish, fright, serious apprehension, besmirched reputation, moral
shock and social humiliation.14 She thus filed the Complaint for
Damages15 before the RTC against petitioners California Clothing, Inc.
(California Clothing), Excelsis Villagonzalo (Villagonzalo), Imelda Hawayon
(Hawayon) and Ybaez. She demanded the payment of moral, nominal,
and exemplary damages, plus attorneys fees and litigation expenses.16

In their Answer,17 petitioners and the other defendants admitted the

issuance of the receipt of payment. They claimed, however, that instead of
the cashier (Hawayon) issuing the official receipt, it was the invoicer
(Villagonzalo) who did it manually. They explained that there was
miscommunication between the employees at that time because prior to
the issuance of the receipt, Villagonzalo asked Hawayon " Ok na ?," and
the latter replied " Ok na ," which the former believed to mean that the item
has already been paid.18 Realizing the mistake, Villagonzalo rushed outside
to look for respondent and when he saw the latter, he invited her to go back
to the shop to make clarifications as to whether or not payment was indeed
made. Instead, however, of going back to the shop, respondent suggested
that they meet at the Cebu Pacific Office. Villagonzalo, Hawayon and
Ybaez thus went to the agreed venue where they talked to
respondent.19 They pointed out that it appeared in their conversation that
respondent could not recall whom she gave the payment.20 They
emphasized that they were gentle and polite in talking to respondent and it
was the latter who was arrogant in answering their questions.21As
counterclaim, petitioners and the other defendants sought the payment of
moral and exemplary damages, plus attorneys fees and litigation
expenses.22
On June 20, 2003, the RTC rendered a Decision dismissing both the
complaint and counterclaim of the parties. From the evidence presented,
the trial court concluded that the petitioners and the other defendants
believed in good faith that respondent failed to make payment. Considering
that no motive to fabricate a lie could be attributed to the Guess
employees, the court held that when they demanded payment from
respondent, they merely exercised a right under the honest belief that no
payment was made. The RTC likewise did not find it damaging for
respondent when the confrontation took place in front of Cebu Pacific
clients, because it was respondent herself who put herself in that situation
by choosing the venue for discussion. As to the letter sent to Cebu Pacific
Air, the trial court also did not take it against the Guess employees,
because they merely asked for assistance and not to embarrass or
humiliate respondent. In other words, the RTC found no evidence to prove
bad faith on the part of the Guess employees to warrant the award of
damages.23

On appeal, the CA reversed and set aside the RTC decision, the
dispositive portion of which reads:

WHEREFORE, the instant appeal is GRANTED. The decision of the

Regional Trial Court of Cebu City, Branch 58, in Civil Case No. CEB-26984
(for: Damages) is hereby REVERSED and SET ASIDE. Defendants
Michelle Ybaez and California Clothing, Inc. are hereby ordered to pay
plaintiff-appellant Shirley G. Quiones jointly and solidarily moral damages
in the amount of Fifty Thousand Pesos (P50,000.00) and attorneys fees in
the amount of Twenty Thousand Pesos (P20,000.00).

SO ORDERED.24

While agreeing with the trial court that the Guess employees were in good
faith when they confronted respondent inside the Cebu Pacific Office about
the alleged non-payment, the CA, however, found preponderance of
evidence showing that they acted in bad faith in sending the demand letter
to respondents employer. It found respondents possession of both the
official receipt and the subject black jeans as evidence of
payment.25Contrary to the findings of the RTC, the CA opined that the letter
addressed to Cebu Pacifics director was sent to respondents employer not
merely to ask for assistance for the collection of the disputed payment but
to subject her to ridicule, humiliation and similar injury such that she would
be pressured to pay.26 Considering that Guess already started its
investigation on the incident, there was a taint of bad faith and malice when
it dragged respondents employer who was not privy to the transaction.
This is especially true in this case since the purported letter contained not
only a narrative of the incident but accusations as to the alleged acts of
respondent in trying to evade payment.27 The appellate court thus held that
petitioners are guilty of abuse of right entitling respondent to collect moral
damages and attorneys fees. Petitioner California Clothing Inc. was made
liable for its failure to exercise extraordinary diligence in the hiring and
selection of its employees; while Ybaezs liability stemmed from her act of
signing the demand letter sent to respondents employer. In view of
Hawayon and Villagonzalos good faith, however, they were exonerated
from liability.28

Ybaez moved for the reconsideration29 of the aforesaid decision, but the
same was denied in the assailed November 14, 2006 CA Resolution.

Petitioners now come before the Court in this petition for review on
certiorari under Rule 45 of the Rules of Court based on the following
grounds:

I.

THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT

THE LETTER SENT TO THE CEBU PACIFIC OFFICE WAS MADE TO
SUBJECT HEREIN RESPONDENT TO RIDICULE, HUMILIATION AND
SIMILAR INJURY.

II.

THE HONORABLE COURT OF APPEALS ERRED IN AWARDING

MORAL DAMAGES AND ATTORNEYS FEES.30

The petition is without merit.

Respondents complaint against petitioners stemmed from the principle of

abuse of rights provided for in the Civil Code on the chapter of human
relations. Respondent cried foul when petitioners allegedly embarrassed
her when they insisted that she did not pay for the black jeans she
purchased from their shop despite the evidence of payment which is the
official receipt issued by the shop. The issuance of the receipt
notwithstanding, petitioners had the right to verify from respondent whether
she indeed made payment if they had reason to believe that she did not.
However, the exercise of such right is not without limitations. Any abuse in
the exercise of such right and in the performance of duty causing damage
or injury to another is actionable under the Civil Code. The Courts
pronouncement in Carpio v. Valmonte31 is noteworthy:

In the sphere of our law on human relations, the victim of a wrongful act or
omission, whether done willfully or negligently, is not left without any
remedy or recourse to obtain relief for the damage or injury he sustained.
Incorporated into our civil law are not only principles of equity but also
universal moral precepts which are designed to indicate certain norms that
spring from the fountain of good conscience and which are meant to serve
as guides for human conduct. First of these fundamental precepts is the
principle commonly known as "abuse of rights" under Article 19 of the Civil
Code. It 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."x x x32The elements of abuse of rights are
as follows: (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.33

In this case, petitioners claimed that there was a miscommunication

between the cashier and the invoicer leading to the erroneous issuance of
the receipt to respondent. When they realized the mistake, they made a
cash count and discovered that the amount which is equivalent to the price
of the black jeans was missing. They, thus, concluded that it was
respondent who failed to make such payment. It was, therefore, within their
right to verify from respondent whether she indeed paid or not and collect
from her if she did not. However, the question now is whether such right
was exercised in good faith or they went overboard giving respondent a
cause of action against them.

Under the abuse of rights principle found in Article 19 of the Civil Code, a
person must, in the exercise of legal right or duty, act in good faith. He
would be liable if he instead acted in bad faith, with intent to prejudice
another.34 Good faith refers to the state of 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.35Malice
or bad faith, on the other hand, implies a conscious and intentional design
to do a wrongful act for a dishonest purpose or moral obliquity.36
Initially, there was nothing wrong with petitioners asking respondent
whether she paid or not. The Guess employees were able to talk to
respondent at the Cebu Pacific Office. The confrontation started well, but it
eventually turned sour when voices were raised by both parties. As aptly
held by both the RTC and the CA, such was the natural consequence of
two parties with conflicting views insisting on their respective beliefs.
Considering, however, that respondent was in possession of the item
purchased from the shop, together with the official receipt of payment
issued by petitioners, the latter cannot insist that no such payment was
made on the basis of a mere speculation. Their claim should have been
proven by substantial evidence in the proper forum.

It is evident from the circumstances of the case that petitioners went

overboard and tried to force respondent to pay the amount they were
demanding. In the guise of asking for assistance, petitioners even sent a
demand letter to respondents employer not only informing it of the incident
but obviously imputing bad acts on the part of
respondent.1wphi1 Petitioners claimed that after receiving the receipt of
payment and the item purchased, respondent "was noted to hurriedly left
(sic) the store." They also accused respondent that she was not completely
being honest when she was asked about the circumstances of payment,
thus:

x x x After receiving the OR and the item, Ms. Gutierrez was noted to
hurriedly left (sic) the store. x x x

When I asked her about to whom she gave the money, she gave out a
blank expression and told me, "I cant remember." Then I asked her how
much money she gave, she answered, "P2,100; 2 pcs 1,000 and 1 pc 100
bill." Then I told her that that would (sic) impossible since we have no such
denomination in our cash fund at that moment. Finally, I asked her if how
much change and if she received change from the cashier, she then
answered, "I dont remember." After asking these simple questions, I am
very certain that she is not completely being honest about this. In fact, we
invited her to come to our boutique to clear these matters but she
vehemently refused saying that shes in a hurry and very busy.37

Clearly, these statements are outrightly accusatory. Petitioners accused

respondent that not only did she fail to pay for the jeans she purchased but
that she deliberately took the same without paying for it and later hurriedly
left the shop to evade payment. These accusations were made despite the
issuance of the receipt of payment and the release of the item purchased.
There was, likewise, no showing that respondent had the intention to evade
payment. Contrary to petitioners claim, respondent was not in a rush in
leaving the shop or the mall. This is evidenced by the fact that the Guess
employees did not have a hard time looking for her when they realized the
supposed non-payment.

It can be inferred from the foregoing that in sending the demand letter to
respondents employer, petitioners intended not only to ask for assistance
in collecting the disputed amount but to tarnish respondents reputation in
the eyes of her employer. To malign respondent without substantial
evidence and despite the latters possession of enough evidence in her
favor, is clearly impermissible. A person should not use his right unjustly or
contrary to honesty and good faith, otherwise, he opens himself to
liability.38

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.39 In this case,
petitioners obviously abused their rights.

Complementing the principle of abuse of rights are the provisions of

Articles 20 and 2 of the Civil Code which read:40

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 or good customs, or public policy shall
compensate the latter for the damage.

In view of the foregoing, respondent is entitled to an award of moral

damages and attorney s fees. Moral damages may be awarded whenever
the defendant s wrongful act or omission is the proximate cause of the
plaintiffs physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation
and similar injury in the cases specified or analogous to those provided in
Article 2219 of the Civil Code.41 Moral damages are not a bonanza. They
are given to ease the defendant s grief and suffering. They should, thus,
reasonably approximate the extent of hurt caused and the gravity of the
wrong done.42 They are awarded not to enrich the complainant but to
enable the latter to obtain means, diversions, or amusements that will serve
to alleviate the moral suffering he has undergone.43 We find that the
amount ofP50,000.00 as moral damages awarded by the CA is reasonable
under the circumstances. Considering that respondent was compelled to
litigate to protect her interest, attorney s fees in the amount of ofP20,000.00
is likewise just and proper.

WHEREFORE, premises considered, the petition is DENIED for lack of

merit. The Court of Appeals Decision dated August 3, 2006 and Resolution
dated November 14, 2006 in CA-G.R. CV No. 80309, are AFFIRMED.

SO ORDERED.
G.R. No. 161921 July 17, 2013

JOYCE V. ARDIENTE, PETITIONER,

vs.
SPOUSES JAVIER AND MA. THERESA PASTORFIDE, CAGAYAN DE
ORO WATER DISTRICT AND GASPAR
GONZALEZ,* JR., RESPONDENTS.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the
Rules of Court seeking to reverse and set aside the Decision1 and
Resolution2 of the Court of Appeals (CA), dated August 28, 2003 and
December 17, 2003, respectively, in CA-G.R. CV No. 73000. The CA
Decision affirmed with modification the August 15, 2001 Decision3 of the
Regional Trial Court (RTC) of Cagayan de Oro City, Branch 24, while the
CA Resolution denied petitioner's Motion for Reconsideration.

The facts, as summarized by the CA, are as follows:

[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 P70,000.00. 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. 237).4

After trial, the RTC rendered judgment holding as follows:

xxxx

In the exercise of their rights and performance of their duties, defendants

did not act with justice, gave plaintiffs their due and observe honesty and
good faith. 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.

They should not have been swayed by the prodding of Joyce V. Ardiente.
They should have investigated first as to the present ownership of the
house. For doing the act because Ardiente told them, they were negligent.
Defendant Joyce Ardiente should have requested before the cutting off of
the water supply, plaintiffs to pay. While she attempted to tell plaintiffs but
she did not have the patience of seeing them. She knew that it was
plaintiffs who had been using the water four (4) years ago and not hers.
She should have been very careful. x x x5

The dispositive portion of the trial court's Decision reads, thus:

WHEREFORE, premises considered, judgment is hereby rendered

ordering defendants [Ardiente, COWD and Gonzalez] to pay jointly and
severally plaintiffs, the following sums:

(a) P200,000.00 for moral damages;

(b) 200,000.00 for exemplary damages; and

(c) 50,000.00 for attorney's fee.

The cross-claim of Cagayan de Oro Water District and Engr. Gaspar

Gonzales is hereby dismissed. The Court is not swayed that the cutting off
of the water supply of plaintiffs was because they were influenced by
defendant Joyce Ardiente. They were negligent too for which they should
be liable.

SO ORDERED.6

Petitioner, COWD and Gonzalez filed an appeal with the CA.

On August 28, 2003, the CA promulgated its assailed Decision disposing

as follows:

IN VIEW OF ALL THE FOREGOING, the appealed decision is AFFIRMED,

with the modification that the awarded damages is reduced to P100,000.00
each for moral and exemplary damages, while attorney's fees is lowered
toP25,000.00. Costs against appellants.
SO ORDERED.7

The CA ruled, with respect to petitioner, that she has a "legal duty to honor
the possession and use of water line by Ma. Theresa Pastorfide pursuant
to their Memorandum of Agreement" and "that when [petitioner] applied for
its disconnection, she acted in bad faith causing prejudice and [injury to]
Ma. Theresa Pastorfide."8

As to COWD and Gonzalez, the CA held that they "failed to give a notice of
disconnection and derelicted in reconnecting the water line despite
payment of the unpaid bills by the [respondent spouses Pastorfide]."9

Petitioner, COWD and Gonzalez filed their respective Motions for

Reconsideration, but these were denied by the CA in its Resolution dated
December 17, 2003.

COWD and Gonzalez filed a petition for review on certiorari with this Court,
which was docketed as G.R. No. 161802. However, based on technical
grounds and on the finding that the CA did not commit any reversible error
in its assailed Decision, the petition was denied via a Resolution10 issued
by this Court on March 24, 2004. COWD and Gonzalez filed a motion for
reconsideration, but the same was denied with finality through this Court's
Resolution11 dated June 28, 2004.

Petitioner, on the other hand, timely filed the instant petition with the
following Assignment of Errors:

7.1 HONORABLE COURT OF APPEALS (ALTHOUGH IT HAS

REDUCED THE LIABILITY INTO HALF) HAS STILL COMMITTED
GRAVE AND SERIOUS ERROR WHEN IT UPHELD THE JOINT
AND SOLIDARY LIABILITY OF PETITIONER JOYCE V. ARDIENTE
WITH CAGAYAN DE ORO WATER DISTRICT (COWD) AND ENGR.
GASPAR D. GONZALES FOR THE LATTER'S FAILURE TO SERVE
NOTICE UPON RESPONDENTS SPOUSES PASTORFIDE PRIOR
TO THE ACTUAL DISCONNECTION DESPITE EVIDENCE
ADDUCED DURING TRIAL THAT EVEN WITHOUT PETITIONER'S
REQUEST, COWD WAS ALREADY SET TO EFFECT
DISCONNECTION OF RESPONDENTS' WATER SUPPLY DUE TO
NON-PAYMENT OF ACCOUNT FOR THREE (3) MONTHS.
 7.2 THE HONORABLE COURT OF APPEALS COMMITTED GRAVE
AND SERIOUS ERROR WHEN IT RULED TOTALLY AGAINST
PETITIONER AND FAILED TO FIND THAT RESPONDENTS ARE
GUILTY OF CONTRIBUTORY NEGLIGENCE WHEN THEY FAILED
TO PAY THEIR WATER BILLS FOR THREE MONTHS AND TO
MOVE FOR THE TRANSFER OF THE COWD ACCOUNT IN THEIR
NAME, WHICH WAS A VIOLATION OF THEIR MEMORANDUM OF
AGREEMENT WITH PETITIONER JOYCE V. ARDIENTE.
RESPONDENTS LIKEWISE DELIBERATELY FAILED TO
EXERCISE DILIGENCE OF A GOOD FATHER OF THE FAMILY TO
MINIMIZE THE DAMAGE UNDER ART. 2203 OF THE NEW CIVIL
CODE.

7.3 THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED

WHEN IT DISREGARDED THE FACT THAT RESPONDENT
SPOUSES PASTORFIDE ARE LIKEWISE BOUND TO OBSERVE
ARTICLE 19 OF THE NEW CIVIL CODE, i.e., IN THE EXERCISE OF
THEIR RIGHTS AND IN THE PERFORMANCE OF THEIR DUTIES
TO ACT WITH JUSTICE, GIVE EVERYONE HIS DUE AND
OBSERVE HONESTY AND GOOD FAITH.

7.4 THE HONORABLE COURT OF APPEALS GRAVELY ERRED

WHEN IT GRANTED AN AWARD OF MORAL AND EXEMPLARY
DAMAGES AND ATTORNEY'S FEES AS AGAINST PETITIONER
ARDIENTE.12

At the outset, the Court noticed that COWD and Gonzalez, who were
petitioner's co-defendants before the RTC and her co-appellants in the CA,
were impleaded as respondents in the instant petition. This cannot be
done. Being her co-parties before the RTC and the CA, petitioner cannot, in
the instant petition for review on certiorari, make COWD and Gonzalez,
adversary parties. It is a grave mistake on the part of petitioner's counsel to
treat COWD and Gonzalez as respondents. There is no basis to do so,
considering that, in the first place, there is no showing that petitioner filed a
cross-claim against COWD and Gonzalez. Under Section 2, Rule 9 of the
Rules of Court, a cross-claim which is not set up shall be barred. Thus, for
failing to set up a cross-claim against COWD and Gonzalez before the
RTC, petitioner is already barred from doing so in the present petition.
More importantly, as shown above, COWD and Gonzalez's petition for
review on certiorari filed with this Court was already denied with finality on
June 28, 2004, making the presently assailed CA Decision final and
executory insofar as COWD and Gonzalez are concerned. Thus, COWD
and Gonzalez are already precluded from participating in the present
petition. They cannot resurrect their lost cause by filing pleadings this time
as respondents but, nonetheless, reiterating the same prayer in their
previous pleadings filed with the RTC and the CA.

As to the merits of the instant petition, the Court likewise noticed that the
main issues raised by petitioner are factual and it is settled that the
resolution of factual issues is the function of lower courts, whose findings
on these matters are received with respect and considered binding by the
Supreme Court subject only to certain exceptions, none of which is present
in this instant petition.13 This is especially true when the findings of the RTC
have been affirmed by the CA as in this case.14

In any case, a perusal of the records at hand would readily show that the
instant petition lacks merit.

Petitioner insists that she should not be held liable for the disconnection of
respondent spouses' water supply, because she had no participation in the
actual disconnection. However, she admitted in the present petition that it
was she who requested COWD to disconnect the Spouses Pastorfide's
water supply. This was confirmed by COWD and Gonzalez in their cross-
claim against petitioner. While it was COWD which actually discontinued
respondent spouses' water supply, it cannot be denied that it was through
the instance of petitioner that the Spouses Pastorfide's water supply was
disconnected in the first place.

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 Pastorfides 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.

In this regard, the Court's ruling in Yuchengco v. The Manila Chronicle

Publishing Corporation17 is instructive, to wit:

xxxx

This provision of law sets standards which must be observed in the

exercise of ones rights as well as in the performance of its duties, to wit: to
act with justice; give everyone his due; and observe honesty and good
faith.

In Globe Mackay Cable and Radio Corporation v. Court of Appeals, it was

elucidated that 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." The Court
said:

One of the more notable innovations of the New Civil Code is the
codification of "some basic principles that are to be observed for the rightful
relationship between human beings and for the stability of the social order."
[REPORT ON THE CODE COMMISSION ON THE PROPOSED CIVIL
CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking to
remedy the defect of the old Code which merely stated the effects of the
law, but failed to draw out its spirit, incorporated certain fundamental
precepts which were "designed to indicate certain norms that spring from
the fountain of good conscience" and which were also meant to serve as
"guides for human conduct [that] should run as golden threads through
society, to the end that law may approach its supreme ideal, which is the
sway and dominance of justice." (Id.) Foremost among these principles is
that pronounced in Article 19 x x x.

xxxx

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.

On the basis of the foregoing, the Court finds no cogent reason to depart
from the ruling of both the RTC and the CA that petitioner, COWD and
Gonzalez are solidarily liable.

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.

As for exemplary damages, Article 2229 provides that exemplary damages

may be imposed by way of example or correction for the public good.
Nonetheless, exemplary damages are imposed not to enrich one party or
impoverish another, but to serve as a deterrent against or as a negative
incentive to curb socially deleterious actions.22 In the instant case, the
Court agrees with the CA in sustaining the award of exemplary damages,
although it reduced the amount granted, considering that respondent
spouses were deprived of their water supply for more than nine (9) months,
and such deprivation would have continued were it not for the relief granted
by the RTC.

With respect to the award of attorney's fees, Article 2208 of the Civil Code
provides, among others, that such fees may be recovered when exemplary
damages are awarded, when the defendant's act or omission has
compelled the plaintiff to litigate with third persons or to incur expenses to
protect his interest, and where the defendant acted in gross and evident
bad faith in refusing to satisfy the plaintiffs plainly valid, just and
demandable claim.
WHEREFORE, instant petition for review on certiorari is DENIED. The
Decision and Resolution of the Court of Appeals, dated August 28, 2003
and December 17, 2003, respectively, in CA-G.R. CV No. 73000 are
AFFIRMED.

SO ORDERED.
G.R. No. 184315 November 28, 2011

ALFONSO T. YUCHENGCO, Petitioner,

vs.
THE MANILA CHRONICLE PUBLISHING CORPORATION, NOEL
CABRERA, GERRY ZARAGOZA, DONNA GATDULA, RODNEY P.
DIOLA, RAUL VALINO, THELMA SAN JUAN and ROBERT COYIUTO,
JR.,Respondents.

R E S O L U T I ON

PERALTA, J.:

For resolution is the Motion for Reconsideration1 dated January 15, 2010,
filed by the respondents, and the Supplemental Motion for
Reconsideration2 of respondent Robert Coyiuto, Jr., dated March 17, 2010,
from the Decision rendered in favor of petitioner Alfonso T. Yuchengco,
dated November 25, 2009.

At the outset, a brief narration of the factual and procedural antecedents

that transpired and led to the filing of the motions is in order.

The present controversy arose when in the last quarter of 1993, several
allegedly defamatory articles against petitioner were published in The
Manila Chronicle by Chronicle Publishing Corporation. Consequently,
petitioner filed a complaint against respondents before the Regional Trial
Court (RTC) of Makati City, Branch 136, docketed as Civil Case No. 94-
1114, under three separate causes of action, namely: (1) for damages due
to libelous publication against Neal H. Cruz, Ernesto Tolentino, Noel
Cabrera, Thelma San Juan, Gerry Zaragoza, Donna Gatdula, Raul Valino,
Rodney P. Diola, all members of the editorial staff and writers of The
Manila Chronicle, and Chronicle Publishing; (2) for damages due to abuse
of right against Robert Coyiuto, Jr. and Chronicle Publishing; and (3) for
attorneys fees and costs against all the respondents.

On November 8, 2002, the trial court rendered a Decision3 in favor of

petitioner.

Aggrieved, respondents sought recourse before the Court of Appeals (CA).

On March 18, 2008, the CA rendered a Decision4 affirming in toto the
decision of the RTC.
Respondents then filed a Motion for Reconsideration5 praying that the CA
reconsider its earlier decision and reverse the decision of the trial court. On
August 28, 2008, the CA rendered an Amended Decision6 reversing the
earlier Decision.

Subsequently, petitioner filed the present recourse before this Court which
puts forth the following assignment of errors:

A. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE

REVERSIBLE ERROR IN RULING THAT THE CASE OF ARTURO
BORJAL, ET AL. V. COURT OF APPEALS, ET AL., CITED BY
RESPONDENTS IN THEIR MOTION FOR RECONSIDERATION,
WARRANTED THE REVERSAL OF THE CA DECISION DATED MARCH
18, 2008.

B. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE

REVERSIBLE ERROR IN RULING THAT THE SUBJECT ARTICLES IN
THE COMPLAINT FALL WITHIN THE CONCEPT OF PRIVILEGED
COMMUNICATION.

C. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE

REVERSIBLE ERROR IN RULING THAT PETITIONER IS A PUBLIC
OFFICIAL OR PUBLIC FIGURE.7

On November 25, 2009, this Court rendered a Decision partially granting

the petition.

Respondents later filed a Motion for Reconsideration dated January 15,

2010, which the Court denied in the Resolution8 dated March 3, 2010.

Meanwhile, respondent Coyiuto, Jr. also filed a Motion for Leave to File
Supplemental Motion for Reconsideration with Attached Supplemental
Motion, both dated March 17, 2010.

On April 21, 2010, this Court issued a Resolution9 resolving to recall the
Resolution dated March 3, 2010; grant Coyiuto, Jr.s motion for leave to file
supplemental motion for reconsideration; note the supplemental motion for
reconsideration; and require petitioner to comment on the motion for
reconsideration and supplemental motion for reconsideration.
On June 22, 2010, petitioner filed his Comment on the Motion for
Reconsideration10 dated January 15, 2010 and Comment on respondent
Coyiuto, Jr.s Supplemental Motion for Reconsideration11 dated 17 March
2010.

In the Motion for Reconsideration, respondents moved for a

reconsideration of the earlier decision on the following grounds:

1. MALICE-IN-FACT HAS NOT BEEN PROVEN.

2. PETITIONER IS A "PUBLIC FIGURE."

3. THE SUBJECT OF THE PUBLICATIONS CONSTITUTES FAIR

COMMENTS, ON PUBLIC ISSUES, ON MATTERS OF PUBLIC
INTEREST AND NATIONAL CONCERN.

4. RESPONDENTS DID NOT ACT IN A RECKLESS MANNER OR

IN COMPLETE DISREGARD OF THE TRUTH OF THE MATTERS
COVERED BY THE SUBJECT PUBLICATIONS.

5. THE PROTECTIVE MANTLE OF QUALIFIED PRIVILEGED

COMMUNICATIONS PROTECTS THE SUBJECT PUBLICATIONS.

6. THERE IS NO LEGAL OR EVIDENTIARY BASIS TO HOLD

DONNA GATDULA, JOINTLY AND SEVERALLY, LIABLE FOR THE
SUBJECT PUBLICATIONS, TOGETHER WITH THE EDITORS AND
STAFF OF THE NEWSPAPER.

7. THERE IS NO EVIDENCE TO HOLD THELMA SAN JUAN

RESPONSIBLE FOR THE SUBJECT PUBLICATIONS.

8. THE "QUICK NOTES" COLUMN OF MR. RAUL VALINO ARE

BASED ON FACTS; THUS, NOT LIBELOUS.

9. ROBERT COYIUTO, JR. IS NOT IMPLEADED WITH THE

EDITORS AND STAFF MEMBERS OF THE MANILA CHRONICLE,
BUT IS SUED IN "HIS PERSONAL CAPACITY" FOR AN "ABUSE
OF RIGHT" AND NO EVIDENCE LINKS HIM TO THE SUBJECT
PUBLICATIONS.
 10. THE AWARDED DAMAGES ARE EXCESSIVE, EQUITABLE
AND UNJUSTIFIED.12

In his Supplemental Motion for Reconsideration, Coyiuto, Jr. raises the

following arguments:

I.

WITH ALL DUE RESPECT, THIS HONORABLE COURT

OBVIOUSLY OVERLOOKED THE FACT THAT IN PETITIONERS
AMENDED COMPLAINT (DATED OCTOBER 17, 1994),
RESPONDENT ROBERT COYIUTO, JR. WAS NOT SUED FOR
DAMAGES ALLEGEDLY DUE TO "LIBELOUS PUBLICATIONS"
(FIRST CAUSE OF ACTION). HE WAS SUED, HOWEVER, IN HIS
PERSONAL CAPACITY FOR "ABUSE OF RIGHT" (SECOND
CAUSE OF ACTION) ALLEGEDLY, AS "CHAIRMAN" OF THE
BOARD, "OFFICER," "PRINCIPAL OWNER," OF THE MANILA
CHRONICLE PUBLISHING CORPORATION UNDER ARTICLES 19
AND 20 OF THE CIVIL CODE. AS SUCH, THE IMPOSITION OF
MORAL (P25 MILLION PESOS) AND EXEMPLARY (P10 MILLION
PESOS) DAMAGES AGAINST RESPONDENT COYIUTO, JR. HAS
NO BASIS IN LAW AND CONTRARY TO THE SPECIFIC
PROVISIONS OF ARTICLES 2219 AND 2229, IN RELATION TO
ARTICLE 2233, RESPECTIVELY, OF THE CIVIL CODE AS WILL BE
ELUCIDATED HEREUNDER.

II.

WITH ALL DUE RESPECT, APART FROM THE SELF-

SERVING/UNILATERAL ALLEGATION IN PARAGRAPH 3.11 OF
THE AMENDED COMPLAINT (ANNEX "C" OF PETITION FOR
REVIEW), NO IOTA OF EVIDENCE WAS ADDUCED ON TRIAL IN
SUPPORT OF THE ALLEGATION THAT RESPONDENT COYIUTO,
JR. WAS "CHAIRMAN", "PRINCIPAL OWNER" AND "OFFICER" OF
RESPONDENT MANILA CHRONICLE PUBLISHING
CORPORATION. SEC DOCUMENTS SHOW THE CONTRARY, AS
WILL BE DISCUSSED HEREUNDER. SO HOW COULD
RESPONDENT COYIUTO, JR. BE IMPLEADED TO HAVE
"ABUSED HIS RIGHT AS A NON-CHAIRMAN, NON-
STOCKHOLDER, NON-OFFICER OF RESPONDENT MANILA
 CHRONICLE PUBLISHING CORPORATION? IT IS FUNDAMENTAL
THAT THE BURDEN OF PROOF RESTS ON THE PARTY
ASSERTING A FACT OR ESTABLISHING A CLAIM (RULE 131,
REVISED RULES OF COURT).13

From the foregoing, it is apparent that the motion for reconsideration

generally restates and reiterates the arguments, which were previously
advanced by respondents and does not present any substantial reasons,
which were not formerly invoked and passed upon by the Court.

However, from the supplemental motion for reconsideration, it is apparent

that Coyiuto, Jr. raises a new matter which has not been raised in the
proceedings below. This notwithstanding, basic equity dictates that
Coyiuto, Jr. should be given all the opportunity to ventilate his arguments in
the present action, but more importantly, in order to write finis to the
present controversy. It should be noted that the Resolution denying the
Motion for Reconsideration was later recalled by this Court in the
Resolution dated March 3, 2010, and therein, petitioner was given the
opportunity to refute Coyiuto, Jr.s arguments by filing his comment on the
motion for reconsideration and the supplemental motion for
reconsideration, which petitioner complied with.

From these Comments and contrary to Coyiuto, Jr.s contention, it was

substantially established that he was the Chairman of Manila Chronicle
Publishing Corporation when the subject articles were published. Coyiuto,
Jr. even admitted this fact in his Reply and Comment on Request for
Admission,14 to wit:

4. Defendant Robert Coyiuto Jr. ADMITS that he was the Chairman of the
Board but not President of the Manila Chronicle during the period
Novemeber (sic) to December 1993.

5. Defendant Robert Coyiuto Jr. DENIES paragraph 11. He has already

conveyed such denial to plaintiff in the course of the pre-trial. It was The
Manila Chronicle, a newspaper of general circulation, of which he is,
admittedly Chairman of the Board, that published the items marked as
plaintiffs Exhibits A, B, C, D, E, F, and G.

xxxx
12. This case, based on plaintiffs Amended Complaint, is limited to the
publications in The Manila Chronicle marked plaintiffs Exhibits "A" to "G",
consecutively, published by defendant Manila Chronicle. Thus, only the
question of whether Mr. Robert Coyiuto, Jr. was Chairman and President of
defendant Manila Chronicle, during these publications and whether he
caused these publications, among all of plaintiffs queries, are relevant and
material to this case. And defendant Robert Coyiuto, Jr. has answered that:
"Yes", he was Chairman of the Board. "No", he was never President of The
Manila Chronicle. "No", he did not cause the publications in The Manila
Chronicle: it was the Manila Chronicle that published the news items
adverted to.15

Both the trial court and the CA affirmed this fact. We reiterate that factual
findings of the trial court, when adopted and confirmed by the CA, are
binding and conclusive on this Court and will generally not be reviewed on
appeal. While this Court has recognized several exceptions16 to this rule,
none of these exceptions exists in the present case. Accordingly, this Court
finds no reason to depart from the findings of fact of the trial court and the
CA.

More importantly and contrary again to Coyiuto, Jr.s contention, the cause
of action of petitioner based on "abuse of rights," or Article 19, in relation to
Article 20 of the Civil Code, warrants the award of damages.

The principle of abuse of rights as enshrined 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 everyone his due, and
observe honesty and good faith.

This provision of law sets standards which must be observed in the

exercise of ones rights as well as in the performance of its duties, to wit: to
act with justice; give everyone his due; and observe honesty and good
faith.17

In Globe Mackay Cable and Radio Corporation v. Court of Appeals,18 it was

elucidated that 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." The Court
said:

One of the more notable innovations of the New Civil Code is the
codification of "some basic principles that are to be observed for the rightful
relationship between human beings and for the stability of the social order."
[REPORT ON THE CODE COMMISSION ON THE PROPOSED CIVIL
CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking to
remedy the defect of the old Code which merely stated the effects of the
law, but failed to draw out its spirit, incorporated certain fundamental
precepts which were "designed to indicate certain norms that spring from
the fountain of good conscience" and which were also meant to serve as
"guides for human conduct [that] should run as golden threads through
society, to the end that law may approach its supreme ideal, which is the
sway and dominance of justice." (Id.) Foremost among these principles is
that pronounced in Article 19 which 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.

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.19

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.20 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. In the present case, it
was found that Coyiuto, Jr. indeed abused his rights as Chairman of The
Manila Chronicle, which led to the publication of the libelous articles in the
said newspaper, thus, entitling petitioner to damages under Article 19, in
relation to Article 20.

Consequently, the trial court and the CA correctly awarded moral damages
to petitioner. Such damages may be awarded when the transgression is the
cause of petitioners anguish.21 Further, converse to Coyiuto, Jr.s
argument, although petitioner is claiming damages for violation of Articles
19 and 20 of the Civil Code, still such violations directly resulted in the
publication of the libelous articles in the newspaper, which, by analogy, is
one of the ground for the recovery of moral damages under (7) of Article
2219.22

However, despite the foregoing, the damages awarded to petitioner appear

to be too excessive and warrants a second hard look by the Court.

While there is no hard-and-fast rule in determining what would be a fair and

reasonable amount of moral damages, the same should not be palpably
and scandalously excessive. Moral damages are not intended to impose a
penalty to the wrongdoer, neither to enrich the claimant at the expense of
the defendant.23

Even petitioner, in his Comment24 dated June 21, 2010, agree that moral
damages "are not awarded in order to punish the respondents or to make
the petitioner any richer than he already is, but to enable the latter to find
some cure for the moral anguish and distress he has undergone by reason
of the defamatory and damaging articles which the respondents wrote and
published."25 Further, petitioner cites as sufficient basis for the award of
damages the plain reason that he had to "go through the ordeal of
defending himself everytime someone approached him to ask whether or
not the statements in the defamatory article are true."

In Philippine Journalists, Inc. (Peoples Journal) v.

Thoenen,26 citing Guevarra v. Almario,27 We noted that the damages in a
libel case must depend upon the facts of the particular case and the sound
discretion of the court, although appellate courts were "more likely to
reduce damages for libel than to increase them." So it must be in this case.

Moral damages are not a bonanza. They are given to ease the defendants
grief and suffering. Moral damages should be reasonably approximate to
the extent of the hurt caused and the gravity of the wrong done.28 The
Court, therefore, finds the award of moral damages in the first and second
cause of action in the amount ofP2,000,000.00 and P25,000,000.00,
respectively, to be too excessive and holds that an award of P1,000,000.00
and P10,000,000.00, respectively, as moral damages are more reasonable.

As for exemplary damages, Article 2229 provides that exemplary damages

may be imposed by way of example or correction for the public good.
Nonetheless, exemplary damages are imposed not to enrich one party or
impoverish another, but to serve as a deterrent against or as a negative
incentive to curb socially deleterious actions.29 On this basis, the award of
exemplary damages in the first and second cause of action in the amount
ofP500,000.00 and P10,000,000.00, respectively, is reduced
to P200,000.00 and P1,000,000.00, respectively.

On the matter of attorneys fees and costs of suit, Article 2208 of the same
Code provides, among others, that attorneys fees and expenses of
litigation may be recovered in cases when exemplary damages are
awarded and where the court deems it just and equitable that attorneys
fees and expenses of litigation should be recovered. In any event, however,
such award must be reasonable, just and equitable.30 Thus, the award of
attorneys fees and costs is reduced from P1,000,000.00 to P200,000.00.

One final note, the case against respondent was one for damages based
on the publication of libelous articles against petitioner; hence, only civil in
nature. The rule is that a party who has the burden of proof in a civil case
must establish his cause of action by a preponderance of evidence. Thus,
respondents liability was proven only on the basis of preponderance of
evidence, which is quite different from a criminal case for libel where proof
beyond reasonable doubt must be established.

Corollarilly, under Article 360 of the Revised Penal Code, the person who
"caused the publication" of a defamatory article shall be responsible for the
same. Hence, Coyiuto, Jr. should have been held jointly and solidarily liable
with the other respondents in the first cause of action under this article and
not on the basis of violation of the principle of abuse of rights founded on
Articles 19 and 20 of the Civil Code. Because of the exclusion of Coyiuto,
Jr. in the first cause of action for libel, he cannot be held solidarily liable
with the other respondents in the first cause of action. Nonetheless, since
damage to petitioner was in fact established warranting the award of moral
and exemplary damages, the same could only be awarded based on
petitioners second cause of action impleading Coyiuto, Jr. for violation of
the principle of abuse of right.

It did not escape the attention of the Court that in filing two different causes
of action based on the same published articles, petitioner intended the
liability of Coyiuto, Jr. to be different from the other respondents. It can be
inferred that if Coyiuto, Jr. was impleaded in the first cause of action for
recovery of the civil liability in libel, petitioner could not have prayed for
higher damages, considering that the other respondents, who are jointly
and severally liable with one another, are not in the same financial standing
as Coyiuto, Jr. Petitioner, in effect, had spared the other respondents from
paying such steep amount of damages, while at the same time prayed that
Coyiuto, Jr. pay millions of pesos by way of moral and exemplary damages
in the second cause of action.

WHEREFORE, the Motion for Reconsideration and Supplemental Motion

for Reconsideration are PARTIALLY GRANTED.1wphi1 The Decision of
this Court, dated November 25, 2009, is MODIFIED to read as follows:

WHEREFORE, in view of the foregoing, judgment is hereby rendered as

follows:

1. On the First Cause of Action, ordering defendants Chronicle

Publishing, Neil H. Cruz, Ernesto Tolentino, Noel Cabrera, Thelma
San Juan, Gerry Zaragoza, Donna Gatdula, Raul Valino and Rodney
Diola, to pay plaintiff Yuchengco, jointly and severally:
 a. the amount of One Million Pesos (P1,000,000.00) as moral
damages; and

b. the amount of Two Hundred Thousand Pesos (P200,000.00)

as exemplary damages;

2. On the Second Cause of Action, ordering defendants Robert

Coyiuto, Jr. and Chronicle Publishing to pay plaintiff Yuchengco,
jointly and severally:

a. the amount of Ten Million Pesos (P10,000,000.00) as moral

damages; and

b. the amount of One Million Pesos (P1,000,000.00) as

exemplary damages;

3. On the Third Cause of Action, ordering all defendants to pay

plaintiff Yuchengco, jointly and severally, the amount of Two Hundred
Thousand Pesos (P200,000.00) as attorneys fee and legal costs.

Costs against respondents.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice
G.R. No. 149241 August 24, 2009

DART PHILIPPINES, INC., Petitioner,

vs.
SPOUSES FRANCISCO and ERLINDA CALOGCOG, Respondents.

DECISION

NACHURA, J.:

Petitioner assails in this Rule 45 petition the February 28, 2001

Decision1 and the July 30, 2001 Resolution2 of the Court of Appeals (CA) in
CA-G.R. CV. No. 52474. The facts and proceedings that led to the filing of
the instant petition are pertinently narrated below.

Engaged in the business of manufacturing or importing into the Philippines

Tupperware products and marketing the same under a direct selling
distribution system,3 petitioner entered into a Distributorship Agreement
with respondents on March 3, 1986.4 The agreement was to expire on
March 31, 1987 but was subject to an automatic renewal clause for two
one-year terms.5 On April 1, 1991, the parties again executed another
Distributorship Agreement6 which was to expire on March 31, 1992 but
renewable on a yearly basis upon terms and conditions mutually agreed
upon in writing by the parties.7

Following the expiration of the agreement, petitioner, on April 30, 1992,

informed respondents that, due to the latters several violations thereof, it
would no longer renew the same.8 Respondents then made a handwritten
promise for them to observe and comply with the terms and conditions
thereof.9 This convinced petitioner to extend, on July 24, 1992, the period
of the distributorship up to September 30, 1992.10

In the meantime, on July 2, 1992, petitioner subjected respondents

account to an audit review.11 In September 1992, petitioner informed
respondents that it had engaged the services of an auditing firm and that it
was again subjecting respondents account to an audit review.12 Objecting
to the second audit,13 respondents disallowed the auditing firm from
inspecting their books and records. As a result, petitioner only accepted
respondents purchase orders on pre-paid basis.141avvphi1
On September 29, 1992, a day before the expiry of the Distributorship
Agreement, respondents filed before the Regional Trial Court (RTC) of
Pasig City a Complaint for damages with application for a writ of injunction
and/or restraining order docketed as Civil Case No. 62444.15 They alleged
that petitioner abused its right when it caused the audit of their account and
when it only honored their orders if they were pre-paid, thereby causing
damages to them of around P1.3M.16

On November 12, 1992, the trial court issued a writ of preliminary injunction
and directed petitioner to observe the terms and conditions of the
Distributorship Agreement and to honor, deliver and fulfill its obligations in
effecting deliveries of Tupperware products to respondents.17 In the
subsequent certiorari proceedings before the appellate court docketed as
CA-G.R. SP No. 29560, the CA ruled that the Distributorship Agreement
already expired; thus, the trial court committed grave abuse of discretion in
granting the writ of preliminary injunction which had the effect of enforcing a
contract that had long expired.18

Respondents then moved before the trial court, on June 14, 1993, for the
admission of their Supplemental Complaint,19 in which they alleged that
petitioner refused to award benefits to the members of respondents sales
force and coerced the said members to transfer to another distributor; that
petitioner refused to comply with Sections 8 and 920 of the Distributorship
Agreement by not paying respondents the value of the products on hand
and in their custody, and by not effecting the transfer of their good will to
the absorbing distributor; and that petitioner, by its actions which resulted in
the loss of respondents sales force, had made inutile respondents
investment in their building. Respondents thus prayed for additional actual
damages, specifically P4,495,000.00 for the good will, P1M for the products
on hand, and P3M for the cost of the building.

Expectedly, petitioner opposed the admission of the supplemental

complaint.21 Amid the protestations of petitioner, the trial court admitted the
supplemental complaint22 and ordered the former to file its supplemental
answer.23

After trial on the merits, the RTC rendered its Decision24 on November 27,
1995. It ruled, among others, that the second audit was unreasonable and
was only made to harass respondents; that the shift from credit to pre-paid
basis in the purchase orders of respondents was another act of
harassment; that petitioner had no valid reason to refuse the renewal of the
distributorship agreement; and that petitioner abused its rights under the
said agreement. It then concluded that because of petitioners unjustified
acts, respondents suffered damages, among which were the salaries paid
to the internal auditors during the first audit, the good will money, the value
of the warehouse, moral and exemplary damages, and attorneys fees. The
dispositive portion of the RTC decision reads:

WHEREFORE, judgment is hereby rendered dismissing for lack of merit

[respondents] claims for payment of items subject of credit memoranda,
and for products alleged to be on hand at the termination of the
[distributorship] agreement. On [respondents] other claims, judgment is
hereby rendered, as follows:

1. Ordering the [petitioner] to pay [respondents] the amount

of P23,500.17 representing the salaries of internal auditors engaged
by the [petitioner] to conduct an audit on [respondents] financial
records;

2. Ordering the [petitioner] to pay [respondents] the sum

of P4,495,000.00 representing "goodwill" money which [respondents]
failed to realize;

3. Ordering the [petitioner] to pay [respondents] the sum

of P1,000,000.00 as reasonable compensation to the [respondents]
for acquiring a lot and constructing thereon a structure to serve as
storage, assembly place and warehouse for [petitioners] products;

4. Ordering the [petitioner] to pay [respondents] the sum

of P500,000.00 as moral damages and anotherP500,000.00 as and
by way of exemplary damages; and

5. Ordering the [petitioner] to pay [respondents] the sum

of P100,000.00 as attorneys fees, plus P2,000.00 per Court
appearance.

[Petitioners] counterclaims are hereby dismissed for lack of merit.

Costs against the [petitioner].

SO ORDERED.25
Aggrieved, petitioner timely interposed its appeal. In the assailed February
28, 2001 Decision,26 the appellate court affirmed with modification the
ruling of the trial court and disposed of the appeal as follows:

WHEREFORE, in view of the foregoing, the assailed decision of the court a

quo is hereby AFFIRMED WITH MODIFICATION, the award for moral
damages is hereby REDUCED to P100,000.00 and the award for
exemplary damages is hereby REDUCED to P50,000.00. The award
of P1,000,000.00 as reasonable compensation for the acquisition of the lot
and construction of the building is hereby DELETED.

SO ORDERED.27

Since its motion for reconsideration was subsequently denied by the

appellate court in the further assailed July 30, 2001 Resolution, 28 petitioner
instituted the instant petition for review on certiorari, raising the following
grounds:

1. The Court of Appeals committed an error in affirming the decision

of the trial court admitting the supplemental complaint thereby taking
cognizance of the issues raised and rendering judgment thereon.

2. The Court of Appeals committed an error in affirming the decision

of the trial court holding petitioner liable to pay respondents the
"goodwill money" they allegedly failed to realize.

3. While petitioner lauds the Court of Appeals decision deleting the

trial courts award of P1,000,000.00 by way of compensation for the
alleged acquisition of the lot and construction of the building, and
appreciates the reduction of the trial courts awards on the alleged
moral damages and exemplary damages, the Court of Appeals still
erred in not totally dismissing respondents claims for damages
including attorneys fees.

4. The Court of Appeals committed an error in not finding for the

petitioner and in not awarding damages in favor of petitioner by way
of reasonable attorneys fees.29

The primordial issue to be resolved by the Court in the instant case is

whether petitioner abused its rights under the distributorship agreement
when it conducted an audit of respondents account, when it accepted
respondents purchase orders only if they were on a pre-paid basis, and
when it refused to renew the said distributorship agreement.

Preliminarily, the Court admits that, ordinarily, it will not review the findings
of fact made by the appellate court. However, jurisprudence lays down
several exceptions, among which are the following which obtain in this
case: when the judgment is based on a misapprehension of facts and when
the appellate court manifestly overlooked certain relevant facts not disputed
by the parties, which, if properly considered, could justify a different
conclusion.30 Thus, the Court finds it imperative to evaluate, as in fact it had
reviewed, the records of the case, including the evidence adduced during
the trial, in relation to the arguments of the parties and the applicable law
and jurisprudence.

Under Article 19 of the Civil Code, 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. To find the existence of
abuse of right under the said article, the following elements must be
present: (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.31 Accordingly, the
exercise of a right shall always be in accordance with the purpose for which
it has been established, and must not be excessive or unduly harshthere
must be no intention to injure another.32 A person will be protected only
when he acts in the legitimate exercise of his right, that is, when he acts
with prudence and in good faith, not when he acts with negligence or
abuse.33

Malice or bad faith is at the core of Article 19 of the Civil Code. Good faith
refers to the state of 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. It is presumed.
Thus, he who alleges bad faith has the duty to prove the same.34 Bad faith
does not simply connote bad judgment or simple negligence; it involves a
dishonest purpose or some moral obloquy 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. 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.35
At the crux of this controversy, therefore, is whether petitioner acted in bad
faith or intended to injure respondents when it caused the auditing of the
latters account, when it implemented the pre-paid basis in treating the
latters orders, and when it refused to renew the distributorship agreement.

The Court rules in the negative. We note that in the written correspondence
of petitioner to respondents on April 30, 1992 informing the latter of the
non-renewal of the distributorship agreement, petitioner already pointed out
respondents violations of the agreement. The letter pertinently reads:

We found that you have committed the following acts which are contrary to
provisions of Section 2(f) of our Agreement:

(a) You submitted several "Vanguard Reports" containing false

statements of the sales performance of your units. A comparison of
the reports you submitted to our office with that actually reported by
your managers show that the sales of your units are actually much
lower than that reported to Tupperware (Exhibits "G," "H," "I," "J," "L,"
"O," "P," "Q," and "R.")

(b) The unauthorized alteration of the mechanics of "Nans

Challenge," which is a Tupperware company sponsored promotion
campaign. The documentary evidence furnished us, Exhibit "E,"
shows that the amount of target party averages were increased by
you.

(c) Charging the managers for accounts of their dealers and for
overdue kits (Exhibits "C" and "D").36

The correspondence prompted respondents to make a handwritten promise

that they would observe and comply with the terms and conditions of the
distributorship agreement.37 This promise notwithstanding, petitioner was
not barred from exercising its right in the agreement to conduct an audit
review of respondents account. Thus, an audit was made in July 1992. In
September 1992, petitioner informed respondents that it was causing the
conduct of a second audit review. And as explained in petitioners
September 11, 1992 correspondence to respondents, the second audit was
intended to cover the period not subject of the initial audit (the period prior
to January 1 to June 30, 1992, and the period from July 1, 1992 to
September 1992).38 Because respondents objected to the second audit,
petitioner exercised its option under the agreement to vary the manner in
which orders are processedthis time, instead of the usual credit
arrangement, petitioner only admitted respondents purchase orders on
pre-paid basis. It may be noted that petitioner still processed respondents
orders and that the pre-paid basis was only implemented during the last
month of the agreement, in September 1992. With the expiry of the
distributorship agreement on September 30, 1992, petitioner no longer
acceded to a renewal of the same.

From these facts, we find that bad faith cannot be attributed to the acts of
petitioner. Petitioners exercise of its rights under the agreement to conduct
an audit, to vary the manner of processing purchase orders, and to refuse
the renewal of the agreement was supported by legitimate reasons,
principally, to protect its own business. The exercise of its rights was not
impelled by any evil motive designed, whimsically and capriciously, to
injure or prejudice respondents. The rights exercised were all in accord with
the terms and conditions of the distributorship agreement, which has the
force of law between them.39 Clearly, petitioner could not be said to have
committed an abuse of its rights. It may not be amiss to state at this
juncture that a complaint based on Article 19 of the Civil Code must
necessarily fail if it has nothing to support it but innuendos and
conjectures.40

Given that petitioner has not abused its rights, it should not be held liable
for any of the damages sustained by respondents. The law affords no
remedy for damages resulting from an act which does not amount to a legal
wrong. Situations like this have been appropriately denominated damnum
absque injuria.41 To this end, the Court reverses and sets aside the trial
and appellate courts rulings. Nevertheless, the Court sustains the trial
courts order for the reimbursement by petitioner to respondents
of P23,500.17, with 12% interest per annum, computed from the filing of
the original complaint up to actual payment, representing the salaries of the
internal auditors, because, first, the award was never questioned by
petitioner, and second, petitioner was the one which engaged the services
of the auditors.

As regards petitioners claim for attorneys fees, the Court cannot grant the
same. We emphasized in prior cases that no premium should be placed on
the right to litigate. Attorneys fees are not to be awarded every time a party
wins a suit. Even when a claimant is compelled to litigate or to incur
expenses to protect his rights, still attorneys fees may not be awarded
where there is no sufficient showing of bad faith in a partys persistence in
a case other than an erroneous conviction of the righteousness of his
cause.42

With the above disquisition, the Court finds no compelling reason to resolve
the other issues raised in the petition.

WHEREFORE, premises considered, the petition is GRANTED. The

decisions of the Regional Trial Court of Pasig City in Civil Case No. 62444
and of the Court of Appeals in CA-G.R. CV. No. 52474 are REVERSED
and SET ASIDE. Petitioner is ORDERED to pay respondents P23,500.17
with interest at 12% per annum computed from the date of filing of the
original complaint.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice