Custodio vs.

Court of Appeals
253 SCRA 483, February 9, 1996
Regalado, J.:

FACTS: Respondents owned a parcel of land wherein a two-door apartment was erected. Said property
was surrounded by other immovables owned by petitioners, spouses Custodio and spouses Santos.
As an access to P. Burgos Street from the subject property, there are two possible passageways.

The first passageway is approximately one meter wide and is about 20 meters distant from Mabasa’s
residence to P. Burgos Street. Such path is passing in between the previously mentioned row of
houses. The second passageway is about 3 meters in width and length from plaintiff Mabasa’s
residence to P. Burgos Street; it is about 26 meters. In passing thru said passageway, a less than a
meter wide path through the septic tank and with 5-6 meters in length, has to be traversed. Petitioners
constructed an adobe fence in the first passageway making it narrower in width.

Said adobe fence was first constructed by defendants Santoses along their property which is also along
the first passageway. Defendant Morato constructed her adobe fence and even extended said fence in
such a way that the entire passageway was enclosed. As a result, the tenants left the apartment
because there was no longer a permanent access to the public street. Respondents then filed an action
for the grant of an easement of right of way. The trial court ordered the petitioner to give respondents
a permanent access to the public street and that in turn, the respondent will pay a sum of Php 8,000.00
to the petitioner as an indemnity for the permanent use of the passageway. On appeal by the
respondent to the CA, the decision of the trial court was affirmed, such that a right of way and an award
of actual, moral and exemplary damages were given to the respondents. Hence, this petition.

ISSUE: Whether or not the award of damages is proper?

HELD: No. To warrant the recovery of damages, there must be both a right of action for a legal wrong
inflicted by the defendant, and damage resulting to the plaintiff therefrom. Wrong without damage, or
damage without wrong, does not constitute a cause of action, since damages are merely part of the
remedy allowed for the injury caused by a breach or wrong.

There is a material distinction between damages and injury. Injury is the illegal invasion of a legal right;
damage is the loss, hurt, or harm which results from the injury, and damages are the recompense or
compensation awarded for the damage suffered. Thus, there can be damage without injury in those
instances in which the loss or harm was not the result of a violation of a legal duty. These situations
are often called damnum absque injuria. In order that a plaintiff may maintain an action for the injuries
of which he complains, he must establish that such injuries resulted from a breach of duty which the
defendant owed to the plaintiff. There must be a concurrence of injury to the plaintiff and legal
responsibility by the person causing it.

In the instant case, although there was damage, there was no legal injury. Contrary to the claim of
respondents, petitioners could not be said to have violated the principle of abuse of right. In order that
the principle of abuse of right provided in Article 21 of the Civil Code can be applied, it is essential that
the following requisites concur: (1) The defendant should have acted in a manner that is contrary to
morals, good customs or public policy; (2) The acts should be willful; and (3) There was damage or
injury to the plaintiff.

The act of petitioners in constructing a fence within their lot is a valid exercise of their right as owners,
hence not contrary to morals, good customs or public policy. The law recognizes in the owner the right
to enjoy and dispose of a thing, without other limitations than those established by law. It is within the
right of petitioners, as owners, to enclose and fence their property. Article 430 of the Civil Code provides
that “(e)very owner may enclose or fence his land or tenements by means of walls, ditches, live or dead
hedges, or by any other means without detriment to servitudes constituted thereon.”

At the time of the construction of the fence, the lot was not subject to any servitudes. There was no
easement of way existing in favor of private respondents, either by law or by contract. The fact that
respondents had no existing right over the said passageway is confirmed by the very decision of the
trial court granting a compulsory right of way in their favor after payment of just compensation. It was
only that decision which gave private respondents the right to use the said passageway after payment
of the compensation and imposed a corresponding duty on petitioners not to interfere in the exercise
of said right. The proper exercise of a lawful right cannot constitute a legal wrong for which an action
will lie, although the act may result in damage to another, for no legal right has been invaded. One may
use any lawful means to accomplish a lawful purpose and though the means adopted may cause
damage to another, no cause of action arises in the latter’s favor. An injury or damage occasioned
thereby is damnum absque injuria. The courts can give no redress for hardship to an individual resulting
from action reasonably calculated to achieve a lawful means.
Valley Golf & Country Club vs. Vda de Caram
542 SCRA 218, April 16, 2009
Tinga, J.:

FACTS: Petitioner is a duly constituted non-stock, non-profit corporation which operates a golf course.
The members and their guests are entitled to play golf on the said course and avail of the facilities and
privilege. The shareholders are likewise assessed monthly membership dues.

Cong. Fermin Z. Caram, Jr., respondent’s husband, subscribed and paid in full 1 Golf Share of the
petitioner and was subsequently issued with a stock certificate which indicated a par value of
P9,000.00. It was alleged by the petitioner that Caram stopped paying his monthly dues and that it has
sent 5 letters to Caram concerning his delinquent account. The Golf Share was subsequently sold at
public auction for P25,000.00 after the BOD had authorized the sale and the Notice of Auction Sale
was published in the Philippine Daily Inquirer.

Caram thereafter died and his wife initiated intestate proceedings before the RTC of IloIlo. Unaware of
the pending controversy over the Golf Share, the Caram family and the RTC included the Golf Share
as part of Caram’s estate. The RTC approved a project of partition of Caram’s estate and the Golf
Share was adjudicated to the wife, who paid the corresponding estate tax due, including that on the
golf Share.

It was only through a letter that the heirs of Caram learned of the sale of the Golf Share following their
inquiry with Valley Golf about the Golf Share. After a series of correspondence, the Caram heirs were
subsequently informed in a letter that they were entitled to the refund of P11,066.52 out of the proceeds
of the sale of the Golf Share, which amount had been in the custody of the petitioner.

Caram’s wife filed an action for reconveyance of the Golf Share with damages before the SEC against
Valley Golf. The SEC Hearing Officer rendered a decision in favor of the wife, ordering Valley Golf to
convey ownership of the Golf Share, or in the alternative. to issue one fully paid share of stock of Valley
Golf of the same class as the Golf Share to the wife. Damages totaling P90,000.00 were also awarded
to the wife.

The SEC hearing officer ruled that under Section 67, paragraph 2 of the Corporation Code, a share
stock could only be deemed delinquent and sold in an extrajudicial sale at public auction only upon the
failure of the stockholder to pay the unpaid subscription or balance for the share. However, the section
could not have applied in Caram’s case since he had fully paid for the Golf Share and he had been
assessed not for the share itself but for his delinquent club dues. Proceeding from the foregoing
premises, the SEC hearing officer concluded that the auction sale had no basis in law and was thus a
nullity. The SEC en banc and the Court of Appeals affirmed the hearing officer’s decision, and so the
petitioner appealed before SC.

ISSUE: Whether or not a non-stock corporation seize and dispose of the membership share of a fully-
paid member on account of its unpaid debts to the corporation when it is authorized to do so under the
corporate by-laws but not by the Articles of Incorporation?
HELD: The Supreme Court ruled that there is a specific provision under Title XI on Non-Stock
Corporations of the Corporation Code dealing with the termination of membership in a non-stock
corporation such as Valley Golf.

Section 91 of the Corporation Code provides:

SEC. 91. Termination of membership.—Membership shall be terminated in the manner and for the
causes provided in the articles of incorporation or the by-laws. Termination of membership shall have
the effect of extinguishing all rights of a member in the corporation or in its property, unless otherwise
provided in the articles of incorporation or the by-laws.

A share can only be deemed delinquent and sold at public auction only upon the failure of the
stockholder to pay the unpaid subscription. Delinquency in monthly club dues was merely an ordinary
debt enforceable by judicial action in a civil case. A provision creating a lien upon shares of stock for
unpaid debts, liabilities, or assessments of stockholders to the corporation, should be embodied in the
Articles of Incorporation, and not merely in the by-laws. Moreover, the by-laws of petitioner should have
provided formal notice and hearing procedure before a member’s share may be seized and sold.

The procedure for stock corporation’s recourse on unpaid subscription is not applicable in member’s
shares in a non-stock corporation.

SC proceeded to declare the sale as invalid. SC found that Valley Golf acted in bad faith when it sent
the final notice to Caram under the pretense they believed him to be still alive, when in fact they had
very well known that he had already died. The Court stated:
Whatever the reason Caram was unable to respond to the earlier notices, the fact remains that at the
time of the final notice, Valley Golf knew that Caram, having died and gone, would not be able to settle
the obligation himself, yet they persisted in sending him notice to provide a color of regularity to the
resulting sale.
That reason alone, evocative as it is of the absence of substantial justice in the sale of the Golf Share,
is sufficient to nullify the sale and sustain the rulings of the SEC and the Court of Appeals.

Moreover, the utter and appalling bad faith exhibited by Valley Golf in sending out the final notice
to Caram on the deliberate pretense that he was still alive could bring into operation Articles 19, 20 and
21 under the Chapter on Human Relations of the Civil Code. These provisions enunciate a general
obligation under law for every person to act fairly and in good faith towards one another. Non-stock
corporations and its officers are not exempt from that obligation.
Meralco vs. Spouses Ramos
783 SCRA 597, February 10, 2016
Brion, J.:

FACTS: MERALCO entered into a contract of service with the respondents agreeing to supply the latter
with electric power in their residence. On November 5, 1999, MERALCO’s service inspector inspected
the respondents’ electrical facilities and found an outside connection attached to their electric meter.
Due to the discovery of the illegal connection, the service inspector disconnected the respondents’
electric services on the same day. The inspection and disconnection were done without the knowledge
of the respondents as they were not at home and their house was closed at the time. The respondents
denied that they had been using an illegal electrical connection and they requested MERALCO to
immediately reconnect their electric services. Despite the respondents’ request, MERALCO instead
demanded from them the payment of P179,231.70 as differential billing. The respondents filed a
complaint for breach of contract with preliminary mandatory injunction and damages against
MERALCO. They prayed for the immediate reconnection of their electric service and the award of
actual, moral, and exemplary damages, attorney’s fees, and litigation expenses. The RTC ordered
MERALCO to reconnect the respondents’ electric service and awarded damages. The CA denied the
appeal for lack of merit and affirmed the RTC’s order of reconnection and award for payment of
damages. The appellate court held that MERALCO failed to comply not only with its own contract of
service, but also with the requirements under Sections 4 and 6 of Republic Act No. 7832, or the Anti-
Electricity and Electric Transmission Lines/Materials Pilferage Act of 1994(R.A. 7832).

ISSUE: Whether or not MERALCO is liable for damages.

HELD: Yes. MERALCO is in bad faith when it failed to comply with the strict requirements of RA 7832,
hence liable for damages.

We observe that MERALCO also failed to follow its own procedure for the discontinuance of service
under its contract of service with the respondents. We quote in this regard the relevant terms of service:

DISCONTINUANCE OF SERVICE:
The Company reserves the right to discontinue service in case the customer is in arrears in the
payment of bills in those cases where the meter stopped or failed to register the correct amount
of energy consumed, or failure to comply with any of these terms and conditions or in case of or
to prevent fraud upon the Company. Before disconnection is made in case of or to prevent fraud,
the Company may adjust the bill of said customer accordingly and if the adjusted bill is not paid,
the Company may disconnect the same. In case of disconnection, the provisions of Revised
Order No. 1 of the former Public Service Commission (now ERC) shall be observed. Any such
suspension of service shall not terminate the contract between the Company and the customer.

There is nothing in its contract of service that gives MERALCO the authority to immediately disconnect
a customer’s electric connection. MERALCO’s contractual right to disconnect electric service arises
only after the customer has been notified of his adjusted bill and has been afforded the opportunity to
pay the differential billing. In this case, the disconnection of the respondents’ electric service happened
on November 5, 1999, while the demand for the payment of differential billing was made through a
letter dated December 4, 1999. Thus, we hold that MERALCO breached its contract of service with the
respondents as it disconnected the latter’s electric service before they were ever notified of the
differential billing.

With MERALCO in bad faith for its failure to follow the strict requirements under R.A. 7832 in the
disconnection of the respondents’ electric service, we agree with the CA that the award of damages is
in order.
Cebu Country Club vs. Elizagaque
542 SCRA 65, January 18, 2008
Sandoval-Gutierrez, J.:

FACTS: Respondent filed with CCCI an application for proprietary membership. As the price of a
proprietary share was around the P5 million range, Benito Unchuan, then president of CCCI, offered to
sell respondent a share for only P3.5 million. Respondent, however, purchased the share of a certain
Dr. Butalid for only P3 million. Consequently, on September 6, 1996, CCCI issued Proprietary
Ownership Certificate No. 1446 to respondent.

During the meetings dated April 4, 1997 and May 30, 1997 of the CCCI Board of Directors, action on
respondent's application for proprietary membership was deferred. In another Board meeting held on
July 30, 1997, respondent's application was voted upon. Subsequently, or on August 1, 1997,
respondent received a letter from Julius Z. Neri, CCCI's corporate secretary, informing him that the
Board disapproved his application for proprietary membership.

On August 6, 1997, Edmundo T. Misa, on behalf of respondent, wrote CCCI a letter of reconsideration.
As CCCI did not answer, respondent, on October 7, 1997, wrote another letter of reconsideration. Still,
CCCI kept silent. On November 5, 1997, responden again sent CCCI a letter... inquiring whether any
member of the Board objected to his application. Again, CCCI did not reply. Consequently, on
December 23, 1998, respondent filed with the Regional Trial Court (RTC), Branch 71, Pasig City a
complaint for damages against petitioners, docketed a Civil Case No. 67190.

After trial, the RTC rendered its Decision dated February 14, 2001 in favor of respondent, thus:
WHEREFORE, judgment is hereby rendered in favor of plaintiff:
HEREFORE, judgment is hereby rendered in favor of plaintiff:
Ordering defendants to pay, jointly and severally, plaintiff the amount of P2,340,000.00
as actual or compensatory damages.
Ordering defendants to pay, jointly and severally, plaintiff the amount of P5,000,000.00
as moral damages.
Ordering defendants to pay, jointly and severally, plaintiff the amount of P1,000,000.00
as exemplary damages.
Ordering defendants to pay, jointly and severally, plaintiff the amount of P1,000,000.00
as and by way of attorney's fees and P80,000.00 as litigation expenses.
Costs of suit.

On appeal by petitioners, the Court of Appeals, in its Decision dated January 31, 2003, affirmed the
trial court's Decision with modification,...

Petitioners contend, inter alia, that the Court of Appeals erred in awarding exorbitant
damages to respondent despite the lack of evidence that they acted in bad faith in
disapproving the latter's application; and in disregarding their defense of damnum
absque... injuria.
As shown by the records, the Board adopted a secret balloting known as the "black ball system" of
voting wherein each member will drop a ball in the ballot box. A white ball represents conformity to the
admission of an applicant, while a black ball means disapproval. Pursuant to Section 3(c), as amended,
cited above, a unanimous vote of the directors is required. When respondent's application for
proprietary membership was voted upon during the Board meeting on July 30, 1997, the ballot box
contained one (1) black ball. Thus, for lack of unanimity, his... application was disapproved.

ISSUE: Whether in disapproving respondent's application for proprietary membership with CCCI,
petitioners are liable to respondent for damages, and if so, whether their liability is joint and several.

HELD: Obviously, the CCCI Board of Directors, under its Articles of Incorporation, has the right to
approve or disapprove an application for proprietary membership. But such right should not be
exercised arbitrarily. Articles 19 and 21 of the Civil Code on the Chapter on Human Relations provide
restrictions, thus:
Article 19. Every person must, in the exercise of his rights and in the performance of... his
duties, act with justice, give everyone his due, and observe honesty and good faith.
Article 21. Any person who willfully causes loss or injury to another in a manner that... is
contrary to morals, good customs or public policy shall compensate the latter for... the
damage.

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

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

Under Article 2219 of the New Civil Code, moral damages may be recovered, among others, in acts
and actions referred to in Article 21. We believe respondent' testimony that he suffered... mental
anguish, social humiliation and wounded feelings as a result of the arbitrary denial of his application.
However, the amount of P2,000,000.00 is excessive. 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.[8] Taking into consideration the attending
circumstances here, we... hold that an award to respondent of P50,000.00, instead of P2,000,000.00,
as moral damages is reasonable.
Albenson Ent. Corp. vs. Court of Appeals
217 SCRA 16, January 11, 1993
Bidin, J.:

FACTS: Albenson Ent. delivered mild steel plates to Guaranteed Industries Inc. A Pacific Banking
Corporation Check was paid and drawn against the account of EL Woodworks. Check was later
dishonored for the reason “Account Closed.” Company traced source of check and later discovered
that the signature belonged to one Eugenio Baltao. Albenson made an extrajudicial demand upon
Baltao but the latter denied that he issued the check or that the signature was his. Company filed a
complaint against Baltao for violation of BP 22. It was later discovered that private respondent had a
son: Eugene Baltao III, who manages the business establishment, EL Woodworks. No effort from the
father to inform Albenson of such information. Rather the father filed complaint for damages against
Albenson.

ISSUE: Whether there is indeed cause for the damages against Albenson Enterprise.

HELD: No. Based on Art 19, 20, 21 of the civil code, petitioners didn’t have the intent to cause damage
to the respondent or enrich themselves but just to collect what was due to them. There was no abuse
of right on the part of Albenson on accusing Baltao of BP 22.

Albenson Corp. honestly believed that it was private respondent who issued check based on the
following inquiries:
 SEC records showed that president to Guaranteed was Eugene Baltao
 Bank said signature belonged to EB
 EB did not do his part in clarifying that there were in fact 3 Eugene Baltaos:, Jr., Sr. and the
III.

There was no malicious prosecution on the part of Albenson. There must be proof that:
 The prosecution was prompted by a sinister design to vex and humiliate a person and
 That damages was initiated deliberately by defendant knowing that his charges were false
and groundless

Elements of abuse of right under Article 19:

Elements under Article 21: contra bonus mores:

A person who has not been paid an obligation owed to him will naturally seek ways to compel the debtor
to pay him. It was normal for petitioners to find means to make the issuer of the check pay the amount
thereof. In the absence of a wrongful act or omission or of fraud or bad faith, moral damages cannot be
awarded and that the adverse result of an action does not per se make the action wrongful and subject
the actor to the payment of damages, for the law could not have meant to impose a penalty on the right
to litigate.

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.