Albenson Enterprises Corp. vs. CA 217 SCRA 16 (1993)

9/25/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 217
16 SUPREME COURT REPORTS ANNOTATED

Albenson Enterprises Corp. vs. Court of Appeals
ALBENSON ENTERPRISES CORP., JESSE YAP, AND BEN-

JAMIN MENDIONA, petitioners, vs. THE COURT OF AP-PEALS
AND EUGENIO S. BALTAO, respondents.
Civil Law; Damages; Article 19 sets certain standards which may be

observed not only in the exercise of one’s right but also in the performance
of one’s duties.—Article 19, known to contain what is commonly referred to
as the principle of abuse of rights, sets certain standards which may be
observed not only in the exercise of one’s rights but also in the performance
of one’s duties. These standards are the following: to act with justice; to
give everyone his due; and to observe honesty and good faith.
Same; Same; Same; A right though by itself legal because recognized

or granted by law as such may nevertheless become the source of some
illegality.—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
________________
* THIRD DIVISION.
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VOL. 217, JANUARY 11, 1993 17
to another, a legal wrong is thereby committed for which the wrongdoer

must be held responsible.
Same; Same; Same; There is no hard and fast rule which can be
applied to determine whether or not the principle of abuse of rights may be
www.central.com.ph/sfsreader/session/00000174c17e63b6affbbec2003600fb002c009e/t/?o=False 1/16
invoked.—There is however, no hard and fast rule which can be applied to

determine whether or not the principle of abuse of rights may be invoked.
The question of whether or not the principle of abuse of rights has been
violated, resulting in damages under Articles 20 and 21 or other applicable
provision of law, depends on the circumstances of each case.
Same; Same; Same; Elements of an abuse of right under Article 19.—

The elements of an abuse of right under Article 19 are the following: (1)
There is a legal right or duty; (2) which is exercised in bad faith; (3) for the
sole intent of prejudicing or injuring another.
Same; Same; 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.—The criminal complaint filed against private
respondent after the latter refused to make good the amount of the bouncing
check despite demand was a sincere attempt on the part of petitioners to find
the best possible means by which they could collect the sum of money due
them. 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.
Same; Same; Malicious Prosecution; The mere act of submitting a case

to the authorities for prosecution does not make one liable for malicious
prosecution.—To constitute malicious prosecution, there must be proof that
the prosecution was prompted by a sinister design to vex and humiliate a
person, and that it was initiated deliberately by the defendant knowing that
his charges were false and groundless. Concededly, the mere act of
submitting a case to the authorities for prosecution does not make one liable
for malicious prosecution.
18
Same; Same; Same; Same; Essential elements for a case of malicious

prosecution to prosper.—True, a civil action for damages for malicious
prosecution is allowed under the New Civil Code, more specifically Articles
19, 20, 26, 29, 32, 33, 35, and 2219 (8) thereof. In order that such a case can
prosper, however, the following three (3) elements must be present, to wit:
(1) The fact of the prosecution and the further fact that the defendant was
himself the prosecutor, and that the action was finally terminated with an
acquittal; (2) That in bringing the action, the prosecutor acted without
probable cause; (3) The prosecutor was actuated or impelled by legal
malice.
Same; Same; Same; A party injured by the filing of a court case against
him even if he is later on absolved may file a case for damages grounded
either on the principle of abuse of rights or on malicious prosecution.—
Thus, a party injured by the filing of a court case against him, even if he is
later on absolved, may file a case for damages grounded either on the
principle of abuse of rights, or on malicious prosecution. As earlier stated, a
complaint for damages based on malicious prosecution will prosper only if
the three (3) elements aforecited are shown to exist. In the case at bar, the
second and third elements were not shown to exist.
Same; Same; Same; Same; It is well settled that one cannot be held
liable for maliciously instituting a prosecution where one has acted with
probable cause.—It is well-settled that one cannot be held liable for
maliciously instituting a prosecution where one has acted with probable
cause. “Probable cause is the existence of such facts and circumstances as
would excite the belief, in a reasonable mind, acting on the facts within the
knowledge of the prosecutor, that the person charged was guilty of the crime
for which he was prosecuted. In other words, a suit will lie only in cases
where a legal prosecution has been carried on without probable cause. The
reason for this rule is that it would be a very great discouragement to public
justice, if prosecutors, who had tolerable ground of suspicion, were liable to
be sued at law when their indictment miscarried.”
Same; Same; Same; Same; Same; The presence of probable cause

signifies as a legal consequence the absence of malice.—The presence of
probable cause signifies, as a legal consequence, the absence of malice. In
the instant case, it is evident that petitioners were not motivated by
malicious intent or by sinister design to unduly harass private respondent,
but only by a well-founded anxiety to protect their rights when they filed the
criminal complaint against private respondent.
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VOL. 217, JANUARY 11, 1993 19
Same; Same; The adverse result of an action does not per se make the
act wrongful and subject the actor to the payment of moral damages.—
Furthermore, the adverse result of an action does not per se make the act
wrongful and subject the actor to the payment of moral damages. The law
could not have meant to impose a penalty on the right to litigate, such right
is so precious that moral damages may not be charged on those who may
even exercise it erroneously. And an adverse decision does not ipso facto
justify the award of attorney’s fees to the winning party.
Same; Same; Same; An award of damages and attorney’s fees is

unwarranted where the action was filed in good faith.—Thus, an award of
damages and attorney’s fees is unwarranted where the action was filed in
good faith. If damage results from a person’s exercising his legal rights, it is
damnum absque injuria.
Same; Same; In determining actual damages, the court cannot rely on

speculation, conjectures or guesswork as to the amount.—Coming now to
the claim of private respondent for actual or compensatory damages, the
records show that the same was based solely on his allegations without
proof to substantiate the same. He did not present proof of the cost of the
medical treatment which he claimed to have undergone as a result of the
nervous breakdown he suffered, nor did he present proof of the actual loss to
his business caused by the unjust litigation against him. In determining
actual damages, the court cannot rely on speculation, conjectures or
guesswork as to the amount. Without the actual proof of loss, the award of
actual damages becomes erroneous.
Same; Same; Same; Actual and compensatory damages are those

recoverable because of pecuniary loss and the same must be proved
otherwise if the proof is flimsy and unsubstantiated no damages will be
given.—Actual and compensatory damages are those recoverable because of
pecuniary lossade, property, profession, job or occupation—and the same
must be proved, otherwise, if the proof is flimsy and unsubstantiated, no
damages will be given (Rubio vs. Court of Appeals, 141 SCRA 488 [1986]).
For these reasons, it was gravely erroneous for respondent court to have
affirmed the award of actual damages in favor of private respondent in the
absence of proof thereof.
Same; Same; Same; Same; Neither may exemplary damages be

awarded where there is no evidence of the other party having acted in
wanton, fraudulent or reckless or oppressive manner.—Where there is
20
reckless, or oppressive manner, neither may exemplary damages be

awarded.
Same; Same; Attorney’s fees; The award of attorney’s fees must be

disallowed where the award of exemplary damages is eliminated.—As to the
award of attorney’s fees, it is well-settled that the same is the exception
rather than the general rule. Needless to say, the award of attorney’s fees
must be disallowed where the award of exemplary damages is eliminated.
PETITION to review the decision of the Court of Appeals.
The facts are stated in the opinion of the Court.

Puruganan, Chato, Chato & Tan for petitioners.
Lino M. Patajo, Francisco Ma. Chanco, Ananiano Desierto
and Segundo Mangohig for private respondent.
BIDIN, J.:
This petition assails the decision of respondent Court of Appeals in

CA-GR CV No. 14948 entitled “Eugenio S. Baltao, plaintiff-
appellee vs. Albenson Enterprises Corporation, et al, defendants-
appellants”, which modified the judgment of the Regional Trial
Court of Quezon City, Branch XCVIII in Civil Case No. Q-40920
and ordered petitioner to pay private respondent, among others, the
sum of P500,000.00 as moral damages and attorney’s fees in the
amount of P50,000.00.
The facts are not disputed.
In September, October, and November 1980, petitioner Al-
benson Enterprises Corporation (Albenson for short) delivered to
Guaranteed Industries, Inc. (Guaranteed for short) located at 3267 V.
Mapa Street, Sta. Mesa, Manila, the mild steel plates which the latter
ordered. As part payment thereof, Albenson was given Pacific
Banking Corporation Check No. 136361 in the amount of P2,575.00
and drawn against the account of E.L. Woodworks (Rollo, p. 148).
When presented for payment, the check was dishonored for the
reason “Account Closed.” Thereafter, petitioner Albenson, through
counsel, traced the origin of the dishonored check. From the records
of the Securities and Exchange Commission
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VOL. 217, JANUARY 11, 1993 21

(SEC), Albenson discovered that the president of Guaranteed, the

recipient of the unpaid mild steel plates, was one “Eugenio S.
Baltao.” Upon further inquiry, Albenson was informed by the
Ministry of Trade and Industry that E.L. Woodworks, a single
proprietorship business, was registered in the name of one “Eugenio
Baltao”. In addition, upon verification with the drawee bank, Pacific
Banking Corporation, Albenson was advised that the signature

appearing on the subject check belonged to one “Eugenio Baltao.”
After obtaining the foregoing information, Albenson, through
counsel, made an extrajudicial demand upon private respondent
Eugenio S. Baltao, president of Guaranteed, to replace and/or make
good the dishonored check.
Respondent Baltao, through counsel, denied that he issued the
check, or that the signature appearing thereon is his. He further
alleged that Guaranteed was a defunct entity and hence, could not
have transacted business with Albenson.
On February 14, 1983, Albenson filed with the Office of the
Provincial Fiscal of Rizal a complaint against Eugenio S. Baltao for
violation of Batas Pambansa Bilang 22. Submitted to support said
charges was an affidavit of petitioner Benjamin Men-diona, an
employee of Albenson. In said affidavit, the above-mentioned
circumstances were stated.
It appears, however, that private respondent has a namesake, his
son Eugenio Baltao III, who manages a business establishment, E.L.
Woodworks, on the ground floor of Baltao Building, 3267 V. Mapa
Street, Sta. Mesa, Manila, the very same business address of
Guaranteed.
On September 5, 1983, Assistant Fiscal Ricardo Sumaway filed
an information against Eugenio S. Baltao for Violation of Batas
Pambansa Bilang 22. In filing said information, Fiscal Sumaway
claimed that he had given Eugenio S. Baltao opportunity to submit
controverting evidence, but the latter failed to do so and therefore,
was deemed to have waived his right.
Respondent Baltao, claiming ignorance of the complaint against
him, immediately filed with the Provincial Fiscal of Rizal a motion
for reinvestigation, alleging that it was not true that he had been
given an opportunity to be heard in the preliminary investigation
conducted by Fiscal Sumaway, and that he never had any dealings
with Albenson or Benjamin
22

Mendiona, consequently, the check for which he has been ac cused

of having issued without funds was not issued by him and the
signature in said check was not his.
On January 30, 1984, Provincial Fiscal Mauro M. Castro of Rizal
reversed the finding of Fiscal Sumaway and exonerated respondent
Baltao. He also instructed the Trial Fiscal to move for dismissal of
the information filed against Eugenio S. Baltao. Fiscal Castro found
that the signature in PBC Check No. 136361 is not the signature of
Eugenio S. Baltao. He also found that there is no showing in the
records of the preliminary investigation that Eugenio S. Baltao

actually received notice of the said investigation. Fiscal Castro then
castigated Fiscal Sumaway for failing to exercise care and prudence
in the performance of his duties, thereby causing injustice to
respondent who was not properly notified of the complaint against
him and of the requirement to submit his counter evidence.
Because of the alleged unjust filing of a criminal case against him
for allegedly issuing a check which bounced in violation of Batas
Pambansa Bilang 22 for a measly amount of P2,575.00, respondent
Baltao filed before the Regional Trial Court of Quezon City a
complaint for damages against herein petitioners Albenson
Enterprises, Jesse Yap, its owner, and Benjamin Mendiona, its
employee.
In its decision, the lower court observed that “the check is drawn
against the account of ‘E.L. Woodworks,’ not of Guaranteed
Industries of which plaintiff used to be President. Guaranteed
Industries had been inactive and had ceased to exist as a corporation
since 1975. x x x. The possibility is that it was with Gene Baltao or
Eugenio Baltao III, a son of plaintiff who had a business on the
ground floor of Baltao Building located on V. Mapa Street, that the
defendants may have been dealing with. x x x” (Rollo, pp. 41-42).
The dispositive portion of the trial court’s decision reads:
“WHEREFORE, judgment is hereby rendered in favor of plaintiff and

against defendants ordering the latter to pay plaintiff jointly and severally:
1. actual or compensatory damages of P133,350.00;

2. moral damages of P1,000,000.00 (1 million pesos);
3. exemplary damages of P200,000.00;
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VOL. 217, JANUARY 11, 1993 23

4. attorney’s fees of P100,000.00;

5. costs.
“Defendants’ counterclaim against plaintiff and claim for damages

against Mercantile Insurance Co. on the bond for the issuance of the writ of
attachment at the instance of plaintiff are hereby dismissed for lack of
merit.” (Rollo, pp. 38-39)
On appeal, respondent court modified the trial court’s decision as

follows:
“WHEREFORE, the decision appealed from is MODIFIED by reducing the

moral damages awarded therein from P1,000,000.00 to P500,000.00 and the
attorney’s fees from P100,000.00 to P50,000.00, said decision being hereby
affirmed in all its other aspects. With costs against appellants.” (Rollo, pp.
50-51)
Dissatisfied with the above ruling, petitioners Albenson Enterprises

Corp., Jesse Yap, and Benjamin Mendiona filed the instant Petition,
alleging that the appellate court erred in:
“1. Concluding that private respondent’s cause of action is not

one based on malicious prosecution but one for abuse of
rights under Article 21 of the Civil Code notwithstanding
the fact that the basis of a civil action for malicious
prosecution is Article 2219 in relation to Article 21 or
Article 2176 of the Civil Code x x x.
“2. Concluding that ‘hitting at and in effect maligning (private
respondent) with an unjust criminal case was, without more,
a plain case of abuse of rights by misdirection’ and ‘was
therefore, actionable by itself,’ and which ‘became
inordinately blatant and grossly aggravated when x x x
(private respondent) was deprived of his basic right to
notice and a fair hearing in the so-called preliminary
investigation x x x’
“3. Concluding that petitioner’s ‘actuations in this case were
coldly deliberate and calculated’, no evidence having been
adduced to support such a sweeping statement.
“4. Holding the petitioner corporation, petitioner Yap and
petitioner Mendiona jointly and severally liable without
sufficient basis in law and in fact.
“5. Awarding respondents—
5.1. P133,350.00 as actual or compensatory damages, even in

the absence of sufficient evidence to show that such was
actually suffered.
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5.2. P500,000.00 as moral damages considering that the

evidence in this connection merely involved private respon-
dent’s alleged celebrated status as a businessman, there
being no showing that the act complained of adversely
affected private respondent’s reputation or that it resulted to
material loss.
5.3. P200,000.00 as exemplary damages despite the fact that
petitioners were duly advised by counsel of their legal
recourse.
5.4. P50,000.00 as attorney’s fees, no evidence having been

adduced to justify such an award” (Rollo, pp. 4-6).
Petitioners contend that the civil case filed in the lower court was
one for malicious prosecution. Citing the case of Madera vs. Lopez
(102 SCRA 700 [1981]), they assert that the absence of malice on
their part absolves them from any liability for malicious prosecution.
Private respondent, on the other hand, anchored his complaint for
**
Damages on Articles 19, 20, and 21 of the Civil Code.
Article 19, known to contain what is commonly referred to as the
principle of abuse of rights, sets certain standards which may be
observed not only in the exercise of one’s rights but also in the
performance of one’s duties. These standards are the following: to
act with justice; to give everyone his due; and to observe honesty
and good faith. The law, therefore, recognizes the primordial
limitation on all rights: that in their exercise, the norms of human
conduct set forth in Article 19 must be observed. A right, though by
itself legal because recognized or granted by law as such, may
nevertheless become the source of some illegality. When a right is
exercised in a manner which does not conform with the norms
enshrined in Article 19 and results in damage to another, a legal
wrong is thereby commit-
__________________
** “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.
“Art. 20. Every person who, contrary to law, willfully or negli-gently causes damage to another,
shall indemnify the latter for the same.
“Art. 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.
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VOL. 217, JANUARY 11, 1993 25

ted for which the wrongdoer must be held responsible. Although the
requirements of each provision is different, these three (3) articles
are all related to each other. As the eminent Civilist Senator Arturo
Tolentino puts it: “With this article (Article 21), combined with
articles 19 and 20, the scope of our law on civil wrongs has been
very greatly broadened; it has become much more supple and
adaptable than the Anglo-American law on torts. It is now difficult
to conceive of any malevolent exercise of a right which could not be
checked by the application of these articles” (Tolentino, 1 Civil

Code of the Philippines 72).
There is however, no hard and fast rule which can be applied to
determine whether or not the principle of abuse of rights may be
invoked. The question of whether or not the principle of abuse of
rights has been violated, resulting in damages under Articles 20 and
21 or other applicable provision of law, depends on the
circumstances of each case. (Globe Mackay Cable and Radio
Corporation vs. Court of Appeals, 176 SCRA 778 [1989]).
The elements of an abuse of right under Article 19 are the
following: (1) There is a legal right or duty; (2) which is exercised in
bad faith; (3) for the sole intent of prejudicing or injuring another.
Article 20 speaks of the general sanction for all other provisions of
law which do not especially provide for their own sanction
(Tolentino, supra, p. 71). Thus, anyone who, whether willfully or
negligently, in the exercise of his legal right or duty, causes damage
to another, shall indemnify his victim for injuries suffered thereby.
Article 21 deals with acts contra bonus mores, and has the following
elements: 1) There is an act which is legal; 2) but which is contrary
to morals, good custom, public order, or public policy; 3) and it is
done with intent to injure.
Thus, under any of these three (3) provisions of law, an act which
causes injury to another may be made the basis for an award of
damages.
There is a common element under Articles 19 and 21, and that is,
the act must be intentional. However, Article 20 does not
distinguish: the act may be done either “willfully”, or “negli-gently”.
The trial court as well as the respondent appellate court mistakenly
lumped these three (3) articles together, and cited the same as the
bases for the award of damages in the civil complaint filed against
petitioners, thus:
26

“With the foregoing legal provisions (Articles 19, 20, and 21) in focus, there
is not much difficulty in ascertaining the means by which appellants’ first
assigned error should be resolved, given the admitted fact that when there
was an attempt to collect the amount of P2,575.00, the defendants were
explicitly warned that plaintiff Eugenio S. Baltao is not the Eugenio Baltao
defendants had been dealing with (supra, p. 5). When the defendants
nevertheless insisted and persisted in filing a case—a criminal case no less
—against plaintiff, said defendants ran afoul of the legal provisions
(Articles 19, 20, and 21 of the Civil Code) cited by the lower court and
heretofore quoted (supra).”
Defendants, not having been paid the amount of P2,575.00, certainly had
the right to complain. But that right is limited by certain constraints. Beyond
that limit is the area of excess, of abuse of rights.” (Rollo, pp. 44-45).
Assuming, arguendo, that all the three (3) articles, together and not
independently of each one, could be validly made the bases for an
award of damages based on the principle of “abuse of right”, under
the circumstances, We see no cogent reason for such an award of
damages to be made in favor of private respondent.
Certainly, petitioners could not be said to have violated the
aforestated principle of abuse of right. What prompted petitioners to
file the case for violation of Batas Pambansa Bilang 22 against
private respondent was their failure to collect the amount of
P2,575.00 due on a bounced check which they honestly believed
was issued to them by private respondent. Petitioners had conducted
inquiries regarding the origin of the check, and yielded the following
results: from the records of the Securities and Exchange
Commission, it was discovered that the President of Guaranteed (the
recipient of the unpaid mild steel plates), was one “Eugenio S.
Baltao”; an inquiry with the Ministry of Trade and Industry revealed
that E.L. Woodworks, against whose account the check was drawn,
was registered in the name of one “Eugenio Baltao”; verification
with the drawee bank, the Pacific Banking Corporation, revealed
that the signature appearing on the check belonged to one “Eugenio
Baltao”.
In a letter dated December 16, 1983, counsel for petitioners wrote
private respondent demanding that he make good the amount of the
check. Counsel for private respondent wrote back and denied,
among others, that private respondent ever trans-
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VOL. 217, JANUARY 11, 1993 27

acted business with Albenson Enterprises Corporation; that he ever

issued the check in question. Private respondent’s counsel even went
further: he made a warning to defendants to check the veracity of
their claim. It is pivotal to note at this juncture that in this same
letter, if indeed private respondent wanted to clear himself from the
baseless accusation made against his person, he should have made
mention of the fact that there are three (3) persons with the same
name, i.e.: Eugenio Baltao, Sr., Eugenio S. Baltao, Jr. (private
respondent), and Eugenio Baltao III (private respondent’s son, who
as it turned out later, was the issuer of the check). He, however,
failed to do this. The last two Baltaos were doing business in the
same building___Baltao Building___located at 3267 V. Mapa Street,
Sta. Mesa, Manila. The mild steel plates were ordered in the name of
Guaranteed of which respondent Eugenio S. Baltao is the president

and delivered to Guaranteed at Baltao building. Thus, petitioners
had every reason to believe that the Eugenio Baltao who issued the
bouncing check is respondent Eugenio S. Baltao when their counsel
wrote respondent to make good the amount of the check and upon
refusal, filed the complaint for violation of BP Blg. 22.
Private respondent, however, did nothing to clarify the case of
mistaken identity at first hand. Instead, private respondent waited in
ambush and thereafter pounced on the hapless petitioners at a time
he thought was propituous by filing an action for damages. The
Court will not countenance this devious scheme.
The criminal complaint filed against private respondent after the
latter refused to make good the amount of the bouncing check
despite demand was a sincere attempt on the part of petitioners to
find the best possible means by which they could collect the sum of
money due them. 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 (Rubio vs. Court of Appeals, 141 SCRA 488
[1986]).
28

In the case at bar, private respondent does not deny that the mild
steel plates were ordered by and delivered to Guaranteed at Baltao
building and as part payment thereof, the bouncing check was issued
by one Eugenio Baltao. Neither had private respondent conveyed to
petitioner that there are two Eugenio Baltaos conducting business in
the same building___he and his son Eugenio Baltao III. Considering
that Guaranteed, which received the goods in payment of which the
bouncing check was issued is owned by respondent, petitioner acted
in good faith and probable cause in filing the complaint before the
provincial fiscal.
To constitute malicious prosecution, there must be proof that the
prosecution was prompted by a sinister design to vex and humiliate
a person, and that it was initiated deliberately by the defendant
knowing that his charges were false and groundless. Concededly, the
mere act of submitting a case to the authorities for prosecution does
not make one liable for malicious prosecution. (Manila Gas
Corporation vs. Court of Appeals, 100 SCRA 602 [1980]). Still,
private respondent argues that liability under Articles 19, 20, and 21
of the Civil Code is so encompassing that it likewise includes
liability for damages for malicious prosecution under Article 2219
(8). True, a civil action for damages for malicious prosecution is
allowed under the New Civil Code, more specifically Articles 19,
20, 26, 29, 32, 33, 35, and 2219 (8) thereof. In order that such a case
can prosper, however, the following three (3) elements must be
present, to wit: (1) The fact of the prosecution and the further fact
that the defendant was himself the prosecutor, and that the action
was finally terminated with an acquittal; (2) That in bringing the
action, the prosecutor acted without probable cause; (3) The
prosecutor was actuated or impelled by legal malice (Lao vs. Court
of Appeals, 199 SCRA 58, [1991]).
Thus, a party injured by the filing of a court case against him,
even if he is later on absolved, may file a case for damages grounded
either on the principle of abuse of rights, or on malicious
prosecution. As earlier stated, a complaint for damages based on
malicious prosecution will prosper only if the three (3) elements
aforecited are shown to exist. In the case at bar, the second and third
elements were not shown to exist. It is well-settled that one cannot
be held liable for maliciously insti-
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VOL. 217, JANUARY 11, 1993 29

tuting a prosecution where one has acted with probable cause.

“Probable cause is the existence of such facts and circumstances as
would excite the belief, in a reasonable mind, acting on the facts
within the knowledge of the prosecutor, that the person charged was
guilty of the crime for which he was prosecuted. In other words, a
suit will lie only in cases where a legal prosecution has been carried
on without probable cause. The reason for this rule is that it would
be a very great discouragement to public justice, if prosecutors, who
had tolerable ground of suspicion, were liable to be sued at law
when their indictment miscarried” (Que vs. Intermediate Appellate
Court, 169 SCRA 137 [1989]).
The presence of probable cause signifies, as a legal consequence,
the absence of malice. In the instant case, it is evident that
petitioners were not motivated by malicious intent or by sinister
design to unduly harass private respondent, but only by a well-
founded anxiety to protect their rights when they filed the criminal
complaint against private respondent.
“To constitute malicious prosecution, there must be proof that the

prosecution was prompted by a sinister design to vex and humiliate a
person, that it was initiated deliberately by the defendant knowing that his
charges were false and groundless. Concededly, the mere act of submitting a
case to the authorities for prosecution does not make one liable for
malicious prosecution. Proof and motive that the institution of the action
was prompted by a sinister design to vex and humiliate a person must be
clearly and preponderantly established to entitle the victims to damages”
(Ibid.).
In the case at bar, there is no proof of a sinister design on the part of

petitioners to vex or humiliate private respondent by instituting the
criminal case against him. While petitioners may have been
negligent to some extent in determining the liability of private
respondent for the dishonored check, the same is not so gross or
reckless as to amount to bad faith warranting an award of damages.
The root of the controversy in this case is founded on a case of
mistaken identity. It is possible that with a more assiduous
investigation, petitioners would have eventually discovered that
private respondent Eugenio S. Baltao is not the “Eugenio Bal-tao”
responsible for the dishonored check. However, the record
30

determine the liability of private respondent. Their investigation

pointed to private respondent as the “Eugenio Baltao” who issued
and signed the dishonored check as the president of the debtor-
corporation Guaranteed Enterprises. Their error in proceeding
against the wrong individual was obviously in the nature of an
innocent mistake, and cannot be characterized as having been
committed in bad faith. This error could have been discovered if
respondent had submitted his counter-affidavit before investigating
fiscal Sumaway and was immediately rectified by Provincial Fiscal
Mauro Castro upon discovery thereof, i.e., during the reinvestigation
resulting in the dismissal of the complaint.
Furthermore, the adverse result of an action does not per se make
the act wrongful and subject the actor to the payment of moral
damages. The law could not have meant to impose a penalty on the
right to litigate, such right is so precious that moral damages may
not be charged on those who may even exercise it erroneously. And
an adverse decision does not ipso facto justify the award of
attorney’s fees to the winning party (Garcia vs. Gonzales, 183 SCRA
72 [1990]).
Thus, an award of damages and attorney’s fees is unwarranted
where the action was filed in good faith. If damage results from a
person’s exercising his legal rights, it is damnum absque injuria
(Ilocos Norte Electric Company vs. Court of Appeals, 179 SCRA 5
[1989]).
Coming now to the claim of private respondent for actual or

compensatory damages, the records show that the same was based
solely on his allegations without proof to substantiate the same. He
did not present proof of the cost of the medical treatment which he
claimed to have undergone as a result of the nervous breakdown he
suffered, nor did he present proof of the actual loss to his business
caused by the unjust litigation against him. In determining actual
damages, the court cannot rely on speculation, conjectures or
guesswork as to the amount. Without the actual proof of loss, the
award of actual damages becomes erroneous (Guilatco vs. City of
Dagupan, 171 SCRA 382 [1989]).
Actual and compensatory damages are those recoverable because
of pecuniary loss—in business, trade, property, profes-
31
VOL. 217, JANUARY 11, 1993 31

sion, job or occupation—and the same must be proved, other wise, if

the proof is flimsy and unsubstantiated, no damages will be given
(Rubio vs. Court of Appeals, 141 SCRA 488 [1986]). For these
reasons, it was gravely erroneous for respondent court to have
affirmed the award of actual damages in favor of private respondent
in the absence of proof thereof.
Where there is no evidence of the other party having acted in
wanton, fraudulent or reckless, or oppressive manner, neither may
exemplary damages be awarded (Dee Hua Liong Electrical
Equipment Corporation vs. Reyes, 145 SCRA 488 [1986]).
As to the award of attorney’s fees, it is well-settled that the same
is the exception rather than the general rule. Needless to say, the
award of attorney’s fees must be disallowed where the award of
exemplary damages is eliminated (Article 2208, Civil Code; Agustin
vs. Court of Appeals, 186 SCRA 375 [1990]). Moreover, in view of
the fact that there was no malicious prosecution against private
respondent, attorney’s fees cannot be awarded him on that ground.
In the final analysis, there is no proof or showing that petitioners
acted maliciously or in bad faith in the filing of the case against
private respondent. Consequently, in the absence of proof of fraud
and bad faith committed by petitioners, they cannot be held liable
for damages (Escritor, Jr. vs. Intermediate Appellate Court, 155
SCRA 577 [1987]). No damages can be awarded in the instant case,
whether based on the principle of abuse of rights, or for malicious
prosecution. The questioned judgment in the instant case attests to
the propensity of trial judges to award damages without basis.
Lower courts are hereby cautioned anew against awarding
unconscionable sums as damages without bases therefor.
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.
SO ORDERED.
Gutierrez, Jr., (Chairman), Davide, Jr., Romero and Melo,

JJ., concur.
Petition granted; decision reversed and set aside.
32

State Investment House, Inc. vs. Court of Appeals
Note.—In the absence of malice and bad faith, moral damages

cannot be awarded (Capco vs. Macasaet, 189 SCRA 561).
——o0o——
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Albenson Enterprises Corp. vs. CA 217 SCRA 16 (1993)

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9/25/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 217

16 SUPREME COURT REPORTS ANNOTATED

ALBENSON ENTERPRISES CORP., JESSE YAP, AND BEN-

Civil Law; Damages; Article 19 sets certain standards which may be

Same; Same; Same; A right though by itself legal because recognized

VOL. 217, JANUARY 11, 1993 17

Albenson Enterprises Corp. vs. Court of Appeals

to another, a legal wrong is thereby committed for which the wrongdoer

invoked.—There is however, no hard and fast rule which can be applied to

Same; Same; Same; Elements of an abuse of right under Article 19.—

Same; Same; In the absence of a wrongful act or omission or of fraud

Same; Same; Malicious Prosecution; The mere act of submitting a case

18 SUPREME COURT REPORTS ANNOTATED

Albenson Enterprises Corp. vs. Court of Appeals

Same; Same; Same; Same; Essential elements for a case of malicious

Same; Same; Same; Same; Same; The presence of probable cause

VOL. 217, JANUARY 11, 1993 19

Albenson Enterprises Corp. vs. Court of Appeals

Same; Same; Same; An award of damages and attorney’s fees is

Same; Same; In determining actual damages, the court cannot rely on

Same; Same; Same; Actual and compensatory damages are those

Same; Same; Same; Same; Neither may exemplary damages be

20 SUPREME COURT REPORTS ANNOTATED

Albenson Enterprises Corp. vs. Court of Appeals

reckless, or oppressive manner, neither may exemplary damages be

Same; Same; Attorney’s fees; The award of attorney’s fees must be

PETITION to review the decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

This petition assails the decision of respondent Court of Appeals in

VOL. 217, JANUARY 11, 1993 21

(SEC), Albenson discovered that the president of Guaranteed, the

Banking Corporation, Albenson was advised that the signature

22 SUPREME COURT REPORTS ANNOTATED

Mendiona, consequently, the check for which he has been ac cused

records of the preliminary investigation that Eugenio S. Baltao

“WHEREFORE, judgment is hereby rendered in favor of plaintiff and

1. actual or compensatory damages of P133,350.00;

VOL. 217, JANUARY 11, 1993 23

4. attorney’s fees of P100,000.00;

“Defendants’ counterclaim against plaintiff and claim for damages

On appeal, respondent court modiﬁed the trial court’s decision as

“WHEREFORE, the decision appealed from is MODIFIED by reducing the

Dissatisﬁed with the above ruling, petitioners Albenson Enterprises

“1. Concluding that private respondent’s cause of action is not

5.1. P133,350.00 as actual or compensatory damages, even in

24 SUPREME COURT REPORTS ANNOTATED

5.2. P500,000.00 as moral damages considering that the

5.4. P50,000.00 as attorney’s fees, no evidence having been

VOL. 217, JANUARY 11, 1993 25

checked by the application of these articles” (Tolentino, 1 Civil

26 SUPREME COURT REPORTS ANNOTATED

VOL. 217, JANUARY 11, 1993 27

acted business with Albenson Enterprises Corporation; that he ever

Guaranteed of which respondent Eugenio S. Baltao is the president

28 SUPREME COURT REPORTS ANNOTATED

VOL. 217, JANUARY 11, 1993 29

tuting a prosecution where one has acted with probable cause.

“To constitute malicious prosecution, there must be proof that the

In the case at bar, there is no proof of a sinister design on the part of

30 SUPREME COURT REPORTS ANNOTATED