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81262
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Republic of the Philippines

THIRD DIVISION

G.R. No. 81262 August 25, 1989

GLOBE MACKAY CABLE AND RADIO CORP., and HERBERT C. HENDRY, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and RESTITUTO M. TOBIAS, respondents.

Atencia & Arias Law Offices for petitioners.

Romulo C. Felizmena for private respondent.

CORTES, J.:

Private respondent Restituto M. Tobias was employed by petitioner Globe Mackay Cable and Radio Corporation
(GLOBE MACKAY) in a dual capacity as a purchasing agent and administrative assistant to the engineering
operations manager. In 1972, GLOBE MACKAY discovered fictitious purchases and other fraudulent transactions for
which it lost several thousands of pesos.

According to private respondent it was he who actually discovered the anomalies and reported them on November
10, 1972 to his immediate superior Eduardo T. Ferraren and to petitioner Herbert C. Hendry who was then the
Executive Vice-President and General Manager of GLOBE MACKAY.

On November 11, 1972, one day after private respondent Tobias made the report, petitioner Hendry confronted him
by stating that he was the number one suspect, and ordered him to take a one week forced leave, not to
communicate with the office, to leave his table drawers open, and to leave the office keys.

On November 20, 1972, when private respondent Tobias returned to work after the forced leave, petitioner Hendry
went up to him and called him a "crook" and a "swindler." Tobias was then ordered to take a lie detector test. He was
also instructed to submit specimen of his handwriting, signature, and initials for examination by the police
investigators to determine his complicity in the anomalies.

On December 6,1972, the Manila police investigators submitted a laboratory crime report (Exh. "A") clearing private
respondent of participation in the anomalies.

Not satisfied with the police report, petitioners hired a private investigator, retired Col. Jose G. Fernandez, who on
December 10, 1972, submitted a report (Exh. "2") finding Tobias guilty. This report however expressly stated that
further investigation was still to be conducted.

Nevertheless, on December 12, 1972, petitioner Hendry issued a memorandum suspending Tobias from work
preparatory to the filing of criminal charges against him.

On December 19,1972, Lt. Dioscoro V. Tagle, Metro Manila Police Chief Document Examiner, after investigating
other documents pertaining to the alleged anomalous transactions, submitted a second laboratory crime report (Exh.
"B") reiterating his previous finding that the handwritings, signatures, and initials appearing in the checks and other
documents involved in the fraudulent transactions were not those of Tobias. The lie detector tests conducted on
Tobias also yielded negative results.

Notwithstanding the two police reports exculpating Tobias from the anomalies and the fact that the report of the
private investigator, was, by its own terms, not yet complete, petitioners filed with the City Fiscal of Manila a
complaint for estafa through falsification of commercial documents, later amended to just estafa. Subsequently five
other criminal complaints were filed against Tobias, four of which were for estafa through Falsification of commercial
document while the fifth was for of Article 290 of' the Revised Penal Code (Discovering Secrets Through Seizure of
Correspondence). Two of these complaints were refiled with the Judge Advocate General's Office, which however,
lâwphî1.ñèt

remanded them to the fiscal's office. All of the six criminal complaints were dismissed by the fiscal. Petitioners
appealed four of the fiscal's resolutions dismissing the criminal complaints with the Secretary of Justice, who,
however, affirmed their dismissal.

In the meantime, on January 17, 1973, Tobias received a notice (Exh. "F") from petitioners that his employment has
been terminated effective December 13, 1972. Whereupon, Tobias filed a complaint for illegal dismissal. The labor
arbiter dismissed the complaint. On appeal, the National Labor Relations Commission (NLRC) reversed the labor
arbiter's decision. However, the Secretary of Labor, acting on petitioners' appeal from the NLRC ruling, reinstated
the labor arbiter's decision. Tobias appealed the Secretary of Labor's order with the Office of the President. During
the pendency of the appeal with said office, petitioners and private respondent Tobias entered into a compromise
agreement regarding the latter's complaint for illegal dismissal.

Unemployed, Tobias sought employment with the Republic Telephone Company (RETELCO). However, petitioner
Hendry, without being asked by RETELCO, wrote a letter to the latter stating that Tobias was dismissed by GLOBE
MACKAY due to dishonesty.

Private respondent Tobias filed a civil case for damages anchored on alleged unlawful, malicious, oppressive, and
abusive acts of petitioners. Petitioner Hendry, claiming illness, did not testify during the hearings. The Regional Trial
Court (RTC) of Manila, Branch IX, through Judge Manuel T. Reyes rendered judgment in favor of private respondent
by ordering petitioners to pay him eighty thousand pesos (P80,000.00) as actual damages, two hundred thousand
pesos (P200,000.00) as moral damages, twenty thousand pesos (P20,000.00) as exemplary damages, thirty
thousand pesos (P30,000.00) as attorney's fees, and costs. Petitioners appealed the RTC decision to the Court of
Appeals. On the other hand, Tobias appealed as to the amount of damages. However, the Court of Appeals, an a
decision dated August 31, 1987 affirmed the RTC decision in toto. Petitioners' motion for reconsideration having
been denied, the instant petition for review on certiorari was filed.
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The main issue in this case is whether or not petitioners are liable for damages to private respondent.

Petitioners contend that they could not be made liable for damages in the lawful exercise of their right to dismiss
private respondent.

On the other hand, private respondent contends that because of petitioners' abusive manner in dismissing him as
well as for the inhuman treatment he got from them, the Petitioners must indemnify him for the damage that he had
suffered.

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.

Article 20, which pertains to damage arising from a violation of law, provides that:

Art. 20. Every person who contrary to law, wilfully or negligently causes damage to another, shall
indemnify the latter for the same.

However, in the case at bar, petitioners claim that they did not violate any provision of law since they were merely
exercising their legal right to dismiss private respondent. This does not, however, leave private respondent with no
relief because Article 21 of the Civil Code provides that:

Art. 21. Any person who wilfully 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.

This article, adopted to remedy the "countless gaps in the statutes, which leave so many victims of moral wrongs
helpless, even though they have actually suffered material and moral injury" [Id.] should "vouchsafe adequate legal
remedy for that untold number of moral wrongs which it is impossible for human foresight to provide for specifically
in the statutes" [Id. it p. 40; See also PNB v. CA, G.R. No. L-27155, May 18,1978, 83 SCRA 237, 247].

In determining whether or not the principle of abuse of rights may be invoked, there is no rigid test which can be
applied. While the Court has not hesitated to apply Article 19 whether the legal and factual circumstances called for
its application [See for e.g., Velayo v. Shell Co. of the Phil., Ltd., 100 Phil. 186 (1956); PNB v. CA, supra; Grand
Union Supermarket, Inc. v. Espino, Jr., G.R. No. L-48250, December 28, 1979, 94 SCRA 953; PAL v. CA, G.R. No.
L-46558, July 31,1981,106 SCRA 391; United General Industries, Inc, v. Paler G.R. No. L-30205, March
15,1982,112 SCRA 404; Rubio v. CA, G.R. No. 50911, August 21, 1987, 153 SCRA 183] the question of whether or
not the principle of abuse of rights has been violated resulting in damages under Article 20 or Article 21 or other
applicable provision of law, depends on the circumstances of each case. And in the instant case, the Court, after
examining the record and considering certain significant circumstances, finds that all petitioners have indeed abused
the right that they invoke, causing damage to private respondent and for which the latter must now be indemnified.

The trial court made a finding that notwithstanding the fact that it was private respondent Tobias who reported the
possible existence of anomalous transactions, petitioner Hendry "showed belligerence and told plaintiff (private
respondent herein) that he was the number one suspect and to take a one week vacation leave, not to communicate
with the office, to leave his table drawers open, and to leave his keys to said defendant (petitioner Hendry)" [RTC
Decision, p. 2; Rollo, p. 232]. This, petitioners do not dispute. But regardless of whether or not it was private
respondent Tobias who reported the anomalies to petitioners, the latter's reaction towards the former upon
uncovering the anomalies was less than civil. An employer who harbors suspicions that an employee has committed
dishonesty might be justified in taking the appropriate action such as ordering an investigation and directing the
employee to go on a leave. Firmness and the resolve to uncover the truth would also be expected from such
employer. But the high-handed treatment accorded Tobias by petitioners was certainly uncalled for. And this
reprehensible attitude of petitioners was to continue when private respondent returned to work on November 20,
1972 after his one week forced leave. Upon reporting for work, Tobias was confronted by Hendry who said. "Tobby,
you are the crook and swindler in this company." Considering that the first report made by the police investigators
was submitted only on December 10, 1972 [See Exh. A] the statement made by petitioner Hendry was baseless.
The imputation of guilt without basis and the pattern of harassment during the investigations of Tobias transgress
the standards of human conduct set forth in Article 19 of the Civil Code. The Court has already ruled that the right of
the employer to dismiss an employee should not be confused with the manner in which the right is exercised and
the effects flowing therefrom. If the dismissal is done abusively, then the employer is liable for damages to the
employee [Quisaba v. Sta. Ines-Melale Veneer and Plywood Inc., G.R. No. L-38088, August 30, 1974, 58 SCRA
771; See also Philippine Refining Co., Inc. v. Garcia, G.R. No. L-21871, September 27,1966, 18 SCRA 107] Under
the circumstances of the instant case, the petitioners clearly failed to exercise in a legitimate manner their right to
dismiss Tobias, giving the latter the right to recover damages under Article 19 in relation to Article 21 of the Civil
Code.

But petitioners were not content with just dismissing Tobias. Several other tortious acts were committed by
petitioners against Tobias after the latter's termination from work. Towards the latter part of January, 1973, after the
filing of the first of six criminal complaints against Tobias, the latter talked to Hendry to protest the actions taken
against him. In response, Hendry cut short Tobias' protestations by telling him to just confess or else the company
would file a hundred more cases against him until he landed in jail. Hendry added that, "You Filipinos cannot be
trusted." The threat unmasked petitioner's bad faith in the various actions taken against Tobias. On the other hand,
the scornful remark about Filipinos as well as Hendry's earlier statements about Tobias being a "crook" and
"swindler" are clear violations of 'Tobias' personal dignity [See Article 26, Civil Code].

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The next tortious act committed by petitioners was the writing of a letter to RETELCO sometime in October 1974,
stating that Tobias had been dismissed by GLOBE MACKAY due to dishonesty. Because of the letter, Tobias failed
to gain employment with RETELCO and as a result of which, Tobias remained unemployed for a longer period of
time. For this further damage suffered by Tobias, petitioners must likewise be held liable for damages consistent
with Article 2176 of the Civil Code. Petitioners, however, contend that they have a "moral, if not legal, duty to
forewarn other employers of the kind of employee the plaintiff (private respondent herein) was." [Petition, p. 14;
Rollo, p. 15]. Petitioners further claim that "it is the accepted moral and societal obligation of every man to advise or
warn his fellowmen of any threat or danger to the latter's life, honor or property. And this includes warning one's
brethren of the possible dangers involved in dealing with, or accepting into confidence, a man whose honesty and
integrity is suspect" [Id.]. These arguments, rather than justify petitioners' act, reveal a seeming obsession to
prevent Tobias from getting a job, even after almost two years from the time Tobias was dismissed.

Finally, there is the matter of the filing by petitioners of six criminal complaints against Tobias. Petitioners contend
that there is no case against them for malicious prosecution and that they cannot be "penalized for exercising their
right and prerogative of seeking justice by filing criminal complaints against an employee who was their principal
suspect in the commission of forgeries and in the perpetration of anomalous transactions which defrauded them of
substantial sums of money" [Petition, p. 10, Rollo, p. 11].

While sound principles of justice and public policy dictate that persons shall have free resort to the courts for redress
of wrongs and vindication of their rights [Buenaventura v. Sto. Domingo, 103 Phil. 239 (1958)], the right to institute
criminal prosecutions can not be exercised maliciously and in bad faith [Ventura v. Bernabe, G.R. No. L-26760, April
30, 1971, 38 SCRA 5871.] Hence, in Yutuk V. Manila Electric Co., G.R. No. L-13016, May 31, 1961, 2 SCRA 337,
the Court held that the right to file criminal complaints should not be used as a weapon to force an alleged debtor to
pay an indebtedness. To do so would be a clear perversion of the function of the criminal processes and of the
courts of justice. And in Hawpia CA, G.R. No. L-20047, June 30, 1967. 20 SCRA 536 the Court upheld the judgment
against the petitioner for actual and moral damages and attorney's fees after making a finding that petitioner, with
persistence, filed at least six criminal complaints against respondent, all of which were dismissed.

To constitute malicious prosecution, there must be proof that the prosecution was prompted by a design to vex and
humiliate a person and that it was initiated deliberately by the defendant knowing that the charges were false and
groundless [Manila Gas Corporation v. CA, G.R. No. L-44190, October 30,1980, 100 SCRA 602]. Concededly, the
filing of a suit by itself, does not render a person liable for malicious prosecution [Inhelder Corporation v. CA, G.R.
No. 52358, May 301983122 SCRA 576]. The mere dismissal by the fiscal of the criminal complaint is not a ground
for an award of damages for malicious prosecution if there is no competent evidence to show that the complainant
had acted in bad faith [Sison v. David, G.R. No. L-11268, January 28,1961, 1 SCRA 60].

In the instant case, however, the trial court made a finding that petitioners acted in bad faith in filing the criminal
complaints against Tobias, observing that:

xxx

Defendants (petitioners herein) filed with the Fiscal's Office of Manila a total of six (6) criminal cases,
five (5) of which were for estafa thru falsification of commercial document and one for violation of Art.
290 of the Revised Penal Code "discovering secrets thru seizure of correspondence," and all were
dismissed for insufficiency or lack of evidence." The dismissal of four (4) of the cases was appealed to
the Ministry of Justice, but said Ministry invariably sustained the dismissal of the cases. As above
adverted to, two of these cases were refiled with the Judge Advocate General's Office of the Armed
Forces of the Philippines to railroad plaintiffs arrest and detention in the military stockade, but this was
frustrated by a presidential decree transferring criminal cases involving civilians to the civil courts.

xxx

To be sure, when despite the two (2) police reports embodying the findings of Lt. Dioscoro Tagle, Chief
Document Examiner of the Manila Police Department, clearing plaintiff of participation or involvement in
the fraudulent transactions complained of, despite the negative results of the lie detector tests which
defendants compelled plaintiff to undergo, and although the police investigation was "still under follow-
up and a supplementary report will be submitted after all the evidence has been gathered," defendants
hastily filed six (6) criminal cases with the city Fiscal's Office of Manila, five (5) for estafa thru
falsification of commercial document and one (1) for violation of Art. 290 of the Revised Penal Code, so
much so that as was to be expected, all six (6) cases were dismissed, with one of the investigating
fiscals, Asst. Fiscal de Guia, commenting in one case that, "Indeed, the haphazard way this case was
investigated is evident. Evident likewise is the flurry and haste in the filing of this case against
respondent Tobias," there can be no mistaking that defendants would not but be motivated by malicious
and unlawful intent to harass, oppress, and cause damage to plaintiff.

xxx

[RTC Decision, pp. 5-6; Rollo, pp. 235-236].

In addition to the observations made by the trial court, the Court finds it significant that the criminal complaints were
filed during the pendency of the illegal dismissal case filed by Tobias against petitioners. This explains the haste in
which the complaints were filed, which the trial court earlier noted. But petitioners, to prove their good faith, point to
the fact that only six complaints were filed against Tobias when they could have allegedly filed one hundred cases,
considering the number of anomalous transactions committed against GLOBE MACKAY. However, petitioners' good
faith is belied by the threat made by Hendry after the filing of the first complaint that one hundred more cases would
be filed against Tobias. In effect, the possible filing of one hundred more cases was made to hang like the sword of
Damocles over the head of Tobias. In fine, considering the haste in which the criminal complaints were filed, the fact
that they were filed during the pendency of the illegal dismissal case against petitioners, the threat made by Hendry,
the fact that the cases were filed notwithstanding the two police reports exculpating Tobias from involvement in the
anomalies committed against GLOBE MACKAY, coupled by the eventual dismissal of all the cases, the Court is led
into no other conclusion than that petitioners were motivated by malicious intent in filing the six criminal complaints
against Tobias.

Petitioners next contend that the award of damages was excessive. In the complaint filed against petitioners, Tobias
prayed for the following: one hundred thousand pesos (P100,000.00) as actual damages; fifty thousand pesos
(P50,000.00) as exemplary damages; eight hundred thousand pesos (P800,000.00) as moral damages; fifty
thousand pesos (P50,000.00) as attorney's fees; and costs. The trial court, after making a computation of the
damages incurred by Tobias [See RTC Decision, pp. 7-8; Rollo, pp. 154-1551, awarded him the following: eighty
thousand pesos (P80,000.00) as actual damages; two hundred thousand pesos (P200,000.00) as moral damages;
twenty thousand pesos (P20,000.00) as exemplary damages; thirty thousand pesos (P30,000.00) as attorney's fees;
and, costs. It must be underscored that petitioners have been guilty of committing several actionable tortious acts,
i.e., the abusive manner in which they dismissed Tobias from work including the baseless imputation of guilt and the
harassment during the investigations; the defamatory language heaped on Tobias as well as the scornful remark on

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Filipinos; the poison letter sent to RETELCO which resulted in Tobias' loss of possible employment; and, the
malicious filing of the criminal complaints. Considering the extent of the damage wrought on Tobias, the Court finds
that, contrary to petitioners' contention, the amount of damages awarded to Tobias was reasonable under the
circumstances.

Yet, petitioners still insist that the award of damages was improper, invoking the principle of damnum absque injuria.
It is argued that "[t]he only probable actual damage that plaintiff (private respondent herein) could have suffered was
a direct result of his having been dismissed from his employment, which was a valid and legal act of the defendants-
appellants (petitioners herein). " [Petition, p. 17; Rollo, p. 18].
lâwphî1.ñèt

According to the principle of damnum absque injuria, damage or loss which does not constitute a violation of a legal
right or amount to a legal wrong is not actionable [Escano v. CA, G.R. No. L-47207, September 25, 1980, 100 SCRA
197; See also Gilchrist v. Cuddy 29 Phil, 542 (1915); The Board of Liquidators v. Kalaw, G.R. No. L-18805, August
14, 1967, 20 SCRA 987]. This principle finds no application in this case. It bears repeating that even granting that
petitioners might have had the right to dismiss Tobias from work, the abusive manner in which that right was
exercised amounted to a legal wrong for which petitioners must now be held liable. Moreover, the damage incurred
by Tobias was not only in connection with the abusive manner in which he was dismissed but was also the result of
several other quasi-delictual acts committed by petitioners.

Petitioners next question the award of moral damages. However, the Court has already ruled in Wassmer v. Velez,
G.R. No. L-20089, December 26, 1964, 12 SCRA 648, 653, that [p]er express provision of Article 2219 (10) of the
New Civil Code, moral damages are recoverable in the cases mentioned in Article 21 of said Code." Hence, the
Court of Appeals committed no error in awarding moral damages to Tobias.

Lastly, the award of exemplary damages is impugned by petitioners. Although Article 2231 of the Civil Code
provides that "[i]n quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence,"
the Court, in Zulueta v. Pan American World Airways, Inc., G.R. No. L- 28589, January 8, 1973, 49 SCRA 1, ruled
that if gross negligence warrants the award of exemplary damages, with more reason is its imposition justified when
the act performed is deliberate, malicious and tainted with bad faith. As in the Zulueta case, the nature of the
wrongful acts shown to have been committed by petitioners against Tobias is sufficient basis for the award of
exemplary damages to the latter.

WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals in CA-G.R. CV No. 09055 is
AFFIRMED.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr. and Bidin, JJ., concur.

Feliciano, J., took no part.

Footnotes

** Penned by Justice Jorge R. Coquia and concurred in be Justice Josue N. Bellosillo and Justice
Venancio D. Aldecoa Jr.

The Lawphil Project - Arellano Law Foundation

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