A party who files a criminal complaint against another based on probable cause and in good faith cannot be held liable for damages under the principle of abuse of rights or for malicious prosecution, even if it is later discovered that the complaint was filed against the wrong person due to an honest mistake of identity. The law does not penalize the right to litigate, and an adverse result of an action does not, by itself, make the act wrongful or subject the actor to payment of damages.

Albenson Enterprises Corporation delivered mild steel plates to Guaranteed Industries, Inc. but was paid with a check that was subsequently dishonored for "Account Closed." The check was drawn against the account of E.L. Woodworks. In an attempt to collect the payment, Albenson conducted inquiries which led them to believe that Eugenio S. Baltao, the president of Guaranteed Industries, was the same "Eugenio Baltao" who owned E.L. Woodworks and issued the check. This belief was based on records from the SEC, the Ministry of Trade and Industry, and the drawee bank. This case of mistaken identity led to the filing of a criminal complaint and the subsequent civil suit for damages.

• In 1980, petitioner Albenson Enterprises Corp. delivered mild steel plates to Guaranteed Industries, Inc. and received a Pacific Banking Corporation check for P2,575.00 as partial payment.
• The check, drawn against the account of "E.L. Woodworks," was dishonored for the reason "Account Closed."
• Albenson's investigation revealed that: (1) respondent Eugenio S. Baltao was the president of Guaranteed Industries; (2) E.L. Woodworks was a single proprietorship registered under the name "Eugenio Baltao"; and (3) the drawee bank confirmed the signature on the check belonged to one "Eugenio Baltao."
• Albenson sent a demand letter to respondent Baltao, whose counsel denied that Baltao issued the check but did not clarify that there were other persons named Eugenio Baltao involved, specifically his son.
• It was later discovered that respondent Baltao has a son, Eugenio Baltao III, who managed E.L. Woodworks and was the actual issuer of the check.
• Based on their investigation, Albenson filed a criminal complaint for violation of Batas Pambansa Blg. 22 against respondent Eugenio S. Baltao.
• An information was filed, but upon reinvestigation prompted by respondent's motion, the Provincial Fiscal found that the signature on the check was not the respondent's and exonerated him.
• Following his exoneration, respondent Baltao filed a civil complaint for damages against Albenson and its employees, alleging malicious prosecution and abuse of rights.
• The Regional Trial Court awarded respondent over P1.3 million in damages, which the Court of Appeals affirmed but with reduced amounts for moral damages and attorney's fees.

• The civil case filed by the respondent was for malicious prosecution, and the absence of malice on their part absolves them of any liability.
• They acted with probable cause and in good faith, having conducted diligent inquiries that all pointed to the respondent as the issuer of the check.
• The respondent's cause of action was not one for abuse of rights under Article 21 of the Civil Code.
• There was no sufficient basis in law or fact to hold them jointly and severally liable for damages.
• The damages awarded by the lower courts (actual, moral, exemplary, and attorney's fees) were baseless and not supported by sufficient evidence.

• His complaint for damages was anchored on the principle of abuse of rights under Articles 19, 20, and 21 of the Civil Code.
• The petitioners' act of filing an unjust criminal case against him was a plain case of abuse of rights, which became grossly aggravated when he was deprived of his right to a fair hearing during the preliminary investigation.
• The petitioners' actions were "coldly deliberate and calculated" to malign him.
• Petitioners insisted on filing the criminal case despite being warned by his counsel that he was not the person they had dealt with.

• Procedural Issues:
  • N/A
• Substantive Issues:
  • Whether the petitioners are liable for damages under the principle of abuse of rights for filing a criminal complaint against the respondent due to a mistaken identity.
  • Whether the elements of malicious prosecution were present to justify an award of damages.
  • Whether the award of actual, moral, exemplary damages, and attorney's fees by the lower courts was proper.

• Procedural:
  • N/A
• Substantive:
  • The petition is granted, and the decision of the Court of Appeals is reversed and set aside; petitioners are not liable for damages.
  • Petitioners did not violate the principle of abuse of right under Articles 19 and 21 of the Civil Code because the essential element of bad faith or intent to injure was absent. They acted based on an honest belief, supported by their investigation, that respondent issued the check.
  • The elements of malicious prosecution are not present. Petitioners had probable cause to file the complaint, which is the existence of facts that would lead a reasonable person to believe the person charged is guilty. The presence of probable cause negates the element of malice.
  • The filing of the complaint was a sincere attempt to collect a due obligation and an exercise of the right to litigate, which the law protects. An adverse result of an action does not automatically make the act wrongful or subject the actor to damages.
  • The error in identity was an innocent mistake that could have been easily clarified by the respondent at the outset. His failure to do so and subsequent filing of a damage suit was deemed a "devious scheme."
  • The awards for actual, moral, exemplary damages, and attorney's fees are all unwarranted. Actual damages were not proven with evidence; moral and exemplary damages require proof of bad faith or malice, which was absent; and attorney's fees cannot be awarded without a basis for other damages.

• Abuse of Right (Article 19, Civil Code) — This principle requires that a person, in the exercise of their rights and performance of their duties, must act with justice, give everyone his due, and observe honesty and good faith. The Court held that for an abuse of right to exist, the exercise of the right must be in bad faith and for the sole intent of prejudicing another. In this case, petitioners were found to have acted in good faith, thus there was no abuse of right.
• Malicious Prosecution — This is a civil action for damages which requires proof of three elements: (1) the defendant was the prosecutor and the action terminated in the plaintiff's acquittal; (2) the prosecutor acted without probable cause; and (3) the prosecutor was motivated by legal malice. The Court found that petitioners acted with probable cause, which negated the second and third elements, thereby precluding a claim for malicious prosecution.
• Probable Cause — Defined as the existence of such facts and circumstances as would excite the belief in a reasonable mind that the person charged was guilty of the crime for which he was prosecuted. The Court ruled that petitioners' inquiries with the SEC, Ministry of Trade, and the bank established probable cause to file the complaint, signifying their actions were not baseless.
• Damnum Absque Injuria — This maxim means "damage without legal injury." It applies when a person sustains damage as a result of another person's exercise of a legal right. The Court applied this doctrine, stating that any damage the respondent may have suffered from the filing of the complaint was a consequence of the petitioners' good-faith exercise of their right to litigate and was therefore not actionable.

• "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."
• "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."

• Que vs. Intermediate Appellate Court — Cited for the definition of probable cause and the rule that a suit for malicious prosecution will only lie where the legal prosecution was carried on without probable cause.
• Rubio vs. Court of Appeals — Referenced for the principle that in the absence of a wrongful act, fraud, or bad faith, moral damages cannot be awarded, and the adverse result of an action does not per se make it wrongful.
• Lao vs. Court of Appeals — Cited to enumerate the three essential elements for a successful civil action for malicious prosecution.
• Ilocos Norte Electric Company vs. Court of Appeals — Referenced for the application of the doctrine of damnum absque injuria, where damage resulting from a person's exercise of legal rights is not compensable.
• Manila Gas Corporation vs. Court of Appeals — Cited for the rule that the mere act of submitting a case to authorities for prosecution does not automatically make one liable for malicious prosecution.

• Article 19, Civil Code — The Court analyzed this article on the principle of abuse of rights and concluded that petitioners did not act with bad faith, a necessary element for its application.
• Article 20, Civil Code — Cited as one of the legal bases for the respondent's claim for damages, which provides for indemnification for damage caused willfully or negligently contrary to law.
• Article 21, Civil Code — This article on acts contrary to morals and good customs was invoked by the respondent, but the Court found no intent to injure on the part of the petitioners.
• Article 2219 (8), Civil Code — This provision, which allows moral damages for malicious prosecution, was deemed inapplicable because the elements of malicious prosecution were not established.
• Batas Pambansa Bilang 22 — This is the statute defining the crime for which the original criminal complaint was filed against the respondent.