Diaz vs. Encanto

A sabbatical leave is a privilege, not a right, and university officials do not act in bad faith in denying such application when they process it through established procedures and base their decision on the exigencies of service; nonetheless, an employee who actually rendered service is entitled to compensation for that service even if administrative requirements were not initially complied with, subject to subsequent submission of the required documents.

Elizabeth L. Diaz had been in the service of the University of the Philippines since 1963, and by 1987 was an associate professor in the College of Mass Communication (CMC). The respondents were UP officials: Georgina R. Encanto (CMC Dean), Ernesto G. Tabujara (Chancellor), Gemino H. Abad (Vice President for Academic Affairs), and the University of the Philippines itself. The dispute arose within the framework of UP's internal rules governing faculty sabbatical leave applications and the Report for Duty Form requirement for salary entitlement, which were administered by these officials in their respective capacities.

Elizabeth L. Diaz had been in the service of the University of the Philippines since 1963. By 1987, she was an associate professor in the College of Mass Communication (CMC). During the second semester of Academic Year (AY) 1987-1988, she taught a full load of 12 units but, after two to three weeks, applied for sick leave effective November 23, 1987 until March 1, 1988. She returned on March 2, 1988 and submitted a Report for Duty Form. On May 3, 1988, Diaz filed a letter-application directly with UP President Abueva for sabbatical leave with pay for one year effective June 1988 to May 1989, for "rest, renewal and study." Cecilia Lazaro, Chair of the Broadcast Department, initially recommended approval but, after discussing options with CMC Dean Encanto, instead recommended on May 10, 1988 that Diaz be granted any leave of absence she might qualify for. In her May 2, 1988 letter, Diaz had indicated her unwillingness to teach. Considering the CMC's experience with Diaz, who had dropped her courses the previous semester, Lazaro deleted Diaz's name from the final schedule of classes for the first semester of AY 1988-89 beginning June 6, 1988 — without Diaz's prior knowledge or consent. Diaz received her salary for June 1988, indicating that her sabbatical might be approved.

Thereafter, Dean Encanto referred Diaz's sabbatical application to the Secretary of UP, recommending its denial, and requested that Diaz's salary be held effective July 1, 1988 until further notice, since the sabbatical application had not yet been approved and she did not teach that semester. Diaz's name was deleted from the payroll from September 1988 to January 1989. On July 4, 1988, Chancellor Tabujara recommended that Diaz be granted a leave without pay to enable the CMC to hire a substitute. The matter was then referred to Vice President for Academic Affairs Abad, who sought Diaz's written explanation. Pursuant to Administrative Order No. 42, the Academic Policy Coordinating Committee reviewed Diaz's case on July 21, 1988. Meanwhile, the Vice Chancellor for Academic Affairs and the HRDO Director instructed Encanto that until Diaz officially reported for duty and accomplished the Certificate of Report for Duty, she would be considered absent without official leave (AWOL).

Diaz was able to teach during the second semester of AY 1988-89 but was unable to claim her salaries because she refused to submit the Report for Duty Form. She received her salaries for June to July 15, 1989, but could no longer claim her salary after July 15, 1989, when Encanto reminded the University Cashier that Diaz had to accomplish the Report for Duty Form to entitle her to salaries and make official her return. Diaz's name was subsequently included in the payroll starting July 1990, when she submitted a Report for Duty after returning from compulsory summer leave.

On January 3, 1989, Diaz filed a complaint with the Office of the Ombudsman against Abad, Tabujara, and Encanto for alleged violation of Section 3(e) of R.A. 3019, involving the legality of the Report for Duty Form as a prerequisite to salary payment. The Ombudsman dismissed the complaint on May 4, 1989, finding no manifest partiality, evident bad faith, or gross inexcusable negligence. Diaz's petitions for certiorari in the Supreme Court (G.R. No. 88834 and G.R. No. 89207) were both dismissed, the latter on August 31, 1989, with the Court noting the Ombudsman's findings were supported by substantial evidence. On July 18, 1989, Diaz instituted a complaint for damages before the RTC of Pasig against UP, Abueva, Encanto, Tabujara, and Abad, claiming they conspired as joint tortfeasors in not paying her salaries from July 1, 1988 and in withholding her earned salaries for the second semester of AY 1988-89 and subsequent periods. The RTC found in favor of Diaz, awarding unpaid salaries, moral and exemplary damages, and attorney's fees, but later absolved Encanto. The Court of Appeals reversed, finding no negligence or bad faith, and reduced the award to P21,879.64 in unpaid salaries while deleting all other damages.

• Findings of Fact Ignored: Petitioner argued that the Court of Appeals grievously erred in ignoring the RTC's findings of fact, which were based on overwhelming evidence revealing the commission of tortious acts by respondents in denying her sabbatical leave, and in adopting the flimsy excuses of respondents to avoid the legal consequences of their acts.
• Judicious Exercise of Discretion: Petitioner maintained that the Court of Appeals erred in holding that there was judicious exercise by respondents of their discretionary power with respect to the denial of the sabbatical leave, contrary to the evidence on record.
• Unlawful Withholding of Salaries: Petitioner argued that the Court of Appeals erred in treating as lawful the withholding of her salaries, contrary to the evidence on record.
• Failure to Prove Negligence: Petitioner contended that the Court of Appeals erred in concluding that she failed to show by a preponderance of evidence the negligence of respondents so as to be entitled to the damages sought.
• Incorrect Computation: Petitioner asserted that the Court of Appeals erred in not correctly computing the sum of her unpaid and earned salaries, in utter disregard of the evidence on record.
• Joint and Several Liability: Petitioner argued that the Court of Appeals erred in not finding that respondents Encanto, Tabujara, and Abad are jointly and severally liable to her for actual, moral, and exemplary damages as joint tortfeasors under the law.

• Absence of Bad Faith: Respondents argued that the RTC erred in holding them liable for damages despite the absence of bad faith on their part, as held by both the Ombudsman in OMB-00-89-0049 and the Supreme Court in G.R. No. 89207.
• Question of Fact: Respondents asserted that the resolution of the issue of bad faith involves a question of fact, which is not within the province of a Rule 45 petition.

• Bad Faith in Sabbatical Leave Denial: Whether respondents acted in bad faith in denying petitioner Diaz's application for sabbatical leave.
• Bad Faith in Delay: Whether respondents acted in bad faith in the delay of the resolution of petitioner Diaz's sabbatical leave application.
• Lawfulness of Salary Withholding: Whether the withholding of petitioner Diaz's salaries was lawful.
• Entitlement to Withheld Salaries: Whether petitioner Diaz is entitled to payment of her withheld salaries and for what periods.
• Liability for Damages: Whether respondents are liable for moral, exemplary damages, and attorney's fees as joint tortfeasors.
• Legal Interest: Whether legal interest is due on the withheld salaries and at what rate.

• Bad Faith in Sabbatical Leave Denial: No. The respondents did not act in bad faith in denying the sabbatical leave application; the denial was a collegial decision based on UP's established rules, subject to the exigencies of service, including acute shortage in teaching staff.
• Bad Faith in Delay: No. Good faith is presumed, and petitioner Diaz failed to prove that respondents purposely delayed the resolution of her application to prejudice her; any delay was attributable to her own failure to follow usual procedures.
• Lawfulness of Salary Withholding: Partially yes. The withholding of salaries from the second semester of AY 1988-89 onward was lawful, as it was due to Diaz's own refusal to comply with the Report for Duty Form requirement, a standard requirement for all UP employees.
• Entitlement to Withheld Salaries: Yes, with conditions. Diaz is entitled to her salaries from July 1 to October 31, 1988 (when her name was removed from the class schedule without her knowledge) and for periods when she actually rendered service (November 1, 1988 to May 31, 1989, and July 16, 1989 to May 31, 1990), upon submission of the required documents.
• Liability for Damages: No. The respondents did not abuse their rights, and the principle of damnum absque injuria applies; attorney's fees were also denied as no bad faith was shown in respondents' persistence in the case.
• Legal Interest: Yes, at 6% per annum. Pursuant to Nacar vs. Gallery Frames, legal interest at 6% per annum applies from the date of the RTC decision (April 17, 1996) for the first period, and from the date Diaz submits the required documents for the subsequent periods.

• Bad Faith in Sabbatical Leave Denial: A sabbatical leave is not a matter of right but a privilege, as established by the Ombudsman, the RTC, the Court of Appeals, and the Supreme Court in prior proceedings. The respondents had a duty to resolve the application but did so through established procedures, with more leeway given to Diaz since she was asked to submit a historical background to support her application. The denial was based on the recommendation of Dean Encanto, who was in the best position to assess the application, and was grounded on the exigencies of service, specifically acute shortage in teaching staff. The Ombudsman found no manifest partiality, evident bad faith, or gross inexcusable negligence, and the Supreme Court En Banc in G.R. No. 89207 upheld those findings as supported by substantial evidence. The Court of Appeals reached the same conclusion. These three separate rulings were given great weight, and the Court's own perusal of the evidence showed no traces of bad faith or malice.

• Bad Faith in Delay: While the RTC awarded damages for unreasonable and unconscionable delay in the resolution of the sabbatical application (not for its denial per se), the Court still found no bad faith. Good faith is presumed, and the burden of proving bad faith rests on the party alleging it. Diaz failed to show that respondents purposely delayed the resolution to prejudice her, or that a six-month delay had never occurred before. On the contrary, any delay was due to Diaz's own failure to follow the usual procedure for filing sabbatical leave applications, which prolonged the processing time. The Court noted that the requirement that sabbatical leave applications be filed at least one semester before the intended date of effectivity was imposed in 1990, possibly to address such delays.

• Lawfulness of Salary Withholding: The withholding of salaries from the second semester of AY 1988-89 onward was lawful. The Ombudsman, the Court of Appeals, and even the RTC (in its Omnibus Order of January 12, 1990 denying Diaz's petition for mandatory injunction) found that the Report for Duty Form is a basic and standard requirement asked from all UP employees. Diaz's own refusal to comply with this documentary requirement was the reason her salaries were withheld. The RTC held that the withholding appeared to be in accordance with existing University regulations and that Diaz failed to show why she should be spared from the requirement.

• Entitlement to Withheld Salaries: While the withholding was generally lawful, the Court found that Diaz was entitled to compensation for certain periods. For the first semester of AY 1988-89 (July 1 to October 31, 1988), Lazaro removed Diaz's name from the class schedule without Diaz's prior knowledge or consent, though Lazaro acted in good faith, expecting Diaz's leave application to be granted. In the interest of equity and fairness, Diaz should be entitled to her salary during that semester, less the amount she received in June 1988. For the periods of November 1, 1988 to May 31, 1989 and July 16, 1989 to May 31, 1990, Diaz actually rendered teaching service to UP and should be compensated, but only upon submission of the required Report for Duty Form.

• Liability for Damages: Since respondents did not abuse their rights, they should not be held liable for any damages. The Court invoked the principle of damnum absque injuria — the law affords no remedy for damages resulting from an act which does not amount to a legal wrong. Attorney's fees were likewise denied, as no premium should be placed on the right to litigate, and there was no sufficient showing of bad faith in respondents' persistence in the case other than an erroneous conviction of the righteousness of their cause.

• Legal Interest: Pursuant to Nacar vs. Gallery Frames, the applicable rate of legal interest is 6% per annum. For salaries withheld from July 1 to October 31, 1988, interest runs from April 17, 1996 (the date of the RTC Decision) until full payment. For salaries withheld from November 1, 1988 to May 31, 1989 and July 16, 1989 to May 31, 1990, interest runs from the date Diaz submits the required Report for Duty Form until full payment.

• Abuse of Right (Article 19, Civil Code) — Article 19 prescribes a primordial limitation on all rights by setting standards that must be observed in the exercise thereof. Abuse of right exists when the following elements are present: (1) there is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring another. The Court found none of these elements present, as respondents exercised their duty to resolve the sabbatical leave application through established procedures without any dishonest purpose or intent to injure Diaz.

• Presumption of Good Faith — Good faith is presumed, and the burden of proving bad faith rests upon the party alleging it. Bad faith does not simply connote bad judgment or simple negligence; it involves a dishonest purpose or some moral obloquy and conscious doing of a wrong, a breach of known duty due to some motive or interest or ill will that partakes of the nature of fraud. Malice connotes ill will or spite and speaks not in response to duty. The Court applied this doctrine to hold that Diaz failed to discharge her burden of proving bad faith on the part of the respondents.

• Sabbatical Leave as Privilege, Not Right — A sabbatical leave is not a matter of right which could be demanded at will, even by a veteran professor of long standing. Its grant is subject to the exigencies of service, and the approving authorities may deny it based on legitimate grounds such as acute shortage in teaching staff.

• Damnum Absque Injuria — The law affords no remedy for damages resulting from an act which does not amount to a legal wrong. The Court applied this principle to deny Diaz's claims for moral and exemplary damages, as the respondents' acts did not constitute a legal wrong.

• "Malice or bad faith is at the core of Article 19 of the Civil Code. Good faith refers to the state of mind which is manifested by the acts of the individual concerned. It consists of the intention to abstain from taking an unconscionable and unscrupulous advantage of another. It is presumed. Thus, he who alleges bad faith has the duty to prove the same. Bad faith does not simply connote bad judgment or simple negligence; it involves a dishonest purpose or some moral obloquy and conscious doing of a wrong, a breach of known duty due to some motives or interest or ill will that partakes of the nature of fraud." — This passage defines the canonical formulation of bad faith under Article 19 of the Civil Code and is frequently cited in Philippine jurisprudence on abuse of rights.

• "The law affords no remedy for damages resulting from an act which does not amount to a legal wrong. Situations like this have been appropriately denominated damnum absque injuria." — This articulates the doctrine of damnum absque injuria as applied to deny damages where respondents' acts, though causing loss to Diaz, did not constitute a legal wrong.

• "Even when a claimant is compelled to litigate or to incur expenses to protect his rights, still attorney's fees may not be awarded where there is no sufficient showing of bad faith in a party's persistence in a case other than an erroneous conviction of the righteousness of his cause." — This states the rule on attorney's fees, denying the award where the opposing party's persistence is attributable to an erroneous conviction rather than bad faith.

• McLeod vs. National Labor Relations Commission, 541 Phil. 214 (2007) — Cited for the proposition that bad faith is a question of fact and is evidentiary, thus generally not within the province of a Rule 45 petition.
• Jarantilla, Jr. vs. Jarantilla, 651 Phil. 13 (2010) — Cited as exception to the rule that Rule 45 petitions cannot resolve questions of fact, where the RTC and the Court of Appeals have the same findings of fact but arrived at different conclusions.
• Barons Marketing Corp. vs. Court of Appeals and Phelps Dodge Phils., Inc., 349 Phil. 769 (1998) — Cited for the principle that Article 19 prescribes a primordial limitation on all rights, and that good faith is presumed with the burden of proving bad faith on the alleging party.
• Dart Philippines, Inc. vs. Calogcog, 613 Phil. 224 (2009) — Cited for the elements of abuse of right under Article 19, the definition of bad faith, the doctrine of damnum absque injuria, and the rule on attorney's fees.
• Nacar vs. Gallery Frames, G.R. No. 189871, August 13, 2013, 703 SCRA 439 — Cited for the applicable rate of legal interest (6% per annum) on the withheld salaries.

• Article 19, Civil Code — Provides that every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. Applied as the basis for Diaz's claim of abuse of right; the Court found no bad faith in the respondents' exercise of their duty to resolve the sabbatical leave application.
• Article 20, Civil Code — Provides that every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same. Cited alongside Article 19 as the legal basis for Diaz's complaint for damages; the Court found no willful or negligent causation of damage contrary to law.
• Section 3(e), Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act) — The provision under which Diaz filed her complaint with the Ombudsman against respondents; the Ombudsman found no manifest partiality, evident bad faith, or gross inexcusable negligence, a finding upheld by the Supreme Court En Banc.

Diosdado M. Peralta, Lucas P. Bersamin, Estela M. Perlas-Bernabe, and Francis H. Jardeleza concurred. No separate concurring opinions were noted.