Heirs of Purisima Nala vs. Cabansag

A person who sends demand letters in good faith to protect a bona fide claim of ownership over property is not liable for damages under Article 19 of the Civil Code, absent proof that the demand was made in bad faith and with the sole intent of prejudicing or injuring another.

The dispute centers on a 400-square meter lot originally owned by Eulogio Duyan, husband of Purisima Nala, which was purportedly conveyed to spouses Eugenio Gomez, Jr. and Felisa Duyan Gomez under a fictitious deed of sale with the understanding that the Gomez spouses would hold it in trust for the Duyan children. The property was covered by TCT No. 281115 in the name of the Gomez spouses. Respondent Artemio Cabansag purchased a 50-square meter portion of that lot from the Gomez spouses on July 23, 1990. Nala, claiming the property belonged to her family under an implied trust, had separate litigation pending for reconveyance of the same property.

Artemio Cabansag purchased a 50-square meter property from spouses Eugenio Gomez, Jr. and Felisa Duyan Gomez on July 23, 1990. The property formed part of a 400-square meter lot registered in the name of the Gomez spouses under TCT No. 281115. That 400-square meter lot, in turn, had originally been part of an 800-square meter property owned by Eulogio Duyan, husband of Purisima Nala. According to Nala, the property had been conveyed to the Gomez spouses through a fictitious deed of sale, with the agreement that they would hold it in trust for the Duyan children. Nala also claimed that Cabansag was merely renting the portion he occupied.

In October 1991, Cabansag received a demand letter from Atty. Alexander del Prado, acting on behalf of Nala, requiring payment of rentals from 1987 to 1991 and directing him to vacate the premises on the ground that the property was owned by Nala. The letter threatened criminal and civil actions if he failed to comply. A second demand letter was sent on May 14, 1991. Cabansag alleged that because of these demands, he suffered damages and was constrained to file a complaint for damages against Nala and Atty. Del Prado in October 1991, docketed as Civil Case No. Q-91-10541 before the RTC of Quezon City, Branch 93.

Atty. Del Prado maintained that he sent the demand letters in good faith and was merely acting on behalf of his client. Nala asserted her ownership claim over the property, disputing Cabansag's title. She had no knowledge that the Gomez spouses had sold a portion of the property to Cabansag; it was only after Cabansag filed the damages suit that she learned of the sale. Meanwhile, Nala had separately filed Civil Case No. 91-8821 before the RTC of Quezon City, Branch 80, seeking reconveyance of the property and cancellation of TCT No. 281115. That case was dismissed by the RTC on September 5, 1994, but the CA later reversed the dismissal in a Decision dated March 8, 2000 in CA-G.R. CV No. 49163, ordering reconveyance of the property to Nala and her children and declaring TCT No. 281115 canceled. The Supreme Court affirmed that CA Decision on March 18, 2005 in G.R. No. 144148, which became final and executory on July 27, 2005.

After trial in the damages case, the RTC rendered judgment on August 10, 1994 in favor of Cabansag, awarding moral damages, exemplary damages, attorney's fees, and costs. Nala and Atty. Del Prado appealed to the CA, which affirmed with modification on December 19, 2002, reducing the awards. Nala died on January 28, 2002 and was substituted by her heirs, who elevated the case to the Supreme Court via petition for review.

• Right to Protect Property Interests: Petitioners argued that their predecessor-in-interest, Purisima Nala, had every right to protect and assert her interests over the property. Nala had no knowledge that the Gomez spouses had sold the property to respondent when the demand letters were sent; she was only aware that the Gomez spouses were managing rentals on the property by virtue of an implied trust created between them and Eulogio Duyan. When the Gomez spouses failed to remit rentals and claimed ownership, Nala procured legal counsel to protect her family's rights.
• Overlooking the Reconveyance Decision: Petitioners contended that the CA erred in taking note of the RTC Decision in Civil Case No. 91-8821 without noting that the CA had already reversed and set aside that decision, ordering reconveyance of the property to Nala and her children in CA-G.R. CV No. 49163.
• Lack of Basis for Damages: Petitioners argued that respondent failed to substantiate his claim for damages and that the awards had no basis.

• Abuse of Rights: Whether Nala and her counsel acted in bad faith and with the sole intent to prejudice or injure respondent when they sent the demand letters, such as to warrant liability for damages under Article 19 of the Civil Code.
• Basis for Damages: Whether the awards of moral damages, exemplary damages, and attorney's fees in favor of respondent were proper.

• Abuse of Rights: No. The sending of demand letters to protect a bona fide claim of ownership does not constitute abuse of rights under Article 19 absent proof of bad faith and sole intent to injure, the requisites of which were not established by respondent.
• Basis for Damages: No. The awards of moral damages, exemplary damages, and attorney's fees were improper, there being no legal wrong committed; whatever damages respondent suffered constitute damnum absque injuria.

• Abuse of Rights: Article 19 of the Civil Code sets the standard that every person must, in the exercise of rights and performance of duties, act with justice, give everyone his due, and observe honesty and good faith. Liability under this provision requires the concurrence of three requisites: (a) existence of a legal right or duty; (b) exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another. Good faith is presumed, and the party alleging bad faith bears the burden of proof. Bad faith connotes dishonest purpose, conscious doing of a wrong, or a breach of known duty due to some motive or ill will partaking of the nature of fraud; malice implies an intention to do ulterior and unjustifiable harm. In this case, nothing on record proved that Nala and her counsel acted in bad faith or malice. Nala had a legitimate basis for her actions — she believed the property was owned by her late husband and that respondent was illegally occupying it. She had no knowledge of the sale to respondent until he filed the damages suit. The bare fact that respondent claimed ownership did not establish bad faith on Nala's part. Respondent likewise failed to show that the demand letters were sent with the sole intention of prejudicing or injuring him. Nala was acting well within her rights to take all necessary legal steps to enforce her legal and equitable rights over the property. One who makes use of his own legal right does no injury. This conclusion was further reinforced by the fact that the property had already been ordered reconveyed to Nala and her heirs by the CA in CA-G.R. CV No. 49163, a decision affirmed by the Supreme Court in G.R. No. 144148 and made final and executory on July 27, 2005.
• Basis for Damages: There is a material distinction between damages and injury. Injury is the legal invasion of a legal right, while damage is the hurt, loss, or harm resulting from the injury. There can be damage without injury where the loss or harm was not the result of a violation of a legal duty; in such cases, the consequences must be borne by the injured person alone, and the law affords no remedy. This situation is known as damnum absque injuria. Since Nala committed no legal wrong in sending the demand letters, whatever damages respondent suffered — including mental anguish, serious anxiety, and sleepless nights — must be borne solely by him.

• Abuse of Rights Principle (Article 19, Civil Code) — 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. When a right is exercised in a manner not conforming to the norms of Article 19 and results in damage to another, a legal wrong is committed. The requisites for liability are: (a) existence of a legal right or duty; (b) exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another. Malice or bad faith is at the core of Article 19; good faith is presumed, and he who alleges bad faith has the duty to prove it. The Court applied this doctrine by finding that Nala's sending of demand letters was a legitimate exercise of her property rights, undertaken without bad faith or malice, and therefore did not constitute abuse of rights.
• Damnum Absque Injuria — Damage without injury; loss or harm suffered without a violation of a legal right or duty. In such cases, the law affords no remedy, and the consequences must be borne by the injured person alone. The Court applied this doctrine to hold that whatever damages respondent suffered from the demand letters were not the result of a legal wrong committed by Nala, and thus must be borne solely by respondent.

• "There is an abuse of right when it is exercised only for the purpose of prejudicing or injuring another. The exercise of a right must be in accordance with the purpose for which it was established, and must not be excessive or unduly harsh; there must be no intention to injure another." — This passage articulates the Court's formulation of the abuse-of-rights principle under Article 19, defining when the exercise of an otherwise legal right becomes actionable.
• "In order to be liable for damages under the abuse of rights principle, the following requisites must concur: (a) the existence of a legal right or duty; (b) which is exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another." — This sets out the three-part test for liability under Article 19, a formulation frequently cited in subsequent jurisprudence on abuse of rights.
• "Thus, there can be damage without injury in those instances in which the loss or harm was not the result of a violation of a legal duty. In such cases, the consequences must be borne by the injured person alone; the law affords no remedy for damages resulting from an act which does not amount to a legal injury or wrong. These situations are often called damnum absque injuria." — This passage defines the doctrine of damnum absque injuria and explains why respondent's claim for damages failed despite his having suffered some form of harm.

• Hongkong and Shanghai Banking Corporation Limited vs. Catalan, G.R. No. 159590, October 18, 2004 — Cited for the principle that Article 19 sets standards observed not only in the exercise of rights but also in the performance of duties, and that a legal right may become a source of illegality when exercised with negligence or abuse.
• Far East Bank and Trust Company vs. Pacilan, Jr., G.R. No. 157314, July 29, 2005 — Cited for the three requisites of liability under the abuse-of-rights principle: (a) existence of a legal right or duty, (b) exercised in bad faith, and (c) for the sole intent of prejudicing or injuring another.
• Saber vs. Court of Appeals, G.R. No. 132981, August 31, 2004 — Cited for the presumption of good faith and the burden on the party alleging bad faith to prove it, as well as for the definition of bad faith as connoting dishonest purpose, conscious doing of a wrong, or breach of known duty due to some motive or ill will partaking of the nature of fraud.
• Diaz vs. Davao Light and Power Co., Inc., G.R. No. 160959, April 4, 2007 — Cited for the doctrine of damnum absque injuria, distinguishing between injury (legal invasion of a legal right) and damage (the hurt, loss, or harm resulting from injury).
• Pro Line Sports Center, Inc. vs. Court of Appeals, 346 Phil. 143 (1997) — Cited for the principle that one who makes use of his own legal right does no injury.

• 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. The Court identified this as the substantive basis for respondent's claim for damages, even though the lower courts had failed to specify the provision, and applied it to determine that Nala's conduct did not constitute abuse of rights.

Consuelo Ynares-Santiago (Chairperson), Minita V. Chico-Nazario, Ruben T. Reyes (in lieu of Justice Antonio Eduardo B. Nachura per Special Order No. 507 dated May 28, 2008), and Arturo D. Brion. No separate concurring opinions were written.