The exercise of a legal right, such as enforcing the rules of an electric cooperative, becomes an actionable tort under Articles 19 and 21 of the Civil Code if it is done in a manner contrary to morals and good customs, with the intent to injure another; such an abuse of rights warrants the award of damages to the aggrieved party.

Respondent Engr. Elmer Fudalan applied for electrical service from Bohol I Electric Cooperative, Inc. (BOHECO I) for his farmhouse. The process required him to hire a BOHECO I-authorized electrician and secure a certification from the local Barangay Power Association (BAPA), which was chaired by petitioner Crispina Raso. The dispute arose from the petitioners' actions following the respondent's attempt to comply with these requirements.

• Respondent applied for electrical service with BOHECO I and hired its authorized electrician, Sabino Albelda.
• Albelda informed the respondent that a certification from petitioner Raso, the BAPA Chairperson, was required before installation.
• Despite diligent efforts, the respondent's farmhand was unable to locate Raso to get the certification.
• On Albelda's assurance that it was permissible and that usage would be properly metered, the respondent consented to tapping his electrical line to the BAPA line.
• When the respondent finally met Raso and explained the situation, she became angry, vowed never to issue the certification, and reported the matter to BOHECO I for disconnection.
• The respondent complained to BOHECO I and met petitioner Lomarda, who, along with Raso, repeatedly told him "Sabut sabuton lang ni nato" ("let us just settle this"), which the respondent interpreted as a solicitation for money.
• On November 6, 2006, the day of the inspection, petitioners demanded P1,750.00 or a promissory note from the respondent to prevent disconnection.
• When the respondent refused to pay without an official order, Lomarda, in the presence of police and other people, publicly shouted, "This is an illegal tapping," and ordered his linemen to cut off the respondent's electricity.
• The respondent later discovered from BOHECO I that his actual electric usage only amounted to P20.00.

• Petitioners argued they should not be held liable for damages because the respondent committed an unauthorized and premature tapping of electricity.
• They invoked the "clean hands" doctrine, asserting that the respondent, having engaged in an illegal act, cannot seek relief from the court.
• They claimed they could not be faulted for the disconnection as they had given the respondent the option to pay a penalty or sign a promissory note, which he refused.
• They contended that the respondent was not entitled to moral damages due to a lack of evidence that their actions caused him moral suffering.

• Respondent alleged that the petitioners conspired to purposely delay his application for electrical connection by withholding the BAPA certification.
• He claimed that petitioners falsely accused him of premature tapping and electricity pilferage.
• He argued that the petitioners attempted to extort P1,750.00 from him when his actual bill was only P20.00.
• He asserted that he acted in good faith, exerted all efforts to comply with the requirements, and that the petitioners' malicious acts tarnished his reputation and caused him humiliation.

• Procedural Issues:
  • N/A
• Substantive Issues:
  • Whether the Court of Appeals correctly held the petitioners liable for damages under Article 21, in relation to Article 19, of the Civil Code for abuse of rights.

• Procedural:
  • N/A
• Substantive:
  • Yes, the petitioners are liable for damages, but the amounts awarded by the lower courts are modified. The Supreme Court found that while the petitioners were performing a legal act (enforcing compliance with cooperative rules), they did so in a manner contrary to morals, good customs, and with an intent to injure. Their actions of withholding information, misleading the respondent with vague promises of "settling" the matter, attempting to extort an exorbitant amount, and publicly humiliating him constituted an abuse of rights under Article 19. The Court ruled that the "clean hands" doctrine was inapplicable because the respondent had acted in good faith and his technical non-compliance was a direct result of the petitioners' own obstructive and malicious conduct. The Court affirmed the finding of liability but reduced the awards for moral damages, exemplary damages, and attorney's fees to P50,000.00, P50,000.00, and P25,000.00, respectively, finding the original amounts excessive.

• Principle of Abuse of Rights (Article 19, Civil Code) — This principle mandates that every person must, in the exercise of their rights and performance of their duties, act with justice, give everyone their due, and observe honesty and good faith. The Court applied this doctrine to find that petitioners, while enforcing BOHECO I's rules, did so unjustly and in bad faith by misleading, extorting from, and publicly humiliating the respondent, thereby causing him injury.
• Acts Contra Bonos Mores (Article 21, Civil Code) — This doctrine holds a person liable for willfully causing loss or injury to another in a manner that is contrary to morals, good customs, or public policy. The Court used this to establish an actionable tort, finding that petitioners' acts, while not necessarily illegal in themselves, were contrary to good customs and done with an ill motive to injure the respondent.
• Clean Hands Doctrine — This is an equitable principle stating that a party seeking relief from a court must not have engaged in inequitable behavior themselves. The Court held this doctrine was inapplicable to the respondent, as he was deemed free from fault; his failure to secure the required certification was caused by the petitioners' own malicious actions, which made compliance impossible.

• "Under the foregoing circumstances, it is clear that petitioners should be held liable for damages under Article 19, in relation to Article 21, of the Civil Code. While it appears that petitioners were engaged in a legal act, i.e., exacting compliance with the requirements for the installation of respondent's electricity in his farmhouse, the circumstances of this case show that the same was conducted contrary to morals and good customs, and were in fact done with the intent to cause injury to respondent."
• "Parties who do not come to court with clean hands cannot be allowed to profit from their own wrongdoing. The action (or inaction) of the party seeking equity must be 'free from fault, and he must have done nothing to lull his adversary into repose, thereby obstructing and preventing vigilance on the part of the latter.'"

• Saudi Arabian Airlines v. CA — Referenced to explain the relationship between Article 19 (the general principle of abuse of rights) and Article 21 (which provides the basis for an actionable tort for acts contra bonos mores) of the Civil Code.
• Mata v. Agravante — Cited for outlining the three elements of an act contra bonos mores under Article 21: (1) a legal act, (2) which is contrary to morals, good customs, public order, or public policy, and (3) is done with intent to injure.
• DPWH v. Quiwa — Cited to define the clean hands doctrine and explain that the party seeking equity must be free from fault.

• Article 19, Civil Code — This article was the primary basis for the ruling, establishing the standard of conduct (acting with justice, honesty, and good faith) that petitioners violated in the exercise of their duties.
• Article 21, Civil Code — This article provided the legal basis for holding petitioners liable for damages, as their actions, though ostensibly legal, were contrary to morals and good customs and were done with the intent to injure the respondent.
• Article 2208, Civil Code — This article was cited to justify the award of attorney's fees, as it permits such an award when exemplary damages are granted.
• Article 2219, Civil Code — This article was cited as the basis for awarding moral damages, as it explicitly allows for such damages in cases falling under Article 21.