The exercise of a legal right, such as filing complaints with appropriate government agencies to seek redress for grievances, does not give rise to liability for damages unless it is proven that such an act was done with malice or bad faith and with the intent to injure another, in violation of the principle of abuse of rights under Articles 19 and 21 of the Civil Code.

The dispute originated from a labor issue where former security guards of the Bessang Pass Security Agency, the respondents, filed complaints against their employer, the petitioner, for non-payment of salaries and other benefits. To pursue their claims, they not only filed a case with the National Labor Relations Commission (NLRC) but also sought the cancellation of the agency's license from the Philippine National Police (PNP), sending copies of their complaint to multiple government bodies.

• Respondents were former security guards of the Bessang Pass Security Agency, owned by petitioner Clarissa Mata.
• On October 27, 1993, respondents filed a complaint with the NLRC for non-payment of salaries and other benefits.
• Subsequently, they filed an affidavit-complaint with the Philippine National Police (PNP) requesting an investigation and the cancellation of the agency's license to operate due to violations of labor laws.
• Copies of this affidavit-complaint were sent to seven other government offices, including the Office of the President and the Department of Public Works and Highways (DPWH), which was the petitioner's biggest client.
• On January 6, 1994, the petitioner filed a civil action for damages against the respondents, claiming their actions were a malicious campaign to destroy her agency's reputation, resulting in the loss of contracts and income.

• The respondents' complaints before the NLRC and PNP were unfounded and baseless.
• The act of furnishing copies of the complaint to seven government offices, particularly her agency's biggest client (DPWH), was not a legitimate exercise of a right but a deliberate campaign of hate and vilification intended to malign her good name and reputation.
• The respondents' actions were motivated by malice and revenge, with the sole intention of destroying her business, which allegedly caused her to lose at least P5,000,000.00 in income.
• The respondents' conduct constituted an abuse of rights in violation of Articles 19, 20, and 21 of the Civil Code, making them liable for damages.

• Filing the complaints and furnishing copies to government agencies was a legitimate exercise of their right to seek justice and redress for grievances, specifically for illegal labor practices committed by the petitioner.
• Their actions were not tainted with bad faith or malice; they merely sought to call the attention of responsible government agencies to take appropriate action against an erring security agency.
• The PNP was the proper body to investigate and potentially cancel the agency's license, a relief distinct from the monetary claims sought from the NLRC.
• There is no liability for exercising a right granted by law, such as filing a labor case, even if it results in the other party being unable to secure contracts.

• Procedural Issues:
  • Whether the Court of Appeals committed a reversible error in setting aside the decision of the trial court, notwithstanding the fact that the respondents had been declared in default.
• Substantive Issues:
  • Whether the respondents' act of filing complaints with the NLRC and PNP and furnishing copies thereof to various government offices constitutes an abuse of rights under Articles 19, 20, and 21 of the Civil Code, which would entitle the petitioner to moral damages.

• Procedural:
  • The Supreme Court did not explicitly rule on the procedural issue concerning the default order but implicitly upheld the propriety of the Court of Appeals' review by focusing its decision entirely on the substantive merits of the case and affirming the appellate court's reversal of the trial court's judgment.
• Substantive:
  • The Supreme Court denied the petition and affirmed the Court of Appeals' decision. The Court held that for a claim under the principle of abuse of rights to prosper, the act complained of must be intentional and attended with malice or bad faith. In this case, the petitioner failed to prove that the respondents acted with malicious intent to injure her reputation. The respondents were merely exercising their legal right to seek assistance from the appropriate government agencies, including the PNP, which has supervisory power over security agencies, to obtain redress for their grievances. Without proof of malice or bad faith, the exercise of a legal right cannot be the basis for an award of damages.

• Principle of Abuse of Rights (Article 19, Civil Code) — This principle mandates 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 applied this doctrine by holding that its antithesis is an act evincing bad faith or intent to injure. As the respondents' actions were not proven to be malicious or in bad faith, they did not violate this principle.
• Acts Contra Bonos Mores (Article 21, Civil Code) — This principle 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, even if the act itself is not illegal. The Court explained that a common element with Article 19 is the intent to injure. It ruled that this doctrine was inapplicable because the respondents' actions were not shown to have been done with the intent to injure the petitioner but were aimed at seeking legal redress.

• "So, we reiterate the basic postulate that in the absence of proof that there was malice or bad faith on the part of the respondents, no damages can be awarded."

• Nikko Hotel Manila Garden v. Reyes — Cited to define the standards of Article 19 and to provide the elements of an act contra bonos mores under Article 21, emphasizing that the act must be attended with bad faith or intent to injure.
• Albenson Enterprises Corporation v. Court of Appeals — Referenced to support the principle that the determination of whether the principle of abuse of rights has been violated is dependent on the specific circumstances of each case.

• Article 19, Civil Code — Invoked as the primary basis for the petitioner's claim, this article sets the standard for the proper exercise of rights and performance of duties.
• Article 20, Civil Code — Cited as a basis for the claim for damages, this article provides for indemnification for damage caused by acts contrary to law.
• Article 21, Civil Code — Cited as a basis for the claim, this article provides for compensation for loss or injury caused by acts that are contrary to morals, good customs, or public policy.
• Section 8 of Republic Act No. 5487 (Private Security Agency Law) — Cited to establish that the PNP has the authority to supervise security agencies and cancel their licenses, making it a proper forum for the respondents' complaint and justifying their action.