G.R. No. 112660 March 14, 1995
SPOUSES ANTONIO CHUA and VIRGINIA CHUA, petitioners, vs. COURT OF APPEALS and RUFINO CO, respondents.

FACTS

Private respondent Rufino Co was the lessee of the second floor of a building in Binondo, Manila, where he conducted his garments manufacturing business. Petitioner spouses Antonio and Virginia Chua managed a “Jollibee Yumburger” establishment on the ground floor of the same building. On September 27, 1984, Co filed a complaint with the Industrial Safety Division of the Manila City Engineer’s Office, alleging that the Chuas’ installation of airconditioning units, a water tank, and exhaust fans obstructed the second floor and created heat and noise. The City Engineer directed the Chuas to stop the installation until a permit was issued. Due to non-compliance, the Secretary to the Mayor, upon the City Engineer’s recommendation, issued an order to close the Chuas’ business. Based on the Chuas’ representations that corrective measures had been taken, the Secretary issued a “Temporary Lifting Order” effective for thirty days, subject to verification. Co filed an original action for mandamus and prohibition with a prayer for preliminary injunction in the Regional Trial Court (RTC) of Manila, alleging grave abuse of discretion in issuing the temporary lifting order and seeking damages for tortious acts. The RTC initially issued a temporary restraining order but lifted it after an ocular inspection found Co’s premises not physically occupied except by an overseer. In their answer, the Chuas denied Co’s allegations, filed a counterclaim for damages, and asserted that Co had no cause of action as corrective measures had been taken and permits issued. The RTC dismissed Co’s complaint and awarded the Chuas actual, moral, and exemplary damages plus attorney’s fees. On appeal, the Court of Appeals upheld the dismissal but deleted the award of damages. The Chuas filed this petition, arguing the appellate court erred in not sustaining the damages award and in holding that such damages could only be claimed against a bond.

ISSUE

Whether or not there was bad faith or ill-motive on the part of private respondent Rufino Co in filing his complaint against petitioners which would entitle petitioners to damages.

RULING

No. The Supreme Court affirmed the decision of the Court of Appeals. The law presumes good faith, and the burden of proving bad faith or ill-motive lies with the party claiming damages. The petitioners’ counterclaim, imputing ill-motive to Co, was in the nature of a claim for damages based on malicious prosecution. For such a claim to succeed, both malice and lack of probable cause must be clearly shown. The Court of Appeals correctly found that Co had probable cause in filing the complaint, as his allegations were investigated and initially acknowledged by city authorities, and no malice was proven. The fact that Co no longer conducted his business on the second floor did not establish bad faith, as he still used the premises for storage, and findings of bad faith cannot be based on mere inferences. The Petition was DENIED.