G.R. No. 77950 August 24, 1990
ISIDRO V. SABA, petitioner, vs. THE HON. COURT OF APPEALS, EMIL L. ONG, EMIL L. ONG CHUAN AND JOSE ONG CHUAN, respondents.

FACTS

Pedro de la Cruz was a grantee of a marshy land lease from the Bureau of Lands under Miscellaneous Lease Application (MLA) No. 810, awarded in 1934 for a maximum period of fifteen years, expiring in 1949. Upon his wife’s death, the leasehold interest was included in intestate proceedings, with 50% adjudicated to Pedro and the other 50% pro-indiviso to his eight children. In 1966, one child, Lourdes C. Agbayani, sold her 1/8 share of this leasehold right to petitioner Isidro V. Saba. Saba, upon Lourdes’s notification to the respondents-lessees, demanded payment of rentals corresponding to that share. The respondents, who had constructed a building on the land after a previous warehouse burned down, refused to pay Saba.
Saba filed a collection case for rentals, which was dismissed by the lower courts for improper venue. He subsequently filed the present collection suit in 1974. The private respondents countered by praying for moral and exemplary damages and attorney’s fees, alleging the suit was baseless and damaged their reputations as prominent businessmen and professionals. The trial court dismissed Saba’s complaint and awarded substantial damages to the respondents, a decision affirmed by the Court of Appeals.

ISSUE

The primary issues are: (1) whether petitioner Saba had a valid cause of action for collection of rentals against the private respondents; and (2) whether the award of moral damages, exemplary damages, and attorney’s fees to the respondents was proper.

RULING

The Supreme Court partly granted the petition. On the first issue, the Court held that Saba had no cause of action. The original lease grant to Pedro de la Cruz had a maximum term of fifteen years, expiring in 1949. No evidence was presented to prove any renewal of this lease. Consequently, by 1966, when Lourdes Agbayani sold her “leasehold right” to Saba, no subsisting leasehold interest existed that could be validly conveyed. Therefore, Saba acquired no enforceable right to collect rentals, and the dismissal of his complaint was correct.
On the second issue, the Court reversed the award of damages. The legal principle is that the exercise of a legal right, even if it ultimately proves unsuccessful, generally causes no actionable injury (damnum absque injuria). The Court found that Saba filed his suit in good faith, relying on the deed of sale from Lourdes and her notification to the respondents. An erroneous belief in one’s legal claim does not in itself constitute bad faith or a willful intent to harass. The worries, expenses, and alleged injury to reputation suffered by the respondents were incidental to being made a defendant in a litigation and were not shown to be the result of malicious or baseless prosecution. Since the filing of the case was not attended by bad faith, the awards for moral damages, exemplary damages, and attorney’s fees had no legal basis. The decision of the Court of Appeals was modified by deleting these awards.