G.R. No. 88694 January 11, 1993
ALBENSON ENTERPRISES CORP., JESSE YAP, AND BENJAMIN MENDIONA, petitioners, vs. THE COURT OF APPEALS AND EUGENIO S. BALTAO, respondents.

FACTS

Petitioner Albenson Enterprises Corporation delivered mild steel plates to Guaranteed Industries, Inc. in 1980. As partial payment, Albenson received a Pacific Banking Corporation check drawn against the account of “E.L. Woodworks,” which was dishonored for reason “Account Closed.” Albenson, through counsel, traced the check and discovered from SEC records that the president of Guaranteed was “Eugenio S. Baltao.” The Ministry of Trade and Industry indicated E.L. Woodworks was registered to “Eugenio Baltao,” and the drawee bank advised the signature on the check belonged to “Eugenio Baltao.” Albenson made an extrajudicial demand on private respondent Eugenio S. Baltao, who denied issuing the check and claimed Guaranteed was defunct. On February 14, 1983, Albenson filed a complaint with the Provincial Fiscal of Rizal against Eugenio S. Baltao for violation of B.P. Blg. 22, supported by an affidavit of petitioner Benjamin Mendiona. An information was filed by Assistant Fiscal Ricardo Sumaway. It was later revealed that private respondent has a namesake son, Eugenio Baltao III, who manages E.L. Woodworks at the same business address. Upon motion for reinvestigation, Provincial Fiscal Mauro M. Castro exonerated respondent Baltao, finding the signature on the check was not his and that he was not properly notified of the preliminary investigation. Consequently, respondent Baltao filed a complaint for damages against petitioners in the Regional Trial Court of Quezon City. The trial court awarded damages in favor of Baltao. The Court of Appeals modified the decision by reducing the moral damages from P1,000,000.00 to P500,000.00 and attorney’s fees from P100,000.00 to P50,000.00. Petitioners filed the instant petition assailing the appellate court’s decision.

ISSUE

Whether petitioners are liable for damages based on the principles of abuse of rights under Articles 19, 20, and 21 of the Civil Code or for malicious prosecution.

RULING

The Supreme Court REVERSED and SET ASIDE the decision of the Court of Appeals. Petitioners are not liable for damages. The Court held that for malicious prosecution to prosper, the plaintiff must prove that the prosecution was prompted by a sinister design to vex and humiliate, that it was initiated without probable cause, and that it terminated in the plaintiff’s acquittal. These elements were not established. The filing of the B.P. Blg. 22 case was based on probable cause derived from petitioners’ investigation, which indicated private respondent’s involvement. There was no proof of malice or bad faith. The principle of abuse of rights under Article 19 requires the exercise of a legal right in bad faith with the sole intent to injure. Petitioners acted on the belief that they had a valid cause of action based on the information gathered. The subsequent dismissal of the case by the Provincial Fiscal does not, by itself, prove abuse of rights. The awards of actual, moral, exemplary damages, and attorney’s fees were disallowed for lack of sufficient proof. Actual damages must be proved with reasonable certainty, which was not done. Moral damages require clear evidence of besmirched reputation, social humiliation, or similar injury, which was absent. Exemplary damages cannot be awarded in the absence of wanton, fraudulent, reckless, or oppressive conduct. Attorney’s fees are not warranted as the award of exemplary damages is eliminated and there was no malicious prosecution. The Court cautioned lower courts against awarding unconscionable damages without basis.