DART
PHILIPPINES, INC. vs. SPOUSES FRANCISCO and ERLINDA
CALOGCOG, G.R. No. 149241, August 24,
2009.
“x x x.
Preliminarily, the Court admits that,
ordinarily, it will not review the findings of fact made by the appellate
court. However, jurisprudence lays down several exceptions, among which are the
following which obtain in this case: when the judgment is based on a
misapprehension of facts and when the appellate court manifestly overlooked
certain relevant facts not disputed by the parties, which, if properly
considered, could justify a different conclusion.[1]
Thus, the Court finds it imperative to evaluate, as in fact it had reviewed,
the records of the case, including the evidence adduced during the trial, in
relation to the arguments of the parties and the applicable law and
jurisprudence.
Under Article 19 of the Civil Code,
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. To find the existence of abuse of right under the said article, the following elements must be
present: (1) there is a legal right or duty; (2) which is exercised in bad
faith; (3) for the sole intent of prejudicing or injuring another.[2] Accordingly, the
exercise of a right shall always be in accordance with the purpose for which it
has been established, and must not be excessive or unduly harsh—there must be
no intention to injure another.[3] A person will be
protected only when he acts in the legitimate exercise of his right, that is,
when he acts with prudence and in good faith, not when he acts with negligence
or abuse.[4]
Malice or bad faith is at the core of
Article 19 of the Civil Code. Good faith refers to the state of mind which is
manifested by the acts of the individual concerned. It consists of the
intention to abstain from taking an unconscionable and unscrupulous advantage
of another. It is presumed. Thus, he who
alleges bad faith has the duty to prove the same.[5] Bad faith
does not simply connote bad judgment or simple negligence; it involves a
dishonest purpose or some moral obloquy and conscious doing of a wrong, a
breach of known duty due to some motives or interest or ill will that partakes
of the nature of fraud. Malice connotes ill will or spite and speaks not in
response to duty. It implies an intention to do ulterior and unjustifiable
harm. Malice is bad faith or bad motive.[6]
At the crux of this controversy,
therefore, is whether petitioner acted in bad faith or intended to injure
respondents when it caused the auditing of the latter’s account, when it
implemented the pre-paid basis in treating the latter’s orders, and when it refused
to renew the distributorship agreement.
The Court rules in the negative. We
note that in the written correspondence of petitioner to respondents on April
30, 1992 informing the latter of the non-renewal of the distributorship
agreement, petitioner already pointed out respondents’ violations of the
agreement. The letter pertinently reads:
We found that you have committed the
following acts which are contrary to provisions of Section 2(f) of our
Agreement:
(a)
You
submitted several “Vanguard Reports” containing false statements of the sales
performance of your units. A comparison of the reports you submitted to our
office with that actually reported by your managers show that the sales of your
units are actually much lower than that reported to Tupperware (Exhibits “G,”
“H,” “I,” “J,” “L,” “O,” “P,” “Q,” and “R.”)
(b)
The
unauthorized alteration of the mechanics of “Nan’s Challenge,” which is a
Tupperware company sponsored promotion campaign. The documentary evidence
furnished us, Exhibit “E,” shows that the amount of target party averages were
increased by you.
(c)
Charging
the managers for accounts of their dealers and for overdue kits (Exhibits “C”
and “D”).[7]
The correspondence
prompted respondents to make a handwritten promise that they would observe and comply
with the terms and conditions of the distributorship agreement.[8] This promise
notwithstanding, petitioner was not barred from exercising its right in the
agreement to conduct an audit review of respondents’ account. Thus, an audit
was made in July 1992. In September 1992, petitioner informed respondents that
it was causing the conduct of a second audit review. And as explained in
petitioner’s September 11, 1992 correspondence to respondents, the second audit
was intended to cover the period not subject of the initial audit (the period
prior to January 1 to June 30, 1992, and the period from July 1, 1992 to
September 1992).[9] Because respondents
objected to the second audit, petitioner exercised its option under the
agreement to vary the manner in which orders are processed—this time, instead
of the usual credit arrangement, petitioner only admitted respondents’ purchase
orders on pre-paid basis. It may be noted that petitioner still processed
respondents’ orders and that the pre-paid basis was only implemented during the
last month of the agreement, in September 1992. With the expiry of the
distributorship agreement on September 30, 1992, petitioner no longer acceded
to a renewal of the same.
From these facts, we
find that bad faith cannot be attributed to the acts of petitioner.
Petitioner’s exercise of its rights under the agreement to conduct an audit, to
vary the manner of processing purchase orders, and to refuse the renewal of the
agreement was supported by legitimate reasons, principally, to protect its own
business. The exercise of its rights was not impelled by any evil motive
designed, whimsically and capriciously, to injure or prejudice respondents. The
rights exercised were all in accord with the terms and conditions of the
distributorship agreement, which has the force of law between them.[10] Clearly,
petitioner could not be said to have committed an abuse of its rights. It may
not be amiss to state at this juncture that a complaint based on Article 19 of
the Civil Code must necessarily fail if it has nothing to support it but
innuendos and conjectures.[11]
Given that petitioner has not abused
its rights, it should not be held liable for any of the damages sustained by
respondents. The law affords no remedy for damages resulting from an act which
does not amount to a legal wrong.
Situations like this have been appropriately denominated damnum absque
injuria.[12] To this end, the
Court reverses and sets aside the trial and appellate courts’ rulings.
Nevertheless, the Court sustains the trial court’s order for the reimbursement
by petitioner to respondents of P23,500.17, with 12% interest per annum,
computed from the filing of the original complaint up to actual payment,
representing the salaries of the internal auditors, because, first, the award
was never questioned by petitioner, and
second, petitioner was the one which engaged the services of the auditors.
As regards petitioner’s claim for
attorney’s fees, the Court cannot grant the same. We emphasized in prior cases
that no premium should be placed on the right to litigate. Attorney’s fees are
not to be awarded every time a party wins a suit. Even when a claimant is
compelled to litigate or to incur expenses to protect his rights, still
attorney’s fees may not be awarded where there is no sufficient showing of bad
faith in a party’s persistence in a case other than an erroneous conviction of
the righteousness of his cause.[13]
X x x.”
[1] Doles v. Angeles, G.R. No. 149353, June 26, 2006, 492 SCRA 607,
615-616.
[2] BPI Express Card Corporation v. Court of Appeals, 357 Phil. 262,
275 (1998).
[3] Heirs of Purisima Nala v. Cabansag, G.R. No. 161188, June 13, 2008,
554 SCRA 437, 442-443.
[4] National Power Corporation v. Philipp Brothers Oceanic, Inc., 421
Phil. 532, 547 (2001).
[5] Development Bank of the Philippines v. Court of Appeals, G.R. No.
137916, December 8, 2004, 445 SCRA 500, 518.
[6] Saber v. Court of Appeals, G.R. No. 132981, August 31, 2004, 437
SCRA 259, 278-279.
[7] Records, p. 98.
[8] Supra note 9.
[9] Records, p. 52.
[10] Barons
Marketing Corporation v. Court of Appeals, G.R. No. 126486, February 9,
1998, 286 SCRA 96, 106.
[11] Nikko Hotel
Manila Garden
[12] BPI
Express Card Corporation v. Court of Appeals, supra note 31, at 276.
[13] ABS-CBN
Broadcasting Corporation v. Court of Appeals, 361 Phil. 499, 529 (1999).
