Legal Primer – Abuse of Right

“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.” – Article 19, New Civil Code of the Philippines

Article 19 encapsulates the basic principle of human relations and is a departure from the theory that he who uses a right injures no one. Under said article, even if you act according to your legal rights but fail to follow the standards of justice, fairness, honesty and good faith, you may be held liable for damage caused as a consequence of abuse of right.

The standards under Article 19 serve not only as a limit in the exercise of one’s rights but also in the performance of one’s duties. A right, though by itself legal because it is recognized or granted by law as such, may nevertheless become the source of some illegality. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. (Albenson Enterprises Corp. v. CA, G.R. No. 88694, Jan. 11, 1993)

Art. 19 was intended to expand the concept of torts by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to provide specifically in statutory law. If mere fault or negligence in one’s acts can make him liable for damages for injury caused thereby, with more reason should abuse or bad faith make him liable. The absence of good faith is essential to abuse of right. Good faith is an honest intention to abstain from taking any unconscientious advantage of another, even through the forms or technicalities of the law, together with an absence of all information or belief of fact which would render the transaction unconscientious. In business relations, it means good faith as understood by men of affairs. (Sea Commercial Company vs. CA, G.R. NO. 122823, Nov. 25, 1999)

The elements of an abuse of rights under Article 19 are: (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.

At the core of Article 19 is malice or bad faith. 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.

Note, however, that when there is no finding of malice or bad faith, and thus no abuse of rights, liability for damages cannot be sustained. 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 as damnum absque injuriaor “damage without injury.”

Some Philippine jurisprudence where Article 19 is applied

When principal goes behind the back of its dealer and deals directly with the customer

In SEA Commercial Company, Inc. (SEACOM) v. Hon. Court of Appeals, et al., G.R. No. 122823, Nov. 25, 1999, the Supreme Court affirmed the trial court and CA rulings invoking Article 19 in the award of unrealized profits to the plaintiff. In that case, SEACOM entered into a dealership agreement with Jamandre Industries, Inc. (JII) whereby SEACOM appointed JII as its exclusive dealer in the City and Province of Iloilo. The agreement was subsequently amended to include Capiz in the territorial coverage and to make the dealership agreement on a non-exclusive basis. In the course of business, JII allegedly incurred a balance of PHP 18,843.85 for unpaid deliveries, and SEACOM brought action to recover said amount plus interest and attorney’s fees. In its Answer, JII interposed a counterclaim for damages representing unrealized profits in the sale of 21 units of tractors upon the allegation that SEACOM, having been informed by JII of its intention to sell the tractors, went behind its back to sell directly to the buyer 21 units of tractors.

In upholding the lower courts’ decisions, the Supreme Court held that “[e]ven if the dealership agreement was amended to make it on a non-exclusive basis, SEACOM may not exercise its right unjustly or in a manner that is not in keeping with honesty or good faith; otherwise it opens itself to liability under the abuse of right rule embodied in Article 19 of the Civil Code. This provision, together with the succeeding article on human relation, was intended to embody certain basic principles “that are to be observed for the rightful relationship between human beings and for the stability of the social order.” What is sought to be written into law is the pervading principle of equity and justice above strict legalism. (SEA Commercial Company, Inc. (SEACOM) v. Hon. Court of Appeals, et al., G.R. No. 122823, Nov. 25, 1999).

When unpaid creditor-mortgagee forcibly takes the mortgaged motorcycle from the lawful possessor

The case of Uypitching, et al. v. Quiamco, G.R. No. 146322, Dec. 6, 2006 involves a situation where the possessor of a motorcycle, Quiamco, acquired the same by virtue of an amicable settlement of the civil aspect of a criminal case for robbery that Quiamco filed against the accused. The original certificate of registration was never surrendered to Quiamco because the accused never came to see him again.

It turned out that one of the accused in the robbery case had purchased the motorcycle from Uypitching on installment basis, the payment of which was secured by a chattel mortgage in favor of the latter. When the accused defaulted on his payment, the collectors for Uypitching were informed as to the location of the motorcycle.

Nine years later, Uypitching, accompanied by policemen, went to recover the motorcycle. During the encounter, Uypitching called Quiamco (who was not present) a thief and instructed the policemen to take the motorcycle. Later, Uypitching filed a criminal complaint for qualified theft or violation of the Anti-Fencing Law against Quiamco, which case was however dismissed. Quiamco thus filed an action for damages against Uypitching.

The Supreme Court ruled that Uypitching abused his right of recovery as mortagee. “True, a mortgagee may take steps to recover the mortgaged property to enable it to enforce or protect its foreclosure right thereon. There is, however, a well-defined procedure for the recovery of possession of mortgaged property: if a mortgagee is unable to obtain possession of a mortgaged property for its sale on foreclosure, he must bring a civil action either to recover such possession as a preliminary step to the sale, or to obtain judicial foreclosure.” (Uypitching, et al. v. Quiamco, G.R. No. 146322, Dec. 6, 2006)

“There is an abuse of right when it is exercise solely to prejudice or injure another. The exercise of a right must be in accordance with the purpose for which it was established and must not be excessive or unduly harsh; there must be no intention to harm another. Otherwise, liability for damages to the injured party will attach.” (Uypitching, et al. v. Quiamco, G.R. No. 146322, Dec. 6, 2006)

“In this case, the manner by which the motorcycle was taken at petitioner’s instance was not only attended by bad faith but also contrary to the procedure laid down by law. Considered in conjunction with the defamatory statement, petitioners’ exercise of the right to recover the mortgaged vehicle was utterly prejudicial and injurious to respondent. On the other hand, the precipitate act of filing an unfounded complaint could not in any way be considered to be in accordance with the purpose for which the right to prosecute a crime was established. Thus, the totality of the petitioners’ actions showed a calculated design to embarrass, humiliate and publicly ridicule respondent. Petitioners acted in an excessively harsh fashion to the prejudice of respondent. Contrary to law, petitioners willfully caused damage to respondent. Hence, they should indemnify him.” (Uypitching, et al. v. Quiamco, G.R. No. 146322, Dec. 6, 2006)

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