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Abuse of rights - Aquino book

Cases from first trinal

Requisites of art 19 NCC abuse of rights


Other terms for abuse of rights
Purpose of art 19

Gr 81262 aug 1989 globe mackay


Gr 88694 Jan 1993 Albenson vs CA

In the sphere of our law on human relations, the victim of a wrongful act or omission, whether done willfully or negligently, is not left
without any remedy or recourse to obtain relief for the damage or injury he sustained. Incorporated into our civil law are not only
principles of equity but also universal moral precepts which are designed to indicate certain norms that spring from the fountain of
good conscience and which are meant to serve as guides for human conduct. First of these fundamental precepts is the principle
commonly known as “abuse of rights” under Article 19 of the Civil Code. It provides that “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 an abuse of right, 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 or prejudicing or injuring another. When a right is exercised in a manner which discards these norms
resulting in damage to another, a legal wrong is committed for which the actor can be held accountable. One is not allowed to
exercise his right in a manner which would cause unnecessary prejudice to another or if he would thereby offend morals or good
customs. Thus, a person should be protected only when he acts in the legitimate exercise of his right, that is when he acts with
prudence and good faith; but not when he acts with negligence or abuse. Complementing the principle of abuse of rights are the
provisions of Articles 20 and 21 of the Civil Code which read, thus:

In the case at bar, although there was damage, there was no legal injury. Contrary to the claim of private respondents, petitioners
could not be said to have violated the principle of abuse of right. In order that the principle of abuse of right provided in Article 21 of
the Civil Code can be applied, it is essential that the following requisites concur: (1) The defendant should have acted in a manner
that is contrary to morals, good customs or public policy; (2) The acts should be willful; and (3) There was damage or injury to the
plaintiff. The act of petitioners in constructing a fence within their lot is a valid exercise of their right as owners, hence not contrary to
morals, good customs or public policy. The law recognizes in the owner the right to enjoy and dispose of a thing, without other
limitations than those established by law. It is within the right of petitioners, as owners, to enclose and fence their property. Article
430 of the Civil Code provides that “(e)very owner may enclose or fence his land or tenements by means of walls, ditches, live or
dead hedges, or by any other means without detriment to servitudes constituted thereon.”

Under such broad concept of torts, Philippine laws include the following torts, some of which are also considered torts in American
law: a) Defamation, b) Fraud, c) Physical Injuries, d) Violation of Constitutional Rights, e) Negligence, f) Interference with
Contractual Relations, g) Violation of Privacy, h) Malicious Prosecution, i) Product liability, j) Strict liability for possession of animals,
k) Abuse of right (Article 19, Civil Code), and l) Acts which violate good morals and customs. (Article 21, NCC). Tort is even broad
enough to include civil liability arising from criminal liability. (6 Reyes and Puno 157). Articles 19, 20 and 21 of Civil Code are
likewise “catch-all” provisions that serve as basis of any imaginable tort action. Under the Anglo-American law, each
tort is usually named and defined. On the other hand, Articles 19, 20 and 21 of the New
Civil Code provide for general concepts that make persons liable for every conceivable wrongful acts. There is a general duty owed
to every person not to cause harm either willfully or negligently. Articles 19, 20, and 21 are provisions on human relations that “were
intended to expand the concept of torts in this jurisdiction by granting adequate legal remedy for the untold number of moral wrongs
which is impossible for human foresight to specifically provide in the statutes.” (Philippine National
Bank vs. The Court of Appeals, et al., 83 SCRA 237, citing Commissioner’s Note, Capistrano, 1 Civil Code of the Philippines, 1950
Ed., p. 29). Under Art. 21, taken together with Articles 19 and 20, “the scope of civil wrongs has been greatly broadened; it has
become much more supple and adequate than Anglo-American law on torts” (Albenson Enterprises, supra, citing Tolentino). The
statutory provisions, as they are now worded, afford relief against novel forms of misconduct when necessary
and appropriate. It is now difficult to conceive of any malevolent exercise of a right
which could not be checked by the application of these articles. (ibid.).

2. CATCH ALL PROVISIONS A. CONCEPTS. As pointed out in the preliminary chapter, the expanded coverage of tort finds
resonance in Articles 19, 20 and 21 of the New Civil Code. Article 20 provides that every person who, contrary to law, willfully or
negligently causes damage to another, shall indemnify the latter for the same. The Code Commission expressed the view that the
rule under Article 20 “pervades the entire legal system, and renders it impossible that a person who suffers damage because
another has violated some legal provision, should find himself without relief.” (Report, p. 39). Article 19, on the other hand, is
believed to be a mere declaration of principles which is being implemented by other provisions. (Velayo, etc. vs. Shell Co. of the
Phils., Inc., 100 Phil. 186, 202 [1956]). Article 19 declares a principle of law and Article 21 gives flesh to its provisions. (Saudi Arabia
Airlines vs. Court of Appeals, 297 SCRA 469 [1998]). The Supreme Court explained the significance of the said articles in this wise:
Article 19, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which may be
observed not only in the exercise of one’s rights but also in the performance of one’s duties. These standards are the following: to
act with justice; to give everyone his due; and to observe honesty and good faith. The law, therefore, recognizes the primordial
limitation on all rights: that in their exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though by
itself legal because 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. Although the requirements
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of each provision is different, these three (3) articles are all related to each other. As the eminent Civilist Senator Arturo Tolentino
puts it: “With this article (Article 21), combined with articles 19 and 20, the scope of our law on civil wrongs has been very greatly
broadened; it has become much more supple and adaptable than the Anglo-American law on torts. It is now difficult to conceive of
any malevolent exercise of a right which could not be checked by the application of these articles.” (Tolentino, 1 Civil Code of the
Philippines 72). There is however, no hard and fast rule which can be applied to determine whether or not the principle of abuse of
rights may be invoked. The question of whether or not the principle of abuse of rights has been violated, resulting in damages under
Articles 20 and 21 or other applicable provision of law, depends on the circumstances of each case. (Globe Mackay Cable and
Radio Corporation vs. Court of Appeals, 176 SCRA 778 [1989]). The elements of an abuse of right under Article 19 are the
following: (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.
Article 20 speaks of the general sanction for all other provisions of law which do not especially provide for their own sanction.
(Tolentino, supra, p. 71). Thus, anyone who, whether willfully or negligently, in the exercise of his legal right or duty, causes damage
to another, shall indemnify his victim for injuries suffered thereby. Article 21 deals with acts contra bonus mores, and has the
following elements: 1) There is an act which is legal; 2) but which is contrary to morals, good custom, public order, or public policy;
3) and it is done with intent to injure. Thus, under any of these three (3) provisions of law, an act which causes injury to another may
be made the basis for an award of damages. There is a common element under Articles 19 and 21, and that is, the act must be
intentional. However, Article 20 does not distinguish: the act may be done either “willfully,” or “negligently.” (Albenson Enterprises
vs. Court of Appeals, supra).
In another case, the Supreme Court offered the following explanation as to the nature of what Judge Sanco calls “catch-all”
provisions: “This article (Art. 19), known to contain what is commonly referred to as the principle of abuse of rights, sets certain
standards which must be observed not only in the exercise of one’s rights but also in the performance of one’s duties. These
standards are the following: to act with justice; to give everyone his due; and to observe honesty and good faith. The law, therefore,

recognizes a primordial limitation on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be
observed. A right, though by itself legal because recognized or granted by law as such, may nevertheless become the source of
some illegality. When a light 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. But while Article 19 lays
down a rule of conduct for the government of human relations and for the maintenance of social order, it does not provide a remedy
for its violation. Generally, an action for damages under either Article 20 or Article 21 would be proper. x x x This article (Art. 21),
adopted to remedy the “countless gaps in the statutes, which leave so many victims of moral wrongs helpless, even though they
have actually suffered material and moral injury” (Id.) should “vouchsafe adequate legal remedy for that untold number of moral
wrongs which it is impossible for human foresight to provide for specifically in the statutes” (Id., at p. 40; See also PNB vs. CA, G.R.
No. L-27155, May 18, 1978, 83 SCRA 237, 247). In determining whether or not the principle of abuse of rights may be invoked,
there is no rigid test which can be applied. While the Court has not hesitated to apply Article 19 whether the legal and factual
circumstances called for its application (See for e.g., Velayo vs. Shell Co. of the Phil., Ltd., 100 Phil. 186 (1956); PNB vs. CA, supra;
Grand Union Supermarket, Inc. vs. Espino, Jr., G.R. No. L-48250, December 28, 1979, 94 SCRA 953; PAL vs. CA, G.R. No. L-
46558, July 31, 1981, 106 SCRA 391; United General Industries, Inc. vs. Paler, G.R. No. L-30205, March 15, 1982, 112 SCRA 404;
Rubio vs. CA, G.R. No. 50911, August 21, 1987, 153 SCRA 183) the question of whether or not the principle of abuse of rights has
been violated resulting in damages under Article 20 or Article 21 or other applicable provision of law, depends on the circumstances
of each case. (Globe Mackay Cable and Radio Corporation vs. Court of Appeals, 176 SCRA 778 [1989]).
Under Article 21, damages are recoverable even though no positive law was violated (Report, p. 26). There are innumerable
instances of this kind which cannot be the subject of specific statutory provisions in view of the impossibility of foreseeing every sort
of human misconduct. (ibid.). The article was further explained in this wise:
“Thus at one stroke, the legislator, if the foregoing rule is approved, would vouchsafe adequate legal remedy for that untold number
of moral wrongs which it is impossible for human
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foresight to provide for specifically in the statutes. But, it may be asked, would not this proposed article obliterate the boundary line
between morality and the law? The answer is that, in the last analysis, every good law draws its breath of life from morals, from
those principles which are written with the words of fire in the conscience of man. If this premise is admitted, then the proposed rule
is a prudent earnest of justice in the face of the impossibility of enumerating, one by one, all wrongs which cause damage. When it
is reflected that while codes of law and statutes have changed from age to age, the conscience of man has remained fixed to its
moorings, one cannot but feel that it is safe and salutary to transmute, as far as may be, moral norms into legal rules, thus imparting
to every legal system that enduring quality which ought to be one of its superlative attributes. Furthermore, there is no belief of more
baneful consequences upon the social order than that a person may with impunity cause damage to his fellowmen so long as he
does not break any law of the State, though he may be defying the most sacred postulates of morality. What is more, the victim
loses faith in the ability of the government to afford him protection or relief. A provision similar to the one under consideration is
embodied in Article 826 of the German Civil Code. The same observations may be made concerning injurious acts that are contrary
to public policy but are not forbidden by statute. There are countless acts of such character, but have not been foreseen by the
lawmakers. Among these are many business practices that are unfair or oppressive, and certain acts of landholders and employers
affecting their tenants and employees which contravene the public policy of social justice.” (Report, pp. 40-41).
B. DAMAGE. It should be emphasized, however, that an action can only prosper when damage, material or otherwise, was suffered
by the plaintiff. An action based on Articles 19, 20 and 21 will be dismissed if the plaintiff merely seeks “recognition.” Thus, a
complaint will be dismissed if the plaintiffs filed an action to be merely recognized as architects of a building. (Enrique J. L. Ruiz, et
al. vs. The Secretary of National Defense, G.R. No. L-15526, December 28, 1963). The Supreme Court observed in Ruiz that:
“x x x The sole object of the appeal is only to secure for them a recognition, that they were allegedly the co-architects of Panlilio, in
the construction of the hospital, so as to enhance their professional prestige and not to impair their standing. If this is the goal of
appellants, a judicial declaration to that effect would seem unnecessary. Let us ponder over the thought that a brilliant professional
enjoys the respect and esteem of his fellow men, even without any court declaration of such fact, and that an incompetent one may
summon all the tribunals in the world, to proclaim his genius in vain. But appellants invoke Article 21 of the Civil Code, which states
— “Any person who wilfully cause loss or injury to another in a manner that is contrary to morals, good customs or public policy shall
compensate the latter for the damages.” contending that the word “injury” in the said article, refers not only to any indeterminate
right or property, but also to honor or credit. (I Tolentino Civ. Code, p. 67). It may be added, however, that this article also envisions
a situation where a person has a legal right, and such right is violated by another in a manner contrary to morals, good customs or
public policy; it presupposes losses or injuries, material or otherwise, which one may suffer as a result of said violation. The
pleadings do not show that damages were ever asked or alleged in connection with this case, predicted upon the article aforecited.
And under the facts and circumstances obtaining in this case, one cannot plausibly sustain the contention that the failure or refusal
to extend the recognition, was an act contrary to morals, good customs or public policy.”
Interestingly, the Supreme Court likewise ruled that the defendant may likewise be guilty of tort under Articles 19 and 21 even if he
acted in good faith. (Grand Union Supermarket vs. Jose J. Espino, Jr., G.R. No. L-48250, December 28, 1979). In those cases,
liability to pay moral damages may not be imposed on the defendant who acted in good faith. (Llorente vs. Court of Appeals, 202
SCRA 309 [1991]).
3. ABUSE OF RIGHT A. ELEMENTS.
ART. 19. 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. The decision in Albenson (cited in BPI Express Card Corp. vs. Court of Appeals, 296
SCRA 260 [1998]) enumerates the elements of an abuse of right under Article 19 to wit: (1) There is a legal right or duty; (2) which is
exercised in bad faith; (3) for the sole intent of
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prejudicing or injuring another. On the other hand, the Supreme Court of Spain cites the following elements: (1) the exercise of a
right which is objective and apparently legal; (2) damage or injury to an interest not specifically protected by a legal precept; and (3)
immorality or anti-social character of the damage or injury caused either with intent to injure or without serious or legitimate purpose.
(5 Caguioa 28-29). The rule is a departure from the traditional view that a person is not liable for damages resulting from the
exercise of one’s right – qui iure suo utitur neminem laedit. (5 Caguioa 26; 5 Tolentino 60). It is practically a restatement of the
Roman Law principle of honeste vivere, alterum non laedere, jus suum cuique tribuere. (5 Caguioa 27, citing I-II Castan, 8th ed., pp.
52-53).
B. EXAMPLES. a. Cases when there is abuse. An example of abuse of right is a case where a creditor — taking advantage of his
knowledge that insolvency proceedings were to be instituted by the debtor if the creditors did not come to an understanding as to
the manner of distribution of the insolvent’s asset among them, and believing it most probable that they would not arrive at such
understanding — schemed and transferred its credit to a sister company in the United States which, in turn, secured a writ of
attachment in the court therein thereby gaining control over the said plane. As a consequence, the other creditors were deprived of
their lawful share thereto and the assignee that was later appointed was deprived of his right to recover said plane. (Velayo, etc. vs.
Shell Co., of the Phils., et al., supra). Another example of abuse of right is when a bank twice disapproved a proposed lease of a
sugar quota by its debtor. The debtor previously mortgaged the sugar quota to the bank. The bank later disapproved the application
of the debtor to obtain possession of the sugar quota so that said debtor can lease the same to a third person. The disapproval was
made even if responsible officers of the bank already informed the debtor and the prospective lessee that the bank will approve the
lease if the consideration therefor was increased from P2.50 to P2.80 per picul. The disapproval was made by the Board of
Directors because it wanted to raise the consideration for the lease to P3.00 per picul. The Supreme Court ruled that there was
abuse of right because the disapproval was unreasonable. The disapproval was made knowing that the agricultural year was about
to expire,

at which time the mortgagor would not be able to utilize the sugar quota. The mortgagor was not able to use the sugar quota
although the difference between the price demanded by the board and the proposed lease was only a small amount. (Philippine
National Bank vs. Court of Appeals, 83 SCRA 237). There is also abuse of right if the principal unreasonably terminated an agency
agreement for selfish reasons. (Arturo P. Valenzuela, et al. vs. The Hon. Court of Appeals, 190 SCRA 1, G.R. No. 83122, October
19, 1990; Sevilla vs. Court of Appeals, 160 SCRA 171). Even if the agency can be terminated at will, termination should not be done
with bad faith or abuse of right. Abuse of right was likewise established in Llorente vs. Court of Appeals, et al. (202 SCRA 309
[1991]). The person sought to be held liable in said case was a public officer who had authority to approve clearances of resigning
employees. Since he had authority to approve clearances he also had the right to disapprove the same if the employee has pending
accountabilities. The absence of accountability was a condition imposed by the rules for the issuance of a clearance. However, if the
practice in the office is to disregard the condition and to clear resigning employees subject to deduction of accountabilities from his
gratuity benefits, the officer who withheld action on the clearance of the employee is liable for damages for abuse of right. There is
such abuse if he did not issue a clearance to the plaintiff but issued the same to all other employees who were similarly situated as
the plaintiff. In Sergio Amonoy v. Sps. Jose Gutierrez (G.R. No. 140420, February 15, 2001, 351 SCRA 731) the petitioners
commenced the demolition of the house of the private respondents under the authority of a writ of demolition which was issued by
the trial court. A temporary restraining order was issued by the Court of Appeals against the writ of demolition but the petitioners still
pursued the demolition. There was abuse of right in this case and the fact that the writ was not subsequently annulled is of no
moment. The principle of damnum absque injuria is not applicable because the principle is premised on the valid exercise of a right.
Anything less or beyond such exercise will not give rise to the legal protection that that principle accords. And when damage or
prejudice to another is occasioned thereby, liability ensues. In Jose Arlequi v. Hon. Court of Appeals (G.R. No. 126437, March 6,
2002), the tenants of an apartment building formed an association to represent them in the negotiation with the owner for the
purchase
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of their respective units. Josue Arlegui and Mateo Tan were the Vice President and Auditor, respectively, of the association. Later,
the members were surprised to learn that Mr. Tan surreptitiously purchased the building and later sold one unit to Mr. Arlegui. There
was abuse of right on the part of Mr. Arlegui and Mr. Tan because they violated the trust reposed on them as officers and
negotiators in behalf of the tenants. There was also abuse of right in Petrophil Corporation v. Court of Appeals, et al. (G.R. No.
122796, December 10, 2001) when the petitioner terminated its hauling contract with private respondent Cruz (whereby the latter
supplied trucks for the hauling of the products of the petitioner) because the latter sympathized with the picketing workers of the
petitioner. The Supreme Court explained:
On the first issue, we agree with petitioner that the contract clearly provided for two ways of terminating the contract, and, one
mode does not exclude the other. Although the contract provided for causes for termination, it also stated in paragraph 11 that the
contract was for an indefinite term subject to the right of Petrophil to terminate it any time after a written notice of 30 days. When the
language of a contract is clear, it requires no interpretation. Thus, the finding that the termination of the contract was “for cause”, is
immaterial. When petitioner terminated the contract “without cause”, it was required only to give Dr. Cruz a 30-day prior written
notice, which it did in this case. However, we differ with petitioner on the second issue. Recall that before Petrophil terminated the
contract on May 25, 1987, there was a strike of its employees at the Pandacan terminal. Dr. Cruz and her husband were seen at the
picket line and were reported to have instructed their truck drivers not to load petroleum products. At the resumption of the operation
in Pandacan terminal, Dr. Cruz’s contract was suspended for one week and eventually terminated. Based on these circumstances,
the Court of Appeals like the trial court concluded that Petrophil terminated the contract because of Dr. Cruz’s refusal to load
petroleum products during the strike. In respondent court’s view, the termination appeared as a retaliation or punishment for her
sympathizing with the striking employees. Nowhere in the record do we find that petitioner asked her to explain her actions.
Petrophil simply terminated her contract. These factual findings are binding and conclusive on us, especially in the absence of any
allegation that said findings are unsupported by the evidence, or that the appellate and trial courts misapprehended these facts. 16
In terminating the hauling contract of Dr. Cruz without hearing her side on the factual context above described, a petitioner opened
itself to a charge of bad faith. While Petrophil had the

right to terminate the contract, petitioner could not act purposely to injure private respondents. In BPI Express Card Corporation vs.
CA, 296 SCRA 260, 272 (1998), we held that there is abuse of a right under Article 19 if the following elements are present: 1) there
is a legal right or duty; 2) which is exercised in bad faith; 3) for the sole purpose of prejudicing or injuring another. We find all these
three elements present in the instant case. Hence, we are convinced that the termination by petitioner of the contract with Dr. Cruz
calls for appropriate sanctions by way of damages.
b. When abuse is absent. However, the Supreme Court ruled in Mita Pardo de Tavera vs. Philippine Tuberculosis Society, et al.
(G.R. No. L-48928, February 25, 1982) that there was no actionable wrong where the defendants acted strictly in accordance with
the Constitution and By-laws of an association or with a contract. In said case, the petitioner was removed as executive director by
the board of the society in accordance with the constitution and by-laws. The Supreme Court observed that:
“While these provisions present some basic principles that are to be observed for the rightful relationship between human beings
and the stability of social order, these are merely guides for human conduct in the absence of specific legal provisions and definite
contractual stipulations. In the case at bar, the Code of By-Laws of the Society contains a specific provision governing the term of
office of petitioner. The same necessarily limits her rights under the New Civil Code and the New Constitution upon acceptance of
the appointment. Moreover, the act of the Board in declaring her position as vacant is not only in accordance with the Code of By-
Laws of the Society but also meets the exacting standards of honesty and good faith. The meeting of May 29, 1974, at which
petitioner’s position was declared vacant, was called specifically to take up the unfinished business of the Reorganizational Meeting
of the Board of April 30, 1974. Hence, said act cannot be said to impart a dishonest purpose or some moral-obliquity and conscious
doing to wrong but rather emanates from the desire of the Board to reorganize itself.”
There is also no abuse of right when an owner of a lot which adjoins the highway fenced his property. No abuse of right was
committed although the tenants in the inner lot can no longer pass through his property. In the absence of an easement of right of
way, the owner is free to enclose his property even if damage to another will result. (Custodio vs. Court of Appeals, supra). It is a
case of damage without injury.
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Likewise, the Department Head, the Assistant Division Superintendent and the Principal of a high school are not guilty of abuse of
right when a teacher was placed in the list of excess teacher when the action was not motivated by undue motives (Virginia M.
Andrade v. Court of Appeals, G.R. No. 127932, December 7, 2001). Abuse of right is also absent if a school did not confer upon the
plaintiff a degree with honors because it merely exercised its discretion in accordance with the rules. (University of San Carlos, et al.
vs. Court of Appeals, G.R. No. L-79237, October 18, 1988). However, if there was already an order from a superior officer to allow
the plaintiff to graduate with honors, the officer who failed to implement the order is liable for damages not on account of abuse of
right but neglect of duty. The reason is that the officer did not have any right to withhold the implementation of the order of the
superior officer to allow the plaintiff to graduate with honors. (Ledesma vs. Court of Appeals). Similarly, there is no abuse of right if
the defendants were legitimately exercising their constitutional rights. In Garciano, et al. vs. Hon. Court of Appeals (212 SCRA 436
[1992]), the majority of the directors of a school reinstated a teacher who was previously terminated from service. Later, the
President, Vice-President, Secretary and three board members resigned because of such action. Earlier, the school principal and
some teachers allegedly threatened to resign en masse if the petitioner teacher would be reinstated. The petitioner sued the
defendants for damages under Articles 19, 20 and 21 but the Supreme Court rejected the claim explaining, inter alia:
“The Court of Appeals was correct in finding that petitioner’s discontinuance from teaching was her own choice. While respondents
admittedly wanted her service terminated, they actually did nothing to physically prevent her from reassuming her post, as ordered
by the school’s Board of Directors. That the school principal and Fr. Wiertz disagreed with Board’s decision to retain her, and some
teachers allegedly threatened to resign en masse, even if true, did not make them liable to her for damages. They were simply
exercising their right to free speech or their right to dissent from the Board’s decision. Their acts were not contrary to law, morals,
good customs or public policy. x x x”
The Supreme Court likewise rejected the allegation that there was abuse of right in Baron’s Marketing Corporation vs. Court of
Appeals (286 SCRA 98 [1998]). The plaintiff in said case filed a complaint for the recovery of the price of the goods that were
delivered to the defendant. In its answer, the defendant claimed that the plaintiff abused its right when it previously rejected
defendant’s offer of set

tlement and subsequently filed an action for collection. It argued that if there was an offer by the debtor to pay its debt or obligation
supported by post-dated checks and with provision for interest, the normal response of the creditor would be to accept the offer of
compromise. The Supreme Court rejected such argument and explained:
Both parties agree that to constitute an abuse of rights under Article 19 the defendant must act with bad faith or intent to prejudice
the plaintiff. They cite the following comments of Tolentino as their authority: Test of Abuse of Right. — Modern jurisprudence does
not permit acts which, although not unlawful, are anti-social. There is undoubtedly an abuse of right when it is exercised for the only
purpose of prejudicing or injuring another. When the objective of the actor is illegitimate, the illicit act cannot be concealed under the
guise of exercising a right. The principle does not permit acts which, without utility or legitimate purpose cause damage to another,
because they violate the concept of social solidarity which considers law as rational and just. Hence, every abnormal exercise of a
right, contrary to its socio-economic purpose, is an abuse that will give rise to liability. 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 injure
another. Ultimately, however, and in practice, courts, in the sound exercise of their discretion, will have to determine all the facts and
circumstances when the exercise of a right is unjust, or when there has been an abuse of right. The question, therefore, is whether
private respondent intended to prejudice or injure petitioner when it rejected petitioner’s offer and filed the action for collection. We
hold in the negative. It is an elementary rule in this jurisdiction that good faith is presumed and that the burden of proving bad faith
rests upon the party alleging the same. In the case at bar, petitioner has failed to prove bad faith on the part of private respondent.
Petitioner’s allegation that private respondent was motivated by a desire to terminate its agency relationship with petitioner so that
private respondent itself may deal directly with Meralco is simply not supported by the evidence. At most, such supposition is merely
speculative. Moreover, we find that private respondent was driven by very legitimate reasons for rejecting petitioner’s offer and
instituting the action for collection before the trial court. As pointed out by private respondent, the corporation had its own “cash
position to protect in order for it to pay its own obligations.” This is not such “a lame and poor rationalization” as petitioner purports it
to be. For if private respondent were to be required to
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accept petitioner’s offer, there would be no reason for the latter to reject similar offers from its other debtors. Clearly, this would be
inimical to the interests of any enterprise, especially a profit oriented one like private respondent. It is plain to see that what we have
here is a mere exercise of rights, not an abuse thereof. Under these circumstances, we do not deem private respondent to have
acted in a manner contrary to morals, good customs or public policy as to violate the provisions of Article 21 of the Civil Code.

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