Case No. G.R. No.

79184 May 6, 1992

Case Name PONCE V. LEGASPI
Ponente Gutierrez, j.

RELEVANT FACTS
1. Ponce was the owner of 43% of L-NOR MARINE SERVICES. The Porters are the owners of
48%. Legaspi is the legal counsel of L-NOR.
2. Ponce found out that the Porters through the help of Legaspi apparently made transactions
prejudicial to LNOR:
a. They created YRASPORT, a company which is in the same line of business as, or in
direct competition to, L-NOR.
b. They bought a skaagit which was worth PHP10,000. The Porters transferred the
obligation to L-NOR and made it pay PHP20,000 for the same.
3. Ponce filed an estafa case against the Porters and a disbarment case against Legaspi.
4. The disbarment case is rooted on three grounds:

First Specification:

That respondent Valentino Legaspi has committed gross misconduct in office as a

practicing lawyer and member of the Philippine Bar, because, as legal counsel, he
violated his duty to and the trust of his client, L'NOR Marine Services, Inc., whom he is
professionally duty bound to represent with entire devotion faithfully as such attorney,
and whose paramount interest he should protect in all good faith with absolute fidelity,
but that, in truth and in fact, he did not do so.

Second Specification:

That respondent Valentino Legaspi, while acting as legal counsel of L'NOR under
continuing monthly retainer, has acted at the same time as lawyer of Edward J. Porter,
et. als., who have committed anomalous acts, prejudicial manipulations and grave frauds
against his client L'NOR Marine services, Inc., that he therefore represented
professionally conflicting interest; and that he committed grave malpractice that is in
flagrant violation of the recognized canons of legal ethics.

Third Specification:

That respondent Valentino Legaspi committed grossly corrupt or dishonest conduct

while under retainer and acting as attorney of L'NOR Marine Services, Inc., when he
facilitated, assisted, aided or otherwise abetted the organization, registration and
operation of another competing entity, Yrasport Drydocks, Inc., in which he is also the
lawyer and corporate Secretary, at the expense of and to which the business and
transactions of L'NOR are being diverted or otherwise appropriated, including the
pirating of skilled personnel and also facilities, and that respondent committed the same
with evident bad faith and absolute lack of fidelity to his client L'NOR, thereby degrading
the good esteem, integrity and honor of the profession.

5. At the trial court, the Porters were found guilty of estafa, but this decision was reversed on
appeal. The Supreme Court, on the other hand, dismissed the disbarment case against
 Legaspi, claiming that Ponce’s actions against him were purely retaliatory in character because
he didn’t want to connive with Ponce.
6. Now, Legaspi is filing a suit for damages against Ponce for the expenses and injury the filing of
the disbarment case has caused him. Some of his clients even had a copy of the disbarment
case thus making them lose confidence in him.
7. The lower court and the CA granted the claim for damages, finding that there has been malice
when Ponce filed the cases. Ponce, according to Legaspi, wanted the latter to render services
and make decisions without the approval of the Board of Directors which was against the policy
of the company. They used “bona fides” as the ultimate test.

ISSUE AND RATIO DECIDENDI

Issue Ratio
Whether / Not NO. “One who exercises his right produces no injury”
Legaspi is entitled
to damages No proof that the copy of the disbarment case given to his clients were from
Ponce. Ponce honestly believed that she has a good case against the
Porters and Legaspi. Ponce had the probable cause to believe that the
wrongdoing has been committed.

Ponce was only exercising his legal right when he filed the case. His averments
in the disbarment case, which are relevant to the case, cannot be the basis of
an action for libel because it is a form of an absolutely privileged
communication. The adverse decision in a case does not necessarily imply
malicious prosecution on the side of the losing party.

RULING
AWARD OF DAMAGES TO LEGASPI REVERSED AND SET ASIDE.

NOTES:

Privileged Communication: BONA FIDES TEST; Libel action may prosper upon finding of malicious
intent / bad faith

Absolutely privileged: RELEVANCE TEST ; Libel action may prosper upon finding that the allegations
made were irrelevant.

+ For the malicious prosecution suit to prosper, the plaintiff must prove: (1) the fact of the prosecution
and the further fact that the defendant was himself the prosecutor, and that the action finally terminated
with an acquittal; (2) that in bringing the action, the prosecutor acted without probable cause; and (3)
that the prosecutor was actuated or impelled by legal malice, that is by improper or sinister motive.

+ In the new commercial code (not yet in effect during the time of the case), the acts done by the
Porters and Legaspi are explicitly punished.

+ Malice alone does not make one liable for malicious prosecution, where probable cause is shown,
even where it appears that the suit was brought for the mere purpose of vexing, harassing and injuring
his adversary. In other words, malice and want of probable cause must both exist in order to justify the
action."