No malice

Moral damages are awarded if physical, mental or psychological injury is sustained by the claimant because of the wrongful act or omission of the defendant which is the proximate cause of the injury. Among the wrongful act or omission enumerated under Article 2219 of the Civil Code is malicious prosecution. This case of Carlos explains the meaning of malicious prosecution.

The case involved a land belonging to Conching which has been declared an Area for Priority Development (APD) and the Urban Land Reform Zone (ULRZ) pursuant to P.D. 1517. Occupying said land for more than 10 years under a contract of lease with Conching was Carlos who had built his home thereon.

On May 2, 1994, Conching verbally offered to sell the subject property to Carlos. But Carlos turned down the offer because he did not have means to purchase it. In fact, he could not even pay the rental. Hence Conching offered to sell it and found another buyer in the person of Mae. Thus title to the property was transferred in Mae’s name (TCT No. 216221).

Since Carlos had not paid his rent from May to August, Mae instituted ejectment proceedings against Carlos before the Metropolitan Trial Court (MeTC) which eventually and ultimately ended in her favor and against Carlos who was ordered ejected.

But Carlos could not be ejected because while the ejectment case was still pending or on October 17 1994, he also filed an action before the Regional Trial Court (RTC) against both Conching and Mae for the annulment of the deed of sale in Mae’s favor, cancellation of her title with injunction and/or issuance of temporary restraining order. Carlos claimed that the sale to Mae is void because no written offer was extended to him before said sale. In their answer Conching and Mae argued that Carlos knew that he was disqualified from exercising his right of first refusal under P.D. 1517 and P.D. 2016, and was not a bona fide tenant because of his failure to pay his rent. So they asked that Carlos be made to pay them moral and exemplary damages and attorney’s fees for filing the clearly baseless and unfounded complaint.

The complaint of Carlos was eventually dismissed by the RTC because the evidence he presented was not enough to prove his cause of action. But the RTC continued to hear and receive the testimonies of Conching and Mae to prove their counterclaim for damages. Then on March 8, 2000, the RTC awarded them P100,000 each as moral damages, P100,000 each as exemplary damages and reimbursement of P50,000 each for attorney’s fees. This ruling was affirmed by the Court of Appeals (CA) although it reduced the awards of damages to P50,000. The CA ruled that Carlos was not a bona fide lessee as contemplated by P.D. 1517 and 2016; that he had failed to pay his rent and therefore he instituted the complaint in bad faith considering that he was in no position to claim his right of first refusal. Was the CA correct?

No. The complaint was based on P.D. 1517 granting preferential right of first refusal to the landless tenants to acquire land within urban land reform areas they occupy for ten years or more and where they had built their homes. Apparently Carlos is a beneficiary of this Act.

His failure to pay the rent does not deny him of his status as a tenant beneficiary as long as he is not a usurper or occupant by tolerance or without the benefit of a contract nor did he enter the land by force or deceit (Sec 3 [1]). He filed the complaint for annulment on the belief that he had a claim to possession based on the right of first refusal. And his belief is not without basis in law. Under Section 34 of the implementing rules of P.D. 1517 a written offer to sell to the tenant is required so that he can exercise his right of first refusal. Since Carlos was not served such written offer, he was merely exercising his right to litigate when he filed the complaint for annulment.

Under the circumstances therefore the suit for annulment did not lack merit and was not intended to vex or harass Conching and Mae but motivated by the desire to prevent the loss of his home. It is not an act of malicious prosecution or abuse of right that warrants an award of moral and exemplary damages and attorney’s fees in favor of Conching and Mae.

But even if his case lacked merit, the award of moral damages is not a legal consequence that automatically follows. The law never intended to impose a penalty on the right to litigate. Otherwise moral damages must every time be awarded in favor of the prevailing defendant against an unsuccessful plaintiff. So the award of damages in favor of Conching and Mae must be deleted (De los Santos vs. Papa and Mateo, G.R. 154427, May 8, 2009).   

Note: Books containing compilation of my articles on Labor Law and Criminal Law (Vols. I and II) are now available. Call tel. 7249445.

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