Damage without legal injury

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. This is the basic rule on human relations embodied in our Civil Code (Article 19). If a person fails to observe this rule, he may be held liable for damages because of abuse of rights pursuant to Article 21 of the same Code. This is what the spouses Carlos and Ana tried to invoke in their case.

Their case stemmed from another case involving Carlos’ brother, Andy, and his wife Marie, who were sued before the Regional Trial Court (RTC) by a dealer of Japanese motor vehicles and heavy equipment (PSC) for unpaid obligations amounting to P240,863. In said case (No. 489-90), PSC was able to preliminarily attach two trucks of Andy which he was using in his hauling business. Andy however was able to have the attachment lifted by filing a counter-attachment bond.

While the case against Andy and Marie was pending, Andy executed a Deed of Sale of one of the trucks (the Hino) in favor of his brother Carlos for a consideration of P50,000. Despite the said sale, Andy continued using the Hino in his hauling business by virtue of a special power of attorney (SPA) given to him by Carlos. On the other hand, three days after the sale, Carlos mortgaged the Hino to a financing company (BA) to secure a loan of P235,632.

In due course, the RTC rendered a decision in case 489-90 against Andy and Marie. In executing the decision PSC however could not claim on the counter-bond because the bond had lapsed for non-payment of premium. So PSC opted to enforce the writ of execution on the properties of the spouses. As a result the sheriff seized the Hino and sold it at public auction with PSC as highest bidder. PSC got possession of the Hino but could not transfer it in its name because it was already registered in the name of Carlos and mortgaged to BA.

In the meantime BA also sued Carlos for non-payment of his loan (Case 5117). After a decision was rendered in the action in favor of BA, a writ of execution was issued by virtue of which the sheriff levied upon and seized the Hino from PSC, sold it at public auction with BA as the highest bidder.

Believing that the sale between the brothers was simulated, PSC thus instituted another action in the RTC (Case No. 898-93) against, among others Andy and wife Marie, Carlos and wife Ana, the BA, the LTC and the Register of Deeds, to annul (a) the deed of sale of the Hino, the chattel mortgage of the same to BA, the Hino’s registration certificate and the registration of the chattel mortgage of said vehicle.

In their answer, Carlos and Ana averred that they had already acquired the Hino from Andy free from any lien or encumbrance prior to its seizure by the sheriff pursuant to the writ issued in Case 489-90; that their acquisition had been made in good faith, considering that at the time of the sale, the preliminary attachment had already been lifted. So PSC was in bad faith and abused its rights when it proceeded with the levy on execution upon the Hino in case 489-90. Thus it should be held liable for damages they sustained pursuant to Article 21 of the Civil Code which provides that “Any person who willfully causes loss or injury to another in a manner contrary to morals, good customs or public policy shall compensate the latter for the damage.” Were they correct?

No. The elements of abuse of rights are: (a) there is a legal right; (b) exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another. In this case, the second and third elements are not present.

PSC acted in good faith in bringing Civil Case 898-93 to annul the deed of sale of the Hino truck executed by Andy in favor of his brother Carlos considering that it believed that said sale had been resorted to so that Andy might evade his obligations. The sale of the Hino truck to Carlos had indeed been simulated. No remedy was available for any damages that Carlos and his wife might have sustained from the filing of said case against them because the law affords no remedy for such damages from an act which does not amount to a legal injury or wrong (Andrada vs. Pilhino Sales Corporation, G.R. 156448, February 23, 2011 644 SCRA, 1).      

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Note: Books containing compilation of my articles on Labor Law and Criminal Law (Vols. I and II) are now available at Suite 403 Sunrise Condominium, Ortigas Avenue, Greenhills, San Juan City. Call tel. 7249445.

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