ERMELINDA C. MANALOTO, AURORA J. CIFRA, FLORDELIZA J. ARCILLA, LOURDES J.

CATALAN,
ETHELINDA J. HOLT, BIENVENIDO R. JONGCO, ARTEMIO R. JONGCO, JR. and JOEL JONGCO, Petitioners,
vs. ISMAEL VELOSO III, Respondent.

G.R. No. 171365 | 2010-10-06

Facts:

An unlawful detainer case was filed by petitioners Ermelinda Manaloto, et al against respondent Ismael
Veloso III. Petitioners alleged that they were lessors of a residential house located in Horseshoe Village,
Quezon City which was leased to respondent at a monthly rental of P17,000.00. The action was
instituted on the ground of respondent’s failure to pay rentals from May 23, 1997 to December 22, 1998
despite repeated demands. Respondent Veloso countered that he made an advance payment of
P825,000.00 when he paid for the repairs done on the leased property.

The MTC decided in favor of the petitioners by ordering respondent to vacate the property and to pay
the rentals due. The RTC reversed the MTC’s decision. Respondent Veloso was ordered to pay
arrearages from May 23, 1997 up to the date of the decision but was also given an option to choose
between staying in the leased property or vacating the same, subject to the petitioners’ reimbursement
of half of the value of the improvements which it found to be P120,000.00. The respondent was also
given the right to remove the improvements should petitioners refuse to pay P60,000.00.

While the respondent’s appeal to the unlawful detainer case was pending, the respondent filed a
complaint with the RTC for breach of contract and damages against petitioners for the embarrassment
that he suffered when petitioners distributed copies of the lower court’s decision on the unlawful
detainer case. He also said that petitioners, as lessors, failed to make continuing repairs on the property
to keep it tenantable.

The petitioners moved for the dismissal of the complaint case for the reason that the decision of the
lower court is a matter of public record thus its disclosure to the public violated no law or any legal right
of the respondent.

The RTC issued a Resolution dismissing respondent Veloso's complaint (for breach of contract and
damages) against petitioners on the ground of failure to state a cause of action. Respondent filed a
Motion for Reconsideration, but the same was denied. He thereafter filed an appeal with the Court of
Appeals (CA).

The CA, giving due course to the appeal, held that the petitioners were liable to respondent for moral
and exemplary damages as the copies were intended to embarrass respondent in the community. It
however dismissed respondent’s second cause of action for breach of contract.

Petitioners now raise this petition questioning the award of moral and exemplary damages by the CA.
They likewise assert that the CA erred in giving due course to the appeal. According to petitioner,
respondent's appeal of the RTC's Resolution, (which dismissed his complaint) was filed out of time.
Respondent received a copy of the said Resolution on September 26, 2003, and he only had 15 days
from such date to file his appeal, or until October 11, 2003. Respondent, instead, filed a Motion for
Reconsideration of the resolution on October 10, 2003, which left him with only one more day to file his
appeal. The RTC subsequently denied respondent's Motion for Reconsideration in an Order dated
December 30, 2003, which the respondent received on February 20, 2004. Respondent only had until
the following day, February 21, 2004, to file the appeal. However, respondent filed his Notice of Appeal
only on March 1, 2004. Hence, petitioners conclude that the dismissal of respondent's complaint already
attained finality.

ISSUES:

Whether the appeal was timely filed

Whether the respondent is entitled to receive damages

Held:

1.) YES.

Neypes vs. Court of Appeals has settled the "fresh period rule," according to which, an ordinary appeal
from the RTC to the Court of Appeals, under Section 3 of Rule 41 of the Rules of Court, shall be taken
within fifteen (15) days either from receipt of the original judgment of the trial court  OR from receipt of
the final order of the trial court dismissing or denying the motion for new trial or motion for
reconsideration.

In effect, with the advent of the "fresh period rule" parties who availed themselves of the remedy of
motion for reconsideration are now allowed to file a notice of appeal within fifteen days from the denial
of that motion.

In this case, respondent received the Order denying his Motion for Reconsideration on February 20,
2004. On March 1, 2004, just after nine days from receipt of the order, respondent already filed his
Notice of Appeal. Clearly, under the fresh period rule, respondent was able to file his appeal well-within
the prescriptive period of 15 days, and the Court of Appeals did not err in giving due course to said
appeal.

2.) YES, but only for damages under Art. 19 of the Civil Code excluding moral damages.

A cause of action (for damages) exists if the following elements are present: (1) a right in favor of the
plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part
of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of
such defendant violative of the right of the plaintiff or constituting a breach of the obligation of
defendant to the plaintiff for which the latter may maintain an action for recovery of damages. We find
that all three elements exist in the case at bar. Respondent may not have specifically identified each
element, but it may be sufficiently determined from the allegations in his complaint.

 Petitioners are obliged to respect respondent's good name even though they are opposing parties in
the unlawful detainer case. As Article 19 of the Civil Code requires, "[e]very 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." A violation of such principle constitutes an abuse of rights, a tortuous conduct.

The principle of abuse of rights under Article 19 departs from the classical theory that "he who uses a
right injures no one." The modern tendency is to depart from the classical and traditional theory, and to
grant indemnity for damages in cases where there is an abuse of rights, even when the act is not illicit.

With respect to moral damages, bad faith should be proven to substantiate the award of moral
damages, otherwise good faith is presumed

The court declared that the Court of Appeals erred in already awarding moral and exemplary damages in
respondent's favor when the parties have not yet had the chance to present any evidence. Bare
allegations, unsubstantiated by evidence are not equivalent to proof. In civil cases, he who alleges a fact
has the burden of proving it by a preponderance of evidence. In this case, the finding of the Court of
Appeals of bad faith and malice on the part of petitioners has no factual basis.

Good faith is presumed and he who alleges bad faith has the duty to prove the same.  Good faith refers
to the state of the mind which is manifested by the acts of the individual concerned. It consists of the
intention to abstain from taking an unconscionable and unscrupulous advantage of another. Bad faith,
on the other hand, does not simply connote bad judgment to simple negligence. It imports a dishonest
purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty due to some
motive 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.