Abuse of Right Doctrine Development Bank of the Philippines vs. CA(445 SCRA 500) G.R. No. 137916.

December 8, 2004 CASE ISSUE: Entitlement to moral damages FACTS: Spouses G owned seven parcels of land which they used as collateral to secure a loan for their poultry project from the DBP. The spouses subsequently entered into an agreement with E for him to pay to the bank the principal and remaining interest balance in exchange for ownership of such lots. Come maturity time, DBP wrote a letter addressed to the spouses demanding for the payment of their remaining balance, but they did not pay or even respond to the bank. Seven months after, DBP wrote a demand letter coupled with a reminder of the upcoming maturity of their loan. When the bank, despite its efforts, did not receive any response from the spouses, it proceeded with the extrajudicial foreclosure of the secured parcels of land. Because of this, E filed a complaint claiming for injunction and payment of damages. On the part of the spouses, they also filed a complaint alleging, among others, that they are entitled to compensation for moral damages brought about by the pre-mature foreclosure. LESSONS: One may seek for compensation of moral damages through the Abuse of Rights Doctrine foun d in Article 19 of the Civil Code. This states 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. The said doctrine has the following elements: (a) the existence of a legal right or duty; (b) which is exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another. For as long as these three are present, then the doctrine shall apply. And the test used to prove t he existence of these three elements is by proving the presence of malice which is construed as bad faith or bad motive. In the case at bar, moral damages cannot be granted to the petitioners since although the foreclosure was pre-mature, DBP made efforts as manifested in the letters of notice it sent to the spouses to let them know the status of their loans as well as the legal implications of such. Hence, the absence of DBPs malice in doing such action.