MAMITUA SABER, SUBSTITUTED BY HIS HEIRS, REPRESENTED BY ORFIA ALICER SABER, PETITIONERS, VS. COURT OF APPEALS, PHILIPPINE AMANAH BANK AND ASGARI ARADJI, RESPONDENTS.

Mamitua Saber versus Court of Appeals

The Case

This is a civil action for damages arising from alleged malicious prosecution, libel, and willful injury under the human relations provisions of the Civil Code. Dr. Mamitua Saber, a distinguished academic appointed to head the Philippine Amanah Bank, sued the bank and one of its directors, Asgari Aradji, after the bank declared him personally liable for pilgrimage receivables, caused the filing of anti-graft charges against him, and allowed the charges to be published nationwide. The case matters because it tests the balance between a corporation's right to pursue what it believes are valid claims and the individual's right to reputation and to be free from oppressive conduct — and it asks whether a corporate officer who acts within his implied authority may be made the personal debtor of his own bank.

Procedural History

Saber filed a complaint for damages in the Regional Trial Court of Marawi City, Branch 9. On motion of Saber, the complaint was dismissed as against the chairman and members of the bank's Board of Directors, leaving the Philippine Amanah Bank and Asgari Aradji as the remaining defendants. After trial, the Regional Trial Court rendered judgment in favor of Saber, ordering the bank and Aradji, jointly and severally, to pay moral damages, nominal damages, attorney's fees, and the costs of suit. The trial court based its ruling on malicious prosecution, libel arising from the publications, and willful injury under the human relations provisions of the Civil Code. The bank and Aradji appealed to the Court of Appeals, which reversed the trial court's decision and denied Saber's motion for reconsideration. Saber's heirs, substituted for him, then filed a petition for review on certiorari with the Supreme Court.

Facts

In April 1974, then President Ferdinand Marcos appointed Dr. Mamitua Saber, then Dean of Research at the Mindanao State University, as Executive Vice-President of the Philippine Amanah Bank and designated him Officer-in-Charge pending the election of a president. Saber had no experience in business or banking and was told he was chosen from among forty applicants because of his proven personal integrity. He took a year-long leave of absence from the university and assumed office. Asgari Aradji was a member of the bank's Board of Directors and Acting Chairman of its Screening Committee for Personnel.

In September 1974, the bank was designated to make arrangements for the annual Muslim pilgrimage to Mecca. Saber formed a Pilgrimage Secretariat and chartered the vessel M/V Sweet Homes for five million three hundred thousand pesos. When politicians were allowed to charter a competing plane and many prospective pilgrims withdrew their reservations, Saber decided to sell tickets on credit to Datu Sacar Basman to fill the vacant cabins, and he also executed a Freight Contract with Basman's company, the Arabian Gulf Export Agency Corporation, without the approval of the Board of Directors. Basman issued postdated checks that were later dishonored, and he failed to pay the freight charge. The bank sustained a huge financial loss.

The bank's Board of Directors approved a resolution declaring Saber liable for the receivables on the ground that it had not authorized him to sell tickets on credit or to execute the Freight Contract. Aradji chaired an Investigating Committee, which recommended the filing of criminal charges against Saber. The bank authorized Aradji to sign the complaint for violation of the Anti-Graft and Corrupt Practices Act, and the complaint and investigation report were published in a newspaper of general circulation. Saber was preventively suspended when the cases reached the Sandiganbayan, which later acquitted all the accused, ruling that Saber, as Executive Vice-President and Officer-in-Charge, must be deemed impliedly clothed with authority to enter into contracts related to the project. Saber then filed this civil action for damages.

Issues

• Whether or not the bank and Aradji are liable for malicious prosecution in filing the anti-graft charges against Saber.
• Whether or not the bank and Aradji are liable for libel arising from the publication of the charges and the investigation report.
• Whether or not the bank and Aradji are liable for willful injury under the human relations provisions of the Civil Code arising from the resolution declaring Saber liable and the conditional clearance.

Applicable Provisions

Article 19 of the Civil Code provides:

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 general standard of conduct that anchors the human relations provisions invoked against the bank and Aradji.

Article 20 of the Civil Code provides:

Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same.

This provision requires an act contrary to law as the basis for an award of damages.

Article 21 of the Civil Code provides:

Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage.

This provision addresses acts that, while not strictly contrary to law, are contrary to morals, good customs, or public policy.

Ruling

The Supreme Court denied the petition and affirmed the Court of Appeals. On the first issue, the Court held that there was no malicious prosecution. The bank had factual and legal bases for filing the anti-graft charges: the Board had not authorized the credit sales and the Freight Contract, the checks were dishonored, and the bank suffered a loss. The acquittal of Saber did not by itself make the prosecution malicious, because malice and the absence of probable cause must be shown, and the bank acted in good faith in the performance of its duties.

On the second issue, the Court held that the bank and Aradji were not liable for libel. The publication of the charges was not shown to have been caused by them, and a fair and true report of a judicial or official proceeding is privileged.

On the third issue, the Court held that the bank and Aradji were not liable for willful injury under the human relations provisions. The bank was merely protecting its interests when it declared Saber liable for the receivables and issued a conditional clearance, and there was no showing that it acted with bad faith or in a manner contrary to morals, good customs, or public policy. The Court emphasized that the human relations provisions are not meant to penalize every act that causes injury, but only those done with abuse of rights, and that the bank's actions were within the legitimate exercise of its rights.

Doctrine

A corporate officer entrusted with the general management and control of the business has implied authority to make any contract or do any other act necessary or appropriate to the conduct of the ordinary business of the corporation. This implied authority means that acts done within its scope are corporate acts, not personal ones, and the officer cannot be made personally liable for the resulting obligations absent a showing of bad faith or personal gain.

For malicious prosecution to prosper, the plaintiff must prove malice and the absence of probable cause. The mere fact of acquittal does not establish malice, because the prosecution may have been commenced in good faith on facts that reasonably warranted it.

Under Articles 19, 20, and 21 of the Civil Code, an award of damages for abuse of rights requires a showing that the defendant acted with bad faith, in a manner contrary to morals, good customs, or public policy, or contrary to law. The legitimate exercise of a right, even if it causes injury, does not give rise to liability.

Disposition

The Supreme Court denied the petition and affirmed the Court of Appeals, thereby absolving the Philippine Amanah Bank and Asgari Aradji of liability for damages.

Remember This

The single line worth memorizing is that a corporate officer acting within his implied authority binds the corporation, not himself, and that the legitimate exercise of a right does not become an abuse of rights merely because it causes injury. Examiners like to use this case to test the elements of malicious prosecution and the application of Articles 19, 20, and 21 of the Civil Code to corporate and commercial dealings.