Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 189311               December 6, 2010

DENNIS R. MANZANAL and BAGUIO COUNTRY CLUB CORPORATION, Petitioners,
vs.
RAMON K. ILUSORIO, Respondent.

D E C I S I O N

CARPIO MORALES, J.:

The only issue presented in this case is whether the complaint for damages filed by Ramon K. Ilusorio (respondent) against petitioners Dennis R. Manzanal and Baguio Country Club Corporation (BCCC) states a cause of action.

On July 7, 1994, a penthouse unit (PH-1) at the BCCC building in Baguio was assigned to respondent by one Felix Adolfo B. Lopez, Jr., with the conformity of BCCC.

By respondentís claim, he, for a period of five (5) years since the assignment, enjoyed the use of the unit and the clubís facilities, along with his business colleagues and friends but that when conflict within the family arose in 1998 and escalated to great proportions, he was barred from using the unit and was almost expelled as member of the club. Hence, spawned his filing of multiple suits against BCCC before the courts and SEC.

Respondent sent a May 31, 2001 letter to BCCC requesting for his current statement of account. Replying, BCCC charged him the amount of ₱102,076.74 which he paid under protest. He, however, requested a breakdown of the amount which BCCC, thru Manzanal, complied with, via letter of November 26, 2001 to which was attached respondentís Statement of Account itemizing the amount which in fact totaled ₱2,928,223.26. The letter reads:

Attached herewith please find Statement of Account with total amount of ₱2,928,223.26.

Our records also show that from April 1995 to July 1999, you sponsored an estimated ninety-seven guests, many of whom are Multinational Investment Bancorporation partners and personnel, Club charges for which amount to Two Million Four Hundred Thirty One thousand Pesos (₱2,431,000.00) for guest room charges exclusive of interest, guest fees and penalties.

This is also to follow-up payment due from you regarding our letter of December 20, 20001, copy attached herewith for your reference.

In light of the foregoing, please remit in full the amount of ₱2,928,223.26. to BCC within seven (7) days from receipt hereof, otherwise we shall be constrained to take the appropriate action and remedies to enforce payment of your obligation.2

BCCC subsequently sent a final demand letter dated December 19, 2001 to respondent for the immediate payment of the unpaid charges, failing which, BCCC stated, it "shall be constrained to take the necessary action available under the clubís rules to protect the interests of the club."

Respondent questioned, by reply letter of January 18, 2002, Manzanalís authority as an Assistant Vice President, as well as the billing for ₱2,431,000 and ₱599,300 as bereft of bases, thus:

I understand you are one of the lawyers of my estranged siblings (Sylvia, Lin, and Max) and now you claim to be the Assistant Vice-President of Baguio Country Club. Under what authority are you holding the said position in the Club? Please present the proof of your authority.

You claim that I have incurred charges from April 1995 to July 1999 amounting to P2,431,000.00. There is no basis for your claim. It is highly irregular for a member to be billed for charges allegedly incurred 6 years ago.1avvphi1

With regard to your claim pertaining to the alleged Penthouse rectification works amounting to P599,300.00, the same has no basis in fact and in law.

It is obvious that you and your principals are using the Club to harass me. Please refrain from dragging the Club into the family feud.3

Taking the demand letters letter as a form of harassment from his family who was utilizing Manzanal and BCCC (petitioners) for that purpose, respondent filed in 2002 a complaint for damages against petitioners before the Makati Regional Trial Court (RTC), alleging:

x x x x

FIRST CAUSE OF ACTION

20. The recent act of BCCC and MANZANAL to collect the amount of P2,928,223.26 is another form of harassment against the plaintiff. To be precise, it is part of the series of harassment, characterized with bad faith and malice, being done by BCCC, MANZANAL, and plaintiffís estranged siblings.

21. Plaintiff has no obligation to pay the amount of P2,928,223.26 to BCCC. It bears to note that under Article 1157 of the Civil Code of the Philippines, obligations arise from law; contracts; quasi-contracts; acts or omissions punished by law; and quasi-delicts. In the present case, it is quite clear that the collection of the amount of P2,928,223.26 is clearly without legal or factual basis. Corollary thereto, BCCC and MANZANAL have no right to collect the amount of P2,928,223.26 from the plaintiff.

22. Collecting room charges purportedly incurred as far as six (6) years ago, aside from the fact that it is baseless, is also dubious and scheming. As owner of the subject UNIT, plaintiff should not be held liable for its use and enjoyment considering that use and enjoyment of the UNIT are incidence of ownership.

23. Assuming without conceding that BCCC has the right to collect the amount of P2,928,223.26 from the plaintiff the same had already prescribed.

24. Assuming without conceding that BCC has the right to collect the amount P2,928,223.26 from the plaintiff, the latter is already guilty of laches and estoppel to effect collection thereof.

25. Moreover, it is improper for BCCC and MANZANAL to collect the amount pertaining to the rectification works regarding a purported encroachment on BCCC common areas because the matter is still subject of a pending case before the Regional Trial Court of Baguio City entitled "Baguio Country Club vs. Ramon K. Ilusorio" docketed as Civil Case No. 4750-R.

26. Under the foregoing circumstances, BCCC and MANZANAL should be enjoined from collecting from the plaintiff or in any way extra-judicially enforcing the payment of said claim or imposing any sanction against the plaintiff on account of said claim.

SECOND CAUSE OF ACTION

27. As a consequence of the unlawful act of MANZANAL and BCCC in initiating collection of the amount of P2,928,223.26 from the plaintiff, characterized with utter malice and gross and evident bad faith, plaintiff has suffered moral damages, consisting of mental anguish, social humiliation, anxiety and the like, which, considering his business and social standing in the community, is reasonably estimated in the amount of One Million Pesos (P1,000,000.00).4

x x x x (emphasis and underscoring in the original)

Respondent averred that, inter alia, he should not be charged for the use of the unit as he, as owner, is entitled to its use and enjoyment. And he cast doubt on billing him for charges dating back to 1995.

In lieu of an Answer, Manzanal filed a Motion to Dismiss the complaint for failure to state a cause of action, he alleging that being merely an officer who signed on behalf of BCCC, he should not be personally liable. He explained that the act of sending a demand letter does not constitute a cause of action against the obligee/creditor. Alternatively, Manzanal claimed that respondentís asseverations against him and BCCC should be ventilated as a matter of defense in the collection suit filed against him.

BCCC also filed a Motion to Dismiss on the ground of litis pendentia, it having filed a collection suit against respondent before the RTC of Baguio City docketed as Civil Case No. 4750-R,5 to recover the cost of removing illegal structures in his unit.

Branch 145 of RTC Makati to which respondentís complaint was raffled, dismissed the complaint, by Order of October 10, 2002 in this wise:

x x x To sustain plaintiff ILUSORIOís assertions that this Complaint states a cause of action would be to rule that the act of sending a demand letter by itself constitutes a cause of action. When a creditor sends a demand letter to a debtor, according to plaintiff ILUSORIOís theory, that is already an actionable wrong, a cause of action. x x x 6

On appeal, the Court of Appeals, by Decision of November 26, 2008,7 reversed the RTC Makati and ordered the reinstatement of respondentís complaint, holding as follows.

x x x In this case, if the allegations in the complaint that (1) the plaintiff-appellant [Ilusorio] is a member of the Baguio Country Club and an owner of one of the units of the Clubís House Building, thereby entitling him to the possession and use of such unit subject to reasonable membership charges. (2) the defendants-appellees had been unreasonably charging him

charges and bills for the use of his unit without factual and legal basis, and (3) despite his objections to the amount charges billed in his name, the defendants-appellees had threatened to enforce the said charges in the manner provided under the Clubís rules are assumed to be true, then the plaintiff-appellant would be entitled to the relief demanded in his complaint.8 (underscoring supplied)

Petitionersí motion for reconsideration was denied by Resolution of August 24, 2009. Hence, the filing of the present petition for review.

The petition is meritorious.

A cause of action is the act or omission by which a party violates the right of another, entitling the injured party to relief. Its existence is determined from the allegations in the complaint.9

The Court finds from the tenor of the demand letters, which respondent annexed to his complaint, that it did not deviate from the standard practice of pursuing the satisfaction of a club memberís obligations. Respondent did not indicate in his complaint how tenuous petitionersí claim for unpaid charges is.10 In his reply to petitionersí final letter of demand, he in fact did not contradict petitionersí statement that his work partners and employees used his unit, thereby admitting that he welched on his undertaking in the contract that only family members are allowed free usage.

As an exclusive organization which primarily derives life from membership fees and charges, BCCC is expected to enforce claims from members in default of their contractual obligations.

Even under the principle of abuse of rights, Cebu Country Club, Inc. v. Elizagaque11 which expounds as follows:

In GF Equity, Inc. v. Valenzona, we expounded Article 19 and correlated it with Article 21, thus: This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which must be observed not only in the exercise of oneís rights but also in the performance of oneís duties. These standards are the following: to act with justice; to give everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a primordial limitation on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though by itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. But while Article 19 lays down a rule of conduct for the government of human relations and for the maintenance of social order, it does not provide a remedy for its violation. Generally, an action for damages under Article 20 or Article 21 would be proper. (citation omitted, underscoring supplied),

respondent cannot seek refuge.

In fine, the RTC did not err in ordering the dismissal of the complaint against petitioners for lack of cause of action. It was thus error for the appellate court to set aside the RTC decision.

WHEREFORE, the petition is GRANTED. The Court of Appeals Decision of November 26, 2008 is REVERSED and SET ASIDE. The Order of the Regional Trial Court of Makati City, Branch 145 dated October 10, 2002 is REINSTATED.

SO ORDERED.

CONCHITA CARPIO MORALES
Associate Justice

WE CONCUR:

ARTURO D. BRION
Associate Justice
LUCAS P. BERSAMIN
Associate Justice
MARTIN S. VILLARAMA, JR.
Associate Justice
MARIA LOURDES P. A. SERENO
Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courtís Division.

CONCHITA CARPIO MORALES
Associate Justice
Chairperson

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersonís Attestation, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courtís Division.

RENATO C. CORONA
Chief Justice


Footnotes

1 It is inferred that the Letter of December 20, 2000 pertained to the amount representing the cost of rectification works in Ilusorioís unit as ordered by the Office of the City Fire Marshall, which shall become the basis of a collection suit against Ilusorio before the RTC of Baguio City.

2 Rollo, p. 143.

3 Id. at 144.

4 Records, pp. 5-6.

5 In the said case, BCCC alleged that Ilusorio constructed a mezzanine in his unit, violating BCCCís Deed of Restrictions. Upon inspection, the Office of the City Fire Marshall ordered BCCC to remove the constructed works as it obstructed a service manhole located at the fire exist stairwell. For the expenses it incurred in rectification works and for failure of Ilusorio to pay, BCCC filed a collection suit to enforce its claim.

6 Records, pp. 159 Ė 161.

7 Penned by Associate Justice Isaias Dicdican with the concurrence of Associate Justices Juan Q. Enriquez, Jr. and Marlene Gonzales-Sison, rollo, pp. 83-93.

8 Id. at 91.

9 Mactan-Cebu International Airport Authority (MCIAA) v. Heirs of Mrcelina L. Sero, G.R. No. 174672, April 16, 2008, 551 SCRA 633.

10 Vide St. Michael School of Cavite, Inc. v. Masaito Development Corporation, G.R. No. 166301, February 29, 2008, 547 SCRA 263.

11 G.R. No. 160273, January 18, 2008, 542 SCRA 65, 73.


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