Good Faith

Our Civil Code provides: “Art. 19. 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.” In other words, every person must act in good faith in performing his duties and exercising his rights. I remember the words of a senior lawyer when I was still new in the practice: “If you are not sure what case to file, use Article 19 of the Civil Code”. I don’t remember using it in any of my cases, but this article is a warning upon all people that although they are granted rights by our laws, these are not to be abused. In short, this provisions urges everyone to be good. But how is “good faith” defined or interpreted by our laws and jurisprudence? The case of Ford vs. Obosa, ( G.R. No. 99039, February 3, 1997) has a good discussion on the principle.

Ford vs. Obosa

Obosa was employed by Ford Philippines and for his good performance he was promoted as General Sales Manager but with the condition that the position is transitory. The position was subsequently declared redundant and Obosa was given two options by Ford. The first option is for him to accept the redundancy and that he will be paid his benefits as mandated by law and company policy and the second is for him to accept the position of Vehicle Sales Manager. He asked for some time to think matters over. Obosa failed on several occasions to signify his intention so the company interpreted this as his unwillingness to accept the position he is being offered. He was therefore terminated by reason of redundancy. Obosa later filed a case for damages in court claiming that his dismissal was attended by bad faith. The trial court did not find bad faith in the acts of Ford but the Court of Appeals reversed and held that the company indeed acted in bad faith.

Not in Bad Faith

The Supreme Court reversed the decision of the Court of Appeals. There was no bad faith on the part of Ford in dismissing Obosa from his employment. The Court found that Ford in fact acted in good faith when it offered two options to him and on several occasions reminded him to signify his intent on which option to accept. “Bad faith does not simply connote bad judgment or negligence. It imports a dishonest purpose or some moral obliquity and conscious doing of wrong. It means a breach of a known duty through some motive or interest or ill will that partakes of the nature of fraud. Applying this precept to the foregoing circumstances, we find that there was no “dishonest purpose,” or “some moral obliquity,” or “conscious doing of wrong,” or “breach of a known duty,” or “some motive or interest or ill will” that “partakes the nature of fraud” that can be attributed to the petitioners. It must be reiterated that bad faith should be established by clear and convincing evidence. Furthermore, the settled rule is that the law always presumes good faith such that any person who seeks to be awarded damages due to acts of another has the burden of proving that the latter acted in bad faith or with ill motive. In the case at bench, we find the evidence presented by the private respondent insufficient to overcome the presumption of good faith. On the contrary, a careful scrutiny of the evidence leads us to take the opposite view. We are convinced that the petitioners had in fact acted in accord with the norms of good faith.”


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