G.R. No. 127823 - J Marketing Corp. vs. Sia, Jr.

Petitioner: J. Marketing Corporation, a company engaged in the business of appliances and motorcycles.
Private Respondent: Felicidad Sia, Jr. (and, by third party, Renato Pelande, Jr. as the seller of the disputed motorcycle).

On April 24, 1983, J. Marketing Corporation received from Kawasaki Motors (Phils.) a brand new Kawasaki motorcycle.
The motorcycle was described as Blue, Model HD-11 (1985) with Engine No. G7E-04848 and Chassis No. KG-805535.
After receipt, the motorcycle was placed in the bodega of the YKS Building along Rizal Avenue, Tacloban City.

On April 20, 1987, the petitioner discovered that the motorcycle was missing from the storage facility.
The loss was immediately reported to the police, specifically at the Headquarters Constabulary Highway Patrol District No. 8 in Tacloban City.

The petitioner initiated efforts to trace the whereabouts of the lost motorcycle.
It was discovered that Felicidad Sia, Jr. had purchased a motorcycle from Renato Pelande, Jr. on May 25, 1987.
A representative of the petitioner visited the residence of Felicidad Sia, Jr. and examined the chassis and motor numbers of the motorcycle in his possession.
It was determined that the numbers had been tampered with so as to correspond with those of the motorcycle originally delivered by Kawasaki Motors.

Upon confronting Felicidad Sia, Jr. at the Constabulary Highway Patrol Group office regarding the questionable motorcycle, the latter refused to return the motorcycle and advised that the petitioner file a case in court.
Accordingly, on September 24, 1987, petitioner's complaint for replevin with damages was filed before the Regional Trial Court of Tacloban City, Branch 8.
On April 14, 1988, Felicidad Sia, Jr. filed a third-party complaint against Renato Pelande, Jr., from whom he purchased the motorcycle. Renato Pelande, Jr. was later declared in default.

After trial, the Regional Trial Court dismissed the petitioner’s complaint for replevin but awarded damages (moral and exemplary) and attorney’s fees to Felicidad Sia, Jr.
The Court of Appeals affirmed the decision of the lower court.

The sole issue raised for the petition is whether the award of attorney’s fees and damages (both moral and exemplary) is proper.
This issue centers on the principle that a person exercising his right to litigate in good faith should not be penalized, even if his case is ultimately dismissed as erroneous.

Whether the judgment awarding damages (moral and exemplary) against the petitioner is proper given that the right to litigate, when exercised in good faith, should not incur liability for such damages.
Whether the award of attorney’s fees to the private respondent is justified under the circumstances, considering that an adverse decision does not automatically entitle a party to recover fees absent special circumstances.
Whether the wrongful imputation of bad faith or malicious intent to a party exercising its right to assert its claim in court, even if erroneously, can serve as a basis for imposing additional penalties such as damages and attorney’s fees.