In the case of Llorente vs. Sandiganbayan (G.R. No. 122166. March 11, 1998), the Honorable Supreme Court ruled that bad faith does not simply connote bad judgment or negligence; it imputes a dishonest purpose or some moral obliquity and conscious doing of a wrong; a breach of sworn duty through some motive or intent or ill will; it partakes of the nature of fraud. (Spiegel v. Beacon Participations, 8 NE 2nd Series, 895, 1007). It contemplates a state of mind affirmatively operating with furtive design or some motive of self interest or ill will for ulterior purposes (Air France v. Carrascoso, 18 SCRA 155, 166-167). Evident bad faith connotes a manifest deliberate intent on the part of the accused to do wrong or cause damage. Furthermore, this must be substantiated by evidence as the unbroken jurisprudence is that bad faith under the law cannot be presumed, it must be established by clear and convincing evidence.
Evident bad faith was illustrated in the case of Mejorada vs. Sandiganbayan (G.R. Nos. L-51065-72 June 30, 1987). The accused therein took advantage of his position as a right-of-way-agent by making the claimants sign the aforementioned agreements to demolish and sworn statements which contained falsified declarations of the value of the improvements and lots. Honorable Supreme Court ruled that there was evident bad faith on the part of the accused when he inflated the values of the true claims and then divested the claimants of a large share of the amounts due them.vi
Similarly, the Honorable Supreme Court ruled in the case of Deniega vs. Sandiganbayan (G.R. No. 109991 May 22, 1995) that there is evident bad faith when the accused therein already paid the contractor a total of P 650,000.00 out of the contract price of P 652, 562.60 when only 36.24% of the construction of the market has been completed. In so doing, petitioners disregarded the provision in the contract that payment should be based on the percentage of work accomplishment. Moreover, the contract provided that in case of delay in the completion of the project, the contractor shall be liable for liquidated damages at the rate of 1/10 of 1% of the contract price per day of delay.
Lastly, there was also a finding of evident bad faith in the case of Asilo vs. People (G.R. Nos. 159017-18, March 9, 2011) when the accused therein demolished market stalls despite the fact that these were not considered public nuisance and where there is no legal order for its demolition.
On the other hand, the Honorable Supreme Court ruled that there can be no evident bad faith when the accused who is a an officer-in-charge of a government hospital removed the name of the private complainant from the plantilla and withheld her salary when the latter was found “moonlighting” (Jacinto vs. Sandiganbayan, G.R. No. 84571 October 2, 1989). In that case, the Honorable Supreme Court ruled that the actions taken by petitioner afore-stated were not entirely without rhyme or reason. They were measures taken by a superior against an erring employee who studiously ignored if not defied his authority. In another case, it also ruled that mistake on a doubtful or difficult question of law may be the basis of good faith as long as it is not shown that they were motivated by malice or gross negligence amounting to bad faith (Daraug vs. Perez, CA-G.R. SP No. 87152, September 18, 2006).
From the above-cited cases, it can be said that a person can be considered in good faith where there is an honest intention to abstain from taking any unconscientious advantage of another (PNB vs. Heirs of Militar, G.R. No. 164801, June 30, 2006). In the case of People vs. Ojeda (G.R. Nos. 104238-58, June 3, 2004), it was ruled that good faith may be demonstrated, for instance, by a debtor’s offer to arrange a payment scheme with his creditor. Any allegation of intent of malice or deceit can be rebutted by an extraordinary effort to pay complainant notwithstanding her own financial situation (People vs. Dimalanta, G.R. No. 157039, October 1, 2004).