Can Creator create morality from nothing?

[Mystic]

Imagine a world where smart intelligent beings are created to do battle with each other. They battle one another but they don't die. They can inflict pain on each other but not physical damage. They fight each other and inflict pain on each other. Now is it possible that part of their "goodness" is to hate each other and inflict pain on each other, for no reason but for sake of hate and inflicting pain? And that it's "evil" to love and have compassion for one another? Those whom decide to help one another, try to live in peace, not inflict pain each other are being "evil"? While those inflicting pain on each other are being "good"? Can the Creator create goodness and evil, in this sense? Or is it impossible?

I say it's impossible. Let me know your thoughts.