R & B SURETY & INSURANCE CO., INC.

, petitioner,

vs.

THE INTERMEDIATE APPELLATE COURT and ANGELINA USON, respondents.

Raul A. Mora for petitioner.

Celedonio Tiongson for respondents.

GUTIERREZ, JR., J.:

This is a petition for review on centiorari, seeking to set aside the decision of the in Intermediate
Appellate Court which awarded the private respondent moral and exemplary damages plus attorney's
fees, after finding that the petitioner acted in bad faith in filing an action against said respondent.

The facts are stated in the desision of the appellate court:

xxx xxx xxx

... On January 3, 1969, defendant Maria Isabel Diaz was granted a loan of P20,000.00 by the Philippine
National Bank. To secure the repayment of the loan, Maria Isabel Diaz submitted a surety bond (Exh. B)
of plaintiff R & B Surety & Insurance Co., Inc. for the sum of P20,000.00 in favor of the Philippine
National Bank. In turn, defendants executed an indemnity agreement with the chattel mortgage (Exh. C)
to indemnify the plaintiff surety "for any damage, prejudice, loss, costs, payments, advances and
expenses of whatever kind and nature, including attorney's fees, which the corporation may, at any
time, become liable for, sustain or incur as a consequence of having executed the above-mentioned
Bond, its renewals, extensions, or substitutions and said attorney's fees not to be less than twenty (20%)
per cent of the total amount claimed by the corporation in each action, the same to be due, demandable
and payable, irrespective of whether the case is settled judicially or extra-judicially and whether the
amount has been actually paid or not."
Maria Isabel Diaz did not file her answer to the complaint or the crossclaim of defendant Angelina Uson,
and she was declared in default in both cases. Defendant Eliseo Santos filed his answer to the complaint
wherein he admits signing the indemnity agreement but claims that "all the time he thought he was and
actually intended to be a character witness only." In his counterclaim, he asks for attorney's fees,
expenses of litigation and other damages in unspecified amounts against the plaintiff. Defendant
Angelina Uson filed a separate answer, stating her signatures appearing on the indemnity agreement are
all forgeries. By way of counterclaim against the plaintiff, she asks for P100,000.00 as moral damages
and a sum equivalent to 25% of the amount of damages she may recover as and for counsel fees. By way
of crossclaim against defendant Maria Isabel Diaz, she asks for the payment of moral damages and
attorney's fees in like amounts for forging or causing to be forged her signature in the indemnity
agreement.

After due trial, judgment was rendered by the Court of First Instance the dispositive portion of which
reads as follows:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants Maria
Isabel Diaz and Eliseo Santos, ordering them, jointly and severally, to pay the former the sum of
P20,000.00, with interest thereon at the rate of 13-l/2% from January 16, 1974, the date when plaintiff
paid the Philippine National Bank; a sum equal to 20% thereof as and for attorney's fees; and the costs
of suit. The complaint is dismissed as against the defendant Angelina Uson.

The counterclaims of the defendants Eliseo Santos and Angelina Uson are hereby dismissed.

xxx xxx xxx

Respondent appealed the dismissal of her counterclaim. On April 29, 1982, the Intermediate Appellate
Court** modified the decision of the lower court and ordered the plaintiff-appellee R & B Surety and
Insurance Co., Inc. R & B), to pay "the sum of P100,000.00 as moral damages, twenty five (25%) per cent
of said amount as attorney's fees and P10,000.00 as exemplary damages ..." on a finding that R & B
acted in bad faith when it filed the action against defendant-appellant Uson. A motion for
reconsideration was filed by R & B but the same was denied. Hence, this petition.

Petitioner R & B assigns the following errors:

1. The respondent appellate Court has committed grievous error in drawing from the established facts a
conclusion that herein Petitioner is guilty of bad faith and negligence, and, therefore liable to private
respondent for moral and exemplary damages, attomey's fees and costs;

2. The respondent appellate Court has committed grave error in over- riding legal presumptions of law
by and with conjectural, illogical, flimsy and misleading deductions not supported by the established
facts;

3. The respondent appellate Court has awarded a kind of damage (exemplary damage) which is not
within the contemplation of the pleadings and which, even the private respondent had not conceived
and asked for; and

4. Generally, the respondent appellate Court had rendered a decision which, in a way, is not in accord
with law or with the applicable decisions of this Honorable Supreme Court.

The only issue raised in the above assignments of errors is whether or not, on the basis of the evidence
found in the records, the respondent court correctly adjudged the petitioner guilty of bad faith and
negligence in filing the complaint against respondent Uson sufficiently to warrant an award of moral and
exemplary damages and attorney's fees in the total amount of P135,000.00.

The appellate court tried to justify the award by stating:

The plaintiff did not appeal from the findings of the lower court that the signatures appearing in the
indemnity agreement (Exh. C), purporting to be those of Miss Uson, are all forgeries, which meant that
some other person, upon the inducement of Maria Isabel Diaz, signed the names of Uson in said Exhibit
C. This could only be done if Exhibit C was signed in the absence of the representative of the plaintiff
corporation, or because the corporation entrusted blank copies or forms of the indemnity agreement to
Maria Isabel Diaz to be signed and accomplished. Herein lies the plaintiff's bad faith. The perpetration of
the forgeries was made possible due to the negligence of plaintiff. Yet, the plaintiff presented Crisoforo
Lopez, its Assistant Manager, who had the temerity to claim that Miss Uson signed Exhibit C. On top of
all this is the uncontradicted testimony of Uson that before the case was filed in court she personally
informed Atty. Armando Abad, an official of plaintiff, that the signatures appearing to be hers in Exhibit
C are forgeries (pp. 13-15, t.s.n., Nov. 6, 1974). Plaintiff's negligence is also demonstrated by its omission
to request, as required of it by Commonwealth Act No. 465, otherwise known as the Residence
Certificate Law, Uson, if she was really present, to exhibit her latest residence certificate before it signed
said indemnity agreement. This circumstance likewise shows that Uson was not present during the
execution of Exhibit C.

Petitioner contends that bad faith and negligence cannot be deduced from the fact that it handed out
blank forms of the indemnity agreement to Maria Isabel Diaz for her and her co-signatories to
accomplish without any representative from the petitioner corporation being present and to return the
same to the latter already duly notarized. Petitioner also maintains that neither can bad faith be
presumed from the fact that it pursued the filing of an action against Uson notwithstanding the fact that
the latter had already informed petitioner beforehand that her signatures on the said agreement were
forged.

We find merit in the petition.

While petitioner might have been negligent in not verifying the authenticity of the signatures in the
indemnity agreement, still the same does not amount to bad faith as to justify the award of damages
and the conclusion that the act of filing the complaint against respondent Uson amounts to malicious
prosecution In filing the action, the petitioner was only protecting its business interests by trying to
recover the amount it had already paid to the Philippine National Bank.

In a long line of cases, we have consistently ruled that in the absence of a wrongful act or omission or of
fraud or bad faith, moral damages cannot be awarded and that the adverse result of an action does not
per se make the action wrongful and subject the actor to the payment of damages, for the law could not
have meant to impose a penalty on the right to litigate. (Salao v. Salao, 70 SCRA 86, 87, citing Barreto v.
Arevalo, 99 Phil. 771, 779; Herrera v. Luy Kim Guan, 110 Phil. 1020, 1028; Heirs of Justina v. Gustilo, 61
O.G. 6959; Castillo v. Castillo, 95 SCRA 68; Mirasol v. De la Cruz, 84 SCRA 342, 343; citing Pacific
Merchandising Corporation v. Diestro Logging Development Corporation, 34 SCRA 704; Octot v. Ybañez
111 SCRA 84, 85; citing Ong Yiu v. Court of Appeals, 91 SCRA 223 and Inhelder Corporation v. Court of
Appeals, 122 SCRA 584-585, citing Buenaventura v. Sto. Domingo, 103 Phil. 239).lwphl@itç

In the case at bar, the act of filing the complaint against respondent Uson was not at all motivated by ill
will or by any desire to vex and humiliate the respondent. This can be gleaned from the fact that after
the termination of the case before the trial court, the petitioner did not appeal the dismissal of the case
against the respondent even though it knew that it would have a greater chance of collecting what it
paid for if all the defendants were adjudged to pay the amount in the indemnity agreement especially
since the main signatory to the agreement had already been declared in default and was nowhere to be
found.

We agree with the trial court in its finding that:

As regards Uson's counterclaim against the plaintiff, the evidence does not support a finding that the
filing of the complaint against this defendant was done in bad faith and with malice. The plaintiff, it must
be assumed was guided solely by the records in its possession in the firing of this case and it cannot be
faulted if the defendant Uson was impleaded as a defendant since her name appears in the indemnity
agreement and other supporting papers. It must be borne in mind that this case was filed more than
four years after the said document was executed and, considering the volume of business done by the
plaintiff of the same nature, defendant Angelina Uson was only a name as far as it is concerned.

Neither can bad faith be presumed from the fact that inspite of the respondent's declaration outside the
court that her signatures were forged, the petitioner still included her in the complaint. There is no
reason why such declaration should be given full faith and credit by herein petitioner as to totally
exclude respondent from the complaint. It is natural for a prospective defendant to deny any
participation or involvement in the subject matter of the litigation. Precisely, the very purpose of going
to trial was to ascertain whether or not her signatures were indeed forged. And as stated earlier, the
mere fact that an action is later found to be based on an erroneous ground does not per se make its
initiator guilty of bad faith and liable for damages, much less in the amount of P110,000.00. Sound
principles of justice and public policy demand that persons shall have free resort to courts of law for
redress of wrongs and vindication of their rights without fear of later on standing trial for damages
should their actions lose ground. (Inhelder Corporation v. Court of Appeals, supra citing Buenaventura v.
Sto. Domingo, 103 Phil. 239). In one case, we held that the award of moral and exemplary damages was
uncalled for on the ground that the petitioner had not acted with malice, fraud or in bad faith despite
the fact that petitioner in instituting the action, solely relied on a letter of the accounting firm which it
knew was still unverified, undetailed, and incomplete. (Panay Electric Co., Inc. v. Court of Appeals, 119
SCRA 459). We reiterate the reminder to lower courts "to guard against the award of exhorbitant
damages that are way out of proportion to the environmental circumstances of a case and which time
and again, this Court has reduced or eliminated. Judicial discretion granted to the courts in the
assessment of damages must always be exercised with balanced restraint and measured objectivity."
Inhelder Corporation v. Court of Appeals, supra). In the case at bar, even if the respondent were entitled
to damages, the award of a total amount of P135,000.00 as damages and attorney's fees was entirely
way out of proportion.

In any case, we hold that the award of damages was erroneous. Moral damages are emphatically not
intended to enrich a complainant at the expense of a defendant; they are awarded only to enable the
injured party to obtain means, diversion or amusements that will serve to alleviate the moral suffering
he has undergone, by reason of the defendants culpable action. In other words, the award of moral
damages is aimed at a restoration, within the limits of the possible of the spiritual status quo ante, and it
must be proportionate to the suffering inflicted. (Grand Union Supermarket, Inc. v. Espino, Jr., 94 SCRA
966, citing the concurring and dissenting opinion of Justice J.B.L. Reyes in Pangasinan Transportation
Company, Inc. v. Legaspi, 12 SCRA 598) In the absence of a wrongful act or omission or of fraud or bad
faith, petitioner cannot be adjudged to pay moral damages. The award of exemplary damages and
attorney's fees are likewise untenable for they can only be given in case the petitioner acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner and if the action instituted by it was
clearly unfounded and so untenable as to amount to gross and evident bad faith. (See Ong Yiu v. Court
of Appeals, supra and Mirasol v. De la Cruz, supra, citing Rizal Surety & Insurance Co. v. Court of Appeals,
20 SCRA 61). The records are bereft of proof to support any finding of bad faith on the part of the
petitioner.

WHEREFORE, the petition is GRANTED. The decision of the Intermediate Appellate Court is hereby
REVERSED and SET ASIDE and the decision of the Court of First Instance of Manila, Branch XVI is
REINSTATED and AFFIRMED

Guita vs. Ca

Petitioner seeks review of the decision of the defunct Court of Appeals holding him liable for moral
damages for issuing, in his capacity as Administrative Officer of the Marinduque Mining and Industrial
Corporation (MMIC), a certification to respondent Cesar Haguisan stating that the latter was employed
by MMIC as security guard from August 21, 1956 up to the date of his separation on February 23, 1971,
"after he was found mentally unfit to work."

Cesar Haguisan was employed as security guard of the MMIC in Sipalay, Negros Occidental.

Before 1970, the MMIC general manager was shot and killed by one of the Company security guards. As
an aftermath of this accident, all MMIC security guards were subjected to psychiatric examination.

The psychiatric examination of Cesar Haguisan was conducted by Dr. Rena Nora, who made the
following findings:

... He has admitted to frequent "absent minded spells" in the last few years. ... Calculating ability is poor,
indicating poor concentration and memory. ... With memory for design test, he made six mistakes which
is interpreted as borderline for motor-perceptual skill impairment ... . His profile shows that of a poorly
adjusted individual both in his personal adjustments and his social adjustment ...

Impression: Borderline mental capacity with mild to moderate memory impairment and poor calculating
ability...

Most of above factors noted were not in satisfactory levels and tests also indicated significant
impairment of mental functioning.

Dr. Nora concluded that Haguisan was

psychiatrically unfit for the job position of security guard at the time he was examined (1970), and that
he cannot be recommended for the job position of security guard, but that he may be gainfully
employed in other departments that require less mental alertness and jobs that do not require evening
shifts.

Based on the foregoing psychiatric report, the services of Haguisan were terminated.

Subsequently, Haguisan requested from Tiburcio Guita, MMIC Administrative Officer, a certification
regarding his MMIC service, as he was then looking for another job. Guita gave this certification to
Haguisan:

This is to certify that Mr. Cesar B. Haguisan has been employed by Marinduque Mining and Industrial
Corporation as Security Guard in its Sipalay Mine, Negros Occidental, from August 21, 1956, up to the
date of his separation on February 23, 1971, with a monthly rate of P371.06, after he was found
mentally unfit to work.

This certification is issued upon the request of Mr. Cesar B. Haguisan, for whatever purpose it may serve
him best.

In 1973, Haguisan and his wife filed with the Court of First Instance of Negros Occidental at Bacolod City
a complaint for damages against Tiburcio Guita, Dr. Rena Nora, Emilio Santos (MMIC Sipalay general
manager) and Roberto Abendaño (MMIC chief security guard). The suit was based on the allegedly false
and derogatory statements regarding Haguisan's mental state which, according to plaintiffs, were not
only designed to ease Haguisan out of MMIC but also to ruin his chances of obtaining employment
elsewhere.

The trial court dismissed the complaint, finding no malice in preparation of the psychiatric report on
Haguisan or the certification subsequently issued on the basis thereof.

On appeal, the Court of Appeals affirmed the dismissal except as to herein petitioner Guita, who was
ordered to pay Cesar Haguisan the sum of P10,000.00 as moral damages and costs upon the finding that
it was "mean and malicious on the part of Guita to unqualifiedly certify that Haguisan was 'mentally
unfit to work', without clarifying, as Dr. Nora had done in her report (Exh. B), that Haguisan was
'psychiatrically unfit for the job position of security guard at the time he was examined (1970)' but that
'he may be gainfully employed in other departments that require less mental alertness and jobs that do
not require evening shifts'.

Dissatisfied, petitioner filed the instant petition for review, assailing the decision of the appellate court
for lack of basis. Haguisan did not appeal.
Ordinarily, the factual findings of the Court of Appeals are accepted as conclusive by this Court. We have
repeatedly held however that this Court may make its own findings of fact and disregard those made by
the Court of Appeals when the latter are grounded entirely on speculations, surmises, or conjectures;
when the interferance is manifestly mistaken, absurd or impossible; when there is a grave abuse of
discretion; when there is a misapprehension of facts; when the findings of fact are conflicting; and when
the Court of Appeals goes beyond the issues of the case and makes findings contrary to the admissions
of the parties. (Roque vs. Buan, 21 SCRA 642; Garcia vs. Court of Appeals, 33 SCRA 22.)

In the instant case, we find that the appellate court's finding that petitioner, in issuing the disputed
certification, acted with malice, is bereft of factual support.

Moral damages may be awarded to compensate one for diverse injuries such as mental anguish,
besmirched reputation, wounded feelings and social humiliation. It is however not enough that such
injuries have arisen; it is essential that they have sprung from a wrongful act or omission of the
defendant which was the proximate cause thereof.

Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be recovered if they are the proximate result of the
defendants wrongful act or omission. (Civil Code, Article 2217.)

In a long line of cases, we have consistently ruled that in the absence of a wrongful act or omission or of
fraud or bad faith, moral damages cannot be awarded... (R&B Surety and Insurance Co., Inc. vs. IAC, 129
SCRA 736, 743.)

It may perhaps be conceded that private respondents have suffered mental anguish or wounded
feelings as a consequence of the statement in the certification that Haguisan was separated from MMIC
" after he was found mentally unfit to work." But was Guita's issuance of the certification wrongful or
malicious?

In the trial court, Haguisan tried to prove that Guita was motivated by malice or bad faith when he made
the certification. The trial judge rejected the testimony of plaintiffs (private respondents) and their
witnesses as "without the earmarks of truth". (CFI Decision, Rollo, p. 36.) This factual finding deserves
the highest respect and ought not to be disturbed, in accordance with settled jurisprudence on the
matter.

When the issue is one of credibility of witnesses, appellate courts will generally not disturb the findings
of the trial court, considering that it is in a better position to decide the question, having heard the
witnesses themselves and observed their deportment and manner of testifying during the trial, unless it
has plainly overlooked certain facts of substance and value that, if considered, might affect the result of
the case." (People vs. Mercado, 97 SCRA 232.)
There is nothing in the record indicating that the trial court has committed any reversible error in its
evaluation of the credibility of the witnesses.

Going to the certification itself, private respondents' claim for damages is based on the statement in
Guita's certification that Haguisan was "employed by MMIC as security guard ... from August 21, 1956 up
to the date of his separation on February 23, 1971 ..., after he was found mentally unfit to work. "It
would seem that the underlined portion is a reasonably fair statement based on the professional
findings in the psychiatric report that :

... He (Haguisan) has admitted to frequent 'absent minded spells' in the last few years ... Calculating
ability is poor, indicating poor concentration and memory ... His profile shows that of a poorly adjusted
individual both in his personal adjustment and his social adjustment ...

Impression: Borderline mental capacity with mild to moderate memory impairment and poor calculating
ability tests also indicated subsequent impairment of mental functioning.

As to the generality of the statement of mental unfitness to work, suffice it to say that the certification
should be read and construed as a whole. So viewed, it is clear that the statement can refer only to
unfitness to work as security guard, for it was that position, and no other, from which Haguisan was
separated. The said position was the only subject matter of the certification.

Finally, the certification was made by Guita upon the request of Haguisan himself and was given to no
one but the latter.

All told, we find petitioner Guita not guilty of any wrongful act. It follows that he cannot be liable for
moral damages.

WHEREFORE, the decision under review is set aside. The trial court's decision dismissing the complaint is
reinstated

Ucpb vs. ramos

Expert Travel and Tours vs Ca

VITUG, J.:

Petitioner, Expertravel and Tours, Inc., seeks in the instant petition for review on certiorari a
modification of the decision, dated 20 March 1997, of the Court of Appeals affirming in toto the 07th
November 1994 judgment of the Regional Trial Court (Branch 5) of Manila, the dispositive portion of
which reads:

WHEREFORE, in view of all the foregoing, judgment is rendered declaring the instant suit DISMISSED,
and hereby orders the plaintiff to pay defendant Ricardo Lo moral damages in the amount of
P30,000.00; attorney's fees in the amount of P10,000.00, and to pay the costs of the suit.
No pronouncement as to other damages for lack of evidence to warrant the same. 1

The factual and case settings of the controversy are culled from the pleadings on record and the assailed
decision of the appellate court and that of the court a quo.

On 07 October 1987, Expertravel & Tours, Inc., ("Expertravel"), a domestic corporation engaged in the
travel agency business, issued to private respondent Ricardo Lo four round-trip plane tickets for
Hongkong, together with hotel accommodations and transfers, for a total cost of P39,677.20. Alleging
that Lo had failed to pay the amount due, Expertravel caused several demands to be made. Since the
demands were ignored by Lo, Expertravel filed a court complaint for recovery of the amount claimed
plus damages.

Respondent Lo explained, in his answer, that his account with Expertravel had already been fully paid.
The outstanding account was remitted to Expertravel through its then Chairperson, Ms. Ma. Rocio de
Vega, who was theretofore authorized to deal with the clients of Expertravel. The payment was
evidenced by a Monte de Piedad Check No. 291559, dated 06 October 1987, for P42,175.20 for which
Ms. de Vega, in turn, issued City Trust Check No. 417920 in favor of Expertravel for the amount of
P50,000.00, with the notation "placement advance for Ricardo Lo, etc." Per its own invoice, Expertravel
received the sum on 10 October 1987.

The trial court, affirmed by the appellate court, held that the payment made by Lo was valid and bidding
on petitioner Expertravel. Even on the assumption that Ms. de Vera had not been specifically authorized
by Expertravel, both courts said, the fact that the amount "delivered to the latter remain(ed) in its
possession up to the present, mean(t) that the amount redounded to the benefit of petitioner
Expertravel, in view of the second paragraph of Article 1241 of the Civil Code to the effect that payment
made to a third person shall also be valid in so far as it has rebounded to the benefit of the creditor

ISSUE: W/N moral damages for negligence or quasi-delict that did not result to physical injury be
awarded to Lo.

HELD: NO. petition is GRANTED and the award of moral damages to respondent Ricardo Lo under the
assailed decision is DELETED

An award of moral damages would require certain conditions to be met; to wit: (1) First, there must be
an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) second, there
must be a culpable act or omission factually established; (3) third, the wrongful act or omission of the
defendant is the proximate cause of the injury sustained by the claimant; and (4) fourth, the award of
damages is predicated on any of the cases stated in Article 2219

in culpa contractual or breach of contract:

moral damages may be recovered when the defendant acted in bad faith or was guilty of gross
negligence (amounting to bad faith) or in wanton disregard of his contractual obligation and,
exceptionally, when the act of breach of contract itself is constitutive of tort resulting in physical injuries

By special rule in Article 1764, in relation to Article 2206, of the Civil Code

moral damages may also be awarded in case the death of a passenger results from a breach of carriage

In culpa aquiliana, or quasi-delict and contracts when breached by tort

(a) when an act or omission causes physical injuries, or (b) where the defendant is guilty of intentional
tort

In culpa criminal

moral damages could be lawfully due when the accused is found guilty of physical injuries, lascivious
acts, adultery or concubinage, illegal or arbitrary detention, illegal arrest, illegal search, or defamation

Malicious prosecution can also give rise to a claim for moral damages

The term "analogous cases," referred to in Article 2219, following the ejusdem generis rule, must be
held similar to those expressly enumerated by the law

Excludes clearly unfounded civil suit

Pp vs. Fontanilla

Facts:

At around 9:30 p.m. on October 29, 1996, Jose Olais was walking along the provincial road in Butubut
Oeste, Balaoan, La Union when Alfonso Fontanilla suddenly struck him in the head with a piece of wood
called bellang.

Olais fell facedown to... the ground, but Fontanilla hit him again in the head with a piece of stone.
Fontanilla desisted from hitting Olais a third time only because Joel Marquez and Tirso Abunan, the
sons-in-law of Olais, shouted at him, causing him to run away. Marquez and Abunan rushed their...
father-in-law to a medical clinic, where Olais was pronounced dead on arrival.

On April 25, 1997, the Office of the Provincial Prosecutor of La Union filed an information for murder
against Fontanilla in the RTC
The accused pleaded not guilty.

The State presented Marquez and Abunan as its witnesses. They claimed that they were only several
meters away from Olais when Fontanilla struck him; that they shouted at Fontanilla, who fled because
of them; and that they were able to see and to identify Fontanilla as the... attacker of their father-in-law
because the area was then well-lighted.

Dr. Felicidad Leda, the physician who conducted the autopsy on the cadaver of Olais, attested that her
post-mortem examination showed that Olais had suffered a fracture on the left temporal area of the
skull, causing his death. She opined that a hard object or a severe force had... hit the skull of the victim
more than once, considering that the skull had been already fragmented and the fractures on the skull
had been radiating.

At the trial, Fontanilla claimed self-defense. He said that on the night of the incident, he had been
standing on the road near his house when Olais, wielding a nightstick and appearing to be drunk, had
boxed him in the stomach; that although he had then talked to Olais nicely,... the latter had continued
hitting him with his fists, striking him with straight blows; that Olais, a karate expert, had also kicked him
with both his legs; that he had thus been forced to defend himself by picking up a stone with which he
had hit the right side of the victim's... head, causing the latter to fall face down to the ground; and that
he had then left the scene for his house upon seeing that Olais was no longer moving

Fontanilla's daughter Marilou corroborated her father's version.

On June 21, 2001, the RTC declared Fontanilla guilty as charged,... The RTC rejected Fontanilla's plea of
self-defense by observing that he had "no necessity to employ a big stone, inflicting upon the victim a
mortal wound causing his death"... due to the victim attacking him only with bare hands. It noted that
Fontanilla... did not suffer any injury despite his claim that the victim had mauled him; that Fontanilla
did not receive any treatment, and no medical certificate attested to any injury he might have suffered,
having been immediately released from the hospital;... that

Fontanilla's failure to give any statement at the time he surrendered to the police was inconsistent with
his plea of self-defense;... and that the manner of attack against Olais established the attendance of
treachery.
On appeal, the CA affirmed the RTC

Fontanilla did not establish the indispensable element of unlawful aggression; that his failure to report
the incident to the police at the earliest opportunity, or even after he was taken into custody, negated
the plea of... self-defense; and that the nature of the victim's injury was a significant physical proof to
show a determined effort on the part of Fontanilla to kill him, and not just to defend himself.

Issues:

THE TRIAL COURT GRAVELY ERRED IN IGNORING THE ACCUSED-APPELLANT'S CLAIM OF SELF-DEFENSE.

EVEN GRANTING THAT ACCUSED-APPELLANT KILLED THE VICTIM, THE TRIAL COURT GRAVELY ERRED IN
CONVICTING THE ACCUSED-APPELLANT OF THE CRIME OF MURDER WHEN THE QUALIFYING
CIRCUMSTANCE OF TREACHERY WAS NOT PROVEN BEYOND REASONABLE DOUBT.

FURTHERMORE, THE TRIAL COURT GRAVELY ERRED IN NOT APPRECIATING THE SPECIAL PRIVILEGE[D]
MITIGATING CIRCUMSTANCE OF INCOMPLETE SELF-DEFENSE AND THE MITIGATING CIRCUMSTANCE OF
VOLUNTARY SURRENDER.

Ruling:

We affirm the conviction.

Fontanilla pleaded self-defense. In order for self-defense to be appreciated, he had to prove by clear
and convincing evidence the following elements: (a) unlawful aggression on the part of the victim; (b)
reasonable necessity of the means employed to prevent or... repel it; and (c) lack of sufficient
provocation on the part of the person defending himself.
Unlawful aggression is the indispensable element of self-defense, for if no unlawful aggression
attributed to the victim is established,... self-defense is unavailing, for there is nothing to repel.[20] The
character of the element of unlawful aggression is aptly explained as follows:

Unlawful aggression on the part of the victim is the primordial element of the justifying circumstance of
self-defense. Without unlawful aggression, there can be no justified killing in defense of oneself. The
test for the presence of unlawful aggression under the... circumstances is whether the aggression from
the victim put in real peril the life or personal safety of the person defending himself; the peril must not
be an imagined or imaginary threat. Accordingly, the accused must establish the concurrence of three
elements of unlawful... aggression, namely: (a) there must be a physical or material attack or assault; (b)
the attack or assault must be actual, or, at least, imminent; and (c) the attack or assault must be
unlawful.

Unlawful aggression is of two kinds: (a) actual or material unlawful aggression; and (b) imminent
unlawful aggression. Actual or material unlawful aggression means an attack with physical force or with
a weapon, an offensive act that positively determines the... intent of the aggressor to cause the injury.
Imminent unlawful aggression means an attack that is impending or at the point of happening; it must
not consist in a mere threatening attitude, nor must it be merely imaginary, but must be offensive and
positively strong (like aiming... a revolver at another with intent to shoot or opening a knife and making
a motion as if to attack). Imminent unlawful aggression must not be a mere threatening attitude of the
victim, such as pressing his right hand to his hip where a revolver was holstered, accompanied by an...
angry countenance, or like aiming to throw a pot.

By invoking self-defense, however, Fontanilla admitted inflicting the fatal injuries that caused the death
of Olais. It is basic that once an accused in a prosecution for murder or homicide admitted his infliction
of the fatal injuries on the deceased, he assumed the burden to... prove by clear, satisfactory and
convincing evidence the justifying circumstance that would avoid his criminal liability.

Fontanilla did not discharge his burden. A review of the records reveals that, one, Olais did not commit
unlawful aggression against Fontanilla, and, two, Fontanilla's act of hitting the victim's head with a
stone, causing the mortal injury, was not proportional... to, and constituted an unreasonable response
to the victim's fistic attack and kicks.

Indeed, had Olais really attacked Fontanilla, the latter would have sustained some injury from the
aggression. It remains, however, that no injury of any kind or gravity was found on the person of
Fontanilla when he presented himself to the hospital; hence, the attending... physician of the hospital
did not issue any medical certificate to him. Nor was any medication applied to him.

In contrast, the physician who examined the cadaver of Olais testified that Olais had been hit on the
head more than once. The plea of... self-defense was thus belied, for the weapons used by Fontanilla
and the location and number of wounds he inflicted on Olais revealed his intent to kill, not merely an
effort to prevent or repel an attack from Olais. We consider to be significant that the gravity of the
wounds... manifested the determined effort of the accused to kill his victim, not just to defend himself.

WHEREFORE, we AFFIRM the decision promulgated on June 29, 2006 by the Court of Appeals, subject to
the MODIFICATION of the civil damages, by ordering accused Alfonso Fontanilla y Obaldo to pay to the
heirs of Jose Olais P25,000.00 as temperate damages... and P30,000.00 as exemplary damages in
addition to the P50,000.00 as death indemnity and the P50,000.00 as moral damages, plus interest of
6% per annum on such amounts from the finality of the judgment. The accused shall pay the costs of
suit.

Pp vs. Barela

When a woman, more so if she is a minor, says that she has been raped, she says in effect all that is
necessary to show that rape was committed. And so long as her testimony meets the test of credibility
and unless the same is controverted by competent physical and testimonial evidence, the accused may
be convicted on the basis thereof.

This principle guides the Court in resolving this appeal from the amended decision rendered on
December 21, 1995 by the Honorable Augusto T. Parcero, Presiding Judge of Branch 39 of the Regional
Trial Court of the Fifth Judicial Region stationed in Daet, Camarines Norte, finding accused-appellant
guilty of the crime of rape and disposing:

WHEREFORE, premises considered, finding Ricky Banela y Arcega guilty beyond reasonable doubt of the
crime of rape which is defined and punished under Article 335 of the Revised Penal Code (prior to its
amendment by RA 7659) and in the absence of any mitigating or aggravating circumstance, he is hereby
sentenced to reclusion perpetua, to indemnify the offended party Marilou Alfonso, the sum of
P50,000.00, and to pay the costs.

SO ORDERED.

(p. 33, Rollo.)

Accused-appellant's conviction for said crime arose from an Information

reading as follows:

The undersigned Provincial Prosecutor upon complaint of the offended party and assisted by the Social
Worker Officer Vilma Garcia hereby accuses RICKY BANELA Y ARCEGA of the crime of RAPE defined and
penalized under Article 335 of the Revised Penal Code, committed as follows:

That on or about 12 o'clock midnight of October 7, 1993 at Market Tienda No. 3, Daet Public Market,
municipality of Daet, province of Camarines Norte, and within the jurisdiction of this Honorable Court,
the above-named accused by using force and intimidation unlawfully, feloniously, and criminally, did
then and there, commit sexual intercourse with one Marilou B. Alfonso, a girl of 14 years old against the
will of the latter to her damage and prejudice.

CONTRARY TO LAW.

(p. 9, Rollo.)

The factual background of the imputed felony, as summarized by the Solicitor-General in the appellee's
brief, is as follows:

The incident occurred on October 7, 1993 . . . .

Shortly before midnight Marilou, was asked by her father to pick up the latter's clothes in Barangay
Mantagbac, Daet, Camarines Norte, after which they were to proceed to the latter's house in Moreno
District, (p. 4, TSN, Oct. 21, 1994.

After getting the clothes, Marilou started on her way home. Along the route, she passed by Summer
Place, a restaurant located in the Daet Public Market (p. 4, TSN, Oct. 21, 1994). She entered the
restaurant and decided to stay a while to listen to her favorite music played in a jukebox (p. 6, TSN, Oct.
21, 1994).while enjoying the music, she noticed appellant, Norlito Cereno and two other men having a
drinking spree inside the restaurant (p. 6, TSN, Oct. 21, 1994). After the tune ended, Marilou left
Summer Place (p. 7, TSN, Oct. 21, 1994). She resumed her trek home, passing through the fruit stalls
near the public market. Looking back, she saw appellant and his companions trailing her (pp. 7-8, TSN,
Oct. 21, 1994). She quickened her pace. The men chased her and eventually caught up with her.
Appellant accosted her and asked where she was going; to which she replied that she was going home
(p. 8, TSN, Oct. 21, 1994). All of a sudden, appellant's companions grabbed her arms while appellant
covered her mouth. They dragged her back to where she came from stopping right behind Summer
Place (pp. 8-10, TSN, Oct. 21, 1994). Two of appellant's companions firmly held Marilou's arms. One of
them forced Marilou to lie down on her back (p. 10, TSN, Oct. 21, 1994). Norlito Cereno then tore off the
victim's red shirt and removed her white short pants, bra, and panty. Marilou cried and struggled with
all her might to free herself but she was easily overpowered by brute force (pp. 11-12, TSN, Oct. 21,
1994). Norlito Cereno stripped and placed himself on top of Marilou (p. 12-13, TSN, Oct. 21, 1994). As
appellant held Marilou's legs, Norlito Cereno succeeded in having sexual intercourse with her (p. 12,
TSN, Oct. 21, 1994). After Norlito had satisfied his lust, appellant took his turn and likewise had sexual
intercourse with Marilou. He covered her mouth with his hand and threatened to kill her if she reported
to the police (pp. 14-15, TSN, Oct. 21, 1994). After appellant, the third malefactor attempted to have
sexual intercourse with Marilou but failed when several security guards on foot patrol arrived at the
scene after hearing the victim's cries (p. 15, TSN, Oct. 21, 1994). Avoiding a confrontation, the culprits
hurriedly fled into the dead of night (p. 15, TSN, Oct. 1, 1994).

The security guards found Marilou totally naked, writhing in pain and blood oozing from her lips (pp. 5
and 6, TSN, Dec. 9, 1994). They brought her to a stall nearby and gave her a piece of cloth to cover
herself (p. 6, TSN, Dec. 9, 1994). When asked by the guards what happened to her, she responded that
she was raped (p. 6, TSN, Dec. 9, 1994). One of the security guards proceeded to the police station to
report the incident (p. 7, TSN, Dec. 9, 1994). SPO3 Salvador Bamba, PO3 Teresita Montoya, and SPO1
Corpuz arrived and brought Marilou to the police station. Afterwards, she was brought to the Camarines
Norte Provincial Hospital for examination (p. 9, TSN, December 9, 1994).

Meanwhile, in their search for the culprits whom they believed were lurking in the vicinity of Zabala
Street and Vinzons avenue, the police finally found a suspect in the person of Norlito Nazareno whom
they brought to the police station for investigation (p. 10, TSN, Dec. 9, 1994).

Dr. Marcelito Abas conducted an examination on the victim at about 1:55 in the morning of October 8,
1993 (See Exhibit A and p. 5, TSN, Oct. 20, 1994). The findings are as follows:
xxx xxx xxx

Laceration at the hymen with minimal fresh bleeding at 5 & 7 o'clock;

xxx xxx xxx

REMARKS: Complains of pain on the right zygomatic area.

(Exhibits A, A-2, A-3)

(pp. 95-97, Rollo.)

Accused-appellant pleaded not guilty to the crime charged. He testified that on October 7, 1993, about
12 o'clock midnight, he was at Magang, Daet, Camarines Norte where he slept in the house of his aunt,
Araceli Villamor. He averred that he slept at 8 o'clock that evening and learned of the case only when
policemen came and brought him to the police station of Daet, Camarines Norte as a suspect in the rape
of Marilou. He declared that he knew Norlito Cereno, alias Norlito Nazareno, a bystander at Daet
Centro. He alleged that he was being charged for rape and not Norlito Nazareno because the wife of
Nazareno is a friend of Marilou (tsn, June 21, 1995, pp. 2-28). The alibi did not impress the trial court:

Hence, the instant appeal, anchored on the catch-all argument that his guilt has not been proven
beyond reasonable doubt.

The arguments advanced in the appeal mainly revolve on the issue of credibility. It is contended that
Marilou could not have possibly made any positive identification of her assailants since she was sexually
abused in an unlighted place. Accused-appellant further claims that in her direct examination, Marilou
positively identified accused-appellant as the person who raped her, whereas in her "Salaysay" executed
immediately after the incident, she failed to name him.
It is doctrinally settled that the assessment of the credibility of witnesses and their testimony is a matter
best undertaken by the trial court because of its unique opportunity to observe the witnesses firsthand
and to note their demeanor, conduct, and attitude under grilling examination. A trial court's findings on
the credibility of witnesses carry great weight and respect and will be sustained by the appellate courts
unless the trial court overlooked, misunderstood, or misapplied some facts or circumstances of weight
and substance which will alter the assailed decision or affect the result of the case (People vs. Castillo,
Jr., 275 SCRA 753 [1997]; People vs. Cogonon, 262 SCRA 693 [1996]; People vs. Cura, 240 SCRA 234
[1995]). In the instant case, we see no cogent reason to depart from this established rule as accused-
appellant has failed to present any substantial evidence which would merit a reversal of the findings of
the court below.

The fact that the crime was committed in a dark and unlighted place does not cast doubt on the
complainant's positive identification of the culprits. Marilou was able to clearly establish that she was
raped by accused-appellant since she actually saw him lying on top of her. She felt his penis inserted into
her sexual organ which caused her pain. Moreover, the face of accused-appellant was in full view of
Marilou and very near her while he was covering her mouth and warning her not to report the matter to
the police. Recognition was easy for she had known accused-appellant for sometime because they are
neighbors in Mantagbac, Daet, Camarines Norte (October 21, 1994, pp. 3-4, 14-15).

The alleged inconsistency between Marilou's sworn statement or "Salaysay", and her testimony in open
court is more apparent than real, brought about by the way the questions to Marilou were phrased. In
her "Salaysay", she declared:

T: Sino ang inirereklamo mo?

S: Yun pong dalawang lalaki na hindi ko naman kilala, subalit kung makikita ay aking silang makikilala.

(Record p. 5; Rollo, p, 55).

On the other hand, the relevant portion of her testimony in court is as follows:

Q. Miss Witness, do you know the accused in this case in the person of Ricky Banela?
WITNESS:

Yes, sir. I know him, sir. He is a resident of Mantagbac.

Q: Why do you know him?

A: He is our neighbor.

Q: Where?

A: Near the "ermita" (chapel of Mantagbac).

Q: If he is present inside the courtroom can you point him out?

A: Yes, sir.

Q: Look around and if he is present, go near him and point him out.

A: This one, sir. (Witness pointed to a person who when asked gave the name Ricky Banela).

(tsn, October 21, 1994, pp. 3-4).

In recent cases, this Court had the occasion to rule that inconsistencies between testimony in open
court and sworn statements given to investigators do not necessarily discredit the witness since ex-parte
affidavits are almost always incomplete. Sworn statements are generally considered to be inferior to the
testimony given in open court (People vs. Lazaro, 249 SCRA 234 [1995]; People vs. Layno, 264 SCRA 558
[1996]; People vs. Pontilar, Jr., 275 SCRA 338 [1997]).

Further, it is an oft-repeated rule that when there is no showing of any improper motive on the part of
the prosecution witness to testify falsely against an accused or to falsely implicate him in the
commission of a crime, the logical conclusion is that no such improper motive exists and that the
testimony is worthy of full faith and credence (People vs. Sotto, 275 SCRA 191 [1997]; People vs. Casil,
241 SCRA 285 [1995]; People vs. Tabao, 240 SCRA 758 [1995]). In the case at bar, accused-appellant was
not able to show any improper ulterior motive on the part of complainant to falsely incriminate him in
such a serious offense. Indeed, her only motive can well be to bring before the bar of justice the person
who had abused her.

Moreover, in view of the intrinsic nature of the crime of rape, oftentimes the only evidence that can be
offered to prove the guilt of the perpetrator is the testimony of the offended woman herself. Thus, her
testimony, standing alone can be made the basis of conviction if such testimony meets the test of
credibility (People vs. Adora, 275 SCRA 441 [1997]); People vs. Ching, 240 SCRA 267 [1995]; People vs.
Sanchez, 250 SCRA 14 [1995]).

We have consistently held that when a woman testifies that she has been raped, she says in effect all
that is necessary to show that the rape has been committed, and that if her testimony meets the test of
credibility, the accused maybe convicted on the basis thereof (People vs. Adora, 275 SCRA 441 [1997];
People vs. Tabao, 240, SCRA 758 [1995]; People vs. Segundo, 228 SCRA 691 [1993]). This is true in the
instant case where the trial court found that there is clear, convincing and competent physical and
testimonial evidence to support a finding of guilt beyond reasonable doubt against accused-appellant.

Accused-appellant's all too familiar and banal defense of alibi cum denial does not inspire the slightest
belief or consideration. This Court has unfailingly upheld the doctrine that alibi and denial cannot prevail
over the positive identification of the accused as the perpetrator of the crime (People vs. Narca, 275
SCRA 696 [1997]; People vs. Paredes, 264 SCRA 578 [1996]). For alibi to prosper the accused must prove
not only that he was somewhere else when the crime was committed but he must likewise demonstrate
that it was be physically impossible for him to be at the scene of the crime at the time of its commission
(People vs. Baniel, 275 SCRA 472 [1997]; People vs. Ballabare, 264 SCRA 350 [1996]). Accused-appellant
has failed to establish that it was physically impossible for him to have been at the crime scene when it
happened. In fact, accused-appellant was in the same municipality (Daet, Camarines Norte) where the
rape occurred (tsn, June 21, 1995, p. 2).
Accused-appellant is charged with rape under Article 335 of the Revised Penal Code, which reads:

Art. 335. When and how rape is committed. — Rape is committed by having carnal knowledge of a
woman under any of the following circumstances:

1. By using force or intimidation.

xxx xxx xxx

The crime of rape shall be punished by reclusion perpetua.

Whenever the crime of rape is committed with the use of a deadly weapon or by two or more persons,
the penalty shall be reclusion perpetua to death.

xxx xxx xxx

However, at the time Marilou was raped on October 7, 1993, the death penalty, had yet to be restored
as Republic Act No. 7659 which revived the death penalty took effect only on January 1, 1994. Hence,
the maximum penalty imposable on accused-appellant is reclusion perpetua.

Originally, Marilou had filed a complaint not only against accused-appellant Ricky Banela but also against
Norlito Nazareno (Record, p. 3). However, during the preliminary examination conducted by the
Municipal Trial Court of Daet, Marilou declared that it was only accused-appellant who sexually abused
her. Thus, Norlito Nazareno was dropped from the complaint per Order dated October 14, 1993 of said
MTC (Record, p. 11).

Finally, we find it opportune to take note of the new policy adopted by the Court in the case of People of
the Phil. vs. Senen Prades (G.R. No. 127569, July 30, 1998), pertaining to the award of indemnity and
damages. The Court declared in the aforesaid case that "the indemnification for the victim shall be in the
increased amount of P75,000.00 if the crime of rape is committed or effectively qualified by any of the
circumstance under which the death penalty is authorized by the applicable amendatory laws."
However, in the case at bar, the crime of rape was committed in 1993, or before the effectivity of
Republic Act No. 7659, the amendatory law restoring the death penalty. Hence, the civil indemnity to be
awarded to the offended party shall remain to be P50,000.00.

Likewise, as declared in Prades, moral damages may additionally be awarded to the victim without the
need for pleading or proof of the basis thereof as has heretofore been the practice, to wit:

The fact that complainant has suffered the trauma of mental, physical and psychological sufferings
which constitute the bases for moral damages are too obvious to still require the recital thereof at the
trial of the victim, since the Court itself even assumes and acknowledges such agony on her part as a
gauge of her credibility.

WHEREFORE, on the foregoing premises, the decision appealed from is hereby AFFIRMED, including the
award of P50,000.00 as compensatory damages, with the MODIFICATION that accused-appellant Ricky
Banela is ordered to pay the additional amount of P50,000.00 as moral damages. No special
pronouncement is made as to costs.

Figueroa vs. People

Facts:

On August 19, 1998, RTC convicted the petitioner of reckless imprudence resulting in homicide. In his
appeal before the CA, the petitioner questioned for the first time the RTC’s jurisdiction.

CA, however, considered the petitioner to have actively participated in the trial and to have belatedly
attacked the jurisdiction of RTC; thus, he was already estopped by laches from asserting the RTC’s lack of
jurisdiction. CA affirmed RTC’s decision.

[Sidenote: While not an issue, the SC clarified that the jurisdiction of the court to hear and decide a case
is conferred by the law in force at the time of the institution of the action, unless such statute provides
for a retroactive application thereof. In this case, at the time the criminal information for reckless
imprudence resulting in homicide with violation of the Automobile Law (now Land Transportation and
Traffic Code) was filed, Section 32(2) of Batas Pambansa (B.P.) Blg. 129 had already been amended by
Republic Act No. 7691. And so as the imposable penalty for the crime charged is prision correccional in
its medium and maximum periods (imprisonment for 2 years 4 months and 1 day, to 6 years),
jurisdiction to hear and try the same is conferred on MTC. Therefore, the RTC does not have jurisdiction
over the case.]

Petitioner filed the instant petition for review on certiorari. While both the appellate court and the
Solicitor General acknowledge the fact that RTC did not have jurisdiction, they nevertheless are of the
position that the principle of estoppel by laches has already precluded the petitioner from questioning
the jurisdiction of the RTC, the trial went on for 4 years with the petitioner actively participating therein
and without him ever raising the jurisdictional infirmity. The petitioner, for his part, counters that the
lack of jurisdiction of a court over the subject matter may be raised at any time even for the first time on
appeal. As undue delay is further absent herein, the principle of laches will not be applicable.

Issue:

Whether or not the case should be dismissed on the ground of lack of jurisdiction on the part of the RTC,
notwithstanding the fact that the petitioner failed to raise the issue during the trial and the alleged
laches in relation to the doctrine in Tijam vs. Sibonghanoy.

Held: YES. SC dismissed the case without prejudice.

The ruling in Sibonghanoy on the matter of jurisdiction is the exception rather than the general rule. For
it to be invoked, laches should clearly be present; that is, lack of jurisdiction must have been raised so
belatedly as to warrant the presumption that the party entitled to assert it had abandoned or declined
to assert it.

SC clarified that in its past decisions concerning the same issue, it wavered on when to apply the
exceptional circumstance in Sibonghanoy and on when to apply the general rule enunciated as early as
in De La Santa and expounded at length in Calimlim. The general rule should, however, be, as it has
always been, that the issue of jurisdiction may be raised at any stage of the proceedings, even on
appeal, and is not lost by waiver or by estoppel. Estoppel by laches, to bar a litigant from asserting the
courts absence or lack of jurisdiction, only supervenes in exceptional cases similar to the factual milieu
of Tijam v. Sibonghanoy. Indeed, the fact that a person attempts to invoke unauthorized jurisdiction of a
court does not estop him from thereafter challenging its jurisdiction over the subject matter, since such
jurisdiction must arise by law and not by mere consent of the parties. This is especially true where the
person seeking to invoke unauthorized jurisdiction of the court does not thereby secure any advantage
or the adverse party does not suffer any harm.

Applying the said doctrine to the instant case, the petitioner is in no way estopped by laches in assailing
the jurisdiction of the RTC, considering that he raised the lack thereof in his appeal before the appellate
court. At that time, no considerable period had yet elapsed for laches to attach. True, delay alone,
though unreasonable, will not sustain the defense of estoppel by laches unless it further appears that
the party, knowing his rights, has not sought to enforce them until the condition of the party pleading
laches has in good faith become so changed that he cannot be restored to his former state, if the rights
be then enforced, due to loss of evidence, change of title, intervention of equities, and other causes. In
applying the principle of estoppel by laches in the exceptional case of Sibonghanoy, the Court therein
considered the patent and revolting inequity and unfairness of having the judgment creditors go up their
Calvary once more after more or less 15 years. The same, however, does not obtain in the instant case.

Equitable Banking vs. Iac

Facts:

Liberato Casals went to

Edward J. Nell Company... and told... that he was interested in buyin... g... garrett... skidders.

he was referred to plaintiff's executive vice-president. Apolonio Javier, for negotiation in connection
with the manner of payment.

When Javier asked for cash payment for the skidders, defendant Casals informed him... that his
corporation, defendant Casville Enterprises, Inc., had a credit line with defendant Equitable Banking
Corporation.

Javier agreed to have the skidders paid by way of a domestic letter of credit... in lieu of cash payment.
defendant Casals handed to plaintiff a check... postdated... which was followed by another check of
same date.

Plaintiff considered these checks either as partial payment for the skidder that was already delivered to

Cagayan de Oro or as reimbursement for the marginal deposit that plaintiff was supposed to pay.

defendants Casals and Casville informed the plaintiff that their application for a letter of credit... had
been approved by the Equitable Banking Corporation.

However, the defendants said that... they would need the sum of P300.000.00 to stand as collateral or
marginal deposit in favor of Equitable Banking Corporation... and an additional amount of PI00.000.00,...
to clear the title of the Estrada property... which had been approved as security for the trust receipts to
be issued by the ban

Although the marginal deposit was supposed to be produced by defendant Casville Enterprises

,... plaintiff agreed to advance the necessary amount in order to facilitate the transaction.

plaintiff issued a check... in the amount of P400.000.00... drawn against the First National City Bank and
made payable to the order of Equitable Banking Corporation

Defendant Casville sent a copy of the foregoing letter to the plaintiff enclosing three postdated checks.

plaintiff was informed... to clean up the Estrada property or a total of P427.300.00... and that the check
covering said amount should be made payable 'to the Order of EQUITABLF/BANKING CORPORATION for
the account of Casville Enterprises Inc.

Defendant
Casville also stated that the three (3) enclosed postdated checks were intended as replacement of the
checks that were previously issued to plaintiff to secure the sum of P427,300.00 that plaintiff would
advance to defendant bank for the account of defendant Casville.

plaintiff issued a check for P427.300.00. payable to the 'order of EQUITABLE BANKING CORPORATION
A/C CASVILLE ENTERPRISES. INC and drawn against the first National City Bank

Plaintiff... entrusted the delivery of the check and the latter to defendant Casals because it believed that
no one, including defendant Casals, could encash the same as it was made payable to the defendant
bank alone.

Upon receiving the chec... defendant Casals immediately deposited it with ihe defendant bank and the
bank teller accepted the same for deposit in defendant Casville's checking account. After depositing said
check, defendant Casville.

acting through defendant Casals, then withdrew all the amount deposited.

plaintiff discovered that the three checks... that were issued by defendant Casville as collateral were all
dishonored for having been drawn against a closed... account.

As defendant Casville failed to pay its obligation to defendant bank, the latter foreclosed the mortgage
executed by defendant Casville on the Estrada property... plaintiff was informed that no letters of credit
were opened by the defendant bank in its favor and... discovered that defendant Casville had in the
meanwhile withdrawn the entire amount... of P427.300.00. without paying its obligation to the bank...
defendants Casals and Casville assigned the garrett skidder to plaintiff which credited in favor of
defendants... as partial satisfaction of plaintiff's claim against them.

What is left for the Court to determine, therefore, is only the liability of defendant bank to plaintiff.

the Trial Court rendered judgment, affirmed by Respondent Court in toto

Issues:

whether or not petitioner Equitable Banking Corporation... is liable to private respondent Edward J. Nell
Co.

for the value of the second check issued by NELL... which was made payable... to the order of
EQUITABLE BANKING CORPORATION A/C OF CASVILLE ENTERPRISES INC.

and which the Bank teller credited to the account of Casville

Ruling:

The Court finds that the check in question was payable only to the defendant bank and to no one else.
Although the words 'A/C OF CASVILLE ENTERPRISES INC appear on the face of the check after or under
the name of defendant bank, the payee was still the latter.

the bank teller who received it was fully aware that the check was not negotiable since he stamped
thereon the words 'NON-NEGOTIABLE For Payee's Account Only

We disagree.

The subject check was equivocal and patently ambiguous. By making the check read:

"Pay to the EQUITABLE BANKING CORPORATION Order of A/C OF CASVILLE ENTERPRISES. INC."... the
payee ceased to be indicated with reasonable certainty in contravention of Section 8 of the Negotiable
Instruments Law.
As worded, it could be accepted as deposit to the account of the party named after the symbols "A/C."
or payable to the Bank as... trustee, or as an agent, for Casville Enterprises, Inc.,... with the latter being
the ultimate beneficiary.

Article 1377 of the Civil Code,... provides

The interpretation of obscure words or stipulations in a contract shall not favor the party who caused
the obscurity.

the subject check was, initially, not non-negotiable.

The rubber-stamping transversally on the face of the subject check of the words "Non-negotiable for
Payee's Account Only"... was made only by the Bank teller in accordance with customary bank practice,
and not by NELL as the drawer of the check, and simply meant that thereafter the same check could no
longer be... negotiated.

NELL's own acts and omissions... were the proximate cause of its own defraudation