TORTS (February 26, 2020)

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-64515 June 22, 1984

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:

... 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.

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 in toto.

SO ORDERED.

FE D. QUITA, petitioner, VS. COURT OF APPEALS and BLANDINA DANDAN, respondents

December 22, 1998

Facts:

Fe D. Quita and Arturo T. Padlan, both Filipinos, were married in the Philippines on May 18, 1941. No children were
born out of their marriage. On July 23, 1954, petitioner obtained a final judgment of divorce in San Francisco,
California, U.S.A. On April 16, 1972, Arturo died leaving no will. On August 31, 1972, Lino Javier Inciong filed a
petition with the RTC for issuance of letters of administration concerning the estate of Arturo in favor of the
Philippine Trust Company. Respondent Blandina Dandan, claiming to be the surviving spouse of Arturo Dandan and
the surviving children, all surnamed Padlan, opposed the petition. The RTC expressed that the marriage between
Antonio and petitioner subsisted until the death of Arturo in 1972, that the marriage existed between private
respondent and Arturo was clearly void since it was celebrated during the existence of his previous marriage to
petitioner. The Court of Appeals remanded the case to the trial court for further proceedings.

Issues:

1. Should the case be remanded to the lower court?

2. Who between the petitioner and private respondent is the proper heir of the decedent?

Held:

If there is a controversy before the court as to who are the lawful heirs of the deceased person  or as to the distributive
shares to which each person is entitled under the law, the controversy shall be heard and decided as in ordinary cases.

No dispute exists as to the right of the six Padlan children to inherit from the decedent because there are proofs that
they have been duly acknowledged by him and petitioner herself even recognizes them as heirs of Arturo Padlan, nor
as to their respective hereditary shares.

Private respondent is not a surviving spouse that can inherit from him as this status presupposes a legitimate
relationship. Her marriage to Arturo being a bigamous marriage considered void ab inito under Articles 80 and 83 of
the Civil Code renders her not a surviving spouse.

The decision of the Court of Appeals ordering the remand of the case is affirmed.

SECOND DIVISION
 G.R. No. 147800 : November 11, 2003

UNITED COCONUT PLANTERS BANK, Petitioner, vs. TEOFILO C. RAMOS, respondent.

DECISION

CALLEJO, SR., J.:

Before us is a petition for review on certiorari of the March 30, 2001 Decision1 of the Court of Appeals in CA-G.R.
CV No. 56737 which affirmed the Decision2 of the Regional Trial Court (RTC) of Makati City, Branch 148, in Civil
Case No. 94-1822.

The Antecedents

On December 22, 1983, the petitioner United Coconut Planters Bank (UCPB) granted a loan of P2,800,000 to
Zamboanga Development Corporation (ZDC) with Venicio Ramos and the Spouses Teofilo Ramos, Sr. and Amelita
Ramos as sureties. Teofilo Ramos, Sr. was the Executive Officer of the Iglesia ni Cristo. In March 1984, the petitioner
granted an additional loan to ZDC, again with Venicio Ramos and the Spouses Teofilo Ramos and Amelita Ramos as
sureties.3 However, the ZDC failed to pay its account to the petitioner despite demands. The latter filed a complaint
with the RTC of Makati against the ZDC, Venicio Ramos and the Spouses Teofilo Ramos, Sr. for the collection of the
corporations account. The case was docketed as Civil Case No. 16453. On February 15, 1989, the RTC of Makati,
Branch 134, rendered judgment in favor of the petitioner and against the defendants. The decretal portion of the
decision reads:

1. To pay plaintiff the sum of THREE MILLION ONE HUNDRED FIFTY THOUSAND PESOS
(P3,150,000.00) plus interest, penalties and other charges;
2. To pay plaintiff the sum of P20,000.00 for attorneys fees; and
3. To pay the cost of suit.4cräläwvirtualibräry
The decision became final and executory. On motion of the petitioner, the court issued on December 18, 1990 a writ
of execution for the enforcement of its decision ordering Deputy Sheriff Pioquinto P. Villapaa to levy and attach all
the real and personal properties belonging to the aforesaid defendants to satisfy the judgment. 5 In the writ of
execution, the name of one of the defendants was correctly stated as Teofilo Ramos, Sr.

To help the Sheriff implement the writ, Atty. Cesar Bordalba, the head of the Litigation and Enforcement Division
(LED) of the petitioner, requested Eduardo C. Reniva, an appraiser of the petitioners Credit and Appraisal
Investigation Department (CAID) on July 17, 1992 to ascertain if the defendants had any leviable real and personal
property. The lawyer furnished Reniva with a copy of Tax Declaration B-023-07600-R covering a property in Quezon
City.6 In the course of his investigation, Reniva found that the property was a residential lot, identified as Lot 12,
Block 5, Ocampo Avenue, Don Jose Subdivision, Quezon City, with an area of 400 square meters, covered by TCT
No. 275167 (PR-13108) under the name of Teofilo C. Ramos, President and Chairman of the Board of Directors of the
Ramdustrial Corporation, married to Rebecca F. Ramos. 7 The property was covered by Tax Declaration No. B-023-
07600-R under the names of the said spouses. Reniva went to the property to inspect it and to verify the identity of the
owner thereof. He saw workers on the property constructing a bungalow. 8 However, he failed to talk to the owner of
the property. Per information gathered from the neighborhood, Reniva confirmed that the Spouses Teofilo C. Ramos
and Rebecca Ramos owned the property.

8
On July 22, 1992, Reniva submitted a report on his appraisal of the property. He stated therein that the fair market
value of the property as of August 1, 1992 was P900,000 and that the owner thereof was Teofilo C. Ramos, married to
Rebecca Ramos. When appraised by the petitioner of the said report, the Sheriff prepared a notice of levy in Civil
Case No. 16453 stating, inter alia, that the defendants were Teofilo Ramos, Sr. and his wife Amelita Ramos and
caused the annotation thereof by the Register of Deeds on the said title. 9cräläwvirtualibräry

Meanwhile, in August of 1993, Ramdustrial Corporation applied for a loan with the UCPB, a sister company of the
petitioner, using the property covered by TCT No. 275167 (PR-13108) as collateral therefor. The Ramdustrial
Corporation intended to use the proceeds of the loan as additional capital as it needed to participate in a bidding
project of San Miguel Corporation.10 In a meeting called for by the UCPB, the respondent was informed that upon
verification, a notice of levy was annotated in TCT No. 275167 in favor of the petitioner as plaintiff in Civil Case No.
16453, entitled United Coconut Planters Bank v. Zamboanga Realty Development Corporation, Venicio A. Ramos
and Teofilo Ramos, Sr., because of which the bank had to hold in abeyance any action on its loan application.

The respondent was shocked by the information. He was not a party in the said case; neither was he aware that his
property had been levied by the sheriff in the said case. His blood temperature rose so much that immediately after the
meeting, he proceeded to his doctor, Dr. Gatchalian, at the St. Lukes Medical Center, who gave the respondent the
usual treatment and medication for cardio-vascular and hypertension problems. 11cräläwvirtualibräry

Upon advise from his lawyer, Atty. Carmelito Montano, the respondent executed an affidavit of denial 12 declaring that
he and Teofilo Ramos, Sr., one of the judgment debtors in Civil Case No. 16453, were not one and the same person.
On September 30, 1993, the respondent, through counsel, Atty. Carmelito A. Montano, wrote Sheriff Villapaa,
informing him that a notice of levy was annotated on the title of the residential lot of the respondent, covered by TCT
No. 275167 (PR-13108); and that such annotation was irregular and unlawful considering that the respondent was not
Teofilo Ramos, Sr. of Iglesia ni Cristo, the defendant in Civil Case No. 16453. He demanded that Sheriff Villapaa
cause the cancellation of the said annotation within five days from notice thereof, otherwise the respondent would take
the appropriate civil, criminal or administrative action against him. Appended thereto was the respondents affidavit of
denial. For his part, Sheriff Villapaa furnished the petitioner with a copy of the said letter.

In a conversation over the phone with Atty. Carmelito Montano, Atty. Cesar Bordalba, the head of the petitioners
LED, suggested that the respondent file the appropriate pleading in Civil Case No. 16453 to prove his claim that Atty.
Montanos client, Teofilo C. Ramos, was not defendant Teofilo Ramos, Sr., the defendant in Civil Case No. 16453.

On October 21, 1993, the respondent was informed by the UCPB that Ramdustrial Corporations credit line application
for P2,000,000 had been approved.13 Subsequently, on October 22, 1993, the respondent, in his capacity as President
and Chairman of the Board of Directors of Ramdustrial Corporation, and Rebecca F. Ramos executed a promissory
note for the said amount payable to the UCPB in installments for a period of 180 days. 14 Simultaneously, the
respondent and his wife Rebecca F. Ramos acted as sureties to the loan of Ramdustrial Corporation. 15 However, the
respondent was concerned because when the proceeds of the loan were released, the bidding period for the San Miguel
Corporation project had already elapsed.16 As business did not go well, Ramdustrial Corporation found it difficult to
pay the loan. It thus applied for an additional loan with the UCPB which was, however, denied. The corporation then
applied for a loan with the Planters Development Bank (PDB), the proceeds of which would be used to pay its account
to the UCPB. The respondent offered to use his property covered by TCT No. 275167 as collateral for its loan. PDB
agreed to pay off the outstanding loan obligation of Ramdustrial Corporation with UCPB, on the condition that the
mortgage with the latter would be released. UCPB agreed. Pending negotiations with UCPB, the respondent
discovered that the notice of levy annotated on TCT No. 275167 (PR-13108) at the instance of the petitioner had not

10

11

12

13

14

15

16
yet been cancelled.17 When apprised thereof, PDB withheld the release of the loan pending the cancellation of the
notice of levy. The account of Ramdustrial Corporation with UCPB thus remained outstanding. The monthly
amortization on its loan from UCPB became due and remained unpaid. When the respondent went to the petitioner for
the cancellation of the notice of levy annotated on his title, the petitioners counsel suggested to the respondent that he
file a motion to cancel the levy on execution to enable the court to resolve the issue. The petitioner assured the
respondent that the motion would not be opposed. Rather than wait for the petitioner to act, the respondent, through
counsel, filed the said motion on April 8, 1994. As promised, the petitioner did not oppose the motion. The court
granted the motion and issued an order on April 12, 1994 ordering the Register of Deeds to cancel the levy. The
Register of Deeds of Quezon City complied and cancelled the notice of levy. 18cräläwvirtualibräry

Despite the cancellation of the notice of levy, the respondent filed, on May 26, 1994, a complaint for damages against
the petitioner and Sheriff Villapaa before the RTC of Makati City, raffled to Branch 148 and docketed as Civil Case
No. 94-1822. Therein, the respondent (as plaintiff) alleged that he was the owner of a parcel of land covered by TCT
No. 275167; that Teofilo Ramos, Sr., one of the judgment debtors of UCPB in Civil Case No. 16453, was only his
namesake; that without any legal basis, the petitioner and Sheriff Villapaa caused the annotation of a notice to levy on
the TCT of his aforesaid property which caused the disapproval of his loan from UCPB and, thus made him lose an
opportunity to participate in the bidding of a considerable project; that by reason of such wrongful annotation of notice
of levy, he suffered sleepless nights, moral shock, mental anguish and almost a heart attack due to high blood
pressure. He thus prayed:

WHEREFORE, premises considered, it is most respectfully prayed of the Honorable Regional Trial Court that after
due hearing, judgment be rendered in his favor by ordering defendants jointly and severally, to pay as follows:

1. P3,000,000.00 as moral damages;

2. 300,000.00 as exemplary damages;

3. 200,000.00 as actual damages;

4. 200,000.00 as attorneys fees;

5. Cost of suit.19cräläwvirtualibräry

In its answer, the petitioner, while admitting that it made a mistake in causing the annotation of notice of levy on the
TCT of the respondent, denied that it was motivated by malice and bad faith. The petitioner alleged that after
ascertaining that it indeed made a mistake, it proposed that the respondent file a motion to cancel levy with a promise
that it would not oppose the said motion. However, the respondent dilly-dallied and failed to file the said motion;
forthwith, if any damages were sustained by the respondent, it was because it took him quite a long time to file the
motion. The petitioner should not thus be made to suffer for the consequences of the respondents delay.

The petitioner further asserted that it had no knowledge that there were two persons bearing the same name Teofilo
Ramos; it was only when Sheriff Villapaa notified the petitioner that a certain Teofilo C. Ramos who appeared to be
the registered owner of TCT No. 275167 that it learned for the first time the notice of levy on the respondents
property; forthwith, the petitioner held in abeyance the sale of the levied property at public auction; barred by the
failure of the respondent to file a third-party claim in Civil Case No. 16453, the petitioner could not cause the removal
of the levy; in lieu thereof, it suggested to the respondent the filing of a motion to cancel levy and that the petitioner
will not oppose such motion; surprisingly, it was only on April 12, 1994 that the respondent filed such motion; the
petitioner was thus surprised that the respondent filed an action for damages against it for his failure to secure a timely
loan from the UCPB and PDB. The petitioner thus prayed:

WHEREFORE, in view of the foregoing premises, it is respectfully prayed of this Honorable Court that judgment be
rendered in favor of defendant UCPB, dismissing the complaint in toto and ordering the plaintiff to:

17

18

19
1. pay moral damages in the amount of PESOS: THREE MILLION P3,000,000.00 and exemplary damages in the
amount of PESOS: FIVE HUNDRED THOUSAND P500,000.00;

2. pay attorneys fees and litigation expenses in an amount of not less than PESOS: TWO HUNDRED THOUSAND
P200,000.00;

Other reliefs and remedies deemed just and equitable under the premises are also prayed for. 20cräläwvirtualibräry

In the meantime, in 1995, PDB released the proceeds of the loan of Ramdustrial Corporation which the latter remitted
to UCPB.

On March 4, 1997, the RTC rendered a decision in favor of the respondent. The complaint against Sheriff Villapaa
was dismissed on the ground that he was merely performing his duties. The decretal part of the decision is herein
quoted:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendant
UCPB, and the latter is hereby ordered to pay the following:

(1) P800,000.00 as moral damages;

(2) P100,000.00 as exemplary damages;

(3) P100,000.00 as attorneys fees;

(4) Cost of suit.21cräläwvirtualibräry

The trial court found that contrary to the contention of the petitioner, it acted with caution in looking for leviable
properties of the judgment debtors/defendants in Civil Case No. 16453, it proceeded with haste as it did not take into
consideration that the defendant Teofilo Ramos was married to Amelita Ramos and had a Sr. in his name, while the
respondent was married to Rebecca Ramos and had C for his middle initial. The investigation conducted by CAID
appraiser Eduardo C. Reniva did not conclusively ascertain if the respondent and Teofilo Ramos, Sr. were one and the
same person.

The trial court further stated that while it was Ramdustrial Corporation which applied for a loan with UCPB and PDB,
the respondent, as Chairman of Ramdustrial Corporation, with his wife Rebecca Ramos, signed in the promissory note
and acted as sureties on the said obligations. Moreover, the property which was levied was the respondents only
property where he and his family resided. Thus, the thought of losing it for reasons not of his own doing gave rise to
his entitlement to moral damages.

The trial court further ruled that the mere fact that the petitioner did not file an opposition to the respondents motion to
cancel levy did not negate its negligence and bad faith. However, the court considered the cancellation of annotation
of levy as a mitigating factor on the damages caused to the respondent. For failure to show that he suffered actual
damages, the court a quo dismissed the respondents claim therefor.

Dissatisfied, the petitioner interposed an appeal to the Court of Appeals (CA). On March 30, 2001, the CA rendered a
decision affirming, in toto, the decision of the trial court, the decretal portion of which is herein quoted:

WHEREFORE, based on the foregoing premises, the assailed decision is hereby AFFIRMED. 22cräläwvirtualibräry

The CA ruled that the petitioner was negligent in causing the annotation of notice of levy on the title of the petitioner
for its failure to determine with certainty whether the defendant Teofilo Ramos, Sr. in Civil Case No. 16453 was the
registered owner of the property covered by TCT No. 275167, and to inform the sheriff that the registered owners of
the property were the respondent and his wife Rebecca Ramos, and thereafter request for the cancellation of the
motion of levy on the property.
20

21

22
Disappointed, the petitioner filed this instant petition assigning the following errors:

IN AFFIRMING THE TRIAL COURTS ORDER, THE COURT OF APPEALS COMMITTED MANIFESTLY
MISTAKEN INFERENCES AND EGREGIOUS MISAPPREHENSION OF FACTS AND GRAVE ERRORS OF
LAW, CONSIDERING THAT:

A. ON THE EVIDENCE, THE BORROWER OF THE LOAN, WHICH RESPONDENT RAMOS

CLAIMED HE TRIED TO OBTAIN, WAS RAMDUSTRIAL CORPORATION. HENCE, ANY
DAMAGE RESULTING FROM THE ANNOTATION WAS SUFFERED BY THE
CORPORATION AND NOT BY RESPONDENT RAMOS.

B. THE DELAY IN THE CANCELLATION OF THE ANNOTATION WAS OF RESPONDENT

RAMOSS (SIC) OWN DOING.

C. THE LOAN APPLICATIONS WITH UNITED COCONUT SAVINGS BANK AND PLANTERS
DEVELOPMENT BANK WERE GRANTED PRIOR TO THE CANCELLATION OF THE
ANNOTATION ON THE TITLE OF THE SUBJECT PROPERTY.

II

THE COURT OF APPEALS DECISION AFFIRMING THE TRIAL COURTS AWARD OF MORAL DAMAGES
TO RESPONDENT RAMOS IN THE AMOUNT OF P800,000 ON A FINDING OF NEGLIGENCE IS
CONTRARY TO LAW AND EVIDENCE.

A. UCPB WAS NOT NEGLIGENT WHEN IT CAUSED THE LEVY ON THE SUBJECT PROPERTY.

B. AS A MATTER OF LAW, MORAL DAMAGES CANNOT BE AWARDED ON A FINDING OF

MERE NEGLIGENCE.

C. IN ANY EVENT, THE AWARD OF MORAL DAMAGES TO RESPONDENT RAMOS WAS

UNREASONABLE AND OPPRESSIVE.

III

THE AWARD OF EXEMPLARY DAMAGES AND ATTORNEYS FEES IS CONTRARY TO LAW SINCE THE
AWARD OF MORAL DAMAGES WAS IMPROPER IN THE FIRST PLACE.23cräläwvirtualibräry

UCPB prayed that:

WHEREFORE, petitioner UNITED COCONUT PLANTERS BANK respectfully prays that this Honorable Court
render judgment reversing and setting aside the Court of Appeals Decision dated 30 March 2001, and ordering the
dismissal of respondent Ramos Complaint dated 05 May 1994.24cräläwvirtualibräry

In his comment, the respondent alleged that the CA did not err in affirming, in toto, the decision of the trial court. He
prayed that the petition be denied due course.

The issues posed for our resolution are the following: (a) whether or not the petitioner acted negligently in causing the
annotation of levy on the title of the respondent; (b) if so, whether or not the respondent was the real party-in-interest
as plaintiff to file an action for damages against the petitioner considering that the loan applicant with UCPB and PDB
was RAMDUSTRIAL CORPORATION; (c) if so, whether or not the respondent is entitled to moral damages,
exemplary damages and attorneys fees.

23

24
On the first issue, we rule that the petitioner acted negligently when it caused the annotation of the notice of levy in
TCT No. 275167.

It bears stressing that the petitioner is a banking corporation, a financial institution with power to issue its promissory
notes intended to circulate as money (known as bank notes); or to receive the money of others on general deposit, to
form a joint fund that shall be used by the institution for its own benefit, for one or more of the purposes of making
temporary loans and discounts, of dealing in notes, foreign and domestic bills of exchange, coin bullion, credits, and
the remission of money; or with both these powers, and with the privileges, in addition to these basic powers, of
receiving special deposits, and making collection for the holders of negotiable paper, if the institution sees fit to
engage in such business.25 In funding these businesses, the bank invests the money that it holds in trust of its
depositors. For this reason, we have held that the business of a bank is one affected with public interest, for which
reason the bank should guard against loss due to negligence or bad faith. 26 In approving the loan of an applicant, the
bank concerns itself with proper informations regarding its debtors. The petitioner, as a bank and a financial institution
engaged in the grant of loans, is expected to ascertain and verify the identities of the persons it transacts business
with.27 In this case, the petitioner knew that the sureties to the loan granted to ZDC and the defendants in Civil Case
No. 94-1822 were the Spouses Teofilo Ramos, Sr. and Amelita Ramos. The names of the Spouses Teofilo Ramos, Sr.
and Amelita Ramos were specified in the writ of execution issued by the trial court.

The petitioner, with Atty. Bordalba as the Chief of LED and handling lawyer of Civil Case No. 16453, in coordination
with the sheriff, caused the annotation of notice of levy in the respondents title despite its knowledge that the property
was owned by the respondent and his wife Rebecca Ramos, who were not privies to the loan availment of ZDC nor
parties-defendants in Civil Case No. 16453. Even when the respondent informed the petitioner, through counsel, that
the property levied by the sheriff was owned by the respondent, the petitioner failed to have the annotation cancelled
by the Register of Deeds.

In determining whether or not the petitioner acted negligently, the constant test is: Did the defendant in doing the
negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same
situation? If not, then he is guilty of negligence. 28 Considering the testimonial and documentary evidence on record,
we are convinced that the petitioner failed to act with the reasonable care and caution which an ordinarily prudent
person would have used in the same situation.

The petitioner has access to more facilities in confirming the identity of their judgment debtors. It should have acted
more cautiously, especially since some uncertainty had been reported by the appraiser whom the petitioner had tasked
to make verifications. It appears that the petitioner treated the uncertainty raised by appraiser Eduardo C. Reniva as a
flimsy matter. It placed more importance on the information regarding the marketability and market value of the
property, utterly disregarding the identity of the registered owner thereof.

It should not be amiss to note that the judgment debtors name was Teofilo Ramos, Sr. We note, as the Supreme Court
of Washington in 1909 had, that a legal name consists of one given name and one surname or family name, and a
mistake in a middle name is not regarded as of consequence. However, since the use of initials, instead of a given
name, before a surname, has become a practice, the necessity that these initials be all given and correctly given in
court proceedings has become of importance in every case, and in many, absolutely essential to a correct designation
of the person intended.29 A middle name is very important or even decisive in a case in which the issue is as between
two persons who have the same first name and surname, did the act complained of, or is injured or sued or the
like.30cräläwvirtualibräry

In this case, the name of the judgment debtor in Civil Case No. 16453 was Teofilo Ramos, Sr., as appearing in the
judgment of the court and in the writ of execution issued by the trial court. The name of the owner of the property
covered by TCT No. 275167 was Teofilo C. Ramos. It behooved the petitioner to ascertain whether the defendant

25

26

27

28

29

30
Teofilo Ramos, Sr. in Civil Case No. 16453 was the same person who appeared as the owner of the property covered
by the said title. If the petitioner had done so, it would have surely discovered that the respondent was not the surety
and the judgment debtor in Civil Case No. 16453. The petitioner failed to do so, and merely assumed that the
respondent and the judgment debtor Teofilo Ramos, Sr. were one and the same person.

In sum, we find that the petitioner acted negligently in causing the annotation of notice of levy in the title of the herein
respondent, and that its negligence was the proximate cause of the damages sustained by the respondent.

On the second issue, the petitioner insists that the respondent is not the real party-in-interest to file the action for
damages, as he was not the one who applied for a loan from UCPB and PDB but Ramdustrial Corporation, of which
he was merely the President and Chairman of the Board of Directors.

We do not agree. The respondent very clearly stated in his complaint that as a result of the unlawful levy by the
petitioner of his property, he suffered sleepless nights, moral shock, and almost a heart attack due to high blood
pressure.31cräläwvirtualibräry

It must be underscored that the registered owner of the property which was unlawfully levied by the petitioner is the
respondent. As owner of the property, the respondent has the right to enjoy, encumber and dispose of his property
without other limitations than those established by law. The owner also has a right of action against the holder and
possessor of the thing in order to recover it.32 Necessarily, upon the annotation of the notice of levy on the TCT, his
right to use, encumber and dispose of his property was diminished, if not negated. He could no longer mortgage the
same or use it as collateral for a loan.

Arising from his right of ownership over the said property is a cause of action against persons or parties who have
disturbed his rights as an owner.33 As an owner, he is one who would be benefited or injured by the judgment, or who
is entitled to the avails of the suit34 for an action for damages against one who disturbed his right of ownership.

Hence, regardless of the fact that the respondent was not the loan applicant with the UCPB and PDB, as the registered
owner of the property whose ownership had been unlawfully disturbed and limited by the unlawful annotation of
notice of levy on his TCT, the respondent had the legal standing to file the said action for damages. In both instances,
the respondents property was used as collateral of the loans applied for by Ramdustrial Corporation. Moreover, the
respondent, together with his wife, was a surety of the aforesaid loans.

While it is true that the loss of business opportunities cannot be used as a reason for an action for damages arising
from loss of business opportunities caused by the negligent act of the petitioner, the respondent, as a registered owner
whose right of ownership had been disturbed and limited, clearly has the legal personality and cause of action to file
an action for damages. Not even the respondents failure to have the annotation cancelled immediately after he came to
know of the said wrongful levy negates his cause of action.

On the third issue, for the award of moral damages to be granted, the following must exist: (1) there must be an injury
clearly sustained by the claimant, whether physical, mental or psychological; (2) there must be a culpable act or
omission factually established; (3) the wrongful act or omission of the defendant is the proximate cause of the injury
sustained by the claimant; and (4) the award for damages is predicated on any of the cases stated in Article 2219 of the
Civil Code.35cräläwvirtualibräry

In the case at bar, although the respondent was not the loan applicant and the business opportunities lost were those of
Ramdustrial Corporation, all four requisites were established. First, the respondent sustained injuries in that his
physical health and cardio-vascular ailment were aggravated; his fear that his one and only property would be
foreclosed, hounded him endlessly; and his reputation as mortgagor had been tarnished. Second, the annotation of
notice of levy on the TCT of the private respondent was wrongful, arising as it did from the petitioners negligent act of
allowing the levy without verifying the identity of its judgment debtor. Third, such wrongful levy was the proximate

31

32

33

34

35
cause of the respondents misery. Fourth, the award for damages is predicated on Article 2219 of the Civil Code,
particularly, number 10 thereof.36cräläwvirtualibräry

Although the respondent was able to establish the petitioners negligence, we cannot, however, allow the award for
exemplary damages, absent the private respondents failure to show that the petitioner acted with malice and bad faith.
It is a requisite in the grant of exemplary damages that the act of the offender must be accompanied by bad faith or
done in a wanton, fraudulent or malevolent manner.37cräläwvirtualibräry

Attorneys fees may be awarded when a party is compelled to litigate or to incur expenses to protect his interest by
reason of an unjustified act of the other party. In this case, the respondent was compelled to engage the services of
counsel and to incur expenses of litigation in order to protect his interest to the subject property against the petitioners
unlawful levy. The award is reasonable in view of the time it has taken this case to be resolved. 38cräläwvirtualibräry

In sum, we rule that the petitioner acted negligently in levying the property of the respondent despite doubts as to the
identity of the respondent vis--vis its judgment debtor. By reason of such negligent act, a wrongful levy was made,
causing physical, mental and psychological injuries on the person of the respondent. Such injuries entitle the
respondent to an award of moral damages in the amount of P800,000. No exemplary damages can be awarded because
the petitioners negligent act was not tainted with malice and bad faith. By reason of such wrongful levy, the
respondent had to hire the services of counsel to cause the cancellation of the annotation; hence, the award of
attorneys fees.

WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 56737 is AFFIRMED WITH
MODIFICATION. The award for exemplary damages is deleted. No costs.

OCT

26

EXPERTRAVEL & TOURS, INC. vs.COURT OF APPEALS and KOREAN AIRLINES, G.R. No. 152392, May 26,
2005, Callejo, Sr., J.

E-COMMERCE ACT (TELECONFERENCING)

EXPERTRAVEL & TOURS, INC. vs.COURT OF APPEALS and KOREAN AIRLINES, G.R. No. 152392,
May 26, 2005, Callejo, Sr., J.
Facts:
Korean Airlines through its general manager Suk Kyoo Kim and through their appointed counsel Atty. Aguinaldo
filed a complaint against Expertravel and tours (ETI) for a collection of sum of money. In the course of the proceeding
a special teleconference occurred and it is alleged that the general manager and counsel attended such meeting and it
is further alleged the board of directors approved a resolution authorizing Atty. Aguinaldo to execute the certificate of
non-forum shopping and to file the complaint. Suk Kyoo Kim also alleged, however, that the corporation had no
written copy of the aforesaid resolution. ETI now challenge the authority of the appointed counsel to sign for the
certification against non forum shopping.
Issue: Whether or not a special teleconference would authorize Atty. Aguinaldo to certify a certification against non
forum shopping
Ruling: Petition GRANTED.
In this age of modern technology, the courts may take judicial notice that business transactions may be made by
individuals through teleconferencing. Teleconferencing is interactive group communication (three or more people in
two or more locations) through an electronic medium. In general terms, teleconferencing can bring people together
under one roof even though they are separated by hundreds of miles.18 This type of group communication may be
used in a number of ways, and have three basic types: (1) video conferencing - television-like communication

36

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38
augmented with sound; (2) computer conferencing - printed communication through keyboard terminals, and (3)
audio-conferencing-verbal communication via the telephone with optional capacity for telewriting or telecopying.19
A teleconference represents a unique alternative to face-to-face (FTF) meetings. It was first introduced in the 1960’s
with American Telephone and Telegraph’s Picturephone. At that time, however, no demand existed for the new
technology. Travel costs were reasonable and consumers were unwilling to pay the monthly service charge for using
the picturephone, which was regarded as more of a novelty than as an actual means for everyday communication.20 In
time, people found it advantageous to hold teleconferencing in the course of business and corporate governance,
because of the money saved, among other advantages include:
1. People (including outside guest speakers) who wouldn’t normally attend a distant FTF meeting can participate.
2. Follow-up to earlier meetings can be done with relative ease and little expense.
3. Socializing is minimal compared to an FTF meeting; therefore, meetings are shorter and more oriented to the
primary purpose of the meeting.
4. Some routine meetings are more effective since one can audio-conference from any location equipped with a
telephone.
5. Communication between the home office and field staffs is maximized.
6. Severe climate and/or unreliable transportation may necessitate teleconferencing.
7. Participants are generally better prepared than for FTF meetings.
8. It is particularly satisfactory for simple problem-solving, information exchange, and procedural tasks.
9. Group members participate more equally in well-moderated teleconferences than an FTF meeting.21
On the other hand, other private corporations opt not to hold teleconferences because of the following disadvantages:
1. Technical failures with equipment, including connections that aren’t made.
2. Unsatisfactory for complex interpersonal communication, such as negotiation or bargaining.
3. Impersonal, less easy to create an atmosphere of group rapport.
4. Lack of participant familiarity with the equipment, the medium itself, and meeting skills.
5. Acoustical problems within the teleconferencing rooms.
6. Difficulty in determining participant speaking order; frequently one person monopolizes the meeting.
7. Greater participant preparation time needed.
8. Informal, one-to-one, social interaction not possible.22
Indeed, teleconferencing can only facilitate the linking of people; it does not alter the complexity of group
communication. Although it may be easier to communicate via teleconferencing, it may also be easier to
miscommunicate. Teleconferencing cannot satisfy the individual needs of every type of meeting.23
In the Philippines, teleconferencing and videoconferencing of members of board of directors of private corporations is
a reality, in light of Republic Act No. 8792. The Securities and Exchange Commission issued SEC Memorandum
Circular No. 15, on November 30, 2001, providing the guidelines to be complied with related to such conferences.24
Thus, the Court agrees with the RTC that persons in the Philippines may have a teleconference with a group of
persons in South Korea relating to business transactions or corporate governance.
Even given the possibility that Atty. Aguinaldo and Suk Kyoo Kim participated in a teleconference along with the
respondent’s Board of Directors, the Court is not convinced that one was conducted; even if there had been one, the
Court is not inclined to believe that a board resolution was duly passed specifically authorizing Atty. Aguinaldo to file
the complaint and execute the required certification against forum shopping.
 PEOPLE OF THE PHILIPPINES v . FREDDIE FONTANILLA 410 SCRA 446 (2003)

Appellant Freddie Fontanilla was charged with two counts of rape for allegedly raping his fourteen year old step
daughter on two different occasions. During the hearing, the private complainant testified regarding the rape(s)
committed by Fontanilla. The Regional Trial Court of Urdaneta City found Fontanilla guilty of the crime of rape and
imposed upon him the penalty of death. Subsequently, after the RTC rendered its decision private complainant
executed an affidavit of recantation stating that Fontanilla never raped her. Taking advantage of this new
development, Fontanilla then filed a Motion for New Trial. The court however denied the same.

ISSUE:

Whether or not the RTC erred in finding Fontanilla guilty beyond reasonable doubt of the crime of rape despite the
recantation made by the complainant.

HELD:

As for the trial court‘s denial of Fontanilla‘s motion for new trial arising from private complainant‘s affidavit of
recantation: Said affidavit cannot qualify as newly discovered evidence to justify a new trial, the following requisites
for which, and these must concur, are not present: (a) the evidence was discovered after the trial; (b) such evidence
could not have been discovered and produced at the trial even with the exercise of reasonable diligence; and (c) such
evidence is material, not merely cumulative, corroborative, or impeaching, and is of such weight that, if admitted,
would probably change the judgment. Besides, affidavits of retraction of testimonies are generally looked with
disfavor because there is always the probability that they may later be repudiated. The unreliable character of this
document is shown by the fact that it is quite incredible that after going through the process of having Fontanilla
arrested by the police, positively identifying him as the person who raped her, enduring the humiliation of a physical
examination of her private parts, and then repeating her accusations in open court by recounting her anguish, private
complainant would suddenly turn around and declare that ―after a careful deliberation over the case, [she] find[s] that
the same does not merit or warrant criminal prosecution.

GR No. 147406  July 14, 2008

Venancio Figueroa y Cervantes, petitioner
vs
People of the Philippines, respondent
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.
WHEREFORE, premises considered, the petition for review on certiorari is GRANTED. Criminal Case No. 2235-M-
94 is hereby DISMISSED without prejudice.

EQUITABLE BANKING V. IAC

161 SCRA 518

FACTS:

Nell Company issued a check to help Casals and Casville Enterprises obtain a  letter  of  credit  from  Equitable 
Banking  in  connection  with  equipment,  a garrett  skidder,  which  Casals  and  Casville  were  buying  from  Nell.   
Nell indicated  the  payee  as  follows  “EQUITABLE  BANKING  CORPORATION  A/C
CASVILLE ENTERPRISES INC.”
 
Casals deposited the check with the bank and the bank teller accepted the same  and  in  accordance  with  customary 
bank  practice,  stamped  in  the check  the  words  “non-negotiable”.    The  amount  was  withdrawn  after  the
deposit.
 
This  prompted  Nell  to  file  a  case  against  the  bank,  Casals  and  Casville.  While  the  instant  case  was  being 
tried,  Casals  and  Casville  assigned  the garrett skidder to plaintiff which credited in favor of defendants the amount
of P450,000, as partial satisfaction of its claim against them.   
 

HELD:

Equitable is not liable to Nell.  Nell should bear the loss as it was through its own acts, which put it into the power of
Casals and Casville Enterprises to perpetuate the fraud against it.  
 
The  check  wasn’t  initially  non-negotiable.    Neither  was  it  cross-checked.  The rubber-stamping transversally on
the face of the check was only made 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.
 
The payee was not indicated with reasonable certainty in contravention of Section 8.  As worded, it could be accepted
as deposit to the account of the party named therein after the symbols  of A/C, or payable to the bank as trustee,  or 
as  an  agent,  for  Casville  with  the  latter  being  the  ultimate beneficiary.