Crim Law 1 Case Digest: People v. Campuhan 2000

People v. Campuhan

G.R. No. 129433             March 30, 2000

Lessons Applicable: Attempted rape

Laws Applicable:

FACTS:
•    April 25, 1996 4 pm: Ma. Corazon P. Pamintuan, mother of 4-year old Crysthel Pamintuan, went to the ground floor of their house to prepare Milo chocolate drinks for her 2 children.  There she met Primo Campuhan, helper of Conrado Plata Jr., brother of Corazon, who was then busy filling small plastic bags with water to be frozen into ice in the freezer located at the second floor.
•    Then she heard Crysthel cry, "Ayo'ko, ayo'ko!" so she went upstairs and saw Primo Campuhan inside her children's room kneeling before Crysthel whose pajamas or "jogging pants" and panty were already removed, while his short pants were down to his knees and his hands holding his penis with his right hand
•    Horrified, she cursed "P - t - ng ina mo, anak ko iyan!" and boxed him several times. He evaded her blows and pulled up his pants. He pushed Corazon aside who she tried to block his path. Corazon then ran out and shouted for help thus prompting Vicente, her brother, a cousin and an uncle who were living within their compound, to chase the Campuhan who was apprehended.  They called the barangay officials who detained.
•    Physical examination yielded negative results as Crysthel ‘s hymen was intact
•    Campuhan: Crysthel was in a playing mood and wanted to ride on his back when she suddenly pulled him down causing both of them to fall down on the floor.
•    RTC: guilty of statutory rape, sentenced him to the extreme penalty of death
•    Thus, subject to automatic review

ISSUE: W/N it was a consummated statutory rape

HELD: NO. MODIFIED. guilty of ATTEMPTED RAPE and sentenced to an indeterminate prison term of eight (8) years four (4) months and ten (10) days of prision mayor medium as minimum, to fourteen (14) years ten (10) months and twenty (20) days of reclusion temporal medium as maximum. Costs de oficio.

•    People v. De la Peña: labia majora must be entered for rape to be consummated
•    Primo's kneeling position rendered an unbridled observation impossible
•    Crysthel made a categorical statement denying penetration but her vocabulary is yet as underdeveloped
•    Corazon narrated that Primo had to hold his penis with his right hand, thus showing that he had yet to attain an erection to be able to penetrate his victim
•    the possibility of Primo's penis having breached Crysthel's vagina is belied by the child's own assertion that she resisted Primo's advances by putting her legs close together and that she did not feel any intense pain but just felt "not happy" about what Primo did to her. Thus, she only shouted "Ayo'ko, ayo'ko!" not "Aray ko, aray ko!
•    no medical basis to hold that there was sexual contact between the accused and the victim

Jurisprudence: G.R. No. 129433 March 30, 2000

EN BANC

G.R. No. 129433             March 30, 2000

PEOPLE OF THE PHILIPPINES, plaintiff,

vs.

PRIMO CAMPUHAN Y BELLO accused.

BELLOSILLO, J.:

On 3 April 1990 this Court in People v. Orita 1 finally did away with frustrated rape 2 and allowed only attempted rape and consummated rape to remain in our statute books. The instant case lurks at the threshold of another emasculation of the stages of execution of rape by considering almost every attempt at sexual violation of a woman as consummated rape, that is, if the contrary view were to be adopted. The danger there is that that concept may send the wrong signal to every roaming lothario, whenever the opportunity bares itself, to better intrude with climactic gusto, sans any restraint, since after all any attempted fornication would be considered consummated rape and punished as such. A mere strafing of the citadel of passion would then be considered a deadly fait accompli, which is absurd.

In Orita we held that rape was consummated from the moment the offender had carnal knowledge of the victim since by it he attained his objective. All the elements of the offense were already present and nothing more was left for the offender to do, having performed all the acts necessary to produce the crime and accomplish it. We ruled then that perfect penetration was not essential; any penetration of the female organ by the male organ, however slight, was sufficient. The Court further held that entry of the labia or lips of the female organ, even without rupture of the hymen or laceration of the vagina, was sufficient to warrant conviction for consummated rape. We distinguished consummated rape from attempted rape where there was no penetration of the female organ because not all acts of execution were performed as the offender merely commenced the commission of a felony directly by overt acts. 3 The inference that may be derived therefrom is that complete or full penetration of the vagina is not required for rape to be consummated. Any penetration, in whatever degree, is enough to raise the crime to its consummated stage.

But the Court in Orita clarified the concept of penetration in rape by requiring entry into the labia or lips of the female organ, even if there be no rupture of the hymen or laceration of the vagina, to warrant a conviction for consummated rape. While the entry of the penis into the lips of the female organ was considered synonymous with mere touching of the external genitalia, e.g., labia majora, labia minora, etc.,4 the crucial doctrinal bottom line is that touching must be inextricably viewed in light of, in relation to, or as an essential part of, the process of penile penetration, and not just mere touching in the ordinary sense. In other words, the touching must be tacked to the penetration itself. The importance of the requirement of penetration, however slight, cannot be gainsaid because where entry into the labia or the lips of the female genitalia has not been established, the crime committed amounts merely to attempted rape.

Verily, this should be the indicium of the Court in determining whether rape has been committed either in its attempted or in its consummated stage; otherwise, no substantial distinction would exist between the two, despite the fact that penalty-wise, this distinction, threadbare as it may seem, irrevocably spells the difference between life and death for the accused — a reclusive life that is not even perpetua but only temporal on one hand, and the ultimate extermination of life on the other. And, arguing on another level, if the case at bar cannot be deemed attempted but consummated rape, what then would constitute attempted rape? Must our field of choice be thus limited only to consummated rape and acts of lasciviousness since attempted rape would no longer be possible in light of the view of those who disagree with this ponencia?

On 27 May 1997 Primo Campuhan y Bello was found guilty of statutory rape and sentenced by the court a quo to the extreme penalty of death, 5 hence this case before us on automatic review under Art. 335 of the Revised Penal Code as amended by RA 7659. 6

As may be culled from the evidence on record, on 25 April 1996, at around 4 o'clock in the afternoon, Ma. Corazon P. Pamintuan, mother of four (4)-year old Crysthel Pamintuan, went down from the second floor of their house to prepare Milo chocolate drinks for her two (2) children. At the ground floor she met Primo Campuhan who was then busy filling small plastic bags with water to be frozen into ice in the freezer located at the second floor. Primo was a helper of Conrado Plata Jr., brother of Corazon. As Corazon was busy preparing the drinks, she heard one of her daughters cry, "Ayo'ko, ayo'ko!" 7 prompting Corazon to rush upstairs. Thereupon, she saw Primo Campuhan inside her children's room kneeling before Crysthel whose pajamas or "jogging pants" and panty were already removed, while his short pants were down to his knees.

According to Corazon, Primo was forcing his penis into Crysthel's vagina. Horrified, she cursed the accused, "P - t - ng ina mo, anak ko iyan!" and boxed him several times. He evaded her blows and pulled up his pants. He pushed Corazon aside when she tried to block his path. Corazon then ran out and shouted for help thus prompting her brother, a cousin and an uncle who were living within their compound, to chase the accused. 8 Seconds later, Primo was apprehended by those who answered Corazon's call for help. They held the accused at the back of their compound until they were advised by their neighbors to call the barangay officials instead of detaining him for his misdeed. Physical examination of the victim yielded negative results. No evident sign of extra-genital physical injury was noted by the medico-legal officer on Crysthel's body as her hymen was intact and its orifice was only 0.5 cm. in diameter.

Primo Campuhan had only himself for a witness in his defense. He maintained his innocence and assailed the charge as a mere scheme of Crysthel's mother who allegedly harbored ill will against him for his refusal to run an errand for her. 9 He asserted that in truth Crysthel was in a playing mood and wanted to ride on his back when she suddenly pulled him down causing both of them to fall down on the floor. It was in this fallen position that Corazon chanced upon them and became hysterical. Corazon slapped him and accused him of raping her child. He got mad but restrained himself from hitting back when he realized she was a woman. Corazon called for help from her brothers to stop him as he ran down from the second floor.

Vicente, Corazon's brother, timely responded to her call for help and accosted Primo. Vicente punched him and threatened to kill him. Upon hearing the threat, Primo immediately ran towards the house of Conrado Plata but Vicente followed him there. Primo pleaded for a chance to explain as he reasoned out that the accusation was not true. But Vicente kicked him instead. When Primo saw Vicente holding a piece of lead pipe, Primo raised his hands and turned his back to avoid the blow. At this moment, the relatives and neighbors of Vicente prevailed upon him to take Primo to the barangay hall instead, and not to maul or possibly kill him.

Although Primo Campuhan insisted on his innocence, the trial court on 27 May 1997 found him guilty of statutory rape, sentenced him to the extreme penalty of death, and ordered him to pay his victim P50,000.00 for moral damages, P25,000.00 for exemplary damages, and the costs.

The accused Primo Campuhan seriously assails the credibility of Ma. Corazon Pamintuan. He argues that her narration should not be given any weight or credence since it was punctured with implausible statements and improbabilities so inconsistent with human nature and experience. He claims that it was truly inconceivable for him to commit the rape considering that Crysthel's younger sister was also in the room playing while Corazon was just downstairs preparing Milo drinks for her daughters. Their presence alone as possible eyewitnesses and the fact that the episode happened within the family compound where a call for assistance could easily be heard and responded to, would have been enough to deter him from committing the crime. Besides, the door of the room was wide open for anybody to see what could be taking place inside. Primo insists that it was almost inconceivable that Corazon could give such a vivid description of the alleged sexual contact when from where she stood she could not have possibly seen the alleged touching of the sexual organs of the accused and his victim. He asserts that the absence of any external signs of physical injuries or of penetration of Crysthel's private parts more than bolsters his innocence.

In convicting the accused, the trial court relied quite heavily on the testimony of Corazon that she saw Primo with his short pants down to his knees kneeling before Crysthel whose pajamas and panty were supposedly "already removed" and that Primo was "forcing his penis into Crysthel's vagina." The gravamen of the offense of statutory rape is carnal knowledge of a woman below twelve (12), as provided in Art. 335, par. (3), of the Revised Penal Code. Crysthel was only four (4) years old when sexually molested, thus raising the penalty, from reclusion perpetua to death, to the single indivisible penalty of death under RA 7659, Sec. 11, the offended party being below seven (7) years old. We have said often enough that in concluding that carnal knowledge took place, full penetration of the vaginal orifice is not an essential ingredient, nor is the rupture of the hymen necessary; the mere touching of the external genitalia by the penis capable of consummating the sexual act is sufficient to constitute carnal knowledge. 10 But the act of touching should be understood here as inherently part of the entry of the penis into the labias of the female organ and not mere touching alone of the mons pubis or the pudendum.

In People v. De la Peña 11 we clarified that the decisions finding a case for rape even if the attacker's penis merely touched the external portions of the female genitalia were made in the context of the presence or existence of an erect penis capable of full penetration. Where the accused failed to achieve an erection, had a limp or flaccid penis, or an oversized penis which could not fit into the victim's vagina, the Court nonetheless held that rape was consummated on the basis of the victim's testimony that the accused repeatedly tried, but in vain, to insert his penis into her vagina and in all likelihood reached the labia of her pudendum as the victim felt his organ on the lips of her vulva, 12 or that the penis of the accused touched the middle part of her vagina. 13 Thus, touching when applied to rape cases does not simply mean mere epidermal contact, stroking or grazing of organs, a slight brush or a scrape of the penis on the external layer of the victim's vagina, or the mons pubis, as in this case. There must be sufficient and convincing proof that the penis indeed touched the labias or slid into the female organ, and not merely stroked the external surface thereof, for an accused to be convicted of consummated rape. 14 As the labias, which are required to be "touched" by the penis, are by their natural situs or location beneath the mons pubis or the vaginal surface, to touch them with the penis is to attain some degree of penetration beneath the surface, hence, the conclusion that touching the labia majora or the labia minora of the pudendum constitutes consummated rape.

The pudendum or vulva is the collective term for the female genital organs that are visible in the perineal area, e.g., mons pubis, labia majora, labia minora, the hymen, the clitoris, the vaginal orifice, etc. The mons pubis is the rounded eminence that becomes hairy after puberty, and is instantly visible within the surface. The next layer is the labia majora or the outer lips of the female organ composed of the outer convex surface and the inner surface. The skin of the outer convex surface is covered with hair follicles and is pigmented, while the inner surface is a thin skin which does not have any hair but has many sebaceous glands. Directly beneath the labia majora is the labia minora. 15 Jurisprudence dictates that the labia majora must be entered for rape to be consummated, 16 and not merely for the penis to stroke the surface of the female organ. Thus, a grazing of the surface of the female organ or touching the mons pubis of the pudendum is not sufficient to constitute consummated rape. Absent any showing of the slightest penetration of the female organ, i.e., touching of either labia of the pudendum by the penis, there can be no consummated rape; at most, it can only be attempted rape, if not acts of lasciviousness.

Judicial depiction of consummated rape has not been confined to the oft-quoted "touching of the female organ," 17 but has also progressed into being described as "the introduction of the male organ into the labia of the pudendum," 18 or "the bombardment of the drawbridge." 19 But, to our mild, the case at bar merely constitutes a "shelling of the castle of orgasmic potency," or as earlier stated, a "strafing of the citadel of passion.

A review of the records clearly discloses that the prosecution utterly failed to discharge its onus of proving that Primo's penis was able to penetrate Crysthel's vagina however slight. Even if we grant arguendo that Corazon witnessed Primo in the act of sexually molesting her daughter, we seriously doubt the veracity of her claim that she saw the inter-genital contact between Primo and Crysthel. When asked what she saw upon entering her children's room Corazon plunged into saying that she saw Primo poking his penis on the vagina of Crysthel without explaining her relative position to them as to enable her to see clearly and sufficiently, in automotive lingo, the contact point. It should be recalled that when Corazon chanced upon Primo and Crysthel, the former was allegedly in a kneeling position, which Corazon described thus:

Q: How was Primo holding your daughter?

A: (The witness is demonstrating in such a way that the chest of the accused is pinning down the victim, while his right hand is holding his penis and his left hand is spreading the legs of the victim).

It can reasonably be drawn from the foregoing narration that Primo's kneeling position rendered an unbridled observation impossible. Not even a vantage point from the side of the accused and the victim would have provided Corazon an unobstructed view of Primo's penis supposedly reaching Crysthel's external genitalia, i.e., labia majora, labia minora, hymen, clitoris, etc., since the legs and arms of Primo would have hidden his movements from Corazon's sight, not to discount the fact that Primo's right hand was allegedly holding his penis thereby blocking it from Corazon's view. It is the burden of the prosecution to establish how Corazon could have seen the sexual contact and to shove her account into the permissive sphere of credibility. It is not enough that she claims that she saw what was done to her daughter. It is required that her claim be properly demonstrated to inspire belief. The prosecution failed in this respect, thus we cannot conclude without any taint of serious doubt that inter-genital contact was at all achieved. To hold otherwise would be to resolve the doubt in favor of the prosecution but to run roughshod over the constitutional right of the accused to be presumed innocent.

Corazon insists that Primo did not restrain himself from pursuing his wicked intention despite her timely appearance, thus giving her the opportunity to fully witness his beastly act.

We are not persuaded. It is inconsistent with man's instinct of self-preservation to remain where he is and persist in satisfying his lust even when he knows fully well that his dastardly acts have already been discovered or witnessed by no less than the mother of his victim. For, the normal behavior or reaction of Primo upon learning of Corazon's presence would have been to pull his pants up to avoid being caught literally with his pants down. The interval, although relatively short, provided more than enough opportunity for Primo not only to desist from but even to conceal his evil design.

What appears to be the basis of the conviction of the accused was Crysthel's answer to the question of the court —

Q: Did the penis of Primo touch your organ?

A: Yes, sir.

But when asked further whether his penis penetrated her organ, she readily said, "No." Thus —

Q: But did his penis penetrate your organ?

A: No, sir. 20

This testimony alone should dissipate the mist of confusion that enshrouds the question of whether rape in this case was consummated. It has foreclosed the possibility of Primo's penis penetrating her vagina, however slight. Crysthel made a categorical statement denying penetration, 27 obviously induced by a question propounded to her who could not have been aware of the finer distinctions between touching and penetration. Consequently, it is improper and unfair to attach to this reply of a four (4)-year old child, whose vocabulary is yet as underdeveloped as her sex and whose language is bereft of worldly sophistication, an adult interpretation that because the penis of the accused touched her organ there was sexual entry. Nor can it be deduced that in trying to penetrate the victim's organ the penis of the accused touched the middle portion of her vagina and entered the labia of her pudendum as the prosecution failed to establish sufficiently that Primo made efforts to penetrate Crysthel. 22 Corazon did not say, nay, not even hint that Primo's penis was erect or that he responded with an erection. 23 On the contrary, Corazon even narrated that Primo had to hold his penis with his right hand, thus showing that he had yet to attain an erection to be able to penetrate his victim.

Antithetically, the possibility of Primo's penis having breached Crysthel's vagina is belied by the child's own assertion that she resisted Primo's advances by putting her legs close together; 24 consequently, she did not feel any intense pain but just felt "not happy" about what Primo did to her. 25 Thus, she only shouted "Ayo'ko, ayo'ko!" not "Aray ko, aray ko!" In cases where penetration was not fully established, the Court had anchored its conclusion that rape nevertheless was consummated on the victim's testimony that she felt pain, or the medico-legal finding of discoloration in the inner lips of the vagina, or the labia minora was already gaping with redness, or the hymenal tags were no longer visible. 26 None was shown in this case. Although a child's testimony must be received with due consideration on account of her tender age, the Court endeavors at the same time to harness only what in her story appears to be true, acutely aware of the equally guaranteed rights of the accused. Thus, we have to conclude that even on the basis of the testimony of Crysthel alone the accused cannot be held liable for consummated rape; worse, be sentenced to death.

Lastly, it is pertinent to mention the medico legal officer's finding in this case that there were no external signs of physical injuries on complaining witness' body to conclude from a medical perspective that penetration had taken place. As Dr. Aurea P. Villena explained, although the absence of complete penetration of the hymen does not negate the possibility of contact, she clarified that there was no medical basis to hold that there was sexual contact between the accused and the victim. 27

In cases of rape where there is a positive testimony and a medical certificate, both should in all respects complement each other; otherwise, to rely on the testimonial evidence alone, in utter disregard of the manifest variance in the medical certificate, would be productive of unwarranted or even mischievous results. It is necessary to carefully ascertain whether the penis of the accused in reality entered the labial threshold of the female organ to accurately conclude that rape was consummated. Failing in this, the thin line that separates attempted rape from consummated rape will significantly disappear.

Under Art. 6, in relation to Art. 335, of the Revised Penal Code, rape is attempted when the offender commences the commission of rape directly by overt acts, and does not perform all the acts of execution which should produce the crime of rape by reason of some cause or accident other than his own spontaneous desistance. All the elements of attempted rape — and only of attempted rape — are present in the instant case, hence, the accused should be punished only for it.

The penalty for attempted rape is two (2) degrees lower than the imposable penalty of death for the offense charged, which is statutory rape of a minor below seven (7) years. Two (2) degrees lower is reclusion temporal, the range of which is twelve (12) years and one (1) day to twenty (20) years. Applying the Indeterminate Sentence Law, and in the absence of any mitigating or aggravating circumstance, the maximum of the penalty to be imposed upon the accused shall be taken from the medium period of reclusion temporal, the range of which is fourteen (14) years, eight (8) months and (1) day to seventeen (17) years and four (4) months, while the minimum shall be taken from the penalty next lower in degree, which is prision mayor, the range of which is from six (6) years and one (1) day to twelve (12) years, in any of its periods.

WHEREFORE, the Decision of the court a quo finding accused PRIMO "SONNY" CAMPUHAN Y BELLO guilty of statutory rape and sentencing him to death and to pay damages is MODIFIED. He is instead found guilty of ATTEMPTED RAPE and sentenced to an indeterminate prison term of eight (8) years four (4) months and ten (10) days of prision mayor medium as minimum, to fourteen (14) years ten (10) months and twenty (20) days of reclusion temporal medium as maximum. Costs de oficio.

SO ORDERED.

Davide, Jr., C.J., Melo, Puno, Vitug, Kapunan, Mendoza, Quisumbing, Purisima, Pardo, Buena, Gonzaga-Reyes, Ynares-Santiago and De Leon, Jr., JJ., concur.

Pnganiban, J., in the result.

Jurisprudence: G.R. No. L-8527 March 30, 1914

EN BANC

G.R. No. L-8527             March 30, 1914

WEST COAST LIFE INSURANCE CO., plaintiff,
vs.
GEO N. HURD, Judge of Court of First Instance, defendant.

Southworth, Hargis & Springer for plaintiff.
Haussermann, Cohn & Fisher for defendant.

MORELAND, J.:

This is an action for the issuance of a writ of prohibition against the defendant "commanding the defendant to desist or refrain from further proceedings in a criminal action pending in that court."

The petitioner is a foreign life-insurance corporation, duly organized under and by virtue of the laws of the State of California, doing business regularly and legally in the Philippine Islands pursuant to its laws.

On the 16th of December, 1912, the assistant prosecuting attorney of the city of Manila filed an information in a criminal action in the Court of First Instance of that city against the plaintiff, said corporation, and also against John Northcott and Manuel C. Grey, charging said corporation and said individuals with the crime of libel. On the 17th day of December the defendant in his official capacity as judge of the court of First Instance signed and issued a process directed to the plaintiff and the other accused in said criminal action, which said process reads as follows:

UNITED STATES OF AMERICA,

PHILIPPINE ISLANDS.

In the Court of First Instance of the Judicial District of Manila.

THE UNITED STATES No. 9661
versus Libel.

WEST COAST LIFE INSURANCE CO., JOHN NORTHCOTT, AND MANUEL C. GREY.

To West Coast Life Insurance Co., John Northcott, and Manuel C. Grey, Manila.

SUMMONS.

You are hereby summoned to appear before the Court of First Instance of the city of Manila P.I., on the 18th day of December, 1912, at the hour of 8 a.m., to answer the charge made against you upon the information of F. H. Nesmith, assistant prosecuting attorney of the city of Manila, for libel, as set forth in the said information filed in this copurt on December 16, 1912, a copy of which is hereto attached and herewith served upon you.

Dated at the city of Manila, P. I., this 17th day of December, 1912.

(Sgd.) GEO N. HURD,
Judge, Court of First Instance.

The information upon which said process was issued is as follows:

The undersigned accuses the West Coast Life Insurance Company, John Northcott, and Manuel C. Grey of the crime of libel, committed as follows:

That on or about the 14th day of September, 1912, and continuously thereafter up to and including the date of this complaint, in the city of Manila, P. I., the said defendant West Coast Life Insurance Company was and has been a foreign corporation duly organized in the State of California, United States of America, and registered and doing business in the Philippine Islands; that the said defendant John Nortcott then and there was and has been the general agent and manager for the Philippine Islands of the said defendant corporation West Coast Life Insurance Company, and the said defendant Manuel C. Grey was and has been an agent and employee of the said defendant corporation West Coast Life Insurance Company, acting in the capacity of treasurer of the branch of the said defendant corporation in the Philippine Islands; that on or about the said 14th day of September, 1912, and for some time thereafter, to wit, during the months of September and October, 1912, in the city of Manila, P.I., the said defendants West Coast Life Insurance Company, John Northcott, and Manuel C. Grey, conspiring and confederating together, did then and there willfully, unlawfully, and maliciously, and to the damage of the Insular Life Insurance Company, a domestic corporation duly organized, registered, and doing business in the Philippine Islands, and with intent o cause such damage and to expose the said Insular Life Insurance Company to public hatred, contempt, and ridicule, compose and print, and cause to be printed a large number of circulars, and, in numerous printings in the form of said circulars, did publish and distribute, and cause to be published and distributed, among other persons, to policy holders and prospective policy holders of the said Insular Life Insurance Company, among other things, a malicious defamation and libel in the Spanish language, of the words and tenor following:

"First. For some time past various rumors are current to the effect that the Insular Life Insurance Company is not in as good a condition as i should be at the present time, and that really it is in bad shape. Nevertheless, the investigations made by the representative of the "Bulletin" have failed fully to confirm these rumors. It is known that the Insular Auditor has examined the books of the company and has found that its capital has diminished, and that by direction of said official the company has decided to double the amount of its capital, and also to pay its reserve fund. All this is true."

That the said circulars, and the matters therein contained hereinbefore set forth in this information, tend to impeach and have impeached the honesty, virtue, and reputation of the said Insular Life Insurance Company by exposing it to public hatred, contempt, and ridicule; that by the matters printed in said circulars, and hereinbefore set forth in this information, the said defendants West Coast Life Insurance Company, John Northcott, and Manuel C. Grey meant and intended to state and represent to those to whom the said defendants delivered said circulars as aforesaid, that the said Insular Life Insurance Company was then and there in a dangerous financial condition and on the point of going into insolvency, to the detriment of the policy holders of the said Insular Life Insurance Company, and of those with whom the said Insular Life Insurance Company have and have had business transactions, and each and all of said persons to whom the said defendants delivered said circulars, and all persons as well who read said circulars understood the said matters in said circulars to have said libelous sense and meaning. Contrary to law.

On the 20th day of December, 1912, the plaintiff, together with the other persons named as accused in said process through their attorneys, served upon the prosecuting attorney and filed with the clerk of the court a motion to quash said summons and the service thereof, on the ground that the court had no jurisdiction over the said company, there being no authority in the court for the issuance of the process, Exhibit B, the order under which it was issued being void. The court denied the motion and directed plaintiff to appear before it on the 28th day of December, 1912, and to plead to the information, to which order the plaintiff then and there duly excepted.

It is alleged in the complaint that "unless restrained by this Court the respondent will proceed to carry out said void order and compel your petitioner to appear before his court and plead and submit to criminal prosecution without having acquired any jurisdiction whatever over your petitioner."

The prayer of the complaint is, "your petitioner prays judgment for the issuance of a writ of prohibition against the respondent, commanding the respondent absolutely to desist or refrain from further proceedings against your petitioner in the said criminal action."

The basis of the action is that the Court of First Instance has no power or authority, under the laws of the Philippine Islands, to proceed against a corporation, as such, criminally, to bring it into court for the purpose of making it amenable to the criminal laws. It is contended that the court had no jurisdiction to issue the process in evidence against the plaintiff corporation; that the issuance and service thereof upon the plaintiff corporation were outside of the authority and jurisdiction of the court, were authorized by no law, conferred no jurisdiction over said corporation, and that they were absolutely void and without force or effect.

The plaintiff, further attacking said process, alleges that the process is a mixture of civil and criminal process, that it is not properly signed, that it does not direct or require an arrest; that it s an order to appear and answer on a date certain without restraint of the person, and that it is not in the form required by law.

Section 5 of General Orders, No. 58, defines an information as "accusation in writing charging a period with a public offense." Section 6 provide that a complaint or information is sufficient it if shows "the name of the defendant, or if his name cannot be discovered, that he is described under a fictitious name with a statement that his true name is unknown to the informant or official signing the same. His true name may be inserted at any stage of the proceedings instituted against him, whenever ascertained." These provisions, as well as those which relate to arraignment and counsel, and to demurrers and pleas, indicate clearly that the maker of the Code of Criminal Procedure had no intention or expectation that corporations would be included among those who would fall within the provisions thereof. The only process known to the Code of Criminal Procedure, or which any court is by that order authorized to issue, is an order of arrest. The Code of Criminal Procedure provides that "if the magistrate be satisfied from the investigation that the crime complained of has been committed, and there is reasonable ground to believe that the party charged has committed it, he must issue an order for his arrest. If the offense be bailable, and the defendant offer a sufficient security, he shall be admitted to bail; otherwise he shall be committed to prison." There is no authority for the issuance of any other process than an order of arrest. As a necessary consequence, the process issued in the case before us is without express authorization of statute.

The question remains as to whether or not he court may, of itself and on its own motion, create not only a process but a procedure by which the process may be made effective.

We do not believe that the authority of the courts of the Philippine Islands extends so far. While having the inherent powers which usually go with courts of general jurisdiction, we are of the opinion that, under the circumstances of their creation, they have only such authority in criminal matters as is expressly conferred upon them by statute or which it is necessary to imply from such authority in order to carry out fully and adequately the express authority conferred. We do not feel that Courts of First Instance have authority to create new procedure and new processes in criminal law. The exercise of such power verges too closely on legislation. Even though it be admitted, a question we do not now decide, that there are various penal laws in the Philippine Islands which corporation as such may violate, still we do not believe that the courts are authorized to go to the extent of creating special procedure and special processes for the purpose of carrying out those penal statutes, when the legislature itself has neglected to do so. To bring a corporation into court criminally requires many additions to the present criminal procedure. While it may be said to be the duty of courts to see to it that criminals are punished, it is no less their duty to follow prescribed forms of procedure and to go out upon unauthorized ways or act in an unauthorized manner.

There are many cases cited by counsel for the defendant which show that corporations have been proceeded against criminally by indictment and otherwise and have been punished as malefactors by the courts. Of this, of course, there can be no doubt; but it is clear that, in those cases, the statute, by express words or by necessary intendment, included corporations within the persons who could offend against the criminal laws; and the legislature, at the same time established a procedure applicable to corporations. No case has been cited to us where a corporation has been proceeded against under a criminal statute where the court did not exercise its common law powers or where there was not in force a special procedure applicable to corporations.

The courts of the Philippine Islands are creatures of statute and, as we have said, have only those powers conferred upon them by statute and those which are required to exercise that authority fully and adequately. The courts here have no common law jurisdiction or powers. If they have any powers not conferred by statute, expressly or impliedly, they would naturally come from Spanish and not from common law sources. It is undoubted that, under the Spanish criminal law and procedure, a corporation could not have been proceeded against criminally, as such, if such an entity as a corporation in fact existed under the Spanish law, and as such it could not have committed a crime in which a willful purpose or a malicious intent was required. Criminal actions would have been restricted or limited, under that system, to the officials of such corporations and never would have been directed against the corporation itself. This was the rule with relation to associations or combinations of persons approaching, more or less, the corporation as it is now understood, and it would undoubtedly have been the rue with corporations. From this source, then, the courts derive no authority to bring corporations before them in criminal actions, nor to issue processes for that purpose.

The case was submitted to this Court on an agreed statement of facts with a stipulation for a decision upon the merits. We are of the opinion that the plaintiff is entitled, under that stipulation, to the remedy prayed for.

It is adjudged that the Court of First Instance of the city of Manila be and it is hereby enjoined and prohibited from proceeding further in the criminal cause which is before us in this proceeding, entitled United States vs. West Coast Life Insurance Company, a corporation, John Northcott and Manuel C. Grey, so far as said proceedings relate to the said West Coast Life Insurance Company, a corporation, the plaintiff in the case.

Arellano, C.J. and Araullo, J., concur.
Carson, J., concurs in the result.

Torts and Damages Case Digest: Francisco v. GSIS (1963)

G.R. No. L-18287             March 30, 1963

Lessons Applicable: Cases where Moral damages are allowed (Torts and Damages)

Laws Applicable: Article 2208,Article 2220

FACTS:

• October 10, 1956: Trinidad J. Francisco, in consideration of a loan in the amount of P400,000 out of which the sum of P336,100 was released to her, mortgaged in favor of the Government Service Insurance System a parcel of land containing an area of 18,232 square meters within 10 years in monthly installments of P3,902.41, and with interest of 7% per annum compounded monthly.
• January 6, 1959: GSIS extrajudicially foreclosed the mortgage
• February 20, 1959: Trinidad's father Atty. Vicente J. Francisco, sent a letter to the general manager of GSIS propsing to pay P30,000 and pay the balance from the P5,000 monthly rentals less P350 for the necessary expenses. 
• GSIS Board approved the request
• February 28, 1959: Atty. Francisco remitted a check for P30,000 and an official receipt was issued
• March 4, 1960: Trinidad remitted P44,121.29 and soon, P24,604.81.  All were issued a receipt
• Then the System sent 3 letters asking for a proposal for the payment of her indebtedness since the 1-year redemption period has expired
• Atty. Francisco sent a letter of protest requesting the proper corrections since their proposal have already commenced
• GSIS contends that for the foreclosure done, Francisco should pay attorney's fees of P35,644.14, publication expenses, filing fee of P301.00, and surcharge of P23.64 so remittances were not enough
• GSIS filed for specific performance
• RTC: Atty. Francisco's offer was unqualifiedly accepted, and was binding
• called attention to the unconscionability of defendant's charging the attorney's fees, totalling over P35,000.00; and this point appears well-taken, considering that the foreclosure was merely extra-judicial, and the attorneys' work was limited to requiring the sheriff to effectuate the foreclosure

ISSUE: W/N Francisco should be awarded Moral damages where there is breach of contract regarding the redemption proposal but no malicious intent

HELD: NO. Affirmed.

• Nor was there error in the appealed decision in denying moral damages, not only on account of the plaintiff's failure to take the witness stand and testify to her social humiliation, wounded feelings, anxiety, etc., as the decision holds, but primarily because a breach of contract like that of defendant, not being malicious or fraudulent, does not warrant the award of moral damages under Article 2220 of the Civil Code
• There is no basis for awarding exemplary damages either, because this species of damages is only allowed in addition to moral, temperate, liquidated, or compensatory damages, none of which have been allowed in this case, for reasons herein before discussed
• As to attorneys' fees, we agree with the trial court's stand that in view of the absence of gross and evident bad faith in defendant's refusal to satisfy the plaintiff's claim, and there being none of the other grounds enumerated in Article 2208 of the Civil Code, such absence precludes a recovery. The award of attorneys' fees is essentially discretionary in the trial court, and no abuse of discretion has been shown. 

Jurisprudence: G.R. No. L-18287

EN BANC

G.R. No. L-18287             March 30, 1963

TRINIDAD J. FRANCISCO, plaintiff-appellee,

vs.

GOVERNMENT SERVICE INSURANCE SYSTEM, defendant-appellant.

-----------------------------

G.R. No. L-18155             March 30, 1963

TRINIDAD J. FRANCISCO, plaintiff-appellant,

vs.

GOVERNMENT SERVICE INSURANCE SYSTEM, defendant-appellee.

Vicente J. Francisco for plaintiff-appellee.

The Government Corporate Counsel for defendant-appellant.

REYES, J.B.L., J.:

Appeal by the Government Service Insurance System from the decision of the Court of First Instance of Rizal (Hon. Angel H. Mojica, presiding), in its Civil Case No. 2088-P, entitled "Trinidad J. Francisco, plaintiff, vs. Government Service Insurance System, defendant", the dispositive part of which reads as follows:

WHEREFORE, judgment is hereby rendered: (a) Declaring null and void the consolidation in the name of the defendant, Government Service Insurance System, of the title of the VIC-MARI Compound; said title shall be restored to the plaintiff; and all payments made by the plaintiff, after her offer had been accepted by the defendant, must be credited as amortizations on her loan; and (b) Ordering the defendant to abide by the terms of the contract created by plaintiff's offer and it's unconditional acceptance, with costs against the defendant.

The plaintiff, Trinidad J. Francisco, likewise appealed separately (L-18155), because the trial court did not award the P535,000.00 damages and attorney's fees she claimed. Both appeals are, therefore, jointly treated in this decision.

The following facts are admitted by the parties: On 10 October 1956, the plaintiff, Trinidad J. Francisco, in consideration of a loan in the amount of P400,000.00, out of which the sum of P336,100.00 was released to her, mortgaged in favor of the defendant, Government Service Insurance System (hereinafter referred to as the System) a parcel of land containing an area of 18,232 square meters, with twenty-one (21) bungalows, known as Vic-Mari Compound, located at Baesa, Quezon City, payable within ten (10) years in monthly installments of P3,902.41, and with interest of 7% per annum compounded monthly.

On 6 January 1959, the System extrajudicially foreclosed the mortgage on the ground that up to that date the plaintiff-mortgagor was in arrears on her monthly installments in the amount of P52,000.00. Payments made by the plaintiff at the time of foreclosure amounted to P130,000.00. The System itself was the buyer of the property in the foreclosure sale.

On 20 February 1959, the plaintiff's father, Atty. Vicente J. Francisco, sent a letter to the general manager of the defendant corporation, Mr. Rodolfo P. Andal, the material portion of which recited as follows:

Yesterday, I was finally able to collect what the Government owed me and I now propose to pay said amount of P30,000 to the GSIS if it would agree that after such payment the foreclosure of my daughter's mortgage would be set aside. I am aware that the amount of P30,000 which I offer to pay will not cover the total arrearage of P52,000 but as regards the balance, I propose this arrangement: for the GSIS to take over the administration of the mortgaged property and to collect the monthly installments, amounting to about P5,000, due on the unpaid purchase price of more than 31 lots and houses therein and the monthly installments collected shall be applied to the payment of Miss Francisco's arrearage until the same is fully covered. It is requested, however, that from the amount of the monthly installments collected, the sum of P350.00 be deducted for necessary expenses, such as to pay the security guard, the street-caretaker, the Meralco Bill for the street lights and sundry items.

It will be noted that the collectible income each month from the mortgaged property, which as I said consists of installments amounting to about P5,000, is more than enough to cover the monthly amortization on Miss Francisco's loan. Indeed, had she not encountered difficulties, due to unforeseen circumstances, in collecting the said installments, she could have paid the amortizations as they fell due and there would have been really no need for the GSIS to resort to foreclosure.

The proposed administration by the GSIS of the mortgaged property will continue even after Miss Francisco's account shall have been kept up to date. However, once the arrears shall have been paid, whatever amount of the monthly installments collected in excess of the amortization due on the loan will be turned over to Miss Francisco.

I make the foregoing proposal to show Francisco's sincere desire to work out any fair arrangement for the settlement of her obligation. I trust that the GSIS, under the broadminded policies of your administration, would give it serious consideration.

Sincerely,.                   

s/ Vicente J. Francisco

t/ VICENTE J. FRANCISCO

On the same date, 20 February 1959, Atty. Francisco received the following telegram:.

VICENTE FRANCISCO

SAMANILLO BLDG. ESCOLTA.

GSIS BOARD APPROVED YOUR REQUEST RE REDEMPTION OF FORECLOSED PROPERTY OF YOUR DAUGHTER

ANDAL"                             

On 28 February 1959, Atty. Francisco remitted to the System, through Andal, a check for P30,000.00, with an accompanying letter, which reads:

I am sending you herewith BPI Check No. B-299484 for Thirty Thousand Pesos (P30,000.00) in accordance with my letter of February 20th and your reply thereto of the same date, which reads:

GSIS BOARD APPROVED YOUR REQUEST RE REDEMPTION OF FORECLOSED PROPERTY OF YOUR DAUGHTER

x x x           x x x           x x x

The defendant received the amount of P30,000.00, and issued therefor its official receipt No. 1209874, dated 4 March 1959. It did not, however, take over the administration of the compound. In the meantime, the plaintiff received the monthly payments of some of the occupants thereat; then on 4 March 1960, she remitted, through her father, the amount of P44,121.29, representing the total monthly installments that she received from the occupants for the period from March to December 1959 and January to February 1960, minus expenses and real estate taxes. The defendant also received this amount, and issued the corresponding official receipt.

Remittances, all accompanied by letters, corresponding to the months of March, April, May, and June, 1960 and totalling P24,604.81 were also sent by the plaintiff to the defendant from time to time, all of which were received and duly receipted for.

Then the System sent three (3) letters, one dated 29 January 1960, which was signed by its assistant general manager, and the other two letters, dated 19 and 26 February 1960, respectively, which were signed by Andal, asking the plaintiff for a proposal for the payment of her indebtedness, since according to the System the one-year period for redemption had expired.

In reply, Atty. Francisco sent a letter, dated 11 March 1960, protesting against the System's request for proposal of payment and inviting its attention to the concluded contract generated by his offer of 20 February 1959, and its acceptance by telegram of the same date, the compliance of the terms of the offer already commenced by the plaintiff, and the misapplication by the System of the remittances she had made, and requesting the proper corrections.

By letter, dated 31 May 1960, the defendant countered the preceding protest that, by all means, the plaintiff should pay attorney's fees of P35,644.14, publication expenses, filing fee of P301.00, and surcharge of P23.64 for the foreclosure work done; that the telegram should be disregarded in view of its failure to express the contents of the board resolution due to the error of its minor employees in couching the correct wording of the telegram. A copy of the excerpts of the resolution of the Board of Directors (No. 380, February 20, 1959) was attached to the letter, showing the approval of Francisco's offer —

... subject to the condition that Mr. Vicente J. Francisco shall pay all expenses incurred by the GSIS in the foreclosure of the mortgage.

Inasmuch as, according to the defendant, the remittances previously made by Atty. Francisco were allegedly not sufficient to pay off her daughter's arrears, including attorney's fees incurred by the defendant in foreclosing the mortgage, and the one-year period for redemption has expired, said defendant, on 5 July 1960, consolidated the title to the compound in its name, and gave notice thereof to the plaintiff on 26 July 1960 and to each occupant of the compound.

Hence, the plaintiff instituted the present suit, for specific performance and damages. The defendant answered, pleading that the binding acceptance of Francisco's offer was the resolution of the Board, and that Andal's telegram, being erroneous, should be disregarded. After trial, the court below found that the offer of Atty. Francisco, dated 20 February 1959, made on behalf of his daughter, had been unqualifiedly accepted, and was binding, and rendered judgment as noted at the start of this opinion.

The defendant-appellant corporation assigns six (6) errors allegedly committed by the lower court, all of which, however, are resolvable on the single issue as to whether or not the telegram generated a contract that is valid and binding upon the parties.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this Honorable Court, without prejudice to the parties adducing other evidence to prove their case not covered by this stipulation of facts. 

We find no reason for altering the conclusion reached by the court below that the offer of compromise made by plaintiff in the letter, Exhibit "A", had been validly accepted, and was binding on the defendant. The terms of the offer were clear, and over the signature of defendant's general manager, Rodolfo Andal, plaintiff was informed telegraphically that her proposal had been accepted. There was nothing in the telegram that hinted at any anomaly, or gave ground to suspect its veracity, and the plaintiff, therefore, can not be blamed for relying upon it. There is no denying that the telegram was within Andal's apparent authority, but the defense is that he did not sign it, but that it was sent by the Board Secretary in his name and without his knowledge. Assuming this to be true, how was appellee to know it? Corporate transactions would speedily come to a standstill were every person dealing with a corporation held duty-bound to disbelieve every act of its responsible officers, no matter how regular they should appear on their face. This Court has observed in Ramirez vs. Orientalist Co., 38 Phil. 634, 654-655, that —

In passing upon the liability of a corporation in cases of this kind it is always well to keep in mind the situation as it presents itself to the third party with whom the contract is made. Naturally he can have little or no information as to what occurs in corporate meetings; and he must necessarily rely upon the external manifestations of corporate consent. The integrity of commercial transactions can only be maintained by holding the corporation strictly to the liability fixed upon it by its agents in accordance with law; and we would be sorry to announce a doctrine which would permit the property of a man in the city of Paris to be whisked out of his hands and carried into a remote quarter of the earth without recourse against the corporation whose name and authority had been used in the manner disclosed in this case. As already observed, it is familiar doctrine that if a corporation knowingly permits one of its officers, or any other agent, to do acts within the scope of an apparent authority, and thus holds him out to the public as possessing power to do those acts, the corporation will, as against any one who has in good faith dealt with the corporation through such agent, be estopped from denying his authority; and where it is said "if the corporation permits" this means the same as "if the thing is permitted by the directing power of the corporation."

It has also been decided that —

A very large part of the business of the country is carried on by corporations. It certainly is not the practice of persons dealing with officers or agents who assume to act for such entities to insist on being shown the resolution of the board of directors authorizing the particular officer or agent to transact the particular business which he assumes to conduct. A person who knows that the officer or agent of the corporation habitually transacts certain kinds of business for such corporation under circumstances which necessarily show knowledge on the part of those charged with the conduct of the corporate business assumes, as he has the right to assume, that such agent or officer is acting within the scope of his authority. (Curtis Land & Loan Co. vs. Interior Land Co., 137 Wis. 341, 118 N.W. 853, 129 Am. St. Rep. 1068; as cited in 2 Fletcher's Encyclopedia, Priv. Corp. 263, perm. Ed.)

Indeed, it is well-settled that —

If a private corporation intentionally or negligently clothes its officers or agents with apparent power to perform acts for it, the corporation will be estopped to deny that such apparent authority is real, as to innocent third persons dealing in good faith with such officers or agents. (2 Fletcher's Encyclopedia, Priv. Corp. 255, Perm. Ed.)

Hence, even if it were the board secretary who sent the telegram, the corporation could not evade the binding effect produced by the telegram..

The defendant-appellant does not disown the telegram, and even asserts that it came from its offices, as may be gleaned from the letter, dated 31 May 1960, to Atty. Francisco, and signed "R. P. Andal, general manager by Leovigildo Monasterial, legal counsel", wherein these phrases occur: "the telegram sent ... by this office" and "the telegram we sent your" (emphasis supplied), but it alleges mistake in couching the correct wording. This alleged mistake cannot be taken seriously, because while the telegram is dated 20 February 1959, the defendant informed Atty. Francisco of the alleged mistake only on 31 May 1960, and all the while it accepted the various other remittances, starting on 28 February 1959, sent by the plaintiff to it in compliance with her performance of her part of the new contract.

The inequity of permitting the System to deny its acceptance become more patent when account is taken of the fact that in remitting the payment of P30,000 advanced by her father, plaintiff's letter to Mr. Andal quoted verbatim the telegram of acceptance. This was in itself notice to the corporation of the terms of the allegedly unauthorized telegram, for as Ballentine says:

Knowledge of facts acquired or possessed by an officer or agent of a corporation in the course of his employment, and in relation to matters within the scope of his authority, is notice to the corporation, whether he communicates such knowledge or not. (Ballentine, Law on Corporations, section 112.)

since a corporation cannot see, or know, anything except through its officers.

Yet, notwithstanding this notice, the defendant System pocketed the amount, and kept silent about the telegram not being in accordance with the true facts, as it now alleges. This silence, taken together with the unconditional acceptance of three other subsequent remittances from plaintiff, constitutes in itself a binding ratification of the original agreement (Civil Code, Art. 1393).

ART. 1393. Ratification may be effected expressly or tacitly. It is understood that there is a tacit ratification if, with knowledge of the reason which renders the contract voidable and such reason having ceased, the person who has a right to invoke it should execute an act which necessarily implies an intention to waive his right.

Nowhere else do the circumstances call more insistently for the application of the equitable maxim that between two innocent parties, the one who made it possible for the wrong to be done should be the one to bear the resulting loss..

The defendant's assertion that the telegram came from it but that it was incorrectly worded renders unnecessary to resolve the other point on controversy as to whether the said telegram constitutes an actionable document..

Since the terms offered by the plaintiff in the letter of 20 February 1959 (Exhibit "A") provided for the setting aside of the foreclosure effected by the defendant System, the acceptance of the offer left the account of plaintiff in the same condition as if no foreclosure had taken place. It follows, as the lower court has correctly held, that the right of the System to collect attorneys' fees equivalent to 10% of the due (P35,694.14) and the expenses and charges of P3,300.00 may no longer be enforced, since by the express terms of the mortgage contract, these sums were collectible only "in the event of foreclosure."

The court a quo also called attention to the unconscionability of defendant's charging the attorney's fees, totalling over P35,000.00; and this point appears well-taken, considering that the foreclosure was merely extra-judicial, and the attorneys' work was limited to requiring the sheriff to effectuate the foreclosure. However, in view of the parties' agreement to set the same aside, with the consequential elimination of such incidental charges, the matter of unreasonableness of the counsel fees need not be labored further.

Turning now to the plaintiff's separate appeal (Case G.R. No. L-18155): Her prayer for an award of actual or compensatory damages for P83,333.33 is predicated on her alleged unrealized profits due to her inability to sell the compound for the price of P750,000.00 offered by one Vicente Alunan, which sale was allegedly blocked because the System consolidated the title to the property in its name. Plaintiff reckons the amount of P83,333.33 by placing the actual value of the property at P666,666.67, a figure arrived at by assuming that the System's loan of P400,000.00 constitutes 60% of the actual value of the security. The court a quo correctly refused to award such actual or compensatory damages because it could not determine with reasonable certainty the difference between the offered price and the actual value of the property, for lack of competent evidence. Without proof we cannot assume, or take judicial notice, as suggested by the plaintiff, that the practice of lending institutions in the country is to give out as loan 60% of the actual value of the collateral. Nor should we lose sight of the fact that the price offered by Alunan was payable in installments covering five years, so that it may not actually represent true market values.

Nor was there error in the appealed decision in denying moral damages, not only on account of the plaintiff's failure to take the witness stand and testify to her social humiliation, wounded feelings, anxiety, etc., as the decision holds, but primarily because a breach of contract like that of defendant, not being malicious or fraudulent, does not warrant the award of moral damages under Article 2220 of the Civil Code (Ventanilla vs. Centeno, L-14333, 28 Jan. 1961; Fores vs. Miranda, L-12163, 4 March 1959).

There is no basis for awarding exemplary damages either, because this species of damages is only allowed in addition to moral, temperate, liquidated, or compensatory damages, none of which have been allowed in this case, for reasons herein before discussed (Art. 2234, Civil Code; Velayo vs. Shell Co. of P.I., L-7817, Res. July 30, 1957; Singson, et al. vs. Aragon and Lorza, L-5164, Jan. 27, 1953, 49 O.G. No. 2, 515).

As to attorneys' fees, we agree with the trial court's stand that in view of the absence of gross and evident bad faith in defendant's refusal to satisfy the plaintiff's claim, and there being none of the other grounds enumerated in Article 2208 of the Civil Code, such absence precludes a recovery. The award of attorneys' fees is essentially discretionary in the trial court, and no abuse of discretion has been shown.

FOR THE FOREGOING REASONS, the appealed decision is hereby affirmed, with costs against the defendant Government Service Insurance System, in G.R. No.L-18287.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur.

Insurance Case Digest: Sharuff & Co. v. Baloise Fire Insurance Co. (1937)

G.R. No. 44119             March 30, 1937

Lessons Applicable: Effect of Lack of Insurable Interest (Insurance)

Laws Applicable: 

FACTS:

• Salomon Sharruf and Elias Eskenazi were doing business under the firm name of Sharruf & Co.  They insured their stocks with aloise Fire Insurance Co., Sun Insurance Office Ltd., and Springfield Insurance Co. raising it to P40,000. Elias Eskenazi having paid the corresponding premiums
• Soon they changed the name of their partnership to Sharruf & Eskenazi
• September 22, 1933: A fire ensued at their building at Muelle de la Industria street where petroleum was spilt lasting 27 minutes
• Sharruf & Co. claimed 40 cases when only 10 or 11 partly burned and scorched cases were found
• RTC: ordered Baloise Fire Insurance Co., Sun Insurance Office Ltd., and Springfield Insurance Co., to pay the partners Salomon Sharruf and Elias Eskenazi  P40,000 plus 8% interest

ISSUE: W/N Sharruf & Eskenazi has juridical personality and insurable interest

HELD: YES. Reversd.  Insurance companies are absolved.

• It does not appear that in changing the title of the partnership they had the intention of defrauding the insurance companies
• fire which broke out in the building at Nos. 299-301 Muelle de la Industria, occupied by  Sharruf & Eskenazi but no evidence sufficient to warrant a finding that they are responsible for the fire
• So great is the difference between the amount of articles insured, which the plaintiffs claim to have been in the building before the fire, and the amount thereof shown by the vestige of the fire to have been therein, that the most liberal human judgment can not attribute such difference to a mere innocent error in estimate or counting but to a deliberate intent to demand of the insurance companies payment of an indemnity for goods not existing at the time of the fire, thereby constituting the so-called "fraudulent claim" which, by express agreement between the insurers and the insured, is a ground for exemption of the insurers from civil liability
• acted in bad faith in presenting a fraudulent claim, they are not entitled to the indemnity claimed
• when the partners of a general partnership doing business under the firm name of "Sharruf & Co." obtain insurance policies issued to said firm and the latter is afterwards changed to "Sharruf & Eskenazi", which are the names of the same and only partners of said firm "Sharruf & Co.", continuing the same business, the new firm acquires the rights of the former under the same policies;