G.R. No. 131516 March 5, 2003
Gloria then sent accused-appellant out on an errand and
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
RONNIE RULLEPA Y GUINTO, accused-appellant.
CARPIO MORALES, J.:
On complaint of Cyra May Francisco Buenafe, accused-appellant
Ronnie Rullepa y Guinto was charged with Rape before the Regional
Trial Court (RTC) of Quezon City allegedly committed as follows:
That on or about the 17th day of November, 1995, in Quezon
City, Philippines, the said accused, by means of force and
intimidation, to wit: by then and there willfully, unlawfully and
feloniously removing her parity, kissing her lips and vagina and
thereafter rubbing his penis and inserting the same to the inner
portion of the vagina of the undersigned complainant, 3 years of
age, a minor, against her will and without her consent. 1
Arraigned on January 15, 1996, accused-appellant pleaded not guilty. 2
From the testimonies of its witnesses, namely Cyra May, her mother
3 Biological Science Branch of the Philippine National Police Crime
Gloria Francisco Buenafe, Dr. Cristina V. Preyra, and SPO4 Catherine
Borda, the prosecution established the following facts:
On November 20, 1995, as Gloria was about to set the table for dinner
at her house in Quezon City, Cyra May, then only three and a half years
old, told her, "Mama, si kuya Ronnie lagay niya titi niya at sinaksak sa
puwit at sa bibig ko."
"Kuya Ronnie" is accused-appellant Ronnie Rullepa, the Buenafes'
house boy, who was sometimes left with Cyra May at home.
Gloria asked Cyra May how many times accused-appellant did those
things to her, to which she answered many times. Pursuing, Gloria
asked Cyra May what else he did to her, and Cyra May indicated the
room where accused-appellant slept and pointed at his pillow.
As on the night of November 20, 1995 accused-appellant was out with
Gloria's husband Col. Buenafe,4 she waited until their arrival at past
11:00 p.m.
informed her husband about their daughter's plaint. Buenafe thereupon
talked to Cyra May who repeated what she had earlier told her mother
Gloria.
When accused-appellant returned, Buenafe and Gloria verified from him
whether what Cyra May had told them was true. Ronnie readily admitted
doing those things but only once, at 4:00 p.m. of November 17, 1995 or
three days earlier. Unable to contain her anger, Gloria slapped accused-
appellant several times.
Since it was already midnight, the spouses waited until the following
morning to bring accused-appellant to Camp Karingal where he
admitted the imputations against him, on account of which he was
detained. Gloria's sworn statement 5 was then taken.6
Recalling what accused-appellant did to her, Cyra May declared at the
witness stand: "Sinaksak nya ang titi sa pepe ko, sa puwit ko, at sa
bunganga," thus causing her pain and drawing her to cry. She added
that accused-appellant did these to her twice in his bedroom.
Dr. Ma. Cristina V. Preyra, the Medico-Legal Officer and Chief of the
Laboratory who examined Cyra May, came up with her report dated
November 21, 1995,7containing the following findings and conclusions:
FINDINGS:
GENERAL AND EXTRA GENITAL:
Fairly developed, fairly nourished and coherent female child
subject. Breasts are undeveloped. Abdomen is flat and soft.
GENITAL:
There is absence of pubic hair. Labia majora are full, convex
and coaptated with congested and abraded labia minora
presenting in between. On separating the same is disclosed
an abraded posterior fourchette and an elastic, fleshy type intact
hymen. External vaginal orifice does not admit the tip of the
examining index finger.
 xxx xxx xxx
CONCLUSION:
Subject is in virgin state physically.
There are no external signs of recent application of any form of trauma
at the time of examination. (Emphasis supplied.)
By Dr. Preyra's explanation, the abrasions on the labia minora could
have been caused by friction with an object, perhaps an erect penis.
She doubted if riding on a bicycle had caused the injuries. 8
The defense's sole witness was accused-appellant, who was 28 and
single at the time he took the witness stand on June 9, 1997. He denied
having anything to do with the abrasions found in Cyra May's genitalia,
and claimed that prior to the alleged incident, he used to be ordered to
buy medicine for Cyra May who had difficulty urinating. He further
alleged that after he refused to answer Gloria's queries if her husband
Buenafe, whom he usually accompanied whenever he went out of the
house, was womanizing, Gloria would always find fault in him. He
suggested that Gloria was behind the filing of the complaint. Thus:
q According to them you caused the abrasions found in her
genital?
a That is not true, sir,
q If that is not true, what is the truth?
a As I have mentioned earlier that before I started working with
the family I was sent to Crame to buy medicine for the daughter
because she had difficulty in urinating.
q Did you know why the child has difficulty in urinating?
a No, I do not know, sir.
q And how about the present complaint filed against you,
the complaint filed by the mother of the victim?
a I did not do it, sir.
q What is the truth, what can you say about this present
complaint filed against you?
a As I said Mrs. Buenafe got mad at me because after I
explained to her that I was going with her gusband (sic) to the
children of the husband with a former marriage. 9
Finding for the prosecution, Branch 96 of the Quezon City RTC
rendered judgment, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered finding accused
RONNIE RULLEPA y GUINTO guilty beyond reasonable doubt
of rape, and he is accordingly sentenced to death.
The accused is ordered to pay CYRA MAE BUENAFE the
amount of P40,000.00 as civil indemnity.
Costs to be paid by the accused.10 (Italics in the original.)
Hence, this automatic review, accused-appellant assigning the following
errors to the trial court:
I
THE COURT A QUO ERRED IN CONSIDERING AS
ADMISSIBLE IN EVIDENCE THE ACCUSED-APPELLANT'S
ADMISSION.
II
THE COURT A QUO ERRED ON (sic) RULING THAT THE
ACCUSED-APPELLANT'S SILENCE DURING TRIAL
AMOUNTED TO AN IMPLIED ADMISSION OF GUILT.
III
THE COURT A QUO ERRED IN FINDING THAT THE GUILT OF
THE ACCUSED-APPELLANT FOR THE CRIME CHARGED
HAS BEEN PROVEN BEYOND REASONABLE DOUBT.
 IV q Do you recall if Ronnie Rullepa did anything to you?

THE COURT A QUO GRAVELY ERRED IN IMPOSING THE a Yes, sir.

SUPREME PENALTY OF DEATH UPON THE ACCUSED-
APPELLANT.11 (Emphasis supplied.) q What did he do to you?

Accused-appellant assails the crediting by the trial court, as the a "Sinaksak nya ang titi sa pepe ko, sa puwit ko, at sa
following portion of its decision shows, of his admission to Gloria of bunganga"
having sexually assaulted Cyra May:
q How many times did he do that to you?
In addition, the mother asserted that Rullepa had admitted Cyra
Ma[y]'s complaint during the confrontation in the house. Indeed, a Twice, sir.
according to the mother, the admission was even
expressly qualified by Rullepa's insistence that he had
xxx xxx xxx
committed the sexual assault only once, specifying the time
thereof as 4:00 pm of November 17, 1995. That qualification
proved that the admission was voluntary and true. An uncoerced q Do you remember when he did these things to you?
and truthful admission like this should be absolutely admissible
and competent. a Opo.

xxx xxx xxx q When was that?

Remarkably, the admission was not denied by the accused a When my mother was asleep, he put — he removed my
during trial despite his freedom to deny it if untrue. Hence, the panty and inserted his penis inside my vagina, my anus and my
admission became conclusive upon him.12 (Emphasis supplied.) mouth, sir.

To accused-appellant, the statements attributed to him are inadmissible xxx xxx xxx
since they were made out of fear, having been elicited only after Cyra
May's parents "bullied and questioned him." He thus submits that it was q After your Kuya Ronnie did those things to you what did
error for the trial court to take his failure to deny the statements during you feel?
the trial as an admission of guilt.
a "Sabi nya ganito (Witness putting her finger in her lips)
Accused-appellant's submission does not persuade. The trial court Nasaktan po ako at umiyak po ako".
considered his admission merely as an additional ground to convince
itself of his culpability. Even if such admission, as well as the implication q Did you cry because of hurt?
of his failure to deny the same, were disregarded, the evidence suffices
to establish his guilt beyond reasonable doubt. a Yes.

The plain, matter-of-fact manner by which Cyra May described her q What part of your body hurt?
abuse in the hands of her Kuya Ronnie is an eloquent testament to the
truth of her accusations. Thus she testified on direct examination:
 a "Pepe ko po." When I went to the bathroom to urinate, I
felt pain in my organ, sir.13
Cyra May reiterated her testimony during cross-examination, providing
more revolting details of her ordeal:
q So, you said that Kuya Ronnie did something to you what
did he do to you on November 17, 1995?
q Why were you in that room?
a Gusto nya po matulog ako sa kuwarto niya.
q When you were in that room, what did Kuya Ronnie do to
you?
a "Hinubo po niya ang panty ko."

a "Sinaksak nga yong titi nya". He inserted his penis to my q And after he remove your panty, what did Kuya Ronnie
organ and to my mouth, sir. do, what did he do to you?

xxx xxx xxx a He inserted his penis to my organ, sir.

q When you said that your kuya Ronnie inserted his penis
into your organ, into your mouth, and into your anus, would you
describe what — his penis?
a It is a round object, sir.
Court:
q Why did kuya Ronnie, was kuya Ronnie already naked or
he was already wearing any clothing?
a Still had his clothing on, sir.
q So, where did his penis, saan lumabas ang penis ni Kuya
Ronnie?

Is this titi of your kuya Ronnie a part of his body? a Dito po, (Witness referring or pointing to her groin area)

a Opo. xxx xxx xxx

q Was that in the head of kuya Ronnie?
a No, sir.
q Which part of his body that titi located?
q So, that's the — and at the time, you did not cry and you
did not shout for help?
a Sabi nya po, not to make any noise because my mother
might be roused from sleep.

(Witness pointing to her groin area) q How long was kuya Ronnie did that to you?

Court: a Matagal po.

Continue q After kuya Ronnie scrub his penis to your vagina, what
other things did he do?
xxx xxx xxx
a After that he inserted his penis to my mouth, and to my
anus, sir.
 q You did not complain and you did not shout?
a I cried, sir.14
Accused-appellant draws attention to the statement of Cyra May that he
was not in the house on November 17 (1995), as reflected in the
following transcript of her testimony:
q Is it not a fact that you said a while ago that when your
father leaves the house, he [was] usually accompanied by your
kuya Ronnie?
a Opo.
q Why is it that Kuya Ronnie was in the house when your
father left the house at that time, on November 17?
a He was with Kuya Ronnie, sir.
q So, it is not correct that kuya Ronnie did something to
you because your kuya Ronnie [was] always with your Papa?
a Yes, sir.15
The above-quoted testimony of Cyra May does not indicate the time
when her father Col. Buenafe left their house on November 17, 1995
with accused-appellant and, thus, does not preclude accused-
appellant's commission of rape on the same date. In any event, a young
child is vulnerable to suggestion, hence, her affirmative response to the
defense counsel's above-quoted leading questions.
As for the variance in the claim regarding when Gloria was informed of
the rape, Gloria having testified that she learned of it on November 20,
199516 while Cyra May said that immediately after the incident, she
awakened her mother who was in the adjacent room and reported
it:17 This is a minor matter that does not detract from Cyra May's
categorical, material testimony that accused-appellant inserted his penis
into her vagina.
Accused-appellant goes on to contend that Cyra May was coached,
citing the following portion of her testimony:
q "Yong sinabi mong sinira nya ang buhay mo," where did
you get that phrase?
a It was the word of my Mama, sir.18
On the contrary, the foregoing testimony indicates that Cyra May was
really narrating the truth, that of hearing her mother utter "sinira niya
ang buhay mo."
Accused-appellant's suggestion that Cyra May merely imagined the
things of which he is accused, perhaps getting the idea from television
programs, is preposterous. It is true that "the ordinary child is a `great
weaver of romances,"' and her "imagination may induce (her) to relate
something she has heard or read in a story as personal
experience."19 But Cyra May's account is hardly the stuff of romance or
fairy tales. Neither is it normal TV fare, if at all.
This Court cannot believe that a victim of Cyra May's age could concoct
a tale of defloration, allow the examination of her private parts, and
undergo the expense, trouble, inconvenience, not to mention the trauma
of public trial."20
Besides, her testimony is corroborated by the findings of Dr. Preyra that
there were abrasions in her labia minora, which she opined, could have
been caused by friction with an erect penis.
This Court thus accords great weight to the following assessment of the
trial court regarding the competency and credibility of Cyra May as a
witness:
Her very tender age notwithstanding, Cyra Ma(y) nonetheless
appeared to possess the necessary intelligence and
perceptiveness sufficient to invest her with the competence to
testify about her experience. She might have been an
impressionable child — as all others of her age are — but her
narration of KuyaRonnie's placing his "titi" in her "pepe" was
certainly one which could not be considered as a common
child's tale. Her responses during the examination of counsel
and of the Court established her consciousness of
the distinction between good and bad, which rendered
inconceivable for her to describe a "bad" act of the accused
unless it really happened to her. Needless to state, she
 described the act of the accused as bad. Her demeanor as a a Yes, Sir.
witness — manifested during trial by her unhesitant,
spontaneous, and plain responses to questions — further q And when — he did not actually penetrated your vagina?
enhanced her claim to credit and trustworthiness.21 (Italics in the
original.) a Yes, sir.26

In a futile attempt at exculpation, accused-appellant claims that even Dr. Preyra, however, found abrasions in the labia minora, which is
before the alleged incident Cyra May was already suffering from pain in "directly beneath the labia majora,"27 proving that there was indeed
urinating. He surmises that she could have scratched herself which penetration of the vagina, not just a mere rubbing or "scrubbing" of the
caused the abrasions. Dr. Preyra, however, was quick to rule out this penis against its surface.
possibility. She stated categorically that that part of the female organ is
very sensitive and rubbing or scratching it is painful. 22 The abrasions
In fine, the crime committed by accused-appellant is not merely acts of
could not, therefore, have been self-inflicted.
lasciviousness but statutory rape.
That the Medical-Legal Officer found "no external signs of recent
The two elements of statutory rape are (1) that the accused had carnal
application of any form of trauma at the time of the examination" does
knowledge of a woman, and (2) that the woman is below twelve years of
not preclude accused-appellant's conviction since the infliction of force
age.28 As shown in the previous discussion, the first element, carnal
is immaterial in statutory rape.23
knowledge, had been established beyond reasonable doubt. The same
is true with respect to the second element.
More. That Cyra May suffered pain in her vagina but not in her anus
despite her testimony that accused-appellant inserted his penis in both
The victim's age is relevant in rape cases since it may constitute an
orifices does not diminish her credibility. It is possible that accused-
element of the offense. Article 335 of the Revised Penal Code, as
appellant's penis failed to penetrate her anus as deeply as it did her
amended by Republic Act No. 7659,29 provides:
vagina, the former being more resistant to extreme forces than the
latter.
Art. 335. When and how rape is committed. — Rape is
committed by having carnal knowledge of a woman under any of
Accused-appellant's imputation of ill motive on the part of Gloria is
the following circumstances:
puerile. No mother in her right mind would subject her child to the
humiliation, disgrace and trauma attendant to a prosecution for rape if
she were not motivated solely by the desire to incarcerate the person xxx xxx xxx.
responsible for the child's defilement. 24 Courts are seldom, if at all,
convinced that a mother would stoop so low as to subject her daughter 3. When the woman is under twelve years of age . . .
to physical hardship and shame concomitant to a rape prosecution just
to assuage her own hurt feelings.25 xxx xxx xxx.

Alternatively, accused-appellant prays that he be held liable for acts of The crime of rape shall be punished by reclusion perpetua.
lasciviousness instead of rape, apparently on the basis of the following
testimony of Cyra May, quoted verbatim, that he merely "scrubbed" his xxx xxx xxx.
penis against her vagina:
Furthermore, the victim's age may constitute a qualifying
q Is it not a fact that kuya Ronnie just made some scrubbed circumstance, warranting the imposition of the death sentence. The
his penis into your vagina? same Article states:
 The death penalty shall also be imposed if the crime of rape is
committed with any of the following attendant circumstances:
1. when the victim is under eighteen (18) years of age and the
offender is a parent, ascendant, step-parent, guardian, relative
by consanguinity or affinity with the third civil degree, or the
common-law spouse of the parent of the victim:
xxx xxx xxx.
4. when the victim is . . . a child below seven (7) years old.
xxx xxx xxx.
Because of the seemingly conflicting decisions regarding the sufficiency
of evidence of the victim's age in rape cases, this Court, in the recently
decided case of People v. Pruna,30 established a set of guidelines in
appreciating age as an element of the crime or as a qualifying
circumstance, to wit:
1. The best evidence to prove the age of the offended party is
an original or certified true copy of the certificate of live birth of
such party.
2. In the absence of a certificate of live birth, similar authentic
documents such as baptismal certificate and school records
which show the date of birth of the victim would suffice to prove
age.
3. If the certificate of live birth or authentic document is shown to
have been lost or destroyed or otherwise unavailable, the
testimony, if clear and credible, of the victim's mother or a
member of the family either by affinity or consanguinity who is
qualified to testify on matters respecting pedigree such as the
exact age or date of birth of the offended party pursuant to
Section 40, Rule 130 of the Rules on Evidence shall be
sufficient under the following circumstances:
a. If the victim is alleged to be below 3 years of age and
what is sought to be proved is that she is less than 7
years old;
b. If the victim is alleged to be below 7 years of age and
what is sought to be proved is that she is less than 12
years old;
c. If the victim is alleged to be below 12 years of age and what is
sought to be proved is that she is less than 18 years old.
4. In the absence of a certificate of live birth, authentic
document, or the testimony of the victim's mother or relatives
concerning the victim's age, the complainant's testimony will
suffice provided that it is expressly and clearly admitted by the
accused.
5. It is the prosecution that has the burden of proving the age of
the offended party. The failure of the accused to object to the
testimonial evidence regarding age shall not be taken against
him.
6. The trial court should always make a categorical finding as to
the age of the victim.
Applying the foregoing guidelines, this Court in the Pruna case held that
the therein accused-appellant could only be sentenced to suffer the
penalty of reclusion perpetua since:
. . . no birth certificate or any similar authentic document, such
as a baptismal certificate of LIZETTE, was presented to prove
her age. . . . .
xxx xxx xxx.
However, the Medico-Legal Report relied upon by the trial court
does not in any way prove the age of LIZETTE, for there is
nothing therein which even mentions her age. Only testimonial
evidence was presented to establish LIZETTE's age. Her
mother, Jacqueline, testified (that the victim was three years old
at the time of the commission of the crime).
xxx xxx xxx
Likewise, LIZETTE testified on 20 November 1996, or almost
two years after the incident, that she was 5 years old. However,
when the defense counsel asked her how old she was on 3
January 1995, or at the time of the rape, she replied that she
was 5 years old. Upon further question as to the date she was
born, she could not answer.
For PRUNA to be convicted of rape in its qualified form and
meted the supreme penalty of death, it must be established with
certainty that LIZETTE was below 7 years old at the time of the
commission of the crime. It must be stressed that the severity of
the death penalty, especially its irreversible and final nature
once carried out, makes the decision-making process in capital
offenses aptly subject to the most exacting rules of procedure
and evidence.
In view of the uncertainty of LIZETTE's exact age, corroborative
evidence such as her birth certificate, baptismal certificate or
any other authentic document should be introduced in evidence
in order that the qualifying circumstance of "below seven (7)
years old" is appreciated against the appellant. The lack of
objection on the part of the defense as to her age did not excuse
the prosecution from discharging its burden. That the defense
invoked LIZETTE's tender age for purposes of questioning her
competency to testify is not necessarily an admission that she
was below 7 years of age when PRUNA raped her on 3 January
1995. Such being the case, PRUNA cannot be convicted of
qualified rape, and hence the death penalty cannot be imposed
on him.
However, conformably with no. 3 (b) of the foregoing guidelines,
the testimony of LIZETTE's mother that she was 3 years old at
the time of the commission of the crime is sufficient for purposes
of holding PRUNA liable for statutory rape, or rape of a girl
below 12 years of age. Under the second paragraph of Article
335, as amended by R.A. No. 7659, in relation to no. 3 of the
first paragraph thereof, having carnal knowledge of a woman
under 12 years of age is punishable by reclusion perpetua.
Thus, the penalty to be imposed on PRUNA should be reclusion
perpetua, and not death penalty. (Italics in the original.)
Several cases31 suggest that courts may take "judicial notice" of the
appearance of the victim in determining her age. For example, the
Court, in People v. Tipay,32 qualified the ruling in People v.
Javier,33 which required the presentation of the birth certificate to prove
the rape victim's age, with the following pronouncement:
This does not mean, however, that the presentation of the
certificate of birth is at all times necessary to prove minority. The
minority of a victim of tender age who may be below the age of
ten is quite manifest and the court can take judicial notice
thereof. The crucial years pertain to the ages of fifteen to
seventeen where minority may seem to be dubitable due to
one's physical appearance. In this situation, the prosecution has
the burden of proving with certainty the fact that the victim was
under 18 years of age when the rape was committed in order to
justify the imposition of the death penalty under the above-cited
provision. (Emphasis supplied.)
On the other hand, a handful of cases34 holds that courts, without the
requisite hearing prescribed by Section 3, Rule 129 of the Rules of
Court,35 cannot take judicial notice of the victim's age.
Judicial notice signifies that there are certain "facta probanda," or
propositions in a party's case, as to which he will not be required to offer
evidence; these will be taken for true by the tribunal without the need of
evidence.36 Judicial notice, however, is a phrase sometimes used in a
loose way to cover some other judicial action. Certain rules of Evidence,
usually known under other names, are frequently referred to in terms of
judicial notice.37
The process by which the trier of facts judges a person's age from his or
her appearance cannot be categorized as judicial notice. Judicial notice
is based upon convenience and expediency for it would certainly be
superfluous, inconvenient, and expensive both to parties and the court
to require proof, in the ordinary way, of facts which are already known to
courts.38 As Tundag puts it, it "is the cognizance of certain facts which
judges may properly take and act on without proof because they
already know them." Rule 129 of the Rules of Court, where the
provisions governing judicial notice are found, is entitled "What Need
Not Be Proved." When the trier of facts observes the appearance of a
person to ascertain his or her age, he is not taking judicial notice of such
fact; rather, he is conducting an examination of the evidence, the
evidence being the appearance of the person. Such a process militates
against the very concept of judicial notice, the object of which is to do
away with the presentation of evidence.
This is not to say that the process is not sanctioned by the Rules of
Court; on the contrary, it does. A person's appearance, where relevant,
is admissible as object evidence, the same being addressed to the
senses of the court. Section 1, Rule 130 provides:
SECTION 1. Object as evidence. — Objects as evidence are
those addressed to the senses of the court. When an object is
relevant to the fact in issue, it may be exhibited to, examined or
viewed by the court.
"To be sure," one author writes, "this practice of inspection by the court
of objects, things or persons relevant to the fact in dispute, has its roots
in ancient judicial procedure."39 The author proceeds to quote from
another authority:
"Nothing is older or commoner in the administration of law in all
countries than the submission to the senses of the tribunal itself,
whether judge or jury, of objects which furnish evidence. The
view of the land by the jury, in real actions, of a wound by the
judge where mayhem was alleged, and of the person of one
alleged to be an infant, in order to fix his age, the inspection
and comparison of seals, the examination of writings, to
determine, whether they are (`)blemished,(') the implements with
which a crime was committed or of a person alleged, in a
bastardy proceeding, to be the child of another, are few
illustrations of what may be found abundantly in our own legal
records and textbooks for seven centuries past."40 (Emphasis
supplied.)
A person's appearance, as evidence of age (for example, of infancy, or
of being under the age of consent to intercourse), is usually
regarded as relevant; and, if so, the tribunal may properly observe the
person brought before it.41 Experience teaches that corporal
appearances are approximately an index of the age of their bearer,
particularly for the marked extremes of old age and youth. In every case
such evidence should be accepted and weighed for what it may be in
each case worth. In particular, the outward physical appearance of an
alleged minor may be considered in judging his age; a contrary rule
would for such an inference be pedantically over-
cautious.42Consequently, the jury or the court trying an issue of fact may
be allowed to judge the age of persons in court by observation of such
persons.43 The formal offer of the person as evidence is not necessary.
The examination and cross-examination of a party before the jury are
equivalent to exhibiting him before the jury and an offer of such person
as an exhibit is properly refused. 44
This Court itself has sanctioned the determination of an alien's age from
his appearance. In Braca v. Collector of Customs,45 this Court ruled that:
The customs authorities may also determine from the personal
appearance of the immigrant what his age is. The person of a Chinese
alien seeking admission into the Philippine Islands is evidence in an
investigation by the board of special inquiry to determine his right to
enter; and such body may take into consideration his appearance to
determine or assist in determining his age and a finding that the
applicant is not a minor based upon such appearance is not without
evidence to support it.
This Court has also implicitly recognized the same process in a criminal
case. Thus, in United States v. Agadas,46this Court held:
Rosario Sabacahan testified that he was 17 years of age; that
he had never purchased a cedula; and that he was going to
purchase a cedula the following January. Thereupon the court
asked this defendant these questions: "You are a pretty big boy
for seventeen." Answer: "I cannot tell exactly because I do not
remember when I was born, but 17 years is my guess." Court:
"If you are going to take advantage of that excuse, you had
better get some positive evidence to that effect." Answer: "I do
not remember, as I already stated on what date and in what year
I was born." The court, in determining the question of the age of
the defendant, Rosario Sabacahan, said:
"The defendant, Rosario Sabacahan, testified that he
thought that he was about 17 years of age, but judging
by his appearance he is a youth 18 or 19 years old. He
has shown that he has no positive information on the
subject and no effort was made by the defense to prove
the fact that he is entitled to the mitigating circumstance
of article 9, paragraph 2, of the Penal code, which fact it
 is held to be incumbent upon the defense to establish by
satisfactory evidence in order to enable the court to give
an accused person the benefit of the mitigating
circumstance."
In United States vs. Estavillo and Perez (10 Off. Gaz., 1984)
Estavillo testified, when the case was tried in the court below,
that he then was only 16 years of age. There was no other
testimony in the record with reference to his age. But the trial
judge said: "The accused Estavillo, notwithstanding his
testimony giving his age as 16 years, is, as a matter of fact, not
less than 20." This court, in passing upon the age of Estavillo,
held:
"We presume that the trial court reached this conclusion
with reference to the age of Estavillo from the latter's
personal appearance. There is no proof in the record, as
we have said, which even tends to establish the
assertion that this appellant understated his age. . . . It is
true that the trial court had an opportunity to note the
personal appearance of Estavillo for the purpose of
determining his age, and by so doing reached the
conclusion that he was at least 20, just two years over
18. This appellant testified that he was only 16, and this
testimony stands uncontradicted. Taking into
consideration the marked difference in the penalties to
be imposed upon that age, we must, therefore, conclude
(resolving all doubts in favor of the appellants) that the
appellants' ages were 16 and 14 respectively."
While it is true that in the instant case Rosario testified that he
was 17 years of age, yet the trial court reached the conclusion,
judging from the personal appearance of Rosario, that "he is a
youth 18 or 19 years old." Applying the rule enunciated in the
case just cited, we must conclude that there exists a reasonable
doubt, at least, with reference to the question whether Rosario
was, in fact 18 years of age at the time the robbery was
committed. This doubt must be resolved in favor of the
defendant, and he is, therefore, sentenced to six months
of arresto mayor in lieu of six years ten months and one day
of presidio mayor. . . . .
There can be no question, therefore, as to the admissibility of a
person's appearance in determining his or her age. As to the weight to
accord such appearance, especially in rape cases, Pruna laid down
guideline no. 3, which is again reproduced hereunder:
3. If the certificate of live birth or authentic document is shown to
have been lost or destroyed or otherwise unavailable, the
testimony, if clear and credible, of the victim's mother or a
member of the family either by affinity or consanguinity who is
qualified to testify on matters respecting pedigree such as the
exact age or date of birth of the offended party pursuant to
Section 40, Rule 130 of the Rules on Evidence shall be
sufficient under the following circumstances:
a. If the victim is alleged to be below 3 years of age and
what is sought to be proved is that she is less than 7
years old;
b. If the victim is alleged to be below 7 years of age and
what is sought to be proved is that she is less than 12
years old;
c. If the victim is alleged to be below 12 years of age
and what is sought to be proved is that she is less than
18 years old.
Under the above guideline, the testimony of a relative with respect to
the age of the victim is sufficient to constitute proof beyond reasonable
doubt in cases (a), (b) and (c) above. In such cases, the disparity
between the allegation and the proof of age is so great that the court
can easily determine from the appearance of the victim the veracity of
the testimony. The appearance corroborates the relative's testimony.
As the alleged age approaches the age sought to be proved, the
person's appearance, as object evidence of her age, loses probative
value. Doubt as to her true age becomes greater and,
following Agadas, supra, such doubt must be resolved in favor of the
accused.
This is because in the era of modernism and rapid growth, the
victim's mere physical appearance is not enough to gauge her
exact age. For the extreme penalty of death to be upheld,
 nothing but proof beyond reasonable doubt of every fact
necessary to constitute the crime must be substantiated. Verily,
the minority of the victim should be not only alleged but likewise
proved with equal certainty and clearness as the crime itself. Be
it remembered that the proof of the victim's age in the present
case spells the difference between life and death. 47
In the present case, the prosecution did not offer the victim's certificate
of live birth or similar authentic documents in evidence. The victim and
her mother, however, testified that she was only three years old at the
time of the rape. Cyra May's testimony goes:
q Your name is Cyra Mae is that correct?
a Yes, sir.
q And you are 3 years old?
a Yes, sir.48
That of her mother goes:
Q How old was your daughter when there things
happened?
A 3 and ½ years old.
Q When was she born?
A In Manila, May 10, 1992.49
Because of the vast disparity between the alleged age (three years old)
and the age sought to be proved (below twelve years), the trial court
would have had no difficulty ascertaining the victim's age from her
appearance. No reasonable doubt, therefore, exists that the second
element of statutory rape, i.e., that the victim was below twelve years of
age at the time of the commission of the offense, is present.
Whether the victim was below seven years old, however, is another
matter. Here, reasonable doubt exists. A mature three and a half-year
old can easily be mistaken for an underdeveloped seven-year old. The
appearance of the victim, as object evidence, cannot be accorded much
weight and, following Pruna, the testimony of the mother is, by itself,
insufficient.
As it has not been established with moral certainty that Cyra May was
below seven years old at the time of the commission of the offense,
accused-appellant cannot be sentenced to suffer the death penalty.
Only the penalty of reclusion perpetua can be imposed upon him.
In line with settled jurisprudence, the civil indemnity awarded by the trial
court is increased to P50,000.00. In addition, Cyra May is entitled to an
award of moral damages in the amount of P50,000.00. 50
WHEREFORE, the Decision of the Regional Trial Court of Quezon City,
Branch 96, is AFFIRMED with MODIFICATION. Accused-appellant
Ronnie Rullepa y Guinto is found GUILTY of Statutory Rape, defined
and punished by Article 335 (3) of the Revised Penal Code, as
amended, and is sentenced to suffer the penalty of reclusion perpetua.
He is ordered to pay private complainant, Cyra May Buenafe y
Francisco, the amount of P50,000.00 as civil indemnity and P50,000.00
as moral damages.
SO ORDERED.
G.R. No. L-36638 June 28, 1974
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
ALEXANDER SACABIN @ "ROMEO", defendant-appellant.
Office of the Solicitor General Estelito P. Mendoza, Assistant Solicitor
General Jaime M. Lantin and Solicitor Reynato S. Puno for plaintiff-
appellee.
Pio A. Sepulveda for defendant-appellant.
FERNANDEZ, J.:p
Convicted of rape sentenced to suffer the penalty of reclusion perpetua1 and to pay the offended
party, Erlinda Montibon, P3,000.00 for moral damages and P3,000.00 for exemplary damages,
appellant Alexander Sacabin has appealed to this Court and now pleads for acquittal on the ground, Q — What did you do when Romeo
which the lower court overruled, that although he really had sexual intercourse with the offended
party, she voluntarily and willingly acceded to it because they were sweethearts. Sacabin wrestled you?

This is a classic case of rape where, on the issue of whether or not the A — I wanted to get away from his hold.
woman was raped, the only eye-witnesses testifying are the offended
party for the prosecution and the accused in his defense. Thus, the Q — Did you shout for help?
judicial observation has been made long ago, that rape is hard to be
proved, but still harder to be defended. And in the case at bar, We A — Yes, I shouted for help.
cannot be aided by the general rule that the findings of fact of the trial
judge must be sustained on appeal because he has had the opportunity xxx xxx xxx
to hear and see the witnesses when they testified before him, for all the
witnesses for the prosecution testified before one trial Judge , while the 2

Q — Did you submit to the urging of the

appellant presented his evidence consisting of his lone testimony before
accused in this case?
another Judge , and the latter was the one that rendered the decision
3

appealed from. We, therefore, reviewed and evaluated all the evidence
on record with extra care. A — No, sir.

On the date of the commission of the offense, November 23, 1968, Q —What did you do?
Erlinda Montibon was barely over 15 years old. She finished sixth
grade. She was then living in the house of the spouses Patrolman and A — We were wrestling for sometime. In
Mrs. Constancio Villondo as a helper. She knew the appellant, then fact he smell(ed) wine.
single and 22 years old, He was a laborer in the Laya building in Iligan
City, then under construction, and was a usual buyer of native bread Q — Could you inform this Court more or
and cakes which Erlinda used to sell at the supermarket nearby. less how long did you wrestle with
Sacabin?
Erlinda testified that around 8:00 o'clock in the evening of November 23,
1968, she was enticed by one Teodelita Dagondon to go to the A — Quite a long time before he got me.
supermarket. Teodelita said she was going to buy for her birthday the
following day all of Erlinda's bread and cakes. They went upstairs to one Q — During all the time that you were
of the rooms of the Laya Building where they would agree on the price wrestling with him, did you not cry out for
of the bread and cakes. The appellant was then there inside. The door help outside?
was closed and appellant was able to have sexual intercourse with her
two times. A — I shouted for help but nobody hear
me because all the windows were
This is the version of Erlinda on how the rape was consummated: 4
closed.

xxx xxx xxx Q — What about the door?

A — Sacabin went near me and wrestled A — It was also closed.

me.
Q — Please inform this Honorable Court
if after all the wrestling by Sacabin and
feminine resistance if Sacabin was able
to have a sexual intercourse with you.
A — Yes, he trapped one of my legs and
I fell on the ground and then he sat on
me.
Q —What did you feel when Romeo
Sacabin was able to introduce his sexual
organ into your vagina?
A — Pain.
Q — After he made the insertion, what
did he do if any?
A — He also kissed me and squeezed
my mammary gland.
COURT:
Make it on record that the witness is
crying.
Q — When he succeeded in introducing
his penis into your vagina, what did he
do if any?
A — He also pushed and pull his organ.
Q — For how long was the push and pull
motion made by this Romeo Sacabin?
A — Quite a few minutes.
Q — Please inform this Honorable Court
if after the introduction of the penis and
the push and pull motion if you felt some
liquid getting inside your vagina.
A — There was, sir.
Q — After that, what happened? Please
inform this Honorable Court.
A — After that Romeo Sacabin left the
room but he was in the other room.
Q —What did you do after he left?
A — I was still crying.
Q — Was that the only sexual
intercourse that was done on you by the
accused Alexander Sacabin?
A — Two times.
COURT:
When was the second time?
A — Nearing dawn.
Q — In the same place?
A — In the same place.
Q — The second time when the accused
tried to make sexual intercourse with you
you already yielded your body to him.
A — No, sir.
Q — What did you do?
A — I also wrestled with him because I
felt the pain.
Q — When you wrestled with him, did
you not occur to your mind to renew your
call for help from outside?
 A — I also shouted for help.
Q —Was Sacabin able to introduce his
sexual organ into your vagina for the
second time?
A — Yes, because he rode on me for the
second time and I was already weak and
I don't want it because it was painful.
Q — Did it not occur to your mind to
appeal to this Alexander Sacabin to
please pity you because you were
feeling pain in your body?
A — I asked Romeo not to because it
was painful and then Romeo said never
mind just allow me because anyway I will
marry you.
Appellant Alexander Sacabin declared that he was 22 years old, single
and a mason by occupation. He saw Erlinda in the evening of that date.
The two of them ate and drank at Eliza's restaurant, which was at the
Iligan Supermarket, in front of which was the Laya Building. From the
restaurant, they went to her house owned by her master, Patrolman
Villondo. While in the house, Erlinda told him that she wanted to go with
him. He left and Erlinda followed him to the Laya Building where he
used to sleep. He was working there as a laborer and the building was
still under construction. When they arrived at the Laya Building, he told
Erlinda that he would go to Cagayan upon the termination of his work.
Erlinda told him that she would go with him to Cagayan. 5
Q — What was your answer, if any, when
she told you that she is going to
Cagayan with you?
A — I answered, `yes, really you love
me?
Q — What was her answer, if any?
A — `Yes, I love you.'
Q — By the way, you have stated before
this Court that you are sweethearts with
Erlinda, when did you become
sweethearts?
A —While I was working at Laya building
this Erlinda was selling refreshments.
Q — Where was she selling
refreshments?
A — Sometime she bring refreshments
at Laya building.
Q — More or less, can you tell the Court
what time when was that when your love
was accepted by Erlinda?
A — August 2, 1968.
Q — Did you consider that you were
sweethearts, did you receive anything
from her, some sort of letters or tokens?
A — I did not ask anything because we
used to see each other and I did not ask
any remembrance from her because she
is poor like myself.
Erlinda then told appellant that she loved him. They slept together in a
room upstairs in the Laya Building. In the room where they slept, there
were no tenants for that particular unit of the apartment. But there were
already electric lights inside that room. They slept on a bed made of
plywood. They had two sexual intercourse, the first time from 8:00 to
9:00 o'clock p.m., and the second in the early morning. They had
already one sexual intercourse about one week prior to November 23,
1968, also at the Laya Building. At that time, she was getting water.6
After a very careful review of the evidence, We affirm the lower court's
finding that the version of the offended party is the one that should be
believed over that of the appellant.
The offended party, Erlinda, was a young provinciana, barely over 15 owned by the latter, corroborated the testimony of the offended party,
years of age, uncouth and almost unlettered, was a mere household Erlinda, that Teodelita Dagondon was the one who fetched Erlinda
helper but at the same time engaged in the selling of native bread and "because the puto and bread that she is selling will all be bought by
cakes. She belonged to the poor and was one of them, and was still Teodelita for the next day would be her birthday."
possessed of the traditional and proverbial modesty of the Filipina,
especially the provinciana. She would not have filed a complaint for The testimony of the appellant that he and Erlinda were sweethearts is
rape and suffered the torment if not the ignominy of having to testify in a unworthy of belief. Erlinda denied vehemently this testimony of the
court of justice about the wrong done to her, if in truth she was not really appellant and even stated that he never courted her. And if they were
raped. really sweethearts, Erlinda would not have filed this serious charge of
rape against him.
Early in the morning of November 24, 1968, she was brought by the
appellant to his father's house in Rosario Heights. She went with him IN VIEW OF ALL THE FOREGOING, the decision appealed from is
because she was threatened with death if she would not do so. hereby affirmed in its entirety with costs against the appellant.
Patrolman Villondo was already there because he was previously
informed that Erlinda failed to return to their house and that appellant
was the one that brought her. And according to Erlinda, she did not tell CITIBANK, N.A. G.R. No. 156132
Patrolman Villondo that she was raped as she was "ashamed to tell him (Formerly First National
because he is a man." And at that time, Villondo's wife was in Cebu. But
when she arrived about six days later, she was at once informed by
City Bank) and Present:
Erlinda that appellant raped her. INVESTORS FINANCE
CORPORATION, doing PANGANIBAN, C.J.
And immediately thereafter, she was brought to the medico legal officer business under the name Chairperson,
of Iligan City, Dr. Manuel Simon, who testified that on December 2,
1968, he examined the offended party, found lacerations in her hymen, and style of FNCB YNARES-SANTIAGO,
in positions 10 and 8 o'clock, which had just recently healed (a Finance, AUSTRIA-MARTINEZ,
laceration heals in 7 days). The lacerations could not have been more Petitioners, CALLEJO, SR., and
than one month old "because at the edge of the lacerations, the color
was reddish and therefore they have healed recently." CHICO-NAZARIO, JJ.

Physical evidence is evidence of the highest order. It speaks more - versus- Promulgated:
eloquently than a hundred witnesses. And the physical evidence in this
case strongly corroborates the testimony of the offended party that she
was raped. They consist of the green color dress and the panty that October 16, 2006
Erlinda was wearing at the time she was raped and which show a torn MODESTA R.
portion of the left side of the dress and a torn portion of the panty.
According to Erlinda, they were torn when appellant forcibly pulled her
SABENIANO,
dress up and removed her panty shortly before she was raped. Respondent.
Surprisingly, appellant did not at all rebut the testimony of Erlinda on this x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
point.
- - - - - - - - - - -x
Francisco Bagohin, who was then also residing in the house of
Patrolman and Mrs. Constancio Villondo, he being the driver of the rig
 DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review
on Certiorari,[1] under Rule 45 of the Revised Rules of
Court, of the Decision[2] of the Court of Appeals in CA-
G.R. CV No. 51930, dated 26 March 2002, and the
Resolution,[3] dated 20 November 2002, of the same court
which, although modifying its earlier Decision, still denied
for the most part the Motion for Reconsideration of herein
petitioners.
Petitioner Citibank, N.A. (formerly known as the First
National City Bank) is a banking corporation duly
authorized and existing under the laws of the United States
of America and licensed to do commercial banking
activities and perform trust functions in the Philippines.
Petitioner Investors Finance Corporation, which did
business under the name and style of FNCB Finance, was
an affiliate company of petitioner Citibank, specifically
handling money market placements for its clients. It is now,
by virtue of a merger, doing business as part of its
successor-in-interest, BPI Card Finance
Corporation. However, so as to consistently establish its
identity in the Petition at bar, the said petitioner shall still
be referred to herein as FNCB Finance.[4]
Respondent Modesta R. Sabeniano was a client of
both petitioners Citibank and FNCB Finance. Regrettably,
the business relations among the parties subsequently went
awry.
On 8 August 1985, respondent filed a
Complaint[5] against petitioners, docketed as Civil Case No.
11336, before the Regional Trial Court (RTC) of Makati
City.Respondent claimed to have substantial deposits and
money market placements with the petitioners, as well as
money market placements with the Ayala Investment and
Development Corporation (AIDC), the proceeds of which
were supposedly deposited automatically and directly to
respondents accounts with petitioner Citibank. Respondent
alleged that petitioners refused to return her deposits and
the proceeds of her money market placements despite her
repeated demands, thus, compelling respondent to file Civil
Case No. 11336 against petitioners for Accounting, Sum of
Money and Damages. Respondent eventually filed an
Amended Complaint[6] on 9 October 1985 to include
additional claims to deposits and money market placements
inadvertently left out from her original Complaint.
In their joint Answer[7] and Answer to Amended
Complaint,[8] filed on 12 September 1985 and 6 November
1985, respectively, petitioners admitted that respondent had
deposits and money market placements with them,
including dollar accounts in the Citibank branch in Geneva,
Switzerland (Citibank-Geneva). Petitioners further alleged
that the respondent later obtained several loans from
petitioner Citibank, for which she executed Promissory
Notes (PNs), and secured by (a) a Declaration of Pledge of
her dollar accounts in Citibank-Geneva, and (b) Deeds of
Assignment of her money market placements with
petitioner FNCB Finance. When respondent failed to pay
her loans despite repeated demands by petitioner Citibank,
the latter exercised its right to off-set or compensate
respondents outstanding loans with her deposits and money
market placements, pursuant to the Declaration of Pledge
and the Deeds of Assignment executed by respondent in its
favor. Petitioner Citibank supposedly informed respondent
Sabeniano of the foregoing compensation through letters,
dated 28 September 1979 and 31 October 1979. Petitioners
were therefore surprised when six years later, in 1985,
respondent and her counsel made repeated requests for the
withdrawal of respondents deposits and money market
placements with petitioner Citibank, including her dollar
accounts with Citibank-Geneva and her money market
placements with petitioner FNCB Finance. Thus,
petitioners prayed for the dismissal of the Complaint and
for the award of actual, moral, and exemplary damages,
and attorneys fees.
When the parties failed to reach a compromise
during the pre-trial hearing,[9] trial proper ensued and the
parties proceeded with the presentation of their respective
evidence. Ten years after the filing of the Complaint on 8
August 1985, a Decision[10] was finally rendered in Civil
Case No. 11336 on 24 August 1995 by the fourth
Judge[11]who handled the said case, Judge Manuel D.
Victorio, the dispositive portion of which reads
WHEREFORE, in view of all the
foregoing, decision is hereby rendered as follows:
(1) Declaring as illegal, null and void the
setoff effected by the defendant Bank [petitioner
Citibank] of plaintiffs [respondent Sabeniano]
dollar deposit with Citibank, Switzerland, in the
amount of US$149,632.99, and ordering the said
 defendant [petitioner Citibank] to refund the said
amount to the plaintiff with legal interest at the
rate of twelve percent (12%) per annum,
compounded yearly, from 31 October 1979 until
fully paid, or its peso equivalent at the time of
payment;
(2) Declaring the plaintiff [respondent
Sabeniano] indebted to the defendant Bank
[petitioner Citibank] in the amount
of P1,069,847.40 as of 5 September 1979 and
ordering the plaintiff [respondent Sabeniano] to
pay said amount, however, there shall be no
interest and penalty charges from the time the
illegal setoff was effected on 31 October 1979;
(3) Dismissing all other claims and
counterclaims interposed by the parties against
each other.
Costs against the defendant Bank.
All the parties appealed the foregoing Decision of the RTC
to the Court of Appeals, docketed as CA-G.R. CV No.
51930. Respondent questioned the findings of the RTC that
she was still indebted to petitioner Citibank, as well as the
failure of the RTC to order petitioners to render an
accounting of respondents deposits and money market
placements with them. On the other hand, petitioners
argued that petitioner Citibank validly compensated
respondents outstanding loans with her dollar accounts with
Citibank-Geneva, in accordance with the Declaration of
Pledge she executed in its favor. Petitioners also alleged
that the RTC erred in not declaring respondent liable for
damages and interest.
On 26 March 2002, the Court of Appeals rendered its
Decision[12] affirming with modification the RTC Decision
in Civil Case No. 11336, dated 24 August 1995, and ruling
entirely in favor of respondent in this wise
Wherefore, premises considered, the
assailed 24 August 1995 Decision of the court a
quo is hereby AFFIRMED with
MODIFICATION, as follows:
1. Declaring as illegal, null and void the
set-off effected by the defendant-appellant Bank
of the plaintiff-appellants dollar deposit with
Citibank, Switzerland, in the amount of
US$149,632.99, and ordering defendant-appellant
Citibank to refund the said amount to the plaintiff-
appellant with legal interest at the rate of twelve
percent (12%) per annum, compounded yearly,
from 31 October 1979 until fully paid, or its peso
equivalent at the time of payment;
2. As defendant-appellant Citibank failed
to establish by competent evidence the alleged
indebtedness of plaintiff-appellant, the set-off
of P1,069,847.40 in the account of Ms. Sabeniano
is hereby declared as without legal and factual
basis;
 3. As defendants-appellants failed to
account the following plaintiff-appellants money
market placements, savings account and current
accounts, the former is hereby ordered to return
the same, in accordance with the terms and
conditions agreed upon by the contending parties
as evidenced by the certificates of investments, to
wit:
(i) Citibank NNPN Serial No.
023356 (Cancels and Supersedes
NNPN No. 22526) issued on 17
March 1977, P318,897.34 with
14.50% interest p.a.;
(ii) Citibank NNPN Serial
No. 23357 (Cancels and Supersedes
NNPN No. 22528) issued on 17
March 1977, P203,150.00 with
14.50 interest p.a.;
(iii) FNCB NNPN Serial No.
05757 (Cancels and Supersedes
NNPN No. 04952), issued on 02
June 1977, P500,000.00 with 17%
interest p.a.;
(iv) FNCB NNPN Serial No.
05758 (Cancels and Supersedes
NNPN No. 04962), issued on 02
June 1977, P500,000.00 with 17%
interest per annum;
(v) The Two Million
(P2,000,000.00) money market
placements of Ms. Sabeniano with
the Ayala Investment &
Development Corporation (AIDC)
with legal interest at the rate of
twelve percent (12%) per annum
compounded yearly, from 30
September 1976 until fully paid;
4. Ordering defendants-appellants to jointly
and severally pay the plaintiff-appellant the sum
of FIVE HUNDRED THOUSAND PESOS
(P500,000.00) by way of moral damages, FIVE
HUNDRED THOUSAND PESOS (P500,000.00)
as exemplary damages, and ONE HUNDRED
THOUSAND PESOS (P100,000.00) as attorneys
fees.
Apparently, the parties to the case, namely, the respondent,
on one hand, and the petitioners, on the other, made
separate attempts to bring the aforementioned Decision of
the Court of Appeals, dated 26 March 2002, before this
Court for review.
G.R. No. 152985
Respondent no longer sought a reconsideration of the
Decision of the Court of Appeals in CA-G.R. CV No.
51930, dated 26 March 2002, and instead, filed
immediately with this Court on 3 May 2002 a Motion for
Extension of Time to File a Petition for Review, [13] which, review on certiorari within the period which
expired on May 3, 2002, the Court Resolves
after payment of the docket and other lawful fees, was to DECLARE THIS CASE
assigned the docket number G.R. No. 152985. In the said TERMINATED and DIRECT the Division Clerk
of Court to INFORM the parties that the
Motion, respondent alleged that she received a copy of the judgment sought to be reviewed has become final
assailed Court of Appeals Decision on 18 April 2002 and, and executory.
thus, had 15 days therefrom or until 3 May 2002 within
which to file her Petition for Review. Since she informed
The said Resolution was duly recorded in the Book of
her counsel of her desire to pursue an appeal of the Court
Entries of Judgments on 3 January 2003.
of Appeals Decision only on 29 April 2002, her counsel
neither had enough time to file a motion for reconsideration
G.R. No. 156132
of the said Decision with the Court of Appeals, nor a
Petition for Certiorari with this Court. Yet, the Motion
Meanwhile, petitioners filed with the Court of
failed to state the exact extension period respondent was
Appeals a Motion for Reconsideration of its Decision in
requesting for.
CA-G.R. CV No. 51930, dated 26 March 2002. Acting
upon the said Motion, the Court of Appeals issued the
Since this Court did not act upon respondents Motion
Resolution,[16] dated 20 November 2002, modifying its
for Extension of Time to file her Petition for Review, then
Decision of 26 March 2002, as follows
the period for appeal continued to run and still expired on 3
May 2002.[14] Respondent failed to file any Petition for WHEREFORE, premises considered, the
Review within the prescribed period for appeal and, hence, instant Motion for
Reconsideration is PARTIALLY GRANTED as
this Court issued a Resolution,[15] dated 13 November 2002, Sub-paragraph (V) paragraph 3 of the
in which it pronounced that assailed Decisionsdispositive portion is hereby
ordered DELETED.
G.R. No. 152985 (Modesta R. Sabeniano
vs. Court of Appeals, et al.). It appearing that
petitioner failed to file the intended petition for
 The challenged 26 March 2002 Decision of
the Court
is AFFIRMED with MODIFICATION.
Assailing the Decision and Resolution of the Court
of Appeals in CA-G.R. CV No. 51930, dated 26 March
2002 and 20 November 2002, respectively, petitioners filed
the present Petition, docketed as G.R. No. 156132. The
Petition was initially denied[17] by this Court for failure of
the petitioners to attach thereto a Certification against
Forum Shopping. However, upon petitioners Motion and
compliance with the requirements, this Court resolved [18] to
reinstate the Petition.
The Petition presented fourteen (14) assignments of
errors allegedly committed by the Court of Appeals in its
Decision, dated 26 March 2002, involving both questions
of fact and questions of law which this Court, for the sake
of expediency, discusses jointly, whenever possible, in the
succeeding paragraphs.
I File a Petition for Review. Respondent, though, did not file
The Resolution of
this Court, dated 13
November 2002, in
G.R. No. 152985,
declaring the
Decision of the
Court of Appeals,
dated 26 March
2002, final and
executory, pertains
to respondent
Sabeniano alone.
Before proceeding to a discussion of the merits of
the instant Petition, this Court wishes to address first the
argument, persistently advanced by respondent in her
pleadings on record, as well as her numerous personal and
unofficial letters to this Court which were no longer made
part of the record, that the Decision of the Court of Appeals
in CA-G.R. CV No. 51930, dated 26 March 2002, had
already become final and executory by virtue of the
Resolution of this Court in G.R. No. 152985, dated 13
November 2002.
G.R. No. 152985 was the docket number assigned by
this Court to respondents Motion for Extension of Time to
her supposed Petition. Thus, after the lapse of the
prescribed period for the filing of the Petition, this Court
issued the Resolution, dated 13 November 2002, declaring
the Decision of the Court of Appeals, dated 26 March 2002,
final and executory. It should be pointed out, however, that
the Resolution, dated 13 November 2002, referred only to
G.R. No. 152985, respondents appeal, which she failed to
perfect through the filing of a Petition for Review within
the prescribed period. The declaration of this Court in the
same Resolution would bind respondent solely, and not
petitioners which filed their own separate appeal before this
Court, docketed as G.R. No. 156132, the Petition at
bar. This would mean that respondent, on her part, should
be bound by the findings of fact and law of the Court of
Appeals, including the monetary amounts consequently
awarded to her by the appellate court in its Decision, dated
26 March 2002; and she can no longer refute or assail any
part thereof. [19]
This Court already explained the matter to
respondent when it issued a Resolution [20] in G.R. No.
156132, dated 2 February 2004, which addressed her
Urgent Motion for the Release of the Decision with the
Implementation of the Entry of Judgment in the following
manner
[A]cting on Citibanks and FNCB
Finances Motion for Reconsideration, we resolved
to grant the motion, reinstate the petition and
require Sabeniano to file a comment thereto in
our Resolution of June 23, 2003. Sabeniano filed
a Comment dated July 17, 2003 to which Citibank
and FNCB Finance filed a Reply dated August 20,
2003.
From the foregoing, it is clear that Sabeniano had
knowledge of, and in fact participated in, the
proceedings in G.R. No. 156132. She cannot feign
ignorance of the proceedings therein and claim
that the Decision of the Court of Appeals has
become final and executory. More precisely,
the Decision became final and executory only
with regard to Sabeniano in view of her failure to
file a petition for review within the extended
period granted by the Court, and not to Citibank
and FNCB Finance whose Petition for Reviewwas
duly reinstated and is now submitted for decision.
Accordingly, the instant Urgent Motion is hereby
DENIED. (Emphasis supplied.)
To sustain the argument of respondent would result in an
unjust and incongruous situation wherein one party may
frustrate the efforts of the opposing party to appeal the case
by merely filing with this Court a Motion for Extension of
Time to File a Petition for Review, ahead of the opposing
party, then not actually filing the intended Petition. [21] The
party who fails to file its intended Petition within the
reglementary or extended period should solely bear the
consequences of such failure.

Respondent
Sabeniano did not
commit forum
shopping.
Another issue that does not directly involve the merits of
the present Petition, but raised by petitioners, is whether
respondent should be held liable for forum shopping.
Petitioners contend that respondent committed forum
shopping on the basis of the following facts:
While petitioners Motion for Reconsideration of the
Decision in CA-G.R. CV No. 51930, dated 26 March 2002,
was still pending before the Court of Appeals, respondent
already filed with this Court on 3 May 2002 her Motion for
Extension of Time to File a Petition for Review of the same
Court of Appeals Decision, docketed as G.R. No.
152985.Thereafter, respondent continued to participate in
the proceedings before the Court of Appeals in CA-G.R.
CV No. 51930 by filing her Comment, dated 17 July 2002,
to petitioners Motion for Reconsideration; and a Rejoinder,
dated 23 September 2002, to petitioners Reply. Thus,
petitioners argue that by seeking relief concurrently from
this Court and the Court of Appeals, respondent is
undeniably guilty of forum shopping, if not indirect
contempt.
This Court, however, finds no sufficient basis to hold
respondent liable for forum shopping.
Forum shopping has been defined as the filing of two or
more suits involving the same parties for the same cause of
action, either simultaneously or successively, for the
purpose of obtaining a favorable judgment.[22] The test for
determining forum shopping is whether in the two (or
more) cases pending, there is an identity of parties, rights
or causes of action, and relief sought.[23] To guard against
this deplorable practice, Rule 7, Section 5 of the revised
Rules of Court imposes the following requirement
SEC. 5. Certification against forum
shopping. The plaintiff or principal party shall certify
under oath in the complaint or other initiatory
pleading asserting a claim for relief, or in a sworn
certification annexed thereto and simultaneously filed
therewith: (a) that he has not theretofore commenced
any action or filed any claim involving the same issues
in any court, tribunal or quasi-judicial agency and, to
the best of his knowledge, no such other action or
claim is pending therein; (b) if there is such other
pending action or claim, a complete statement of the
present status thereof; and (c) if he should thereafter
learn that the same or similar action or claim has been
 filed or is pending, he shall report that fact within five
(5) days therefrom to the court wherein his aforesaid
complaint or initiatory pleading has been filed.
Failure to comply with the foregoing
requirements shall not be curable by mere amendment
of the complaint or other initiatory pleading but shall
be cause for the dismissal of the case without
prejudice, unless otherwise provided, upon motion and
after hearing. The submission of a false certification or
non-compliance with any of the undertakings therein
shall constitute indirect contempt of court, without
prejudice to the corresponding administrative and
criminal actions. If the acts of the party or his counsel
clearly constitute willful and deliberate forum
shopping, the same shall be ground for summary
dismissal with prejudice and shall constitute direct
contempt, as well as cause for administrative
sanctions.
Although it may seem at first glance that respondent was
simultaneously seeking recourse from the Court of Appeals
and this Court, a careful and closer scrutiny of the details of
the case at bar would reveal otherwise.
It should be recalled that respondent did nothing
more in G.R. No. 152985 than to file with this Court a
Motion for Extension of Time within which to file her
Petition for Review. For unexplained reasons, respondent
failed to submit to this Court her intended Petition within
the reglementary period. Consequently, this Court was
prompted to issue a Resolution, dated 13 November 2002,
declaring G.R. No. 152985 terminated, and the therein
assailed Court of Appeals Decision final and
executory. G.R. No. 152985, therefore, did not progress
and respondents appeal was unperfected.
The Petition for Review would constitute the
initiatory pleading before this Court, upon the timely filing
of which, the case before this Court commences; much in
the same way a case is initiated by the filing of a Complaint
before the trial court. The Petition for Review establishes
the identity of parties, rights or causes of action, and relief
sought from this Court, and without such a Petition, there is
technically no case before this Court. The Motion filed by
respondent seeking extension of time within which to file
her Petition for Review does not serve the same purpose as
the Petition for Review itself. Such a Motion merely
presents the important dates and the justification for the
additional time requested for, but it does not go into the
details of the appealed case.
Without any particular idea as to the assignments of
error or the relief respondent intended to seek from this
Court, in light of her failure to file her Petition for Review,
there is actually no second case involving the same parties,
rights or causes of action, and relief sought, as that in CA-
G.R. CV No. 51930.
It should also be noted that the Certification against
Forum Shopping is required to be attached to the initiatory
pleading, which, in G.R. No. 152985, should have been
respondents Petition for Review. It is in that Certification
wherein respondent certifies, under oath, that: (a) she has
not commenced any action or filed any claim involving the
same issues in any court, tribunal or quasi-judicial agency
and, to the best of her knowledge, no such other action or
claim is pending therein; (b) if there is such other pending
action or claim, that she is presenting a complete statement
of the present status thereof; and (c) if she should thereafter
learn that the same or similar action or claim has been filed
or is pending, she shall report that fact within five days
therefrom to this Court. Without her Petition for Review,
respondent had no obligation to execute and submit the
foregoing Certification against Forum Shopping. Thus,
respondent did not violate Rule 7, Section 5 of the Revised
Rules of Court; neither did she mislead this Court as to the
pendency of another similar case.
Lastly, the fact alone that the Decision of the Court
of Appeals, dated 26 March 2002, essentially ruled in favor
of respondent, does not necessarily preclude her from
appealing the same. Granted that such a move is ostensibly
irrational, nonetheless, it does not amount to malice, bad
faith or abuse of the court processes in the absence of
further proof. Again, it should be noted that the respondent
did not file her intended Petition for Review. The Petition
for Review would have presented before this Court the
grounds for respondents appeal and her arguments in
support thereof. Without said Petition, any reason attributed
to the respondent for appealing the 26 March 2002
Decision would be grounded on mere speculations, to
which this Court cannot give credence.
II
As an exception to
the general rule,
this Court takes
cognizance of
questions of fact
raised in the
Petition at bar.
It is already a well-settled rule that the jurisdiction of
this Court in cases brought before it from the Court of
Appeals by virtue of Rule 45 of the Revised Rules of Court
is limited to reviewing errors of law. Findings of fact of the
Court of Appeals are conclusive upon this Court. There are,
however, recognized exceptions to the foregoing rule, respondent. In addition, petitioners invoked in the instant
namely: (1) when the findings are grounded entirely on Petition for Review several exceptions that would justify
speculation, surmises, or conjectures; (2) when the this Courts review of the factual findings of the Court of
interference made is manifestly mistaken, absurd, or Appeals, i.e., the Court of Appeals made conflicting
impossible; (3) when there is grave abuse of discretion; (4) findings of fact; findings of fact which went beyond the
when the judgment is based on a misapprehension of facts; issues raised on appeal before it; as well as findings of fact
(5) when the findings of fact are conflicting; (6) when in premised on the supposed absence of evidence and
making its findings, the Court of Appeals went beyond the contradicted by the evidence on record.
issues of the case, or its findings are contrary to the On the basis of the foregoing, this Court shall
admissions of both the appellant and the appellee; (7) when proceed to reviewing and re-evaluating the evidence on
the findings are contrary to those of the trial court; (8) record in order to settle questions of fact raised in the
when the findings are conclusions without citation of Petition at bar.
specific evidence on which they are based; (9) when the
facts set forth in the petition as well as in the petitioners The fact that the
trial judge who
main and reply briefs are not disputed by the respondent; rendered the RTC
and (10) when the findings of fact are premised on the Decision in Civil
supposed absence of evidence and contradicted by the Case No. 11336,
dated 24 August
evidence on record.[24]
1995, was not the
same judge who
Several of the enumerated exceptions pertain to the heard and tried the
case, does not, by
Petition at bar.
itself, render the
It is indubitable that the Court of Appeals made said Decision
factual findings that are contrary to those of the RTC, erroneous.
[25]
thus, resulting in its substantial modification of the trial
courts Decision, and a ruling entirely in favor of the
The Decision in Civil Case No. 11336 was rendered more
than 10 years from the institution of the said case. In the
course of its trial, the case was presided over by four (4)
different RTC judges.[26] It was Judge Victorio, the fourth
judge assigned to the case, who wrote the RTC Decision,
dated 24 August 1995. In his Decision,[27] Judge Victorio
made the following findings
After carefully evaluating the mass of evidence
adduced by the parties, this Court is not inclined to
believe the plaintiffs assertion that the promissory
notes as well as the deeds of assignments of her FNCB
Finance money market placements were
simulated. The evidence is overwhelming that the
plaintiff received the proceeds of the loans evidenced
by the various promissory notes she had signed. What
is more, there was not an iota of proof save the
plaintiffs bare testimony that she had indeed applied
for loan with the Development Bank of the
Philippines.
More importantly, the two deeds of assignment
were notarized, hence they partake the nature of a
public document. It makes more than preponderant
proof to overturn the effect of a notarial
attestation. Copies of the deeds of assignments were
actually filed with the Records Management and
Archives Office.
Finally, there were sufficient evidence wherein
the plaintiff had admitted the existence of her loans
with the defendant Bank in the total amount
of P1,920,000.00 exclusive of interests and penalty
charges (Exhibits 28, 31, 32, and 33).
In fine, this Court hereby finds that the
defendants had established the genuineness and due
execution of the various promissory notes heretofore
identified as well as the two deeds of assignments of
the plaintiffs money market placements with
defendant FNCB Finance, on the strength of which the
said money market placements were applied to
partially pay the plaintiffs past due obligation with the
defendant Bank. Thus, the total sum of P1,053,995.80
of the plaintiffs past due obligation was partially offset
by the said money market placement leaving a balance
of P1,069,847.40 as of 5 September 1979 (Exhibit 34).
Disagreeing in the foregoing findings, the Court of Appeals
stressed, in its Decision in CA-G.R. CV No. 51930, dated
26 March 2002, that the ponente of the herein
assailed Decision is not the Presiding Judge who heard and
tried the case.[28] This brings us to the question of whether
the fact alone that the RTC Decision was rendered by a
judge other than the judge who actually heard and tried the
case is sufficient justification for the appellate court to
disregard or set aside the findings in the Decision of the
court a quo?
This Court rules in the negative.
What deserves stressing is that, in this jurisdiction, there
exists a disputable presumption that the RTC Decision was

rendered by the judge in the regular performance of his
official duties. While the said presumption is only
disputable, it is satisfactory unless contradicted or
overcame by other evidence.[29] Encompassed in this
presumption of regularity is the presumption that the RTC
judge, in resolving the case and drafting his Decision,
reviewed, evaluated, and weighed all the evidence on
record. That the said RTC judge is not the same judge who
heard the case and received the evidence is of little
consequence when the records and transcripts of
stenographic notes (TSNs) are complete and available for
consideration by the former.
In People v. Gazmen,[30] this Court already elucidated its
position on such an issue
Accused-appellant makes an issue of the fact
that the judge who penned the decision was not the
judge who heard and tried the case and concludes
therefrom that the findings of the former are
erroneous. Accused-appellants argument does not
merit a lengthy discussion. It is well-settled that the
decision of a judge who did not try the case is not by
that reason alone erroneous.
It is true that the judge who ultimately decided
the case had not heard the controversy at all, the trial
having been conducted by then Judge Emilio L. Polig,
who was indefinitely suspended by this
Court. Nonetheless, the transcripts of stenographic
notes taken during the trial were complete and were
presumably examined and studied by Judge Baguilat
before he rendered his decision. It is not unusual for a
judge who did not try a case to decide it on the basis
of the record. The fact that he did not have the
opportunity to observe the demeanor of the witnesses
during the trial but merely relied on the transcript of
their testimonies does not for that reason alone render
the judgment erroneous.
(People vs. Jaymalin, 214 SCRA 685, 692
[1992])
Although it is true that the judge who heard the
witnesses testify is in a better position to observe the
witnesses on the stand and determine by their
demeanor whether they are telling the truth or
mouthing falsehood, it does not necessarily follow that
a judge who was not present during the trial cannot
render a valid decision since he can rely on the
transcript of stenographic notes taken during the trial
as basis of his decision.
Accused-appellants contention that the trial
judge did not have the opportunity to observe the
conduct and demeanor of the witnesses since he was
not the same judge who conducted the hearing is also
untenable. While it is true that the trial judge who
conducted the hearing would be in a better position to
ascertain the truth and falsity of the testimonies of the
witnesses, it does not necessarily follow that a judge
who was not present during the trial cannot render a
valid and just decision since the latter can also rely on
the transcribed stenographic notes taken during the
trial as the basis of his decision.
(People vs. De Paz, 212 SCRA 56, 63 [1992])

At any rate, the test to determine the value of
the testimony of the witness is whether or not such is
in conformity with knowledge and consistent with the
experience of mankind (People vs. Morre, 217 SCRA
219 [1993]). Further, the credibility of witnesses can
also be assessed on the basis of the substance of their
testimony and the surrounding circumstances (People
v. Gonzales, 210 SCRA 44 [1992]). A critical
evaluation of the testimony of the prosecution
witnesses reveals that their testimony accords with the
aforementioned tests, and carries with it the ring of
truth end perforce, must be given full weight and
credit.
Irrefragably, by reason alone that the judge who penned the
RTC Decision was not the same judge who heard the case
and received the evidence therein would not render the
findings in the said Decision erroneous and
unreliable. While the conduct and demeanor of witnesses
may sway a trial court judge in deciding a case, it is not,
and should not be, his only consideration. Even more vital
for the trial court judges decision are the contents and
substance of the witnesses testimonies, as borne out by the
TSNs, as well as the object and documentary evidence
submitted and made part of the records of the case.
This Court
proceeds to making
its own findings of
fact.
Since the Decision of the Court of Appeals in CA-
G.R. CV No. 51930, dated 26 March 2002, has become
final and executory as to the respondent, due to her failure
to interpose an appeal therefrom within the reglementary
period, she is already bound by the factual findings in the
said Decision. Likewise, respondents failure to file, within
the reglementary period, a Motion for Reconsideration or
an appeal of the Resolution of the Court of Appeals in the
same case, dated 20 November 2002, which modified its
earlier Decision by deleting paragraph 3(v) of its
dispositive portion, ordering petitioners to return to
respondent the proceeds of her money market placement
with AIDC, shall already bar her from questioning such
modification before this Court. Thus, what is for review
before this Court is the Decision of the Court of Appeals,
dated 26 March 2002, as modified by the Resolution of the
same court, dated 20 November 2002.
Respondent alleged that she had several deposits and
money market placements with petitioners. These deposits
and money market placements, as determined by the Court
of Appeals in its Decision, dated 26 March 2002, and as
modified by its Resolution, dated 20 November 2002, are Money market placements with petitioner Citibank
as follows
The history of respondents money market
Deposit/Placement Amount placements with petitioner Citibank began on 6 December
Dollar deposit with Citibank-Geneva $ 149,632.99
Money market placement with Citibank, 1976, when she made a placement of P500,000.00 as
evidenced by Promissory Note (PN) No. principal amount, which was supposed to earn an interest
23356 (which cancels and supersedes PN
No. 22526), earning 14.5% interest per P 318,897.34 of 16% p.a. and for which PN No. 20773 was
annum (p.a.) issued. Respondent did not yet claim the proceeds of her
Money market placement with Citibank,
evidenced by PN No. 23357 (which cancels placement and, instead, rolled-over or re-invested the
and supersedes PN No. 22528), earning P 203,150.00 principal and proceeds several times in the succeeding
14.5% interest p.a.
Money market placement with FNCB years for which new PNs were issued by petitioner
Finance, evidenced by PN No. 5757 (which Citibank to replace the ones which matured. Petitioner
cancels and supersedes PN No. 4952), P 500,000.00
earning 17% interest p.a. Citibank accounted for respondents original placement and
Money market placement with FNCB the subsequent roll-overs thereof, as follows
Finance, evidenced by PN No. 5758 (which
cancels and supersedes PN No. 2962), P 500,000.00
earning 17% interest p.a. Maturity Date
Date PN No. Cancels (mm/dd/yyyy) Amount Interest
This Court is tasked to determine whether petitioners are (mm/dd/yyy PN No. (P) (p.a.)
indeed liable to return the foregoing amounts, together with y)
12/06/1976 20773 None 01/13/1977 500,000.00 16%
the appropriate interests and penalties, to respondent. It
01/14/1977 21686 20773 02/08/1977 508,444.44 15%
shall trace respondents transactions with petitioners, from 02/09/1977 22526 21686 03/16/1977 313,952.59 15-3/4%
her money market placements with petitioner Citibank and 2252 21686 03/16/1977 200,000.00 15-3/4%
8
petitioner FNCB Finance, to her savings and current 03/17/1977 23356 22526 04/20/1977 318,897.34 14-1/2%
accounts with petitioner Citibank, and to her dollar 2335 22528 04/20/1977 203,150.00 14-1/2%
7
accounts with Citibank-Geneva.

Petitioner Citibank alleged that it had already paid to
respondent the principal amounts and proceeds of PNs No.
23356 and 23357, upon their maturity. Petitioner Citibank
further averred that respondent used the P500,000.00 from
the payment of PNs No. 23356 and 23357,
plus P600,000.00 sourced from her other funds, to open
two time deposit (TD) accounts with petitioner Citibank,
namely, TD Accounts No. 17783 and 17784.
Petitioner Citibank did not deny the existence nor
questioned the authenticity of PNs No. 23356 and 23357 it
issued in favor of respondent for her money market
placements. In fact, it admitted the genuineness and due
execution of the said PNs, but qualified that they were no
longer outstanding.[31] In Hibberd v. Rohde and McMillian,
[32]
this Court delineated the consequences of such an
admission
By the admission of the genuineness and due
execution of an instrument, as provided in this section,
is meant that the party whose signature it bears admits
that he signed it or that it was signed by another for
him with his authority; that at the time it was signed it
was in words and figures exactly as set out in the
pleading of the party relying upon it; that the
document was delivered; and that any formal
requisites required by law, such as a seal, an
acknowledgment, or revenue stamp, which it lacks,
are waived by him. Hence, such defenses as that the
signature is a forgery (Puritan Mfg. Co. vs. Toti &
Gradi, 14 N. M., 425; Cox vs. Northwestern Stage
Co., 1 Idaho, 376; Woollen vs. Whitacre, 73 Ind., 198;
Smith vs. Ehnert, 47 Wis., 479; Faelnar vs. Escao, 11
Phil. Rep., 92); or that it was unauthorized, as in the
case of an agent signing for his principal, or one
signing in behalf of a partnership (Country
Bank vs. Greenberg, 127 Cal., 26; Henshaw vs. Root,
60 Inc., 220; Naftzker vs. Lantz, 137 Mich., 441) or of
a corporation (Merchant vs. International Banking
Corporation, 6 Phil Rep., 314; Wanita vs. Rollins, 75
Miss., 253; Barnes vs.Spencer & Barnes Co., 162
Mich., 509); or that, in the case of the latter, that the
corporation was authorized under its charter to sign
the instrument (Merchant vs. International Banking
Corporation, supra); or that the party charged signed
the instrument in some other capacity than that alleged
in the pleading setting it out (Payne vs. National Bank,
16 Kan., 147); or that it was never delivered
(Hunt vs. Weir, 29 Ill., 83; Elbring vs. Mullen, 4 Idaho,
199; Thorp vs. Keokuk Coal Co., 48 N.Y., 253; Fire
Association of Philadelphia vs. Ruby, 60 Neb., 216)
are cut off by the admission of its genuineness and due
execution.
The effect of the admission is such that in the
case of a promissory note a prima facie case is made
for the plaintiff which dispenses with the necessity of
evidence on his part and entitles him to a judgment on
the pleadings unless a special defense of new matter,
such as payment, is interposed by the defendant
(Papa vs. Martinez, 12 Phil. Rep., 613; Chinese
Chamber of Commerce vs. Pua To Ching, 14 Phil.
Rep., 222; Banco Espaol-Filipino vs. McKay &
Zoeller, 27 Phil. Rep., 183). x x x
Since the genuineness and due execution of PNs No. 23356
and 23357 are uncontested, respondent was able to
establish prima facie that petitioner Citibank is liable to her
for the amounts stated therein. The assertion of petitioner
Citibank of payment of the said PNs is an affirmative
allegation of a new matter, the burden of proof as to such
resting on petitioner Citibank. Respondent having proved
the existence of the obligation, the burden of proof was
upon petitioner Citibank to show that it had been
discharged.[33] It has already been established by this Court
that
As a general rule, one who pleads payment has
the burden of proving it. Even where the plaintiff must
allege non-payment, the general rule is that the burden
rests on the defendant to prove payment, rather than
on the plaintiff to prove non-payment. The debtor has
the burden of showing with legal certainty that the
obligation has been discharged by payment.
When the existence of a debt is fully
established by the evidence contained in the record,
the burden of proving that it has been extinguished by
payment devolves upon the debtor who offers such
defense to the claim of the creditor. Where the debtor
introduces some evidence of payment, the burden of
going forward with the evidence as distinct from the
general burden of proof shifts to the creditor, who is
then under the duty of producing some evidence of
non-payment.[34]
Reviewing the evidence on record, this Court finds
that petitioner Citibank failed to satisfactorily prove that
PNs No. 23356 and 23357 had already been paid, and that
the amount so paid was actually used to open one of
respondents TD accounts with petitioner Citibank.
Petitioner Citibank presented the testimonies of two
witnesses to support its contention of payment: (1) That of
Mr. Herminio Pujeda,[35] the officer-in-charge of loans and
placements at the time when the questioned transactions
took place; and (2) that of Mr. Francisco Tan, [36] the former
Assistant Vice-President of Citibank, who directly dealt
with respondent with regard to her deposits and loans.
The relevant portion[37] of Mr. Pujedas testimony as
to PNs No. 23356 and 23357 (referred to therein as
Exhibits No. 47 and 48, respectively) is reproduced below
Atty. Mabasa:
Okey [sic]. Now Mr. Witness, you were asked to
testify in this case and this case is [sic] consist
[sic] of several documents involving
transactions between the plaintiff and the
defendant. Now, were you able to make your
own memorandum regarding all these
transactions?
 Atty. Mabasa:
A Yes, based on my recollection of these facts, I did
come up of [sic] the outline of the Q Now, basing on the notes that you prepared, Mr.
chronological sequence of events. Witness, and according to you basing also on
your personal recollection about all the
Court: transactions involved between Modesta
Sabeniano and defendant City Bank [sic] in
Are you trying to say that you have personal this case. Now, would you tell us what
knowledge or participation to these happened to the money market placements of
transactions? Modesta Sabeniano that you have earlier
identified in Exhs. 47 and 48?
A Yes, your Honor, I was the officer-in charge of the
unit that was processing these A The transactions which I said earlier were
transactions. Some of the documents bear my terminated and booked to time deposits.
signature.
Q And you are saying time deposits with what bank?
Court:
A With First National Citibank.
And this resume or summary that you have prepared is
based on purely your recollection or Q Is it the same bank as Citibank, N.A.?
documents?
A Yes, sir.
A Based on documents, your Honor.
Q And how much was the amount booked as time
Court: deposit with defendant Citibank?

Are these documents still available now? A In the amount of P500,000.00.

A Yes, your honor. Q And outside this P500,000.00 which you said was
booked out of the proceeds of Exhs. 47 and 48,
Court: were there other time deposits opened by Mrs.
Modesta Sabeniano at that time.
Better present the documents.
A Yes, she also opened another time deposit
Atty. Mabasa: for P600,000.00.

Yes, your Honor, that is why your Honor. Q So all in all Mr. Witness, sometime in April of 1978
Mrs. Modesta Sabeneano [sic] had time
 deposit placements with Citibank in the
amount of P500,000.00 which is the proceeds
of Exh. 47 and 48 and another P600,000.00, is
it not?
A Yes, sir.
Q And would you know where did the other P600,000
placed by Mrs. Sabeneano [sic] in a time
deposit with Citibank, N.A. came [sic] from?
A She funded it directly.
Q What are you saying Mr. Witness is that
the P600,000 is a [sic] fresh money coming
from Mrs. Modesta Sabeneano [sic]?
A That is right.
In his deposition in Hong Kong, Mr. Tan recounted
what happened to PNs No. 23356 and 23357 (referred to
therein as Exhibits E and F, respectively), as follows
Atty. Mabasa : Now from the Exhibits that you have
identified Mr. Tan from Exhibits A
to F, which are Exhibits of the
plaintiff. Now, do I understand
from you that the original amount is
Five Hundred Thousand and
thereafter renewed in the
succeeding exhibits?
Mr. Tan : Yes, Sir.
Atty. Mabasa : Alright, after these Exhibits E and F
matured, what happened thereafter?
Mr. Tan : Split into two time deposits.
Atty. Mabasa : Exhibits E and F?
Before anything else, it should be noted that when
Mr. Pujedas testimony before the RTC was made on 12
March 1990 and Mr. Tans deposition in Hong Kong was
conducted on 3 September 1990, more than a decade had
passed from the time the transactions they were testifying
on took place. This Court had previously recognized the
frailty and unreliability of human memory with regards to
figures after the lapse of five years.[38] Taking into
consideration the substantial length of time between the
transactions and the witnesses testimonies, as well as the
undeniable fact that bank officers deal with multiple clients
and process numerous transactions during their tenure, this
Court is reluctant to give much weight to the testimonies of
Mr. Pujeda and Mr. Tan regarding the payment of PNs No.
23356 and 23357 and the use by respondent of the proceeds
thereof for opening TD accounts. This Court finds it
implausible that they should remember, after all these
years, this particular transaction with respondent involving
her PNs No. 23356 and 23357 and TD accounts. Both
witnesses did not give any reason as to why, from among
all the clients they had dealt with and all the transactions
they had processed as officers of petitioner Citibank, they
specially remembered respondent and her PNs No. 23356
and 23357. Their testimonies likewise lacked details on the
circumstances surrounding the payment of the two PNs and
the opening of the time deposit accounts by respondent,
such as the date of payment of the two PNs, mode of
payment, and the manner and context by which respondent
relayed her instructions to the officers of petitioner
Citibank to use the proceeds of her two PNs in opening the
TD accounts.
Moreover, while there are documentary evidences to
support and trace respondents money market placements
with petitioner Citibank, from the original PN No. 20773,
rolled-over several times to, finally, PNs No. 23356 and
23357, there is an evident absence of any documentary
evidence on the payment of these last two PNs and the use
of the proceeds thereof by respondent for opening TD
accounts. The paper trail seems to have ended with the
copies of PNs No. 23356 and 23357. Although both Mr.
Pujeda and Mr. Tan said that they based their testimonies,
not just on their memories but also on the documents on
file, the supposed documents on which they based those
portions of their testimony on the payment of PNs No.
23356 and 23357 and the opening of the TD accounts from
the proceeds thereof, were never presented before the
courts nor made part of the records of the
case. Respondents money market placements were of
substantial amounts consisting of the principal amount
of P500,000.00, plus the interest it should have earned
during the years of placement and it is difficult for this
Court to believe that petitioner Citibank would not have
had documented the payment thereof.
When Mr. Pujeda testified before the RTC on 6
February 1990,[39] petitioners counsel attempted to present
in evidence a document that would supposedly support the
claim of petitioner Citibank that the proceeds of PNs No.
23356 and 23357 were used by respondent to open one of
her two TD accounts in the amount
of P500,000.00.Respondents counsel objected to the
presentation of the document since it was a mere xerox"
copy, and was blurred and hardly readable. Petitioners
counsel then asked for a continuance of the hearing so that
they can have time to produce a better document, which
was granted by the court. However, during the next hearing
and continuance of Mr. Pujedas testimony on 12 March
1990, petitioners counsel no longer referred to the said
document.
 As respondent had established a prima facie case that
petitioner Citibank is obligated to her for the amounts
stated in PNs No. 23356 and 23357, and as petitioner
Citibank failed to present sufficient proof of payment of the
said PNs and the use by the respondent of the proceeds
thereof to open her TD accounts, this Court finds that PNs
No. 23356 and 23357 are still outstanding and petitioner
Citibank is still liable to respondent for the amounts
stated therein.
The significance of this Courts declaration that PNs No.
23356 and 23357 are still outstanding becomes apparent in
the light of petitioners next contentions that respondent
used the proceeds of PNs No. 23356 and 23357, together
with additional money, to open TD Accounts No. 17783
and 17784 with petitioner Citibank; and, subsequently,
respondent pre-terminated these TD accounts and
transferred the proceeds thereof, amounting
to P1,100,000.00, to petitioner FNCB Finance for money
market placements. While respondents money market
placements with petitioner FNCB Finance may be traced
back with definiteness to TD Accounts No. 17783 and
17784, there is only flimsy and unsubstantiated connection
between the said TD accounts and the supposed proceeds
paid from PNs No. 23356 and 23357. With PNs No. 23356
and 23357 still unpaid, then they represent an obligation of
petitioner Citibank separate and distinct from the obligation
of petitioner FNCB Finance arising from respondents
money market placements with the latter.
Money market placements with petitioner FNCB Finance
According to petitioners, respondents TD Accounts No.
17783 and 17784, in the total amount of P1,100,000.00,
were supposed to mature on 15 March 1978. However,
respondent, through a letter dated 28 April 1977, [40] pre-
terminated the said TD accounts and transferred all the
proceeds thereof to petitioner FNCB Finance for money
market placement. Pursuant to her instructions, TD
Accounts No. 17783 and 17784 were pre-terminated and
petitioner Citibank (then still named First National City
Bank) issued Managers Checks (MC) No. 199253[41] and
199251[42] for the amounts of P500,000.00 and P600,00.00,
respectively. Both MCs were payable to Citifinance (which,
according to Mr. Pujeda,[43] was one with and the same as
petitioner FNCB Finance), with the additional notation that
A/C MODESTA R. SABENIANO. Typewritten on MC No.
199253 is the phrase Ref. Proceeds of TD 17783, and on
MC No. 199251 is a similar phrase, Ref. Proceeds of TD
17784. These phrases purportedly established that the MCs
were paid from the proceeds of respondents pre-terminated As presented by the petitioner FNCB Finance, respondent
TD accounts with petitioner Citibank. Upon receipt of the rolled-over only the principal amounts of her money
MCs, petitioner FNCB Finance deposited the same to its market placements as she chose to receive the interest
account with Feati Bank and Trust Co., as evidenced by the income therefrom. Petitioner FNCB Finance also pointed
rubber stamp mark of the latter found at the back of both out that when PN No. 4962, with principal amount
MCs. In exchange, petitioner FNCB Finance booked the of P600,000.00, matured on 1 June 1977, respondent
amounts received as money market placements, and received a partial payment of the principal which, together
accordingly issued PNs No. 4952 and 4962, for the with the interest, amounted to P102,633.33;[44] thus, only
amounts of P500,000.00 and P600,000.00, respectively, the amount of P500,000.00 from PN No. 4962 was rolled-
payable to respondents savings account with petitioner over to PN No. 5758.
Citibank, S/A No. 25-13703-4, upon their maturity on 1
June 1977. Once again, respondent rolled-over several Based on the foregoing records, the principal amounts of
times the principal amounts of her money market PNs No. 5757 and 5758, upon their maturity, were rolled
placements with petitioner FNCB Finance, as follows over to PNs No. 8167 and 8169, respectively. PN No.
8167[45]expressly canceled and superseded PN No. 5757,
Maturity Date while PN No. 8169[46] also explicitly canceled and
Date PN Cancels (mm/dd/yyyy) Amount Interest
(mm/dd/yyy No. PN No. (P) (p.a.) superseded PN No. 5758. Thus, it is patently erroneous for
y) the Court of Appeals to still award to respondent the
04/29/1977 4952 None 06/01/1977 500,000.00 17%
496 None 06/01/1977 600,000.00 17% principal amounts and interests covered by PNs No. 5757
2 and 5758 when these were already canceled and
06/02/1977 5757 4952 08/31/1977 500,000.00 17%
575 4962 08/31/1977 500,000.00 17% superseded. It is now incumbent upon this Court to
8 determine what subsequently happened to PNs No. 8167
08/31/1977 8167 5757 08/25/1978 500,000.00 14%
816 5752 08/25/1978 500,000.00 14%
and 8169.
9
Petitioner FNCB Finance presented four checks as proof of
payment of the principal amounts and interests of PNs No.
8167 and 8169 upon their maturity. All the checks were
payable to respondents savings account with petitioner
Citibank, with the following details
77034 were invested by petitioner FNCB Finance, on
behalf of respondent, in money market placements for
which it issued PNs No. 20138 and 20139. The PNs each
covered P500,000.00, to earn 11% interest per annum, and
to mature on 3 September 1979.

Date of Amount On 3 September 1979, petitioner FNCB Finance issued

Issuance Check No. (P) Notation
(mm/dd/yyyy) Check No. 100168, pay to the order of Citibank N.A. A/C
09/01/1978 76962 12,833.34Interest payment on Modesta Sabeniano, in the amount of P1,022,916.66, as full
PN#08167
09/01/1978 76961 12,833.34Interest payment on payment of the principal amounts and interests of both PNs
PN#08169 No. 20138 and 20139 and, resultantly, canceling the said
09/05/1978 77035 500,000.00Full payment of principal
on PN#08167 which is PNs.[48] Respondent actually admitted the issuance and
hereby cancelled existence of Check No. 100168, but with the qualification
09/05/ 1978 77034 500,000.00Full payment of principal
on PN#08169 which is that the proceeds thereof were turned over to petitioner
hereby cancelled Citibank.[49] Respondent did not clarify the circumstances
attending the supposed turn over, but on the basis of the
Then again, Checks No. 77035 and 77034 were later allegations of petitioner Citibank itself, the proceeds of PNs
returned to petitioner FNCB Finance together with a memo, No. 20138 and 20139, amounting to P1,022,916.66, was
[47]
dated 6 September 1978, from Mr. Tan of petitioner used by it to liquidate respondents outstanding
Citibank, to a Mr. Bobby Mendoza of petitioner FNCB loans. Therefore, the determination of whether or not
Finance. According to the memo, the two checks, in the respondent is still entitled to the return of the proceeds of
total amount of P1,000,000.00, were to be returned to PNs No. 20138 and 20139 shall be dependent on the
respondents account with instructions to book the said resolution of the issues raised as to the existence of the
amount in money market placements for one more loans and the authority of petitioner Citibank to use the
year. Pursuant to the said memo, Checks No. 77035 and proceeds of the said PNs, together with respondents other
deposits and money market placements, to pay for the
same.
Savings and current accounts with petitioner Citibank
Respondent presented and submitted before the RTC
deposit slips and bank statements to prove deposits made to
several of her accounts with petitioner Citibank,
particularly, Accounts No. 00484202, 59091, and 472-751,
which would have amounted to a total of P3,812,712.32,
had there been no withdrawals or debits from the said
accounts from the time the said deposits were made.
Although the RTC and the Court of Appeals did not make
any definitive findings as to the status of respondents
savings and current accounts with petitioner Citibank, the
Decisions of both the trial and appellate courts effectively
recognized only the P31,079.14 coming from respondents
savings account which was used to off-set her alleged
outstanding loans with petitioner Citibank.[50]
Since both the RTC and the Court of Appeals had
consistently recognized only the P31,079.14 of respondents
savings account with petitioner Citibank, and that
respondent failed to move for reconsideration or to appeal
this particular finding of fact by the trial and appellate
courts, it is already binding upon this Court. Respondent is
already precluded from claiming any greater amount in her
savings and current accounts with petitioner
Citibank. Thus, this Court shall limit itself to determining
whether or not respondent is entitled to the return of the
amount of P31,079.14 should the off-set thereof by
petitioner Citibank against her supposed loans be found
invalid.
Dollar accounts with Citibank-Geneva
Respondent made an effort of preparing and presenting
before the RTC her own computations of her money market
placements and dollar accounts with Citibank-Geneva,
purportedly amounting to a total of United States (US)
$343,220.98, as of 23 June 1985.[51] In her Memorandum
filed with the RTC, she claimed a much bigger amount of
deposits and money market placements with Citibank-
Geneva, totaling US$1,336,638.65.[52] However, respondent
herself also submitted as part of her formal offer of
evidence the computation of her money market placements
and dollar accounts with Citibank-Geneva as determined by
 US$ 310.87 various charges including closing charges
the latter.[53] Citibank-Geneva accounted for respondents
According to the foregoing computation, by 25 October
money market placements and dollar accounts as follows
1979, respondent had a total of US$156,942.70, from
MODESTA SABENIANO &/OR which, US$149,632.99 was transferred by Citibank-Geneva
==================
to petitioner Citibank in Manila, and was used by the latter
US$ 30000.-- Principal Fid. Placement to off-set respondents outstanding loans. The balance of
+ 339.06 Interest at 3,875% p.a. from 12.07.
US$ 25.10.79
respondents accounts with Citibank-Geneva, after the
- US$ 95.-- Commission (minimum) remittance to petitioner Citibank in Manila, amounted to
US$ 30244.06 Total proceeds on 25.10.1979 US$7,309.71, which was subsequently expended by a
transfer to another account with Citibank-Zuerich, in the
US$ 114000.-- Principal Fid. Placement amount of US$6,998.84, and by payment of various bank
+ 1358.50 Interest at 4,125% p.a. from 12.07. charges, including closing charges, in the amount of
US$ 25.10.79
- US$ 41.17 Commission US$310.87. Rightly so, both the RTC and the Court of
US$ 115317.33 Total proceeds on 25.10.1979 Appeals gave more credence to the computation of
Citibank-Geneva as to the status of respondents accounts
US$ 145561.39 Total proceeds of both placements on with the said bank, rather than the one prepared by
25.10.1979 respondent herself, which was evidently self-serving. Once
+ 11381.31 total of both current accounts
US$ again, this Court shall limit itself to determining whether or
US$ 156942.70 Total funds available not respondent is entitled to the return of the amount of
US$149,632.99 should the off-set thereof by petitioner
- US$ 149632.99 Transfer to Citibank Manila on 26.10.1979
(counter value of Pesos 1102944.78) Citibank against her alleged outstanding loans be found
US$ 7309.71 Balance in current accounts invalid. Respondent cannot claim any greater amount since
- US$ 6998.84 Transfer to Citibank Zuerich ac no. 121359 she did not perfect an appeal of the Decision of the Court
on March of Appeals, dated 26 March 2002, which found that she is
13, 1980
entitled only to the return of the said amount, as far as her
accounts with Citibank-Geneva is concerned. According to petitioner Citibank, respondent incurred her
loans under the circumstances narrated below.
III As early as 9 February 1978, respondent obtained
her first loan from petitioner Citibank in the principal
Petitioner Citibank amount of P200,000.00, for which she executed PN No.
was able to establish
by preponderance of 31504.[54]Petitioner Citibank extended to her several other
evidence the loans in the succeeding months. Some of these loans were
existence of paid, while others were rolled-over or renewed. Significant
respondents loans.
to the Petition at bar are the loans which respondent
obtained from July 1978 to January 1979, appropriately
covered by PNs (first set).[55] The aggregate principal
Petitioners version of events
amount of these loans was P1,920,000.00, which could be
broken down as follows
In sum, the following amounts were used by petitioner
Citibank to liquidate respondents purported outstanding
Date of Issuance Date of Date of Release
loans PN (mm/dd/yyyy) Maturity Principal (mm/dd/yyyy)
No. (mm/dd/yyyy) Amount
32935 07/20/1978 09/18/1978 P 400,000.00 07/20/1978
Description Amount
33751 10/13/1978 12/12/1978 100,000.00 Unrecov
Principal and interests of PNs No. 20138
33798 10/19/1978 11/03/1978 100,000.00 10/19/1978
and 20139
34025 11/15/1978 01/15/1979 150,000.00 11/16/1978
(money market placements with petitioner P 1,022,916.66
FNCB Finance) 34079 11/21/1978 01/19/1979 250,000.00 11/21/1978
Savings account with petitioner Citibank 31,079.14 34192 12/04/1978 01/18/1979 100,000.00 12/05/1978
Dollar remittance from Citibank- 34402 12/26/1978 02/23/1979 300,000.00 12/26/1978
Geneva (peso equivalent 34534 01/09/1979 03/09/1979 150,000.00 01/09/1979
Of US$149,632.99) 1,102,944.78 34609 01/17/1979 03/19/1979 150,000.00 01/17/1979
34740 01/30/1979 03/30/1979 220,000.00 01/30/1979
Total P 2,156,940.58
Total P1,920,000.00

Respondent secured her foregoing loans with

When respondent was unable to pay the first set of PNs petitioner Citibank by executing Deeds of Assignment of
upon their maturity, these were rolled-over or renewed her money market placements with petitioner FNCB
several times, necessitating the execution by respondent of Finance. On 2 March 1978, respondent executed in favor of
new PNs in favor of petitioner Citibank. As of 5 April petitioner Citibank a Deed of Assignment [57] of PN No.
1979, respondent had the following outstanding PNs 8169, which was issued by petitioner FNCB Finance, to
(second set),[56] the principal amount of which remained secure payment of the credit and banking facilities
at P1,920,000.00 extended to her by petitioner Citibank, in the aggregate
principal amount of P500,000.00. On 9 March 1978,
Date of Issuance Date of Maturity
PN No. (mm/dd/yyyy) (mm/dd/yyyy) Principal Amount respondent executed in favor of petitioner Citibank another
34510 01/01/1979 03/02/1979 P 400,000.00 Deed of Assignment,[58] this time, of PN No. 8167, also
34509 01/02/1979 03/02/1979 100,000.00
34534 01/09/1979 03/09/1979 150,000.00 issued by petitioner FNCB Finance, to secure payment of
34612 01/19/1979 03/16/1979 150,000.00 the credit and banking facilities extended to her by
34741 01/26/1979 03/12/1979 100,000.00
35689 02/23/1979 05/29/1979 300,000.00
petitioner Citibank, in the aggregate amount
35694 03/19/1979 05/29/1979 150,000.00 of P500,000.00. When PNs No. 8167 and 8169,
35695 03/19/1979 05/29/1979 100,000.00 representing respondents money market placements with
356946 03/20/1979 05/29/1979 250,000.00
35697 03/30/1979 05/29/1979 220,000.00 petitioner FNCB Finance, matured and were rolled-over to
PNs No. 20138 and 20139, respondent executed new Deeds
Total P 1,920,000.00
of Assignment,[59] in favor of petitioner Citibank, on 25
August 1978. According to the more recent Deeds,
All the PNs stated that the purpose of the loans covered
respondent assigned PNs No. 20138 and 20139,
thereby is To liquidate existing obligation, except for PN
representing her rolled-over money market placements with
No. 34534, which stated for its purpose personal
petitioner FNCB Finance, to petitioner Citibank as security
investment.
for the banking and credit facilities it extended to her, in the
aggregate principal amount of P500,000.00 per Deed.
In addition to the Deeds of Assignment of her money
market placements with petitioner FNCB Finance,
respondent also executed a Declaration of Pledge, [60] in
which she supposedly pledged [a]ll present and future
fiduciary placements held in my personal and/or joint name
with Citibank, Switzerland, to secure all claims the
petitioner Citibank may have or, in the future, acquire
against respondent. The petitioners copy of the Declaration
of Pledge is undated, while that of the respondent, a copy
certified by a Citibank-Geneva officer, bore the date 24
September 1979.[61]
When respondent failed to pay the second set of PNs upon
their maturity, an exchange of letters ensued between
respondent and/or her representatives, on one hand, and the
representatives of petitioners, on the other.
The first letter[62] was dated 5 April 1979, addressed to
respondent and signed by Mr. Tan, as the manager of
petitioner Citibank, which stated, in part, that
Despite our repeated requests and follow-up, we regret
you have not granted us with any response or
payment.
We, therefore, have no alternative but to call your loan
of P1,920,000.00 plus interests and other charges due
and demandable. If you still fail to settle this
obligation by 4/27/79, we shall have no other
alternative but to refer your account to our lawyers for
legal action to protect the interest of the bank.
Respondent sent a reply letter[63] dated 26 April 1979,
printed on paper bearing the letterhead of respondents
company, MC Adore International Palace, the body of
which reads
This is in reply to your letter dated April 5, 1979
inviting my attention to my loan which has become
due. Pursuant to our representation with you over the
telephone through Mr. F. A. Tan, you allow us to pay
the interests due for the meantime.
Please accept our Comtrust Check in the amount
of P62,683.33.
Please bear with us for a little while, at most ninety
days. As you know, we have a pending loan with the
Development Bank of the Philippines in the amount
of P11-M. This loan has already been recommended
for approval and would be submitted to the Board of
Governors. In fact, to further facilitate the early
release of this loan, we have presented and furnished
Gov. J. Tengco a xerox copy of your letter.
You will be doing our corporation a very viable
service, should you grant us our request for a little
more time.

A week later or on 3 May 1979, a certain C. N.
Pugeda, designated as Executive Secretary, sent a
letter[64] to petitioner Citibank, on behalf of respondent. The
letter was again printed on paper bearing the letterhead of
MC Adore International Palace. The pertinent paragraphs
of the said letter are reproduced below
Per instructions of Mrs. Modesta R. Sabeniano, we
would like to request for a re-computation of the
interest and penalty charges on her loan in the
aggregate amount of P1,920,000.00 with maturity date
of all promissory notes at June 30, 1979. As she has
personally discussed with you yesterday, this date will
more or less assure you of early settlement.
In this regard, please entrust to bearer, our Comtrust
check for P62,683.33 to be replaced by another check
with amount resulting from the new
computation. Also, to facilitate the processing of the
same, may we request for another set of promissory
notes for the signature of Mrs. Sabeniano and to
cancel the previous ones she has signed and forwarded
to you.
This was followed by a telegram,[65] dated 5 June 1979, and
received by petitioner Citibank the following day. The
telegram was sent by a Dewey G. Soriano, Legal
Counsel.The telegram acknowledged receipt of the
telegram sent by petitioner Citibank regarding the re-past
due obligation of McAdore International Palace. However,
it reported that respondent, the President and Chairman of
MC Adore International Palace, was presently abroad
negotiating for a big loan. Thus, he was requesting for an
extension of the due date of the obligation until respondents
arrival on or before 31 July 1979.
The next letter,[66] dated 21 June 1979, was signed by
respondent herself and addressed to Mr. Bobby Mendoza, a
Manager of petitioner FNCB Finance. Respondent wrote
therein
Re: PN No. 20138
for P500,000.00 & PN
No. 20139
for P500,000.00
totalling P1 Million,
both PNs will mature on
9/3/1979.
This is to authorize you to release the accrued
quarterly interests payment from my captioned
placements and forward directly to Citibank, Manila
Attention: Mr. F. A. Tan, Manager, to apply to my
interest payable on my outstanding loan with Citibank.
Please note that the captioned two placements
are continuously pledged/hypothecated to Citibank,
Manila to support my personal outstanding
loan. Therefore, please do not release the captioned
placements upon maturity until you have received the
instruction from Citibank, Manila.

On even date, respondent sent another letter[67] to Mr.
Tan of petitioner Citibank, stating that
Re: S/A No. 25-225928
and C/A No. 484-946
This letter serves as an authority to debit
whatever the outstanding balance from my
captioned accounts and credit the amount to
my loan outstanding account with you.
Unlike respondents earlier letters, both letters, dated 21
June 1979, are printed on plain paper, without the
letterhead of her company, MC Adore International Palace.
By 5 September 1979, respondents outstanding and past
due obligations to petitioner Citibank
totaled P2,123,843.20, representing the principal amounts
plus interests. Relying on respondents Deeds of
Assignment, petitioner Citibank applied the proceeds of
respondents money market placements with petitioner
FNCB Finance, as well as her deposit account with
petitioner Citibank, to partly liquidate respondents
outstanding loan balance,[68] as follows
Respondents outstanding obligation (principal P 2,123,843.20
and interest)
Less: Proceeds from respondents money market
placements
with petitioner FNCB Finance (principal (1,022,916.66)
and interest)
Deposits in respondents bank accounts with
petitioner
Citibank (31,079.14)
Balance of respondents obligation P 1,069,847.40
Mr. Tan of petitioner Citibank subsequently sent a letter,
[69]
dated 28 September 1979, notifying respondent of the
status of her loans and the foregoing compensation which
petitioner Citibank effected. In the letter, Mr. Tan informed
respondent that she still had a remaining past-due
obligation in the amount of P1,069,847.40, as of 5
September 1979, and should respondent fail to pay the
amount by 15 October 1979, then petitioner Citibank shall
proceed to off-set the unpaid amount with respondents
other collateral, particularly, a money market placement in
Citibank-Hongkong.
On 5 October 1979, respondent wrote Mr. Tan of petitioner
Citibank, on paper bearing the letterhead of MC Adore
International Palace, as regards the P1,920,000.00 loan
account supposedly of MC Adore Finance & Investment,
Inc., and requested for a statement of account covering the
principal and interest of the loan as of 31 October
1979. She stated therein that the loan obligation shall be
paid within 60 days from receipt of the statement of
account.
Almost three weeks later, or on 25 October 1979, a certain
Atty. Moises Tolentino dropped by the office of petitioner
Citibank, with a letter, dated 9 October 1979, and printed
on paper with the letterhead of MC Adore International
Palace, which authorized the bearer thereof to represent the
respondent in settling the overdue account, this time,
purportedly, of MC Adore International Palace Hotel. The
letter was signed by respondent as the President and
Chairman of the Board.
Eventually, Atty. Antonio Agcaoili of Agcaoili &
Associates, as counsel of petitioner Citibank, sent a letter to
respondent, dated 31 October 1979, informing her that
petitioner Citibank had effected an off-set using her
account with Citibank-Geneva, in the amount of
US$149,632.99, against her outstanding, overdue,
demandable and unpaid obligation to petitioner
Citibank. Atty. Agcaoili claimed therein that the
compensation or off-set was made pursuant to and in
accordance with the provisions of Articles 1278 through
1290 of the Civil Code. He further declared that
respondents obligation to petitioner Citibank was now fully
paid and liquidated.
Unfortunately, on 7 October 1987, a fire gutted the 7 th floor
of petitioner Citibanks building at Paseo de Roxas St.,
Makati, Metro Manila. Petitioners submitted a
Certification[70] to this effect, dated 17 January 1991, issued
by the Chief of the Arson Investigation Section, Fire
District III, Makati Fire Station, Metropolitan Police
Force.The 7th floor of petitioner Citibanks building housed
its Control Division, which was in charge of keeping the
necessary documents for cases in which it was
involved. After compiling the documentary evidence for
the present case, Atty. Renato J. Fernandez, internal legal
counsel of petitioner Citibank, forwarded them to the
Control Division. The original copies of the MCs, which
supposedly represent the proceeds of the first set of PNs, as
well as that of other documentary evidence related to the
case, were among those burned in the said fire.[71]
Respondents version of events
Respondent disputed petitioners narration of the
circumstances surrounding her loans with petitioner
Citibank and the alleged authority she gave for the off-set
or compensation of her money market placements and
deposit accounts with petitioners against her loan
obligation.
Respondent denied outright executing the first set of PNs,
except for one (PN No. 34534 in particular). Although she
admitted that she obtained several loans from petitioner
Citibank, these only amounted to P1,150,000.00, and she
had already paid them. She secured from petitioner
Citibank two loans of P500,000.00 each. She executed in
favor of petitioner Citibank the corresponding PNs for the
loans and the Deeds of Assignment of her money market
placements with petitioner FNCB Finance as security. [72] To
prove payment of these loans, respondent presented two
provisional receipts of petitioner Citibank No. 19471,
[73]
dated 11 August 1978, and No. 12723,[74] dated 10
November 1978 both signed by Mr. Tan, and
acknowledging receipt from respondent of several checks
in the total amount of P500,744.00 and P500,000.00,
respectively, for liquidation of loan.
She borrowed another P150,000.00 from petitioner
Citibank for personal investment, and for which she
executed PN No. 34534, on 9 January 1979. Thus, she
admitted to receiving the proceeds of this loan via MC No.
228270. She invested the loan amount in another money
market placement with petitioner FNCB Finance. In turn,
she used the very same money market placement with
petitioner FNCB Finance as security for her P150,000.00
loan from petitioner Citibank. When she failed to pay the
loan when it became due, petitioner Citibank allegedly
forfeited her money market placement with petitioner
FNCB Finance and, thus, the loan was already paid.[75]
Respondent likewise questioned the MCs presented by
petitioners, except for one (MC No. 228270 in particular),
as proof that she received the proceeds of the loans covered
by the first set of PNs. As recounted in the preceding
paragraph, respondent admitted to obtaining a loan
of P150,000.00, covered by PN No. 34534, and receiving
MC No. 228270 representing the proceeds thereof, but
claimed that she already paid the same. She denied ever
receiving MCs No. 220701 (for the loan of P400,000.00,
covered by PN No. 33935) and No. 226467 (for the loan
of P250,000.00, covered by PN No. 34079), and pointed
out that the checks did not bear her indorsements. She did
not deny receiving all other checks but she interposed that
she received these checks, not as proceeds of loans, but as
payment of the principal amounts and/or interests from her
money market placements with petitioner Citibank. She
also raised doubts as to the notation on each of the checks notation, This isa (sic) simulated non-negotiable note,
that reads RE: Proceeds of PN#[corresponding PN No.], signed copy given to Mr. Tan., (sic) per agreement to be
saying that such notation did not appear on the MCs when shown to DBP representative. itwill (sic) be returned to me
she originally received them and that the notation appears if the P11=M (sic) loan for MC Adore Palace Hotel is
to have been written by a typewriter different from that approved by DBP.[77]
used in writing all other information on the checks (i.e.,
date, payee, and amount).[76] She even testified that MCs Findings of this Court as to the existence of the loans
were not supposed to bear notations indicating the purpose
for which they were issued.
After going through the testimonial and documentary
As to the second set of PNs, respondent acknowledged
evidence presented by both sides to this case, it is this
having signed them all. However, she asserted that she only
Courts assessment that respondent did indeed have
executed these PNs as part of the simulated loans she and
outstanding loans with petitioner Citibank at the time it
Mr. Tan of petitioner Citibank concocted. Respondent
effected the off-set or compensation on 25 July 1979 (using
explained that she had a pending loan application for a big
respondents savings deposit with petitioner Citibank), 5
amount with the Development Bank of the Philippines
September 1979 (using the proceeds of respondents money
(DBP), and when Mr. Tan found out about this, he
market placements with petitioner FNCB Finance) and 26
suggested that they could make it appear that the
October 1979 (using respondents dollar accounts remitted
respondent had outstanding loans with petitioner Citibank
from Citibank-Geneva).The totality of petitioners evidence
and the latter was already demanding payment thereof; this
as to the existence of the said loans preponderates over
might persuade DBP to approve respondents loan
respondents. Preponderant evidence means that, as a whole,
application. Mr. Tan made the respondent sign the second
the evidence adduced by one side outweighs that of the
set of PNs, so that he may have something to show the
adverse party.[78]
DBP investigator who might inquire with petitioner
Citibank as to respondents loans with the latter. On her own
copies of the said PNs, respondent wrote by hand the
Respondents outstanding obligation for P1,920,000.00 had
been sufficiently documented by petitioner Citibank.
The second set of PNs is a mere renewal of the prior loans
originally covered by the first set of PNs, except for PN
No. 34534. The first set of PNs is supported, in turn, by the
existence of the MCs that represent the proceeds thereof
received by the respondent.
It bears to emphasize that the proceeds of the loans were
paid to respondent in MCs, with the respondent specifically
named as payee. MCs checks are drawn by the banks
manager upon the bank itself and regarded to be as good as
the money it represents.[79] Moreover, the MCs were
crossed checks, with the words Payees Account Only.
In general, a crossed check cannot be presented to the
drawee bank for payment in cash. Instead, the check can
only be deposited with the payees bank which, in turn,
must present it for payment against the drawee bank in the
course of normal banking hours. The crossed check cannot
be presented for payment, but it can only be deposited and
the drawee bank may only pay to another bank in the
payees or indorsers account.[80] The effect of crossing a
check was described by this Court in Philippine
Commercial International Bank v. Court of Appeals[81]
[T]he crossing of a check with the phrase Payees
Account Only is a warning that the check should be
deposited in the account of the payee. Thus, it is the
duty of the collecting bank PCI Bank to ascertain that
the check be deposited in payees account only. It is
bound to scrutinize the check and to know its
depositors before it can make the clearing indorsement
all prior indorsements and/or lack of indorsement
guaranteed.
The crossed MCs presented by petitioner Bank were indeed
deposited in several different bank accounts and cleared by
the Clearing Office of the Central Bank of the Philippines,
as evidenced by the stamp marks and notations on the said
checks. The crossed MCs are already in the possession of
petitioner Citibank, the drawee bank, which was ultimately
responsible for the payment of the amount stated in the
checks. Given that a check is more than just an instrument
of credit used in commercial transactions for it also serves
as a receipt or evidence for the drawee bank of the
cancellation of the said check due to payment,[82] then, the
possession by petitioner Citibank of the said MCs, duly
stamped Paid gives rise to the presumption that the said
MCs were already paid out to the intended payee, who was
in this case, the respondent.
This Court finds applicable herein the presumptions that
private transactions have been fair and regular,[83] and that
the ordinary course of business has been followed.[84] There
is no question that the loan transaction between petitioner
Citibank and the respondent is a private transaction. The
transactions revolving around the crossed MCs from their
issuance by petitioner Citibank to respondent as payment of
the proceeds of her loans; to its deposit in respondents
accounts with several different banks; to the clearing of the
MCs by an independent clearing house; and finally, to the
payment of the MCs by petitioner Citibank as the drawee
bank of the said checks are all private transactions which
shall be presumed to have been fair and regular to all the
parties concerned. In addition, the banks involved in the
foregoing transactions are also presumed to have followed
the ordinary course of business in the acceptance of the
crossed MCs for deposit in respondents accounts,
submitting them for clearing, and their eventual payment
and cancellation.
The afore-stated presumptions are disputable, meaning,
they are satisfactory if uncontradicted, but may be
contradicted and overcome by other evidence.
[85]
Respondent, however, was unable to present sufficient
and credible evidence to dispute these presumptions.
It should be recalled that out of the nine MCs presented by
petitioner Citibank, respondent admitted to receiving one as
proceeds of a loan (MC No. 228270), denied receiving two
(MCs No. 220701 and 226467), and admitted to receiving
all the rest, but not as proceeds of her loans, but as return
on the principal amounts and interests from her money
market placements.
Respondent admitted receiving MC No. 228270
representing the proceeds of her loan covered by PN No.
34534. Although the principal amount of the loan
is P150,000.00, respondent only received P146,312.50,
because the interest and handling fee on the loan
transaction were already deducted therefrom.[86] Stamps and
notations at the back of MC No. 228270 reveal that it was
deposited at the Bank of the Philippine Islands (BPI),
Cubao Branch, in Account No. 0123-0572-28.[87] The check
also bore the signature of respondent at the back. [88] And,
although respondent would later admit that she did sign PN
No. 34534 and received MC No. 228270 as proceeds of the
loan extended to her by petitioner Citibank, she
contradicted herself when, in an earlier testimony, she
claimed that PN No. 34534 was among the PNs she
executed as simulated loans with petitioner Citibank.[89]

Respondent denied ever receiving MCs No. 220701 and
226467. However, considering that the said checks were
crossed for payees account only, and that they were actually
deposited, cleared, and paid, then the presumption would
be that the said checks were properly deposited to the
account of respondent, who was clearly named the payee in
the checks. Respondents bare allegations that she did not
receive the two checks fail to convince this Court, for to
sustain her, would be for this Court to conclude that an
irregularity had occurred somewhere from the time of the
issuance of the said checks, to their deposit, clearance, and
payment, and which would have involved not only
petitioner Citibank, but also BPI, which accepted the
checks for deposit, and the Central Bank of the Philippines,
which cleared the checks. It falls upon the respondent to
overcome or dispute the presumption that the crossed
checks were issued, accepted for deposit, cleared, and paid
for by the banks involved following the ordinary course of
their business.
The mere fact that MCs No. 220701 and 226467 do not
bear respondents signature at the back does not negate
deposit thereof in her account. The liability for the lack of
indorsement on the MCs no longer fall on petitioner
Citibank, but on the bank who received the same for
deposit, in this case, BPI Cubao Branch. Once again, it
must be noted that the MCs were crossed, for payees
account only, and the payee named in both checks was
none other than respondent. The crossing of the MCs was
already a warning to BPI to receive said checks for deposit
only in respondents account. It was up to BPI to verify
whether it was receiving the crossed MCs in accordance
with the instructions on the face thereof. If, indeed, the
MCs were deposited in accounts other than respondents,
then the respondent would have a cause of action against
BPI.[90]
BPI further stamped its guarantee on the back of the checks
to the effect that, All prior endorsement and/or Lack of
endorsement guaranteed. Thus, BPI became the indorser of
the MCs, and assumed all the warranties of an indorser,
[91]
specifically, that the checks were genuine and in all
respects what they purported to be; that it had a good title
to the checks; that all prior parties had capacity to contract;
and that the checks were, at the time of their indorsement,
valid and subsisting.[92] So even if the MCs deposited by
BPI's client, whether it be by respondent herself or some
other person, lacked the necessary indorsement, BPI, as the
collecting bank, is bound by its warranties as an indorser
and cannot set up the defense of lack of indorsement as
against petitioner Citibank, the drawee bank.[93]
Furthermore, respondents bare and unsubstantiated denial
of receipt of the MCs in question and their deposit in her
account is rendered suspect when MC No. 220701 was
actually deposited in Account No. 0123-0572-28 of BPI
Cubao Branch, the very same account in which MC No.
228270 (which respondent admitted to receiving as
proceeds of her loan from petitioner Citibank), and MCs
No. 228203, 228357, and 228400 (which respondent
admitted to receiving as proceeds from her money market
placements) were deposited. Likewise, MC No. 226467
was deposited in Account No. 0121-002-43 of BPI Cubao
Branch, to which MCs No. 226285 and 226439 (which
respondent admitted to receiving as proceeds from her
money market placements) were deposited. It is an
apparent contradiction for respondent to claim having
received the proceeds of checks deposited in an account,
and then deny receiving the proceeds of another check
deposited in the very same account.
Another inconsistency in respondents denial of receipt of
MC No. 226467 and her deposit of the same in her account,
is her presentation of Exhibit HHH, a provisional receipt
which was supposed to prove that respondent turned
over P500,000.00 to Mr. Tan of petitioner Citibank, that the
said amount was split into three money market placements,
and that MC No. 226467 represented the return on her
investment from one of these placements.[94] Because of her
Exhibit HHH, respondent effectively admitted receipt of
MC No. 226467, although for reasons other than as
proceeds of a loan.
Neither can this Court give credence to respondents
contention that the notations on the MCs, stating that they
were the proceeds of particular PNs, were not there when
she received the checks and that the notations appeared to
be written by a typewriter different from that used to write
the other information on the checks. Once more,
respondents allegations were uncorroborated by any other
evidence. Her and her counsels observation that the
notations on the MCs appear to be written by a typewriter
different from that used to write the other information on
the checks hardly convinces this Court considering that it
constitutes a mere opinion on the appearance of the
notation by a witness who does not possess the necessary
expertise on the matter. In addition, the notations on the
MCs were written using both capital and small letters,
while the other information on the checks were written
using capital letters only, such difference could easily
confuse an untrained eye and lead to a hasty conclusion
that they were written by different typewriters.
Respondents testimony, that based on her experience
transacting with banks, the MCs were not supposed to
include notations on the purpose for which the checks were
issued, also deserves scant consideration. While respondent
may have extensive experience dealing with banks, it still
does not qualify her as a competent witness on banking
procedures and practices. Her testimony on this matter is
even belied by the fact that the other MCs issued by
petitioner Citibank (when it was still named First National
City Bank) and by petitioner FNCB Finance, the existence
and validity of which were not disputed by respondent, also
bear similar notations that state the reason for which they
were issued.
Respondent presented several more pieces of evidence to
substantiate her claim that she received MCs No. 226285,
226439, 226467, 226057, 228357, and 228400, not as
proceeds of her loans from petitioner Citibank, but as the
return of the principal amounts and payment of interests
from her money market placements with petitioners. Part of
respondents exhibits were personal checks[95] drawn by
respondent on her account with Feati Bank & Trust Co.,
which she allegedly invested in separate money market
placements with both petitioners, the returns from which
were paid to her via MCs No. 226285 and 228400. Yet, to
this Court, the personal checks only managed to establish
respondents issuance thereof, but there was nothing on the
face of the checks that would reveal the purpose for which
they were issued and that they were actually invested in
money market placements as respondent claimed.
Respondent further submitted handwritten notes that
purportedly computed and presented the returns on her
money market placements, corresponding to the amount
stated in the MCs she received from petitioner
Citibank. Exhibit HHH-1[96] was a handwritten note, which
respondent attributed to Mr. Tan of petitioner Citibank,
showing the breakdown of her BPI Check for P500,000.00
into three different money market placements with
petitioner Citibank. This Court, however, noticed several
factors which render the note highly suspect. One, it was
written on the reversed side of Provisional Receipt No.
12724 of petitioner Citibank which bore the initials of Mr.
Tan acknowledging receipt of respondents BPI Check No.
120989 for P500,000.00; but the initials on the handwritten
note appeared to be that of Mr. Bobby Mendoza of
petitioner FNCB Finance.[97]Second, according to
Provisional Receipt No. 12724, BPI Check No. 120989
for P500,000.00 was supposed to be invested in three
money market placements with petitioner Citibank for the
period of 60 days. Since all these money market
placements were made through one check deposited on the
same day, 10 November 1978, it made no sense that the
handwritten note at the back of Provisional Receipt No.
12724 provided for different dates of maturity for each of
the money market placements (i.e., 16 November 1978, 17
January 1979, and 21 November 1978), and such dates did
not correspond to the 60 day placement period stated on the
face of the provisional receipt. And third, the principal
amounts of the money market placements as stated in the
handwritten note P145,000.00, P145,000.00
and P242,000.00 totaled P532,000.00, and was obviously
in excess of the P500,000.00 acknowledged on the face of
Provisional Receipt No. 12724.
Exhibits III and III-1, the front and bank pages of a
handwritten note of Mr. Bobby Mendoza of petitioner
FNCB Finance,[98] also did not deserve much evidentiary
weight, and this Court cannot rely on the truth and accuracy
of the computations presented therein. Mr. Mendoza was
not presented as a witness during the trial before the RTC,
so that the document was not properly authenticated nor its
contents sufficiently explained. No one was able to
competently identify whether the initials as appearing on
the note were actually Mr. Mendozas.
Also, going by the information on the front page of
the note, this Court observes that payment of respondents
alleged money market placements with petitioner FNCB
Finance were made using Citytrust Checks; the MCs in
question, including MC No. 228057, were issued by
petitioner Citibank. Although Citytrust (formerly Feati
Bank & Trust Co.), petitioner FNCB Finance, and
petitioner Citibank may be affiliates of one another, they
each remained separate and distinct corporations, each
having its own financial system and records. Thus, this
Court cannot simply assume that one corporation, such as
petitioner Citibank or Citytrust, can issue a check to
discharge an obligation of petitioner FNCB Finance. It
should be recalled that when petitioner FNCB Finance paid
for respondents money market placements, covered by its
PNs No. 8167 and 8169, as well as PNs No. 20138 and
20139, petitioner FNCB Finance issued its own checks.
As a last point on this matter, if respondent truly had
money market placements with petitioners, then these
would have been evidenced by PNs issued by either
petitioner Citibank or petitioner FNCB Finance,
acknowledging the principal amounts of the investments,
and stating the applicable interest rates, as well as the dates
of their of issuance and maturity. After respondent had so
meticulously reconstructed her other money market
placements with petitioners and consolidated the
documentary evidence thereon, she came surprisingly short
of offering similar details and substantiation for these
particular money market placements.
Since this Court is satisfied that respondent indeed received
the proceeds of the first set of PNs, then it proceeds to
analyze her evidence of payment thereof.
In support of respondents assertion that she had
already paid whatever loans she may have had with
petitioner Citibank, she presented as evidence Provisional
Receipts No. 19471, dated 11 August 1978, and No. 12723,
dated 10 November 1978, both of petitioner Citibank and
signed by Mr. Tan, for the amounts of P500,744.00
and P500,000.00, respectively. While these provisional
receipts did state that Mr. Tan, on behalf of petitioner
Citibank, received respondents checks as payment for her
loans, they failed to specifically identify which loans were
actually paid. Petitioner Citibank was able to present
evidence that respondent had executed several PNs in the
years 1978 and 1979 to cover the loans she secured from
the said bank. Petitioner Citibank did admit that respondent
was able to pay for some of these PNs, and what it
identified as the first and second sets of PNs were only
those which remained unpaid. It thus became incumbent
upon respondent to prove that the checks received by Mr.
Tan were actually applied to the PNs in either the first or
second set; a fact that, unfortunately, cannot be determined
from the provisional receipts submitted by respondent since
they only generally stated that the checks received by Mr.
Tan were payment for respondents loans.
Mr. Tan, in his deposition, further explained that
provisional receipts were issued when payment to the bank
was made using checks, since the checks would still be
subject to clearing. The purpose for the provisional receipts
was merely to acknowledge the delivery of the checks to
the possession of the bank, but not yet of payment.[99] This
bank practice finds legitimacy in the pronouncement of this
Court that a check, whether an MC or an ordinary check, is
not legal tender and, therefore, cannot constitute valid
tender of payment. In Philippine Airlines, Inc. v. Court of
Appeals, [100] this Court elucidated that:

Since a negotiable instrument is only a
substitute for money and not money, the delivery of
such an instrument does not, by itself, operate as
payment (Sec. 189, Act 2031 on Negs. Insts.; Art.
1249, Civil Code; Bryan Landon Co. v. American
Bank, 7 Phil. 255; Tan Sunco, v. Santos, 9 Phil. 44; 21
R.C.L. 60, 61). A check, whether a manager's check or
ordinary check, is not legal tender, and an offer of a
check in payment of a debt is not a valid tender of
payment and may be refused receipt by the obligee or
creditor. Mere delivery of checks does not discharge
the obligation under a judgment. The obligation is not
extinguished and remains suspended until the payment
by commercial document is actually realized (Art.
1249, Civil Code, par. 3).
In the case at bar, the issuance of an official receipt by
petitioner Citibank would have been dependent on whether
the checks delivered by respondent were actually cleared
and paid for by the drawee banks.
As for PN No. 34534, respondent asserted payment thereof
at two separate instances by two different means. In her
formal offer of exhibits, respondent submitted a deposit slip
of petitioner Citibank, dated 11 August 1978, evidencing
the deposit of BPI Check No. 5785 for P150,000.00.[101] In
her Formal Offer of Documentary Exhibits, dated 7 July
1989, respondent stated that the purpose for the
presentation of the said deposit slip was to prove that she
already paid her loan covered by PN No. 34534. [102] In her
testimony before the RTC three years later, on 28
November 1991, she changed her story. This time she
narrated that the loan covered by PN No. 34534 was
secured by her money market placement with petitioner
FNCB Finance, and when she failed to pay the said PN
when it became due, the security was applied to the loan,
therefore, the loan was considered paid.[103] Given the
foregoing, respondents assertion of payment of PN No.
34534 is extremely dubious.
According to petitioner Citibank, the PNs in the
second set, except for PN No. 34534, were mere renewals
of the unpaid PNs in the first set, which was why the PNs
stated that they were for the purpose of liquidating existing
obligations. PN No. 34534, however, which was part of the
first set, was still valid and subsisting and so it was
included in the second set without need for its renewal, and
it still being the original PN for that particular loan, its
stated purpose was for personal investment.[104] Respondent
essentially admitted executing the second set of PNs, but
they were only meant to cover simulated loans. Mr. Tan
supposedly convinced her that her pending loan application
with DBP would have a greater chance of being approved if
they made it appear that respondent urgently needed the
money because petitioner Citibank was already demanding
payment for her simulated loans.
Respondents defense of simulated loans to escape liability
for the second set of PNs is truly a novel one. It is
regrettable, however, that she was unable to substantiate the
same.Yet again, respondents version of events is totally
based on her own uncorroborated testimony. The notations
on the second set of PNs, that they were non-negotiable
simulated notes, were admittedly made by respondent
herself and were, thus, self-serving. Equally self-serving
was respondents letter, written on 7 October 1985, or more
than six years after the execution of the second set of PNs,
in which she demanded return of the simulated or fictitious
PNs, together with the letters relating thereto, which Mr.
Tan purportedly asked her to execute. Respondent further
failed to present any proof of her alleged loan application
with the DBP, and of any circumstance or correspondence
wherein the simulated or fictitious PNs were indeed used
for their supposed purpose.
In contrast, petitioner Citibank, as supported by the
testimonies of its officers and available documentation,
consistently treated the said PNs as regular loans accepted,
approved, and paid in the ordinary course of its business.
The PNs executed by the respondent in favor of petitioner
Citibank to cover her loans were duly-filled out and signed,
including the disclosure statement found at the back of the
said PNs, in adherence to the Central Bank requirement to
disclose the full finance charges to a loan granted to
borrowers.
Mr. Tan, then an account officer with the Marketing
Department of petitioner Citibank, testified that he dealt
directly with respondent; he facilitated the loans; and the
PNs, at least in the second set, were signed by respondent
in his presence.[105]
Mr. Pujeda, the officer who was previously in charge
of loans and placements, confirmed that the signatures on
the PNs were verified against respondents specimen
signature with the bank.[106]
Ms. Cristina Dondoyano, who worked at petitioner
Citibank as a loan processor, was responsible for booking
respondents loans. Booking the loans means recording it in
the General Ledger. She explained the procedure for
booking loans, as follows: The account officer, in the
Marketing Department, deals directly with the clients who
wish to borrow money from petitioner Citibank. The
Marketing Department will forward a loan booking
checklist, together with the borrowing clients PNs and
other supporting documents, to the loan pre-processor, who
will check whether the details in the loan booking checklist
are the same as those in the PNs. The documents are then
sent to Signature Control for verification of the clients
signature in the PNs, after which, they are returned to the
loan pre-processor, to be forwarded finally to the loan
processor. The loan processor shall book the loan in the
General Ledger, indicating therein the client name, loan
amount, interest rate, maturity date, and the corresponding
PN number. Since she booked respondents loans
personally, Ms. Dondoyano testified that she saw the
original PNs. In 1986, Atty. Fernandez of petitioner
Citibank requested her to prepare an accounting of
respondents loans, which she did, and which was presented
as Exhibit 120 for the petitioners. The figures from the said
exhibit were culled from the bookings in the General
Ledger, a fact which respondents counsel was even willing
to stipulate.[107]
Ms. Teresita Glorioso was an Investigation and
Reconcilement Clerk at the Control Department of
petitioner Citibank. She was presented by petitioner
Citibank to expound on the microfilming procedure at the
bank, since most of the copies of the PNs were retrieved
from microfilm. Microfilming of the documents are
actually done by people at the Operations Department. At
the end of the day or during the day, the original copies of
all bank documents, not just those pertaining to loans, are
microfilmed. She refuted the possibility that insertions
could be made in the microfilm because the microfilm is
inserted in a cassette; the cassette is placed in the microfilm
machine for use; at the end of the day, the cassette is taken
out of the microfilm machine and put in a safe vault; and
the cassette is returned to the machine only the following
day for use, until the spool is full.This is the microfilming
procedure followed everyday. When the microfilm spool is
already full, the microfilm is developed, then sent to the
Control Department, which double checks the contents of
the microfilms against the entries in the General
Ledger. The Control Department also conducts a random
comparison of the contents of the microfilms with the
original documents; a random review of the contents is
done on every role of microfilm.[108]
Ms. Renee Rubio worked for petitioner Citibank for 20
years. She rose from the ranks, initially working as a
secretary in the Personnel Group; then as a secretary to the
Personnel Group Head; a Service Assistant with the
Marketing Group, in 1972 to 1974, dealing directly with
corporate and individual clients who, among other things,
secured loans from petitioner Citibank; the Head of the
Collection Group of the Foreign Department in 1974 to
1976; the Head of the Money Transfer Unit in 1976 to
1978; the Head of the Loans and Placements Unit up to the
early 1980s; and, thereafter, she established operations
training for petitioner Citibank in the Asia-Pacific Region
responsible for the training of the officers of the bank. She
testified on the standard loan application process at
petitioner Citibank. According to Ms. Rubio, the account
officer or marketing person submits a proposal to grant a
loan to an individual or corporation. Petitioner Citibank has
a worldwide policy that requires a credit committee,
composed of a minimum of three people, which would
approve the loan and amount thereof. There can be no
instance when only one officer has the power to approve
the loan application. When the loan is approved, the
account officer in charge will obtain the corresponding PNs
from the client. The PNs are sent to the signature verifier
who would validate the signatures therein against those
appearing in the signature cards previously submitted by
the client to the bank. The Operations Unit will check and
review the documents, including the PNs, if it is a clean
loan, and securities and deposits, if it is collateralized. The
loan is then recorded in the General Ledger. The Loans and
Placements Department will not book the loans without the
PNs.When the PNs are liquidated, whether they are paid or
rolled-over, they are returned to the client.[109] Ms. Rubio
further explained that she was familiar with respondents
accounts since, while she was still the Head of the Loan
and Placements Unit, she was asked by Mr. Tan to prepare
a list of respondents outstanding obligations.[110] She thus
calculated respondents outstanding loans, which was sent
as an attachment to Mr. Tans letter to respondent, dated 28
September 1979, and presented before the RTC as Exhibits
34-B and 34-C.[111]
Lastly, the exchange of letters between petitioner Citibank
and respondent, as well as the letters sent by other people
working for respondent, had consistently recognized that
respondent owed petitioner Citibank money.
In consideration of the foregoing discussion, this
Court finds that the preponderance of evidence supports the
existence of the respondents loans, in the principal sum
ofP1,920,000.00, as of 5 September 1979. While it is well-
settled that the term preponderance of evidence should not
be wholly dependent on the number of witnesses, there are
certain instances when the number of witnesses become the
determining factor
The preponderance of evidence may be
determined, under certain conditions, by the number
of witnesses testifying to a particular fact or state of
facts. For instance, one or two witnesses may testify to
a given state of facts, and six or seven witnesses of
equal candor, fairness, intelligence, and truthfulness,
and equally well corroborated by all the remaining
evidence, who have no greater interest in the result of
the suit, testify against such state of facts. Then the
preponderance of evidence is determined by the
number of witnesses. (Wilcox vs. Hines, 100 Tenn.
524, 66 Am. St. Rep., 761.)[112]
Best evidence rule
This Court disagrees in the pronouncement made by
the Court of Appeals summarily dismissing the
documentary evidence submitted by petitioners based on its
broad and indiscriminate application of the best evidence
rule.
In general, the best evidence rule requires that the
highest available degree of proof must be
produced. Accordingly, for documentary evidence, the
contents of a document are best proved by the production
of the document itself,[113] to the exclusion of any secondary
or substitutionary evidence.[114]
The best evidence rule has been made part of the
revised Rules of Court, Rule 130, Section 3, which reads
SEC. 3. Original document must be produced;
exceptions. When the subject of inquiry is the contents
of a document, no evidence shall be admissible other
than the original document itself, except in the
following cases:
(a) When the original has been lost or
destroyed, or cannot be produced in court, without bad
faith on the part of the offeror;
(b) When the original is in the custody or
under the control of the party against whom the
evidence is offered, and the latter fails to produce it
after reasonable notice;
(c) When the original consists of numerous
accounts or other documents which cannot be
examined in court without great loss of time and the
fact sought to be established from them is only the
general result of the whole; and
(d) When the original is a public record in the
custody of a public officer or is recorded in a public
office.
As the afore-quoted provision states, the best evidence rule
applies only when the subject of the inquiry is the contents
of the document. The scope of the rule is more extensively
explained thus
 xxxx
But even with respect to documentary
In several Canadian provinces, the principle of
evidence, the best evidence rule applies only when
unavailability has been abandoned, for certain
the content of such document is the subject of the
documents in which ordinarily no real dispute arised.
inquiry. Where the issue is only as to whether such
This measure is a sensible and progressive one and
document was actually executed, or exists, or on the
deserves universal adoption (post, sec. 1233). Its
circumstances relevant to or surrounding its execution,
essential feature is that a copy may be used
the best evidence rule does not apply and testimonial
unconditionally, if the opponent has been given an
evidence is admissible (5 Moran, op. cit., pp. 76-66; 4
opportunity to inspect it.(Emphasis supplied.)
Martin, op. cit., p. 78). Any other substitutionary
evidence is likewise admissible without need for
accounting for the original.
This Court did not violate the best evidence rule
Thus, when a document is presented to prove
when it considered and weighed in evidence the
its existence or condition it is offered not as
documentary, but as real, evidence. Parol evidence of photocopies and microfilm copies of the PNs, MCs, and
the fact of execution of the documents is allowed
(Hernaez, et al. vs. McGrath, etc., et al., 91 Phil
letters submitted by the petitioners to establish the
565). x x x [115] existence of respondents loans. The terms or contents of
these documents were never the point of contention in the
In Estrada v. Desierto,[116] this Court had occasion to rule Petition at bar. It was respondents position that the PNs in
that the first set (with the exception of PN No. 34534) never
It is true that the Court relied not upon the existed, while the PNs in the second set (again, excluding
original but only copy of the Angara Diary as PN No. 34534) were merely executed to cover simulated
published in the Philippine Daily Inquirer on February
4-6, 2001. In doing so, the Court, did not, however, loan transactions. As for the MCs representing the proceeds
violate the best evidence rule. Wigmore, in his book on of the loans, the respondent either denied receipt of certain
evidence, states that:
MCs or admitted receipt of the other MCs but for another
Production of the original may be dispensed purpose. Respondent further admitted the letters she wrote
with, in the trial courts discretion, whenever in the
case in hand the opponent does not bona fide dispute personally or through her representatives to Mr. Tan of
the contents of the document and no other useful petitioner Citibank acknowledging the loans, except that
purpose will be served by requiring production.24
she claimed that these letters were just meant to keep up the
ruse of the simulated loans. Thus, respondent questioned
the documents as to their existence or execution, or when
the former is admitted, as to the purpose for which the
documents were executed, matters which are, undoubtedly,
external to the documents, and which had nothing to do
with the contents thereof.
Alternatively, even if it is granted that the best
evidence rule should apply to the evidence presented by
petitioners regarding the existence of respondents loans, it
should be borne in mind that the rule admits of the
following exceptions under Rule 130, Section 5 of the
revised Rules of Court
SEC. 5. When the original document is
unavailable. When the original document has been
lost or destroyed, or cannot be produced in court, the
offeror, upon proof of its execution or existence and
the cause of its unavailability without bad faith on his
part, may prove its contents by a copy, or by a recital
of its contents in some authentic document, or by the
testimony of witnesses in the order stated.
The execution or existence of the original copies of
the documents was established through the testimonies of
witnesses, such as Mr. Tan, before whom most of the
documents were personally executed by respondent. The
original PNs also went through the whole loan booking
system of petitioner Citibank from the account officer in its
Marketing Department, to the pre-processor, to the
signature verifier, back to the pre-processor, then to the
processor for booking.[117] The original PNs were seen by
Ms. Dondoyano, the processor, who recorded them in the
General Ledger. Mr. Pujeda personally saw the original
MCs, proving respondents receipt of the proceeds of her
loans from petitioner Citibank, when he helped Attys.
Cleofe and Fernandez, the banks legal counsels, to
reconstruct the records of respondents loans. The original
MCs were presented to Atty. Cleofe who used the same
during the preliminary investigation of the case, sometime
in years 1986-1987. The original MCs were subsequently
turned over to the Control and Investigation Division of
petitioner Citibank.[118]
It was only petitioner FNCB Finance who claimed
that they lost the original copies of the PNs when it moved
to a new office. Citibank did not make a similar contention;
instead, it explained that the original copies of the PNs
were returned to the borrower upon liquidation of the loan,
either through payment or roll-over. Petitioner Citibank
proffered the excuse that they were still looking for the
documents in their storage or warehouse to explain the
delay and difficulty in the retrieval thereof, but not their

absence or loss. The original documents in this case, such
as the MCs and letters, were destroyed and, thus,
unavailable for presentation before the RTC only on 7
October 1987, when a fire broke out on the 7th floor of the
office building of petitioner Citibank. There is no showing
that the fire was intentionally set. The fire destroyed
relevant documents, not just of the present case, but also of
other cases, since the 7th floor housed the Control and
Investigation Division, in charge of keeping the necessary
documents for cases in which petitioner Citibank was
involved.
The foregoing would have been sufficient to allow
the presentation of photocopies or microfilm copies of the
PNs, MCs, and letters by the petitioners as secondary
evidence to establish the existence of respondents loans, as
an exception to the best evidence rule.
The impact of the Decision of the Court of Appeals in the
Dy case
In its assailed Decision, the Court of Appeals made the
following pronouncement
Besides, We find the declaration and
conclusions of this Court in CA-G.R. CV No.
15934 entitled Sps. Dr. Ricardo L. Dy and Rosalind O.
Dy vs. City Bank, N.A., et al, promulgated on 15
January 1990, as disturbing taking into consideration
the similarities of the fraud, machinations, and deceits
employed by the defendant-appellant Citibank and its
Account Manager Francisco Tan.
Worthy of note is the fact that Our declarations
and conclusions against Citibank and the person of
Francisco Tan in CA-G.R. CV No. 15934 were
affirmed in toto by the Highest Magistrate in a Minute
Resolution dated 22 August 1990 entitled Citibank,
N.A., vs. Court of Appeals, G.R. 93350.
As the factual milieu of the present appeal
created reasonable doubts as to whether the nine (9)
Promissory Notes were indeed executed with
considerations, the doubts, coupled by the findings
and conclusions of this Court in CA-G.R. CV No.
15934 and the Supreme Court in G.R. No. 93350.
should be construed against herein defendants-
appellants Citibank and FNCB Finance.
What this Court truly finds disturbing is the significance
given by the Court of Appeals in its assailed Decision to the
Decision[119] of its Third Division in CA-G.R. CV No.
15934 (or the Dy case), when there is an absolute lack of
legal basis for doing such.
Although petitioner Citibank and its officer, Mr. Tan, were
also involved in the Dy case, that is about the only
connection between the Dy case and the one at bar. Not
only did the Dy case tackle transactions between parties
other than the parties presently before this Court, but the
transactions are absolutely independent and unrelated to
those in the instant Petition.
In the Dy case, Severino Chua Caedo managed to obtain
loans from herein petitioner Citibank amounting
to P7,000,000.00, secured to the extent of P5,000,000.00 by
a Third Party Real Estate Mortgage of the properties of
Caedos aunt, Rosalind Dy. It turned out that Rosalind Dy
and her husband were unaware of the said loans and the
mortgage of their properties. The transactions were carried
out exclusively between Caedo and Mr. Tan of petitioner
Citibank. The RTC found Mr. Tan guilty of fraud for his
participation in the questionable transactions, essentially
because he allowed Caedo to take out the signature cards,
when these should have been signed by the Dy spouses
personally before him.Although the Dy spouses signatures
in the PNs and Third Party Real Estate Mortgage were
forged, they were approved by the signature verifier since
the signature cards against which they were compared to
were also forged. Neither the RTC nor the Court of
Appeals, however, categorically declared Mr. Tan
personally responsible for the forgeries, which, in the
narration of the facts, were more likely committed by
Caedo.
In the Petition at bar, respondent dealt with Mr. Tan
directly, there was no third party involved who could have
perpetrated any fraud or forgery in her loan
transactions. Although respondent attempted to raise
suspicion as to the authenticity of her signatures on certain
documents, these were nothing more than naked allegations
with no corroborating evidence; worse, even her own
allegations were replete with inconsistencies. She could not
even establish in what manner or under what circumstances
the fraud or forgery was committed, or how Mr. Tan could
have been directly responsible for the same.
While the Court of Appeals can take judicial notice of the
Decision of its Third Division in the Dy case, it should not
have given the said case much weight when it rendered the
assailed Decision, since the former does not constitute a
precedent. The Court of Appeals, in the challenged
Decision, did not apply any legal argument or principle
established in the Dy case but, rather, adopted the findings
therein of wrongdoing or misconduct on the part of herein
petitioner Citibank and Mr. Tan. Any finding of
wrongdoing or misconduct as against herein petitioners
 defendant to surprise as well as confuse the court and
should be made based on the factual background and pieces prolong the trial.[121]
of evidence submitted in this case, not those in another
case.
The factual backgrounds of the two cases are so different
and unrelated that the Dy case cannot be used to prove
It is apparent that the Court of Appeals took judicial notice
specific intent, knowledge, identity, plan, system, scheme,
of the Dy case not as a legal precedent for the present case,
habit, custom or usage on the part of petitioner Citibank or
but rather as evidence of similar acts committed by
its officer, Mr. Tan, to defraud respondent in the present
petitioner Citibank and Mr. Tan. A basic rule of
case.
evidence, however, states that, Evidence that one did or did
not do a certain thing at one time is not admissible to prove
IV
that he did or did not do the same or similar thing at
another time; but it may be received to prove a specific The liquidation of
intent or knowledge, identity, plan, system, scheme, habit, respondents
custom or usage, and the like.[120] The rationale for the rule outstanding loans
were valid in so far
is explained thus as petitioner
Citibank used
The rule is founded upon reason, public policy, respondents savings
justice and judicial convenience. The fact that a person account with the
has committed the same or similar acts at some prior
bank and her
time affords, as a general rule, no logical guaranty that
he committed the act in question. This is so because, money market
subjectively, a mans mind and even his modes of life placements with
may change; and, objectively, the conditions under petitioner FNCB
which he may find himself at a given time may Finance; but illegal
likewise change and thus induce him to act in a and void in so far as
different way. Besides, if evidence of similar acts are
petitioner Citibank
to be invariably admitted, they will give rise to a
multiplicity of collateral issues and will subject the used respondents
dollar accounts with
Citibank-Geneva.
Savings Account with petitioner Citibank
Compensation is a recognized mode of extinguishing
obligations. Relevant provisions of the Civil Code provides
Art. 1278. Compensation shall take place when
two persons, in their own right, are creditors and
debtors of each other.
Art. 1279. In order that compensation may be
proper, it is necessary;
(1) That each one of the obligors be bound
principally, and that he be at the same time a principal
creditor of the other;
(2) That both debts consist in a sum of money,
or if the things due are consumable, they be of the
same kind, and also of the same quality if the latter
has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any
retention or controversy, commenced by third persons
and communicated in due time to the debtor.
There is little controversy when it comes to the right
of petitioner Citibank to compensate respondents
outstanding loans with her deposit account. As already
found by this Court, petitioner Citibank was the creditor of
respondent for her outstanding loans. At the same time,
respondent was the creditor of petitioner Citibank, as far as
her deposit account was concerned, since bank deposits,
whether fixed, savings, or current, should be considered as
simple loan or mutuum by the depositor to the banking
institution.[122]Both debts consist in sums of money. By June
1979, all of respondents PNs in the second set had matured
and became demandable, while respondents savings
account was demandable anytime. Neither was there any
retention or controversy over the PNs and the deposit
account commenced by a third person and communicated
in due time to the debtor concerned. Compensation takes
place by operation of law,[123] therefore, even in the absence
of an expressed authority from respondent, petitioner
Citibank had the right to effect, on 25 June 1979, the partial
compensation or off-set of respondents outstanding loans
with her deposit account, amounting to P31,079.14.
Money market placements with FNCB Finance
Things though are not as simple and as
straightforward as regards to the money market placements
and bank account used by petitioner Citibank to complete
the compensation or off-set of respondents outstanding
loans, which came from persons other than petitioner
Citibank.
Respondents money market placements were with
petitioner FNCB Finance, and after several roll-overs, they
were ultimately covered by PNs No. 20138 and 20139,
which, by 3 September 1979, the date the check for the
proceeds of the said PNs were issued, amounted
to P1,022,916.66, inclusive of the principal amounts and
interests. As to these money market placements, respondent
was the creditor and petitioner FNCB Finance the debtor;
while, as to the outstanding loans, petitioner Citibank was
the creditor and respondent the debtor. Consequently, legal
compensation, under Article 1278 of the Civil Code, would
not apply since the first requirement for a valid
compensation, that each one of the obligors be bound
principally, and that he be at the same time a principal
creditor of the other, was not met.
What petitioner Citibank actually did was to exercise
its rights to the proceeds of respondents money market
placements with petitioner FNCB Finance by virtue of the
Deeds of Assignment executed by respondent in its favor.
The Court of Appeals did not consider these Deeds
of Assignment because of petitioners failure to produce the
original copies thereof in violation of the best evidence
rule.This Court again finds itself in disagreement in the
application of the best evidence rule by the appellate court.
To recall, the best evidence rule, in so far as
documentary evidence is concerned, requires the
presentation of the original copy of the document only
when the context thereof is the subject of inquiry in the
case. Respondent does not question the contents of the
Deeds of Assignment. While she admitted the existence and
execution of the Deeds of Assignment, dated 2 March 1978
and 9 March 1978, covering PNs No. 8169 and 8167 issued
by petitioner FNCB Finance, she claimed, as defense, that
the loans for which the said Deeds were executed as
security, were already paid. She denied ever executing both
Deeds of Assignment, dated 25 August 1978, covering PNs
No. 20138 and 20139. These are again issues collateral to
the contents of the documents involved, which could be
proven by evidence other than the original copies of the
said documents.
Moreover, the Deeds of Assignment of the money
market placements with petitioner FNCB Finance were
notarized documents, thus, admissible in evidence. Rule
132, Section 30 of the Rules of Court provides that
SEC. 30. Proof of notarial documents. Every
instrument duly acknowledged or proved and certified
as provided by law, may be presented in evidence
without further proof, the certificate of
acknowledgement being prima facie evidence of the
execution of the instrument or document involved.
Significant herein is this Courts elucidation in De
Jesus v. Court of Appeals,[124] which reads
On the evidentiary value of these documents, it
should be recalled that the notarization of a private
document converts it into a public one and renders it
admissible in court without further proof of its
authenticity (Joson vs. Baltazar, 194 SCRA 114
[1991]). This is so because a public document duly
executed and entered in the proper registry is
presumed to be valid and genuine until the contrary is
shown by clear and convincing proof (Asido vs.
Guzman, 57 Phil. 652 [1918]; U.S. vs. Enriquez, 1 Phil
241 [1902]; Favor vs. Court of Appeals, 194 SCRA
308 [1991]). As such, the party challenging the recital
of the document must prove his claim with clear and
convincing evidence (Diaz vs. Court of Appeals, 145
SCRA 346 [1986]).
The rule on the evidentiary weight that must be
accorded a notarized document is clear and
unambiguous. The certificate of acknowledgement in the
notarized Deeds of Assignment constituted prima
facie evidence of the execution thereof. Thus, the burden of
refuting this presumption fell on respondent. She could
have presented evidence of any defect or irregularity in the
execution of the said documents[125] or raised questions as
to the verity of the notary publics acknowledgment and
certificate in the Deeds.[126] But again, respondent admitted
executing the Deeds of Assignment, dated 2 March 1978
and 9 March 1978, although claiming that the loans for
which they were executed as security were already
paid. And, she assailed the Deeds of Assignment, dated 25
August 1978, with nothing more than her bare denial of
execution thereof, hardly the clear and convincing evidence
required to trounce the presumption of due execution of a
notarized document.
Petitioners not only presented the notarized Deeds of
Assignment, but even secured certified literal copies
thereof from the National Archives.[127] Mr. Renato Medua,
an archivist, working at the Records Management and
Archives Office of the National Library, testified that the
copies of the Deeds presented before the RTC were
certified literal copies of those contained in the Notarial
Registries of the notary publics concerned, which were
already in the possession of the National Archives. He also

explained that he could not bring to the RTC the Notarial
Registries containing the original copies of the Deeds of
Assignment, because the Department of Justice (DOJ)
Circular No. 97, dated 8 November 1968, prohibits the
bringing of original documents to the courts to prevent the
loss of irreplaceable and priceless documents.[128]
Accordingly, this Court gives the Deeds of Assignment
grave importance in establishing the authority given by the
respondent to petitioner Citibank to use as security for her
loans her money her market placements with petitioner
FNCB Finance, represented by PNs No. 8167 and 8169,
later to be rolled-over as PNs No. 20138 and 20139. These
Deeds of Assignment constitute the law between the
parties, and the obligations arising therefrom shall have the
force of law between the parties and should be complied
with in good faith.[129] Standard clauses in all of the Deeds
provide that
The ASSIGNOR and the ASSIGNEE hereby
further agree as follows:
xxxx
2. In the event the OBLIGATIONS are not
paid at maturity or upon demand, as the case may be,
the ASSIGNEE is fully authorized and empowered to
collect and receive the PLACEMENT (or so much
thereof as may be necessary) and apply the same in
payment of the OBLIGATIONS. Furthermore, the
ASSIGNOR agrees that at any time, and from time to
time, upon request by the ASSIGNEE, the
ASSIGNOR will promptly execute and deliver any
and all such further instruments and documents as
may be necessary to effectuate this Assignment.
xxxx
5. This Assignment shall be considered as
sufficient authority to FNCB Finance to pay and
deliver the PLACEMENT or so much thereof as may
be necessary to liquidate the OBLIGATIONS, to the
ASSIGNEE in accordance with terms and provisions
hereof.[130]
Petitioner Citibank was only acting upon the authority
granted to it under the foregoing Deeds when it finally used
the proceeds of PNs No. 20138 and 20139, paid by
petitioner FNCB Finance, to partly pay for respondents
outstanding loans. Strictly speaking, it did not effect a legal
compensation or off-set under Article 1278 of the Civil
Code, but rather, it partly extinguished respondents
obligations through the application of the security given by
the respondent for her loans. Although the pertinent
documents were entitled Deeds of Assignment, they were,
in reality, more of a pledge by respondent to petitioner
Citibank of her credit due from petitioner FNCB Finance
by virtue of her money market placements with the balance, pursuant to a Declaration of Pledge supposedly
latter. According to Article 2118 of the Civil Code executed by respondent in its favor.

ART. 2118. If a credit has been pledged

Certain principles of private international law should be
becomes due before it is redeemed, the pledgee may
collect and receive the amount due. He shall apply the considered herein because the property pledged was in the
same to the payment of his claim, and deliver the
surplus, should there be any, to the pledgor.
possession of an entity in a foreign country, namely,
Citibank-Geneva. In the absence of any allegation and
evidence presented by petitioners of the specific rules and
PNs No. 20138 and 20139 matured on 3 September 1979,
laws governing the constitution of a pledge in Geneva,
without them being redeemed by respondent, so that
Switzerland, they will be presumed to be the same as
petitioner Citibank collected from petitioner FNCB Finance
Philippine local or domestic laws; this is known as
the proceeds thereof, which included the principal amounts
processual presumption.[131]
and interests earned by the money market placements,
amounting to P1,022,916.66, and applied the same against
Upon closer scrutiny of the Declaration of Pledge, this
respondents outstanding loans, leaving no surplus to be
Court finds the same exceedingly suspicious and irregular.
delivered to respondent.

First of all, it escapes this Court why petitioner Citibank

Dollar accounts with Citibank-Geneva
took care to have the Deeds of Assignment of the PNs
notarized, yet left the Declaration of Pledge
Despite the legal compensation of respondents savings
unnotarized. This Court would think that petitioner
account and the total application of the proceeds of PNs
Citibank would take greater cautionary measures with the
No. 20138 and 20139 to respondents outstanding loans,
preparation and execution of the Declaration of Pledge
there still remained a balance of P1,069,847.40. Petitioner
because it involved respondents all present and future
Citibank then proceeded to applying respondents dollar
fiduciary placements with a Citibank branch in another
accounts with Citibank-Geneva against her remaining loan
country, specifically, in Geneva, Switzerland. While there
is no express legal requirement that the Declaration of
Pledge had to be notarized to be effective, even so, it could
not enjoy the same prima facie presumption of due
execution that is extended to notarized documents, and
petitioner Citibank must discharge the burden of proving
due execution and authenticity of the Declaration of
Pledge.
Second, petitioner Citibank was unable to establish the date
when the Declaration of Pledge was actually executed. The
photocopy of the Declaration of Pledge submitted by
petitioner Citibank before the RTC was undated.[132] It
presented only a photocopy of the pledge because it already
forwarded the original copy thereof to Citibank-Geneva
when it requested for the remittance of respondents dollar
accounts pursuant thereto. Respondent, on the other hand,
was able to secure a copy of the Declaration of Pledge,
certified by an officer of Citibank-Geneva, which bore the
date 24 September 1979.[133] Respondent, however,
presented her passport and plane tickets to prove that she
was out of the country on the said date and could not have
signed the pledge. Petitioner Citibank insisted that the
pledge was signed before 24 September 1979, but could not
provide an explanation as to how and why the said date was
written on the pledge. Although Mr. Tan testified that the
Declaration of Pledge was signed by respondent personally
before him, he could not give the exact date when the said
signing took place. It is important to note that the copy of
the Declaration of Pledge submitted by the respondent to
the RTC was certified by an officer of Citibank-Geneva,
which had possession of the original copy of the pledge. It
is dated 24 September 1979, and this Court shall abide by
the presumption that the written document is truly dated.
[134]
Since it is undeniable that respondent was out of the
country on 24 September 1979, then she could not have
executed the pledge on the said date.
Third, the Declaration of Pledge was irregularly filled-
out. The pledge was in a standard printed form. It was
constituted in favor of Citibank, N.A., otherwise referred to
therein as the Bank. It should be noted, however, that in the
space which should have named the pledgor, the name of
petitioner Citibank was typewritten, to wit
The pledge right herewith constituted shall secure all
claims which the Bank now has or in the future
acquires against Citibank, N.A., Manila (full name and
address of the Debtor), regardless of the legal cause or
the transaction (for example current account, securities
transactions, collections, credits, payments,
documentary credits and collections) which gives rise
thereto, and including principal, all contractual and
penalty interest, commissions, charges, and costs.

The pledge, therefore, made no sense, the pledgor and
pledgee being the same entity. Was a mistake made by
whoever filled-out the form? Yes, it could be a
possibility.Nonetheless, considering the value of such a
document, the mistake as to a significant detail in the
pledge could only be committed with gross carelessness on
the part of petitioner Citibank, and raised serious doubts as
to the authenticity and due execution of the same. The
Declaration of Pledge had passed through the hands of
several bank officers in the country and abroad, yet,
surprisingly and implausibly, no one noticed such a glaring
mistake.
Lastly, respondent denied that it was her signature on the
Declaration of Pledge. She claimed that the signature was a
forgery. When a document is assailed on the basis of
forgery, the best evidence rule applies
Basic is the rule of evidence that when the
subject of inquiry is the contents of a document, no
evidence is admissible other than the original
document itself except in the instances mentioned in
Section 3, Rule 130 of the Revised Rules of Court.
Mere photocopies of documents are inadmissible
pursuant to the best evidence rule. This is especially
true when the issue is that of forgery.
As a rule, forgery cannot be presumed and
must be proved by clear, positive and convincing
evidence and the burden of proof lies on the party
alleging forgery. The best evidence of a forged
signature in an instrument is the instrument itself
reflecting the alleged forged signature. The fact of
forgery can only be established by a comparison
between the alleged forged signature and the authentic
and genuine signature of the person whose signature is
theorized upon to have been forged. Without the
original document containing the alleged forged
signature, one cannot make a definitive comparison
which would establish forgery. A comparison based on
a mere xerox copy or reproduction of the document
under controversy cannot produce reliable results.[135]
Respondent made several attempts to have the
original copy of the pledge produced before the RTC so as
to have it examined by experts. Yet, despite several Orders
by the RTC,[136] petitioner Citibank failed to comply with
the production of the original Declaration of Pledge. It is
admitted that Citibank-Geneva had possession of the
original copy of the pledge. While petitioner Citibank in
Manila and its branch in Geneva may be separate and
distinct entities, they are still incontestably related, and
between petitioner Citibank and respondent, the former had
more influence and resources to convince Citibank-Geneva
to return, albeit temporarily, the original Declaration of
Pledge. Petitioner Citibank did not present any evidence to
convince this Court that it had exerted diligent efforts to
secure the original copy of the pledge, nor did it proffer the
reason why Citibank-Geneva obstinately refused to give it
back, when such document would have been very vital to
the case of petitioner Citibank. There is thus no
justification to allow the presentation of a mere photocopy
of the Declaration of Pledge in lieu of the original, and the
photocopy of the pledge presented by petitioner Citibank
has nil probative value.[137] In addition, even if this Court
cannot make a categorical finding that respondents
signature on the original copy of the pledge was forged, it
is persuaded that petitioner Citibank willfully suppressed
the presentation of the original document, and takes into
consideration the presumption that the evidence willfully
suppressed would be adverse to petitioner Citibank if
produced.[138]
Without the Declaration of Pledge, petitioner
Citibank had no authority to demand the remittance of
respondents dollar accounts with Citibank-Geneva and to
apply them to her outstanding loans. It cannot effect legal
compensation under Article 1278 of the Civil Code since,
petitioner Citibank itself admitted that Citibank-Geneva is a
distinct and separate entity. As for the dollar accounts,
respondent was the creditor and Citibank-Geneva is the
debtor; and as for the outstanding loans, petitioner Citibank
was the creditor and respondent was the debtor. The parties
in these transactions were evidently not the principal
creditor of each other.
Therefore, this Court declares that the remittance of
respondents dollar accounts from Citibank-Geneva and the
application thereof to her outstanding loans with petitioner
Citibank was illegal, and null and void. Resultantly,
petitioner Citibank is obligated to return to respondent the
amount of US$149,632,99 from her Citibank-Geneva
accounts, or its present equivalent value in Philippine
currency; and, at the same time, respondent continues to be
obligated to petitioner Citibank for the balance of her
outstanding loans which, as of 5 September 1979,
amounted to P1,069,847.40.
V
The parties shall be
liable for interests
on their monetary
obligations to each
other, as determined
herein.
 In summary, petitioner Citibank is ordered by this
Court to pay respondent the proceeds of her money market
placements, represented by PNs No. 23356 and 23357,
amounting to P318,897.34 and P203,150.00, respectively,
earning an interest of 14.5% per annum as stipulated in the
PNs,[139] beginning 17 March 1977, the date of the
placements.
Petitioner Citibank is also ordered to refund to
respondent the amount of US$149,632.99, or its equivalent
in Philippine currency, which had been remitted from her
Citibank-Geneva accounts. These dollar accounts,
consisting of two fiduciary placements and current
accounts with Citibank-Geneva shall continue earning their
respective stipulated interests from 26 October 1979, the
date of their remittance by Citibank-Geneva to petitioner
Citibank in Manila and applied against respondents
outstanding loans.
As for respondent, she is ordered to pay petitioner
Citibank the balance of her outstanding loans, which
amounted to P1,069,847.40 as of 5 September 1979. These
loans continue to earn interest, as stipulated in the
corresponding PNs, from the time of their respective
maturity dates, since the supposed payment thereof using
respondents dollar accounts from Citibank-Geneva is
deemed illegal, null and void, and, thus, ineffective.
VI
Petitioner Citibank
shall be liable for
damages to
respondent.
Petitioners protest the award by the Court of Appeals of
moral damages, exemplary damages, and attorneys fees in
favor of respondent. They argued that the RTC did not
award any damages, and respondent, in her appeal before
the Court of Appeals, did not raise in issue the absence of
such.
While it is true that the general rule is that only errors
which have been stated in the assignment of errors and
properly argued in the brief shall be considered, this Court
has also recognized exceptions to the general rule, wherein
it authorized the review of matters, even those not assigned
as errors in the appeal, if the consideration thereof is
necessary in arriving at a just decision of the case, and
there is a close inter-relation between the omitted
assignment of error and those actually assigned and
discussed by the appellant.[140]Thus, the Court of Appeals
did not err in awarding the damages when it already made
findings that would justify and support the said award.
Although this Court appreciates the right of petitioner
Citibank to effect legal compensation of respondents local
deposits, as well as its right to the proceeds of PNs No.
20138 and 20139 by virtue of the notarized Deeds of
Assignment, to partly extinguish respondents outstanding
loans, it finds that petitioner Citibank did commit wrong
when it failed to pay and properly account for the proceeds
of respondents money market placements, evidenced by
PNs No. 23356 and 23357, and when it sought the
remittance of respondents dollar accounts from Citibank-
Geneva by virtue of a highly-suspect Declaration of Pledge
to be applied to the remaining balance of respondents
outstanding loans. It bears to emphasize that banking is
impressed with public interest and its fiduciary character
requires high standards of integrity and performance.[141] A
bank is under the obligation to treat the accounts of its
depositors with meticulous care whether such accounts
consist only of a few hundred pesos or of millions of pesos.
[142]
The bank must record every single transaction
accurately, down to the last centavo, and as promptly as
possible.[143] Petitioner Citibank evidently failed to exercise
the required degree of care and transparency in its
transactions with respondent, thus, resulting in the
wrongful deprivation of her property.
Respondent had been deprived of substantial
amounts of her investments and deposits for more than two
decades. During this span of years, respondent had found
herself in desperate need of the amounts wrongfully
withheld from her. In her testimony[144] before the RTC,
respondent narrated
Q By the way Mrs. Witness will you kindly tell us
again, you said before that you are a
businesswoman, will you tell us again what are
the businesses you are engaged into [sic]?
A I am engaged in real estate. I am the owner of the
Modesta Village 1 and 2 in San Mateo, Rizal. I
am also the President and Chairman of the
Board of Macador [sic] Co. and Business Inc.
which operates the Macador [sic] International
Palace Hotel. I am also the President of the
Macador [sic] International Palace Hotel, and
also the Treasures Home Industries, Inc. which
I am the Chairman and president of the Board
and also operating affiliated company in the
name of Treasures Motor Sales engaged in car
dealers [sic] like Delta Motors, we are the
dealers of the whole Northern Luzon and I am
the president of the Disto Company, Ltd.,
based in Hongkong licensed in Honkong [sic]
and now operating in Los Angeles, California.
Q What is the business of that Disto Company Ltd.?
A Disto Company, Ltd., is engaged in real estate and
construction.
Q Aside from those businesses are you a member of
any national or community organization for
social and civil activities?
A Yes sir.
Q What are those?
A I am the Vice-President of thes [sic] Subdivision
Association of the Philippines in 1976, I am
also an officer of the Chamber of Real Estate
Business Association; I am also an officer of
the Chatholic [sic] Womens League and I am
also a member of the CMLI, I forgot the
definition.
Q How about any political affiliation or government
position held if any?
A I was also a candidate for Mayo last January 30,
1980.
Q Where?
A In Dagupan City, Pangasinan.
Q What else?
A I also ran as an Assemblywoman last May, 1984,
Independent party in Regional I, Pangasinan.
Q What happened to your businesses you mentioned
as a result of your failure to recover you [sic]
investments and bank deposits from the
defendants?
A They are not all operating, in short, I was hampered
to push through the businesses that I have.
A [sic] Of all the businesses and enterprises that you
mentioned what are those that are paralyzed
and what remain inactive?
A Of all the company [sic] that I have, only the Disto
Company that is now operating in California.
Q How about your candidacy as Mayor of Dagupan,
[sic] City, and later as Assemblywoman of
Region I, what happened to this?
A I won by voting but when election comes on [sic]
the counting I lost and I protested this, it is still
pending and because I dont have financial
resources I was not able to push through the
case.I just have it pending in the Comelec.
Q Now, do these things also affect your social and
civic activities?
A Yes sir, definitely.
Q How?
A I was embarrassed because being a businesswoman
I would like to inform the Honorable Court
that I was awarded as the most outstanding
businesswoman of the year in 1976 but when
this money was not given back to me I was not
able to comply with the commitments that I
have promised to these associations that I am
engaged into [sic], sir.

For the mental anguish, serious anxiety, besmirched
reputation, moral shock and social humiliation suffered by
the respondent, the award of moral damages is but
proper.However, this Court reduces the amount thereof
to P300,000.00, for the award of moral damages is meant to
compensate for the actual injury suffered by the
respondent, not to enrich her.[145]
Having failed to exercise more care and prudence
than a private individual in its dealings with respondent,
petitioner Citibank should be liable for exemplary
damages, in the amount of P250,000.00, in accordance with
Article 2229[146] and 2234[147] of the Civil Code.
With the award of exemplary damages, then respondent
shall also be entitled to an award of attorneys fees.
[148]
Additionally, attorney's 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.[149] In this case, an award of P200,000.00 attorneys
fees shall be satisfactory.
In contrast, this Court finds no sufficient basis to award
damages to petitioners. Respondent was compelled to
institute the present case in the exercise of her rights and in
the protection of her interests. In fact, although her
Complaint before the RTC was not sustained in its entirety,
it did raise meritorious points and on which this Court rules
in her favor. Any injury resulting from the exercise of ones
rights is damnum absque injuria.[150]
IN VIEW OF THE FOREGOING, the instant
Petition is PARTLY GRANTED. The assailed Decision of
the Court of Appeals in CA-G.R. No. 51930, dated 26
March 2002, as already modified by its Resolution, dated
20 November 2002, is hereby AFFIRMED WITH
MODIFICATION, as follows
1. PNs No. 23356 and 23357
are DECLARED subsisting and outstanding. Petitioner
Citibank is ORDERED to return to respondent the
principal amounts of the said PNs, amounting to Three
Hundred Eighteen Thousand Eight Hundred Ninety-Seven
Pesos and Thirty-Four Centavos (P318,897.34) and Two
Hundred Three Thousand One Hundred Fifty Pesos
(P203,150.00), respectively, plus the stipulated interest of
Fourteen and a half percent (14.5%) per annum, beginning the respective dates of their maturity to 5 September 1979,
17 March 1977; was computed to be in the sum of One Million Sixty-Nine
Thousand Eight Hundred Forty-Seven Pesos and Forty
2. The remittance of One Hundred Forty-Nine Centavos (P1,069,847.40), inclusive of interest. These
Thousand Six Hundred Thirty Two US Dollars and Ninety- outstanding loans shall continue to earn interest, at the rates
Nine Cents (US$149,632.99) from respondents Citibank- stipulated in the corresponding PNs, from 5 September
Geneva accounts to petitioner Citibank in Manila, and the 1979 until payment thereof.
application of the same against respondents outstanding SO ORDERED.
loans with the latter, is DECLARED illegal, null and CONCEPCION CHUA G.R. No. 160855
void. Petitioner Citibank is ORDERED to refund to GAW,
respondent the said amount, or its equivalent in Philippine Petitioner,
Present:
currency using the exchange rate at the time of payment, YNARES-SANTIAGO, J.,
plus the stipulated interest for each of the fiduciary Chairperson,
placements and current accounts involved, beginning 26 - versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
October 1979;
NACHURA, and
REYES, JJ.
3. Petitioner Citibank is ORDERED to pay
respondent moral damages in the amount of Three Hundred SUY BEN CHUA and
Promulgated:
FELISA CHUA,
Thousand Pesos (P300,000.00); exemplary damages in the April 16, 2008
Respondents.
amount of Two Hundred Fifty Thousand Pesos
(P250,000.00); and attorneys fees in the amount of Two x----------------------------------------
Hundred Thousand Pesos (P200,000.00); and - - - - - - - - - - -x

4. Respondent is ORDERED to pay petitioner

Citibank the balance of her outstanding loans, which, from DECISION

NACHURA, J.:
This is a Petition for Review on Certiorari from the
Decision[1] of the Court of Appeals (CA) in CA-G.R. CV
No. 66790 and Resolution[2] denying the motion for
reconsideration. The assailed decision affirmed the ruling
of the Regional Trial Court (RTC) in a Complaint for Sum
of Money in favor of the plaintiff.
The antecedents are as follows:
Spouses Chua Chin and Chan Chi were the founders
of three business enterprises[3] namely: Hagonoy Lumber,
Capitol Sawmill Corporation, and Columbia Wood
Industries. The couple had seven children, namely, Santos
Chua; Concepcion Chua; Suy Ben Chua; Chua Suy Phen;
Chua Sioc Huan; Chua Suy Lu; and Julita Chua. On June
19, 1986, Chua Chin died, leaving his wife Chan Chi and
his seven children as his only surviving heirs. At the time
of Chua Chins death, the net worth of Hagonoy Lumber
was P415,487.20.[4]
On December 8, 1986, his surviving heirs executed a
Deed of Extra-Judicial Partition and Renunciation of
Hereditary Rights in Favor of a Co-Heir[5] (Deed of
Partition, for brevity), wherein the heirs settled their
interest in Hagonoy Lumber as follows: one-half (1/2)
thereof will pertain to the surviving spouse, Chan Chi, as
her share in the conjugal partnership; and the other half,
equivalent to P207,743.60, will be divided among Chan
Chi and the seven children in equal pro indiviso shares
equivalent to P25,967.00 each.[6] In said document, Chan
Chi and the six children likewise agreed to voluntarily
renounce and waive their shares over Hagonoy Lumber in
favor of their co-heir, Chua Sioc Huan.
In May 1988, petitioner Concepcion Chua Gaw and
her husband, Antonio Gaw, asked respondent, Suy Ben
Chua, to lend them P200,000.00 which they will use for the
construction of their house in Marilao, Bulacan. The parties
agreed that the loan will be payable within six (6) months
without interest.[7] On June 7, 1988, respondent issued in
their favor China Banking Corporation Check No.
240810[8] for P200,000.00 which he delivered to the
couples house in Marilao, Bulacan. Antonio later encashed
the check.
On August 1, 1990, their sister, Chua Sioc Huan,
executed a Deed of Sale over all her rights and interests in
Hagonoy Lumber for a consideration of P255,000.00 in
favor of respondent.[9]
Meantime, the spouses Gaw failed to pay the amount
they borrowed from respondent within the designated
period. Respondent sent the couple a demand letter,
[10]
dated March 25, 1991, requesting them to settle their
obligation with the warning that he will be constrained to
take the appropriate legal action if they fail to do so.
Failing to heed his demand, respondent filed a
Complaint for Sum of Money against the spouses Gaw with
the RTC. The complaint alleged that on June 7, 1988, he
extended a loan to the spouses Gaw for P200,000.00,
payable within six months without interest, but despite
several demands, the couple failed to pay their obligation.[11]
In their Answer (with Compulsory Counterclaim),
the spouses Gaw contended that the P200,000.00 was not a
loan but petitioners share in the profits of Hagonoy
Lumber, one of her familys businesses. According to the
spouses, when they transferred residence to Marilao,
Bulacan, petitioner asked respondent for an accounting, and
payment of her share in the profits, of Capital Sawmills
Corporation, Columbia Wood Industries Corporation, and
Hagonoy Lumber. They claimed that respondent persuaded
petitioner to temporarily forego her demand as it would
offend their mother who still wanted to remain in control of
the family businesses. To insure that she will defer her
demand, respondent allegedly gave her P200,000.00 as her
share in the profits of Hagonoy Lumber.[12]
In his Reply, respondent averred that the spouses
Gaw did not demand from him an accounting of Capitol
Sawmills Corporation, Columbia Wood Industries, and
Hagonoy Lumber. He asserted that the spouses Gaw, in
fact, have no right whatsoever in these businesses that
would entitle them to an accounting thereof. Respondent
insisted that the P200,000.00 was given to and accepted by
them as a loan and not as their share in Hagonoy Lumber.
[13]
With leave of court, the spouses Gaw filed an
Answer (with Amended Compulsory Counterclaim)
wherein they insisted that petitioner, as one of the
compulsory heirs, is entitled to one-sixth (1/6) of Hagonoy
Lumber, which the respondent has arrogated to himself.
They claimed that, despite repeated demands, respondent
has failed and refused to account for the operations of
Hagonoy Lumber and to deliver her share therein. They
then prayed that respondent make an accounting of the
operations of Hagonoy Lumber and to deliver to petitioner
her one-sixth (1/6) share thereof, which was estimated to be
worth not less than P500,000.00.[14]
In his Answer to Amended Counterclaim, respondent
explained that his sister, Chua Sioc Huan, became the sole
owner of Hagonoy Lumber when the heirs executed the
Deed of Partition on December 8, 1986. In turn, he became
the sole owner of Hagonoy Lumber when he bought it from
Chua Sioc Huan, as evidenced by the Deed of Sale
dated August 1, 1990.[15]
Defendants, in their reply,[16] countered that the
documents on which plaintiff anchors his claim of
ownership over Hagonoy Lumber were not true and valid
agreements and do not express the real intention of the
parties. They claimed that these documents are mere paper
arrangements which were prepared only upon the advice of
a counsel until all the heirs could reach and sign a final and
binding agreement, which, up to such time, has not been
executed by the heirs.[17]
During trial, the spouses Gaw called the respondent
to testify as adverse witness under Section 10, Rule 132.
On direct examination, respondent testified that Hagonoy
Lumber was the conjugal property of his parents Chua Chin
and Chan Chi, who were both Chinese citizens. He narrated
that, initially, his father leased the lots where Hagonoy
Lumber is presently located from his godfather, Lu Pieng,
and that his father constructed the two-storey concrete
building standing thereon. According to respondent, when
he was in high school, it was his father who managed the
business but he and his other siblings were helping him.
Later, his sister, Chua Sioc Huan, managed Hogonoy
Lumber together with their other brothers and sisters. He
stated that he also managed Hagonoy Lumber when he was
in high school, but he stopped when he got married and
found another job. He said that he now owns the lots where
Hagonoy Lumber is operating.[18]
On cross-examination, respondent explained that he
ceased to be a stockholder of Capitol Sawmill when he sold
his shares of stock to the other stockholders on January 1,
1991. He further testified that Chua Sioc Huan acquired
Hagonoy Lumber by virtue of a Deed of Partition, executed
by the heirs of Chua Chin. He, in turn, became the owner of
Hagonoy Lumber when he bought the same from Chua
Sioc Huan through a Deed of Sale dated August 1, 1990. [19]
 2. P50,000.00 as attorneys
On re-direct examination, respondent stated that he fees; and
sold his shares of stock in Capitol Sawmill 3. Costs of suit.
The defendants counterclaim is hereby
for P254,000.00, which payment he received in cash. He dismissed for being devoid of merit.
also paid the purchase price of P255,000.00 for Hagonoy
SO ORDERED.[22]
Lumber in cash, which payment was not covered by a
separate receipt as he merely delivered the same to Chua
Sioc Huan at her house in Paso de Blas, Valenzuela.
The RTC held that respondent is entitled to the payment of
Although he maintains several accounts at Planters Bank,
the amount of P200,000.00 with interest. It noted that
Paluwagan ng Bayan, and China Bank, the amount he paid
respondent personally issued Check No. 240810 to
to Chua Sioc Huan was not taken from any of them. He
petitioner and her husband upon their request to lend them
kept the amount in the house because he was engaged in
the aforesaid amount. The trial court concluded that
rediscounting checks of people from the public market. [20]
the P200,000.00 was a loan advanced by the respondent
from his own funds and not remunerations for services
On December 10, 1998, Antonio Gaw died due to
rendered to Hagonoy Lumber nor petitioners advance share
cardio vascular and respiratory failure.[21]
in the profits of their parents businesses.

On February 11, 2000, the RTC rendered a Decision

in favor of the respondent, thus:
WHEREFORE, in the light of all the
foregoing, the Court hereby renders judgement
ordering defendant Concepcion Chua Gaw to pay the
[respondent] the following:
1. P200,000.00 representing the
principal obligation with legal interest
from judicial demand or the institution
of the complaint on November 19,
1991;
The trial court further held that the validity and due
execution of the Deed of Partition and the Deed of Sale,
evidencing transfer of ownership of Hagonoy Lumber from
Chua Sioc Huan to respondent, was never
impugned. Although respondent failed to produce the
originals of the documents, petitioner judicially admitted
the due execution of the Deed of Partition, and even
acknowledged her signature thereon, thus constitutes an
exception to the best evidence rule. As for the Deed of Sale,
since the contents thereof have not been put in issue, the
non-presentation of the original document is not fatal so as
to affect its authenticity as well as the truth of its contents.
Also, the parties to the documents themselves do not
contest their validity. Ultimately, petitioner failed to
establish her right to demand an accounting of the
operations of Hagonoy Lumber nor the delivery of her 1/6
share therein.
As for petitioners claim that an accounting be done
on Capitol Sawmill Corporation and Columbia Wood
Industries, the trial court held that respondent is under no
obligation to make such an accounting since he is not
charged with operating these enterprises.[23]
Aggrieved, petitioner appealed to the CA, alleging that the
trial court erred (1) when it considered the amount
of P200,000.00 as a loan obligation and not Concepcions
share in the profits of Hagonoy Lumber; (2) when it
considered as evidence for the defendant, plaintiffs
testimony when he was called to testify as an adverse party
under Section 10 (e), Rule 132 of the Rules of Court; and
(3) when it considered admissible mere copies of the Deed
of Partition and Deed of Sale to prove that respondent is
now the owner of Hagonoy Lumber.[24]
On May 23, 2003, the CA affirmed the Decision of
the RTC. [25] The appellate court found baseless the
petitioners argument that the RTC should not have included
respondents testimony as part of petitioners evidence. The
CA noted that the petitioner went on a fishing expedition,
the taking of respondents testimony having taken up a total
of eleven hearings, and upon failing to obtain favorable
information from the respondent, she now disclaims the
same. Moreover, the CA held that the petitioner failed to
show that the inclusion of respondents testimony in the
statement of facts in the assailed decision unduly prejudiced
her defense and counterclaims. In fact, the CA noted that
the facts testified to by respondent were deducible from the
totality of the evidence presented.
The CA likewise found untenable petitioners claim
that Exhibits H (Deed of Sale) and Exhibit I (Deed of
Partition) were merely temporary paper arrangements. The
CA agreed with the RTC that the testimony of petitioner
regarding the matter was uncorroborated she should have
presented the other heirs to attest to the truth of her
allegation. Instead, petitioner admitted the due execution of
 COURTS DECISION ANNEX C AND THE
the said documents. Since petitioner did not dispute the due QUESTIONED DECISION OF MAY 23,
execution and existence of Exhibits H and I, there was no 2003 (ANNEX A) AND THE RESOLUTION
OF DECEMBER 2, 2003, (ANNEX B) IN
need to produce the originals of the documents in DEVIATING FROM AND DISREGARDING
accordance with the best evidence rule.[26] ESTABLISHED SUPREME COURT
DECISIONS ENJOINING COURTS NOT TO
OVERLOOK OR MISINTERPRET
On December 2, 2003, the CA denied the petitioners IMPORTANT FACTS AND
CIRCUMSTANCES, SUPPORTED BY
motion for reconsideration for lack of merit.[27] CLEAR AND CONVINCING EVIDENCE
ON RECORD, AND WHICH ARE OF
GREAT WEIGHT AND VALUE, WHICH
Petitioner is before this Court in this petition for WOULD CHANGE THE RESULT OF THE
review on certiorari, raising the following errors: CASE AND ARRIVE AT A JUST, FAIR AND
OBJECTIVE DECISION. (Citations omitted)

III. THAT FINALLY, AS TO THE OTHER

I. THAT ON THE PRELIMINARY LEGAL IMPORTANT ISSUE RELATIVE TO
IMPORTANT RELATED ISSUE, CLEAR CLAIM OR OWNERSHIP OF
AND PALPABLE LEGAL ERROR HAS THE HAGONOY LUMBER FAMILY
BEEN COMMITTED IN THE BUSINESS, CLEAR AND PALPABLE
APPLICATION AND LEGAL LEGAL ERROR HAS BEEN COMMITTED
SIGNIFICANCE OF THE RULE ON ON THE REQUIREMENTS AND CORRECT
EXAMINATION OF ADVERSE PARTY OR APPLICATION OF THE BEST EVIDENCE
HOSTILE WITNESS UNDER SECTION 10 RULE UNDER SECTION 3, RULE 130 OF
(d) AND (e) OF RULE 132, CAUSING THE REVISED RULES OF COURT.[28]
SERIOUS DOUBT ON THE LOWER
COURTS APPEALED DECISIONS
OBJECTIVITY, ANNEX C. The petition is without merit.
II. THAT ON THE IMPORTANT LEGAL
ISSUE RELATIVE TO THE AFORESAID Petitioner contends that her case was unduly
TWO OPPOSING CLAIMS OF
RESPONDENT AND PETITIONER, CLEAR prejudiced by the RTCs treatment of the respondents
AND PALPABLE LEGAL ERROR HAS testimony as adverse witness during cross-examination by
BEEN COMMITTED UNDER THE LOWER
his own counsel as part of her evidence. Petitioner argues

that the adverse witness testimony elicited during cross-
examination should not be considered as evidence of the
calling party. She contends that the examination of
respondent as adverse witness did not make him her
witness and she is not bound by his testimony, particularly
during cross-examination by his own counsel.[29] In
particular, the petitioner avers that the following testimony
of the respondent as adverse witness should not be
considered as her evidence:
(11.a) That RESPONDENT-Appellee became owner of
the HAGONOY LUMBER business when he
bought the same from Chua Sioc Huan
through a Deed of Sale dated August 1,
1990(EXH.H);
(11.b) That the HAGONOY LUMBER, on the other
hand, was acquired by the sister Chua Sioc
Huan, by virtue of Extrajudicial Partition and
Renunciation of Hereditary Rights in favor of
a Co-Heir (EXH. I);
(11.c) That the 3 lots on which the HAGONOY
LUMBER business is located were acquired
by Lu Pieng from the Santos family under the
Deed of Absolute Sale (EXH. J); that Lu Pieng
sold the Lots to Chua Suy Lu in 1976 (EXHS.
K, L, & M.); that Chua Siok Huan eventually
became owner of the 3 Lots; and in 1989 Chua
Sioc Huan sold them to RESPONDENT-
Appellee (EXHS. Q and P); that after he
acquired the 3 Lots, he has not sold them to
anyone and he is the owner of the lots.[30]
We do not agree that petitioners case was prejudiced
by the RTCs treatment of the respondents testimony during
cross-examination as her evidence.
If there was an error committed by the RTC in
ascribing to the petitioner the respondents testimony as
adverse witness during cross-examination by his own
counsel, it constitute a harmless error which would not, in
any way, change the result of the case.
In the first place, the delineation of a piece of
evidence as part of the evidence of one party or the other is
only significant in determining whether the party on whose
shoulders lies the burden of proof was able to meet the
quantum of evidence needed to discharge the burden. In
civil cases, that burden devolves upon the plaintiff who
must establish her case by preponderance of evidence. The
rule is that the plaintiff must rely on the strength of his own
evidence and not upon the weakness of the defendants
evidence. Thus, it barely matters who with a piece of
evidence is credited. In the end, the court will have to
consider the entirety of the evidence presented by both
parties. Preponderance of evidence is then determined by
considering all the facts and circumstances of the case,
culled from the evidence, regardless of who actually
presented it.[31]
That the witness is the adverse party does not
necessarily mean that the calling party will not be bound by
the formers testimony. The fact remains that it was at his
instance that his adversary was put on the witness
stand. Unlike an ordinary witness, the calling party may
impeach an adverse witness in all respects as if he had been
called by the adverse party,[32] except by evidence of his bad
character.[33] Under a rule permitting the impeachment of an
adverse witness, although the calling party does not vouch
for the witness veracity, he is nonetheless bound by his
testimony if it is not contradicted or remains unrebutted.[34]
A party who calls his adversary as a witness is,
therefore, not bound by the latters testimony only in the
sense that he may contradict him by introducing other
evidence to prove a state of facts contrary to what the
witness testifies on.[35] A rule that provides that the party
calling an adverse witness shall not be bound by his
testimony does not mean that such testimony may not be
given its proper weight, but merely that the calling party
shall not be precluded from rebutting his testimony or from
impeaching him.[36] This, the petitioner failed to do.
In the present case, the petitioner, by her own
testimony, failed to discredit the respondents testimony on
how Hagonoy Lumber became his sole property. The
petitioner admitted having signed the Deed of Partition but
she insisted that the transfer of the property to Chua Siok
Huan was only temporary. On cross-examination, she
confessed that no other document was executed to indicate
that the transfer of the business to Chua Siok Huan was a
temporary arrangement. She declared that, after their
mother died in 1993, she did not initiate any action
concerning Hagonoy Lumber, and it was only in her
counterclaim in the instant that, for the first time, she raised
a claim over the business.
Due process requires that in reaching a decision, a
tribunal must consider the entire evidence presented.[37] All
the parties to the case, therefore, are considered bound by
the favorable or unfavorable effects resulting from the
evidence.[38] As already mentioned, in arriving at a
decision, the entirety of the evidence presented will be
considered, regardless of the party who offered them in
evidence. In this light, the more vital consideration is not
whether a piece of evidence was properly attributed to one
party, but whether it was accorded the apposite probative
weight by the court. The testimony of an adverse witness is
evidence in the case and should be given its proper
weight, and such evidence becomes weightier if the other
party fails to impeach the witness or contradict his
testimony.
Significantly, the RTCs finding that the P200,000.00
was given to the petitioner and her husband as a loan is
supported by the evidence on record. Hence, we do not
agree with the petitioners contention that the RTC has
overlooked certain facts of great weight and value in
arriving at its decision. The RTC merely took into
consideration evidence which it found to be more credible
than the self-serving and uncorroborated testimony of the
petitioner.
At this juncture, we reiterate the well-entrenched
doctrine that the findings of fact of the CA affirming those
of the trial court are accorded great respect, even finality,
by this Court. Only errors of law, not of fact, may be
reviewed by this Court in petitions for review
on certiorari under Rule 45.[39] A departure from the
general rule may be warranted where the findings of fact of
the CA are contrary to the findings and conclusions of the
trial court, or when the same is unsupported by the
evidence on record.[40]There is no reason to apply the
exception in the instant case because the findings and
conclusions of the CA are in full accord with those of the
trial court. These findings are buttressed by the evidence on
record. Moreover, the issues and errors alleged in this
petition are substantially the very same questions of fact
raised by petitioner in the appellate court.
On the issue of whether the P200,000.00 was really a
loan, it is well to remember that a check may be evidence
of indebtedness.[41] A check, the entries of which are in
writing, could prove a loan transaction. [42] It is pure naivet
to insist that an entrepreneur who has several sources of
income and has access to considerable bank credit, no
longer has any reason to borrow any amount.
The petitioners allegation that the P200,000.00 was
advance on her share in the profits of Hagonoy Lumber is
implausible. It is true that Hagonoy Lumber was originally
owned by the parents of petitioner and respondent.
However, on December 8, 1986, the heirs freely renounced
and waived in favor of their sister Chua Sioc Huan all their
hereditary shares and interest therein, as shown by the
Deed of Partition which the petitioner herself signed. By
virtue of this deed, Chua Sioc Huan became the sole owner
and proprietor of Hagonoy Lumber. Thus, when the
respondent delivered the check for P200,000.00 to the
petitioner on June 7, 1988, Chua Sioc Huan was already the
sole owner of Hagonoy Lumber. At that time, both
petitioner and respondent no longer had any interest in the
business enterprise; neither had a right to demand a share in
the profits of the business. Respondent became the sole
owner of Hagonoy Lumber only after Chua Sioc Huan sold
it to him on August 1, 1990. So, when the respondent
delivered to the petitioner the P200,000.00 check on June
7, 1988, it could not have been given as an advance on
petitioners share in the business, because at that moment in
time both of them had no participation, interest or share in
Hagonoy Lumber. Even assuming, arguendo, that the check
was an advance on the petitioners share in the profits of the
business, it was highly unlikely that the respondent would
deliver a check drawn against his personal, and not against
the business enterprises account.
It is also worthy to note that both the Deed of
Partition and the Deed of Sale were acknowledged before a
Notary Public. The notarization of a private document
converts it into a public document, and makes it admissible
in court without further proof of its authenticity.[43] It is
entitled to full faith and credit upon its face.[44] A notarized
document carries evidentiary weight as to its due execution,
and documents acknowledged before a notary public have
in their favor the presumption of regularity. Such a
document must be given full force and effect absent a
strong, complete and conclusive proof of its falsity or
nullity on account of some flaws or defects recognized by
law.[45] A public document executed and attested through
the intervention of a notary public is, generally, evidence of
the facts therein express in clear unequivocal manner.[46]
Petitioner, however, maintains that the RTC erred in
admitting in evidence a mere copy of the Deed of Partition
and the Deed of Sale in violation of the best evidence
rule.In addition, petitioner insists that the Deed of Sale was
not the result of bona fide negotiations between a true seller
and buyer.
The best evidence rule as encapsulated in Rule 130,
Section 3,[47] of the Revised Rules of Civil Procedure
applies only when the content of such document is the
subject of the inquiry. Where the issue is only as to whether
such document was actually executed, or exists, or on the
circumstances relevant to or surrounding its execution, the
best evidence rule does not apply and testimonial evidence
is admissible. Any other substitutionary evidence is
likewise admissible without need to account for the
original.[48]Moreover, production of the original may be
dispensed with, in the trial courts discretion, whenever the
opponent does not bona fide dispute the contents of the
document and no other useful purpose will be served by
requiring production.[49]
Accordingly, we find that the best evidence rule is
not applicable to the instant case. Here, there was no
dispute as to the terms of either deed; hence, the RTC
correctly admitted in evidence mere copies of the two
deeds. The petitioner never even denied their due execution
and admitted that she signed the Deed of Partition. [50] As
for the Deed of Sale, petitioner had, in effect, admitted its
genuineness and due execution when she failed to
specifically deny it in the manner required by the rules.
[51]
The petitioner merely claimed that said documents do
not express the true agreement and intention of the parties
since they were only provisional paper arrangements made
upon the advice of counsel.[52] Apparently, the petitioner
does not contest the contents of these deeds but alleges that
there was a contemporaneous agreement that the transfer of
Hagonoy Lumber to Chua Sioc Huan was only temporary.
An agreement or the contract between the parties is
the formal expression of the parties rights, duties and
obligations. It is the best evidence of the intention of the
parties.[53] The parties intention is to be deciphered from the
language used in the contract, not from the unilateral post
facto assertions of one of the parties, or of third parties who
are strangers to the contract.[54] Thus, when the terms of an
agreement have been reduced to writing, it is deemed to
contain all the terms agreed upon and there can be, between
the parties and their successors in interest, no evidence of
such terms other than the contents of the written agreement.
[55]
WHEREFORE, premises considered, the petition
is DENIED. The Decision of the Court of Appeals in CA-
G.R. CV No. 66790 dated May 23, 2003 and Resolution
dated December 2, 2003 are AFFIRMED.
PACIFICO B. ARCEO, JR., G.R. No. 142641
Petitioner,
Present:
PUNO, J., Chairperson,
SANDOVAL-
GUTIERREZ,
- v e r s u s - CORONA,
AZCUNA and
 GARCIA, JJ. amount of P100,000.00. Several weeks
thereafter, [petitioner] obtained an
PEOPLE OF THE PHILIPPINES, additional loan of P50,000.00 from
Respondent. Promulgated: [Cenizal]. [Petitioner] then issued in favor
July 17, 2006 of Cenizal, Bank of the Philippine Islands
[(BPI)] Check No. 163255, postdated
x----------------------------------- August 4, 1991, for P150,000.00,
at Cenizals house located at
-------x
70 Panay Avenue, Quezon City. When
August 4, 1991 came, [Cenizal] did not
DECISION deposit the check immediately because
CORONA, J.: [petitioner] promised [] that he would
replace the check with cash. Such promise
was made verbally seven (7) times. When
This petition for review on certiorari assails the his patience ran out, [Cenizal] brought the
check to the bank for encashment. The
April 28, 1999 decision[1] and March 27, 2000 head office of the Bank of the Philippine
resolution[2] of the Court of Appeals in CA-G.R. Islands through a letter dated December 5,
1991, informed [Cenizal] that the check
CR No. 19601 affirming the trial courts bounced because of insufficient funds.
judgment finding petitioner Pacifico B. Arceo, Jr.
Thereafter, [Cenizal] went to the house of
liable for violation of Batas Pambansa Blg. (BP) [petitioner] to inform him of the dishonor of
the check but [Cenizal] found out that
22, otherwise known as the Bouncing Checks
[petitioner] had left the place. So, [Cenizal]
Law. referred the matter to a lawyer who wrote a
letter giving [petitioner] three days from
The facts of the case as found by the trial court receipt thereof to pay the amount of the
check. [Petitioner] still failed to make good
and adopted by the Court of Appeals follow. the amount of the check. As a
consequence, [Cenizal] executed on
On March 14, 1991, [petitioner], January 20, 1992 before the office of the
obtained a loan from private City Prosecutor of Quezon City his affidavit
complainant Josefino Cenizal [] in the
 and submitted documents in support of his
complaint for [e]stafa and [v]iolation of [BP
22] against [petitioner]. After due
investigation, this case for [v]iolation of [BP
22] was filed against [petitioner] on March
27, 1992. The check in question and the
return slip were however lost by [Cenizal]
as a result of a fire that occurred near his
residence on September 16, 1992.
[Cenizal] executed an Affidavit of Loss
regarding the loss of the check in question
and the return slip.[3]
check because it was presented beyond the 90-
day period provided under the law. Petitioner
further questions his conviction since the notice
requirement was not complied with and he was
given only three days to pay, not five banking
days as required by law. Finally, petitioner
asserts that he had already paid his obligation
to Cenizal.

Petitioners contentions have no merit.

After trial, petitioner was found guilty as
charged. Aggrieved, he appealed to the Court of
Appeals. However, on April 28, 1999, the SIGNIFICANCE OF
THE 90-DAY PERIOD
appellate court affirmed the trial courts FOR PRESENTMENT
OF THE CHECK
decision in toto. Petitioner sought
reconsideration but it was denied. Hence, this
petition. Petitioner asserts that there was no violation of
Petitioner claims that the trial and appellate BP 22 because the check was presented to
courts erred in convicting him despite the failure the drawee bank only on December 5, 1991 or
of the prosecution to present the dishonored 120 days from the date thereof (August 4, 1991).
check during the trial. He also contends that he He argues that this was beyond the 90-day
should not be held liable for the dishonor of the

period provided under the law in connection
with the presentment of the check. We disagree.
Section 1 of BP 22 provides:
SECTION 1. Checks without sufficient funds. ―
Any person who makes or draws and
issues any check to apply on account or for
value, knowing at the time of issue that he
does not have sufficient funds in or credit
with the drawee bank for the payment of
such check in full upon its presentment,
which check is subsequently dishonored by
the draweebank for insufficiency of funds
or credit or would have been dishonored
for the same reason had not the drawer,
without any valid reason, ordered the bank
to stop payment, shall be punished by
imprisonment of not less than thirty days
but not more than one (1) year or by a fine
of not less than but not more than double
the amount of the check which fine shall in
no case exceed Two Hundred Thousand
Pesos, or both such fine and imprisonment
at the discretion of the court.
The same penalty shall be imposed upon any
person who, having sufficient funds in or
credit with the drawee bank when he
makes or draws and issues a check, shall
fail to keep sufficient funds or to maintain a
credit to cover the full amount of the check
if presented within a period of ninety (90)
days from the date appearing thereon, for
which reason it is dishonored by
the drawee bank.
Where the check is drawn by a corporation,
company or entity, the person or persons
who actually signed the check in behalf of
such drawer shall be liable under this Act.
In Wong v. Court of Appeals,[4] the Court ruled
that the 90-day period provided in the law is not
an element of the offense. Neither does it
discharge petitioner from his duty to maintain
sufficient funds in the account within a
reasonable time from the date indicated in the
check. According to current banking practice,
the reasonable period within which to present a
check to the drawee bank is six months.
Thereafter, the check becomes stale and the
drawer is discharged from liability thereon to the
extent of the loss caused by the delay.
Thus, Cenizals presentment of the check to
the drawee bank 120 days (four months) after its
issue was still within the allowable period.
Petitioner was freed neither from the obligation
to keep sufficient funds in his account nor from
liability resulting from the dishonor of the check.
APPLICABILITY OF
THE
BEST EVIDENCE
RULE
Petitioners insistence on the presentation
of the check in evidence as a condition sine qua
non for conviction under BP 22 is wrong.
Petitioner anchors his argument on Rule 130,
Section 3, of the Rules of Court, otherwise
known as the best evidence rule. However, the
rule applies only where the content of the
document is the subject of the inquiry. Where
the issue is the execution or existence of the
document or the circumstances surrounding its
execution, the best evidence rule does not apply
and testimonial evidence is admissible. [5]
The gravamen of the offense is the act of
drawing and issuing a worthless check. [6] Hence,
the subject of the inquiry is the fact of issuance
or execution of the check, not its content.
Here, the due execution and existence of
the check were sufficiently
established. Cenizal testified that he presented
the originals of the check, the return slip and
other pertinent documents before the Office of
the City Prosecutor of Quezon City when he
executed his complaint-affidavit during the
preliminary investigation. The City Prosecutor
found a prima facie case against petitioner for
violation of BP 22 and filed the corresponding
information based on the documents. Although
the check and the return slip were among the
documents lost by Cenizal in a fire that occurred
near his residence on September 16, 1992, he
was nevertheless able to adequately establish
the due execution, existence and loss of the
check and the return slip in an affidavit of loss
 in or credit with the draweebank
as well as in his testimony during the trial of the
for the payment of the check in
case. full upon its presentment; and

Moreover, petitioner himself admited that he

issued the check. He never denied that the
check was presented for payment to 3. subsequent dishonor of the
check by the drawee bank for
the drawee bank and was dishonored for having insufficiency of funds or credit,
been drawn against insufficient funds. or dishonor of the check for the
same reason had not the drawer,
without any valid cause, ordered
PRESENCE OF THE the bank to stop payment.[8]
ELEMENTS OF THE
OFFENSE

All these elements are present in this

Based on the allegations in the information, case.

[7]
petitioner was charged for violating the first Both the trial and appellate courts found that

paragraph of BP 22. The elements of the offense petitioner issued BPI check no. 163255

are: postdated August 4, 1991 in the amount

of P150,000 in consideration of a loan which he
1. the making, drawing and
issuance of any check to apply to obtained from Cenizal. When the check was
account or for value; deposited, it was dishonored by the drawee bank
for having been drawn against insufficient
2. knowledge of the maker, drawer,
or issuer that at the time of issue funds. There was sufficient evidence on record
he does not have sufficient funds
that petitioner knew of the insufficiency of his demanded payment of the value of the check.
funds in the drawee bank at the time of the Despite receipt of the notice of dishonor and
issuance of the check. In fact, this was why, on demand for payment, petitioner still failed to pay
maturity date, he requested the payee not the amount of the check.
to encash it with the promise that he would
Petitioner cannot claim that he was
replace it with cash. He made this request and
deprived of the period of five banking days from
assurance seven times but repeatedly failed to
receipt of notice of dishonor within which to pay
make good on his promises despite the repeated
the amount of the check.[9] While petitioner may
accommodation granted him by the
have been given only three days to pay the value
payee, Cenizal.
of the check, the trial court found that the
amount due thereon remained unpaid even after
five banking days from his receipt of the notice
of dishonor. This negated his claim that he had
NOTICE OF already paid Cenizal and should therefore be
DISHONOR TO relieved of any liability.
PETITIONER
AND PAYMENT OF
THE OBLIGATION Moreover, petitioners claim of payment was
nothing more than a mere allegation. He
The trial court found that, contrary to presented no proof to support it. If indeed there
petitioners claim, Cenizals counsel had informed was payment, petitioner should have redeemed
petitioner in writing of the checks dishonor and or taken the check back in the ordinary course
 HEIRS OF LOURDES SAEZ
of business.[10] Instead, the check remained in
SABANPAN: BERNARDO S. SABANPAN,
the possession of the payee who demanded the RENE S. SABANPAN, DANILO S. SABANPAN
and THELMA S. CHU; HEIRS OF ADOLFO
satisfaction of petitioners obligation when the
SAEZ: MA. LUISA SAEZ TAPIZ, MA.
check became due as well as when the check VICTORIA SAEZ LAPITAN, MA. BELEN SAEZ
and EMMANUEL SAEZ; and HEIRS OF
was dishonored by the drawee bank.
CRISTINA SAEZ GUTIERREZ: ROY SAEZ
GUTIERREZ and LUIS SAEZ
These findings (due notice to petitioner and JR., petitioners, vs. ALBERTO C.
COMORPOSA, HERDIN C. COMORPOSA,
nonpayment of the obligation) were confirmed by
OFELIA C. ARIEGO, REMEDIOS
[1]

the appellate court. This Court has no reason to COMORPOSA, VIRGILIO A. LARIEGO, 1-

rule otherwise. Well-settled is the rule that the BELINDA M. COMORPOSA and ISABELITA
a

H. COMORPOSA, respondents.
factual findings of the trial court, when affirmed
DECISION
by the appellate court, are not to be disturbed. [11]
PANGANIBAN, J.:
WHEREFORE, the petition is
The admissibility of evidence should be
hereby DENIED. The April 28, 1999 decision
distinguished from its probative value. Just because a
and March 27, 2000 resolution of the Court of piece of evidence is admitted does not ipso facto mean
that it conclusively proves the fact in dispute.
Appeals in CA-G.R. CR No. 19601
are AFFIRMED.
The Case

Costs against petitioner.

Before us is a Petition for Review under Rule 45 of
[2]

the Rules of Court, seeking to set aside the August 7,

2001 Decision and the February 27, 2002 Resolution of
the Court of Appeals (CA) in CA-GR SP No. 60645. The
[3]

[G.R. No. 152807. August 12, 2003] dispositive portion of the assailed Decision reads as
follows:
WHEREFORE, in view of all the foregoing, the Court
hereby AFFIRMS the Decision dated 22 June 2000 rendered
by Branch 18 of the Regional Trial Court of Digos, Davao del
Sur, REVERSING and SETTING ASIDE the Decision of
the Municipal Trial Court of Sta. Cruz, Davao del Su[r].[4]
The assailed Resolution denied petitioners Motion
[5]
for Reconsideration.
The Facts
The CA summarized the factual antecedents of the
case as follows:
A [C]omplaint for unlawful detainer with damages was filed
by [petitioners] against [respondents] before the Santa Cruz,
Davao del Sur Municipal Trial Court.
The [C]omplaint alleged that Marcos Saez was the lawful and
actual possessor of Lot No. 845, Land 275 located at Darong,
Sta. Cruz, Davao del Sur with an area of 1.2 hectares. In
1960, he died leaving all his heirs, his children and
grandchildren.
In 1965, Francisco Comorposa who was working in the land
of Oboza was terminated from his job. The termination of his
employment caused a problem in relocating his house. Being
a close family friend of [Marcos] Saez, Francisco Comorposa
approached the late Marcos Saezs son, [Adolfo] Saez, the
husband of Gloria Leano Saez, about his problem. Out of pity
and for humanitarian consideration, Adolfo allowed Francisco
Comorposa to occupy the land of Marcos Saez. Hence, his
nipa hut was carried by his neighbors and transferred to a
portion of the land subject matter of this case. Such transfer
was witnessed by several people, among them, Gloria Leano
and Noel Oboza. Francisco Comorposa occupied a portion of
Marcos Saez property without paying any rental.
Francisco Comorposa left for Hawaii, U.S.A. He was
succeeded in his possession by the respondents who likewise
did not pay any rental and are occupying the premises
through petitioners tolerance.
On 7 May 1998, a formal demand was made upon the
respondents to vacate the premises but the latter refused to
vacate the same and claimed that they [were] the legitimate
claimants and the actual and lawful possessor[s] of the
premises. A [C]omplaint was filed with the barangay office of
Sta. Cruz[,] Davao del Sur, but the parties failed to arrive at
an amicable settlement. Thus, the corresponding Certificate to
File Action was issued by the said barangay and an action for
unlawful detainer was filed by petitioners against
respondents.
Respondents, in their Answer, denied the material allegations
of the [C]omplaint and alleged that they entered and occupied
the premises in their own right as true, valid and lawful
claimants, possessors and owners of the said lot way back in
1960 and up to the present time; that they have acquired just
and valid ownership and possession of the premises by
ordinary or extraordinary prescription, and that the Regional
Director of the DENR, Region XI has already upheld their
possession over the land in question when it ruled that they
[were] the rightful claimants and possessors and [were],
therefore, entitled to the issuance of a title.
The Municipal Trial Court of Sta. Cruz, Davao del Sur
rendered judgment in favor of petitioners but the Regional
Trial Court of Digos, Davao del Sur, on appeal, reversed and
set aside the said decision. x x x
[6]
Ruling of the Court of Appeals
Affirming the Regional Trial Court (RTC), the CA
upheld the right of respondents as claimants and
possessors. The appellate court held that -- although
not yet final -- the Order issued by the regional
executive director of the Department of Environment
and Natural Resources (DENR) remained in full force
and effect, unless declared null and void. The CA added
that the Certification issued by the DENRs community
environment and natural resources (CENR) officer was
proof that when the cadastral survey was conducted,
the land was still alienable and was not yet allocated to
any person.
According to the CA, respondents had the better
right to possess alienable and disposable land of the
public domain, because they have suffiently proven
their actual, physical, open, notorious, exclusive,
continuous and uninterrupted possession thereof since
1960. The appellate court deemed as self-serving, and
therefore incredible, the Affidavits executed by Gloria
Leano Saez, Noel Oboza and Paulina Paran.
Hence, this Petition. [7]
The Issue
In their Memorandum, petitioners raise the following
issues for the Courts consideration:
I
Did the Court of Appeals gravely abuse its discretion and
[err] in sustaining the ruling of the Regional Trial Court
giving credence to the Order dated 2 April 1998 issued by the
regional executive director?
II
Did the Court of Appeals gravely abuse its discretion and err
in sustaining the Regional Trial Courts ruling giving weight
to the CENR Officers Certification, which only bears the
facsimile of the alleged signature of a certain Jose F. Tagorda
and, [worse], it is a new matter raised for the first time on
appeal?
III
Did the Court of Appeals gravely abuse its discretion and err
in holding that the land subject matter of this case has been
acquired by means of adverse possession and prescription?
IV
Did the Court of Appeals gravely abuse its discretion, and err
in declaring that, neither is there error on the part of the
Regional Trial Court, when it did not give importance to the
affidavits by Gloria Leano Saez, Noel [Oboza], and Paulina
Paran for allegedly being self serving?[8]
To facilitate the discussion, the fourth and the third
issues shall be discussed in reverse sequence.
 The Courts Ruling
The Petition has no merit.
First Issue:
The DENR Order of April 2, 1998
Petitioners claim that the reliance of the CA upon
the April 2, 1998 Order issued by the regional director of
the DENR was erroneous. The reason was that the
Order, which had upheld the claim of respondents, was
supposedly not yet final and executory. Another Order
dated August 23, 1999, issued later by the DENR
[9]
regional director, allegedly held in abeyance the
effectivity of the earlier one.
Under the Public Land Act, the management and
[10]
the disposition of public land is under the primary
control of the director of lands (now the director of the
[11]
Lands Management Bureau or LMB), subject to review [12]
by the DENR secretary. As a rule, then, courts have no
[13]
jurisdiction to intrude upon matters properly falling
within the powers of the LMB.
The powers given to the LMB and the DENR to
alienate and dispose of public land does not, however,
divest regular courts of jurisdiction over possessory
actions instituted by occupants or applicants to protect
their respective possessions and occupations. The
power to determine who has actual physical possession
or occupation of public land and who has the better right
of possession over it remains with the courts. But once [15]
the DENR has decided, particularly through the grant of
a homestead patent and the issuance of a certificate of
title, its decision on these points will normally prevail. [16]
Therefore, while the issue as to who among the
parties are entitled to a piece of public land remains
pending with the DENR, the question of recovery of
possession of the disputed property is a matter that may
be addressed to the courts.
Second Issue:
CENR Officers Certification
Petitioners contend that the CENR Certification
dated July 22, 1997 is a sham document, because the
signature of the CENR officer is a mere facsimile. In
support of their argument, they cite Garvida v. Sales Jr.
and argue that the Certification is a new matter being
[17]
raised by respondents for the first time on appeal.
We are not persuaded.
In Garvida, the Court held:
A facsimile or fax transmission is a process involving the
transmission and reproduction of printed and graphic matter
by scanning an original copy, one elemental area at a time,
and representing the shade or tone of each area by a specified
amount of electric current. x x x
[18]
[14] Pleadings filed via fax machines are not considered
originals and are at best exact copies. As such, they are
not admissible in evidence, as there is no way of
determining whether they are genuine or authentic. [19]
 The Certification, on the other hand, is being
contested for bearing a facsimile of the signature of
CENR Officer Jose F. Tagorda. The facsimile referred to
is not the same as that which is alluded to
in Garvida. The one mentioned here refers to a
facsimile signature, which is defined as a signature
produced by mechanical means but recognized as valid
in banking, financial, and business transactions. [20]
Note that the CENR officer has not disclaimed the
Certification. In fact, the DENR regional director has
acknowledged and used it as reference in his Order
dated April 2, 1998:
x x x. CENR Officer Jose F. Tagorda, in a CERTIFICATION dated
22 July 1997, certified among others, that: x x x per records
available in his Office, x x x the controverted lot x x x was
not allocated to any person x x x.
[21]
If the Certification were a sham as petitioner claims,
then the regional director would not have used it as
reference in his Order. Instead, he would have either
verified it or directed the CENR officer to take the
appropriate action, as the latter was under the formers
direct control and supervision.
Petitioners claim that the Certification was raised for
the first time on appeal is incorrect. As early as the
pretrial conference at the Municipal Trial Court (MTC),
the CENR Certification had already been marked as
evidence for respondents as stated in the Pre-trial
Order. The Certification was not formally offered,
[22]
however, because respondents had not been able to file
their position paper.
Neither the rules of procedure nor[23]
jurisprudence would sanction the admission of
[24]
evidence that has not been formally offered during the
trial. But this evidentiary rule is applicable only to
ordinary trials, not to cases covered by the rule on
summary procedure -- cases in which no full-blown trial
is held.
[25]
Third Issue:
Affidavit of Petitioners Witnesses
Petitioners assert that the CA erred in disregarding
the Affidavits of their witnesses, insisting that the Rule
on Summary Procedure authorizes the use of
affidavits. They also claim that the failure of
respondents to file their position paper and counter-
affidavits before the MTC amounts to an admission by
silence.
The admissibility of evidence should not be
confused with its probative value. Admissibility refers to
the question of whether certain pieces of evidence are
to be considered at all, while probative value refers to
the question of whether the admitted evidence proves
an issue. Thus, a particular item of evidence may be
[26]
admissible, but its evidentiary weight depends on
judicial evaluation within the guidelines provided by the
rules of evidence. [27]
While in summary proceedings affidavits are
admissible as the witnesses respective testimonies, the
failure of the adverse party to reply does not ipso
facto render the facts, set forth therein, duly
proven. Petitioners still bear the burden of proving their
cause of action, because they are the ones asserting an
affirmative relief.[28]
Fourth Issue:
Defense of Prescription
Petitioners claim that the court a quo erred in
upholding the defense of prescription proffered by
respondents. It is the formers contention that since the
latters possession of the land was merely being
tolerated, there was no basis for the claim of
prescription. We disagree.
For the Court to uphold the contention of petitioners,
they have first to prove that the possession of
respondents was by mere tolerance. The only pieces of
evidence submitted by the former to support their claim
were a technical description and a vicinity map drawn in
accordance with the survey dated May 22, 1936. Both[29]
of these were discredited by the CENR Certification,
which indicated that the contested lot had not yet been
allocated to any person when the survey was
conducted. The testimony of petitioners witnesses
[30]
alone cannot prevail over respondents continued and
uninterrupted possession of the subject lot for a
considerable length of time.
Furthermore, this is an issue of fact that cannot, as
a rule, be raised in a petition for review under Rule 45. [31]
WHEREFORE, the Petition is DENIED and the
assailed Decision AFFIRMED. Costs against
petitioners.
SO ORDERED.
G.R. No. 191696 April 10, 2013
ROGELIO DANTIS, Petitioner,
vs.
JULIO MAGHINANG, JR., Respondent.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari seeking to reverse and set
aside the January 25, 2010 Decision1 and the March 23, 2010
Resolution2 of the Court of Appeals (CA). in CA-G.R. CV No. 85258,
reversing the March 2, 2005 Decision3 of the Regional Trial Court,
Branch 18, Malolos, Bulacan (RTC), in an action for quieting of title and
recovery of possession with damages.
The Facts
The case draws its origin from a complaint 4 for quieting of title and
recovery of possession with damages filed by petitioner Rogelio Dantis
(Rogelio) against respondent Julio Maghinang, Jr. (Julio, Jr.) before the
RTC, docketed as Civil Case No. 280-M-2002. Rogelio alleged that he
was the registered owner of a parcel of land covered by Transfer
Certificate of Title (TCT) No. T-125918, with an area of 5,657 square
meters, located in Sta. Rita, San Miguel, Bulacan; that he acquired
ownership of the property through a deed of extrajudicial partition of the
estate of his deceased father, Emilio Dantis (Emilio), dated December
22, 1993; that he had been paying the realty taxes on the said property;
that Julio, Jr. occupied and built a house on a portion of his property
without any right at all; that demands were made upon Julio, Jr. that he
vacate the premises but the same fell on deaf ears; and that the acts of
Julio, Jr. had created a cloud of doubt over his title and right of
possession of his property. He, thus, prayed that judgment be rendered
declaring him to be the true and real owner of the parcel of land covered
by TCT No. T-125918; ordering Julio, Jr. to deliver the possession of
that portion of the land he was occupying; and directing Julio, Jr. to pay
rentals from October 2000 and attorney’s fees of ₱100,000.00.
He added that he was constrained to institute an ejectment suit against
Julio, Jr. before the Municipal Trial Court of San Miguel, Bulacan (MTC),
but the complaint was dismissed for lack of jurisdiction and lack of
cause of action.
In his Answer,5 Julio, Jr. denied the material allegations of the complaint.
By way of an affirmative defense, he claimed that he was the actual
owner of the 352 square meters (subject lot) of the land covered by TCT
No. T-125918 where he was living; that he had been in open and
continuous possession of the property for almost thirty (30) years; the
subject lot was once tenanted by his ancestral relatives until it was sold
by Rogelio’s father, Emilio, to his father, Julio Maghinang, Sr. (Julio, Sr.);
that later, he succeeded to the ownership of the subject lot after his
father died on March 10, 1968; and that he was entitled to a separate
registration of the subject lot on the basis of the documentary evidence
of sale and his open and uninterrupted possession of the property.
As synthesized by the RTC from the respective testimonies of the
principal witnesses, their diametrically opposed positions are as follows:
Plaintiff Rogelio Dantis testified that he inherited 5,657 square meters of
land, identified as Lot 6-D-1 of subdivision plan Psd-031421-054315,
located at Sta. Rita, San Miguel, Bulacan, through an Extrajudicial
Partition of Estate of Emilio Dantis, executed in December 1993 which
land was titled later on under his name, Rogelio Dantis, married to
Victoria Payawal, as shown by copy of Transfer Certificate of Title No. T-
125918, issued by the Register of Deeds of Bulacan on September 29,
1998, declared for taxation purposes as Tax Declaration with ARP No.
C20-22-043-07-046. According to him, defendant and his predecessor-
in-interest built the house located on said lot. When he first saw it, it was
only a small hut but when he was about 60 years old, he told defendant
not to build a bigger house thereon because he would need the land
and defendant would have to vacate the land. Plaintiff, however, has not
been in physical possession of the premises.
Defendant Julio Maghinang, Jr., presented by plaintiff as adverse
witness, testified that he has no title over the property he is occupying.
He has not paid realty taxes thereon. He has not paid any rental to
anybody. He is occupying about 352 square meters of the lot. He
presented an affidavit executed on September 3, 1953 by Ignacio
Dantis, grandfather of Rogelio Dantis and the father of Emilio Dantis.
The latter was, in turn, the father of Rogelio Dantis.
The affidavit, according to affiant Ignacio Dantis, alleged that Emilio
Dantis agreed to sell 352 square meters of the lot to Julio Maghinang on
installment. Defendant was then 11 years old in 1952.
Defendant Julio Maghinang, Jr. likewise testified for the defendant’s
case as follows: He owns that house located at Sta. Rita, San Miguel,
Bulacan, on a 352 square meter lot. He could not say that he is the
owner because there is still question about the lot. He claimed that his
father, Julio Maghinang (Sr.), bought the said lot from the parents of
Rogelio Dantis. He admitted that the affidavit was not signed by the
alleged vendor, Emilio Dantis, the father of Rogelio Dantis. The receipt
he presented was admittedly a mere photocopy. He spent ₱50,000.00
as attorney’s fees. Since 1953, he has not declared the property as his
nor paid the taxes thereon because there is a problem. 6
On March 2, 2005, the RTC rendered its decision declaring Rogelio as
the true owner of the entire 5,657-square meter lot located in Sta. Rita,
San Miguel, Bulacan, as evidenced by his TCT over the same. The RTC
did not lend any probative value on the documentary evidence of sale
adduced by Julio, Jr. consisting of: 1) an affidavit allegedly executed by
Ignacio Dantis (Ignacio), Rogelio’s grandfather, whereby said affiant
attested, among others, to the sale of the subject lot made by his son,
Emilio, to Julio, Sr. (Exhibit "3")7; and 2) an undated handwritten receipt
of initial downpayment in the amount of ₱100.00 supposedly issued by
Emilio to Julio, Sr. in connection with the sale of the subject lot (Exhibit
"4").8 The RTC ruled that even if these documents were adjudged as
competent evidence, still, they would only serve as proofs that the
purchase price for the subject lot had not yet been completely paid and,
hence, Rogelio was not duty-bound to deliver the property to Julio, Jr.
The RTC found Julio, Jr. to be a mere possessor by tolerance. The
dispositive portion of the RTC decision reads:
WHEREFORE, Judgment is hereby rendered as follows:
1. quieting the title and removing whatever cloud over the title on the
parcel of land, with area of 5,647 sq. meters, more or less, located at
Sta. Rita, San Miguel, Bulacan, covered by Transfer Certificate of Title
No. T-125918 issued by the Register of Deeds of Bulacan in the name
of "Rogelio Dantis, married to Victoria Payawal";
2. declaring that Rogelio Dantis, married to Victoria Payawal, is the true
and lawful owner of the aforementioned real property; and
3. ordering defendant Julio Maghinang, Jr. and all persons claiming
under him to peacefully vacate the said real property and surrender the
possession thereof to plaintiff or latter’s successors-in-interest.
No pronouncement as to costs in this instance.
SO ORDERED.9
Julio, Jr. moved for a reconsideration of the March 2, 2005 Decision, but
the motion was denied by the RTC in its May 3, 2005 Order.10 Feeling
aggrieved, Julio, Jr. appealed the decision to the CA.
On January 25, 2010, the CA rendered the assailed decision in CA-G.R.
CV NO. 85258, finding the appeal to be impressed with merit. It held
that Exhibit "4" was an indubitable proof of the sale of the 352-square
meter lot between Emilio and Julio, Sr. It also ruled that the partial
payment of the purchase price, coupled with the delivery of the res,
gave efficacy to the oral sale and brought it outside the operation of the
statute of frauds. Finally, the court a quo declared that Julio, Jr. and his
predecessors-in-interest had an equitable claim over the subject lot
which imposed on Rogelio and his predecessors-in-interest a personal
duty to convey what had been sold after full payment of the selling price.
The decretal portion of the CA decision reads:
IN VIEW OF THE FOREGOING, the decision appealed from is
reversed. The heirs of Julio Maghinang Jr. are declared the owners of
the 352-square meter portion of the lot covered by TCT No. T-125968
where the residence of defendant Julio Maghinang is located, and the
plaintiff is ordered to reconvey the aforesaid portion to the aforesaid
heirs, subject to partition by agreement or action to determine the exact
metes and bounds and without prejudice to any legal remedy that the
plaintiff may take with respect to the unpaid balance of the price.
SO ORDERED. 11
The motion for reconsideration12 filed by Rogelio was denied by the CA
in its March 23, 2010 Resolution. Unfazed, he filed this petition for
review on certiorari before this Court.
Issues:
The fundamental question for resolution is whether there is a perfected
contract of sale between Emilio and Julio, Sr. The determination of this
issue will settle the rightful ownership of the subject lot.
Rogelio submits that Exhibit "3" and Exhibit "4" are devoid of evidentiary
value and, hence, deserve scant consideration. He stresses that Exhibit
"4" is inadmissible in evidence being a mere photocopy, and the
existence and due execution thereof had not been established. He
argues that even if Exhibit "4" would be considered as competent and
admissible evidence, still, it would not be an adequate proof of the
existence of the alleged oral contract of sale because it failed to provide
a description of the subject lot, including its metes and bounds, as well
as its full price or consideration. 13
Rogelio argues that while reconveyance may be availed of by the owner
of a real property wrongfully included in the certificate of title of another,
the remedy is not obtainable herein since he is a transferee in good
faith, having acquired the land covered by TCT No. T-125918, through a
Deed of Extrajudicial Partition of Estate.14 He asserts that he could not
be considered a trustee as he was not privy to Exhibit "4." In any event,
he theorizes that the action for reconveyance on the ground of implied
trust had already prescribed since more than 10 years had lapsed since
the execution of Exhibit "4" in 1953. It is the petitioner’s stance that
Julio, Jr. did not acquire ownership over the subject lot by acquisitive
prescription contending that prescription does not lie against a real
property covered by a Torrens title. He opines that his certificate of title
to the subject lot cannot be collaterally attacked because a Torrens title
is indefeasible and must be respected unless challenged in a direct
proceeding.15
The Court’s Ruling
In the case at bench, the CA and the RTC reached different conclusions
on the question of whether or not there was an oral contract of sale. The
RTC ruled that Rogelio Dantis was the sole and rightful owner of the
parcel of land covered by TCT No. T-125918 and that no oral contract of
sale was entered into between Emilio Dantis and Julio Maghinang, Sr.
involving the 352-square meter portion of the said property. The CA was
of the opposite view. The determination of whether there existed an oral
contract of sale is essentially a question of fact.
In petitions for review under Rule 45, the Court, as a general rule, does
not venture to re-examine the evidence presented by the contending
parties during the trial of the case considering that it is not a trier of facts
and the findings of fact of the CA are conclusive and binding upon this
Court. The rule, however, admits of several exceptions. One of which is
when the findings of the CA are contrary to those of the trial
court.16 Considering the incongruent factual conclusions of the CA and
the RTC, this Court is constrained to reassess the factual circumstances
of the case and reevaluate them in the interest of justice.
The petition is meritorious.
It is an age-old rule in civil cases that he who alleges a fact has the
burden of proving it and a mere allegation is not evidence. 17 After
carefully sifting through the evidence on record, the Court finds that
Rogelio was able to establish a prima facie case in his favor tending to
show his exclusive ownership of the parcel of land under TCT No. T-
125918 with an area of 5,657 square meters, which included the 352-
square meter subject lot. From the records, it appears that TCT No. T-
125918 is a derivative of TCT No. T-256228, which covered a bigger
area of land measuring 30,000 square meters registered in the name of
Emilio Dantis; that Emilio died intestate on November 13, 1952; that
Emilio’s five heirs, including Rogelio, executed an extra-judicial partition
of estate on December 22, 1993 and divided among themselves specific
portions of the property covered by TCT No. T-256228, which were
already set apart by metes and bounds; that the land known as Lot 6-D-
1 of the subdivision plan Psd-031421-054315 with an area of 5,657 sq.
m. went to Rogelio, the property now covered by TCT No. T-125918;
and that the property was declared for realty tax purpose in the name of
Rogelio for which a tax declaration was issued in his name; and that the
same had not been transferred to anyone else since its issuance.
In light of Rogelio’s outright denial of the oral sale together with his
insistence of ownership over the subject lot, it behooved upon Julio, Jr.
to contravene the former’s claim and convince the court that he had a
valid defense. The burden of evidence shifted to Julio, Jr. to prove that
his father bought the subject lot from Emilio Dantis. In Jison v. Court of
Appeals,18 the Court held:
Simply put, he who alleges the affirmative of the issue has the burden of
proof, and upon the plaintiff in a civil case, the burden of proof never
parts. However, in the course of trial in a civil case, once plaintiff makes
out a prima facie case in his favor, the duty or the burden of evidence
shifts to defendant to controvert plaintiff’s prima facie case, otherwise, a
verdict must be returned in favor of plaintiff. Moreover, in civil cases, the
party having the burden of proof must produce a preponderance of
evidence thereon, with plaintiff having to rely on the strength of his own
evidence and not upon the weakness of the defendant’s. The concept of
"preponderance of evidence" refers to evidence which is of greater
weight, or more convincing, that which is offered in opposition to it; at
bottom, it means probability of truth.19
Julio, Jr. failed to discharge this burden. His pieces of evidence, Exhibit
"3" and Exhibit "4," cannot prevail over the array of documentary and
testimonial evidence that were adduced by Rogelio. The totality of Julio,
Jr.’s evidence leaves much to be desired.
To begin with, Exhibit "3," the affidavit of Ignacio, is hearsay evidence
and, thus, cannot be accorded any evidentiary weight. Evidence is
hearsay when its probative force depends on the competency and
credibility of some persons other than the witness by whom it is sought
to be produced. The exclusion of hearsay evidence is anchored on
three reasons: 1) absence of cross-examination; 2) absence of
demeanor evidence; and 3) absence of oath.20
Jurisprudence dictates that an affidavit is merely hearsay evidence
where its affiant/maker did not take the witness stand. 21 The sworn
statement of Ignacio is of this kind. The affidavit was not identified and
its averments were not affirmed by affiant Ignacio. Accordingly, Exhibit
"3" must be excluded from the judicial proceedings being an
inadmissible hearsay evidence. It cannot be deemed a declaration
against interest for the matter to be considered as an exception to the
hearsay rule because the declarant was not the seller (Emilio), but his
father (Ignacio). Exhibit "4," on the other hand, is considered secondary
evidence being a mere photocopy which, in this case, cannot be
admitted to prove the contents of the purported undated handwritten
receipt. The best evidence rule requires that the highest available
degree of proof must be produced. For documentary evidence, the
contents of a document are best proved by the production of the
document itself to the exclusion of secondary or substitutionary
evidence, pursuant to Rule 130, Section 322.
A secondary evidence is admissible only upon compliance with Rule
130, Section 5, which states that: when the original has been lost or
destroyed, or cannot be produced in court, the offeror, upon proof of its Q: And you were then…?
execution or existence and the cause of its unavailability without bad
faith on his part, may prove its contents by a copy, or by a recital of its A: I was born October 1942, Sir.
contents in some authentic document, or by the testimony of witnesses
in the order stated. Accordingly, the offeror of the secondary evidence is Q: You were eleven (11) years old?
burdened to satisfactorily prove the predicates thereof, namely: (1) the
execution or existence of the original; (2) the loss and destruction of the
A: Yes, Sir.
original or its non-production in court; and (3) the unavailability of the
original is not due to bad faith on the part of the proponent/offeror. Proof
of the due execution of the document and its subsequent loss would Q: And you mean to say that you witnessed the signing allegedly of the
constitute the basis for the introduction of secondary evidence. 23 In MCC original of Exhibit "4" when you were eleven (11) years old?
Industrial Sales Corporation v. Ssangyong Corporation, 24 it was held that
where the missing document is the foundation of the action, more A: Yes, Sir.
strictness in proof is required than where the document is only
collaterally involved. Q: And you remember what was signed in this receipt. From your
memory can you tell the title of this Exhibit "4"?
Guided by these norms, the Court holds that Julio, Jr. failed to prove the
due execution of the original of Exhibit "4" as well as its subsequent A: What I can say that it is a Sale, Sir.
loss. A nexus of logically related circumstance rendered Julio, Jr.’s
evidence highly suspect. Also, his testimony was riddled with Q: So, when you said that you witnessed an alleged sale you are
improbabilities and contradictions which tend to erode his credibility and referring to Exhibit "4"?
raise doubt on the veracity of his evidence.
A: Yes, Sir.25 (Emphasis supplied)
First, the claim of Julio, Jr. that Emilio affixed his signature on the
original of Exhibit "4" in 1953 is highly improbable because record Second, Julio, Jr.’s testimony pertinent to the alleged loss of the original
shows that Emilio died even before that year, specifically, on November of Exhibit "4" is laden with inconsistencies that detract from his
13, 1952. Excerpts from Julio, Jr.’s testimony relative to this matter are credibility. His testimony bears the earmarks of falsehood and, hence,
as follows: not reliable. Julio, Jr. testified in this wise:

Atty. Vicente Millora Atty. Roldan Villacorta

(On Cross-examination) (On Direct examination)

Q: You don’t remember how old you were when this according to you Q: Mr. Witness, I noticed that this document marked as Exhibit "4" is
you witnessed Emilio Dantis signed this? only a photocopy, where is the original of this document?

A: Eleven years old, Sir. A: The original was with the safekeeping of my parents because of the
lapse of time the original was misplaced, Sir.26
Q: So that was 1953?
The above testimony of Julio, Jr. tends to give the impression that the
A: Yes, Sir. original of the document was lost while it was in the possession of his
parents. During cross-examination, however, he testified that it was lost
while it was in his possession.
Atty. Vicente Millora
(On Cross-examination)
Q: x x x Where did you keep that document?
A: I was the one keeping that document because I live in different
places, [the said] it was lost or misplaced, Sir.
Q: In other words, it was lost while the same was in your possession??
A: Yes, Sir.27 (Emphasis supplied)
Still, later, Julio, Jr. claimed that his sister was the one responsible for
the loss of the original of Exhibit "4" after borrowing the same from him.
Atty. Vicente Millora
(On Cross-examination)
Q: So, who is your sister to whom you gave the original?
A: Benedicta Laya, Sir.
Q: In other words now, you did not lost the document or the original of
Exhibit "4" but you gave it to your sister, am I correct?
A: I just lent to her the original copy, Sir.
Q: So, you lent this original of Exhibit "4" to your sister and your sister
never returned the same to you?
A: Yes, Sir, because it was lost, that was the only one left in her custody.
Interpreter:
Witness referring to the xerox copy.
Atty. Vicente Millora
Q: In other words, it was your sister who lost the original, is that correct?
A: Yes, Sir, when I lent the original. 28 (Emphasis supplied)
The Court also notes the confused narration of Julio, Jr. regarding the
last time he saw the original of Exhibit "4."
Atty. Vicente Millora
(On Cross-examination)
Q: And when did you last see the original?
A: When my mother died in 1993 that was the last time I tried to see the
original of the document after her interment, Sir.
Q: Where did you see this document?
A: From the safekeeping of my mother, Sir.29
xxxx
Q: When did you get this Exhibit "4" now, the photocopy from your
sister?
A: When the interment of my mother in September 1993, Sir.
Q: Now, let us reform. Which one did you get after the interment of your
mother, this Exhibit "4" or the original?
A: I asked that xerox copy because I have lost the original and I could
not find the same, Sir.
Q: So, from the safe of your mother after her interment, what used you
found and got this Exhibit "4"?
A: Yes, Sir, from my sister.
Q: So, not from your mother safe?
A: The original was taken from the safe of my mother, Sir.
Q: So after your mother’s death you never saw the original?
A: I did not see it anymore because the original was lost before she
died, Sir.30 (Underscoring supplied)
Third, it is quite strange that two receipts were prepared for the initial
payment of ₱100.00 in connection with the sale of the subject lot. The
Court notes that the contents of Exhibit "4" were similar to those of
Annex "A"31 of Julio, Jr.’s Answer, dated June 9, 2002. Annex "A,"
however, was typewritten and the name of the recipient indicated
therein was a certain Cornelio A. Dantis, whose identity and
participation in the alleged sale was never explained.
Fourth, apart from the lone testimony of Julio, Jr., no other witness who
knew or read Exhibit "4," much less saw it executed, was presented. In
the absence of any shred of corroborative evidence, the Court cannot
help but entertain doubts on the truthfulness of Julio, Jr.’s naked
assertion.
Assuming, in gratia argumenti, that Exhibit "4" is admissible in evidence,
there will still be no valid and perfected oral contract for failure of Julio,
Jr. to prove the concurrence of the essential requisites of a contract of
sale by adequate and competent evidence.
By the contract of sale, one of the contracting parties obligates himself
to transfer the ownership of, and to deliver, a determinate thing, and the
other to pay therefor a price certain in money or its equivalent. 32 A
contract of sale is a consensual contract and, thus, is perfected by mere
consent which is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the
contract.33 Until the contract of sale is perfected, it cannot, as an
independent source of obligation, serve as a binding juridical relation
between the parties.34 The essential elements of a contract of sale are:
a) consent or meeting of the minds, that is, consent to transfer
ownership in exchange for the price; b) determinate subject matter; and
c) price certain in money or its equivalent. 35 The absence of any of the
essential elements shall negate the existence of a perfected contract of
sale.36
Seemingly, Julio, Jr. wanted to prove the sale by a receipt when it
should be the receipt that should further corroborate the existence of
the sale. At best, his testimony only alleges but does not prove the
existence of the verbal agreement. Julio, Jr. miserably failed to establish
by preponderance of evidence that there was a meeting of the minds of
the parties as to the subject matter and the purchase price.
The chief evidence of Julio, Jr. to substantiate the existence of the oral
contract of sale is Exhibit "4." For a better understanding and resolution
of the issue at hand, Exhibit "4" is being reproduced here:
Alamin ng sino mang
Makababasa
Akong si Emilio Dantis may sapat na Gulang may asawa naninirahan sa
Sta Rita San Miguel Bul. ay kusang nagsasasay ng sumosunod.
Na ako Tumanggap Kay Julio Maghinang ng ₱100.00 peso cuartang
Pilipino, bilang paunang bayad sa Lupa niyang nilote sa akin 400 apat
na raan mahigit na metro cudrado.
Testigo Tumangap,
Emilio a Dantis
A perusal of the above document would readily show that it does not
specify a determinate subject matter. Nowhere does it provide a
description of the property subject of the sale, including its metes and
bounds, as well as its total area. The Court notes that while Julio, Jr.
testified that the land subject of the sale consisted of 352 square
meters, Exhibit "4," however, states that it’s more than 400 square
meters. Moreover, Exhibit "4" does not categorically declare the price
certain in money. Neither does it state the mode of payment of the
purchase price and the period for its payment.
In Swedish Match, AB v. Court of Appeals,37 the Court ruled that the
manner of payment of the purchase price was an essential element
before a valid and binding contract of sale could exist. Albeit the Civil
Code does not explicitly provide that the minds of the contracting parties
must also meet on the terms or manner of payment of the price, the
same is needed, otherwise, there is no sale.38 An agreement anent the
manner of payment goes into the price so much so that a disagreement
on the manner of payment is tantamount to a failure to agree on the
price.39 Further, in Velasco v. Court of Appeals,40 where the parties
already agreed on the object of sale and on the purchase price, but not
on how and when the downpayment and the installment payments were
to be paid, this Court ruled:
Such being the situation, it cannot, therefore, be said that a definite and
firm sales agreement between the parties had been perfected over the
lot in question. Indeed, this Court has already ruled before that a definite
agreement on the manner of payment of the purchase price is an
essential element in the formation of a binding and enforceable contract
of sale. The fact, therefore, that the petitioners delivered to the
respondent the sum of ₱10,000.00 as part of the down-payment that
they had to pay cannot be considered as sufficient proof of the
perfection of any purchase and sale agreement between the parties
herein under Art. 1482 of the new Civil Code, as the petitioners
themselves admit that some essential matter - the terms of payment -
still had to be mutually covenanted.41
The CA held that partial performance of the contract of sale- giving of a
downpayment coupled with the delivery of the res - took the oral
contract out of the scope of the Statute of Frauds. This conclusion arose
from its erroneous finding that there was a perfected contract of sale.
The above disquisition, however, shows that there was none. There is,
therefore, no basis for the application of the Statute of Frauds. The
application of the Statute of Frauds presupposes the existence of a
perfected contract.42 As to the delivery of the res, it does not appear to
be a voluntary one pursuant to the purported sale. If Julio, Jr. happened
to be there, it was because his ancestors tenanted the land. It must be
noted that when Julio, Jr. built his house, Rogelio protested.
WHEREFORE, the petition is GRANTED. The assailed January 25,
2010 Decision and the March 23, 2010 Resolution of the Court Appeals,
in CA-G.R. CV No. 85258, are REVERSED and SET ASIDE. The March
2, 2005 Decision of the Regional Trial Court of Malolos, Bulacan,
Branch 18, in Civil Case No. 280-M-2002, is REINSTATED.
SO ORDERED.
G.R. No. 108453 July 11, 1994
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
DONALD DISMUKE Y PAMARITO, accused-appellant.
The Solicitor General for plaintiff-appellee.
Public Attorney's Office for accused-appellant.
DAVIDE, JR., J.:
In an information filed with the Regional Trial Court of Valenzuela,
1
Metro Manila, and docketed therein as Criminal Case No. 994-V-92,
accused Donald Dismuke y Pamarito was charged with the violation of
Section 4, Article II of R.A. No. 6425, as amended, committed in this
wise:
That on or about the 8th day of February 1992 in
Valenzuela, MM. and within the jurisdiction of this
Honorable Court, the above-named accused, without
having been authorized by law, did then and there
wilfully, unlawfully and feloniously deliver, sell and give
away to one PO2 Nelson Labrador two tea bags of
marijuana flowering tops for one Twenty peso bill with
SN QB65721, knowing the same to be a prohibited drug
under the provision of the above-cited law.
CONTRARY TO LAW.
The accused pleaded not guilty at his arraignment on 24 February
1992.
After trial on the merits, the lower court promulgated on 28 August 1992
its decision finding the accused guilty of the crime charged and
2
sentencing him to suffer the penalty of reclusion perpetua, to pay a fine
of P20,000.00, and to pay the costs.
In the main, the prosecution's case drew its support from the
uncorroborated testimony of PO3 Nelson Labrador of the Northern
Police District Anti-Narcotics Unit (NPD-ANU). He had joined the
National Police Service on 5 November 1991. According to him, at
3
about 3:00 p.m. of 8 February 1992 (barely three months after he had
joined the service), he was at the office of the NPD-ANU at
Sangandaan, Caloocan City, when an informer arrived and told him that
a certain "Donald" was selling marijuana. He then decided to conduct a
4
buy-bust operation, with himself acting as the buyer, and with PO3
Eliseo Gargaritano and PO3 Wilfredo Lumba as the other team
members. Together with the informer, they proceeded to Consuelo
Street, Doña Ata Subdivision, Marulas, Valenzuela, Metro Manila. They
arrived at their destination at about 5:00 p.m. and while cruising around,
their informer pointed to a man near a sari-sari store as Donald, the
accused in this case. Labrador, who was in plainclothes, approached
Donald and told the latter of his "intention to buy P20.00 worth of
marijuana." Since Donald "trusted" him, he (Labrador) "gave him the
buy/bust money" and Donald in turn gave the former "two teabags of
marijuana." Then, pursuant to the team's pre-arranged signal, Labrador
5
held Donald's right hand. Responding thereto, the other members of the
team came out from their strategic locations, identified themselves, and
assisted Labrador in arresting Donald. The team then brought Donald to
the NPD-ANU office in Sangandaan, Caloocan City, where he was
turned over to the unit's investigator, a certain Reynaldo Lichido, for
proper disposition and investigation. The latter prepared a referral-letter
to the PC Laboratory for examination of the tea bags.
Labrador, however, could only produce in court a photocopy of the
alleged marked money (Exhibit "E") because the bill itself was allegedly
in the custody of PO3 Gargaritano. The bill had supposedly been
marked by Gargaritano on the "Saligang Batas" portion thereof. The6
latter, despite subpoenas sent to him, failed to appear, thereby causing
the postponement of the hearing and prompting the trial court to issue
orders requiring him to show cause why he should not be held in
contempt of court. Although he subsequently appeared, the prosecution
7
did not present him as a witness in the case.
Through Ms. Tita V. Advincula, a forensic chemist of the PNP Central
Laboratory Section, Central Police District, Manila, the prosecution also
proved that the contents of the two heat-sealed transparent plastic bags
(Exhibits "B-1" and "B-2"), which were transmitted to her office by PNP
Inspector Asuncion S. Santos of the District Dangerous Drug
Enforcement Division of the Northern Police District Command, were
found positive "for marijuana, a prohibited drug."8
On the other hand, through the testimonies of the accused and Dennis
Pinpin, the defense presented a different version of the incident.
According to the accused, in the afternoon of 8 February 1992, he and
his friends, namely, Dennis Pinpin, Ricky Pinpin, and Erwin Soriano
were at Consuelo Street, Marulas, Valenzuela, helping their friend, Allan
Olequino, transfer residence. Suddenly, a tricycle stopped, and PO3
9
Nelson Labrador and his two companions, Erning and Vicente, alighted
from the tricycle. Labrador asked who among them had quarreled with
his brother. Labrador's companions pointed to the accused and so
Nelson told him to board the tricycle and picked up a piece of wood of
which he brandished at him. The three forced him to board the tricycle.
The accused protested that he had not done anything, but he was told
to do his explaining at the police headquarters. He was not, however,
brought to the headquarters but to a place near the barangay hall at F.
Bautista Street in Marulas where he was questioned about the identities
of the pushers in the area. When he failed to name or pinpoint any
pusher, he was taken to the Sangandaan police headquarters where
PO3 Labrador took out two plastic teabags of marijuana which Labrador
threatened to use against him if he would still refuse to name the
pushers. Nonetheless, he insisted that he did not know any pusher. He
was detained at the said headquarters for about two days. Thereafter,
he was brought before a fiscal in Caloocan City after being warned not
to say anything against them.10
The accused further testified that during his school days at the
Valenzuela Municipal High School in 1990, he intervened in a fight
between his neighbor and Noel Labrador, a brother of PO3 Labrador.
When he failed to pacify them, he boxed Noel, hitting him on the chin.
This incident came to the knowledge of the school principal who then
called them to a conference, which PO3 Labrador attended. He had
personally known PO3 Labrador for a long time because the latter's
residence is at F. Bautista Street, Marulas, Valenzuela, which is merely
within "walking distance" from where he, the accused, lived.11
Dennis Pinpin, a neighbor, friend, and former schoolmate of Donald,
corroborated the latter's testimony on the incident of 8 February
1992, He also testified that he was the one who had a
12
misunderstanding with Noel Labrador in 1990. He reported the matter to
Donald who tried to settle their differences but Donald ended up fighting
with Noel. He, Donald, and Noel were called to the principal's office and
were reprimanded by the principal. At the said conference, Noel's
parents and PO3 Labrador were present. Thereafter, Noel threatened
them by saying that the fight was not yet over.
13
The lower court found the testimony of PO3 Labrador to be credible and
positive and dismissed the accused's claim that he was framed and that
the charge was ill-motivated. It said:
The alleged quarrel happened in 1990 almost two years
ago and was allegedly patched up and settled by the
school principal in the presence of PO2 Nelson
Labrador. If it is true that there was a fight/quarrel, the
Labradors will not wait that long a time to take the
alleged vindictive
move. 14
In his Appellant's Brief, the accused asserts that the trial court erred:
I would sell a prohibited drug to a brother of a former foe who, after the
. . . IN GIVING WEIGHT AND CREDENCE TO THE
IMPROBABLE AND INCREDIBLE TESTIMONY OF THE
PROSECUTION LONE EYEWITNESS.
II
. . . IN ADMITTING IN EVIDENCE THE TWO TEA BAGS
OF MARIJUANA WHICH WAS PLANTED BY POLICE
OFFICER NELSON LABRADOR IN BLATANT
VIOLATION OF THE ACCUSED ['S] CONSTITUTIONAL
RIGHTS.
III
. . . IN NOT HOLDING THAT THE PROSECUTION
MISERABLY FAILED TO PROVE THE GUILT OF THE
ACCUSED BEYOND REASONABLE DOUBT. 15
At the heart of these assigned errors is the issue of credibility of
witnesses. It is well-settled that this Court will not interfere with the
judgment of the trial court in passing on the credibility of the witnesses,
unless there appears in the record some fact or circumstance of weight
and influence which has been overlooked or the significance of which
has been misapprehended or misinterpreted. The reason for this is that
16
the trial court is in a better position to decide the question, having heard
the witnesses themselves and observed their deportment and manner
of testifying during the trial.
17
A careful review of the records of this case and a meticulous evaluation
of the evidence of the parties reveal vital facts and circumstances which
the trial court overlooked or misapprehended and which if taken into
account would alter the result of this case.
For one thing, the accused personally knew PO3 Labrador; they had
met in 1990 in the principal's office of the Valenzuela Municipal High
School during a confrontation between PO3 Labrador's brother, Nelson,
on the one hand, and Dennis Pinpin and the accused on the other, after
the accused had intervened in the fight between Nelson and Dennis and
boxed Nelson on his chin. It is, therefore, most unlikely that the accused
confrontation, had warned that the fight was not yet over. This incident
18
could have provided PO3 Labrador with a motive against the accused.
The trial court is of the view that it could not have, because the incident
happened two years earlier, the dispute was settled by the principal, and
if Labrador desired revenge, he would not have waited for two years.
We do not agree. While time may heal wounds of conflict, it does not
necessarily extinguish the desire for vengeance, which may just
hibernate until the circumstances become favorable.
In the instant case, the favorable circumstances could have arisen when
PO3 Labrador joined the PNP in November of 1991. Within three
months thereafter, he conducted the alleged buy-bust operation against
the accused solely on the basis of an alleged tip from an informer given
two hours before he conducted the operation. It may be noted that PO3
Labrador did not testify that he had obtained other derogatory
information against the accused or that he had known the accused to be
a drug dealer, pusher, or user. His conduct in this case tainted the
presumption of regularity in the performance of his duty.
For another, we have serious doubts on the existence of the alleged
marked money. There is no evidence as to who provided it and as to
when and where it was allegedly marked by PO3 Gargaritano. What
Labrador produced was a mere photocopy of the alleged marked
money (Exhibit "E"). He claimed that the marked money itself was in the
possession of Gargaritano. If it was in Gargaritano's possession, we
cannot understand why he was not called anymore to the witness stand
to testify for the prosecution when he finally appeared in court in
compliance with its orders.
While the presentation in evidence of the marked money in drugs cases
resulting from buy-bust operations may not be indispensable, the19
peculiar circumstances of this case, heightened by the attempt of the
alleged poseur-buyer to present a photocopy of what he claims to be
the buy-bust money and the unexplained failure of the prosecution to
call to the witness stand the claimed custodian of the marked money
although the latter had already appeared in court, only taint further the
veracity of PO3 Labrador's story.
Exhibit "E" is not admissible in evidence under the best evidence
rule. To be admissible as secondary evidence, the prosecution should
20
have shown that the original marked money has been lost or destroyed
or cannot be produced in court or that it is in the custody of the adverse
party. The prosecution did not.
21
Then too, the prosecution failed to prove that the specimens examined
by the forensic chemist were the ones purportedly sold by the accused
to PO3 Labrador. According to the latter, when they arrived at their
headquarters after the buy-bust operation, he turned over the accused
to their investigator, a certain Reynaldo Lichido, for proper disposition
and investigation. Lichido also "immediately prepared the referral to the
PC Laboratory for examination in order to be sure if the specimen is
positive." What the forensic chemist examined were the contents of
22
"two transparent plastic bag [sic] containing flowering tops with rolling
papers suspected to be marijuana" transmitted by PNP Inspector
Asuncion Santos, Officer-in-Charge of the District Dangerous Drugs
Enforcement Division of the Northern Police District Command. Both 23
Lichido and Santos were not presented by the prosecution to testify in
this case. Thus, there is no evidence to prove that what were allegedly
sold by the accused to PO3 Labrador were actually the ones turned
over to Lichido, that what the latter received were turned over to Santos,
and that what Santos transmitted to the forensic chemist were those
allegedly sold by the accused. The failure to establish the evidence's
chain of custody is damaging to the prosecution's case.
On the whole then, the scanty evidence for the prosecution casts
serious doubts as to the guilt of the accused. It does not pass the test of
moral certainty and is insufficient to rebut the presumption of innocence
which the Bill of Rights guarantees the accused. It is apropos to repeat
the doctrine that an accusation is not, according to the fundamental law,
synonymous with guilt; the prosecution must overthrow the presumption
of innocence with proof of guilt beyond reasonable doubt. 24
In the light of the above disquisition, it is apparent that the law
enforcement agency charged with the enforcement of the Dangerous
Drugs Act is partly to be blamed for the result of this case, assuming
that it does have a case against the accused. In People vs.
Tantiado, we exhorted "the law enforcement agencies, especially those
25
assigned to enforce the Dangerous Drugs Act, to carefully prepare their
plans for buy-bust operations and to efficiently and effectively carry
them out, ever mindful of the possibility that their blunders may not only
frustrate the efforts to eradicate the drug menace but worse, embolden
drug lords, pushers or users into defying the authorities." Equally at fault
is the prosecuting arm of the Government, whose ineptitude in
prosecuting the case warrants that its attention be likewise directed, as
in the Tantiado case and the recent case of People vs. Camba, to what
26
was said in People vs. Esquivel: 27
In this connection it may not be out of place to bring to
the attention of prosecuting attorneys the absolute
necessity of laying before the court the pertinent facts at
their disposal with methodical and meticulous attention,
clarifying contradictions and filling up gaps and
loopholes in their evidence, to the end that the court's
mind may not be tortured by doubts, that the innocent
may not suffer and the guilty not escape unpunished.
Obvious to all, this is the prosecution's prime duty to the
court, to the accused, and to the state.
Again, just like in People vs. Camba, we cannot help but notice that the
28
trial court imposed the penalty of reclusion perpetua which was not the
penalty provided for by law at the time the offense charged was
allegedly committed. Although the penalty imposable is now immaterial,
we call the trial court's attention to the fact that the penalty then
imposable was life imprisonment, if only to underscore the need to
impose only the penalty which the law prescribes.
WHEREFORE, the appealed decision of Branch 171 of the Regional
Trial Court of Valenzuela, Metro Manila, in Criminal Case No. 994-V-92
is REVERSED and, on the ground of reasonable doubt, accused-
appellant DONALD DISMUKE y PAMARITO is hereby ACQUITTED. His
immediate release from detention is hereby ordered, unless further
detention for any lawful cause is warranted.
Costs de oficio.
SO ORDERED.
G.R. No. L-43955-56 July 30, 1979
RENATO LAZATIN alias RENATO STA. CLARA, petitioner,
vs.
HONORABLE JUDGE JOSE C. CAMPOS, JR., NORA L. DE LEON,
BERNARDO DE LEON, ARLENE DE LEON and IRMA L.
VELOSO, respondents.
Ernesto T. Zshornack, Jr. for petitioner.
Jose W. Diokno Law Office private respondents the Leons.
Arturo E. Balbastro for privates respondent Veloso.
TEEHANKEE, J.: 1äwphï1.ñët
The Court dismisses the petition which seeks to overrule respondent
judge's orders declaring that petitioner has failed to establish by
competent evidence his alleged status as an adopted child of the
deceased Lazatin spouses and prays for judgment of this Court
"declaring as established the fact of (his) adoption as a son of the
deceased spouses entitling him to succeed in their estates as such."
Respondent judge correctly ruled that he could not allow petitioner (who
had filed a motion to intervene in the proceedings to probate the will of
the late Margarita de Asis Vda. de Lazatin and to settle her estate as
her adopted son, after having earlier filed a motion to intervene in the
intestate proceedings of her pre-deceased husband as his admitted
illegitimate [not natural] son), over the opposition of private respondents,
to introduce evidence that he had "enjoyed ... the status of an adopted
child of the without his first producing competent and documentary that
there had been judicial proceedings for his by the said spouses which
resulted in the final judgment of a competent court decreeing his
adoption.
On January 13, 1974, Dr. Mariano M. Lazatin diamond intestate in
Pasay City, survived by his wife, Margarita de Asis, and his adopted twin
daughters, respondent Nora L. de Leon, married to respondent
Bernardo de Leon, and respondent Irma Lazatin, married to Francisco
Veloso.
One month after Mariano's death, his widow, Margarita de Asis,
commenced an intestate proceeding before the Court of First Instance
of Pasay, docketed as Sp. Proc. No. 2326-P. Mariano, Oscar, Virgilio
and Yvonne, claiming to be admitted illegitimate (not natural) children of
Dr. Lazatin with one Helen Munoz, intervened. Subsequently, one Lily
Lazatin also intervened, claiming to be another admitted illegitimate (not
natural) child.
Two months after or on April 11, 1974, the widow, Margarita de Asis,
also died, leaving a & holographic will executed on May 29, 1970,
providing, among others, for a legacy of cash, jewelry, and stocks to
respondent Arlene de Leon, a granddaughter; a legacy of support to
Rodolfo Gallardo, a son of her late sister; and a legacy of education to
Ramon Sta. Clara, son of petitioner Renato Lazatin alias Renato Sta.
Clara.
During her lifetime, Margarita de Asis kept a safety deposit box at the
People's Bank and Trust Company, Roxas Boulevard branch, which
either she or respondent Nora L. de Leon could open. Five days after
Margarita's death, respondent Nora L. de Leon, accompanied by her
husband, respondent Bernardo de Leon, opened the safety deposit box
and removed its contents: (a) shares of stock; (b) her adoption papers
and those of her sister, respondent Irma L. Veloso; and (c) jewelry
belonging to her and to her mother. Respondent Nora L. de Leon claims
that she opened the safety deposit box in good faith, believing that it
was held jointly by her and her deceased mother. Her sole reason for
opening the box was to get her stock certificates and other small items
deposited therein. When she was to close the deposit box, the bank
personnel informed her that she needed an authority from the court to
do so, in view of her mother's death and so, she removed everything
from the box.
On June 3, 1974, private respondents filed a petition to probate the will
of the late Margarita de Asis, before docketed as Sp. Proc. No. 2341-P
of respondent Court, Days after having learned that respondent Nora L.
de Leon had opened this safety deposit box, petitioner's son, Ramon
Sta. Clara, filed a motion in the probate court, claiming that the
deceased had executed a will subsequent to that submitted for probate
and demanding its production. He likewise prayed for the opening of the
safety deposit box. Respondent Nora L. de Leon admitted that she
opened the box but there was no will or any document resembling a will
therein.
Upon the order of the probate court, presided over by Judge Arsenio B.
Alcantara, the safety deposit box was opened on November 6, 1974, at
which time it was found to be empty, because prior thereto respondent
Nora L. de Leon had already removed its contents.
On November 22, 1974, or seven months after, the death of Margarita
de Asis, petitioner intervened for the first time in the proceedings to
settle the estate of the late Dr. Mariano M. Lazatin (Sp. Proc. No. 2326-
P), as an admitted illegitimate (not natural) child.
Under the same date of November 22, 1974, petitioner's son, Ramon,
filed a petition in the estate proceedings of Margarita de Asis to examine
private respondents on the contents of the safety deposit box,
Whereupon, on January 31, 1975, the probate court ordered respondent
Nora L. de Leon to deliver the properties taken from the safety deposit
box to the Clerk of Court. Subsequently, however, the two cases (Sp.
Proc. No. 2326-P, Mariano Lazatin, and 2341-P, Margarita de Asis) were
transferred to the sala of respondent Judge Jose C. Campos, Jr.
On May 29, 1975, Judge Campos issued an order requiring counsel for
respondents Nora L. de Leon and Bernardo de Leon to produce all
those papers and items removed from the safety deposit box and to
deliver the same to the custody of the court within one week. Within the
period ordered, respondent Nora L. de Leon deposited with the Clerk of
Court, not the items themselves, but two keys to a new safety deposit
box which could only be opened upon order of the court.
On August 20, 1975, petitioner Renato to Lazatin alias Renato Sta.
Clara filed a motion to intervene in the estate of Margarita de Asis, Sp.
Proc. No. 2341-P, as an adopted child, on the basis of an affidavit
executed by Benjamin Lazatin, brother of the deceased Dr. Mariano M.
Lazatin, the petitioner was an "illegitimate son" of Dr. Lazatin and was
later adopted by him. This affidavit was later modified on August 19,
1975 to state that petitioner was adopted by both Mariano M. Lazatin
and his wife Margarita de Asis.
On September 29, 1975, Judge Campos found respondent' Nora L. de
Leon guilty of contempt of court for not complying with the orders of
January 31, 1975 and May 29, 1975, requiring her to produce and
deliver to the court an the papers and items removed from the safety
deposit box. Her former counsel was also found guilty of contempt,
sentenced to pay a fine of P00.00 and suspended from appearing in the
two cases (Sp. Proc. No. 2326-P, Mariano M. Lazatin, and Sp. Proc. No.
2341-P, Margarita de Asis), on her testimony that she, Nora L. de Leon,
acted upon his advice.
Respondent court heard petitioner's motion to intervene as an adopted
son in the estate of Margarita de Asis, Sp. Proc. No. 2341-P, at which
hearings petitioner presented no decree of adoption in his, favor.
Instead, petitioner attempted to prove, over private respondents'
objections, that he had recognized the deceased spouses as his
parents; he had been supported by them until their death; formerly he
was known as "Renato Lazatin" but was compelled to change his
surname to "Sta. Clara" when the deceased spouses refused to give
consent to his marriage to his present wife; that at first, he and his wife
stayed at the residence of Engracio de Asis, father of Margarita, but a
few months later, they transferred to the Mercy Hospital at Taft Avenue,
Manila, owned by the deceased spouses, where they continuously
resided up to the present. Photographs were also intended to be
presented by petitioner, e.g., photograph of Irma Veloso where she
addressed herself as sister of petitioner; photograph of deceased
Margarita de Asis and petitioner when he was a boy; document showing
that petitioners real name is "Renato Lazatin." 1
Respondent court first reserved its ruling on private respondents'
objections to the admission of petitioner's evidence, but on November
14, 1975, when petitioner could not present evidence on the issue of his
alleged legal adoption, respondent court discontinued the hearing and
gave the parties time to file memoranda on the question of the
admissibility of the evidence sought to be introduced by petitioner.
On March 4, 1976, respondent court barred the introduction of
petitioner's evidence because: têñ.£îhqwâ£
 All the evidence submitted by Renato and Ramon Sta.
Clara through their counsel do not prove or have no
tendency to prove the existence of any judicial
proceeding where the adoption of the parties above
named were taken up by any court. Neither do the
evidence tend to establish the presence of any record of
a proceeding in court where the adoption of the above
named persons was held. The evidence, however, tends
to prove a status of a recognized natural child which,
however, is not the legal basis for which Renato and
Ramon seek to intervene in this proceedings. In view
thereof, and taking into consideration the evidence
heretofore presented by the petitioners, any further
introduction of similar evidence, documentary or oral,
would not prove or tend to prove the fact of their
adoption but rather of a recognized natural child.
Petitioner then filed on March 16, 1976, in both cases, a motion to
declare as established the fact of adoption in view of respondent Nora
L. de Leon's refusal to comply with the orders of respondent court to
deposit the items she had removed from the safety deposit box of
Margarita de Asis. As authority therefor, petitioner invokes the sanction
of Rule 29, Section 3 of the Rules of Court, since according to him, the
order of the court for the production of the items in the safety deposit
box can be considered as an order for production and inspection of
documents under Rule 27.
Private respondents opposed the motion, and on March 26, 1976,
respondent court denied petitioner's motion. On April 26, 1976,
respondent Nora L. de Leon deposited with respondent court the items
she had removed from the safety deposit box. An inventory was
conducted by respondent court, with notice to the parties, and the items
surrendered consisted only of pieces of jewelry and stock certificates.
On June 3,1976, respondent court, ruling on petitioners motion for
definite resolution on his previous n declare as established the fact of
adoption, issued the f order:têñ.£îhqwâ£
As far as the case of Renato Sta. Clara is his Petition to
establish his status as an adopted child, The Court has
ruled that he has failed to establish such status. The any
motion for reconsideration unless based on some
documentary proof.
Hence, the petition at bar.
We find the ruling of the respondent court to be in conformity with law
and jurisprudence.
1. Adoption is a juridical act, a proceeding in rem which creates
2
between two persons a relationship similar to that which results from
legitimate paternity and filiation. Only an adoption made through the
3
court, or in pursuance with the procedure laid down under Rule 99 of
the Rules of Court is valid in this jurisdiction. It is not of natural law at
4
all, but is wholly and entirely artificial. To establish the relation, the
5
statutory requirements must be strictly carried out, otherwise, the
adoption is an absolute nullity. The fact of adoption is never presumed,
6
but must be affirmatively proved by the person claiming its existence.
The destruction by fire of a public building in which the adoption papers
would have been filed if existent does not give rise to a presumption of
adoption nor is the destruction of the records of an adoption proceeding
to be presumed. On the contrary, the absence of a record of adoption
has been said to evolve a presumption of its non-existence. Where,
7
under the provisions of the statute, an adoption is effected by a court
order, the records of such court constitute the evidence by which such
adoption may be established. 8
2. Petitioner's flow of evidence in the case below does not lead us to
any proof of judicial adoption. We can not pluck from his chain of
evidence any link to the real existence of a court decree of adoption in
his favor. Petitioner's proofs do not show or tend to show that at one
time or another a specific court of competent jurisdiction rendered in an
adoption proceeding initiated by the late spouses an order approving his
adoption as a child of the latter. No judicial records of such adoption or
copies thereof are presented or attempted to be presented. Petitioner
merely proceeds from a nebulous assumption that he was judicially
adopted between the years 1928 and 1932. By what particular court
was the adoption decreed or by whom was the petition heard, petitioner
does not even manifest, much less show. There are no witnesses cited
to that adoption proceeding or to the adoption decree. Apparently on the
assumption that the adoption was commenced in Manila, petitioner's
counsel secured a certification from the Court of first Instance of Manila
which, however, negatively reported "(T)hat among the salvaged
records now available in this Office, there has not been found, after a
diligent search, any record regarding the adoption of Mr. Renato Lazatin
alias Renato Sta. Clara allegedly filed sometime in the years 1928 to
1931 by the spouses Dr. Mariano M. Lazatin and Margarita de Asis
Lazatin." The certification of the Local Civil Registrar of Manila "(T)hat
our pre-war records relative to decisions of the Court of First Instance
were either destroyed or burned during the Liberation of the City of
Manila," does not furnish any legal basis for a presumption of adoption
in favor of petitioner. This is because there was no proof that petitioner
was really adopted in Manila or that an adoption petition was filed in the
Court of first Instance of Manila by the deceased spouses, where, after
hearing, a judgment of approval was rendered by said court. Moreover,
if there was really such adoption, petitioner could have conveniently
secured a copy of the newpaper publication of the adoption as required
under Section 4, Rule 99 of the Rules of Court (formerly Section 4, Rule
100) or a certification of the publishing house to that effect. Petitioner's
failure on this point is anotherer strong indication of the non-existence of
the one who gave the written consent of the non-existence of the
adoption paper. We also observed to the adoption (Section 3, Rule 99,
Rules of Court), whether the parents or orphanage, does not appear on
this point is not so difficult and such proof must be presented if only to
prove the real existence of the adoption. And of course, if the war, the
clear right and duty of petitioner was to duly reconstitute the records as
provided by law.
3. The absence of proof of such order of adoption by the court, as
provided by the statute, cannot be substituted by parol evidence that a
child has lived with a person, not his parent, and has been treated as a
child to establish such adoption. Even evidence of declaration of the
9
deceased, made in his lifetime, that he intended to adopt a child as his
heir, and that he had adopted him, and of the fact that the child resided
with the deceased, as a member of his family, from infancy until he
attained his majority, is not sufficient to establish the fact of
adoption. Nor does the fact that the deceased spouses fed, clothed,
10
educated, recognized and referred to one like petitioner as an adopted
child, recognized and referred to one like petitioner as an adopted child,
necessarily establish adoption of the child. Withal, the attempts of
11
petitioner to prove his adoption by acts and declarations of the
deceased do not discharge the mandatory presentation of the judicial
decree of adoption. The thrust of petitioner's evidence is rather to
establish his status as an admitted illegitimate child, not an adopted
child which status of an admitted illegitimate child was — the very basis
of his petitioner for intervention in the estate proceedings of the late Dr.
Lazatin, as above stated. (Supra, at page 3 hereof)
We do not discount though that declarations in regard to pedigree,
although hearsay, are admitted on the principle that they are natural
expressions of persons who must know the truth. Pedigree testimony
12
is admitted because it is the best that the nature of the case admits and
because greater evil might arise from the rejection of such proof than
from its admission. But, in proving an adoption, there is a better proof
13
available and it should be produced. The whereabouts of the child's
family and circulation of the jurisdiction in which they resided and
investigation in those courts where adoption are usually granted would
surely produce an adoption order, if indeed there was an
order. Besides, since the point in favor of receiving hearsay evidence
14
upon matters of family history or pedigree is its reliability, it has been set
forth as a condition upon which such evidence is received that it
emanate from a source within the family. Pursuant to this view, before a
declaration of a deceased person can be admitted to prove pedigree, or
ancestry, the relationship of the declarant, by either of blood or affinity to
the family in question, or a branch thereof, must ordinarily be
established by competent evidence. Section 33 of Rule 130 states:
15
"The act or declaration of a person deceased, or outside of the
Philippines, or unable to testify, in respect to the pedigree of another
person related to him by birth or marriage, may be received in evidence
where it occurred before the controversy, and the relationship between
the two persons is shown by evidence other than such actor
declaration ..."
4. Secondary evidence is nonetheless admissible where the records of
adoption proceedings were actually lost or destroyed. But, prior to the
introduction of such secondary evidence, the proponent must establish
the former existence of the instrument. The correct order of proof is as
follows: Existence; execution; loss; contents; although this order may be
changed if necessary in the discretion of the court. The sufficiency of
16
the proof offered as a predicate for the admission of an alleged lost
deed lies within the judicial discretion of the trial court under all the
circumstances of the particular case. As earlier pointed out, petitioner
17
failed to establish the former existence of the adoption paper and its
subsequent loss or destruction. Secondary proof may only be
introduced if it has first beer. established that such adoption paper really
existed and was lost. This is indispensable. Petitioner's supposed
18
adoption was only testified to by him and is allegedly to be testified to a
brother of the deceased Mariano M. Lazatin or others who have
witnessed that the deceased spouses treated petitioner as their child. If
adoption was really made, the records thereof should have existed and
the same presented at the hearing or subsequent thereto or a
reasonable explanation of loss or destruction thereof, if that be the case,
adduced. 19
Assuming the mere fact that the deceased spouses treated petitioner as
their child does not justify the conclusion that petitioner had been in fact
judicially adopted by the spouses nor does it constitute admissible proof
of adoption.
We cannot entertain the plea of petitioner that the sanction of Rule 29
should be applied to consider as established the fact of his adoption due
to the refusal of respondent Nora L. de Leon to produce the document
of adoption, because first, the fact or real existence of petitioner's
adoption had not been established; second, there is no proof that such
document of adoption is in the possession of respondent Nora L. de
Leon; third, the motu proprio order of the court for Nora de Leon to
produce the items retrieved from the safety deposit box cannot be
treated as a mode of discovery of production and inspection of
documents under Rule 27; and fourth, the items deposited in the safety
deposit box have already been surrendered by respondent Nora L. de
Leon on April 26; 1976 and no document of adoption in favor of
petitioner was listed as found in the safety deposit box.
5. As a necessary consequence, petitioner Renato Lazatin alias Renato
Sta. Clara cannot properly intervene in the settlement of the estate of
Margarita de Asis, Sp. Proc. No. 2341-P as an adopted child because of
lack of proof thereof. For one to intervene in an estate proceeding, it is a
requisite that he has an interest in the estate, either as one who would
be benefited as an heir or one who has a claim against the estate like a
creditor. A child by adoption cannot inherit from the parent creditor. by
20
adoption unless the act of adoption has been done in strict accord with
the statue. Until this is done, no rights are acquired by the child and
neither the supposed adopting parent or adopted child could be bound
thereby. The burden of proof in establishing adoption is upon the
21
person claiming such relationship. He must prove compliance with the
statutes relating to adoption in the jurisdiction where the adoption
occurred. A fortiori if no hereditary interest in the estate can be gained
22
by a claimant who failed to submit proof thereof, whether the will is
probated or not, intervention should be denied as it would merely result
in unnecessary complication. To succeed, a child must be ligitimate,
23
legitimated, adopted, acknowledged illegitimate natural child or natural
child by legal fiction or recognized spurious child.
24
In the face of the verified pleadings of record (constituting judicial
admissions) which show that petitioner sought to intervene on
November 22, 1974 in the estate proceedings of his alleged adoptive
father Dr. Mariano M. Lazatin (Sp. Proc. No. 2326-P) as an admitted
illegitimate (not natural) child, while his intervention on August 20,
25
1975 in the estate of Margarita de Asis, widow of the deceased Dr.
Lazatin (Sp. Proc. No. 2341-P) was as her adopted child on the basis of
the affidavit of a brother of the deceased Dr. Lazatin, Benjamin Lazatin,
executed August 19, 1975 (which affidavit modified a first affidavit
executed on May 31, 1975, which failed to estate by "oversight"
petitioner, but stated that affiant knew petitioner to be "an illegitimate
son" of Dr. Lazatin who later "legally adopted (him) as a son before the
Court of First Instance of Manila sometime between the years 1928 and
1921") and prescinding from the question of whether a natural or
spurious child may be legally adopted by the putative father, we hold
that no grave abuse of discretion nor error of law as committed by
respondent judge in issuing the questioned orders of March 4, 1976,
March 26, 1976 and June 3, 1976 denying petitioner's petition "to
declare as established in this proceeding the fact of adoption" and
denying "any motion for reconsideration unless based on some
documentary proof." The Court finds no basis to grant the affirmative
relief sought in this proceeding by petitioner for a rendition of judgment
"declaring as established the fact of your petitioner's adoption as a son
of the deceased spouses entitling him to succeed in their estates as
such in accordance with the applicable law on succession as to his
inheritance."
Upon the filing of the petition, the Court issued on June 16, 1976 a
temporary restraining order; which as amended on July 21, 1976,
restrained respondent judge "from proceeding with the hearing
scheduled on June 17, 1976 at 8:30 a.m., requiring the submission of
evidence to establish heirship in Special Proceedings No. 2326-P
entitled 'Intestate Estate of the Late Mariano M. Lazatin' and Special
Proceedings No. 2341-P, entitled 'Testate Estate of the late Margarita de
Asis Vda. de Lazatin,' and from proceeding with the probate of the
alleged holographic will of the deceased Doñ;a Margarita de Asis Vda.
de Lazatin scheduled on June 29, 1976, August 10 and 12, 1976 and on
any other dates." With the Court's determination of the issues as herein
set forth, there is no longer any need for restraining the proceedings
below and the said restraining order shall be immediately lifted.
On January 24, 1977, the Court upon petitioner's motion resolved to
conditionally allow respondent judge "to take the deposition of
petitioner's witnesses to perpetuate their testimonies pursuant to Rule
134, Section 7 of the Rules of Court, subject to the Court's ruling in due
course on the admissibility of such testimonies." The Court thereby
permitted in effect the advance testimonies of petitioner's witnesses,
principally among them Rafael Lazatin and Esteban L. Lazatin, both
brothers of the deceased Dr. Mariano L. Lazatin and as stated in
petitioner's motion of January 11, 1977: têñ.£îhqwâ£
Substantially, the testimony of the above-named
witnesses will be on the fact that they had been
informed by the deceased spouses, Mariano and
Margarita Lazatin that your petitioner was their
[Mariano's and Margarita's] judicially adopted son and to
elicit further from them the fact that your petitioner
enjoys the reputation of being their judicially adopted
son in the Lazatin family.
The Court's resolution allowing the advance testimonies of petitioner's
witnesses was but in application of the Court's long standing admonition
to trial courts is reaffirmed in Lamagan vs. De la Cruz, , "to be liberal in
26
accepting proferred evidence since even if they were to refuse to accept
the evidence, the affected party will nevertheless be allowed to spread
the excluded evidence on the record, for review on appeal." The Court
therein once again stressed the established rule that "it is beyond
question that rulings of the trial court on procedural questions and on
admissibility of evidence during the course of the trial are interlocutory in
nature and may not be the subject of separate appeal or review on
certiorari, but are to be assigned as errors and reviewed in the appeal
properly taken from the decision rendered by the trial court on the merits
of the case," and that a party's recourse when proferred evidence is
27
rejected by the trial court is to make a offer stating on the record what a
party or witness would have testified to were his testimony not excluded,
as well as to attach to the record any rejected exhibits.
At the continuation of the proceedings below for declaration of heirship
and for probate of the alleged holographic the deceased Margarita de
Asis Vda. de Lazatin, pet who has failed to establish his status as an
alleged ;m child of Margarita de Asis (unless, as reserved to him by the
court below, he can show some documentary proof),and whose
intervention in the estate of the deceased Dr. Mariano Lazatin is as an
admitted illegitimate child, win have to decide whether he will pursue his
first theory of having the of such admitted illegitimate child of said
deceased. Whatever be his theory and his course of action and whether
or not he may be duly snowed to intervene in the proceedings below as
such alleged admitted illegitimate child, his recourse in the event of an
adverse ruling against him is to make a formal offer of proof and of his
excluded evidence, oral and documentary, and seek a reversal on an
appeal in due course.
ACCORDINGLY, the petition is dismissed and the questioned orders
denying petitioner's petition below "to declare as established in this
proceeding the fact of [his] adoption" are hereby affirmed. The
temporary restraining order issued on June 16, 1976 and amended on
July 21, 1976 is ordered lifted, effective immediately. Without costs.
SO ORDERED.
G.R. No. L-29575 April 30, 1971
THE DIRECTOR OF LANDS, and ADRIANO CARPIO, MARTIN
AGUILAR and PEDRO AGUILAR, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and MARIANO
RAYMUNDO, respondents.
Barrera and Recto Law Office for private petitioners.
Dominador I. Reyes for private respondent.
Office of the Solicitor General Felix V. Makasiar, Assistant Solicitor
General Antonio G. Ibarra and Solicitor Hector C. Fule for petitioner
Director of Lands.
REYES, J.B.L., J.:
Petition for review of the decision of the Court of Appeals, in its Case
CA-G.R. No. 29461-R, recognizing the registerable title of respondent
Mariano Raymundo over certain parcels of land in Mabitac, Laguna, on
the basis of an unsigned copy of a deed of sale, the original of which
was said to have been lost.
The records show that on 16 June 1950, Mariano B. Raymundo filed in
the Court of First Instance of Laguna an application for registration of
1
his imperfect or incomplete title over five parcels of land (Lots Nos. 461,
462, 463, 480 and 483, Mabitac Cadastre) situated in Mabitac, Laguna,
allegedly acquired by actual, open, adverse and continuous occupation
of the properties, by himself and by his predecessors-in-interest since
time immemorial.
The application for registration was opposed by several parties,
specifically, (a) by the Director of Lands, on the ground of applicant's
lack of registerable title; and (b) by Adriano Carpio, Martin Aguilar and
Pedro Aguilar, as regards the northern portion of Lot No. 463, for the
reason that they were the actual possessors thereof and had filed
homestead applications therefor since 1935.
After hearing, the registration court rendered judgment declaring
applicant Raymundo to have established proprietary rights over Lots
Nos. 461, 462, 480, 483 and the southern portion of Lot No. 463; and
ruling oppositors Carpio and Aguilar brothers to have likewise proved
their title as regards the northern portion of Lot No. 463, with an area of
72 hectares.
Both Raymundo and the Director of Lands appealed to the Court of
Appeals. In its decision of 11 July 1968, the appellate court modified the
judgment of the trial court, by recognizing Raymundo's registerable title,
not only over Lots Nos. 461, 462, 480, 483 and the southern portion of
Lot No. 463 but even over the northern part of Lot No. 463 adjudicated
to oppositors Carpio and Aguilar brothers. Raymundo's claim over the
whole Lot No. 463 was declared proved by a Deed of Absolute Sale
(Exhibit "E-1") dated August, 1936, covering 10 hectares, executed in
his favor by Gerardo Olarte and by a deed of sale (Exhibit "O") involving
around 80 hectares, allegedly executed by Mariano Castro on 18
September 1929. Overruling the objection of the oppositors to the
admissibility of Exhibit "O," which is merely an unsigned copy of the
supposed deed, the Court of Appeals said:
... However, applicant Raymundo satisfactorily explained
the presentation of said copy in lieu of the original by
proving that the original document together with other
pertinent papers were entrusted by him to his lawyer,
Judge Mariano C. Melendres, sometime before the war
in connection with registration proceedings over the said
parcels of land. Unfortunately, these documents were
burned during the last World War and no official copy
could be obtained from the Register of Deeds of
Mabitac, Laguna. (Exhibit K, certification of Municipal
Treasurer). The testimony of Raymundo was
corroborated by Judge Melendres on the witness stand
when he declared that he was indeed entrusted with the
custody of these papers and that upon his appointment
to the Judiciary he turned over all these papers to a
certain Atty. Facundo San Agustin who was killed by the
Japanese during the war and no trace of the aforesaid
documents has been found. Moreover, Raymundo
submitted a receipt, duly signed by Mariano Castro
attesting to the fact that the latter received the amount of
P100.00 as down payment on the purchase price of the
property sold by him to Raymundo on 27 August 1929
(Exhibit O-1). This receipt, taken in conjunction with the
copy of the deed of sale and the testimony of Judge
Melendres, clearly indicates that applicant Raymundo
did in fact buy some 80 hectares of land from Castro of
Lot No. 463.
The Director of Lands and oppositors Adriano Carpio Martin Aguilar and
Pedro Aguilar then come to this court, questioning the correctness and
legality of the above ruling of the Court of Appeals, effecting solely the
northern portion of Lot No. 463, that was allegedly made in
contravention of the express provisions of the Rules of Court.
Section 51 of the old Rule 123, Rules of Court, referred to by herein
petitioners, reads as follows:
SEC. 51. Secondary evidence when original is lost or
destroyed. — When the original writing has been lost or
destroyed, upon proof of its execution and loss or
destruction, its contents may be proved by a copy, or by
a recital of its contents in some authentic document, or
by the recollection of witnesses.
There is merit in the petitioners' contention. From the enactment of Act
No. 190 to the present Rules of Court, the rule governing the sale of real
property has remained unchanged: it can be proved only by the very
instrument reciting the transaction, duly subscribed by the proper party
or his authorized agent, or else by secondary evidence of the contents declaring Raymundo's title over the northern portion of Lot No. 463 to
of such document. However, before the terms of a transaction in realty
2
have been proven, on the basis of the foregoing evidence.
may be established by secondary evidence, it is necessary that the due
execution and subsequent loss of the original instrument evidencing the The applicant, having failed to establish his right or title over the
transaction be proved. For it is the due execution, and loss thereafter,
3
northern portion of Lot No. 463 involved in the present controversy, and
of the document that would warrant or constitute basis for the there being no showing that the same has been acquired by any private
introduction of secondary evidence to prove the contents of such person from the Government, either by purchase or by grant, the
document. And the due execution of the document should be proved
4
property is and remains part of the public domain. 7

through the testimony of (1) the person or persons who executed it; (2)
the person before whom its execution was acknowledged; or (3) any
person who was present and saw it executed and delivered, or who,
after its execution and delivery, saw it and recognized the signatures, or
by a person to whom the parties to the instruments had previously
confessed the execution thereof. Thus, in one case, the admission of
5 6
the certified copy of the record of a deed in a public registry as
secondary evidence of the terms of the deed of sale, was declared
improper and invalid, the Court pointing to the party's failure to present
the notary and those persons who must have seen the signing of the
document as witnesses to testify on its due execution.
In the present case, the declaration of applicant Raymundo's former
counsel, Mariano C. Melendres, does not satisfy the requirements of the
Rules. As mentioned in the decision of the Court of Appeals, this
witness testified that the alleged original deed of sale, together with
other pertinent papers, were entrusted to him by applicant sometime
before the war, that upon his appointment to the bench all those papers
were turned over to one Attorney Facundo San Agustin; that Attorney
San Agustin, however, was killed by the Japanese and no trace of the
documents could be found thereafter. It may be noted from the
foregoing finding of the Court of Appeals that Judge Melendres did not
state that he was present when the deed of sale was supposedly
executed by Mariano Castro, or that the fact of its execution was
acknowledged or admitted to him by the latter. It appears simply that the
deed, perhaps then already accomplished, was delivered to him by
applicant, together with other papers. Even assuming, therefore, that
this witness could have read the contents of the document, yet if it is
considered that there is no showing that the witness knew and
recognized the signatures affixed thereon, such knowledge of the terms
would not qualify him to testify on the due execution of the document.
The same thing may be said of the receipt signed by Mariano Castro,
acknowledging payment by Raymundo of the sum of P100.00. It has
nothing to do at all with the execution of the supposed deed of sale.
Hence, the Court of Appeals clearly committed reversible error in
WHEREFORE, the decision of the Court of Appeals under review is
reversed, only insofar as it decreed to applicant Mariano Raymundo title
to and ownership of the northern portion of Lot No. 463, Mabitac
Cadastre, subject of this proceeding, which is hereby declared part of
the public domain, subject to the possessory rights of oppositors
Adriano Carpio, Martin Aguilar and Pedro Aguilar. No pronouncement as
to costs.
G.R. No. L-23893 October 29, 1968
VILLA REY TRANSIT, INC., plaintiff-appellant,
vs.
EUSEBIO E. FERRER, PANGASINAN TRANSPORTATION CO., INC.
and PUBLIC SERVICE COMMISSION,defendants.
EUSEBIO E. FERRER and PANGASINAN TRANSPORTATION CO.,
INC., defendants-appellants.
PANGASINAN TRANSPORTATION CO., INC., third-party plaintiff-
appellant,
vs.
JOSE M. VILLARAMA, third-party defendant-appellee.
Chuidian Law Office for plaintiff-appellant.
Bengzon, Zarraga & Villegas for defendant-appellant / third-party
plaintiff-appellant.
Laurea & Pison for third-party defendant-appellee.
ANGELES, J.:
This is a tri-party appeal from the decision of the Court of First Instance
of Manila, Civil Case No. 41845, declaring null and void the sheriff's
sale of two certificates of public convenience in favor of defendant
Eusebio E. Ferrer and the subsequent sale thereof by the latter to
defendant Pangasinan Transportation Co., Inc.; declaring the plaintiff
Villa Rey Transit, Inc., to be the lawful owner of the said certificates of
public convenience; and ordering the private defendants, jointly and
severally, to pay to the plaintiff, the sum of P5,000.00 as and for
attorney's fees. The case against the PSC was dismissed.
The rather ramified circumstances of the instant case can best be
understood by a chronological narration of the essential facts, to wit:
Prior to 1959, Jose M. Villarama was an operator of a bus
transportation, under the business name of Villa Rey Transit, pursuant
to certificates of public convenience granted him by the Public Service
Commission (PSC, for short) in Cases Nos. 44213 and 104651, which
authorized him to operate a total of thirty-two (32) units on various
routes or lines from Pangasinan to Manila, and vice-versa. On January
8, 1959, he sold the aforementioned two certificates of public
convenience to the Pangasinan Transportation Company, Inc.
(otherwise known as Pantranco), for P350,000.00 with the condition,
among others, that the seller (Villarama) "shall not for a period of 10
years from the date of this sale, apply for any TPU service identical or
competing with the buyer."
Barely three months thereafter, or on March 6, 1959: a corporation
called Villa Rey Transit, Inc. (which shall be referred to hereafter as the
Corporation) was organized with a capital stock of P500,000.00 divided
into 5,000 shares of the par value of P100.00 each; P200,000.00 was
the subscribed stock; Natividad R. Villarama (wife of Jose M. Villarama)
was one of the incorporators, and she subscribed for P1,000.00; the
balance of P199,000.00 was subscribed by the brother and sister-in-law
of Jose M. Villarama; of the subscribed capital stock, P105,000.00 was
paid to the treasurer of the corporation, who was Natividad R. Villarama.
In less than a month after its registration with the Securities and
Exchange Commission (March 10, 1959), the Corporation, on April 7,
1959, bought five certificates of public convenience, forty-nine buses,
tools and equipment from one Valentin Fernando, for the sum of
P249,000.00, of which P100,000.00 was paid upon the signing of the
contract; P50,000.00 was payable upon the final approval of the sale by
the PSC; P49,500.00 one year after the final approval of the sale; and
the balance of P50,000.00 "shall be paid by the BUYER to the different
suppliers of the SELLER."
The very same day that the aforementioned contract of sale was
executed, the parties thereto immediately applied with the PSC for its
approval, with a prayer for the issuance of a provisional authority in
favor of the vendee Corporation to operate the service therein
involved.1 On May 19, 1959, the PSC granted the provisional permit
prayed for, upon the condition that "it may be modified or revoked by the
Commission at any time, shall be subject to whatever action that may
be taken on the basic application and shall be valid only during the
pendency of said application." Before the PSC could take final action on
said application for approval of sale, however, the Sheriff of Manila, on
July 7, 1959, levied on two of the five certificates of public
convenience involved therein, namely, those issued under PSC cases
Nos. 59494 and 63780, pursuant to a writ of execution issued by the
Court of First Instance of Pangasinan in Civil Case No. 13798, in favor
of Eusebio Ferrer, plaintiff, judgment creditor, against Valentin
Fernando, defendant, judgment debtor. The Sheriff made and entered
the levy in the records of the PSC. On July 16, 1959, a public sale was
conducted by the Sheriff of the said two certificates of public
convenience. Ferrer was the highest bidder, and a certificate of sale
was issued in his name.
Thereafter, Ferrer sold the two certificates of public convenience to
Pantranco, and jointly submitted for approval their corresponding
contract of sale to the PSC.2 Pantranco therein prayed that it be
authorized provisionally to operate the service involved in the
said two certificates.
The applications for approval of sale, filed before the PSC, by Fernando
and the Corporation, Case No. 124057, and that of Ferrer and
Pantranco, Case No. 126278, were scheduled for a joint hearing. In the
meantime, to wit, on July 22, 1959, the PSC issued an order disposing
that during the pendency of the cases and before a final resolution on
the aforesaid applications, the Pantranco shall be the one to operate
provisionally the service under the twocertificates embraced in the
contract between Ferrer and Pantranco. The Corporation took issue
with this particular ruling of the PSC and elevated the matter to the
Supreme Court,3 which decreed, after deliberation, that until the issue
on the ownership of the disputed certificates shall have been finally
settled by the proper court, the Corporation should be the one to
operate the lines provisionally.
On November 4, 1959, the Corporation filed in the Court of First
Instance of Manila, a complaint for the annulment of the sheriff's sale of
the aforesaid two certificates of public convenience (PSC Cases Nos.
59494 and 63780) in favor of the defendant Ferrer, and the subsequent
sale thereof by the latter to Pantranco, against Ferrer, Pantranco and
the PSC. The plaintiff Corporation prayed therein that all the orders of
the PSC relative to the parties' dispute over the said certificates be
annulled.
In separate answers, the defendants Ferrer and Pantranco averred that
the plaintiff Corporation had no valid title to the certificates in question
because the contract pursuant to which it acquired them from Fernando
was subject to a suspensive condition — the approval of the PSC —
which has not yet been fulfilled, and, therefore, the Sheriff's levy and the
consequent sale at public auction of the certificates referred to, as well
as the sale of the same by Ferrer to Pantranco, were valid and regular,
and vested unto Pantranco, a superior right thereto.
Pantranco, on its part, filed a third-party complaint against Jose M.
Villarama, alleging that Villarama and the Corporation, are one and the
same; that Villarama and/or the Corporation was disqualified from
operating the two certificates in question by virtue of the aforementioned
agreement between said Villarama and Pantranco, which stipulated that
Villarama "shall not for a period of 10 years from the date of this sale,
apply for any TPU service identical or competing with the buyer."
Upon the joinder of the issues in both the complaint and third-party
complaint, the case was tried, and thereafter decision was rendered in
the terms, as above stated.
As stated at the beginning, all the parties involved have appealed from
the decision. They submitted a joint record on appeal.
Pantranco disputes the correctness of the decision insofar as it holds
that Villa Rey Transit, Inc. (Corporation) is a distinct and separate entity
from Jose M. Villarama; that the restriction clause in the contract of
January 8, 1959 between Pantranco and Villarama is null and void; that
the Sheriff's sale of July 16, 1959, is likewise null and void; and the
failure to award damages in its favor and against Villarama.
Ferrer, for his part, challenges the decision insofar as it holds that the
sheriff's sale is null and void; and the sale of the two certificates in
question by Valentin Fernando to the Corporation, is valid. He also
assails the award of P5,000.00 as attorney's fees in favor of the
Corporation, and the failure to award moral damages to him as prayed
for in his counterclaim.
The Corporation, on the other hand, prays for a review of that portion of
the decision awarding only P5,000.00 as attorney's fees, and insisting
that it is entitled to an award of P100,000.00 by way of exemplary
damages.
After a careful study of the facts obtaining in the case, the vital issues to
be resolved are: (1) Does the stipulation between Villarama and
Pantranco, as contained in the deed of sale, that the former "SHALL
NOT FOR A PERIOD OF 10 YEARS FROM THE DATE OF THIS SALE,
APPLY FOR ANY TPU SERVICE IDENTICAL OR COMPETING WITH
THE BUYER," apply to new lines only or does it include existing lines?;
(2) Assuming that said stipulation covers all kinds of lines, is such
stipulation valid and enforceable?; (3) In the affirmative, that said
stipulation is valid, did it bind the Corporation?
For convenience, We propose to discuss the foregoing issues by
starting with the last proposition.
The evidence has disclosed that Villarama, albeit was not an
incorporator or stockholder of the Corporation, alleging that he did not
become such, because he did not have sufficient funds to invest, his
wife, however, was an incorporator with the least subscribed number of
shares, and was elected treasurer of the Corporation. The finances of
the Corporation which, under all concepts in the law, are supposed to be
under the control and administration of the treasurer keeping them as
trust fund for the Corporation, were, nonetheless, manipulated and
disbursed as if they were the private funds of Villarama, in such a way
and extent that Villarama appeared to be the actual owner-treasurer of
the business without regard to the rights of the stockholders. The
following testimony of Villarama,4together with the other evidence on
record, attests to that effect:
Q. Doctor, I want to go back again to the incorporation of the
Villa Rey Transit, Inc. You heard the testimony presented here
by the bank regarding the initial opening deposit of ONE
HUNDRED FIVE THOUSAND PESOS, of which amount Eighty-
Five Thousand Pesos was a check drawn by yourself
personally. In the direct examination you told the Court that the
reason you drew a check for Eighty-Five Thousand Pesos was
because you and your wife, or your wife, had spent the money
of the stockholders given to her for incorporation. Will you
please tell the Honorable Court if you knew at the time your wife
was spending the money to pay debts, you personally knew she
was spending the money of the incorporators?
A. You know my money and my wife's money are one. We
never talk about those things.
Q. Doctor, your answer then is that since your money and
your wife's money are one money and you did not know when
your wife was paying debts with the incorporator's money?
A. Because sometimes she uses my money, and sometimes
the money given to her she gives to me and I deposit the
money.
Q. Actually, aside from your wife, you were also the
custodian of some of the incorporators here, in the beginning?
A. Not necessarily, they give to my wife and when my wife
hands to me I did not know it belonged to the incorporators.
Q. It supposes then your wife gives you some of the money
received by her in her capacity as treasurer of the corporation?
A. Maybe.
Q. What did you do with the money, deposit in a regular
account?
A. Deposit in my account.
Q. Of all the money given to your wife, she did not receive
any check?
A. I do not remember.
Q. Is it usual for you, Doctor, to be given Fifty Thousand
Pesos without even asking what is this?
xxx xxx xxx
JUDGE: Reform the question.
Q. The subscription of your brother-in-law, Mr. Reyes, is
Fifty-Two Thousand Pesos, did your wife give you Fifty-two
Thousand Pesos?
A. I have testified before that sometimes my wife gives me
money and I do not know exactly for what.
The evidence further shows that the initial cash capitalization of the
corporation of P105,000.00 was mostly financed by Villarama. Of the
P105,000.00 deposited in the First National City Bank of New York,
representing the initial paid-up capital of the Corporation, P85,000.00
was covered by Villarama's personal check. The deposit slip for the said
amount of P105,000.00 was admitted in evidence as Exh. 23, which
shows on its face that P20,000.00 was paid in cash and P85,000.00
thereof was covered by Check No. F-50271 of the First National City
Bank of New York. The testimonies of Alfonso Sancho5 and Joaquin
Amansec,6 both employees of said bank, have proved that the drawer of
the check was Jose Villarama himself.
Another witness, Celso Rivera, accountant of the Corporation, testified
that while in the books of the corporation there appears an entry that the
treasurer received P95,000.00 as second installment of the paid-in
subscriptions, and, subsequently, also P100,000.00 as the first
installment of the offer for second subscriptions worth P200,000.00 from
the original subscribers, yet Villarama directed him (Rivera) to make
vouchers liquidating the sums.7 Thus, it was made to appear that the
P95,000.00 was delivered to Villarama in payment for equipment
purchased from him, and the P100,000.00 was loaned as advances to
the stockholders. The said accountant, however, testified that he was
not aware of any amount of money that had actually passed hands
among the parties involved,8 and actually the only money of the
corporation was the P105,000.00 covered by the deposit slip Exh. 23, of
which as mentioned above, P85,000.00 was paid by Villarama's
personal check.
Further, the evidence shows that when the Corporation was in its initial
months of operation, Villarama purchased and paid with his personal
checks Ford trucks for the Corporation. Exhibits 20 and 21 disclose that
the said purchases were paid by Philippine Bank of Commerce Checks
Nos. 992618-B and 993621-B, respectively. These checks have been
sufficiently established by Fausto Abad, Assistant Accountant of Manila
Trading & Supply Co., from which the trucks were purchased 9 and
Aristedes Solano, an employee of the Philippine Bank of Commerce, 10as
having been drawn by Villarama.
Exhibits 6 to 19 and Exh. 22, which are photostatic copies of ledger
entries and vouchers showing that Villarama had co-mingled his
personal funds and transactions with those made in the name of the
Corporation, are very illuminating evidence. Villarama has assailed the
admissibility of these exhibits, contending that no evidentiary value
whatsoever should be given to them since "they were merely
photostatic copies of the originals, the best evidence being the originals
themselves." According to him, at the time Pantranco offered the said
exhibits, it was the most likely possessor of the originals thereof
because they were stolen from the files of the Corporation and only
Pantranco was able to produce the alleged photostat copies thereof.
Section 5 of Rule 130 of the Rules of Court provides for the requisites
for the admissibility of secondary evidence when the original is in the
custody of the adverse party, thus: (1) opponent's possession of the
original; (2) reasonable notice to opponent to produce the original; (3)
satisfactory proof of its existence; and (4) failure or refusal of opponent
to produce the original in court.11 Villarama has practically admitted the
second and fourth requisites.12As to the third, he admitted their previous
existence in the files of the Corporation and also that he had seen some
of them.13 Regarding the first element, Villarama's theory is that since
even at the time of the issuance of the subpoena duces tecum, the
originals were already missing, therefore, the Corporation was no longer
in possession of the same. However, it is not necessary for a party
seeking to introduce secondary evidence to show that the original is in
the actual possession of his adversary. It is enough that the
circumstances are such as to indicate that the writing is in his
possession or under his control. Neither is it required that the party
entitled to the custody of the instrument should, on being notified to
produce it, admit having it in his possession. 14 Hence, secondary
evidence is admissible where he denies having it in his possession. The
party calling for such evidence may introduce a copy thereof as in the
case of loss. For, among the exceptions to the best evidence rule is
"when the original has been lost, destroyed, or cannot be produced in
court."15 The originals of the vouchers in question must be deemed to
have been lost, as even the Corporation admits such loss. Viewed upon
this light, there can be no doubt as to the admissibility in evidence of
Exhibits 6 to 19 and 22.
Taking account of the foregoing evidence, together with Celso Rivera's
testimony,16 it would appear that: Villarama supplied the organization
expenses and the assets of the Corporation, such as trucks and
equipment;17 there was no actual payment by the original subscribers of
the amounts of P95,000.00 and P100,000.00 as appearing in the
books;18 Villarama made use of the money of the Corporation and
deposited them to his private accounts;19 and the Corporation paid his
personal accounts.20
Villarama himself admitted that he mingled the corporate funds with his
own money.21 He also admitted that gasoline purchases of the
Corporation were made in his name22 because "he had existing account
with Stanvac which was properly secured and he wanted the
Corporation to benefit from the rebates that he received." 23
The foregoing circumstances are strong persuasive evidence showing
that Villarama has been too much involved in the affairs of the
Corporation to altogether negative the claim that he was only a part-time
general manager. They show beyond doubt that the Corporation is
his alter ego.
It is significant that not a single one of the acts enumerated above as
proof of Villarama's oneness with the Corporation has been denied by
him. On the contrary, he has admitted them with offered excuses.
Villarama has admitted, for instance, having paid P85,000.00 of the
initial capital of the Corporation with the lame excuse that "his wife had
requested him to reimburse the amount entrusted to her by the
incorporators and which she had used to pay the obligations of Dr.
Villarama (her husband) incurred while he was still the owner of Villa
Rey Transit, a single proprietorship." But with his admission that he had
received P350,000.00 from Pantranco for the sale of the two certificates
and one unit,24 it becomes difficult to accept Villarama's explanation that
he and his wife, after consultation, 25 spent the money of their relatives
(the stockholders) when they were supposed to have their own money.
Even if Pantranco paid the P350,000.00 in check to him, as claimed, it
could have been easy for Villarama to have deposited said check in his
account and issued his own check to pay his obligations. And there is
no evidence adduced that the said amount of P350,000.00 was all
spent or was insufficient to settle his prior obligations in his business,
and in the light of the stipulation in the deed of sale between Villarama
and Pantranco that P50,000.00 of the selling price was earmarked for
the payments of accounts due to his creditors, the excuse appears
unbelievable.
On his having paid for purchases by the Corporation of trucks from the
Manila Trading & Supply Co. with his personal checks, his reason was
that he was only sharing with the Corporation his credit with some
companies. And his main reason for mingling his funds with that of the
Corporation and for the latter's paying his private bills is that it would be
more convenient that he kept the money to be used in paying the
registration fees on time, and since he had loaned money to the
Corporation, this would be set off by the latter's paying his bills.
Villarama admitted, however, that the corporate funds in his possession
were not only for registration fees but for other important obligations
which were not specified.26
Indeed, while Villarama was not the Treasurer of the Corporation but
was, allegedly, only a part-time manager, 27 he admitted not only having
held the corporate money but that he advanced and lent funds for the
Corporation, and yet there was no Board Resolution allowing it.28
Villarama's explanation on the matter of his involvement with the
corporate affairs of the Corporation only renders more credible
Pantranco's claim that his control over the corporation, especially in the
management and disposition of its funds, was so extensive and intimate
that it is impossible to segregate and identify which money belonged to
whom. The interference of Villarama in the complex affairs of the
corporation, and particularly its finances, are much too inconsistent with
the ends and purposes of the Corporation law, which, precisely, seeks
to separate personal responsibilities from corporate undertakings. It is
the very essence of incorporation that the acts and conduct of the
corporation be carried out in its own corporate name because it has its
own personality.
The doctrine that a corporation is a legal entity distinct and separate
from the members and stockholders who compose it is recognized and
respected in all cases which are within reason and the law. 29 When the
fiction is urged as a means of perpetrating a fraud or an illegal act or as
a vehicle for the evasion of an existing obligation, the circumvention of
statutes, the achievement or perfection of a monopoly or generally the
perpetration of knavery or crime, 30 the veil with which the law covers and
isolates the corporation from the members or stockholders who
compose it will be lifted to allow for its consideration merely as an
aggregation of individuals.
Upon the foregoing considerations, We are of the opinion, and so hold,
that the preponderance of evidence have shown that the Villa Rey
Transit, Inc. is an alter ego of Jose M. Villarama, and that the restrictive
clause in the contract entered into by the latter and Pantranco is also
enforceable and binding against the said Corporation. For the rule is
that a seller or promisor may not make use of a corporate entity as a
means of evading the obligation of his covenant. 31 Where the
Corporation is substantially the alter ego of the covenantor to the
restrictive agreement, it can be enjoined from competing with the
covenantee.32
The Corporation contends that even on the supposition that Villa Rey
Transit, Inc. and Villarama are one and the same, the restrictive clause
in the contract between Villarama and Pantranco does not include the
purchase of existing lines but it only applies to application for the new
lines. The clause in dispute reads thus:
(4) The SELLER shall not, for a period of ten (10) years from the
date of this sale apply for any TPU service identical or
competing with the BUYER. (Emphasis supplied)
As We read the disputed clause, it is evident from the context thereof
that the intention of the parties was to eliminate the seller as a
competitor of the buyer for ten years along the lines of operation
covered by the certificates of public convenience subject of their
transaction. The word "apply" as broadly used has for frame of
reference, a service by the seller on lines or routes that would compete
with the buyer along the routes acquired by the latter. In this jurisdiction,
prior authorization is needed before anyone can operate a TPU
service,33whether the service consists in a new line or an old one
acquired from a previous operator. The clear intention of the parties was
to prevent the seller from conducting any competitive line for 10 years
since, anyway, he has bound himself not to apply for authorization to
operate along such lines for the duration of such period. 34
If the prohibition is to be applied only to the acquisition of new
certificates of public convenience thru an application with the Public
Service Commission, this would, in effect, allow the seller just the same
to compete with the buyer as long as his authority to operate is only
acquired thru transfer or sale from a previous operator, thus defeating
the intention of the parties. For what would prevent the seller, under the
circumstances, from having a representative or dummy apply in the
latter's name and then later on transferring the same by sale to the
seller? Since stipulations in a contract is the law between the
contracting parties,
Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his
due, and observe honesty and good faith. (Art. 19, New Civil
Code.)
We are not impressed of Villarama's contention that the re-wording of
the two previous drafts of the contract of sale between Villarama and
Pantranco is significant in that as it now appears, the parties intended to
effect the least restriction. We are persuaded, after an examination of
the supposed drafts, that the scope of the final stipulation, while not as
long and prolix as those in the drafts, is just as broad and
comprehensive. At most, it can be said that the re-wording was done
merely for brevity and simplicity.
The evident intention behind the restriction was to eliminate the sellers
as a competitor, and this must be, considering such factors as the good
will35 that the seller had already gained from the riding public and his
adeptness and proficiency in the trade. On this matter, Corbin, an
authority on Contracts has this to say.36
When one buys the business of another as a going concern, he
usually wishes to keep it going; he wishes to get the location,
the building, the stock in trade, and the customers. He wishes to
step into the seller's shoes and to enjoy the same business
relations with other men. He is willing to pay much more if he
can get the "good will" of the business, meaning by this the
good will of the customers, that they may continue to tread the
old footpath to his door and maintain with him the business
relations enjoyed by the seller.
... In order to be well assured of this, he obtains and pays for the
seller's promise not to reopen business in competition with the
business sold.
As to whether or not such a stipulation in restraint of trade is valid, our
jurisprudence on the matter37says:
The law concerning contracts which tend to restrain business or
trade has gone through a long series of changes from time to
time with the changing condition of trade and commerce. With
trifling exceptions, said changes have been a continuous
development of a general rule. The early cases show plainly a
disposition to avoid and annul all contract which prohibited or
restrained any one from using a lawful trade "at any time or at
any place," as being against the benefit of the state. Later,
however, the rule became well established that if the restraint
was limited to "a certain time" and within "a certain place," such
contracts were valid and not "against the benefit of the state."
Later cases, and we think the rule is now well established, have
held that a contract in restraint of trade is valid providing there is
a limitation upon either time or place. A contract, however, which
restrains a man from entering into business or trade without
either a limitation as to time or place, will be held invalid.
The public welfare of course must always be considered and if it
be not involved and the restraint upon one party is not greater
than protection to the other requires, contracts like the one we
are discussing will be sustained. The general tendency, we
believe, of modern authority, is to make the test whether the
restraint is reasonably necessary for the protection of the
contracting parties. If the contract is reasonably necessary to
protect the interest of the parties, it will be upheld. (Emphasis
supplied.)
Analyzing the characteristics of the questioned stipulation, We find that
although it is in the nature of an agreement suppressing competition, it
is, however, merely ancillary or incidental to the main agreement which
is that of sale. The suppression or restraint is only partial or limited:
first, in scope, it refers only to application for TPU by the seller in
competition with the lines sold to the buyer; second, in duration, it is
only for ten (10) years; and third, with respect to situs or territory, the
restraint is only along the lines covered by the certificates sold. In view
of these limitations, coupled with the consideration of P350,000.00 for
just two certificates of public convenience, and considering, furthermore,
that the disputed stipulation is only incidental to a main agreement, the
same is reasonable and it is not harmful nor obnoxious to public
service.38 It does not appear that the ultimate result of the clause or
stipulation would be to leave solely to Pantranco the right to operate
along the lines in question, thereby establishing monopoly or
predominance approximating thereto. We believe the main purpose of
the restraint was to protect for a limited time the business of the buyer.
Indeed, the evils of monopoly are farfetched here. There can be no
danger of price controls or deterioration of the service because of the
close supervision of the Public Service Commission. 39 This Court had
stated long ago,40that "when one devotes his property to a use in which
the public has an interest, he virtually grants to the public an interest in
that use and submits it to such public use under reasonable rules and
regulations to be fixed by the Public Utility Commission."
Regarding that aspect of the clause that it is merely ancillary or
incidental to a lawful agreement, the underlying reason sustaining its
validity is well explained in 36 Am. Jur. 537-539, to wit:
... Numerous authorities hold that a covenant which is incidental
to the sale and transfer of a trade or business, and which
purports to bind the seller not to engage in the same business in
competition with the purchaser, is lawful and enforceable. While
such covenants are designed to prevent competition on the part
of the seller, it is ordinarily neither their purpose nor effect to
stifle competition generally in the locality, nor to prevent it at all
in a way or to an extent injurious to the public. The business in
the hands of the purchaser is carried on just as it was in the
hands of the seller; the former merely takes the place of the
latter; the commodities of the trade are as open to the public as
they were before; the same competition exists as existed before;
there is the same employment furnished to others after as
before; the profits of the business go as they did before to swell
the sum of public wealth; the public has the same opportunities
of purchasing, if it is a mercantile business; and production is
not lessened if it is a manufacturing plant.
The reliance by the lower court on tile case of Red Line Transportation
Co. v. Bachrach41 and finding that the stipulation is illegal and void
seems misplaced. In the said Red Line case, the agreement therein
sought to be enforced was virtually a division of territory between two
operators, each company imposing upon itself an obligation not to
operate in any territory covered by the routes of the other. Restraints of
this type, among common carriers have always been covered by the
general rule invalidating agreements in restraint of trade. 42
Neither are the other cases relied upon by the plaintiff-appellee
applicable to the instant case. In Pampanga Bus Co., Inc. v.
Enriquez,43the undertaking of the applicant therein not to apply for the
lifting of restrictions imposed on his certificates of public convenience
was not an ancillary or incidental agreement. The restraint was the
principal objective. On the other hand, in Red Line Transportation Co.,
Inc. v. Gonzaga,44 the restraint there in question not to ask for extension
of the line, or trips, or increase of equipment — was not an agreement
between the parties but a condition imposed in the certificate of public
convenience itself.
Upon the foregoing considerations, Our conclusion is that the stipulation
prohibiting Villarama for a period of 10 years to "apply" for TPU service
along the lines covered by the certificates of public convenience sold by
him to Pantranco is valid and reasonable. Having arrived at this
conclusion, and considering that the preponderance of the evidence
have shown that Villa Rey Transit, Inc. is itself the alter ego of Villarama,
We hold, as prayed for in Pantranco's third party complaint, that the said
Corporation should, until the expiration of the 1-year period
abovementioned, be enjoined from operating the line subject of the
prohibition.
To avoid any misunderstanding, it is here to be emphasized that the 10-
year prohibition upon Villarama is not against his application for, or
purchase of, certificates of public convenience, but merely the operation
of TPU along the lines covered by the certificates sold by him to
Pantranco. Consequently, the sale between Fernando and the
Corporation is valid, such that the rightful ownership of the disputed
certificates still belongs to the plaintiff being the prior purchaser in good
faith and for value thereof. In view of the ancient rule of caveat
emptor prevailing in this jurisdiction, what was acquired by Ferrer in the
sheriff's sale was only the right which Fernando, judgment debtor, had
in the certificates of public convenience on the day of the sale. 45
Accordingly, by the "Notice of Levy Upon Personalty" the Commissioner
of Public Service was notified that "by virtue of an Order of Execution
issued by the Court of First Instance of Pangasinan, the rights, interests,
or participation which the defendant, VALENTIN A. FERNANDO — in
the above entitled case may have in the following realty/personalty is
attached or levied upon, to wit: The rights, interests and participation on
the Certificates of Public Convenience issued to Valentin A. Fernando,
in Cases Nos. 59494, etc. ... Lines — Manila to Lingayen, Dagupan,
etc. vice versa." Such notice of levy only shows that Ferrer, the vendee
at auction of said certificates, merely stepped into the shoes of the
judgment debtor. Of the same principle is the provision of Article 1544 of
the Civil Code, that "If the same thing should have been sold to different
vendees, the ownership shall be transferred to the person who may
have first taken possession thereof in good faith, if it should be movable
property."
There is no merit in Pantranco and Ferrer's theory that the sale of the
certificates of public convenience in question, between the Corporation
and Fernando, was not consummated, it being only a conditional sale
subject to the suspensive condition of its approval by the Public Service
Commission. While section 20(g) of the Public Service Act provides that
"subject to established limitation and exceptions and saving provisions
to the contrary, it shall be unlawful for any public service or for the
owner, lessee or operator thereof, without the approval and
authorization of the Commission previously had ... to sell, alienate,
mortgage, encumber or lease its property, franchise, certificates,
privileges, or rights or any part thereof, ...," the same section also
provides:
... Provided, however, That nothing herein contained shall be
construed to prevent the transaction from being negotiated or
completed before its approval or to prevent the sale, alienation,
or lease by any public service of any of its property in the
ordinary course of its business.
It is clear, therefore, that the requisite approval of the PSC is not a
condition precedent for the validity and consummation of the sale.
Anent the question of damages allegedly suffered by the parties, each
of the appellants has its or his own version to allege.
Villa Rey Transit, Inc. claims that by virtue of the "tortious acts" of
defendants (Pantranco and Ferrer) in acquiring the certificates of public
convenience in question, despite constructive and actual knowledge on
their part of a prior sale executed by Fernando in favor of the said
corporation, which necessitated the latter to file the action to annul the
sheriff's sale to Ferrer and the subsequent transfer to Pantranco, it is
entitled to collect actual and compensatory damages, and attorney's
fees in the amount of P25,000.00. The evidence on record, however,
does not clearly show that said defendants acted in bad faith in their
acquisition of the certificates in question. They believed that because
the bill of sale has yet to be approved by the Public Service
Commission, the transaction was not a consummated sale, and,
therefore, the title to or ownership of the certificates was still with the
seller. The award by the lower court of attorney's fees of P5,000.00 in
favor of Villa Rey Transit, Inc. is, therefore, without basis and should be
set aside.
Eusebio Ferrer's charge that by reason of the filing of the action to annul
the sheriff's sale, he had suffered and should be awarded moral,
exemplary damages and attorney's fees, cannot be entertained, in view
of the conclusion herein reached that the sale by Fernando to the
Corporation was valid.
Pantranco, on the other hand, justifies its claim for damages with the
allegation that when it purchased ViIlarama's business for P350,000.00,
it intended to build up the traffic along the lines covered by the
certificates but it was rot afforded an opportunity to do so since barely
three months had elapsed when the contract was violated by Villarama
operating along the same lines in the name of Villa Rey Transit, Inc. It is
further claimed by Pantranco that the underhanded manner in which
Villarama violated the contract is pertinent in establishing punitive or
moral damages. Its contention as to the proper measure of damages is
that it should be the purchase price of P350,000.00 that it paid to
Villarama. While We are fully in accord with Pantranco's claim of
entitlement to damages it suffered as a result of Villarama's breach of
his contract with it, the record does not sufficiently supply the necessary
evidentiary materials upon which to base the award and there is need
for further proceedings in the lower court to ascertain the proper
amount.
PREMISES CONSIDERED, the judgment appealed from is hereby
modified as follows:
1. The sale of the two certificates of public convenience in question by
Valentin Fernando to Villa Rey Transit, Inc. is declared preferred over
that made by the Sheriff at public auction of the aforesaid certificate of
public convenience in favor of Eusebio Ferrer;
2. Reversed, insofar as it dismisses the third-party complaint filed by
Pangasinan Transportation Co. against Jose M. Villarama, holding that
Villa Rey Transit, Inc. is an entity distinct and separate from the
personality of Jose M. Villarama, and insofar as it awards the sum of
P5,000.00 as attorney's fees in favor of Villa Rey Transit, Inc.;

3. The case is remanded to the trial court for the reception of evidence
in consonance with the above findings as regards the amount of
damages suffered by Pantranco; and

4. On equitable considerations, without costs. So ordered.