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CASENT REALTY DEVELOPMENT CORP., G.R. No.

150731

Petitioner,

- versus -

PHILBANKING CORPORATION,
Respondent.

Promulgated:

September 14, 2007

x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

On appeal to this Court through Rule 45 of the Rules of Court is the March 29,
2001 Decision[1] and November 7, 2001 Resolution[2] of the Court of Appeals (CA) in CA-G.R. CV
No. 63979 entitled Philbanking Corporation v. Casent Realty Development Corporation. The CA
reversed the May 12, 1999 Order[3] of the Makati City Regional Trial Court (RTC), Branch 145 in
Civil Case No. 93-2612, which granted petitioners demurrer to evidence and dismissed the
complaint filed by respondent.

The Facts

The facts according to the appellate court are as follows:

In 1984, petitioner Casent Realty Development Corporation executed two promissory notes
in favor of Rare Realty Corporation (Rare Realty) involving the amounts of PhP 300,000 (PN No.
84-04) and PhP 681,500 (PN No. 84-05). It was agreed in PN No. 84-04 that the
loan it covered would earn an interest of 36% per annum and a penalty of 12% in case of non-
payment by June 27, 1985, while the loan covered by PN No. 84-05 would earn an interest of 18%
per annum and 12% penalty if not paid by June 25, 1985.[4] On August 8, 1986, these promissory
notes were assigned to respondent Philbanking Corporation through a Deed of Assignment.[5]

Respondent alleged that despite demands, petitioner failed to pay the promissory notes
upon maturity such that its obligation already amounted to PhP 5,673,303.90 as of July 15,
1993. Respondent filed on July 20, 1993 a complaint before the Makati City RTC for the
collection of said amount. In its Answer, petitioner raised the following as special/affirmative
[6]

defenses:

1. The complaint stated no cause of action or if there was any, the same was
barred by estoppel, statute of frauds, statute of limitations, laches, prescription, payment, and/or
release;
2. On August 27, 1986, the parties executed a Dacion en Pago[7] (Dacion) which
ceded and conveyed petitioners property in Iloilo City to respondent,with the intention of totally
extinguishing petitioners outstanding accounts with respondent. Petitioner presented a
Confirmation Statement[8] dated April 3, 1989issued by respondent stating that petitioner had no
loans with the bank as of December 31, 1988.

3. Petitioner complied with the condition in the Dacion regarding the repurchase
of the property since the obligation was fully paid. Respondent sent confirmation statements in
the latter months of 1989, which showed that petitioner had no more outstanding loan; and

4. Assuming that petitioner still owed respondent, the latter was already
estopped since in October 1988, it reduced its authorized capital stock by 50% to wipe out a deficit
of PhP 41,265,325.12.[9]

Thus, petitioner, by way of compulsory counterclaim, alleged that it made an overpayment


of approximately PhP 4 million inclusive of interest based on Central Bank Reference Lending Rates
on dates of overpayment. Petitioner further claimed moral and exemplary damages and attorneys
fee, amounting to PhP 4.5 million plus the costs of suit as a consequence of respondents insistence
on collecting.[10]

The parties failed to reach an amicable settlement during the pre-trial


conference. Thereafter, respondent presented its evidence and formally offered its
exhibits.Petitioner then filed a Motion for Judgment on Demurrer to the Evidence, [11]
pointing out
that the plaintiffs failure to file a Reply to the Answer which raised the Dacion and Confirmation
Statement constituted an admission of the genuineness and execution of said documents; and
that since the Dacion obliterated petitioners obligation covered by the promissory notes, the bank
had no right to collect anymore.

Respondent subsequently filed an Opposition[12] which alleged that: (1) the grounds relied
upon by petitioner in its demurrer involved its defense and not insufficiency of
evidence; (2) the Dacion and Confirmation Statement had yet to be offered in evidence and
evaluated; and (3) since respondent failed to file a Reply, then all the new matters alleged in the
Answer were deemed controverted.[13]

The trial court ruled in favor of petitioner and dismissed the complaint through the May 12,
1999 Order, the dispositive portion of which reads:

WHEREFORE, premises considered[,] finding defendants Motion For Judgment On


Demurrer To The Evidence to be meritorious[,] the same is
hereby GRANTED.Consequently, considering that the obligation of the defendant to
the plaintiff having been extinguish[ed] by a Dacion en Pago duly executed by said
parties, the instant complaint is hereby DISMISSED, with prejudice. Without
Cost.[14]

The Ruling of the Court of Appeals

On appeal, respondent alleged that the trial court gravely erred because the promissory
notes were not covered by the Dacion, and that respondent was able to prove its causes of action
and right to relief by overwhelming preponderance of evidence. It explained that at the time of
execution of the Dacion, the subject of the promissory notes was the indebtedness of petitioner to
Rare Realty and not to the Bankthe party to the Dacion. It was only in 1989 after Rare
Realty defaulted in its obligation to respondent when the latter enforced the security provided
under the Deed of Assignment by trying to collect from petitioner, because it was only then
that petitioner became directly liable to respondent. It was also for this reason that the April 3,
1989 Confirmation Statement stated that petitioner had no obligations to repondent as
of December 31, 1988. On the other hand, petitioner claimed that the Deed of Assignment
provided that Rare Realty lost its rights, title, and interest to directly proceed against petitioner on
the promissory notes since these were transferred to respondent. Petitioner reiterated that
the Dacion covered all conceivable amounts including the promissory notes.[15]

The appellate court ruled that under the Rules of Civil Procedure, the only issue to be
resolved in a demurrer is whether the plaintiff has shown any right to relief under the facts
presented and the law. Thus, it held that the trial court erred when it considered the Answer which
alleged the Dacion, and that its genuineness and due execution were not at issue. It added
that the court a quo should have resolved whether the two promissory notes were covered by
the Dacion, and that sincepetitioners demurrer was granted, it had already lost its right to present
its evidence.[16]

The CA found that under the Deed of Assignment, respondent clearly had the right to
proceed against the promissory notes assigned by Rare Realty. Thus, the CA ruled, as follows:

WHEREFORE, premises considered, the Order dated May 12, 1999 of the Regional
Trial Court, National Capital Judicial Region, Branch 145, Makati City is
hereby REVERSED and SET ASIDE.

Judgment is hereby entered ORDERING [petitioner] Casent


Realty [Development] Corporation to:

1. pay [respondent] Philbanking Corporation the amount of P300,000.00 with


an interest of 36% per annum and a penalty of 12% for failure to pay the same
on its maturity date, June 27, 1985 as stipulated in Promissory Note No. 84-
04;

2. pay [respondent] Philbanking Corporation the amount of P681,500.00 with


an interest of 18% per annum and a penalty of 12% for failure to pay the same
on its maturity date, June 25, 1985 as stipulated in Promissory Note No. 84-
05; and

3. pay [respondent] Philbanking Corporation, the amount representing


25% of total amount due as attorneys fee as stipulated in the promissory
notes.
SO ORDERED.[17]

Petitioner filed a Motion for Reconsideration[18] which was denied by the CA in its November
7, 2001 Resolution.[19]

The Issues

WHETHER OR NOT THE COURT OF APPEALS ERRED IN EXCLUDING THE PETITIONERS


AFFIRMATIVE DEFENSES IN ITS ANSWER IN RESOLVING A DEMURRER TO
EVIDENCE; AND

WHETHER OR NOT PETITIONER IS LIABLE TO PAY THE RESPONDENT


In other words, the questions posed by this case are:

1. Does respondents failure to file a Reply and deny the Dacion and Confirmation Statement
under oath constitute a judicial admission of the genuineness and due execution of these
documents?

2. Should judicial admissions be considered in resolving a demurrer to evidence? If yes, are


the judicial admissions in this case sufficient to warrant the dismissal of the complaint?

Petitioner asserts that its obligation to pay under the promissory notes was already
extinguished as evidenced by the Dacion and Confirmation Statement.Petitioner submits that
when it presented these documents in its Answer, respondent should have denied the same under
oath. Since respondent failed to file a Reply, the genuineness and due execution of said documents
were deemed admitted, thus also admitting that the loan was already paid. On the other hand,
respondent states that while it failed to file a Reply, all the new matters were deemed controverted
pursuant to Section 10, Rule 6 of the Rules of Court. Also, the loan which was covered by
the Dacion refers to another loan of petitioner amounting to PhP 3,921,750 which was obtained
directly from the respondent as of August 1986.[20]Furthermore, petitioner argued
that assuming respondent admitted the genuineness and due execution of the Dacion and
Confirmation Statement, said admission wasnot all-encompassing as to include the allegations
and defenses pleaded in petitioners Answer.

The Courts Ruling

The petition is partly meritorious.

Rule 33, Section 1 of the 1997 Rules of Civil Procedure provides:

Section 1. Demurrer to evidence.After the plaintiff has completed the presentation of


his evidence, the defendant may move for dismissal on the ground that upon the
facts and the law the plaintiff has shown no right to relief. If his motion is denied, he
shall have the right to present evidence. If the motion is granted but on appeal the
order of dismissal is reversed he shall be deemed to have waived the right to present
evidence.

In Gutib v. Court of Appeals, we defined a demurrer to evidence as an objection by one of


the parties in an action, to the effect that the evidence which his adversary produced is insufficient
in point of law, whether true or not, to make out a case or sustain the issue.[21]

What should be resolved in a motion to dismiss based on a demurrer to evidence is whether


the plaintiff is entitled to the relief based on the facts and the law.The evidence contemplated
by the rule on demurrer is that which pertains to the merits of the case, excluding technical aspects
such as capacity to sue.[22] However, the plaintiffs evidence should not be the only basis in
resolving a demurrer to evidence. The facts referred to in Section 8 should include all the means
sanctioned by the Rules of Court in ascertaining matters in judicial proceedings. These include
judicial admissions, matters of judicial notice, stipulations made during the pre-trial and trial,
admissions, and presumptions, the only exclusion being the defendants evidence.
Petitioner points out that the defense of Dacion and Confirmation Statement, which were
submitted in the Answer, should have been specifically denied under oath by respondent in
accordance with Rule 8, Section 8 of the Rules of Court:

Section 8. How to contest such documents.When an action or defense is founded


upon a written instrument, copied in or attached to the corresponding pleading as
provided in the preceding section, the genuineness and due execution of the
instrument shall be deemed admitted unless the adverse party, under oath,
specifically denies them, and sets forth, what he claims to be the facts; but the
requirement of an oath does not apply when the adverse party does not appear to
be a party to the instrument or when compliance with an order for an inspection of
the original instrument is refused.

Since respondent failed to file a Reply, in effect, respondent admitted the genuineness and
due execution of said documents. This judicial admission should have been considered by the
appellate court in resolving the demurrer to evidence. Rule 129, Section 4 of the Rules of Court
provides:

Section 4. Judicial admissions.An admission, verbal or written, made by a party in


the course of the proceeding in the same case, does not require proof. The admission
may be contradicted only by showing that it was made through palpable mistake or
that no such admission was made.

On appeal to the CA, respondent claimed that even though it failed to file a Reply, all the
new matters alleged in the Answer are deemed controverted anyway, pursuant to Rule 6, Section
10:

Section 10. Reply.A reply is a pleading, the office or function of which is to deny, or
allege facts in denial or avoidance of new matters alleged by way of defense in the
answer and thereby join or make issue as to such new matters. If a party does not
file such reply, all the new matters alleged in the answer are deemed controverted.

We agree with petitioner. Rule 8, Section 8 specifically applies to actions or defenses


founded upon a written instrument and provides the manner of denying it.It is more controlling
than Rule 6, Section 10 which merely provides the effect of failure to file a Reply. Thus, where the
defense in the Answer is based on an actionable document, a Reply specifically denying it under
oath must be made; otherwise, the genuineness and due execution of the document will be
deemed admitted.[23] Since respondent failed to deny the genuineness and due execution of
the Dacion and Confirmation Statement under oath, then these are deemed admitted and must
be considered by the court in resolving the demurrer to evidence. We held in Philippine American
General Insurance Co., Inc. v. Sweet Lines, Inc.that [w]hen the due execution and genuineness
of an instrument are deemed admitted because of the adverse partys failure to make a specific
verified denial thereof, the instrument need not be presented formally in evidence for it may be
considered an admitted fact.[24]

In any case, the CA found that:


From the facts of the case, the genuineness and due execution of the Dacion
en Pago were never put to issue. Genuineness merely refers to the fact that the
signatures were not falsified and/or whether there was no substantial alteration to
the document. While due execution refers to whether the document was signed by
one with authority.[25]
The more important issue now is whether the Dacion and Confirmation Statement
sufficiently prove that petitioners liability was extinguished. Respondent asserts that the
admission of the genuineness and due execution of the documents in question is not all
encompassing as to include admission of the allegations and defenses pleaded in petitioners
Answer. In executing the Dacion, the intention of the parties was to settle only the loans
of petitioner with respondent, not the obligation of petitioner arising from the promissory notes
that were assigned by Rare Realty to respondent.

We AGREE.

Admission of the genuineness and due execution of the Dacion and Confirmation Statement
does not prevent the introduction of evidence showing that the Dacion excludes the promissory
notes. Petitioner, by way of defense, should have presented evidence to show that
the Dacion includes the promissory notes.

The promissory notes matured in June 1985, and Rare Realty assigned these promissory
notes to respondent through a Deed of Assignment dated August 8, 1986. The Deed of
Assignment provides, thus:

Rare Realty Corporation, a corporation duly organized and existing in accordance with
law, with office at 8th Floor Philbanking Building, Ayala Ave., Makati, Metro Manila
(herein called Assignor) in consideration of the sum of THREE MILLION SEVEN
HUNDRED NINETY THOUSAND & 00/100 pesos [PhP 3,790,000.00] and as security
fee or in the payment of the sum, obtained or to be obtained as loan or credit
accommodation of whatever form or nature from
the [PHILBANKING] CORPORATION, with office at Ayala Ave., Makati, Metro Manila
(herein called Assignee), including renewals or extensions of such loan or credit
accommodation, now existing or hereinafter incurred, due or to become due, whether
absolute or contingent, direct or indirect, and whether incurred by the Assignor as
principal, guarantor, surety, co-maker, or in any other capacity, including interest,
charges, penalties, fees, liquidated damage, collection expenses and attorneys
fee, the Assignor hereby assigns, transfers and conveys to Assignee all its rights, title
and interest in and to: (a) contracts under which monies are or will be due to
Assignor, (b) moneys due or to be due thereunder, or (c) letters of credit and/or
proceeds or moneys arising from negotiations under such credits, all which are herein
called moneys or receivables assigned or assigned moneys or receivables, and are
attached, or listed and described in the Attached Annex A (for contracts) or Annex B
(for letters of credit).[26]

It is clear from the foregoing deed that the promissory notes were given as security for the
loan granted by respondent to Rare Realty. Through the Deed of Assignment, respondent stepped
into the shoes of Rare Realty as petitioners creditor.

Respondent alleged that petitioner obtained a separate loan of PhP 3,921,750. Thus,
when petitioner and respondent executed the Dacion on August 27, 1986, what was then covered
was petitioners loan from the bank. The Dacion provides, thus:

NOW, THEREFORE, in consideration of the foregoing premises, the DEBTOR hereby


transfers and conveys in favor of the BANK by way of Dacion en Pago, the above-
described property in full satisfaction of its outstanding indebtedness in the amount
of P3,921,750.00 to the BANK, subject to x x x terms and
conditions.[27] (Emphasis supplied.)

The language of the Dacion is unequivocalthe property serves in full satisfaction


of petitioners own indebtedness to respondent, referring to the loan of PhP 3,921,750. For this
reason, the bank issued a Confirmation Statement saying that petitioner has no unpaid
obligations with the bank as of December 31, 1988.

In 1989, however, Rare Realty defaulted in its payment


to respondent. Thus, respondent proceeded against the security assigned to it, that is, the
promissory notes issued by the petitioner. Under these promissory notes, petitioner is liable for
the amount of PhP 300,000 with an interest of 36% per annum and a penalty of 12% for failure
to pay on the maturity date, June 27, 1985; and for the amount of PhP 681,500 with an interest
of 18% per annum and a penalty of 12% for failure to pay on the maturity date, June 25, 1985.

WHEREFORE, the March 29, 2001 Decision and November 7, 2001 Resolution of
the CA are AFFIRMED. Costs against petitioner. SO ORDERED.
PACIFICO B. ARCEO, JR., G.R. No. 142641
Petitioner,

-versus–

PEOPLE OF THE PHILIPPINES,


Respondent. Promulgated:
July 17, 2006

x------------------------------------------x

DECISION
CORONA, J.:

This petition for review on certiorari assails the April 28, 1999 decision [1] and March 27, 2000

resolution[2] of the Court of Appeals in CA-G.R. CR No. 19601 affirming the trial courts judgment

finding petitioner Pacifico B. Arceo, Jr. liable for violation of Batas PambansaBlg. (BP) 22,

otherwise known as the Bouncing Checks Law.

The facts of the case as found by the trial court and adopted by the Court of Appeals follow.

On March 14, 1991, [petitioner], obtained a loan from private


complainant Josefino Cenizal [] in the amount of P100,000.00. Several weeks
thereafter, [petitioner] obtained an additional loan of P50,000.00 from [Cenizal].
[Petitioner] then issued in favor of Cenizal, Bank of the Philippine Islands [(BPI)]
Check No. 163255, postdated August 4, 1991, for P150,000.00, at Cenizals house
located at 70 Panay Avenue, Quezon City. When August 4, 1991 came, [Cenizal] did
not deposit the check immediately because [petitioner] promised [] that he would
replace the check with cash. Such promise was made verbally seven (7) times. When
his patience ran out, [Cenizal] brought the check to the bank for encashment. The
head office of the Bank of the Philippine Islands through a letter dated December 5,
1991, informed [Cenizal] that the check bounced because of insufficient funds.

Thereafter, [Cenizal] went to the house of [petitioner] to inform him of the dishonor
of the check but [Cenizal] found out that [petitioner] had left the place. So, [Cenizal]
referred the matter to a lawyer who wrote a letter giving [petitioner] three days from
receipt thereof to pay the amount of the check. [Petitioner] still failed to make good
the amount of the check. As a consequence, [Cenizal] executed on January 20, 1992
before the office of the City Prosecutor of Quezon City his affidavit 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]

After trial, petitioner was found guilty as charged. Aggrieved, he appealed to the Court of Appeals.

However, on April 28, 1999, the appellate court affirmed the trial courts decision in toto. Petitioner

sought reconsideration but it was denied. Hence, this petition.

Petitioner claims that the trial and appellate courts erred in convicting him despite the failure of

the prosecution to present the dishonored check during the trial. He also contends that he should

not be held liable for the dishonor of the 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.

SIGNIFICANCE OF THE 90-DAY PERIOD FOR PRESENTMENT OF THE CHECK

Petitioner asserts that there was no violation of BP 22 because the check was presented to

the drawee bank only on December 5, 1991 or 120 days from the date thereof (August 4, 1991).

He argues that this was beyond the 90-day 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 drawee bank 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 as well as in his testimony during the trial of the case.

Moreover, petitioner himself admited that he issued the check. He never denied that the check

was presented for payment to the draweebank and was dishonored for having been drawn against

insufficient funds.

PRESENCE OF THE ELEMENTS OF THE OFFENSE

Based on the allegations in the information,[7] petitioner was charged for violating the first

paragraph of BP 22. The elements of the offense are:

1. the making, drawing and issuance of any check to apply to account or for
value;

2. knowledge of the maker, drawer, or issuer that at the time of issue he does
not have sufficient funds in or credit with the drawee bank for the payment of
the check in full upon its presentment; and

3. subsequent dishonor of the check by the drawee bank for insufficiency of


funds or credit, or dishonor of the check for the same reason had not the
drawer, without any valid cause, ordered the bank to stop payment.[8]

All these elements are present in this case.


Both the trial and appellate courts found that petitioner issued BPI check no. 163255 postdated

August 4, 1991 in the amount of P150,000 in consideration of a loan which he obtained

from Cenizal. When the check was deposited, it was dishonored by the draweebank for having

been drawn against insufficient funds. There was sufficient evidence on record that petitioner knew

of the insufficiency of his funds in the drawee bank at the time of the issuance of the check. In

fact, this was why, on maturity date, he requested the payee not to encash it with the promise

that he would replace it with cash. He made this request and assurance seven times but repeatedly

failed to make good on his promises despite the repeated accommodation granted him by the

payee, Cenizal.

NOTICE OF DISHONOR TO PETITIONER AND PAYMENT OF THE OBLIGATION

The trial court found that, contrary to petitioners claim, Cenizals counsel had informed petitioner

in writing of the checks dishonor and demanded payment of the value of the check. Despite receipt

of the notice of dishonor and demand for payment, petitioner still failed to pay the amount of the

check.

Petitioner cannot claim that he was deprived of the period of five banking days from receipt

of notice of dishonor within which to pay the amount of the check.[9] While petitioner may have

been given only three days to pay the value 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 already paid Cenizal and should therefore be relieved

of any liability.

Moreover, petitioners claim of payment was nothing more than a mere allegation. He

presented no proof to support it. If indeed there was payment, petitioner should have redeemed

or taken the check back in the ordinary course of business.[10] Instead, the check remained in the

possession of the payee who demanded the satisfaction of petitioners obligation when the check

became due as well as when the check was dishonored by the drawee bank.

These findings (due notice to petitioner and nonpayment of the obligation) were confirmed

by the appellate court. This Court has no reason to rule otherwise. Well-settled is the rule that the

factual findings of the trial court, when affirmed by the appellate court, are not to be disturbed.[11]

WHEREFORE, the petition is hereby DENIED. The April 28, 1999 decision and March 27,

2000 resolution of the Court of Appeals in CA-G.R. CR No. 19601 are AFFIRMED. Costs against

petitioner. SO ORDERED.
THE CONSOLIDATED BANK G.R. No. 143338
AND TRUST CORPORATION
(SOLIDBANK),
P e t i t i o n e r, Promulgated:

July 29, 2005

- versus

DEL MONTE MOTOR WORKS,


INC., NARCISO G.
MORALES,[1]AND SPOUSE,
R e s p o n d e n t s.
x--------------------------------------------------x

DECISION

CHICO-NAZARIO, J.:

This is a petition for review on certiorari of the Decision[2] of the Court of Appeals in CA-G.R. CV

No. 16886 entitled, The Consolidated Bank & Trust Corporation (SOLIDBANK) v. Del Monte Motor

Works, Inc., Narciso O. Morales and Spouse promulgated on 25 November 1999 and of the

Resolution of the appellate court dated 11 May 2000 denying petitioners motion for

reconsideration. Said decision and resolution affirmed the order dated 28 December 1987 of the

Regional Trial Court (RTC), Branch 27, Manila.

The facts of the case are as follows:

On 13 June 1984, petitioner filed before the RTC of Manila a complaint [3] for recovery of sum of

money against respondents, impleading the spouse of respondent Narciso O. Morales (respondent

Morales) in order to bind their conjugal partnership of gains. Petitioner, a domestic banking and

trust corporation, alleges therein that on 23 April 1982, it extended in favor of respondents a loan

in the amount of One Million Pesos (P1,000,000.00) as evidenced by a promissory note executed

by respondents on the same date. Under the promissory note, respondents Del Monte Motor

Works, Inc. (respondent corporation) and Morales bound themselves jointly and severally to pay

petitioner the full amount of the loan through twenty-five monthly installments of P40,000.00 a

month with interest pegged at 23% per annum. The note was to be paid in full by 23 May 1984.

As respondents defaulted on their monthly installments, the full amount of the loan became due

and demandable pursuant to the terms of the promissory note. Petitioner likewise alleges that it

made oral and written demands upon respondents to settle their obligation but notwithstanding

these demands, respondents still failed to pay their indebtedness which, as of 09 March 1984,

stood at P1,332,474.55. Petitioner attached to its complaint as Annexes A, B, and C, respectively,

a photocopy of the promissory note supposedly executed by respondents, a copy of the demand
letter it sent respondents dated 20 January 1983, and statement of account pertaining to

respondents loan.

On 31 October 1984, petitioner filed an Ex-Parte Motion to Declare the Defendants in Default which

was opposed by the defendants upon the ground that they were never served with copies of the

summons and of petitioners complaint.

On 23 November 1984, respondent corporation filed before the trial court a manifestation

attaching thereto its answer to petitioners complaint which states the following:

2- That it denies generally and specifically the allegations contained in paragraphs 3,


4, 5, 6, 7 and 8 thereof for lack of knowledge and information sufficient to form a
belief as to the truth of the matters therein alleged, the truth being those alleged in
the Special and Affirmative Defenses hereinbelow contained;

3- ANSWERING FURTHER, and by way of a first special and affirmative defense,


defendant herein states that the promissory note in question is void for want of valid
consideration and/or there was no valuable consideration involved as defendant
herein did not receive any consideration at all;

4- ANSWERING FURTHER, and by way of a second special affirmative defense,


defendant herein alleges that no demand has ever been sent to nor received by herein
defendant and if ever demands were made, denies any liability as averred therein.

5- ANSWERING FURTHER, and by way of a third special and affirmative defense,


defendant herein avers that the complaint states no cause of action and has no basis
either in fact or in law;

VERIFICATION
I, JEANETTE D. TOLENTINO, of legal age, after having been duly sworn to in
accordance with law, depose and state:

That I am the Controller of Del Monte Motor Works, Inc., one of the defendants in
this case.

That for and in behalf of the defendant corporation, I caused the preparation of the
above-narrated answer.

That I have read the contents thereof and they are true of my own knowledge.

(SGD) JEANNETTE D. TOLENTINO[4]

On 06 December 1984, respondent Morales filed his manifestation together with his answer

wherein he likewise renounced any liability on the promissory note, thus:

1. He ADMIT[S] paragraphs 1, 2, and 3 of the complaint with a qualification in


paragraph 3 thereof that he has long been separated from his wife and the system
governing their property relations is that of complete separation of property and not
that of conjugal partnership of gain[s];

2. He [DENIES], generally and specifically, the allegations contained in paragraphs


4, 5, 6, 7, and 8 thereof, for lack of knowledge and information sufficient to form a
belief and as to the truth of the matter therein averred, the truth being those alleged
in the Special And Affirmative Defenses hereinbelow pleaded;

SPECIAL AND AFFIRMATIVE DEFENSES

4. He has never signed the promissory note attached to the complaint in his personal
and/or individual capacity as such;

5. That the said promissory note is ineffective, unenforceable and void for lack of
valid consideration;

6. That even admitting, argumenti gratia, the validity and execution of the questioned
promissory note, still, defendant herein cannot be bound personally and individually
to the said obligations as banking procedures requires, it being a standard operating
procedure of all known banking institution, that to hold a borrower jointly and
severally liable in his official as well as personal capacity, the borrower must sign a
Suretyship Agreement or at least, a continuing guarranty with that of the corporation
he represent(s) but which in this case is wanting;

7. That transaction/obligation in question did not, in any way, redound/inure to the


benefit of the conjugal partnership of gain, as there is no conjugal partnership of gain
to speak with, defendant having long been separated from his wife and their property
relation is governed by the system of complete separation of property, and more
importantly, he has never signed the said promissory note in his personal and
individual capacity as such;

VERIFICATION

That I, NARCISO MORALES, after having been duly sworn to in accordance with law,
hereby depose and declare that:

I am one of the named defendant[s] in the above-entitled case;

I have cause[d] the preparation of the foregoing Answer upon facts and figures
supplied by me to my retained counsel; have read each and every allegations
contained therein and hereby certify that the same are true and correct of my own
knowledge and information.

(SGD) NARCISO MORALES


Affiant[5]

On 26 December 1984, the trial court denied petitioners motion to declare respondents in default

and admitted their respective answers.[6]

During the trial on the merits of this case, petitioner presented as its sole witness, Liberato A.

Lavarino (Lavarino), then the manager of its Collection Department. Substantially, Lavarino stated

that respondents obtained the loan, subject of this case, from petitioner and due to respondents

failure to pay a single monthly installment on this loan, petitioner was constrained to send a

demand letter to respondents; that as a result of this demand letter, Jeannette Tolentino

(Tolentino), respondent corporations controller, wrote a letter to petitioner requesting for some

consideration because of the unfavorable business atmosphere then buffeting their business
operation; that Tolentino enclosed to said letter a check with a face value of P220,020.00 to be

discounted by petitioner with the proceeds being applied as partial payment to their companys

obligation to petitioner; that after receipt of this partial payment, respondents obligation again

became stagnant prompting petitioner to serve respondents with another demand letter which,

unfortunately, was unheeded by respondents. Lavarino also identified the following exhibits for

petitioner: photocopy of the duplicate original of the promissory note attached to the complaint

as Exhibit A;[7] petitioners 20 January 1983 demand letter marked as Exhibit B;[8] Tolentinos letter

to petitioner dated 10 February 1983 and marked as Exhibit C;[9] and the 09 March 1984 statement

of account sent to respondents marked as Exhibit D.[10]

On 26 September 1985, petitioner made its formal offer of evidence. However, as the

original copy of Exhibit A could no longer be found, petitioner instead sought the admission of the

duplicate original of the promissory note which was identified and marked as Exhibit E.

The trial court initially admitted into evidence Exhibit E and granted respondents motion that they

be allowed to amend their respective answers to conform with this new evidence.[11]

On 30 September 1985, respondent corporation filed a manifestation and motion for

reconsideration[12] of the trial courts order admitting into evidence petitioners Exhibit E.

Respondent corporation claims that Exhibit E should not have been admitted as it was immaterial,

irrelevant, was not properly identified and hearsay evidence. Respondent corporation insists that

Exhibit E was not properly identified by Lavarino who testified that he had nothing to do in the

preparation and execution of petitioners exhibits, one of which was Exhibit E. Further, as there

were markings in Exhibit A which were not contained in Exhibit E, the latter could not possibly be

considered an original copy of Exhibit A. Lastly, respondent corporation claims that the exhibit in

question had no bearing on the complaint as Lavarino admitted that Exhibit E was not the original

of Exhibit A which was the foundation of the complaint and upon which respondent corporation

based its own answer.

Respondent Morales similarly filed a manifestation with motion to reconsider order admitting as

evidence Exhibit E[13] which, other than insisting that the due execution and genuineness of the

promissory note were not established as far as he was concerned, essentially raised the same

arguments contained in respondent corporations manifestation with motion for reconsideration

referred to above.
On 06 December 1985, the trial court granted respondents motions for

reconsideration.[14] Petitioner moved for the reconsideration of this order which was denied by the

court a quo on 20 December 1985.[15]

On 26 December 1985, respondents separately filed their motions to dismiss on the similar ground

that with the exclusion of Exhibits A and E, petitioner no longer possessed any proof of respondents

alleged indebtedness.[16]

On 08 April 1986, petitioner filed a motion[17] praying that the presiding judge, Judge Ricardo D.

Diaz, of the court a quo inhibit himself from this case maintaining that the latter rushed into

resolving its motion for reconsideration of the trial courts order of 06 December 1985 thereby

depriving it the opportunity of presenting proof that the original of Exhibit A was delivered to

respondents as early as 02 April 1983. Such haste on the part of the presiding judge, according

to petitioner, cast doubt on his objectivity and fairness. This motion to inhibit was denied by the

trial court on 06 August 1987.[18]

In an order dated 28 December 1987,[19] the case before the trial court was dismissed, the

dispositive portion of which reads:

WHEREFORE, the instant case against defendants Del Monte Motor Works, Inc. and
Narciso O. Morales and spouse, is hereby DISMISSED, with costs against the plaintiff.

The trial courts finding was affirmed by the Court of Appeals in the assailed decision now before

us. The dispositive portion of the appellate courts decision reads:

WHEREFORE, PREMISES CONSIDERED, the decision of the Regional Trial Court,


Manila, Branch 27, dated December 28, 1987 dismissing plaintiff-appellant['s]
complaint is hereby AFFIRMED. Cost against the plaintiff-appellant.[20]

Petitioner thereafter filed a motion for reconsideration dated 14 December 1999 which was denied

for lack of merit in a resolution of the Court of Appeals promulgated on 11 May 2000.[21]

Aggrieved by the appellate courts ruling, petitioner now seeks redress from this Court imputing

the following errors on the Court of Appeals:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT FOUND THAT


PRIVATE RESPONDENTS DENIED THE MATERIAL ALLEGATIONS OF PETITIONER
SOLIDBANKS COMPLAINT, DESPITE THE PRESENCE OF INDUBITABLE FACTS
CLEARLY POINTING TO THE FACT THAT SAID PRIVATE RESPONDENTS ADMITTED
THE GENUINENESS AND DUE EXECUTION OF THE SUBJECT PROMISSORY NOTE.

II

THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT UPHELD THE


EXCLUSION OF EXHIBIT E, THE SECOND ORIGINAL OF THE PROMISSORY NOTE,
DESPITE THE FACT THAT THE ORIGINAL OF EXHIBIT A (XEROX COPY OF THE
DUPLICATE ORIGINAL OF THE PROMISSORY NOTE) WAS ACTUALLY IN THE
POSSESSION OF PRIVATE RESPONDENTS, THUS WARRANTING THE ADMISSION OF
SECONDARY EVIDENCE.

III

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE
TRIAL JUDGE SHOULD HAVE INHIBITED HIMSELF FROM TAKING COGNIZANCE OF
AND FROM TRYING AND DECIDING THE INSTANT CASE CONSIDERING HIS
PERCEIVED AND MANIFEST BIAS AND PARTIALITY IN FAVOR OF THE PRIVATE
RESPONDENTS TO THE GRAVE PREJUDICE OF PETITIONER SOLIDBANK.[22]

The petition is meritorious.

In resolving the case against petitioner, the appellate court held that contrary to petitioners stance,

respondents were able to generally and specifically deny under oath the genuineness and due

execution of the promissory note, thus:

There can be no dispute to the fact that the allegations in the answer (Record, p. 20,
26-27), of both defendants, they denied generally and specifically under oath the
genuineness and due execution of the promissory note and by way of special and
affirmative defenses herein states that he (MORALES) never signed the promissory
note attached to the complaint (Exh. A) in his personal and/or individual capacity.
Moreover, what appears in the record (Record, p. 20) was an admission of paragraphs
1 & 2 but they deny generally and specifically the rest of the allegations. It would be
considered that there is a sufficient compliance of the requirement of the law for
specific denial.[23]

We hold otherwise.

The pertinent portion of the Rules of Court on the matter provides:

SEC. 8. How to contest such documents. When an action or defense is founded upon
a written instrument, copied in or attached to the corresponding pleading as provided
in the preceding section, the genuineness and due execution of the instrument shall
be deemed admitted unless the adverse party, under oath, specifically denies them
and sets forth what he claims to be the facts; but the requirement of an oath does
not apply when the adverse party does not appear to be a party to the instrument or
when compliance with an order for an inspection of the original instrument is
refused.[24]

In the case of Permanent Savings and Loan Bank v. Mariano Velarde,[25] this Court held that

. . . Respondent also denied any liability on the promissory note as he allegedly did
not receive the amount stated therein, and the loan documents do not express the
true intention of the parties. Respondent reiterated these allegations in his denial
under oath, stating that the promissory note sued upon, assuming that it exists and
bears the genuine signature of herein defendant, the same does not bind him and
that it did not truly express the real intention of the parties as stated in the defenses

Respondents denials do not constitute an effective specific denial as contemplated by


law. In the early case of Songco vs. Sellner,[26] the Court expounded on how to deny
the genuineness and due execution of an actionable document, viz.:

. . . This means that the defendant must declare under oath that he did
not sign the document or that it is otherwise false or fabricated. Neither
does the statement of the answer to the effect that the instrument was
procured by fraudulent representation raise any issue as to its
genuineness or due execution. On the contrary such a plea is an
admission both of the genuineness and due execution thereof, since it
seeks to avoid the instrument upon a ground not affecting either.[27]

In this case, both the court a quo and the Court of Appeals erred in ruling that respondents were

able to specifically deny the allegations in petitioners complaint in the manner specifically required

by the rules. In effect, respondents had, to all intents and purposes, admitted the genuineness

and due execution of the subject promissory note and recognized their obligation to petitioner.

The appellate court likewise sustained the ruling of the trial court that the best evidence rule or

primary evidence must be applied as the purpose of the proof is to establish the terms of the

writing meaning the alleged promissory note as it is the basis of the recovery of the money

allegedly loaned to the defendants (respondents herein).[28]

The best evidence rule is encapsulated in Rule 130, Section 3, of the Revised Rules of Civil

Procedure which provides:

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.

The best evidence rule, according to Professor Thayer, first appeared in the year 1699-1700

when in one case involving a goldsmith, Holt, C. J., was quoted as stating that they should take

into consideration the usages of trade and that the best proof that the nature of the thing will
afford is only required.[29] Over the years, the phrase was used to describe rules which were

already existing such as the rule that the terms of a document must be proved by the production

of the document itself, in preference to evidence about the document; it was also utilized to

designate the hearsay rule or the rule excluding assertions made out of court and not subject to

the rigors of cross-examination; and the phrase was likewise used to designate the group of rules

by which testimony of particular classes of witnesses was preferred to that of others.[30]

According to McCormick, an authority on the rules of evidence, the only actual rule that the

best evidence phrase denotes today is the rule requiring the production of the original

writing[31] the rationale being:

(1) that precision in presenting to the court the exact words of the writing is of more
than average importance, particularly as respects operative or dispositive
instruments, such as deeds, wills and contracts, since a slight variation in words may
mean a great difference in rights, (2) that there is a substantial hazard of inaccuracy
in the human process of making a copy by handwriting or typewriting, and (3) as
respects oral testimony purporting to give from memory the terms of a writing, there
is a special risk of error, greater than in the case of attempts at describing other
situations generally. In the light of these dangers of mistransmission, accompanying
the use of written copies or of recollection, largely avoided through proving the terms
by presenting the writing itself, the preference for the original writing is justified.[32]

Bearing in mind that the risk of mistransmission of the contents of a writing is the justification for

the best evidence rule, we declare that this rule finds no application to this case. It should be

noted that respondents never disputed the terms and conditions of the promissory note thus

leaving us to conclude that as far as the parties herein are concerned, the wording or content of

said note is clear enough and leaves no room for disagreement. In their responsive pleadings,

respondents principal defense rests on the alleged lack of consideration of the promissory note.

In addition, respondent Morales also claims that he did not sign the note in his personal capacity.

These contentions clearly do not question the precise wording[33] of the promissory note which

should have paved the way for the application of the best evidence rule. It was, therefore, an error

for the Court of Appeals to sustain the decision of the trial court on this point.

Besides, the best evidence rule as stated in our Revised Rules of Civil Procedure is not absolute.

As quoted earlier, the rule accepts of exceptions one of which is when the original of the subject

document is in the possession of the adverse party. As pointed out by petitioner in its motion to

inhibit, had it been given the opportunity by the court a quo, it would have sufficiently established

that the original of Exhibit A was in the possession of respondents which would have called into

application one of the exceptions to the best evidence rule.


Significantly, and as discussed earlier, respondents failed to deny specifically the execution of the

promissory note. This being the case, there was no need for petitioner to present the original of

the promissory note in question. Their judicial admission with respect to the genuineness and

execution of the promissory note sufficiently established their liability to petitioner regardless of

the fact that petitioner failed to present the original of said note.[34]

Indeed, when the defendant fails to deny specifically and under oath the due execution and

genuineness of a document copied in a complaint, the plaintiff need not prove that fact as it is

considered admitted by the defendant.[35] In the case of Asia Banking Corporation v. Walter E.

Olsen & Co.,[36] this Court held that

Another error assigned by the appellant is the fact that the lower court took into
consideration the documents attached to the complaint as a part thereof, without
having been expressly introduced in evidence. This was no error. In the answer of
the defendants there was no denial under oath of the authenticity of these
documents. Under Section 103 of the Code of Civil Procedure, the authenticity and
due execution of these documents must, in that case, be deemed admitted. The effect
of this is to relieve the plaintiff from the duty of expressly presenting such documents
as evidence. The court, for the proper decision of the case, may and should consider,
without the introduction of evidence, the facts admitted by the parties.[37]

Anent petitioners allegation that the presiding judge of the court a quo should have inhibited

himself from this case, we resolve this issue against petitioner.

In order for this Court to sustain a charge of partiality and prejudice brought against a judge,

there must be convincing proof to show that he or she is, indeed, biased and partial. Bare

allegations are not enough. Bias and prejudice are serious charges which cannot be presumed

particularly if weighed against a judges sacred obligation under his oath of office to administer

justice without respect to person and do equal right to the poor and the rich.[38] There must be a

showing of bias and prejudice stemming from an extrajudicial source resulting in an opinion in the

merits on some basis other than what the judge learned from his participation in the case.[39]

In this case, as petitioner failed to proffer any evidence indicating that Judge Diaz was guilty of

bias and prejudice, we affirm the Court of Appeals holding that there was no cogent reason for

him to disqualify himself from this case.

Finally, Rule 33, Section 1, of the Revised Rules of Civil Procedure states the rule on the effect of

judgment on demurrer to evidence. It reads:

SECTION 1. Demurrer to evidence.- After the plaintiff has completed the presentation
of his evidence, the defendant may move for dismissal on the ground that upon the
facts and the law the plaintiff has shown no right to relief. If his motion is denied, he
shall have the right to present evidence. If the motion is granted but on appeal the
order of dismissal is reversed he shall be deemed to have waived the right to present
evidence.
A demurrer to evidence abbreviates judicial proceedings, it being an instrument for the expeditious

termination of an action. Caution, however, must be exercised by the party seeking the dismissal

of a case upon this ground as under the rules, if the movants plea for the dismissal on demurrer

to evidence is granted and the order of dismissal is reversed on appeal, he loses his right to adduce

evidence. If the defendants motion for judgment on demurrer to evidence is granted and the order

is subsequently reversed on appeal, judgment is rendered in favor of the adverse party because

the movant loses his right to present evidence.[40] The reviewing court cannot remand the case

for further proceedings; rather, it should render judgment on the basis of the evidence presented

by the plaintiff.[41]

Under the promissory note executed by respondents in this case, they are obligated to petitioner

in the amount of One Million Pesos, this being the amount of loan they obtained on 23 April 1982.

In addition, they also bound themselves to pay the 23% interest per annum on the loan; and a

penalty charge of 3% per annum on the amount due until fully paid. Respondents likewise agreed

to pay attorneys fees equivalent to 10% of the total amount due, but in no case less than P200.00,

plus costs of suit with both these amounts bearing a 1% interest per month until paid. Costs

against respondents.

WHEREFORE, premises considered, the Court of Appeals decision dated 25 November 1999 as well

as its Resolution of 11 May 2000, affirming the order of the Regional Trial Court, Manila, Branch

27, dated 28 December 1987, are hereby REVERSED and SET ASIDE. Respondents are ordered

to pay One Million Pesos (P1,000,000.00) plus 23% interest per annum, penalty charge of 3%

interest per annum, and 10% of the amount due as attorneys fees together with a 1% interest

per month until fully paid. The sum of P220,020.00 which was the value of the postdated check

given by respondents to petitioner as partial payment should be deducted from the amount due

from respondents. SO ORDERED.


CONCEPCION CHUA GAW,
G.R. No. 160855
Petitioner,

- versus - Promulgated:
April 16, 2008

SUY BEN CHUA and


FELISA CHUA,
Respondents.

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

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 indivisoshares 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]

On re-direct examination, respondent stated that he sold his shares of stock in Capitol
Sawmill for P254,000.00, which payment he received in cash. He also paid the purchase price
of P255,000.00 for Hagonoy 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.
Although he maintains several accounts at Planters Bank, Paluwagan ng Bayan, and China Bank,
the amount he paid to Chua Sioc Huan was not taken from any of them. He kept the amount in
the house because he was engaged in rediscounting checks of people from the public market. [20]

On December 10, 1998, Antonio Gaw died due to cardio vascular and respiratory failure.[21]

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;
2. P50,000.00 as attorneys fees; and
3. Costs of suit.
The defendants counterclaim is hereby dismissed for being devoid of merit.

SO ORDERED.[22]
The RTC held that respondent is entitled to the payment of the amount of P200,000.00 with
interest. It noted that respondent personally issued Check No. 240810 to petitioner and her
husband upon their request to lend them the aforesaid amount. The trial court concluded that
the P200,000.00 was a loan advanced by the respondent from his own funds and not
remunerations for services rendered to Hagonoy Lumber nor petitioners advance share in the
profits of their parents businesses.

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 the said documents. Since petitioner did not dispute the due execution and
existence of Exhibits H and I, there was no need to produce the originals of the documents in
accordance with the best evidence rule.[26]

On December 2, 2003, the CA denied the petitioners motion for reconsideration for lack of
merit.[27]

Petitioner is before this Court in this petition for review on certiorari, raising the following
errors:

I. THAT ON THE PRELIMINARY IMPORTANT RELATED ISSUE, CLEAR


AND PALPABLE LEGAL ERROR HAS BEEN COMMITTED IN THE APPLICATION
AND LEGAL SIGNIFICANCE OF THE RULE ON EXAMINATION OF ADVERSE
PARTY OR HOSTILE WITNESS UNDER SECTION 10 (d) AND (e) OF RULE 132,
CAUSING SERIOUS DOUBT ON THE LOWER COURTS APPEALED DECISIONS
OBJECTIVITY, ANNEX C.

II. THAT ON THE IMPORTANT LEGAL ISSUE RELATIVE TO THE AFORESAID


TWO OPPOSING CLAIMS OF RESPONDENT AND PETITIONER, CLEAR AND
PALPABLE LEGAL ERROR HAS BEEN COMMITTED UNDER THE LOWER COURTS
DECISION ANNEX C AND THE QUESTIONED DECISION OF MAY 23, 2003
(ANNEX A) AND THE RESOLUTION OF DECEMBER 2, 2003, (ANNEX B) IN
DEVIATING FROM AND DISREGARDING ESTABLISHED SUPREME COURT
DECISIONS ENJOINING COURTS NOT TO OVERLOOK OR MISINTERPRET
IMPORTANT FACTS AND CIRCUMSTANCES, SUPPORTED BY CLEAR AND
CONVINCING EVIDENCE ON RECORD, AND WHICH ARE OF GREAT WEIGHT
AND VALUE, WHICH WOULD CHANGE THE RESULT OF THE CASE AND ARRIVE
AT A JUST, FAIR AND OBJECTIVE DECISION. (Citations omitted)

III. THAT FINALLY, AS TO THE OTHER LEGAL IMPORTANT ISSUE RELATIVE


TO CLAIM OR OWNERSHIP OF THE HAGONOY LUMBER FAMILY BUSINESS,
CLEAR AND PALPABLE LEGAL ERROR HAS BEEN COMMITTED ON THE
REQUIREMENTS AND CORRECT APPLICATION OF THE BEST EVIDENCE RULE
UNDER SECTION 3, RULE 130 OF THE REVISED RULES OF COURT.[28]

The petition is without merit.

Petitioner contends that her case was unduly prejudiced by the RTCs treatment of the
respondents testimony as adverse witness during cross-examination by 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. SO ORDERED.
MANILA MINING CORPORATION, G.R. No. 171702
Petitioner,

Promulgated:

- versus -
February 12, 2009

MIGUEL TAN, doing business under


the name and style of MANILA
MANDARIN MARKETING,
Respondent.

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

QUISUMBING, J.:

Assailed in this petition for review on certiorari are the Decision[1] dated December 20, 2005 and
the Resolution[2] dated February 24, 2006 of the Court of Appeals in CA-G.R. CV No. 84385. The
Court of Appeals had affirmed the Decision[3] dated October 27, 2004 of the Regional Trial Court
(RTC), Branch 55, Manila, in Civil Case No. 01-101786.

The facts of the case are as follows:

Miguel Tan, doing business under the name and style of Manila Mandarin Marketing, was engaged
in the business of selling electrical materials.

From August 19 to November 26, 1997, Manila Mining Corporation (MMC) ordered and
received various electrical materials from Tan valued at P2,347,880.MMC agreed to pay the
purchase price within 30 days from delivery, or be charged interest of 18% per annum, and in
case of suit to collect the same, to pay attorneys fees equal to 25% of the claim.[4]

MMC made partial payments in the amount of P464,636. But despite repeated demands, it
failed to give the remaining balance of P1,883,244, which was covered by nine invoices.[5]

On September 3, 2001, Tan filed a collection suit against MMC at the Manila RTC.[6]

After Tan completed presenting evidence, MMC filed a Demurrer to Evidence.[7] On December 18,
2003, the RTC issued an Order, denying the demurrer and directing MMC to present evidence.[8]

MMC offered as sole witness Rainier Ibarrola, its accountant from year 2000 to 2002. Ibarrola
confirmed that it was standard office procedure for a supplier to present the original sales invoice and
purchase order when claiming to be paid. He testified that the absence of stamp marks on the invoices
and purchase orders negated receipt of said documents by MMCs representatives.[9]

On rebuttal, Tan presented Wally de los Santos, his sales representative in charge of MMCs
account. De los Santos testified that he delivered the originals of the invoices and purchase orders
to MMCs accounting department. As proof, he showed three customers acknowledgment receipts
bearing the notation:

I/We signed below to signify my/our receipt of your statement of account with
you for the period and the amount stated below, together with the corresponding
original copies of the invoices, purchase order and requisition slip attached for
purpose of verification, bearing acknowledgment of my/our receipt of goods.[10]
On October 27, 2004, the RTC ruled for Tan. Its ruling stated as follows:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the


plaintiff, and against the defendant, ordering the defendant to pay the principal amount
of ONE MILLION EIGHT HUNDRED EIGHTY-THREE THOUSAND TWO HUNDRED FORTY-
FOUR PESOS (P1,883,244.00), with interest thereon at the rate of eighteen [percent]
(18%) per annum starting after thirty (30) days from each date of delivery of the
merchandise sold until finality hereof, and thereafter, at the rate of twelve percent
(12%) per annum, and the further sum equal to [twenty five percent] (25%) of the
principal amount as liquidated damages.

SO ORDERED.[11]

On November 30, 2004, MMC moved for reconsideration, but its motion was denied by the
RTC in an Order dated January 5, 2005.

On appeal, the Court of Appeals affirmed the RTCs decision. The decretal portion of the
Court of Appeals Decision dated December 20, 2005 reads:
WHEREFORE, premises considered, the appeal is DENIED. The Decision of
the RTC dated October 27, 2004 is hereby AFFIRMED.

SO ORDERED.[12]

Hence, this petition, which raises as sole issue:

WHETHER OR NOT PETITIONERS OBLIGATION TO PAY HAD ALREADY LEGALLY


ACCRUED CONSIDERING THAT RESPONDENT HAS NOT FULLY COMPLIED WITH ALL
THE PREREQUISITES FOR PAYMENT IMPOSED UNDER PETITIONERS PURCHASE
ORDERS, THERE BEING NO PROOF THAT RESPONDENT HAD ACTUALLY DONE SO.[13]

Simply stated, we are now called upon to address the question of whether MMC should pay
for the electrical materials despite its allegation that Tan failed to comply with certain requisites
for payment.

Petitioner contends that respondents claim for payment was premature inasmuch as the
original invoices and purchase orders were not sent to its accounting department. Consequently,
Tans claims were not verified and processed. MMC believes that mere delivery of the goods did
not automatically give rise to its obligation to pay. It relies on Article 1545 of the Civil Code to
justify its refusal to pay:

ART. 1545. Where the obligation of either party to a contract of sale is subject
to any condition which is not performed, such party may refuse to proceed with the
contract or he may waive performance of the condition.

Petitioner also assails the probative value of the documentary evidence presented during trial. MMC
claims that the unauthenticated photocopies of invoices and purchase orders did not satisfy the Best
Evidence Rule,[14] which requires the production of the original writing in court. It adds that by Tans
failure to yield the original documents, he was presumed to have suppressed evidence under Section
3(e),[15] Rule 131 of the Rules of Court.

In its Memorandum dated February 20, 2007,[16] petitioner refutes any liability altogether,
denying that it consented to the sale. MMC maintains that the unmarked documents indicated a
mere offer to sell, which it did not act upon. MMC also charges Tan with laches for filing his claim
nearly four years after the transaction.

In his Memorandum dated January 30, 2007,[17] respondent Tan counters that the petition
presents a factual issue which has already been settled by the Court of Appeals. He stresses that
findings of fact by the appellate court are conclusive on the Supreme Court and only questions of
law may be entertained by it.

After serious consideration, we are in agreement that the petition lacks merit.

Petitioner poses a question of fact which is beyond this Courts power to review. This Courts
jurisdiction is generally limited to reviewing errors of law that may have been committed by the
Court of Appeals. We reiterate the oft-repeated and fully established rule that findings of fact of the
Court of Appeals, especially when they are in agreement with those of the trial court, are accorded
not only respect but even finality, and are binding on this Court. Barring a showing that the findings
complained of were devoid of support, they must stand. For this Court is not expected or required
to examine or refute anew the oral and documentary evidence submitted by the parties. The trial
court, having heard the witnesses and observed their demeanor and manner of testifying, is
admittedly in a better position to assess their credibility.[18]We cannot weigh again the merits of
their testimonies.

Having thoroughly reviewed the records of this case, we find no persuasive much less compelling
reason to overturn the findings and conclusions of the trial court and appellate court. We hereby
sustain their findings and conclusions.

Worth stressing, Article 1475 of the Civil Code provides the manner by which a contract of sale is
perfected:

ART. 1475. The contract of sale is perfected at the moment there is a meeting
of minds upon the thing which is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to
the provisions of the law governing the form of contracts.

In this case, the purchase orders constituted accepted offers when Tan supplied the electrical
materials to MMC.[19] Hence, petitioner cannot evade its obligation to pay by claiming lack of
consent to the perfected contracts of sale. The invoices furnished the details of the transactions.

As regards respondents failure to present the original documents, suffice it to say that the
best evidence rule applies only if the contents of the writing are directly in issue. Where the existence
of the writing or its general purport is all that is in issue, secondary evidence may be introduced in
proof.[20] MMC did not deny the contents of the invoices and purchase orders. Its lone contention
was that Tan did not submit the original copies to facilitate payment. But we are in agreement that
photocopies of the documents were admissible in evidence to prove the contract of sale between
the parties.

Neither is there merit to petitioners contention that respondent was guilty of delay in filing
the collection case. A careful examination of the records shows that Tan brought suit against MMC
less than a year after the latter stopped making partial payments. Tan is, therefore, not guilty
of laches.

Laches is the neglect to assert a right or claim which, taken together with lapse of time and
other circumstances causing prejudice to adverse party, operates as bar in a court of
equity.[21] Here, Tan had no reason to go to court while MMC was paying its obligation, even if
partially, under the contracts of sale.

WHEREFORE, the petition is DENIED for lack of merit. The Decision dated December 20,
2005 and Resolution dated February 24, 2006 of the Court of Appeals in CA-G.R. CV No. 84385
are AFFIRMED. SO ORDERED.
NISSAN NORTH EDSA operating G.R. No. 179470
under the name MOTOR
CARRIAGE, INC.,
Petitioner, Promulgated:

April 20, 2010

-versus-

UNITED PHILIPPINE SCOUT


VETERANS DETECTIVE AND
PROTECTIVE AGENCY,
Respondent.

x----------------------------------------------------------------------------------------------- x

DECISION

PEREZ, J.:

The Case

Before us is a petition for review under Rule 45 of the Rules of Court assailing the Decision [1] of
the Court of Appeals in CA-G.R. SP No. 80580. The challenged decision affirmed with modification
the Decision[2] of the Regional Trial Court, Branch 200, Las Pias City, in Civil Case No. LP-02-0265
which, in turn, affirmed the Decision[3] of the Metropolitan Trial Court, Branch 79, Las Pias City, in
Civil Case No. 4542.

The Facts

Respondent United Philippine Scout Veterans Detective and Protective Agency (United) is a
domestic corporation engaged in the business of providing security services.[4] In 1993, it entered
into a contract for security services with petitioner[5] Nissan North Edsa (Nissan), and beginning
23 April 1993, it was able to post 18 security guards within Nissans compound located in EDSA
Balintawak, Quezon City.[6]

In the morning of 31 January 1996, Nissan informed United, through the latters General Manager,
Mr. Ricarte Galope (Galope), that its services were being terminated beginning 5:00 p.m. of that
day.[7] Galope personally pleaded with the personnel manager of Nissan to reconsider its
decision.[8] When Nissan failed to act on this verbal request, Galope wrote a Letter[9] dated 5
February 1996, addressed to Nissans general manager, formally seeking a reconsideration of its
action. As this was likewise ignored, Uniteds President and Chairman of the Board wrote a
Letter[10] dated 27 February 1996, addressed to Nissans President and General Manager,
demanding payment of the amount equivalent to thirty (30) days of service in view of Nissans act
of terminating Uniteds services without observing the required 30-day prior written notice as
stipulated under paragraph 17 of their service contract.

As a result of Nissans continued failure to comply with Uniteds demands, the latter filed a case for
Sum of Money with damages before the Metropolitan Trial Court of Las Pias City.
In its Answer, Nissan maintained that the above-mentioned paragraph 17 of the service contract
expressly confers upon either party the power to terminate the contract, without the necessity of
a prior written notice, in cases of violations of the provisions thereof.[11] Nissan alleged that United
violated the terms of their contract, thereby allowing Nissan to unilaterally terminate the services
of United without prior notice.[12]

It appears that on 3 November 1995, Uniteds night supervisor and night security guard did not
report for duty.[13] This incident was the subject of a Memorandum issued by Nissans security
officer to Uniteds officer-in-charge stationed at its security detachment.[14] Then, on 16 January
1996, at noontime, the security supervisor assigned at Nissans premises abandoned his
post.[15] Although the general manager of United directed the immediate replacement of its
security supervisor,[16]Nissan nevertheless claimed that its premises had been exposed to threats
in security, which allegedly constitutes a clear violation of the provisions of the service contract.[17]

On 6 April 2001, Nissans counsel withdrew his appearance in the case with Nissans
conformity. Despite the directive of the trial court for Nissan to hire another lawyer, no new
counsel was engaged by it. Accordingly, the case was submitted for decision on the basis of the
evidence adduced by respondent United.[18]

The Ruling of the Metropolitan Trial Court

In its Decision dated 31 July 2002, the Metropolitan Trial Court ruled in favor of herein respondent
United. The trial court pronounced that Nissan has not adduced any evidence to substantiate its
claim that the terms of their contract were violated by United; and that absent any showing that
violations were committed, the 30-day prior written notice should have been observed.[19]

It thus rendered judgment as follows:

WHEREFORE, in the light of the foregoing, judgment is hereby rendered ordering the
defendant to pay the plaintiff as follows:

1. The sum of P108,651.00 plus legal interest from February 1, 1996 until
fully paid as actual damages;

2. The sum of P20,000.000 as exemplary damages;

3. The sum of P30,000.00 as attorneys fees and other litigation expenses;


and

4. Costs of suit.[20]

Nissan appealed to the Regional Trial Court, questioning the award of actual and exemplary
damages, as well as the directive to pay attorneys fees and litigation expenses. It alleged that
there was no evidence to support the award of actual damages, as the service contract, upon
which the amount of the award was based, was never presented nor offered as evidence in the
trial.[21] Furthermore, no evidence was adduced to show bad faith on the part of Nissan in
unilaterally terminating the contract, making the award of exemplary damages improper.[22]
The Ruling of the Regional Trial Court

In its Decision dated 10 June 2003, the Regional Trial Court declared the appeal without merit as
there appears no cogent reason to reverse the findings and rulings of the lower court.[23] It denied
the appeal and affirmed the decision of the Metropolitan Trial Court.

Nissan filed a motion for reconsideration of the decision of the Regional Trial Court but the same
was denied in an Order[24] dated 15 October 2003.

Nissan further went on an appeal to the Court of Appeals, citing the same assignment of errors it
presented before the Regional Trial Court.

The Ruling of the Court of Appeals

The 14 February 2007 Decision of the Court of Appeals affirmed the Decision dated 10 June 2003
and the 15 October 2003 Order of the Regional Trial Court, with the modification that the award
for exemplary damages was deleted. The Court of Appeals held that the breach of contract was
not done by Nissan in a wanton, fraudulent, reckless, oppressive or malevolent manner.[25]

Nissan sought reconsideration of the decision affirming the judgment of the lower court but the
Court of Appeals denied the same in a Resolution[26] promulgated on 24 August 2007.

Hence, this petition.

The Issue

Petitioner Nissan insists that no judgment can properly be rendered against it, as respondent
United failed, during the trial of the case, to offer in evidence the service contract upon which it
based its claim for sum of money and damages. As a result, the decisions of the lower courts were
mere postulations.[27] Nissan asserts that the resolution of this case calls for the application of the
best evidence rule.[28]
The Ruling of the Court

The petition is without merit. We thus sustain the ruling of the Court of Appeals.

Nissans reliance on the best evidence rule is misplaced. The best evidence rule is the rule which
requires the highest grade of evidence to prove a disputed fact.[29]However, the same applies only
when the contents of a document are the subject of the inquiry.[30] In this case, the contents of
the service contract between Nissan and United have not been put in issue. Neither United nor
Nissan disputes the contents of the service contract; as in fact, both parties quoted and relied on
the same provision of the contract (paragraph 17) to support their respective claims and
defenses. Thus, the best evidence rule finds no application here.

The real issue in this case is whether or not Nissan committed a breach of contract, thereby
entitling United to damages in the amount equivalent to 30 days service.

We rule in the affirmative.

At the heart of the controversy is paragraph 17 of the service contract, which reads:
However, violations committed by either party on the provisions of this Contract shall
be sufficient ground for the termination of this contract, without the necessity of prior
notice, otherwise a thirty (30) days prior written notice shall be observed.[31]

Nissan argues that the failure of Uniteds security guards to report for duty on two occasions,
without justifiable cause, constitutes a violation of the provisions of the service contract, sufficient
to entitle Nissan to terminate the same without the necessity of a 30-day prior notice.

We hold otherwise.
As the Metropolitan Trial Court of Las Pias City stated in its decision, Nissan did not adduce any
evidence to substantiate its claim that the terms of the contract were violated by United.

What Nissan failed to do is to point out or indicate the specific provisions of the service
contract which were violated by United as a result of the latters lapses in security. In so failing,
Nissans act of unilaterally terminating the contract constitutes a breach thereof, entitling United
to collect actual damages.

WHEREFORE, the Decision dated 14 February 2007 and the Resolution dated 24 August
2007 of the Court of Appeals in CA-G.R. SP No. 80580 are AFFIRMED. SO ORDERED.
G.R. No. 167147 August 3, 2005

PEOPLE OF THE PHILIPPINES, Appellee,


vs.
GENARO CAYABYAB y FERNANDEZ, Appellant.

DECISION

PER CURIAM:

Appellant Genaro Cayabyab y Fernandez was sentenced to death by the Regional Trial Court of
Pasay City, Branch 109, in Criminal Case No. 01-1311, for rape committed against six-year-old
Alpha Jane Bertiz.1

Alpha Jane was born on November 26, 1994,2 and the eldest among the six children of Conrado
and Metchie Bertiz.3 She was six years and nine months old when the rape was committed on
August 7, 2001.

On that day, at around 6:00 p.m., Alpha Jane was at home in Manlunas St., Lagoon Area, Villamor
Airbase, Pasay City, taking care of her younger siblings. Her mother went to buy kerosene, while
her father was out. On the guise of teaching arithmetic, appellant went to the victim's house and
asked her to lie down on her father's bed. When she refused, appellant removed her clothes and
his own clothes, then forced her to lie down on the bed and laid on top of her and inserted his
penis into her vagina. Alpha Jane shouted in pain which startled the appellant who sprayed her
with tear gas and left.4

Her mother, Metchie arrived shortly thereafter and Alpha Jane told her what had happened. She
immediately reported the incident to the barangay officials and brought Alpha Jane to the
Philippine Air Force General Hospital for medical examination. She also sought assistance from the
police at the 521st Air Police Squadron who, after gathering information from the victim, arrested
the appellant at his house.5 Alpha Jane was brought to the PNP Crime Laboratory at Camp Crame
the following day,6 and on August 10, 2001, to the Child Protection Unit (CPU) at UP-PGH7 for
further medical examinations, which both found hymenal abrasions and lacerations, respectively,
on the victim's genitalia.8

On August 10, 2001, appellant was charged with rape before the Regional Trial Court of Pasay
City in an Information that reads:

That on or about the 07th day of August 2001, in Pasay City, Metro , Philippines and within the
jurisdiction of this Honorable Court, the above-named accused, GENARO CAYABYAB Y
FERNANDEZ, did then and there wilfully, unlawfully, and feloniously by means of force and
intimidation have carnal knowledge of ALPHA JEAN BERTIS Y JONGCO, a minor six (6) years of
age, against her will and consent.

CONTRARY TO LAW.9

When arraigned, appellant pleaded not guilty to the charge. Trial then ensued.

Appellant raised the defenses of denial and alibi. He testified that on August 7, 2001, he was plying
his normal route inside the Villamor Airbase as a tricycle driver from 6:00 a.m. until 7:00
p.m.10 After returning the tricycle to its owner Roberto Gabo at the corner of 14th and 15th Sts.,
Villamor Airbase, he reached home at around 7:30 p.m and went to sleep after eating dinner.11 At
around 9:30 p.m., he woke up to urinate at the back of their house when three (3) policemen
arrested and mauled him.12 At the headquarters, he was forced to admit the rape13 while the
victim's father asked for money in exchange for his release, which he refused.14

The trial court gave credence to the testimonies of the prosecution witnesses. It found the victim's
testimony consistent with the medical findings of the doctors from the PNP Crime Laboratory and
CPU, UP-PGH. Moreover, it applied the rule that an unsubstantiated defense of denial and alibi
cannot prevail over a positive and categorical testimony of a minor victim. Finally, it appreciated
the qualifying circumstance of minority and imposed the penalty of death. The dispositive portion
reads:

In view of all the foregoing, the Court opines that the prosecution has proven the guilt of the
accused Genaro Cayabyab y Fernandez beyond reasonable doubt for rape as defined and penalized
under Article 335, paragraph 3 and 4 as the victim herein is only six (6) years old and hereby
sentence accused Genaro Cayabyab y Fernandez to DEATH and to pay civil indemnity in the
amount of Php 75,000.00 and moral and exemplary damages in the amount of Php 50,000.00
with subsidiary imprisonment in case of insolvency.

SO ORDERED.15

The case was directly elevated to this Court for automatic review. However, pursuant to our
decision in People v. Mateo16 modifying the pertinent provisions of the Revised Rules on Criminal
Procedure insofar as direct appeals from the Regional Trial Court to the Supreme Court in cases
where the penalty imposed is death, reclusion perpetuaor life imprisonment, this case was
transferred to the Court of Appeals,17 which affirmed in toto the decision of the trial court, thus:

IN VIEW OF ALL THE FOREGOING, the decision of the trial court finding accused-appellant guilty
beyond reasonable doubt of the crime of rape and sentencing him to suffer the supreme penalty
of death is AFFIRMED intoto, and accordingly certifies the case and elevate the entire records
to the Supreme Court for review pursuant to Rule124, Section 13[a] of the Revised Rules on
Criminal Procedure, as amended by A.M. No. 00-5-03-SC.

SO ORDERED.18

We have painstakingly reviewed the evidence on record and found no cogent reason to disturb the
findings of the trial court and the appellate court. There is no doubt that appellant raped Alpha
Jane on August 7, 2001 inside their house at Villamor Airbase, PasayCity. This credibility given by
the trial court to the rape victim is an important aspect of evidence19 which appellate courts can
rely on because of its unique opportunity to observe the witnesses, particularly their demeanor,
conduct, and attitude, during the direct and cross-examination by counsel.

On direct examination, Alpha Jane narrated the incident and positively identified appellant as her
assailant, thus:

Fiscal Barrera:

Now at around 6:00 p.m. of August 7, 2001 where were you?

A. I was inside our house.

Q. You mean your house at lagoon area, Villamor Air Base, Pasay City?

A. Yes, sir.

Q. What about you mother and father where were they on that date and time?

A. My mother bought gas while my father was 'naglalakad ng spray gun for painting.

Q. Who were left in your house on August 7, 2001 at 6:00 p.m. while your mother bought gas and
your father was walking with his spray gun used for painting?

A. My brothers and sisters.

Q. While in your house on said date and time do you know of any unusual incident that happened
to you?

A. Yes, sir.

Q. What was that unusual incident that happened to you?

A. Kuya Jimmy entered our house.

Q. After Kuya Jimmy entered your house, what happened next?

A. Kuya Jimmy called for me inside our house.

Q. What did you do when Kuya Jimmy called for you?

A. He asked me one plus one and I answered two.


Q. After that what else happened?

A. He asked me to lie down on my father's bed.

Q. Did you follow him?

A. No, sir, I did not follow.

Q. And so what else happened?

A. He removed my clothes 'hinubaran niya ako; he removed my shorts and panty.

Q. After Kuya Jimmy removed your shorts and panty, what happened?

A. 'Pinatungan po niya ako', he laid on top of me.

Q. What happened when he laid on top of you?

A. He inserted his penis inside my private part.

Fiscal Barrera:

What did you do when this Kuya Jimmy inserted his penis to your private part?

A. I shouted, sir.

Q. After Kuya Jimmy inserted his penis inside your vagina and you shouted, what happened?

A. 'Pinakawalan niya ako', he released me.

Q. Then what happened?

A. 'Tinergas niya ako.

Q. After Kuya Jimmy teargas you, what happened?

A. I run away.

Q. Regarding what Kuya Jimmy did to you, did you report it to your mother?

A. Yes, sir.

Q. This Kuya Jimmy whom you said went inside your house and removed your shorts and panty
and thereafter inserted his penis inside your vagina on August 7, 2001 can you point at him if you
see him?

A. Yes, sir.

Q. If this Kuya Jimmy Cayabyab is inside the courtroom will you be able to identify him?

A. Yes, sir.

Q. Is he inside the courtroom?

Interpreter:

Witness pointed to a person who answered by the name of Genaro Cayabyab.20

Despite grueling cross-examination by the defense suggesting extortion by the victim's father,
Alpha Jane remained steadfast and consistent that it was appellant who raped her. The victim's
testimony was supported by the medico-legal report of the medico-legal experts from the PNP
Crime Laboratory and CPU, UP-PGH, to wit:
ANO-GENITAL

EXAMINATION

Hymen: Tanner Stage 2, hymenal transection at 5 oclock, Type of Hymen: Anullar

...

IMPRESSIONS

Evidence of blunt force or penetrating trauma.

(Exh. 'L', p. 8, Records)

Dr. Baluyut explained that in her findings, the terms hymenal transection at 5 oclock and laceration
at 5 oclock are synonymous (TSN, November 20, 2001, p. 6). Dr. Baluyut further explained that
there was prior injury to the victim's hymen which might have been caused by the insertion of a
blunt object such as an erected penis which was compatible with the victim's claim that she had
been raped (TSN, November 20, 2001, pp. 6-7).21

The trial court correctly imposed the death penalty.

Rape, such as committed against a 'child below seven (7) years old', is a dastardly and repulsive
crime which merit no less than the penalty of death pursuant to Article 266-B of the Revised Penal
Code. This special qualifying circumstance of age must be specifically pleaded or alleged with
certainty in the information and proven during the trial; otherwise the penalty of death cannot be
imposed.

In the case of People v. Pruna,22 this Court took note of conflicting pronouncements concerning
the appreciation of minority, either as an element of the crime or as a qualifying circumstance.
There were a number of cases where no birth certificate was presented where the Court ruled that
the age of the victim was not duly proved.23 On the other hand, there were also several cases
where we ruled that the age of the rape victim was sufficiently established despite the failure of
the prosecution to present the birth certificate of the offended party to prove her age.24 Thus, in
order to remove any confusion, we set in Pruna the following guidelines in appreciating age,
either as an element of the crime or as a qualifying circumstance.

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.78

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.25
To paraphrase Pruna, the best evidence to prove the age of a person is the original birth certificate
or certified true copy thereof; in their absence, similar authentic documents may be presented
such as baptismal certificates and school records. If the original or certified true copy of the birth
certificate is not available, credible testimonies of the victim's mother or a member of the family
may be sufficient under certain circumstances. In the event that both the birth certificate or other
authentic documents and the testimonies of the victim's mother or other qualified relative are
unavailable, the testimony of the victim may be admitted in evidence provided that it is expressly
and clearly admitted by the accused.

In Pruna, no birth certificate or any similar authentic document, such as the baptismal
certificate of the victim was presented to prove her age. The trial court based its finding that
Lizette was 3 years old when she was raped on the Medico-Legal Report, and the fact that the
defense did not contest her age and questioned her qualification to testify because of her tender
age. It was however noted that the Medico-Legal Report never mentioned her age and only the
testimony of her mother was presented to establish Lizette's age. The Court found that there
was uncertainty as to the victim's exact age, hence, it required that 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.

Unlike in Pruna, the trial court in this case made a categorical finding that Alpha Jane was only 6
years old at the time she was raped, based not only on the testimonies of the complainant and
her mother, but also on the strength of the photocopy of Alpha Jane's birth certificate. It is well
to note that the defense did not object to the presentation of the birth certificate; on the contrary
it admitted the same 'as to fact of birth.

We are not unaware of our ruling in People v. Mantis26 that a mere photocopy of the birth
certificate, in the absence of any showing that the original copy was lost or destroyed, or was
unavailable, without the fault of the prosecution, does not prove the victim's minority, for said
photocopy does not qualify as competent evidence for that purpose.

However, there are other exceptions to the 'best evidence rule as expressly provided under Section
3, Rule 130 of the Rules of Court, 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. [Emphasis supplied]

Without doubt, a certificate of live birth is a public record in the custody of the local civil registrar
who is a public officer. Clearly, therefore, the presentation of the photocopy of the birth certificate
of Alpha Jane is admissible as secondary evidence to prove its contents. Production of the original
may be dispensed with, in the trial court's discretion, whenever in the case at hand the opponent
does not bona fide dispute the contents of the document and no other useful purpose will be
served by requiring production.27

In the case at bar, the defense did not dispute the contents of the photocopied birth certificate; in
fact it admitted the same. Having failed to raise a valid and timely objection against the
presentation of this secondary evidence the same became a primary evidence, and deemed
admitted and the other party is bound thereby.28

In fine, we find that the prosecution sufficiently proved that Alpha Jane was only six-years-old,
being born on November 26, 1994, when the rape incident happened on August 7, 2001.
Anent the award of damages, we sustain the award of P75,000.00 as civil indemnity consistent
with the prevailing jurisprudence that if the crime is qualified by circumstances which warrant the
imposition of the death penalty by applicable amendatory laws, the accused should be ordered to
pay the complainant the amount of P75,000.00 as civil indemnity.

The Court notes that the trial court awarded P50,000.00 as moral and exemplary damages. Moral
damages is distinct from exemplary damages, hence must be awarded separately. The award of
moral damages is automatically granted in rape cases without need of further proof other than
the commission of the crime because it is assumed that a rape victim has actually suffered moral
injuries entitling her to such award.29 However, the award of P50,000.00 must be increased to
P75,000.00 in accord with prevailing jurisprudence.30 As regards exemplary damages, we held
in People v. Catubig31 that the presence of an aggravating circumstance, whether ordinary or
qualifying, entitles the offended party to an award of exemplary damages. Conformably, we award
the amount of P25,000.00 as exemplary damages in accord with the prevailing jurisprudence.32

WHEREFORE, the decision of the Regional Trial Court of Pasay City, Branch 109, in Criminal Case
No. 01-1311, as affirmed in toto by the Court of Appeals in CA-G.R. CR.-H.C. No. 00258, finding
appellant Genaro Cayabyab y Fernandez guilty beyond reasonable doubt of the crime of rape and
imposing the penalty of DEATH33 is AFFIRMED with the MODIFICATION that appellant is
further ordered to pay the victim P75,000.00 as moral damages and P25,000.00 as exemplary
damages. SO ORDERED.
G.R. No. L-28999 May 24, 1977

COMPAÑIA MARITIMA, plaintiff-appellee,


vs.
ALLIED FREE WORKERS UNION, SALVADOR T. LLUCH, MARIANO LL. BADELLES,
individually and in their capacities as President and Vice-President, respectively of the
Allied Free Workers Union, NICANOR HALEBAS and LAURENTINO LL. BADELLES,
individually and officers of Allied Free Workers Union, defendants-appellants.

Halibas, Badelles, Padilla & Sepulveda and Vicente A. Rafael & Associates for defendants-
appellants.

Rufino J. Abadies, Francisco Obach & Jesus Quijano for appellee.

AQUINO, J.:

Antecedents. - Since the onset in 1954 of litigation between the parties herein, this is the fifth
case between them that has been elevated to this Court. The incidents preceding the instant
appeal are as follows:

On August 11, 1952 the Compañia Maritima and the Allied Free Workers Union entered into a
written contract whereby the union agreed to perform arrastre and stevedoring work for the
consignees. vessels at Iligan City. The contract was to be effective for one month counted from
August 12, 1952.

It was stipulated that the company could revoke the contract before the expiration of the term if
the union failed to render proper service. The contract could be renewed by agreement of the
parties (Exh. J).

At the time the contract was entered into, the union had just been organized. Its primordial desire
was to find work for its members. The union agreed to the stipulation that the company
would not be liable for the payment of the services of the union "for the loading, unloading and
deliveries of cargoes" and that the compensation for such services would be paid "by the owners
and consigness of the cargoes" as "has been the practice in the port of Iligan City" (Par. 2 of Exh.
J).

The union found out later that that stipulation was oppressive and that the company was unduly
favored by that arrangement.

Under the contract, the work of the union consisted of arrastre and stevedoring service. Arrastre,
a Spanish word which refers to hauling of cargo, comprehends the handling of cargo on the wharf
or between the establishment of the consignee or shipper and the ship's tackle. The service is
usually performed by longshoremen.

On the other hand, stevedoring refers to the handling of the cargo in the holds of the vessel or
between the ship's tackle and the holds of the vessel.

The shippers and consignees paid the union oth for the arrastre work. They refused to pay for the
stevedoring service. They claimed that the shipowner was the one obligated to pay for the
stevedoring service because the bill of lading provided that the unloading of the cargo was at the
shipowner's expense (Exh. 1).

On the other hand, the company refused to pay for the stevedoring service because the contract
(Exh. J) explicitly provided that the compensation for both arrastre and stevedoring work should
be paid by the shippers and consignees, as was the alleged practice in Iligan City, and that the
shipowner would not be liable for the payment of such services.

Thus, the issue of whether the company should pay for the stevedoring service became a sore
point of contention between the parties. The union members labored under the impression that
they were not being compensated for their stevedoring service as distinguished from arrastre
service.

Although the arrastre and stevedoring contract (Exh. J) was disadvantageous to the union, it did
not terminate the contract because its members were in dire need of work and work, which was
not adequately compensated, was preferable to having no work at all (204, 214-5, 226-7 tsn May
20, 1960).
Upon the expiration of the one-month period, the said contract was verbally renewed. The
company allowed the union to continue performing arrastre and stevedoring work.

On July 23, 1954 the union sent a letter to the company requesting that it be recognized as the
exclusive bargaining unit to load and unload the cargo of its vessels at Iligan City. The company
ignored that demand. So, the union filed on August 6, 1954 in the Court of Industrial Relations
(CIR) a petition praying that it be certified as the sole collective bargaining unit.

Despite that certification case, the company on August 24, 1954 served a written notice on the
union that, in accordance with payment of the 1952 contract, the same would be terminated on
August 31, 1954. Because of that notice, the union on August 26, 1954 filed in the CIR charges of
unfair labor practice against the company.

On August 31, 1954 the company entered into a new stevedoring and arrastre contract with the
Iligan Stevedoring Association. On the following day, September 1, the union members picketed
the wharf and prevented the Iligan Stevedoring Association from performing arrastre and
stevedoring work. The picket lasted for nine days.

On September 8, 1954 the company sued the union and its officers in the Court of First Instance
of Lanao for the rescission of the aforementioned 1952 contract, to enjoin the union from
interfering with the loading and unloading of the cargo, and for the recovery of damages.

On the following day, September 9, the lower court issued ex parte a writ of preliminary injunction
after the company had posted a bond in the sum of P20,000. A few hours lateron that same day
the union was allowed to file a counterbond. The injunction was lifted. The union members
resumed their arrastre and stevedoring work.

Later, the union assailed in a prohibition action in this Court the jurisdiction of the trial court to
entertain the action for damages, and injunction.

A majority of this Court held that the lower court had jurisdiction to issue the injunction and to
take cognizance of the damage suit filed by the company but that the injunction was void because
it was issued ex parte and the procedure laid down in section 9(d) of Republic Act No. 875 was
not followed by the trial court (Allied Free Workers Union vs. Judge Apostol, 102 Phil. 292, 298).

After trial, the lower court rendered a decision dated December 5, 1960, amended on January 11,
1961, (1) declaring the arrastre and stevedoring contract terminated on August $1, 1954; (2)
dismissing the union's counterclaim; (3) ordering the union and its officers to pay solidarily to the
company P520,000 as damages, with six percent interest per annum from September 9, 1954,
when the complaint. was filed; (4) permanently enjoining the union from performing any arrastre
and stevedoring work for the company at Iligan City, and (5) requiring the union to post a
supersedeas bond in the sum of P520,000 to stay execution.

The union filed a motion for reconsideration. On the other hand, the company filed a motion for
the execution pending appeal of the money judgment. It filed another motion for the immediate
issuance of a writ of injunction. That second motion was filed in the municipal court of Iligan City
in view of the absence of the District Judge.

The municipal court issued the writ of injunction. However, this Court set it aside because it was
not an interlocutory order and no special reasons were adduced to justify its issuance (Allied Free
Workers Union vs. Judge Estipona, 113 Phil. 748).

The union on January 6, 1961 had perfected an appeal from the lower court's original decision. It
did not appeal from the amended decision. On March 24, 1962 the lower court issued an order
declaring its amended decision final and executory in view of the union's failure to appeal
therefrom. The court directed the clerk of court to issue a writ of execution. That order was assailed
by the union in a certiorari action filed in this Court. A preliminary injunction was issued by this
Court to restrain the execution of the judgment.

On May 16, 1962 this Court dissolved the injunction at the instance of the company which had
filed a counterbond. Thereupon, the 225 members of the union yielded their ten-year old jobs to
the new set of workers contracted by the company.

The certiorari incident was decided on June 30, 1966. This Court noted that the lower court
amended its decision for the purpose of correcting certain errors and omissions which were not
substantial in character and that its amended decision was served upon the parties after the union
had perfected its appeal from the original decision.

Under those circumstances, this Court held that the union's appeal should be given due coarse,
subject to the amendment of its record on appeal. This Court reserved to the members of the
union the right to secure restitution under sections 2 and 5, Rule 39 of the Rules of Court (Allied
Free Workers Union vs. Estipona, L-19651, June 30, 1966,17 SCRA 513, 64 O.G. 2701).

Pursuant to that reservation, the union on December 16, 1966 filed a motion for restitution,
praying that its 225 members be restored to their jobs and that the company be ordered to pay P
1,620,000 as damages, consisting of the lost earnings during the four-years period from May 8,
1962 to May 8, 1966.

On the other hand, the company in its motion of January 18, 1967 reiterated its 1960 motion for
the execution of the lower court's judgment as to the damages, of P520,000 and the permanent
injunction.

Later, the company called the lower court's attention to this Court's decision dated January 31,
1967. In that decision, this Court affirmed the CIR's decision holding that the company did not
commit any unfair labor practice and reversed the CIR's directive that a certification election be
held to determine whether the union should be the exonemtod bargaining unit. This Court held
that the union could not act as a collective bargaining unit because the union was an independent
contractor and its members were not employees of the company (Allied Free Workers Union vs.
Compañia Maritima, L-22951-2 and L-22971, 19 SCRA 258).

The lower court in its order of April 25, 1967 (1) denied the union's motion for restitution and to
stay execution of its amended decision on January 11, 1961 and (2) required the union to file a
supersedeas bond in the sum of P100,000 within thirty days from notice. The bond was reduced
to P50,000 in the lower court's order of August 16, 1967. The union posted the bond on August
24,1967.

The lower court approved the union's amended record on appeal in its order of October 6, 1967.

The union appealed directly to this Court because the amount involved exceeds P200,000. The
appeal was perfected before Republic Act No. 5440 took effect on September 9,1968.

Other proceedings. - The company in its original complaint prayed that the union and its officials
be ordered to pay actual damages, amounting to P15,000 for the union's failure to load and unload
cargo in and from the consignees. vessels from September 1 to 8, 1954; P50,000 as damages,
due to the union's inefficiency in performing arrastre and stevedoring work "during the latter part
of the existence" of the contract; P50,000 as moral and exemplary damages, (not supported by
any allegation in the body of the complaint) and P5,000 as attorney's Considering (10-12, Record
on Appeal).

On September 15, 1954 the company added a fourth cause ofaction to its complaint. It alleged
that by reason of the acts of harassment and obstruction perpetrated by the union in the loading
and unloading ofcargo the company suffered additional damage in the form of lost and unrealized
freight and passenger charges in the amount of P10,000 for September 9 and 10, 1954 (66,
Record on Appeal).

On November 2, 1954 the company attached to its motion for the revival of the injunction against
the union an auditor's report dated September 15, 1954 wherein it was indicated that the company
lost freight revenues amounting to P178,579.20 during the period from January 1 to September
7, 1954 (121-143, Record on Appeal).

On November 27, 1954 the company filed another motion for the restoration of the injunction. In
support of that motion the company attached a trip operation report showing the unloaded cargoes
on the consignees. vessels, when they docked at Iligan City on September 14, 19, 22 and 26 and
October 3 and 5, 1954, as well as the delays in their departure (157-162, Record on Appeal).

On March 5, 1955 the company added a fifth cause ofaction too its complaint. It alleged that
during the period from September 12 to December 28, 1954 it lost freight charges on unloaded
cargoes in the sum of P62,680.12, as shown in a detailed statement, and that it incurred an
estimated amount of P20,000 for overhead expenses. for the delay in the dismissal of its vessels
attributable to the union's unsatisfactory stevedoring and arrastre work (225-229, 237-8, Record
on Appeal).
Also on March 5, 1955 the union answered the original and supplemental complaints. It denied
that its members had rendered inefficient service. It averred that the termination of the contract
was prompted by the consignees. desire to give the work to the Iligan Stevedoring Association
which the company had allegedly organized and subsidized. The union filed a counterclaim for
P200,000 as compensation for its services to the company and P500,000 as other damages, (239-
252, Record on Appeal).

On March 9, 1960 the company filed a third supplemental complaint, It alleged that the
continuation of the stevedoring and arrastre work by the union for the company from 1955 to date
had caused losses to the company at the rate of P25,000 annually in the form of lost freight on
shutout cargoes and the expenses. for the equipment used to assist the union members in
performing their work (320-3, Record on Appeal).

Plaintiff company's evidence. - Jose C. Teves, the consignees. branch manager at Iligan City,
testified that on August 24, 1954 he terminated the arrastre and stevedoring contract with the
union (Exh. J) upon instruction of the head office. The contract was terminated in order to avoid
further losses to the company caused by the union's inefficient service (85-86 tsn March 11, 1960).

After the termination of the contract, the members of the union allegedly harassed the company
with the help of goons. The cargoes could not be unloaded in spite of the fact that the company
had sought the protection of the law-enforcing authorities (88). The consignees. last recourse was
to go to court. (89).

The company supposedly suffered losses as a result of the union's inefficient service since
September 1, 1954 (91). Teves hired auditors to ascertain the losses suffered by the company
during the period from January 1 to September 11, 1954.

The trial court awarded actual damages, amounting to P450,000 on the basis of the auditor's
reports, Exhibits A to I. It did not carefully examine the said exhibits. Contrary to the trial court's
impression, Exhibits B, C and D are not auditors' reports.

The trial court did not bother to make a breakdown of the alleged damages, totalling P450,000.
The reports of the two hired accountants, Demetrio S. Jayme and M. J. Siojo, show the following
alleged damages, in the aggregate amount of P349,245.37 (not P412,663.17, as erroneously
added by the consignees. counsel, 161,163-4 tsn March 11, 1960):

TABULATION OF ALLEGED

DAMAGES CLAIMED BY COMPAÑIA MARITIMA

(1) Freight for 74,751 bags of fertilizer


allegedly booked for shipment in the
company's vessels but loaded in other vessels
during the period from Jan. 1 to August 31,
1954, Statement A in Exh. A, CPA Jayme's
report......................................................... P29,900.40
(2) Lost freight on other shutout cargoes
for January 1 to August 31, 1954, Statement A
in Exh. A, of CPA Jayme ......................... 4,339.64
(3) Lost freight on shutout cargoes for
September 2 to 7, 1954 booked for shipment in
M. V. Mindoro, Panay and Masterhead Knot,
Statement B in Exh. A, CPA Jayme's report... 6,167.16
(4) Losses sustained in voyages of M.V.
Panay and Mindoro in four voyages from
September 4 to 11, 1954, with estimates,
Statement B, Exh. A............................... 3,764.50
(5) Other estimated losses for the said
voyages of M.V. Panay and Mindoro for the
same period, based on interviews of parties at
the wharf, Statement B, Exh. A............... 10,000.00
(6) Additional subsistence expenses. for the
M.V. Mindoro and Panay due to the delays in
their dismissal from January 1 to August 31,
1954 as certified by the pursers of the two
vessels, Statement C, Exh. A..................... 4,407.50
(7) Estimated loss in freight and passenger
revenue for the period from January 1 to
August 31, 1954, based on 1953 freight revenue
for the same period Statement D, Exh. A..... 100,000.00
(8) Estimated loss in passenger fares for
the period from September to December 31,
1954, Statement D, Exh. A....................... 20,000.00
(9) Lost freight charges from September
12 to December 28, 1954, as certified by the
chief clerk of the consignees. Iligan office. Exh.
B............................................................. 62,680.12
(10) Estimated overhead expenses for
delay of vessels in port, Exh. B................. 20,000.00
(11) Forklift operating expenses. for 1955,
consisting of salaries and maintenance
expenses, Exh. E- 1.................................... 5,677.54
(12) Lost freight revenue for 1955, Exh. E-
2............................................................... 17,838.78
(13) Forklift operating expenses. for 1956,
Exh. F- 1................................................... 3,520.90
(14) Lost freight revenue for 1956, Exh. F-2 3,849.56
(15) Forklift operating expenses. for 1957,
Exh. G- 1................................................... 8,259.08
(16) Lost freight revenue for 1957, Exh. G-
2.................................................................... 14,538.10
(17) Forklift operating expenses. for 1958,
Exh. H-1................................................... 7,503.45
(18) Lost freight revenue for 1958, Exh. H-
2............................................................. 10,193.46
(19) Forklift operating expenses. for 1959,
Exh. I-1.................................................... 8,745.35
(20) Lost freight revenue for 1959, Exh. I-2 7,959.83
T OT A L - P349,245.37

We tabulated the alleged damages, to show that the trial court's award to the company of
P450,000 as damages, is not supported by the evidence. On the other hand, the statement of the
consignees. counsel that the damages, totalled P412,663.17 (162- 164 tsn March 11, 1960) is
wrong.

Teves, the consignees. branch manager, submitted a statement (Exh. K) showing the alleged cost
of three forklifts, 200 pieces of pallet boards, 530 pieces of wire rope slings and two pieces of
tarpaulins in the total sum of P27,215. In that statement, he claims that the damages, to the
company by reason of the depreciation of the said items of equipment amounted to P38,835 or
more than the cost thereof.

The company's counsel, in his summary of the damages, ignored the alleged damages, of P38,835
indicated by Teves in Exhibit K. The consignees. counsel relied oth on the auditors' reports, Exhibits
A and E to I and on Exhibit B, the chief clerk's statement. As already noted, those documents
show that the total damages, claimed by the company amounted to P349,245.37.

The best evidence on the cost of the said equipment would have been the sales invoices instead
of the oral testimony of Teves. He did not produce the sales invoices.

Teves further testified that Salvador T. Lluch was the president of the union; Nicanor Halibas, the
treasurer; Mariano Badelles, the general manager, and Luarentino Badelles, a vice president.

Appellants' statement of facts. - To sustain their appeal, the appellants made the following
exceedingly short and deficient recital of the facts:

Sometime in the month of August, 1954, defendant, Allied Free Workers Union filed
an unfair labor practice case against defendant (should be plaintiff) and its branch
manager, Mr. Jose Teves, with the Court of Industrial Relations, Manila, and docketed
as Case No. 426-UPL: defendant union also filed a petition for certification election
docketed as Case No, 175-MC against plaintiff; defendant union also filed a notice of
strike dated August 27, 1954; the Secretary of Labor wired the public defender, Iligan
City, on August 27, 1954 (see annexes 1-4, motion to dismiss, Record on Appeal, pp.
54-65).

To counteract these legitimate moves of labor, plaintiff filed the complaint docketed
as Civil Case No. 577 in the Court of First Instance of Lanao (now Lanao del Norte)
for damages, and/or resolution of contract with writ of preliminary injunction, On a
decision adverse to their interests, defendants take this appeal.

On the question of jurisdiction taken before this Honorable Tribunal in G.R. No. L-
8876, it was held:

... for the instant case merely refers to the recovery of damages, occasioned by the
picketing undertaken by the members of the union and the rescission of the arrastre
and stevedoring contract previously entered into between the parties.

The appellants did not discuss their oral and documentary evidence. *

First assignment of error. - The appellants contend that the trial court erred in awarding to the
company actual damages, amounting to P450,000, moral damages, of P50,000 and attorney's
Considering of P20,000, and in holding that the four officers of the union are solidarily liable for
the said damages.

Appellants' counsel assailed the award of actual damages, on the ground that the auditors' reports,
on which they were based, were hearsay.

After analyzing the nature of the damages, awarded, how the same were computed, and the
trustworthiness of the company's evidence, we find the first assignment of error meritorious.

We have already stress that, on the basis of the reports of the two accountants, the damages,
claimed by the complaint as a matter of simple addition, does not reach the sum of P 450,000
fixed by the trial court. The damages, shown in the accountants' reports and in the statement
made by the consignees. chief clerk (who did not testify) amount to P349,245.37, or much less
than P450,000.

The company argues that the accountants' reports are admissible in evidence because of the rule
that "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
oth the general result of the whole", the original writings need not be produced (Sec. 2[e], Rule
130, Rules of Court).

That rule cannot be applied in this case because the voluminous character of the records, on which
the accountants' reports were based, was not duly established (U. S. vs. Razon and Tayag, 37
Phil. 856, 861; 29 Am Jur 2nd 529).

It is also a requisite for the application of the rule that the records and accounts should be made
accessible to the adverse party so that the company, of the summary may be tested on cross-
examination (29 Am Jur 2nd 517-8; 32A C.J.S. 111).

What applies to this case is the general rule "that an audit made by, or the testimony of, a private
auditor, is inadmissible in evidence as proof of the original records, books of accounts, reports or
the like" (Anno 52 ALR 1266).

That general rule cannot be relaxed in this case because the company failed to make a preliminary
showing as to the difficulty or impossibility attending the production of the records in court and
their examination and analysis as evidence by the court (29 Am Jur 2nd 529).

A close scrutiny of the accountants' reports reveals their lack of probative value. The propriety of
allowing the different items of damages, is discussed below.

Unrealized freight and passenger revenue for 1954 ascertained by Accountant Demetrio S.
Jayme. - In his report (Exh. A, pp. 134 to 147, Record on Appeal), Jayme used the pronouns "we"
and "our" and made reference to the examination made by the "auditors" and his accounting
office.

He did not disclose the names of other "auditors" who assisted him in making the examination of
the consignees. records.

He gave the impression that he was an independent accountant hired by the company to make a
"special investigation" of the consignees. losses for the period from January 1 to September 7,
1954.

The truth is that Jayme was a "personal friend" of Teves, the consignees. branch manager at Iligan
City. Teves was the consignees. principal witness in this case. He verified the complaint. herein.
He signed for the company the stevedoring and arrastre contract which he later rescinded. In fact,
Teves intervened in the drafting of the contract. It was his Idea that the company should not pay
the arrastre and stevedoring Considering and that those charges should be borne by the shippers
and consignees.

Jayme was not only the friend of Teves but was also his co-employee. Jayme was the consignees.
branch manager at Ozamis City and later at Cagayan de Oro City (217-8 tsn May 20, 1960; Exh.
12). He suppressed that fact in his report of examination. Apparently, the practice of accounting
was his sideline or he practised accounting and, as the saying goes, he moonlighted as the
consignees. branch manager. Obviously, Jayme would be biased for the company. He violated a
rule of the accountants' code of ethics by not disclosing in his report of examination that he was
an employee of the company (84 tsn June 2, 1960).

Accountant Jayme allegedly found from the consignees. records at Iligan City that its freight and
passenger revenue for the eight- month period from January 1 to August 31, 1953 amounted to
P373,333.14 and that for the same period in 1954, that revenue amounted to P470,716.29, or an
increase of P97,383.12 (Statement D of Exh. A, 145, Record on Appeal).

Jayme interpreted those figures as signifying that the company would have realized more revenue
if the union had rendered better service. He reasoned out that there was a big volume of business
in Iligan City due to the Maria Cristina Fertilizer Plant, Iligan Steel Mill and NPC Hydroelectric Plant.
He imagined that the consignees. freight revenue during the first eight months of 1954 could have
amounted to at least P600,000 and that since it actually realized oth P 470,716.29, its loss of
freight revenue for that period could be "conservatively" estimated at least P100,000 (item 7 of
the tabulation of damages).

He stated that he attached to his report on the comparative statement of gross revenue a
certificate of the captain of the vessel Panay showing the delays in its dismissal in Iligan City as
indicated in its logbook. No such document was attached to Jayme's report.

And from the fact that the total fares received by the company during the eight-month period
were reduced in the sum of P3,951.58 (Jayme fixed the reduction at the round figure of P4,000),
he calculated that the company suffered a loss of at least P20,000 in passenger revenue up to
December 31, 1954 (Item 8 of the tabulation of damages).

Jayme also included in his report (a) damages, amounting to P10,000 as his estimate of losses
supposedly "based on interviews with disinterested parties at the wharf and city proper
customers"; (b) damages, amounting to P3,764.50 allegedly suffered in the operation of the
vessels Mindoro and Panay from September 4 to 11, 1954, consisting of extra meals, expenses.
for unloading cargo, estimated loss in passage revenue for four voyages, and estimated loss from
14 re-routed freights to competing vessels" (consisting of rice, corn and bananas), and (e) the
sum of P4,407.50 as alleged additional subsistence incurred for the crew of
the Panay and Mindoro from January 1 to August 31, 1954 (items 4, 5 and 6 of the tabulation of
damages). The records of the purser and chief steward were allegedly examined in ascertaining
those damages.

It would not be proper to allow Jayme's estimates as recoverable damages. They are not supported
by reliable evidence. They can hardly be sanctioned by the "generally accepted auditing standards"
alluded to in Jayme's report. The pertinent records of the company should have been produced in
court. The purser and steward did not testify.

The rule is that the auditor's summary should not include his conclusions or inferences (29 Am Jur
2d 519). His opinion is not evidence.

The trial court unreservedly gave credence to the conjectures of Jayme. Obviously, his inflated
guesses are inherently speculative and devoid of probative value. Furthermore, his estimate of
the unrealized freight revenue for January 1 to August 31, 1954 overlapped with his computation
of the lost freight for the unloaded 74,751 bags of fertilizer and other cargoes covering the same
period (Statement A of Exh. A).

The foregoing discussion shows Jayme's unreliable modus operandi in ascertaining the 1954 losses
which the company claimed to have suffered in consequence of the union's alleged inefficiency or
poor service. It is noteworthy that those losses were not averred with particularity and certitude
in the consignees. complaint.

The same observations apply with equal cogency to the damages, amounting to P40,407.20 as
lost freight revenue also for the year 1954 (items 1 to 3 of the tabulation of damages) which were
computed by Accountant Jayme.

Those items refer to (1) the sum of P29,900.40 as lost freight revenue on 74,751 bags of fertilizer,
already mentioned, which were booked for shipment in the consignees. vessels from January 1 to
August 31, 1954 but which were allegedly loaded in other vessels; (2) P4,339.64 as unrealized
freight revenue for other cargoes booked in the consignees. vessels but not loaded therein during
the same eight-month period, and (3) P6,167,16 as unrealized freight revenue on shutout cargoes
not loaded in the consignees. vessels during the six-day period from September 2 to 7, 1954.

Jayme allegedly based his computations on the records of the company which were not produced
in court. The union objected to Jayme's report as inadmissible under the hearsay rule or as not
being the best evidence.

Even if the presentation of the records themselves as exhibits should have been dispensed with,
yet the complaint to show good faith and fair dealing, could have brought the records in court
(manifests, bills of lading, receipts for the freights, if any, etc.) and enabled the court and the
union's counsel and its expert accountant to verify the accuracy of Jayme's summaries.

Photostatic copies of some manifests and bills of lading proving that the company was not able to
collect the stipulated freight on the alleged shutout cargoes should have been proforma. in
evidence as supporting papers for Jayme's report. No such exhibits were presented.
The flaw or error in relying merely on Jayme's summaries is that, as pointed out by witness Mariano
LL. Badelles, cargoes might be shutout due to causes other than the supposed inefficiency of the
union. He testified that cargoes were shutout deliberately by the company because they could not
be loaded in one vessel (for example, 50,000 bags of fertilizer), or a shipper had no allotment, or
because the company did not want to load cargoes like bananas (189-194 tsn May 20, 1960).
Jayme's summaries did not take into account the probability that a part of the cargo booked in
the consignees. vessel for a certain date might not have been loaded on that date but was loaded
in another vessel of the company which docked at the port a few days later, In that case, there
would be no loss of freight revenue. The mere shutting out of cargo in a particular voyage did
not ipso facto produce loss of freight revenue.

Our conclusion is that an injustice would be perpetrated if the damages, aggregating P178,579
computed and estimated in the report of Jayme, a biased witness, should be accepted at their face
value.

Damages computed by Salvador M. Magante. - The company also claims as damages, for the
period from September 12 to December 28, 1954 lost freight charges on shutout cargoes in the
sum of P62,680.12, and the sum of P20,000 as "overhead expenses. for delay of vessels in port",
as set forth by Salvador M. Magante, the consignees. chief clerk at Iligan City, in his statement,
Exhibit B (items 9 and 10 of the tabulation of damages).

Magante did not testify on his statement. Instead, accountant Jayme, substituting for Magante,
testified on that statement. Jayme said that he verified the consignees. records on which Magante
based his statement. Jayme assured the court that the figures in Magante's statement were
supported by the consignees. records.

But as to the damages, of P20,000, Jayme said that he could not certify as to their company,
because he had not finished his investigation (33 tsn March 9, 1955). In spite of that admission,
the trial court allowed that item of damages.

The trial court erred in allowing the damages, totalling P82,680.12 because Magante's statement,
Exhibit B, is hearsay. Magante should have been proforma. as a witness. Jayme was not competent
to take his place since the statement was prepared by Magante, not by Jayme. More appropriate
still, the documents and records on which the statement was based should have been proforma.
as evidence or at least brought to the court for examination by the union's counsel and its
accountant. The trial court required the production of the manifests supporting Magante's
statement (85-86 tsn march 9, 1955). Only one such manifest, Exhibit C, was produced. The
nonproduction of the other records was not explained.

Lost freight revenue and operating expenses for the forklifts. - The company claimed as damages,
the sum of P87,986.05 (P151,403.85 as erroneously computed by the consignees. counsel, 163
tsn March 11, 1950) consisting of supposed unrealized freight charges for shutout or unloaded
cargoes for the year 1955 to 1959 (Exh. E to I, Items 11 to 20 of the tabulation of damages).

The claim is covered by the company's third supplemental complaint dated March 9, 1960 wherein
it was alleged that due to the acts of the union and its officers the company had suffered damages,
of not less than P25,000 annually since 1955 (320-3, Record on Appeal). That supplemental
complaint was hurriedly filed during the trial as directed by the trial court.

The said damages, were computed in the reports of Miguel J. Siojo, an accountant who, for two
days and nights, March 8 to 10, 1960, or shortly before and during the trial, allegedly examined
the consignees. record at Iligan City, such as its cash book, cash vouchers, reports to the head
office, shipping manifests, and liquidation reports. Those records were not produced in court. Their
nonproduction was not explained. If the accountant was able to summarize the contents of those
records in two days, they could not have been very voluminous. They should have been offered in
evidence.

The alleged expenses. in the operation of the forklifts consisted of (a) the wates of the operators
hired by the company and (b) the cost of gasoline and oil and expenses. for repair.

The company's theory is that under the 1952 contract (Exh. J) the union was obligated to provide
for forklifts in the loading and unloading of cargo. Inasmuch as the union allegedly did not have
forklifts, the complaint to expedite the arrastre and stevedoring work, purchase forklifts, hired
laborers to operate the same, and paid for the maintenance expenses. The company treated those
expenses as losses or damages.
Those alleged damages, amounting to P87,986.05 are in the same category as the depreciation
allowances amounting to P38,835 which the company claimed for the forklifts, pallet boards,
tarpaulins and wire rope slings that it purchased for oth P27,215, We have stated that the
consignees. counsel ignored that depreciation in his recapitulation of the damages, claimed by the
plaintiff.

The union contends that Siojo's reports (Exh. E to I) were inadmissible evidence because they
were hearsay, meaning that the original documents, on which the reports were based, were not
presented in evidence and, therefore, appellants' counsel and the court itself were not able to
gauge the correctness of the figures or data contained in the said reports. The person who had
personal knowledge of the operating expenses. was not examined in court.

We are of the opinion that, to avoid fraud or fabrication, the documents evidencing the alleged
expenses. should have been proforma. in evidence. Siojo's reports were not the best evidence on
the said operating expenses. The explanation of Badelles with respect to shutout cargoes and our
observations on Jayme's summaries are applicable to accountant Siojo's reports.

A more substantial ground for rejecting Siojo's reports is that the said expenses, if really incurred,
cannot be properly treated as darn ages to the company.

The union's witness, Mariano LI. Badelles, testified that the consignees. forklifts were not used
exclusively on the wharf. They were used in the fertilizer and carbide plants. Sometimes, the union
supplied the driver and the gasoline for the operation of the forklifts (174-177 tsn May 20, 1960).

Moreover, as stated earlier, the company was not paying the union a single centavo for arrastre
and stevedoring work. The shippers and consignees paid for the arrastre service rendered by the
union. The union did not receive any compensation for stevedoring work.

The company complained that the union had been rendering unsatisfactory arrastre and
stevedoring services. That grievance was controverted by the union.

The use of the forklifts, tarpaulins pallet boards and wire rope slings immeasurably benefitted the
company. It is not proper nor just that the consignees. investment in those pieces of equipment
should be considered damages, just because it was able to bind the union to a one-sided contract
which exempted it from the payment of arrastre and stevedoring Considering and which impliedly
obligated the union to purchase the said equipment.

If the service rendered by the union members was unsatisfactory, it must be because the poor
stevedores were underfed and underpaid. They were underfed and underpaid because the
company was astute enough to insure that it would obtain stevedoring service without paying for
it.

If to improve the arrastre and stevedoring service, the company had to incur expenses. for the
purchase of forklifts, pallet boards, tarpaulins and wire rope slings and for the operation of the
forklifts, the union should not be required to reimburse the company for those expenses. The
company should bear those expenses. because the same redounded to its benefit.

The trial court erred in ordering the union and its officials to pay the amount of the said expenses.
as damages, to the company.

Moral damages and attorney's fees. - Considering that the consignees. claim for moral damages,
was based on the same facts on which it predicated its claim for actual deduction which we have
found to be groundless, it follows that the company, a juridical person, is not entitled to moral
damages.

Anyway, the company did not plead and prove moral damages. It merely claimed moral damages,
in the prayer of its complaint. That is not sufficient (Darang vs. Ty Belizar, L-19487, January 31,
1967, 19 SCRA 214, 222).

Under the facts of this case, we do not find any justification for awarding attorney's Considering
to the company. Hence, the trial court's award of P20,000 as attorney's Considering is set aside.

Appellants' first assignment of error, although not properly argued by their counsel, should be
sustained.
Other assignments of error. - The union and its officers contend that the lower court erred in
dismissing their counterclaims. Their counsel did not even bother to state in their brief the amount
of the counterclaims.

The union filed counterclaims for P200,000 as compensation for stevedoring services from August,
1952 to March 4, 1955; P500,000 as deduction P10,000 as attorney's Considering and P5,000 as
premium on the counterbond (251-2, Record on Appeal). In their supplemental counterclaim, they
demanded P500,000 as stevedoring charges for the period from March 4, 1955 to March 4, 1960
and additional damages, of P10,000 (308-10, Record on Appeal). The trial court dismissed the
said counterclaims.

The appellants in their three-sentence argument in support of their counterclaims alleged that the
company's bill of lading provided that the unloading of the cargoes was at the consignees. expense
(Exh. 1); that the company had not paid the sum of P500,000 as compensation for the stevedoring
services rendered by the laborers up to 1960, and that the stipulation in the arrastre contract,
"that the Compañia Maritima shall not be liable for the payment of the services rendered by the
Allied Free Workers Union for the loading and deliveries of cargoes as same is payable by the
owners and consignees of cargoes, as it has been the practice in the port of Iligan City" (Exh. J,
pp. 14, 334, 359, 500 Record on Appeal), was 'non- operative" and void, "being contrary to morals
and public policy".

That superficial argument is not well-taken. The printed stipulation in the bill of lading was
superseded by the contractual stipulation. The contract was prepared by the union officials. As
already noted, it was stipulated in the contract that the stevedoring and arrastre charges should
be paid by the shippers and consignees in consonance with the practice in Iligan City. That
stipulation was binding and enforceable.

The supposed illegality of that stipulation was not squarely raised by the union and its officials in
their answer. They merely averred that the contract did not express the true agreement of the
parties. They did not sue for reformation of the instrument evidencing the contract. The lower
court did not err in dismissing defendants' counterclaims.

The other two errors assigned by the appellants, namely, that the lower court erred in issuing a
permanent injunction against them and in executing its decision pending appeal, are devoid of
merit.

The appellants invoke section 9(d) of the Magna Carta of Labor regarding the issuance of
injunctions. That section has no application to this case because it was definitively ruled by this
Court in the certification and unfair labor practice cases that there is no employer-employee
relationship between the company and the stevedores. (They work under the cabo system).

The lower court did not execute the money aspect of its judgment. It merely required the
defendants to file a supersedeas bond of P50,000.

As to the injunction, it should be recalled that it was this Court which, in its resolution of May 16,
1962 in the execution and appeal incident (L-19651, 17 SCRA 513), allowed the company to
terminate the stevedoring and arrastre work of the union and to use another union to perform
that work.

The company had the contractual right to terminate the 1952 contract (Taylor vs. Uy Teng Piao,
43 Phil. 873). The lower court did not err in sustaining the consignees. rescission of the contract
and in enjoining the union from performing arrastre and stevedoring work.

WHEREFORE, that portion of the trial court's judgment declaring the arrastre and stevedoring
contract terminated, permanently enjoining the union and its officials from performing arrastre
and stevedoring work for the vessels of the Compañia Maritima, and dismissing defendants'
counterclaim is affirmed. The lower court's award of damages, is reversed and set aside. No costs.
SO ORDERED.
PEOPLE OF THE PHILIPPINES, G.R. No. 167955
Appellee, (Formerly G.R. No. 151275)

- versus - Promulgated:

September 30, 2009


ARMANDO PADILLA y NICOLAS,
Appellant.

x-----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

For review is the Decision[1] of the Court of Appeals (CA) dated February 23, 2005 in CA-G.R. CR-
H.C. No. 00571 which affirmed, with modification, the Decision of the Regional Trial Court (RTC)
of Malolos, Bulacan, Branch 15, in Criminal Case No. 166-M-96,[2] finding appellant Armando
Padilla y Nicolas guilty beyond reasonable doubt of the crime of Statutory Rape and sentencing
him to suffer the penalty of Death. The CA found appellant guilty of Qualified Rape and likewise
imposed on him the penalty of Death. It reduced the awards for civil indemnity from P100,000.00
to P75,000.00 and exemplary damages from P50,000.00 to P25,000.00. In addition, the CA
awarded moral damages in the amount of P50,000.00.

Consistent with the Court's decision in People v. Cabalquinto,[3] the real name of the rape victim
in this case is withheld and, instead, fictitious initials are used to represent her. Also, the personal
circumstances of the victim or any other information tending to establish or compromise her
identity, as well as those of her immediate family or household members, are not disclosed in this
decision.

The facts of the case, as established by the prosecution, are as follows:

Around 9 o'clock in the evening of February 22, 1994, AAA was inside their house located at
Marilao, Bulacan.[4] With her were her father, herein appellant, her two older brothers and her
sister BBB.[5] She was then staying in one of the rooms because she was suffering from asthma
and was taking medicine through the help of her sister, BBB.[6] On the other hand, her brothers
were already asleep in another room.[7] After AAA took her medicine, appellant told BBB to sleep
outside the room where AAA was staying.[8] When BBB went outside, appellant turned off the light
and proceeded to their kitchen.[9] Thereafter, appellant returned to the room where AAA was
staying.[10] He then took off AAA's clothes and also removed his.[11] He went on top of AAA and
tried to insert his penis into her vagina.[12] AAA resisted but appellant held her hands and boxed
her left thigh twice.[13] She was then rendered weak enabling appellant to successfully insert his
organ inside her vagina.[14] AAA felt pain, after which her vagina bled.[15] While appellant's penis
was inside her vagina, he made push and pull movements.[16] She pleaded with appellant to stop
but to no avail.[17] It was in the course of her struggle against appellant's advances that she called
on her sister for help.[18] Thereafter, she felt something come out of his penis.[19] Appellant
withdrew his penis from her vagina but remained on top of her and even began touching her
breast.[20] It was during that compromising position that BBB entered the room and saw
them.[21] Appellant immediately gathered his clothes and went to the comfort room.[22] Thereafter,
AAA cried while BBB handed her clothes to her.[23] They then slept beside each other.[24]
AAA did not complain nor tell her brothers about her ordeal because she was afraid as she was
threatened by appellant that he will hurt them and burn their house if she relates the incident to
them.[25] It was only in October 1995 that she was able to tell her aunt about her experience in
the hands of appellant.[26] Subsequently, her aunt accompanied her to the office of the National
Bureau of Investigation (NBI) where they filed a complaint against appellant.[27]
On February 1, 1996, an Information[28] was filed against appellant charging him before the RTC
of Malolos, Bulacan with the crime of statutory rape, the accusatory portion of which reads:

That on or about the 22nd day of February, 1994 in the Municipality of Marilao,
province of Bulacan, Philippines, and within the jurisdiction of this Honorable Court,
the above-named accused did then and there willfully, unlawfully and feloniously,
with lewd designs have carnal knowledge of said AAA, a minor who is 11 years old,
against her will.

All contrary to law with an aggravating circumstance that the accused is the
legitimate father of AAA.[29]

On arraignment, appellant pleaded not guilty.[30] Pre-trial conference followed.[31] Thereafter, trial
ensued.

On November 5, 2001, the RTC rendered its Decision,[32] the dispositive portion of which is as
follows:

WHEREFORE, the Court finds the accused Armando Padilla y Nicolas GUILTY beyond
reasonable doubt of the crime of Statutory Rape described and penalized under Article
335 of the Revised Penal Code and Republic Act 7659 otherwise referred to as the
Death Penalty Law, and hereby sentences him the capital penalty of DEATH.

The accused is likewise ordered to indemnify the offended party AAA damages in the
amount of P100,000.00 and to pay exemplary damages in the amount of P50,000.00
to deter other sex perverts from sexually assaulting hapless and innocent girls
especially their kin.

In passing, Justice Vicente Abad Santos once remarked there should be a special
place in hell for child molesters. The accused deserves a deeper pit because the child
he molested was his own daughter. More than anyone else, it was he to whom the
child would have looked up for

the protection of her chastity. He cynically betrayed that faith with his unnatural
lechery.

SO ORDERED.[33]

In an Order[34] dated November 6, 2001, the RTC directed the transmittal of the entire records of
the case to this Court and likewise ordered the commitment of the accused to the National
Penitentiary in Muntinlupa.

Pursuant to the Court's pronouncement in People v. Mateo,[35] which modified the provisions of the
Rules of Court insofar as they provide for direct appeals from the RTC to this Court in cases where
the penalty imposed by the trial court is death, reclusion perpetua or life imprisonment, the case
was referred to the CA for appropriate action and disposition.[36]

After a review of the case, the CA affirmed, with modification, the decision of the RTC convicting
the appellant. The dispositive portion of the CA Decision reads, thus:
WHEREFORE, premises considered, the appealed judgment dated November 5, 2001
of the Regional Trial Court of Malolos, Bulacan, Branch 15 in Criminal Case No. 166-
M-96 finding Armando Padilla y Nicolas guilty of Qualified Rape and sentencing him
to suffer the supreme penalty of DEATH is hereby AFFIRMED with the MODIFICATION
that he is ordered to pay the victim the amount of P75,000.00 as civil indemnity,
P50,000.00 as moral damages, and P25,000.00 as exemplary damages.

In accordance with A.M. No. 00-5-03-SC which took effect on October 15, 2004,
amending Section 13, Rule 124 of the Revised Rules of Criminal Procedure, let the
entire records of this case be elevated to the Supreme Court for review.

Costs against the accused-appellant.

SO ORDERED.[37]

The case was then elevated to this Court for review.

In a Resolution[38] dated July 19, 2005, the parties were required to simultaneously submit their
respective supplemental briefs if they so desire. However, both parties manifested that they are
not filing their supplemental briefs as their positions in the present case had been thoroughly
expounded in their respective appeal briefs which were forwarded to the CA. Thereafter, the case
was deemed submitted for deliberation.

Appellant assigned the following assignment of errors in his Brief:

APPLYING THE PRUNA GUIDELINES, THE TRIAL COURT GRAVELY ERRED IN


IMPOSING THE DEATH PENALTY ON ACCUSED-APPELLANT CONSIDERING THE
PROSECUTIONS FAILURE TO SUFFICIENTLY PROVE THE MINORITY OF THE
COMPLAINANT AND HER RELATIONSHIP WITH THE ACCUSED.

THE TRIAL COURT GRAVELY ERRED IN FINDING THAT THE PROSECUTION HAD
PROVEN BEYOND REASONABLE DOUBT ACCUSED-APPELLANTS GUILT FOR
QUALIFIED RAPE.

THE TRIAL COURT GRAVELY ERRED IN AWARDING DAMAGES TO THE PRIVATE


COMPLAINANT.[39]

As to the first assigned error, appellant avers that the death penalty may not be imposed because
the qualifying circumstances of minority and relationship were not properly alleged and proved by
the prosecution.

The Court agrees in part.

The first issue is whether or not the qualifying circumstances of minority and relationship were
properly alleged by the prosecution.

It is clear from the Information that AAA was alleged to be a minor who was aged eleven (11) at
the time of the commission of the crime and that the accused is her father. Contrary to the
prosecution's asseveration, it does not matter that the private complainant's relationship with the
accused was denominated as an aggravating circumstance and not as a special qualifying
circumstance.

The Court has repeatedly held, even after the amendments to the Rules of Criminal Procedure took
effect,[40] that qualifying circumstances need not be preceded by descriptive words such as
qualifying or qualified by to properly qualify an offense.[41] The Court has repeatedly qualified cases
of rape where the twin circumstances of minority and relationship have been specifically alleged in
the Information even without the use of the descriptive words qualifying or qualified by.[42] In the
instant case, the fact that AAA's relationship with appellant was described as aggravating instead
of qualifying does not take the Information out of the purview of Article 335 of the Revised Penal
Code (RPC ), as amended by Section 11 of Republic Act No. 7659 (RA 7659),[43] which was the
prevailing law at the time of the commission of the offense. Article 335 does not use the words
qualifying or aggravating in enumerating the circumstances that qualify rape so as to make it a
heinous crime punishable by death. It merely refers to the enumerated circumstances as attendant
circumstances. The specific allegation of the attendant circumstances in the Information, coupled
with the designation of the offense and a statement of the acts constituting the offense as required
in Sections 8[44] and 9[45] of Rule 110, are sufficient to warn appellant that the crime charged is
qualified rape punishable by death.

In the present case, the attendant circumstances of minority and relationship were specifically
alleged in the Information. These allegations are sufficient to qualify the offense of rape.

The next question to be resolved is whether the prosecution was able to prove appellant's
relationship with AAA as well as the latter's minority.

As to AAAs relationship with appellant, the Court agrees that the prosecution was able to prove it
beyond reasonable doubt. The Information alleged that appellant is the father of AAA. Appellant,
in turn, admitted during trial that AAA is her daughter.[46] Under prevailing jurisprudence,
admission in open court of relationship has been held to be sufficient and, hence, conclusive to
prove relationship with the victim.[47]

However, with respect to AAA's minority, the settled rule is that there must be independent
evidence proving the age of the victim, other than the testimonies of the prosecution witnesses
and the absence of denial by appellant.[48] The victim's original or duly certified birth
certificate, baptismal certificate or school records would suffice as competent evidence of her
age.[49] In the instant case, aside from the testimonies of prosecution witnesses, coupled with
appellant's absence of denial, no independent substantial evidence was presented to prove the
age of AAA. Neither was it shown by the prosecution that the said documents had been lost,
destroyed, unavailable or were otherwise totally absent.

Anent appellants failure to object to the testimony of AAA, regarding her age, the Court has held
that the failure of the accused to object to the testimonial evidence regarding the rape victims age
shall not be taken against him.[50] Even the appellant's implied admission of the victim's age, in
the absence of any supporting independent evidence, may not be considered sufficient to prove
her age. In People v. Biong,[51] the appellant testified as to the exact date when her daughter, the
complainant, was born. However, the Court held that appellant's testimony falls short of the
quantum of proof required to establish her age. As the qualifying circumstance of minority alters
the nature of the crime of rape and increases the penalty thereof, it must be proved with equal
certainty and clearness as the crime itself.[52] In the present case, the Court agrees with appellant
that the prosecution failed to discharge this burden.

Coming to the second assigned error, appellant questions the credibility of the victim, AAA, arguing
that his constitutional right to be presumed innocent should take precedence over the unfounded
claim of AAA that he raped her.
It is settled that to determine the innocence or guilt of the accused in rape cases, the courts are
guided by three well-entrenched principles: (1) an accusation of rape can be made with facility
and while the accusation is difficult to prove, it is even more difficult for the accused, though
innocent, to disprove; (2) considering that in the nature of things, only two persons are usually
involved in the crime of rape, the testimony of the complainant should be scrutinized with great
caution; and (3) the evidence for the prosecution must stand or fall on its own merits and cannot
be allowed to draw strength from the weakness of the evidence for the defense.[53]

Accordingly, in resolving rape cases, primordial consideration is given to the credibility of the
victim's testimony.[54] The settled rule is that the trial courts conclusions on the credibility of
witnesses in rape cases are generally accorded great weight and respect, and at times even
finality, unless there appear in the record certain facts or circumstances of weight and value which
the lower court overlooked or misappreciated and which, if properly considered, would alter the
result of the case.[55]

Having seen and heard the witnesses themselves and observed their behavior and manner of
testifying, the trial court stood in a much better position to decide the question of
credibility.[56] Findings of the trial court on such matters are binding and conclusive on the
appellate court, unless some facts or circumstances of weight and substance have been
overlooked, misapprehended or misinterpreted.[57] No such facts or circumstances exist in the
present case.

In this case, both the RTC and the CA are in agreement that AAAs account of her ordeal in the
hands of her father was categorical and straightforward.

Appellant contends that AAA had a grudge against him and, aside from that, she was influenced
and even instigated by her aunt, Elena Manahan, to file the complaint against appellant because
of the bitterness that Elena feels towards him. According to the appellant, this bitterness was
brought about by a misunderstanding between him and Elena involving money entrusted to the
latter by his wife which was supposed to be used for the construction of apartments.[58] However,
appellant's claim deserves scant consideration. The Court finds it incredible for private complainant
to trump up a charge of rape against appellant on the simple reason that she has a grudge against
the latter or that she was influenced by her aunt who harbors resentment against him. No woman
would cry rape, allow an examination of

her private parts, subject herself to humiliation, go through the rigors of public trial and taint her
good name if her claim were not true.[59]

Thus, the unfounded claim of evil motive on the part of the victim would not destroy the credibility
reposed upon her by the RTC and the CA because, as the Court has held, a rape victims testimony
is entitled to greater weight when she accuses a close relative of having raped her, as in the case
of a daughter against her father.[60]

Moreover, appellant's rape of private complainant was corroborated by no less than the latter's
sister who is also a daughter of appellant. The rule is that where there is no evidence that the
witness for the prosecution was actuated by improper motive, the presumption is that he was not
so actuated and his testimony is entitled to full credence.[61]
In addition, AAAs subsequent acts of disclosing and complaining about her molestation to her aunt
and the authorities and taking immediate steps to subject herself to medical examination represent
conduct consistent with her straightforward, logical and probable testimony that she was in fact
raped by appellant. They represent strong and compelling factors that enhance complainants
credibility as a witness.

Against the overwhelming evidence of the prosecution, appellant merely interposed the defense
of denial. Categorical and consistent positive identification, absent any showing of ill-motive on
the part of the eyewitness testifying on the matter, prevails over the defense of denial.[62] In the
present case, there is no showing of any improper motive on the part of the victim to testify falsely
against the appellant or to implicate him falsely in the commission of the crime; hence, the logical
conclusion is that no such improper motive exists and that the testimony is worthy of full faith and
credence. Accordingly, appellant's weak defense of denial cannot prosper.

The prevailing law at the time the crime was committed in 1994 was still Article 335 of the
RPC as amended by Section 11 of RA 7659, the first paragraph of which provides as follows:

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

1. By using force or intimidation;


2. When the woman is deprived of reason or otherwise unconscious; and

3. When the woman is under twelve years of age or is demented.

The crime of rape shall be punished by reclusion perpetua.

xxxx
Paragraph 7(1) of the same Article further provides that:

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 within the third
civil degree, or the common-law spouse of the parent of the victim.

xxxx

The elements of statutory rape, of which appellant was charged are: (1) that the accused had
carnal knowledge of a woman; and (2) that the woman is below 12 years of age.[63]

In the present case, the prosecution failed to prove the age of AAA, much less the allegation that
she was under the age of twelve when she was raped. Thus, the Court cannot hold appellant liable
for statutory rape. However, since the prosecution was able to establish, without any objection
from the defense, that appellant had carnal knowledge of AAA with the use of force, he can be
convicted of simple rape the penalty for which is reclusion perpetua. Appellant may not be
convicted of rape in its qualified form, as to impose upon him the penalty of death, considering
that, while the aggravating circumstance of relationship was proven, the prosecution failed to
establish AAA's minority by independent proof.

With respect to the last assigned error, the Court agrees with the CA in awarding civil indemnity
as well as moral and exemplary damages to AAA. However, since the penalty is reclusion perpetua,
the civil indemnity must be reduced from P75,000.00 to P50,000.00 in line with prevailing
jurisprudence.[64] Moreover, when a crime is committed with an aggravating circumstance, either
qualifying or generic, an award of P30,000.00 as exemplary damages is justified under Article
2230 of the New Civil Code.[65]
WHEREFORE, the assailed Decision of the Court of Appeals dated February 23, 2005 in CA-G.R.
CR-H.C. No. 00571 is AFFIRMED with MODIFICATION. Appellant Armando Padilla is
found GUILTY beyond reasonable doubt of the Crime of Simple Rape under Article 335 of the
Revised Penal Code, as amended, and is sentenced to suffer the penalty of reclusion perpetua,
and ordered to pay the private complainant AAA the reduced amount of P50,000.00 as civil
indemnity, P50,000.00 as moral damages and the increased amount of P30,000.00 as exemplary
damages. Costs de oficio. SO ORDERED.
[G.R. No. 159288. October 19, 2004]

JOHNSON LEE, petitioner, vs. PEOPLE OF THE PHILIPPINES and NEUGENE MARKETING,
INC., respondents.

DECISION
CALLEJO, SR., J.:

NEUGENE Marketing, Inc. (NMI) was incorporated on January 27, 1978 with funds provided
by the Uy Family. It had an authorized capital stock of P3 million divided into 30,000 shares with
a par value of P100 per share. The original incorporators, with their corresponding number of
shares and the amounts thereof, are as follows:
Johnson Lee 600 P 60,000.00
Lok Chun Suen 1,200 120,000.00
Charles O. Sy 1,800 180,000.00
Eugenio Flores, Jr. 2,100 210,000.00
Arsenio Yang, Jr. 300 30,000.00
T O T A L 6,000 P600,000.00
===== =========
There were two stock dividend declarations, one on June 7, 1980 in the amount of P60,000.00
and another on May 2, 1981 for P40,000.00. On May 15, 1986 Eugenio Flores, Jr.
assigned/divested himself of his shares in favor of Sonny Moreno, 1,050 shares; Arsenio Yang,
Jr., 700 shares and Charles O. Sy, 700 shares.[1]
On June 11, 1987, the NMI sold and delivered to the Victorias Milling Company, Inc. (VMCI),
in Victorias, Negros Occidental, 77,500 pieces of empty white bags for the price of P565,750.00.
NMI issued Charge Invoice No. 0809[2] dated June 11, 1987 to VMCI covering said sale. On June
18, 1987, VMCI purchased 100,000 pieces of empty white bags from NMI for P730,000.00 for
which NMI issued Charge Invoice No. 0810.[3] On June 25, 1987, VMCI again purchased 28,000
pieces of empty white bags from NMI for the price of P204,400.00 and the latter issued Charge
Invoice No. 0811[4] dated June 25, 1987. In payment of said purchases from NMI, VMCI drew and
issued two Bank of the Philippine Islands (BPI) Checks: Check No. 068706 dated August 3, 1987
in the amount of P565,750.00[5] and Check No. 068993 dated August 19, 1987 in the amount
of P934,400.00.[6] Both checks were payable to the order of NMI.
On October 13, 1987, stockholders owning two-thirds (2/3) of the subscribed capital stock of
NMI voted to call a stockholders meeting. One of the items in the agenda was the dissolution of
the corporation.
Pursuant thereto, a special stockholders meeting was held on October 24, 1987 in Bacolod
City. The following stockholders, who were also directors, were present and voted to dissolve the
corporation:

Name of Stockholders Number of Shares

Arsenio Yang, Jr. 1,050


Charles Sy 2,800
Lok Chun Suen 1,400
Total 5,250
Accordingly, notices were again sent to all stockholders of record, all of whom properly
acknowledged the said notices, that a meeting was to be held on November 30, 1987 to consider
the dissolution of the corporation. Again the stockholders who attended the October 24, 1987
meeting were present. Upon motion duly seconded, the dissolution was approved. Per Resolution
of the Board of Directors, the law firm of Reyes, Treyes & Fudolin Law Office was appointed as
trustee to collect all the receivables of the corporation.
At the time of the approval of the dissolution of the corporation on November 30, 1987, the
shares of each stockholder were as follows:

Name of Stockholders Total as of Nov. 30.

Johnson Lee, 600 (subscription);


60 (June 7, 1980 stock dividend);
40 (May 2, 1981 stock dividend) --------- 700 shares
Lok Chun Suen, 1,200 (subscription);
120 (June 7, 1980 stock dividend);
80 (May 2, 1981 stock dividend) ---------- 1,400 shares

Charles O. Sy, 1800 (subscription); 180


(June 7, 1980 stock dividend); 120
(May 2, 1981 stock dividend); 700
(acquisition from Eugenio Flores ---------- 2,800 shares

Arsenio Yang, Jr., 300 (subscription);


30 (June 7, 1980 stock dividend); 20
(May 2, 1981 stock dividend); 700
(acquisition from Eugenio Flores) -------- 1,050 shares

Sonny Moreno, 1,050 (acquisition


From Eugenio Flores) ----------------------- 1,050 shares
Total ---------------------------------- 7,000 shares
Pursuant to Section 11 of the Corporation Code, the Securities and Exchange Commission
approved the dissolution of the corporation on March 1, 1988 subject to compliance of the
requirements, such as the sending of notices to stockholders and publication thereof in a
newspaper of general circulation, among others.
On March 22, 1988, Johnson Lee, Sonny Moreno, Leoncio Tan and Nicanor Martin filed a
petition with the Securities and Investigation Clearing Department (SICD) of the Commission
praying, among other things, for the annulment or nullification of the Certification of Filing of
Resolution of Voluntary Dissolution of NMI for being contrary to law and its by-laws.
In the meantime, the trustee wrote the petitioner, Johnson Lee, on March 8, 1988 requesting
him to turn over to it the P1,500,150.00 he received in payment of the empty bags sold by NMI
to VCMI. However, he failed to do so.[7]
A verified complaint for three (3) counts of estafa was filed against the petitioner and Sonny
Moreno with the City Prosecutors Office. Appended to the complaint were photocopies of Charge
Invoice Nos. 0809, 0810, and 0811, issued by NMI to VMCI.
During the requisite preliminary investigation, the petitioner and Moreno submitted their
counter-affidavits. The counter-affidavit of the petitioner consisted of five pages.[8]After the
investigation, two (2) Amended Informations were filed against the petitioner and Moreno, with
the Regional Trial Court (RTC) of Negros Occidental. Except as to the particulars of the checks,
the accusatory portions of the two Informations are identical, thus:

That sometime in the month of August 1987, in the City of Bacolod, Philippines, and within the
jurisdiction of this Honorable Court, the herein accused, Johnson Lee, being then the President
and Sonny Moreno, the General Manager of Neugene Marketing, Inc., with the duty and
responsibility to collect, turn over and deliver their collections to the herein offended party,
Neugene Marketing, Inc., a corporation organized and existing by and under the laws of the
Philippines, represented herein by its Trustees, Roger Reyes, Ernesto Treyes, and Eutiquio Fudolin,
the said accused conspiring, confederating, and acting in concert far from complying with the
aforementioned obligation having collected the amount of P565,750.00 covered by BPI Check No.
068766 (sic) dated August 3, 1987 as payment of Victorias Milling Company, a customer of the
herein offended party, with intent of gain, and with unfaithfulness or abuse of confidence failed
and refused to deliver the aforementioned amount to the herein offended party, up to the present,
in spite of proper demands, but instead, did, then and there willfully, unlawfully and feloniously
convert[ed] and/or misappropriated the same to their personal use and benefit to the damage and
prejudice of the herein offended party in the aforementioned amount of FIVE HUNDRED SIXTY-
FIVE THOUSAND SEVEN HUNDRED FIFTY (P565,750.00) PESOS, Philippine Currency.

Act contrary to law.[9]

The cases were docketed as Criminal Cases Nos. 10010 and 10011.
During the trial, the original copies of Charge Invoice Nos. 0809, 0810 and 0811, and of BPI
Check Nos. 068766 and 068993 were not in the custody of the prosecution.
To prove the loss, destruction or non-availability of the original copies of the charge invoices
and checks, as well as the authenticity and due execution thereof, the prosecution presented Ban
Hua Flores, who testified that she saw the two checks in the office of the petitioner at the Singson
Building, Plaza Moraga, Sta. Cruz, Manila. Sometime in 1987, she went to the office of the VMCI
and inquired if it still had copies of the two checks and the clerk thereat informed her that it would
be difficult to locate the checks as they were stored in the bodega, where many other checks were
kept.[10] Flores also testified that the signatures at the dorsal portion of the checks were those of
the petitioner, the President of NMI, with whom she had been working, and that he indorsed and
deposited the same on September 4, 1987 with the Solidbank, instead of the BPI Plaza Cervantes
branch in Manila, the official depository bank of NMI. According to Flores, she was able to secure
microfilm copies of the checks from Solidbank, and was sure that the copies of the checks and
invoices were faithful reproductions of the original copies thereof.[11]
Testifying for the prosecution in obedience to a subpoena issued by the court, Merlita Bayaban,
Manager for Corporate Affairs of VMCI, declared that the records section of VMCI, which had
custody of all checks and other corporate records, was near her office. She testified that the
checks, including their other records, were lost during the flood in 1985.[12] She also testified on
the Certification[13] issued by Carolina Diaz, the Comptroller of VMCI, confirming the loss of the
two checks. She, however, admitted that she did not see the original copies of the checks[14] and
that she was not a signatory thereto.[15]
Thereafter, the prosecution formally offered in evidence the counter-affidavit of the petitioner
during the preliminary investigation, as well as the charge invoices and checks, viz.
G NMI Charge Invoice To prove that Victorias Milling Co., Inc.
No. 0809 dated (VMC) ordered 77,500 pieces of empty
June 11, 1987 bags from NMI on June 11, 1987 and that
these bags were delivered to VMC.
H NMI Charge Invoice To prove that VMC ordered 100,000
No. 0810 dated pieces of empty bags from NMI on June
June 18, 1987 18, 1987 and that these bags were
delivered to VMC.
I NMI Charge Invoice To prove that VMC ordered 28,000 pieces
No. 0811 dated of empty bags from NMI on June 25, 1987
June 25, 1987 and that these bags were delivered to
VMC.
J Demand letter dated To prove that in 1988, NMI made a
March 8, 1988 demand upon the accused for the delivery
signed by Atty. of the amount of of P1,500,150.00
Roger Z. Reyes representing VMCs payment for the
delivery of the empty bags mentioned in
Exhibits G, H and I.
J-1 Signature appearing To prove the genuineness, authenticity
above the and due execution of Exhibit J.
typewritten name
Roger Z. Reyes
duly identified by
the prosecution
witness, Mrs. Ban
Hua Flores as the
signature of Atty.
Roger Z. Reyes
K Bank of the Philippine To prove that VMC made a check payable
Islands (BPI) to NMI, in the amount of P565,750, as
Legaspi Village payment to NMI for the delivery of the
Extension Check empty bags mentioned in Exhibits G, H
No. 068706 dated and I.
August3, 1987 in
the amount of
P565,750.00
K-1 Signature found on To prove that the accused Lee received
the dorsal side of and was in possession of Exhibit K and
Exhibit K which that he indorsed and deposited the same.
Mrs. Flores
identified as the
signature of
Accused Johnson
Lee.

K-2 Rubberstamp To prove that Exhibit K was deposited by


showing the name accused Lee in the Solidbank which is not
of Solidbank the official depository bank of NMI, the
appearing on the official NMI depository bank being the BPI
dorsal side of Plaza Cervantes Branch.
Exhibit K
L BPI Legaspi Village To prove that VMC made a check payable
Extension Check to NMI in the amount of P934,400, as
No. 068993 dated payment to NMI for the delivery of the
Aug. 19, 1987 in empty bags mentioned in Exhibits G, H
the Amount of and I.
P934,400.00
L-1 Signature found on To prove that the accused Lee received
the dorsal side of and was in possession of Exhibit L and
Exhibit L which that he indorsed and deposited the same.
Mrs. Flores
identified as the
signature of
accused Lee
L-2 Rubberstamp To prove that Exhibit L was deposited by
showing the name accused Lee in the Solidbank which is not
of Solid bank the official depository bank of NMI, the
appearing on Official NMI depository bank being the BPI
dorsal side of Exh. Plaza Cervantes Branch.16
L
The prosecution also offered in evidence the counter-affidavit of the petitioner during the
preliminary investigation, as follows:
O Counter-Affidavit dated September 9, To prove that the proceeds of Exhibit K
1988 signed and submitted by and L in the total amount of P1,500.150
Johnson Lee in B.C.-I.S. No. 88- are in the possession and control of the
347, consisting of 5 pages accused and that both refused to deliver
the same to NMI despite demand
O-1 Signature found on page 5 of Exhibit To prove the genuineness, due execution
O above the typewritten Name and authenticity of Exhibit O, which both
Johnson Lee of the accused also admitted.
O-2 Paragraph 6 of Exhibit O found On Same purpose as in Exhibit O.
page 2 thereof.17
The accused objected to the admission of the photocopies of the checks and charge invoices
on the ground that the best evidence were the original copies thereof. On April 12, 2002, the trial
court issued an Order admitting the counter-affidavit of the petitioner, as well as the photocopies
of the checks and charge invoices, on the ground that the prosecution had adduced preponderant
evidence that the original copies of the said charges and checks were lost, destroyed or non-
available.18 The accused filed a motion for reconsideration of the order, claiming that the
prosecution failed to prove the authenticity and due execution of the offered documents, a
prerequisite to the admission thereof as secondary evidence. They also filed a Motion for Leave to
File a Demurrer to Evidence. The trial court denied both motions.
In a petition for certiorari under Rule 65 of the Rules of Court filed with the Court of Appeals,
the petitioner alleged that -

Respondent judge committed grave abuse of discretion equivalent to lack or excess of


jurisdiction, in admitting in evidence the Peoples documentary evidence, consisting of mere
unauthenticated photocopies, in flagrant violation of the Best Evidence Rule (Sec. 3, 4, 5 and 6,
Rule 130), despite the repeated vehement objections of the petitioner, thereby wantonly
refusing to exclude such clearly inadmissible evidence, which actuation as embodied in his two
(2) assailed Orders, is capricious, whimsical and patently erroneous, as to amount to an evasion
of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in
contemplation of law, and the remedy of ordinary appeal would not afford petitioner adequate
and expeditious relief, for while available eventually, such remedy is cumbersome for it requires
petitioner to undergo a useless and time-consuming trial, and thus becomes an oppressive
exercise of judicial authority; hence, the imperative necessity for the issuance of a temporary
restraining order or preliminary injunction requiring respondent judge to refrain from further
proceeding with Crim. Cases Nos. 10010 and 10011 until the Petition shall have been disposed
of, otherwise, failure of justice is sure to ensue.19
On March 14, 2003, the Court of Appeals rendered judgment dismissing the petition for lack
of merit.20
The Court of Appeals ruled that the charge invoices and the checks were not the best evidence
to prove receipt by the accused of the amounts allegedly misappropriated; hence, the best
evidence rule does not apply. It also held that even if the contents of the checks were the subject
of inquiry, based on the proofs adduced by the prosecution, such checks are admissible in
evidence. The Court of Appeals declared that, in any event, the prosecution proved the loss or
destruction or non-availability of the checks and charge invoices. The petitioners motion for
reconsideration of the decision suffered the same fate.
The petitioner then sought relief from this Court, in a petition for review on certiorari, and
raises the following issues:

1. CAN (sic) PRIVATE DOCUMENT OFFERED AS AUTHENTIC BE RECEIVED IN EVIDENCE


WITHOUT PROOF OF ITS DUE EXECUTION AND AUTHENTICITY?

2. CAN SECONDARY EVIDENCE BE ADMITTED WITHOUT PROOF OF ITS LOSS OR


UNAVAILABILITY AND EXECUTION OF THE ORIGINAL?

3. DID THE COURT OF APPEALS ERR WHEN IT RULED THAT THE FAILURE TO PRODUCE THE
ORIGINAL OF A DOCUMENTARY EVIDENCE, CONSISTING OF PRIVATE INSTRUMENTS DOES NOT
VIOLATE THE BEST EVIDENCE RULE, INASMUCH AS RECEIPT BY THE PETITIONER OF THE
AMOUNT ALLEGEDLY MISAPPROPRIATED MAY BE PROVED BY EVIDENCE OTHER THAN THE
ORIGINAL OF THE SAID PRIVATE DOCUMENTS?

4. IS THE FINDING OF THE COURT OF APPEALS THAT THE FACT OF LOSS OR DESTRUCTION OF
THE CHECKS AND THE CHARGE INVOICES HAS BEEN ESTABLISHED BY OTHER EVIDENCE,
DEVOID OF SUPPORT BY THE EVIDENCE ON RECORD AND IS, THEREFORE, A BARE
CONCLUSION OR A FINDING BASED ON SURMISE AND CONJECTURES?

5. IS ANOTHER FINDING, IN THE FORM OF ASSUMPTION, OF THE COURT OF APPEALS THAT


SINCE THE WITNESSES FOR THE PROSECUTION ARE OFFICERS WITH AUTHORITY TO KEEP THE
QUESTIONED DOCUMENTS, THEY NECESSARILY TOOK AND CONDUCTED A THOROUGH SEARCH
FOR THE MISSING DOCUMENTS, A MERE CONJECTURE OR SURMISE OR A FINDING GROUNDED
ENTIRELY ON SPECULATION?

6. DID THE COURT OF APPEALS VIOLATE THE DICTUM OF THE COLD NEUTRALITY OF AN
IMPARTIAL JUDGE WHEN IT DENIED PETITIONERS MOTION FOR INHIBITION GROUNDED ON
ITS DISPLAY OF UNDUE INTERESTS AND WHEN A MEMBER THEREOF HAS SEEN IT FIT AND
APPROPRIATE TO RECUSE HERSELF?21

The petitioner avers that the prosecution failed to prove the loss, destruction or non-
availability of the original copies of the checks and charge invoices; that diligent efforts were
undertaken to locate the original copies of the checks and invoices; and that said efforts were
futile. He asserts that the witness competent to prove the loss or destruction of the original of the
checks would be the records custodian of VMCI. Bayaban was not a competent witness thereon,
considering that she merely testified that the clerk of the VMCI failed to locate the original copies
of the checks because the latter was lazy to search for the same. The petitioner posits that the
prosecution failed to prove the due execution and authenticity of the charge invoices and the two
checks through the testimonies of Flores and Bayaban. He contends that Bayaban even admitted
that she was not privy to and had no knowledge of the execution of the said checks and of the
signatories of the checks. The petitioner further avers that, although the appellate court held that
the photocopies of the checks were admissible in evidence based on other proofs adduced by the
prosecution, it failed to specify the other proofs adverted to by it.
In its Comment on the petition, the Office of the Solicitor General asserts that through the
testimony of Bayaban, the due execution and authenticity of the checks were proved by the
prosecution as well as the admissions of the petitioner in his counter-affidavit during the
preliminary investigation. It further averred that through the testimonies of Bayaban and Flores,
it proved, with reasonable certainty, the loss or destruction of the original copies of the checks
and the charge invoices.
The issues for resolution are as follows: (a) whether or not the petition at bar is the proper
remedy of the petitioner; and (b) whether or not the trial court committed a grave abuse of its
discretion amounting to excess or lack of jurisdiction in admitting in evidence the photocopies of
the checks and charge invoices in lieu of the original copies thereof.
The Ruling of the Court

In People v. Court of Appeals,22 we held that for a petition for certiorari or prohibition to be
granted, it must set out and demonstrate, plainly and distinctly, all the facts essential to establish
a right to a writ.23 The petitioner must allege in his petition and establish facts to show that any
other existing remedy is not speedy or adequate24 and that (a) the writ is directed against a
tribunal, board or officer exercising judicial or quasi-judicial functions; (b) such tribunal, board or
officer has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting
to excess or lack of jurisdiction; and, (c) there is no appeal or any plain, speedy and adequate
remedy in the ordinary course of law.25
The trial court acts without jurisdiction if it does not have the legal power to determine the
case; there is excess of jurisdiction where the respondent, being clothed with the power to
determine the case, oversteps its authority as determined by law. There is grave abuse of
discretion where the public respondent acts in a capricious, whimsical, arbitrary or despotic
manner in the exercise of its judgment as to be said to be equivalent to lack of jurisdiction.26 Mere
abuse of discretion is not enough. A remedy is plain, speedy and adequate if it will promptly relieve
the petitioner from the injurious effects of that judgment and the acts of the tribunal or inferior
court.27 A petition for certiorari cannot co-exist with an appeal or any other adequate remedy. The
existence and the availability of the right to appeal are antithetical to the availment of the special
civil action for certiorari. These two remedies are mutually exclusive.28
In a petition for certiorari, the jurisdiction of the court is narrow in scope. It is limited to
resolving only errors of jurisdiction. It is not to stray at will and resolve questions or issues beyond
its competence such as errors of judgment. Errors of judgment of the trial court are to be resolved
by the appellate court in the appeal by and of error or via a petition for review on certiorari under
Rule 45 of the Rules of Court, as amended. Certiorari will issue only to correct errors of jurisdiction.
It is not a remedy to correct errors of judgment.29 An error of judgment is one in which the court
may commit in the exercise of its jurisdiction, and which error is reversible only by an appeal.
Error of jurisdiction is one where the act complained of was issued by the court without or in
excess of jurisdiction and which error is correctible only by the extraordinary writ of
certiorari.30 Certiorari will not be issued to cure errors made by the trial court in its appreciation
of the evidence of the parties, its conclusions anchored on the said findings and its conclusions of
law thereon.31 As long as the court acts within its jurisdiction, any alleged errors committed in the
exercise of its discretion will amount to nothing more than mere errors of judgment, correctible
by an appeal if the aggrieved party raised factual and legal issues; or a petition for review under
Rule 45 of the Rules of Court if only questions of law are involved. 32
In this case, there is no dispute that the RTC had jurisdiction over the cases filed by the public
respondent against the petitioner for estafa. The Order admitting in evidence the photocopies of
the charge invoices and checks was issued by the RTC in the exercise of its jurisdiction. Even if
erroneous, the same is a mere error of judgment and not of jurisdiction. Additionally, the
admission of secondary evidence in lieu of the original copies predicated on proof of the offeror of
the conditions sine qua non to the admission of the said evidence is a factual issue addressed to
the sound discretion of the trial court.33 Unless grave abuse of discretion amounting to excess or
lack of jurisdiction is shown to have been committed by the trial court, the resolution of the trial
court admitting secondary evidence must be sustained. The remedy of the petitioner, after the
admission of the photocopies of the charge invoices and the checks, was to adduce his evidence,
and if after trial, he is convicted, to appeal the decision to the appropriate appellate court.
Moreover, under Rule 45 of the Rules of Court, as amended, only questions of law may be properly
raised.
In the final analysis, the threshold issue in this case is whether or not the prosecution adduced
evidence, testimonial and documentary, to prove the predication to the admission of the
photocopies of the charge invoices34 and of the checks.35 The petitioner posits that the prosecution
failed to discharge its burden, in contrast to the claim of the prosecution that it succeeded in doing
so. In resolving the petition at bar, the court will have to delve into and calibrate the testimonial
and documentary evidence adduced by the parties in the trial court, which the court is proscribed
to do under Rule 45 of the Rules of Court. This was the ruling of the Court in Johnson Lee v.
People:36

In other words, certiorari will issue only to correct errors of jurisdiction and not to correct errors
of procedure or mistakes in the courts findings and conclusions. An interlocutory order may be
assailed by certiorari or prohibition only when it is shown that the court acted without or in excess
of jurisdiction or with grave abuse of discretion. However, this Court generally frowns upon this
remedial measure as regards interlocutory orders. To tolerate the practice of allowing interlocutory
orders to be the subject of review by certiorari will not only delay the administration of justice but
will also unduly burden the courts.

We find that the allegations of the petitioners are not sufficient grounds to qualify as abuse of
discretion warranting the issuance of a writ of certiorari. The petitioners present factual
contentions to absolve them from the criminal charge of estafa. The criminal cases concern
corporate funds petitioners allegedly received as payment for plastic bought by Victorias Milling
Corporation from NMI. They refused to turn over the money to the trustee after NMIs dissolution
on the ground that they were keeping the money for the protection of the corporation itself. Thus,
the elements of misappropriation and damage are absent. They argue that there is no proof that,
as officers of the corporation, they converted the said amount for their own personal benefit. They
likewise claim that they already turned the money over to the majority stockholder of the defunct
corporation.

Clearly, the said allegations are defenses that must be presented as evidence in the hearing of the
criminal cases. They are inappropriate for consideration in a petition for certiorari before the
appellate court inasmuch as they do not affect the jurisdiction of the trial court hearing the said
criminal cases but instead are defenses that might absolve them from criminal liability. A petition
for certiorari must be based on jurisdictional grounds because, as long as the respondent court
acted with jurisdiction, any error committed by it in the exercise thereof will amount to nothing
more than an error of judgment which can be reviewed or corrected on appeal.

Moreover, the petition for certiorari before the Court of Appeals was premature for the reason that
there were other plain and adequate remedies at law available to the petitioners. Under Section
3(a) of Rule 117 of the Revised Rules of Criminal Procedure, the accused can move to quash the
information on the ground that the facts do not constitute an offense. There is no showing that
the petitioners, as the accused in the criminal cases, ever filed motions to quash the subject
informations or that the same were denied. It cannot then be said that the lower court acted
without or in excess of jurisdiction or with grave abuse of discretion to justify recourse to the
extraordinary remedy of certiorari or prohibition.

But it must be stressed that, even if petitioners did file motions to quash, the denial thereof would
not have automatically given rise to a cause of action under Rule 65 of the Rules of Court. The
general rule is that, where a motion to quash is denied, the remedy is not certiorari but to go to
trial without prejudice to reiterating the special defenses involved in said motion, and if, after trial
on the merits an adverse decision is rendered, to appeal therefrom in the manner authorized by
law. And, even in the exceptional case where such denial may be the subject of a special civil
action for certiorari, a motion for reconsideration must first be filed to give the trial court an
opportunity to correct its error. Finally, even if a motion for reconsideration was filed and denied,
the remedy under Rule 65 would still be unavailable absent any showing of the grounds provided
for in Section 1 thereof. The petition before the Court of Appeals, subject of this appeal, did not
allege any of such grounds.

Furthermore, a petition for review under Rule 45 of the 1997 Revised Rules of Civil Procedure
before this Court only allows questions of law. Inasmuch as petitioners defenses alleging
circumstances that negate misappropriation definitely require appreciation of
facts, i.e., testimonial and documentary evidence, this Court cannot assess the merit of the said
claims.37

Moreover, the factual findings of the Court of Appeals are conclusive on the Court unless the
petitioner is able to establish that the findings of facts of the appellate court are not supported by
or are contrary to the evidence; or if the appellate court ignored, misconstrued or misinterpreted
vital facts and circumstances, which, if considered, could change or even reverse the outcome of
the case. In this, the petitioner failed.
Rule 130, Section 3 of the Revised Rules of Court reads:

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;

(d) When the original is a public record in the custody of a public officer or is recorded in a public
office.

Before the onset of liberal rules of discovery, and modern technique of electronic copying, the
best evidence rule was designed to guard against incomplete or fraudulent proof and the
introduction of altered copies and the withholding of the originals. But the modern justification for
the rule has expanded from the prevention of fraud to a recognition that writings occupy a central
position in the law. The importance of the precise terms of writings in the world of legal relations,
the fallibility of the human memory as reliable evidence of the terms, and the hazards of inaccurate
or incomplete duplicate are the concerns addressed by the best evidence rule.38
The rule does not apply to proof of facts collateral to the issues such as the nature, appearance
or condition of physical objects or to evidence relating to a matter which does not come from the
foundation of the cause of action or defense; or when a party uses a document to prove the
existence of an independent fact, as to which the writing is merely collated or incidental.39
The offeror of secondary evidence is burdened to prove the predicates thereof: (a) the loss or
destruction of the original without bad faith on the part of the proponent/offeror which can be
shown by circumstantial evidence of routine practices of destruction of documents;40 (b) the
proponent must prove by a fair preponderance of evidence as to raise a reasonable inference of
the loss or destruction of the original copy; and (c) it must be shown that a diligent and bona
fide but unsuccessful search has been made for the document in the proper place or places.41 It
has been held that where the missing document is the foundation of the action, more strictness in
proof is required than where the document is only collaterally involved.42
If the document is one in which other persons are also interested, and which has been placed
in the hands of a custodian for safekeeping, the custodian must be required to make a search and
the fruitlessness of such search must be shown, before secondary evidence can be admitted.43 The
certificate of the custody of the document is incompetent to prove the loss or destruction thereof.
Such fact must be proved by some person who has knowledge of such loss.44
The proponent is also burdened to prove the due execution or existence of the original as
provided in Rule 130, Section 5 of the Revised Rules of Court:

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.

Rule 132, Section 20 of the Revised Rules of Court provides the procedure on how the
authenticity and due execution of a private document which is offered as authentic may be proved:

Proof of private document. Before any private document offered as authentic is received in
evidence, its due execution and authenticity must be proved either:

(a) By anyone who saw the document executed or written; or


(b) By evidence of the genuineness of the signature or handwriting of the maker.

Any other private document need only be identified as that which it is claimed to be.

The testimony of an eyewitness as to the execution of a private document must be positive.


He must state that the document was actually executed by the person whose name is subscribed
thereto.45 The admission of that party against whom the document is offered, of the authenticity
and due execution thereof, is admissible in evidence to prove the existence, authenticity and due
execution of such document.
In this case, there is no dispute that the original copies of the checks were returned to VMCI
after the same were negotiated and honored by the drawee bank. The originals of the charge
invoices were kept by VMCI. There is also no dispute that the prosecution offered the photocopies
of the invoices in evidence to prove the contents thereof, namely that: (a) VMCI purchased
203,500 empty bags from NMI for the total price of P1,500,150.00; (b) VMCI received the said
goods in good order and condition; and (c) NMI charged VMCI for the purchase price of said goods.
The prosecution offered the checks to prove the contents thereof as well as the following: (a) VMCI
drew and delivered the checks to the NMI; (b) the said checks were endorsed by the petitioner;
and (c) the said checks were deposited by the petitioner with the Solidbank which was not the
official depository of NMI. Thus, the prosecution was burdened to prove the loss, destruction or
its inability to produce in court without bad faith on its part of the original copies of the said
invoices and checks without bad faith on its part.
We agree with the petitioner that the Certification signed by Carolina Diaz was inadmissible in
evidence against him because of the failure of the prosecution to present her as witness and to
testify on said certification.
However, the records show that, in obedience to the subpoena duces tecum and ad
testificandum issued by the trial court directing the VMCI to produce the originals of the checks
and the charge invoices, Bayaban, the Manager for Corporate Affairs of VMCI, testified that all its
records, including the charge invoices and checks, were destroyed seven years ago in a flash flood
which occurred on November 28, 1995, and that such loss/destruction was known to all the
employees of VMCI, including herself:
FISCAL ESQUILLA:
Q Please inform this Honorable Court how were you able to appear this afternoon in
connection with this case?
A The Legal Department, through the instruction of our Chief Operating Officer, inquired
from our Accounting through our comptroller, Carolina S. Diaz to produce the original
copies of the two (2) checks which was mentioned in the subpoena issued by
Prosecutor Esquilla. And then, through my direct Boss, the Chief Accountant, Mrs.
Melanie Roa, instructed me to look into the two (2) checks. And since the record is
under my Department, I immediately asked my subordinate to look for it. And, in fact,
she was also under my supervision when we looked for the document. And I have
already knowledge during the November 28, 1995 due to flash flood, we lost our
records. And in fact, we have declaration to the Bureau of Internal Revenue (BIR). And
we also exhausted some means to look for the documents, but we really cannot
produce the original copies of the checks, even the Xerox, no more copies of the checks
as requested.
Q Madam Witness, when you said that you instructed your subordinate to look for the
record, specifically, the records being asked in the subpoena, the original copies of the
checks, these two (2) checks, will you please inform this Honorable Court where these
records in 1995 including these checks, of course, have been kept by your office?
A It is kept at the Records Section Office just near my table. It is just over there. It is just
over there. The distance is very near. We have the vault power cards and all old records
were kept are downstairs and the new ones are kept upstairs. So, we dont anticipate
the flood and because that was the first time that we were hit by that flash flood.
Q So, you want to impress this Honorable Court that those records which were kept
downstairs your office were carried or destroyed by this flash flood which occurred in
1995 is that correct or is that what you mean?
A Yes, Your Honor.
Q And can you say that if these two (2) checks, subject of this case now, were there
downstairs and was destroyed by the 1995 flash flood, can you say that before this
Honorable Court?
A Yes, Your Honor.
Q Aside from these checks downstairs which were destroyed by this flash flood, what were
the other records that were kept there that were lost also?
A All our Bank Vouchers, some of our General Ledgers. Actually, I cannot memorize it, but
in our declaration to the Bureau of Internal Revenue (BIR) we have listings of those
documents which were damaged by flash flood.
Q Alright, Madam Witness. So, when this subpoena/subpoena (sic) duces tecum was
received by Victorias Milling Company, addressed to the Chief Operating Officer, do I
get from you that this was referred to the Legal Affairs of VICMICO?
A Yes, Your Honor.
COURT:
Slowly, the stenographer may not be able to catch up with you.
FISCAL ESQUILLA:
I see. Sorry, Your Honor. And from the Legal Affairs, where did it proceed, this subpoena
or this was referred to by the Legal Affairs to whom?
WITNESS:
A To Mrs. Carolina Diaz, the Comptroller.
FISCAL ESQUILLA:
Q You mentioned that she is your immediate Boss?
A I have also, next to her, Mrs. Melanie Roa, and I am next to her.
Q And you are holding office there at VICMICO together with the Comptroller, Carolina
Diaz?
A We are in the same building.
Q And does she has a cubicle of her own?
A Yes, Your Honor.
Q And your table up to her cubicle, how far is your table from her cubicle?
A They are very near. I can see from my place her office and I can see anytime she went
in and out of the room. Maybe from here up to that next room.
COURT:
About 25 to 30 meters, more or less.
FISCAL ESQUILLA:
Q And, Madam Witness, may I know from you that who requested you to testify because
this Certification bears the signature of Mrs. Diaz?
A Ah, Mrs. Diaz, in fact, ah there is a Memo from the Legal Affairs that we will submit the
Certification to the Honorable Court and the Memo was addressed to Mrs. Diaz. And
there was a note from Mrs. Diaz to my direct Boss, the Chief Accountant, and then I
was tasked by my immediate Boss to attend to this.
Q How were you able to secure a Certification?
A A Certification was issued also upon our recommendation to the Chief Accountant that
we cannot produce anymore the original copies of the said document.
Q Who gave you that Certification so that you can bring that today in Court?
A Marie Melanie G. Roa.
Q Do you have with you now the Certification?
A Yes, Your Honor.
Q And you are showing the original copy of the Certification?
A Yes, Your Honor.
Q I show to you the Certification dated December 6, 2001 issued by Carolina Diaz,
Comptroller. Do you know whose signature is this?
A That is the signature of Mrs. Carolina S. Diaz.
Q How do you know that this is her signature?
A Im very much familiar with her signature because in our day to day undertakings in the
office, I can see this in the checks she signed, and in the Office Memorandum. And, in
fact, I also prepare some of the communications for her signature.
Q For the record, Madam Witness, will you please read the first paragraph of that
Certification issued by Carolina Diaz?
A Victorias Milling Co., Inc. Certification. This is to certify that Victorias Milling Co., Inc. no
longer have the original copies of the BPI, Legaspi Village, Extension Office, Legaspi
St., Makati, Metro Manila, Check No. 068766 dated August 3, 1987 and Check No.
068993 dated August 19, 1987 as the same were destroyed by flash flood that hit the
province of Negros Occidental particularly the City of Victorias on November 28, 1995.
FISCAL ESQUILLA:
Your Honor, may I request that this Certification be marked as our Exhibit X temporarily.
COURT:
Mark it.
FISCAL ESQUILLA:
And then the signature as identified by this witness, of her immediate Boss, be encircled
and marked as Exhibit X-1.
COURT:
Mark it.
COURT INTERPRETER:
Your last Exhibit is Exhibit Y.
FISCAL ESQUILLA:
I will change my Exhibit from Exhibit X and X-1 to Z and Z-1. No further, Your Honor.
COURT:
Do you want to cross?
ATTY. MAGDAMIT:
Yes, Your Honor.
COURT:
Alright, cross for the accused Moreno. We will give the Manila lawyer the first shot.

CROSS-EXAMINATION OF THE WITNESS MERLITA T. BAYABAN CONDUCTED BY


ATTY. SIMEON M. MAGDAMIT.
ATTY. MAGDAMIT
Q Madam Witness, when you received the subpoena, it contained a photocopy of the
checks that were being requested, is that correct?
(At this juncture, there is no answer from the witness)
ATTY. MAGDAMIT: (Follow-up question)
Q Did it already contain a copy of the photocopy?
A Ah. Attached to the subpoena.
Q Have you seen this photocopy when you received the subpoena? You did not see?
A Ah, actually, the subpoena was directed to the Legal.
Q You did not see. You did not see the photocopy?
May I know the point of Compaero, Your Honor.
WITNESS: (Answers before Atty. Magdamit)
A I remember it was presented to me by Mrs. Diaz.
ATTY. MAGDAMIT
Q Mrs. Diaz. So, let me just clear this up. The subpoena did not immediately go to the
Legal, it was presented to you by Mrs. Diaz?
A No, it was presented by the Legal to our Comptroller. Then . . .
...
COURT:
Q And then to?
A And then to me.
Q There is an initial, MGR. Do you know who is that?
A That is Mrs. Melanie G. Roa, our Chief Accountant.
Q And from then, when it reached you, you were the ones who sorted through the files,
were you the one?
A Ah, my subordinate.
Q Ah, you were not the one?
A No, Your Honor.
Q Now, but you were certain I withdraw that question. When you received the subpoena
with the attached document, were you already aware that the records, the original,
were destroyed or you were not yet aware?
A Very much aware that the records were destroyed by the flash flood because it was not
only in that case that we were tasked to look for the documents. There were also
Examiners from the Bureau of Internal Revenue who asked for the documents prior to
1995 and thats our reason, we cannot produce the documents.
Q Now, wait. Were you the only one who was aware that this file was destroyed or was it
a matter that was known in your company?
A It was known to everybody.
Q It was known?
A Yeah.
Q So, can you conclude that just upon receiving the subpoena and looking at the photocopy
of the checks, you would immediately know that this was among the files that was
destroyed by the flood?
A Yes, because of the date, 1995.
Q So, despite that knowledge, it still went through the process and you still looked for it,
is that correct?
A Yes, Your Honor.
Q So, despite of your knowledge that it was destroyed, you still looked for it?
A Yeah, we still looked for it because there might be some files to prove that it was really
our check issuance. So even our files, even our Bank Recon, we cannot produce it.46
Contrary to the claim of the petitioner, the prosecution adduced preponderant evidence to
prove the existence, the due execution and the authenticity of the said checks and charge invoices
consisting of the admission of no less than the petitioner in his counter-affidavit. The petitioner
admitted therein that he received the total amount of P1,500,150.00 from VMCI in full payment
of the delivery and sale of the empty bags by NMI to VMCI and that the said amount was in the
custody of the said corporation, thus:
6. That the collection by the Corporation of the amount of P1,500,150.00 is a valid act of
the corporation; that it is the full and complete and just payment for the three deliveries
of plastic materials by the Neugene Marketing, Inc to Victorias Milling Company on June
11, 1987, June 18, 1987 and June 25, 1987 when I was and I am still the President and
Mr. Sonny Moreno, General Manager of the Neugene Marketing, Inc. and that the said
Victorias Milling Company paid in full and payments were made to the Corporation and
it is only a legitimate act of the Neugene Marketing, Inc. in the regular course of
business to receive payment for the obligations of its customers to the Corporation;
7. That with respect to the demand letter addressed to me to turn over
aforesaid P1,500,150.00, the said amount is money of the Neugene Marketing, Inc. and
the corporation is the legitimate possessor thereof and that Reyes, Treyes, and Fudolin
Law Firm has no right or authority to make the demand letter; and that it is the
corporation that holds the money and that personally, neither I nor Sonny Moreno can
just take the money to give to Reyes, Treyes and Fudolin Law Firm which cannot be
trusted and which is an unauthorized entity to receive, hold and possess said funds or
to file this case;
8. That the amount of P1,500,150.00 the corporate funds of the Neugene Marketing, Inc.
unless authorized by the members of the Board of Directors, neither I nor Sonny Moreno
can dispose of the said sum of money and it is the corporation that is holding the said
amount and holding it to answer for corporation expenses on its business operations
and to answer for obligations to its creditors including the claims of Sonny Moreno and
myself for unpaid compensation, salaries, fringe benefits, allowances and shares in the
profits of the Corporation; and that therefore, it is beyond our authority or power to
refuse the turn over or to turn over the aforesaid amount; and that if there is evidence
of the malicious and criminal intent to appropriate the same for personal benefit that is
more applicable to Reyes, Treyes and Fudolin who apparently without any legal
authority and illegally posing as a trustee when as a matter of fact, they have never
been appointed or designated a[s] trustee by the Neugene Marketing, Inc.; and
therefore, complainants should be the one held criminally responsible for the illegal
dissolution of the Neugene Marketing, Inc., and for which they will be charged with the
corresponding action for falsification and perjury for having been able to secure a
Certification of Dissolution from the Securities and Exchange Commission by means of
false pretenses and representations;47
It bears stressing that the counter-affidavit of the petitioner was adduced in evidence by the
prosecution precisely to prove the existence, authenticity and due execution of the original of the
said charge invoices and checks and the trial court admitted the same for the said purpose.
By his counter-affidavit, the petitioner, in effect, admitted the allegations of the affidavit-
complaint of the trustee of NMI:

a. Sometime on June 11, 1987, June 18, 1987 and June 25, 1987, respectively,
NEUGENE MARKETING, INC. made three (3) deliveries of plastic materials to Victorias
Milling Company, Victorias, Negros Occidental totalling P1,500,150.00 covered by
Charge invoices

b. Aforesaid charge invoices were subsequently paid by Victorias Milling Company in


full and payments delivered to Johnson Lee and/or Sonny Moreno, as President and
General Manager of Neugene Marketing, Inc.

c. As Trustee of Neugene Marketing, Inc., the Reyes, Treyes & Fudolin Law Firm sent
a demand letter addressed to Johnson Lee to turn over aforesaid P1,500,150.00.

d. As of the date of this Affidavit-Complaint, Johnson Lee and/or Sonny Moreno have failed
to deliver aforesaid sum to the herein trustee contrary to law.

4. Johnson Lee and/or Sonny Moreno have no authority whatsoever to withhold aforesaid sum
of P1,500,150.00 and their refusal to turn over aforesaid amount is evidence of a malicious and
criminal intent to appropriate the same for their own personal benefit.48

With the admissions of the petitioner in his counter-affidavit, the prosecution even no longer
needed to adduce evidence aliunde to prove the existence, due execution and the authenticity of
the charge invoices and the checks.
All told then, the prosecution mustered the requisite quantum of evidence to prove the
predicates to the admission of the photocopies of the charge invoices and checks.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The assailed decision of the
Court of Appeals is AFFIRMED. No costs. SO ORDERED.
BANK OF THE PHILIPPINE ISLANDSas G.R. No. 175466
successor-in-interest of FAR EAST BANK
AND TRUST COMPANY,
Petitioner, Promulgated:

December 23, 2009


- versus -

SMP, INC.,
Respondent.

x------------------------------------------------------------------------------------x

RESOLUTION

NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing
the Decision[1] dated August 16, 2006 and the Resolution[2]dated November 15, 2006 of the Court
of Appeals (CA) in CA-G.R. CV No. 86055.

The facts of the case, as culled by the CA from the Decision[3] dated June 6, 2005 of the Regional
Trial Court (RTC), Branch 92, Quezon City, in Civil Case No. Q-97-30372, entitled SMP, Inc. v. Far
East Bank and Trust Company, et al., are as follows:

Sometime in January 1995, Maria Teresa Michaela Ong, as Sales Executive of SMP,
Inc. undertook the acceptance and servicing of a purchase order of CLOTHESPAK
MANUFACTURING PHILS. (Clothespak) for 4,000 bags or sacks of General purpose
(GPS) polystyrene products. The ordered products were delivered, for which delivery
receipts were issued. The total selling price of the products amounted to U.S.
$118,500.00. As payment, Clothespak issued postdated checks in favor of plaintiff
SMP and delivered the same to Maria Teresa Michaela Ong. When the same were
deposited by SMP Inc. on their maturity dates, the drawee bank dishonored and
returned said checks for the reason Account Closed.

In the meantime, a case was filed by herein defendant Far East Bank and Trust
Company against Clothespak for a recovery of sum of money with prayer for issuance
of preliminary attachment. The Pasig Court granted and issued the writ dated March
14, 1995 in favor of the plaintiff bank. Real and personal properties of the defendants
were levied and attached.

Thereafter, on March 28, 1995, SMP, Inc. filed an Affidavit of Third Party Claim in
that Civil Case No. 65006, claiming ownership of the 4,000 bags of General Purpose
(GPS) polystyrene products taken at Clothespak factory worth P3,096,405.00. With
the filing by Far East Bank of the indemnity bond, the goods claimed were not
released and the Pasig Court directed SMP, Inc. to ventilate its claim of ownership in
a vindicatory action under Section 17, Rule 39 of the Revised Rules of
Court. Meanwhile, Far East Bank obtained a favorable judgment against
Clothespak. It has become final and executory which led to the implementation and
enforcement of said decision against Clothespaks properties inclusive of the goods
earlier attached. Hence, the instant case is filed by SMP, Inc. to recover from the
attaching bank the value of the goods it claims ownership and for damages.

SMP, Inc. alleges that there was wrongful attachment of the goods for ownership of
the same was never transferred to Clothespak. The former anchors its claim of
ownership over the goods by virtue of the Provisional Receipt No. 4476 issued by
Sales Executive Maria Teresa Michaela Ong to Clothespak with the words, Materials
belong to SMP Inc. until your checks clear. She testified during the trial that the
above words were in her own handwriting. The said receipt was allegedly issued to
Alex Tan of Clothespak after the checks, payment for the goods, were issued to her. It
is asserted that despite receipt by Clothespak of the goods, ownership remained with
SMP, Inc. until the postdated checks it issued were cleared.
Defendant bank, however, claims that the said provisional receipt was falsified to
negate the terms of the Sales Invoices. The phrase, materials belong to SMP, Inc.
until your checks clear, was only an insertion of plaintiffs representative in her own
handwriting. It did not bear the conformity of Clothespak. Further, defendant bank
assails the admissibility of the receipt for it is a mere triplicate copy; the original and
duplicate copies were not presented in court, in violation of the Best Evidence
Rule. Neither was there secondary evidence presented to conform to the rule.

Defendant asserted that the buyer Clothespak had already acquired ownership over
the goods at the time of attachment. As the delivery receipts clearly showed that the
goods had already been delivered and received by the buyer subject to the terms
and conditions of the sales invoices where it was provided that the sales is (sic) F.O.B.
with the loss and/or damage to the goods in transit being for the buyers account. As
provided by law, the ownership of the thing is acquired by the vendee from the
moment of delivery in any of the ways therein specified or in any manner signifying
an agreement that the possession is transferred to the vendee, and the thing sold is
considered delivered when placed in the control and possession of the said vendee.
The main issue presented is whether at the time of the attachment, plaintiff still
owned the goods levied upon, or ownership thereof had already passed to Clothespak
Manufacturing. After carefully studying the different contentions of both parties and
the pieces of evidence they have submitted, the Courts (sic) finds in favor of the
plaintiff. [4]

The dispositive portion of the RTC Decision reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against


defendant Far East Bank and Trust Company (now Bank of the Philippine Islands),
ordering the latter to pay the former the sum of Two Million Nine Hundred Sixty Three
Thousand Forty One Pesos and Fifty Three Centavos (P2,963,041.53) as actual
damages, plus costs of suit.

SO ORDERED.[5]

On appeal, the CA affirmed in toto the RTC decision in a Decision[6] dated August 16, 2006.
Petitioner filed a motion for reconsideration but the CA denied the same in a Resolution[7] dated
November 15, 2006.

Hence, this petition.

Petitioner submitted this sole issue for resolution:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT


THERE WAS A WRONGFUL ATTACHMENT THUS AFFIRMING THE DECISION OF THE
COURT A QUO THAT THE GOODS ATTACHED WERE STILL OWNED BY SMP, INC., NOT
[BY] CLOTHESPACK, WHEN THEY WERE ATTACHED.[8]

We find the petition bereft of merit.

A distinction between a contract to sell and a contract of sale is helpful in order to determine the
true intention of the parties. In a contract of sale, the title to the property passes to the vendee
upon the delivery of the thing sold; while in a contract to sell, ownership is, by agreement,
reserved for the vendor and is not to pass to the vendee until full payment of the purchase
price.[9] In a contract of sale, non-payment of the price is a negative resolutory condition. In a
contract to sell, full payment is a positive suspensive condition. In a contract of sale, the vendor
loses and cannot recover ownership of the thing sold until and unless the contract of sale is itself
resolved and set aside. In a contract to sell, the title remains with the vendor if the vendee does
not comply with the condition precedent of making payment at the time specified in the
contract.[10] In a contract to sell, the payment of the purchase price is a positive suspensive
condition, the failure of which is not a breach, casual or serious, but a situation which prevents
the obligation of the vendor to convey title from acquiring an obligatory force.[11]

In the instant case, ownership of the general purpose polystyrene products was retained by SMP,
Incorporated (SMP) until after the checks given as payment by Clothespak Manufacturing
Philippines (Clothespak) cleared. This was evidenced by a provisional receipt issued by SMP to
Clothespak. The agreement between SMP and Clothespak involved a contract to sell defined under
Article 1478 of the Civil Code.

On the other hand, the stipulation that the loss or destruction of the products during transit is on
the account of Clothespak, as buyer of the products, is of no moment. This does not alter the
nature of the contract as a contract to sell. The free on board stipulation on the contract can
coexist with the contract to sell. Otherwise stated, the provisions or stipulations in the contract --
for the reservation of the ownership of a thing until full payment of the purchase price and for the
loss or destruction of the thing would be on account of the buyer -- are valid and can exist in
conjunction with the other.

In order to discredit the claim of ownership by SMP, petitioner questions the admissibility of the
receipt presented by the former, wherein the ownership was reserved for the buyer until after full
payment of the purchase price. Petitioner claims that the same was inadmissible in evidence and
was in contravention of the best evidence rule. We beg to disagree.

The best evidence rule is the rule which requires the highest grade of evidence obtainable to prove
a disputed fact. Although there are certain recognized exceptions when the subject of inquiry is
the contents of a document, no evidence shall be admissible other than the original document
itself.[12]

However, in the instant case, contrary to petitioners contention, the receipt presented by SMP is
deemed as an original, considering that the triplicate copy of the provisional receipt was executed
at the same time as the other copies of the same receipt involving the same transaction. Section
4, Rule 130 of the Rules of Court provides:

Sec. 4. Original of document.


(a) The original of the document is one the contents of which are the subject of
inquiry.
(b) When a document is in two or more copies executed at or about the same time,
with identical contents, all such copies are equally regarded as originals.
(c) When an entry is repeated in the regular course of business, one being copied
from another at or near the time of the transaction, all the entries are likewise equally
regarded as originals.

WHEREFORE, in view of the foregoing, the instant petition is DENIED for lack of merit.
The Decision dated August 16, 2006 and the Resolution dated November 15, 2006 of the Court of
Appeals in CA-G.R. CV No. 86055 are hereby AFFIRMED. Costs against petitioner. SO ORDERED.
NORMALLAH A. PACASUM, G.R. No. 180314
Petitioner,

Promulgated:
- versus -
April 16, 2009

PEOPLE OF THE PHILIPPINES,


Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

CHICO-NAZARIO, J.:

Before Us is a petition for review on certiorari which seeks to set aside the Decision[1] of the
Sandiganbayan in Crim. Case No. 27483 promulgated on 7 August 2007 which found petitioner
Normallah A. Pacasum guilty of Falsification under Article 171, paragraph 1 of the Revised Penal
Code, and its Resolution[2]dated 22 October 2007 denying petitioners Motion for Reconsideration
and Motion for New Trial/Reception of Newly Discovered Evidence.

On 2 May 2002, petitioner was charged before the Sandiganbayan with Falsification of Public
Documents, defined and punished under paragraph 1 of Article 171 of the Revised Penal Code,
committed as follows:

That on or about August 22-23, 2000, or sometime prior or subsequent thereto in


Cotabato City, Philippines and within the jurisdiction of this Honorable Court, the
accused NORMALLAH A. PACASUM, a high ranking public official being the Regional
Secretary of the Department of Tourism in the Autonomous Region in Muslim
Mindanao, Cotabato City, while in the performance of her official functions,
committing the offense in relation thereto, taking advantage of her official position,
did then and there, willfully, unlawfully and feloniously falsified her Employee
Clearance[3] submitted to the Office of the Regional Governor of the Autonomous
Region in Muslim Mindanao, by imitating the signature of Laura Y. Pangilan, the
Supply officer I of the DOT-ARMM, for the purpose of claiming her salary for the
months of August and September 2000.[4]

On 29 May 2002, petitioner filed a Motion for Reinvestigation asking that she be given the
opportunity to file her counter-affidavit during a preliminary investigation in order that her right
to due process would not be violated.[5] Petitioner further filed an Urgent Motion for Preliminary
Investigation and/or Reinvestigation with a Prayer to Recall or Defer Issuance of Warrant of
Arrest.[6]

On 4 May 2004, the Sandiganbayan denied petitioners motion for preliminary


investigation/reinvestigation decreeing that petitioner was not deprived of the opportunity to be
heard before the Office of the Ombudsman as she had waived her right to be heard on preliminary
investigation.[7]

On 16 June 2004, petitioner, assisted by counsel de parte, pleaded not guilty to the crime
charged.[8] Thereafter, pre-trial conference was held and the Sandiganbayan issued a Pre-Trial
Order.[9] The parties did not enter any admission or stipulation of facts, and agreed that the issues
to be resolved were as follows:

1. Whether or not accused Normallah Pacasum, being then the Regional Secretary
of the Department of Tourism in the Autonomous Region in Muslim Mindanao,
Cotabato City, falsified her Employee Clearance, which she submitted to the Office
of the Regional Governor of the Autonomous Region in Muslim Mindanao, by
imitating the signature of Laura Y. Pangilan, the Supply Officer I of the DOT-
ARMM, for purposes of claiming her salary for the months of August and
September 2000;

2. Whether or not the accused took advantage of her official position in order to
commit the crime charged.[10]

The prosecution presented three witnesses, namely: Subaida K. Pangilan,[11] former Human
Resource Management Officer V of the Autonomous Region in Muslim Mindanao (ARMM); Laura Y.
Pangilan, former Supply Officer of the Department of Tourism, ARMM;[12] and Rebecca A.
Agatep,[13] Telegraph Operator, Telegraph Office, Quezon City.

Subaida K. Pangilan (Pangilan) testified that she was a retired government employee and
formerly a Human Resource Management Officer V of the ARMM which position she held from May
1993 to 28 May 2003. As such, one of her duties was to receive applications for clearance of
Regional Secretaries of the ARMM.She explained that an Employees Clearance was a requirement
to be submitted to the Office of the Regional Director by retiring employees, employees leaving
the country or those applying for leave in excess of thirty days. The person applying for clearance
shall get a copy of the employees clearance and shall accomplish the same by having the different
division heads sign it.

Mrs. Pangilan disclosed that she knew the accused-petitioner Norma Pacasum to be the
former Regional Secretary of the Department of Tourism (DOT), ARMM. She narrated that in the
year 2000, petitioner submitted the original of an Employees Clearance to her office in compliance
with the memorandum[14] dated 8 August 2000 issued by Governor Nur Misuari, directing all
officers and employees to clear themselves of property and money accountabilities before their
salaries for August and September 2000 would be paid. Upon inspection of the Employees
Clearance, she noticed that the signature of Laura Pangilan (Laura) contained in said document
was not hers. She said Laura Pangilan was her daughter-in-law, and that the latters signature was
very familiar to her. Mrs. Pangilan immediately photocopied[15] the original Employees Clearance
with the intention of sending the same to her daughter-in-law for the purpose of having the latter
confirm if the signature on top of her name in the Employees Clearance was hers. There being no
messenger available, she instead called up Laura to come to her office to verify the
signature. Laura, whose office was only a walking distance away, came and inspected the
clearance, and denied signing the same. After she denied that she signed the clearance, and while
they were conversing, the bearer of the Employees Clearance took said document and left.
Mrs. Pangilan said she did not know the name of the person who took the original of the
Employee Clearance, but said that the latter was a niece and staff member of the petitioner. She
said that all the signatures[16] appearing in the Employees Clearance were all genuine except for
Lauras signature.

The next witness for the prosecution was Laura Y. Pangilan, the person whose signature
was allegedly imitated. Laura testified that presently she was holding the position of Human
Resource Management Officer II of the Department of Tourism - ARMM. Prior to said position, she
was the Supply Officer of the DOT - ARMM from 1994 to January 2001. As such, she issued
memorandum receipts (MR) to employees who were issued government property, and received
surrendered office properties from officers and employees of the DOT - ARMM. She said she knew
the accused, as she was their Regional Secretary of the DOT - ARMM.
Laura recounted that on 9 August 2002, Marie Cris[17] Batuampar, an officemate and niece
of petitioner Pacasum, went to her house with the Employees Clearance of petitioner. Batuampar
requested her to sign in order to clear petitioner of all property accountabilities. She refused to
sign the clearance because at that time, petitioner had not yet turned over all the office properties
issued to her. A few days later, she was called by her mother-in-law to go to the latters office and
inspect the Employees Clearance submitted by the representative of petitioner. She went to her
mother-in-laws office and was shown the Employees Clearance of petitioner. Upon seeing the
same, she denied the signature[18] appearing on top of her name. Thereupon, Marie Cris
Batuampar, the representative of petitioner, took the Employees Clearance and left.
Laura revealed she executed a joint complaint-affidavit[19] dated 28 August 2001 regarding
the instant case. She issued a certification[20] with a memorandum receipt[21] dated 23 November
1999, signed[22] by petitioner. The certification attested she did not sign petitioners Employees
Clearance because all the office properties issued to petitioner had not been turned over or
returned to the Supply Officer of the DOT - ARMM. Finally, she said that as of 2 January 2005, her
last day as Supply Officer, petitioner had not returned anything.

The last witness for the prosecution, Rebecca A. Agatep, Telegraph Operator, Telegraph
Office, Quezon City, testified that she had been a telegraph operator for nineteen years. On 31
May 2005, she was at the Telegraph Office in Commission on Audit, Quezon City. She received
two telegrams[23] for transmissions both dated 31 May 2005. One was addressed to petitioner and
the other to Marie Cris Batuampar. Upon receiving said documents, she transmitted the documents
through telegram. The telegram addressed to petitioner was received by her relative, Manso
Alonto, in her residence on 1 June 2005, while that addressed to Ms. Batuampar was transmitted
to, and received in, Cotabato City on 1 June 2005.[24]

On 4 July 2005, the prosecution formally offered[25] its documentary evidence consisting of
Exhibits A, A-1, A-1-a, A-2, A-2-a, A-2-b, A-2-c, A-2-d, A-2-e, A-2-f, A-2-g, A-3, A-3-1, A-4, A-
4-a, A-5, A-6, A-7, A-8, and A-9, to which the accused filed her objections.[26] The trial court
admitted all the exhibits on 10 August 2005.[27]

For the defense, petitioner and Atty. Jose I. Lorena, former ARMM Regional Solicitor
General, took the stand.

For her defense, petitioner testified that she was appointed by ARMM Regional Governor
Nur Misuari (Gov. Misuari) as Regional Secretary of the DOT of the ARMM in 1999. She said she
was familiar with the Memorandum dated 8 August 2000 issued by Gov. Misuari directing all ARMM
officers and employees to liquidate all outstanding cash advances on or before 31 August 2000 in
view of the impending expiration of the Governors extended term. At first, she said the
memorandum applied to her, she being a cabinet secretary, but later she said same did not apply
to her because she had no cash advances. Only those with cash advances were required to get an
Employees Clearance before they could receive their salaries. She then instructed her staff to work
on her salary.

Petitioner said she did not know where the original of her Employees Clearance was. Neither
did she know if the signature of Laura Pangilan therein had been imitated or forged. She likewise
said that although the Employee Clearance was in her name, she did not cause Lauras signature
to be affixed thereto.
Petitioner disclosed that she was able to get her salary for the month of August 2000
sometime in said month, because ARMM Executive Secretary Randolph C. Parcasio told her that
she did not need a clearance before she could get her salary because she was re-appointed.[28]

Petitioner explained that she has not seen the original of the subject Employees
Clearance.[29] When she first saw the photocopy of the Employees Clearance, the signature of
Laura was not there. She was able to see the photocopy of the Employees Clearance again after
this case had been filed with the Sandiganbayan, already with the alleged signature of
Laura. Petitioner said it was not she who placed or caused Lauras purported signature to be affixed
there.

Petitioner added that the memorandum of Gov. Misuari did not apply to her, because she
had no cash advances and she could receive her salary even without clearance. At that time, she
said the Cashier, Accountant and the Auditor checked her records and found that she had no cash
advances.[30] Because she was elsewhere, she instructed her secretary to get her salary. However,
she was informed by her staff that her salary could not be released because the Office of the
Governor required a clearance. Her staff worked on her clearance, the purpose of which was for
the release of her salary for the months of August and September 2000. She was able to get all
the needed signatures except for Lauras signature. With the refusal of Laura to sign, her staff
went to Executive Secretary Parcasio and explained the situation.

Petitioner denied receiving a telegram from Asst. Special Prosecutor I Anna Isabel G.
Aurellano ordering her to submit to the Office of the Special Prosecutor the original of the
Employees Clearance of the DOT-ARMM issued in her name sometime on 22-23 August 2000.
On cross-examination, petitioner said that prior to her receipt of her salary, she believed
that an Employees Clearance was necessary, and for this reason she had this document prepared
by her staff. She said her Employees Clearance was always in the possession of Marie Cris, her
assistant secretary. It was Marie Cris who showed her the document twice.[31]

Atty. Jose I. Lorena, former ARMM Solicitor General, testified that he was familiar with the
Memorandum dated 8 August 2000 issued by Gov. Misuari because the same was the product of
consultation among him, Gov. Misuari and ARMM Executive Secretary Parcasio. He explained that
this memorandum pertained only to outstanding cash advances. He added that an Employees
Clearance was not a requirement and was not sufficient to comply with the directive contained in
the memorandum, because what was required for the purpose of release of salaries was a credit
notice from the Resident Auditors of the Commission on Audit.

On 16 February 2007, the defense formally offered its documentary exhibits [32] consisting
of Exhibits 1 to 5, with sub-markings. The prosecution objected to the purpose for which Exhibit
1 was offered. The trial court admitted all the defense exhibits.[33]

On 7 August 2007, the Sandiganbayan rendered the assailed decision convicting petitioner
of the crime charged in the information. The dispositive portion of the decision reads:

WHEREFORE, judgment is hereby rendered finding accused Normallah A.


Pacasum GUILTY beyond reasonable doubt of the offense charged in the Information
and, with the application of the Indeterminate Sentence Law and without any
mitigating or aggravating circumstance, hereby sentencing her to suffer the
indeterminate penalty of TWO (2) YEARS, FOUR (4) MONTHS and ONE (1) DAY
OF prision correccional as minimum to EIGHT (8) YEARS and ONE (1) DAY of prision
mayor as maximum with the accessories thereof and to pay a fine of TWO THOUSAND
PESOS (P2,000.00) with costs against the accused.[34]

The Sandiganbayan found the signature of DOT-ARMM Supply Officer Laura Y. Pangilan
appearing in the Employees Clearance of petitioner to have been falsified/forged. It did not give
much weight on petitioners defense denying she was the one who actually falsified her Employees
Clearance by imitating the signature of Laura Pangilan and that she had no idea about the alleged
falsification, because it was her assistant secretary, Marie Cris Batuampar, who worked for her
clearance and the one who submitted the said clearance to the Office of the Regional Governor of
the ARMM. The trial court found said denial unsubstantiated and ruled that while there was no
direct evidence to show that petitioner herself actually falsified/forged the signature of Laura
Pangilan, there were circumstances that indicated she was the one who committed the
falsification/forgery, or who asked somebody else to falsify/forge the subject signature in her
Employees Clearance. The Sandiganbayan added that considering it was petitioner who took
advantage of and profited from the use of the falsified clearance, the presumption was that she
was the material author of the falsification. Despite full opportunity, she was not able to rebut said
presumption, failing to show that it was another person who falsified/forged the signature of Laura
Pangilan, or that another person had the reason or motive to commit the falsification/forgery or
could have benefited from the same.

The Sandiganbayan likewise did not sustain petitioners contention that she did not stand to
benefit from the falsification of her Employees Clearance and from the submission thereof to the
Office of the Regional Governor, because she allegedly had no existing cash advances. She claimed
that an Employees Clearance was not needed to enable her to draw her salary for the months of
August and September 2000 under the 8 August 2000 Memorandum of Gov. Misuari, and that the
presumption that he who benefits from the falsification is presumed to be the author thereof does
not apply to her. The lower court explained that the aforementioned memorandum applied to
petitioner, she being an official of the ARMM. It said that the applicability of said memorandum to
petitioner was even admitted by her when she, in compliance therewith, instructed her
staff/assistant secretary to work for her Employees Clearance to enable her to collect her salary
for the month of August 2000. It said that the fact that she (allegedly) had no existing cash
advances did not exempt her from the coverage of the memorandum, because she must show she
had no cash advances and the only way to do this was by obtaining a clearance.

Petitioner argued that the photocopy of her Employees Clearance had no probative value in
proving its contents and was inadmissible because the original thereof was not presented by the
prosecution. The Sandiganbayan did not agree. It said that the presentation and admission of
secondary evidence, like a photocopy of her Employees Clearance, was justified to prove the
contents thereof, because despite reasonable notices (telegrams) made by the prosecution to
petitioner and her assistant secretary to produce the original of her Employees Clearance, they
ignored the notice and refused to present the original of said document.

On 21 August 2007, petitioner filed a motion for reconsideration of the decision of the
Sandiganbayan[35] to which the prosecution filed a Comment/Opposition.[36] Subsequent thereto,
petitioner filed a Supplement to Accuseds Motion for Reconsideration & Motion for New
Trial/Reception of Newly Discovered Evidence.[37] Petitioner prayed that her motion for new trial
be granted in order that the testimony of Marie Cris Batuampar be introduced, the same being
newly discovered evidence. The prosecution filed its Opposition.[38]
On 22 October 2007, the Sandiganbayan issued its resolution denying petitioners motion
for reconsideration for lack of merit; and the motion for new trial, because the evidence sought to
be presented did not qualify as newly discovered evidence.[39]

On 16 November 2007, the instant petition was filed.

In our Resolution[40] dated 27 November 2007, respondent People of the Philippines,


through the Office of the Special Prosecutor (OSP), was required to file its Comment on the
petition.[41] After two motions for extension to file comment on the petition, which were granted
by this Court, the OSP filed its Comment dated 18 February 2008.[42] Petitioner was required[43] to
file a Reply to the Comment, which she did on 5 June 2008.[44]

On 5 August 2008, the Court resolved to give due course to the petition for review
on certiorari and required the parties to submit their respective memoranda within thirty (30) days
from notice. They filed their respective memoranda on 21 November 2008 and on 5 November
2008.[45]

Petitioner assails her conviction arguing that the Sandiganbayan committed grave abuse of
discretion, amounting to lack or excess of jurisdiction, in:

I. Finding that petitioner benefited from the alleged falsification, hence must be
deemed the author thereof, when the evidence on record does not support,
but even contradicts, such a conclusion.

II. Presuming that petitioner had unliquidated cash advances hence was required
under the Misuari Memorandum to submit her Employees Clearance to clear
herself of these, when there is no evidence to that effect and the prosecution
even admitted so.

III. Not resolving doubt as to the authenticity of the photocopy of the allegedly forged
Employees Clearance, in favor of the innocence of the Accused.

IV. In short-circuiting the right of the petitioner to present additional evidence on her
behalf, thus denying her due process.[46]

Petitioner contends that under the Misuari memorandum dated 8 August 2000, she was not
required to file an Employees Clearance to draw her salary, since what was required under said
memorandum was a Credit Notice from the COA. She further contends that since she was not
required to file said Employees Clearance because she had no cash advances, the signature in her
Employees Clearance was irrelevant and a non-issue because what was required was a Credit
Notice.

As to the first contention, we agree with petitioner that under the aforesaid memorandum,
what was required before she could draw her salaries was a Credit Notice from the COA and not
an Employees Clearance. The full text of the Memorandum[47] form the Regional Governor reads:

MEMORANDUM FROM THE REGIONAL GOVERNOR

TO: ALL CONCERNED


SUBJECT: AS STATED
DATE: AUGUST 8, 2000

1. In view of the impending expiration of the extended term of the


undersigned, it is hereby directed that all outstanding cash advances be
liquidated on or before August 31, 2000.
2. Effective September 1, 2000, the salaries and other emoluments of all
ARMM officials/employees with unliquidated cash advance shall be withheld
until they have settled their accounts and a corresponding Credit Notice is
issued to them by the Commission on Audit.

3. Due to budgetary and financial constraints brought about by the


drastic cut of our budget, memorandum dated December 01, 1998 is hereby
reiterated. Therefore all releases for financial assistance is hereby suspended
effective immediately.

4. For strict compliance.

PROF. NUR MISUARI

It is clear from said memorandum that what was required from officers/employees who had
unliquidated cash advances was the corresponding Credit Notice issued by the COA after they had
settled their accounts. There was indeed no mention of any Employees Clearance therein. Up to
this point, we agree with petitioner. However, on her contention that the signature of Laura
Pangilan in her Employees Clearance was irrelevant and a non-issue, we disagree. Whether the
signature of Laura Pangilan was imitated or not is the main issue in this case for falsification.

From the memorandum of Gov. Misuari, the Credit Notice requirement was effective only starting 1
September 2000 and not before. In the case at bar, the information charges petitioner not with
failure to secure a Credit Notice, but with allegedly falsifying her Employees Clearance by imitating
the signature of Laura Y. Pangilan, Supply Officer I of the DOT-ARMM. The Credit Notice
requirement was therefore irrelevant and a non-issue as regards the release of salaries prior to 1
September 2000.

The questions to be answered are: (1) Was the signature of Laura Pangilan in petitioners
Employees Clearance imitated? If yes, (2) Who imitated or caused the imitation of said signature?

On the first query, the same was answered by Laura Pangilan. She said that the signature in
petitioners Employees Clearance was not hers. The same was an imitation.When a person whose
signature was affixed to a document denies his/her signature therein, a prima facie case for
falsification is established which the defendant must overcome.[48]

Petitioner argues there was no need for her to file an Employees Clearance to draw her salary. She
adds that Atty. Randolph C. Parcasio, Executive Secretary of the ARMM, told her and her secretary,
Marie Cris Batuampar, that she did not need an Employees Clearance because she was re-
appointed.[49]

These arguments are untenable. There was a need for petitioner to file an Employees
Clearance not only for compliance with the Misuari memorandum but, more importantly, because
her term of office was about to end, since her position was coterminous with the term of Gov.
Misuari, the appointing authority.[50] She even admitted that before she received her salary for
August, 2000,[51] an Employees Clearance was necessary.[52] Moreover, her claim that Atty.
Parcasio told her and her secretary that she did not need an Employee Clearance to get her salary
does not persuade us. In fact, we find her alleged re-appointment, when she was working for her
Employees Clearance at around August 2000, improbable. How could she have been re-appointed
by Gov. Alvarez,[53] whom she claims re-appointed her sometime in the year 2000, when Gov.
Misuari was still the Regional Governor of the ARMM when she had her Employees Clearance
prepared sometime in August 2000? Clearly, her statement that she did not need an Employees
Clearance because she was re-appointed does not inspire belief.

Petitioner faults the Sandiganbayan for applying the presumption that if a person had in his
position a falsified document and he made use of it (uttered it), taking advantage of it and profiting
thereby, he is presumed to be the material author of the falsification. He argues that the
Sandiganbayan overlooked the fact that there was no evidence to prove that petitioner made use
of or uttered the Employees Clearance, because there was no evidence that she submitted it -- if
not, at least caused it to be submitted to the Office of the Regional Governor. To support such
claim, she said there were no receipt marks in the Employees Clearance to show that the Office
of the Regional Governor received said documents.

It is to be made clear that the use of a falsified document is separate and distinct from the
falsification of a public document. The act of using falsified documents is not necessarily included
in the falsification of a public document. Using falsified documents is punished under Article 172
of the Revised Penal Code. In the case at bar, the falsification of the Employees Clearance was
consummated the moment the signature of Laura Pangilan was imitated. In the falsification of a
public document, it is immaterial whether or not the contents set forth therein were false. What is
important is the fact that the signature of another was counterfeited.[54] It is a settled rule that in
the falsification of public or official documents, it is not necessary that there be present the idea
of gain or the intent to injure a third person for the reason that in the falsification of a public
document, the principal thing punished is the violation of the public faith and the destruction of
the truth as therein solemnly proclaimed.[55] Thus, the purpose for which the falsification was
made and whether the offender profited or hoped to profit from such falsification are no longer
material.

The records further show that petitioner used or uttered the Employees Clearance. The fact
that the same was circulated to the different division heads for their signatures is already
considered use of falsified documents as contemplated in Article 172. The lack of the stamp mark
Received in the Employees Clearance does not mean that said document was not received by the
Office of the Regional Governor. We find the certification signed by Atty. Randolph C. Parcasio,
Executive Secretary of Office of the Regional Governor - ARMM, as contained in the Employees
Clearance, to be sufficient proof that the same was submitted to the Office of the Regional
Governor. It must be stressed that the Executive Secretary is part of the Office of the Regional
Governor.

Petitioner denies having actually falsified her Employees Clearance by imitating the
signature of Laura Pangilan, claiming that she had no knowledge about the falsification because it
was her assistant secretary, Marie Cris Batuampar, who worked for her Employees Clearance.

Petitioners denial, unsubstantiated and uncorroborated, must certainly fail. Denial, when
unsubstantiated by clear and convincing evidence, is negative and self-serving evidence, which
deserves no greater evidentiary value than the testimony of credible witnesses who testify on
affirmative matters.[56] Denial is intrinsically weak, being a negative and self-serving assertion.[57]

In the case at bar, petitioner did not even present as her witness Marie Cris Batuampar, the
person whom she instructed to work for her Employees Clearance.Her failure to present this person
in order to shed light on the matter was fatal to her cause. In fact, we find that the defense never
intended to present Marie Cris Batuampar as a witness. This is clear from the pre-trial order,
because the defense never listed her as a witness.[58] Her attempt to present Ms. Batuampar to
help her cause after she has been convicted is already too late in the day, and Ms. Batuampars
testimony, which is supposed to be given, cannot be considered newly discovered evidence as to
merit the granting of her motion for new trial and/or reception of newly discovered evidence.

The lack of direct evidence showing that petitioner actually imitated the signature of Laura
Pangilan in her Employees Clearance will not exonerate her. We have ruled that it is not strange
to realize that in cases of forgery, the prosecution would not always have the means for obtaining
such direct evidence to confute acts contrived clandestinely. Courts have to rely on circumstantial
evidence consisting of pieces of facts, which if woven together would produce a single network
establishing the guilt of the accused beyond reasonable doubt.[59] We totally agree with the
Sandiganbayan, which said:

While there is no direct evidence to show that the accused herself actually
forged the signature of Laura Pangilan in the Employees Clearance in question, the
Court nevertheless finds the following circumstances, obtaining in the records, to
establish/indicate that she was the one who committed the forgery or who asked
somebody else to forge or caused the forgery of the signature of Laura Pangilan in
her Employees Clearance, to wit

1. that the accused instructed her staff Maricris Batuampar to work for her Employees
Clearance in compliance with the Memorandum of ARMM Regional Governor Nur
Misuari and that the forged signature of Laura Pangilan was affixed on her clearance
are strong evidence that the accused herself either falsified the said signature or
caused the same to be falsified/imitated, and that possession by Maricris of the
falsified clearance of the accused is possession by the accused herself because the
former was only acting upon the instructions and in behalf of the latter;

2. that it was the accused who is required to accomplish and to submit her Employees
Clearance to enable her to collect her salary for the months of August and September
2000 is sufficient and strong motive or reason for her to commit the falsification by
imitating the signature of Laura Pangilan or order someone else to forge it; and

3. that the accused was the only one who profited or benefited from the falsification
as she admitted that she was able to collect her salary for the month of August 2000
after her falsified Employees Clearance was submitted and approved by the ORG-
ARMM and therefore, she alone could have the motive for making such falsification.

On the basis of the foregoing circumstances, no reasonable and fair-minded man


would say that the accused a Regional Secretary of DOT-ARMM had no knowledge of
the falsification. It is an established rule, well-buttressed upon reason, that in the
absence of a satisfactory explanation, when a person has in his possession or control
a falsified document and who makes use of the same, the presumption or inference
is justified that such person is the forger or the one who caused the forgery and,
therefore, guilty of falsification. Thus, in People v. Sendaydiego, the Supreme Court
held that

The rule is that if a person had in his possession a falsified document


and he made use of it (uttered it), taking advantage of it and profiting
thereby, the presumption is that he is the material author of the
falsification. This is especially true if the use or uttering of the forged
documents was so closely connected in time with the forgery that the
user or possessor may be proven to have the capacity of committing the
forgery, or to have close connection with the forgers. (U.S. v. Castillo,
6 Phil. 453; People v. De Lara, 45 Phil. 754; People v. Domingo, 49 Phil.
28; People v. Astudillo, 60 Phil. 338; People v. Manansala, 105 Phil.
1253).

In line with the above ruling, and considering that it was the accused who took
advantage and profited in the use of the falsified Employees Clearance in question,
the presumption is inevitable that she is the material author of the falsification. And
despite full opportunity, she was not able to rebut such presumption by failing to
show that it was another person who forged or falsified the signature of Laura
Pangilan or that at least another person and not she alone, had the reason or motive
to commit the forgery or falsification, or was or could have been benefited by such
falsification/forgery.[60]

The circumstances enumerated by the Sandiganbayan, as against the denials of petitioner,


convince us to apply the rule that in the absence of satisfactory explanation, one who is found in
possession of, and who has used, a forged document, is the forger and, therefore, guilty of
falsification.[61] The effect of a presumption upon the burden of proof is to create the need of
presenting evidence to overcome the prima facie case created, which, if no contrary proof is
offered, will thereby prevail.[62] A prima facie case of falsification having been established,
petitioner should have presented clear and convincing evidence to overcome such burden. This,
she failed to do.

Petitioner assails the weight given by the Sandiganbayan to the testimonies of the two
Pangilans when they failed to report the alleged falsification to the police or alert the Office of the
Regional Governor of said falsification, or tried to stop petitioner from getting her salaries.

We do not agree with the petitioner. It is a settled rule that the findings of fact of the trial court,
its calibration of the testimonies of the witnesses and its assessment of the probative weight
thereof, as well as its conclusions anchored on said findings, are accorded high respect if not
conclusive effect.[63] The determination of the credibility of witnesses is the domain of the trial
court, as it is in the best position to observe the witnesses demeanor.[64] The Sandiganbayan has
given full probative value to the testimonies of the prosecution witnesses. So have we. We find no
reason to depart from such a rule.

Aware that the prosecution failed to present the original from which the photocopy of petitioners
Employees Clearance was supposed to have been obtained, she maintains that the Sandiganbayan
should have doubted the authenticity and probative value of the photocopy of the Employees
Clearance.

The Sandiganbayan correctly admitted in evidence the photocopy of the Employees Clearance. We
agree when it ruled:

Section 3, Rule 130 of the Rules of Court provides that when the subject of
inquiry is the contents of a document, no evidence shall be admissible other than the
original document itself. The purpose of the rule requiring the production by the
offeror of the best evidence if the prevention of fraud, because if a party is in
possession of such evidence and withholds it and presents inferior or secondary
evidence in its place, the presumption is that the latter evidence is withheld from the
court and the adverse party for a fraudulent or devious purpose which its production
would expose and defeat. Hence, as long as the original evidence can be had, the
Court should not receive in evidence that which is substitutionary in nature, such as
photocopies, in the absence of any clear showing that the original has been lost or
destroyed or cannot be produced in court. Such photocopies must be disregarded,
being inadmissible evidence and barren of probative weight.

The foregoing rule, however, admits of several exceptions. Under Section 3(b)
of Rule 130, secondary evidence of a writing may be admitted 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. And to warrant the
admissibility of secondary evidence when the original of a writing is in the custody or
control of the adverse party, Section 6 of Rule 130 provides as follows:
Sec. 6. When original document is in adverse partys custody or
control. If the document is in the custody or control of the adverse party,
he must have reasonable notice to produce it. If after such notice and
after satisfactory proof of its existence, he fails to produce the
document, secondary evidence may be presented as in the case of loss.

Thus, the mere fact that the original is in the custody or control of the adverse
party against whom it is offered does not warrant the admission of secondary
evidence. The offeror must prove that he has done all in his power to secure the best
evidence by giving notice to the said party to produce the document which may be
in the form of a motion for the production of the original or made in open court in the
presence of the adverse party or via a subpoena duces tecum, provided that the party
in custody of the original has sufficient time to produce the same. When such party
has the original of the writing and does not voluntarily offer to produce it, or refuses
to produce it, secondary evidence may be admitted.

Here, the accused admitted that her Employees Clearance was always in the
possession of her assistant secretary, [Marie Cris] Batuampar. So the prosecution in
its effort to produce the original copy of the said Employees Clearance of the accused,
thru Assistant Special Prosecutor Anna Isabel G. Aurellano of the Office of the
Prosecutor, sent on May 31, 2005 thru the COA Telegraph Office at Quezon City two
(2) telegram subpoenas addressed to accused Normallah Pacasum, and [Marie Cris]
Batuampar ordering them to submit to the Office of the Special Prosecutor on or
before June 8, 2005, the original of the Employees Clearance in the name of
Normallah Alonto Lucman-Pacasum for the release of her August and September
2000 salary as DOT Regional Secretary. Notwithstanding receipt of the said telegram
subpoena by her uncle Manso Alonto in her residence on June 1, 200[5], the accused
did not appear before or submit to Assistant Special Prosecutor Anna Isabel G.
Aurellano, the original of the said Employees Clearance, much less offered to produce
the same.

Under the circumstances, since there was proof of the existence of the
Employees Clearance as evidenced by the photocopy thereof, and despite the
reasonable notices made by the prosecution to the accused and her assistant
secretary to produce the original of said employees clearance they ignored the notice
and refused to produce the original document, the presentation and admission of the
photocopy of the original copy of the questioned Employees Clearance as secondary
evidence to prove the contents thereof was justified.[65]

This Court decrees that even though the original of an alleged falsified document is not, or may
no longer be produced in court, a criminal case for falsification may still prosper if the person
wishing to establish the contents of said document via secondary evidence or substitutionary
evidence can adequately show that the best or primary evidence the original of the document is
not available for any of the causes mentioned in Section 3,[66] Rule 130 of the Revised Rules of
Court.

Petitioner claims she was denied due process when the Sandiganbayan severely restricted her
time to present evidence, allowing her only two hearing dates, thus resulting in her failure to
present another important witness in the of person of Atty. Randolph Parcasio. Petitioner was not
denied due process. She was given every opportunity to adduce her evidence. The Sandiganbayan
outlined the proceedings of the case as follows:

After the prosecution rested its case, by agreement of the parties, the initial
hearing for the reception of defense evidence was scheduled on September 19 and
20, 2005 both at 8:30 in the morning. However, upon motion of the prosecution, the
Court, in its Order of September 16, 2005, cancelled the setting as the handling
prosecutor, Pros. Anna Isabel G. Aurellano, had to attend a 5-day workshop at
PHINMA in Tagaytay City on September 19-23, 2005 and scheduled anew the hearing
on November 23 and 24, 2005, both at 8:30 in the morning. However, for failure of
the defense counsel, Atty. Rico B. Bolongaita, to appear at the November 23, 2005
hearing despite due notice, the Court cancelled the November 23 and 24 hearings,
and moved the same to March 13 and 14, 2006 both at 8:30 in the morning, and at
the same time directed the said defense counsel to show cause in writing within five
(5) days from receipt of the Order why he should not be held in contempt for his
failure to appear despite due notice. In compliance with this Order, Atty. Rico B.
Bolongaita, filed his Explanation and Withdrawal of Appearance, respectively, which
were both Noted by the Court in its Resolution of January 19, 2006.

In view of the absence of the accused in the March 13, 2006 hearing and her
continued failure to get a substitute counsel considering that her counsel, Atty. Rico
B. Bolongaita, had already withdrawn from the case since January 16, 2006,
the Court cancelled the March 13 and 14, 2006 hearings and moved the same to July
3 and 4, 2006 both at 8:30 in the morning and designated Atty. Conrado Rosario of
the PAO as counsel de oficio of the accused and directed the accused upon receipt of
the order to immediately confer with said counsel for purposes of preparing for her
defense in the case.

On March 20, 2006, the Court issued the following Resolution, which reads:

Accused Normallah L. Pacasums letter of February 17, 2006 (received by mail on


March 16, 2006) requesting extension of time to engage the services of counsel is
merely NOTED WITHOUT ACTION as the next hearings are scheduled on July 3 and
4, 2006 and said accused would have more than ample time to engage the services
of counsel of her choice. For this reason, any excuse from the accused on said
settings that she failed to engage the services of counsel or that her counsel needs
more time to prepare will be unacceptable. At all events, this Court, in its Order
of March 13, 2006, had already appointed Atty. Conrado Rosario of the PAO as a
counsel de oficio to represent the accused, with specific orders to the latter to confer
with Atty. Rosario and assist him in preparing for her defense.

On July 3, 2006, upon the manifestation of Atty. Conrado Rosario, counsel for the
accused, that since he was appointed counsel de oficio, the accused has not
communicated with him and therefore he was not ready to present any evidence for
the accused, the Court cancelled the hearing in order to give the defense another
opportunity to present its evidence and reset it to July 4, 2006, the following day as
previously scheduled.

On July 4, 2006, the Court issued the following Order, which reads

When this case was called for hearing, accused asked for the resetting
of the case on the ground that she just hired a new counsel who
thereafter arrived and entered his appearance as Atty. Napoleon Uy
Galit with address at Suite 202 Masonic Building, #35 Matalino St.,
Diliman, Quezon City. With the appearance of her new counsel, Atty.
Conrado C. Rosario is hereby discharged as counsel de oficio of the
accused.

As prayed for by the accused, she is given the last chance to present
her evidence on October 9 and 10, 2006, both at 8:30 oclock in the
morning. For repeated failure of the accused to acknowledge receipt of
the notices of the Court, her waiver of appearance is hereby cancelled
and she is ordered to personally appear in the scheduled hearings of
this case.

SO ORDERED.

On October 6, 2006, the accused thru counsel, Atty. Bantreas Lucman, filed an Entry
of Appearance, Motion For Postponement of October 9 and 10 Hearings stating
therein that since his service as new counsel was just engaged by the accused, and
that the accused herself cannot also attend the said hearing because she is
undergoing fasting until October 24, 2006 in observance of Ramadan, he asked to
postpone the settings on October 9 and 10, 2006. At the hearing on October 9, 2006,
the Court issued the following, which reads

Acting on the Entry of Appearance, Motion for Postponement of October


9 and 10, 2006 Hearing filed by accused Normallah L. Pacasum, thru
counsel, Atty. Bantreas Lucman, finding the same to be without merit,
as this case has been set for hearing several times and the accused has
been given the last chance to present evidence, the Court hereby denies
the motion for postponement.

In this regard, in view of the absence of accused Normallah L. Pacasum


in todays hearing despite the Order of the Court dated July 4, 2006,
canceling her waiver of appearance, and ordering her to personally
appear before this Court, as prayed for by the prosecution, let a Bench
Warrant of Arrest be issued against the said accused. The cash bond
posted for her provisional liberty is ordered confiscated in favor of the
government. The accused is given thirty (30) days from notice to
explain in writing why final judgment shall not be rendered against the
said bond.

With the Manifestation of Atty. Bantreas Lucman that the defense is not
ready to present its evidence today and tomorrow, the last chance for it
to present its evidence, the Court is constraint to consider the accuseds
right to present evidence as waived.

The parties are hereby given thirty (30) days to submit their respective
memoranda. Thereafter, the case shall be deemed submitted for
decision.

SO ORDERED.

Subsequently, the accused thru counsel, filed a Motion for Reconsideration of the
above Order dated October 25, 2006, and Motion to Set Hearing For Motion for
Reconsideration and to Lift Warrant of Arrest dated October 31, 2006.

At the hearing of accuseds motion for reconsideration on November 3, 2006, the


Court issued the following Order, which reads

When the Motion To Set Hearing for Motion for Reconsideration and to
Lift Warrant of Arrest was called for hearing this morning, only Attorneys
Bantuas M. Lucman and Jose Ventura Aspiras appeared. Accused
Normallah L. Pacasum was absent.

In view of the absence of the accused, the Court is not inclined to give
favorable action to the Motion for Reconsideration. It must be stressed
that the primordial reason for the issuance of the order sought to be
reconsidered in the presence of the accused in the previous hearing in
violation of the Courts Order for her to personally appear in the hearings
of this case and for her indifference to the directives of the Court. With
the absence anew of the accused, the Court has no alternative but to
deny the Motion.

Moreover, the Court notes the allegation in the Motion that the counsel
sought the assurance of the accused (and she promised) to appear
before this Court if the motion will be granted, as if the Court owes the
accused the favor to appear before it. The accused is reminded/advised
that the issuance of the warrant of arrest, she has to voluntarily
surrender and appear before the Court or be arrested and brought to
the Court.

WHEREFORE, the Motion for Reconsideration is denied.

SO ORDERED.

Acting on the Omnibus Motion to Hold in Abeyance Consideration of


Prosecutions Memorandum (And for a Second Look on the Matter of Accuseds Right
to Present Defense Evidence) of the accused dated November 21, 2006, and the
prosecutions Opposition thereto, the Court issued the following Order, which reads

This refers to the Accused Omnibus Motion to Hold in Abeyance Consideration of


Prosecutions November 7, 2006 Memorandum (And For a Second Look on the Matter
of Accuseds Right to Present Defense Evidence) dated November 21, 2006 and the
plaintiffs Opposition thereto dated November 28, 2006.
Inasmuch as the accused has already appeared before the Court and posted an
additional bond of P10,000.00 despite the aforesaid opposition of the prosecution, in
the interest of justice, the Court is inclined to reconsider and give favorable action to
the motion and grant the accused another and last opportunity to present here
evidence.
WHEREFORE, the motion is granted and this case is set for hearing for the
accuseds last chance to present and/or complete the presentation of her evidence on
February 5 and 6, 2007 both at 8:30 in the morning in
the Sandiganbayan Centennial Building in Quezon City.

SO ORDERED.

Thus, despite the initial indifference of the accused to present her defense, the Court
gave her ample opportunity to present her evidence.[67]

The Sandiganbayan properly dealt with the situation. In fact, we find that the trial court
was lenient with the petitioner. The failure of the defense to present Atty. Parcasio was its own
doing. The defense failed to prepare its witnesses for the case. As proof of this, we quote a portion
of the hearing when petitioner was testifying:

ATTY. ASPIRAS
Q Would you know where (sic) the whereabouts of this Sec. Parcasio would be (sic)
at this time?

A He lives in Davao but after what happened to Gov. Misuari, we have not got
together with the other members of the cabinet of Gov. Misuari, but he lives
in Davao, sir.

Q Would it be possible, Madame Witness, to request or ask him to testify in this case?

A After this hearing, I will look for Sec. Parcasio just to clear my name, sir.

CHAIRMAN

Not after this hearing, you should have already done that. Because we already gave
you enough opportunity to present your side, right? You should not be telling
the Court that only after this hearing, you will start looking (for) people who
will, definitely, clear your name. You should be doing that months ago, correct?
WITNESS

Yes, your Honors.[68]

Petitioner was charged with falsifying her Employees Clearance under Article 171, paragraph 1 of
the Revised Penal Code. For one to be convicted of falsification under said paragraph, the
followings elements must concur: (1) that the offender is a public officer, an employee, or a notary
public; (2) that he takes advantage of his official position; and (3) that he falsifies a document by
counterfeiting or imitating any handwriting, signature or rubric.

All the foregoing elements have been sufficiently established. There is no dispute that petitioner
was a public officer, being then the Regional Secretary of the Department of Tourism of the ARMM,
when she caused the preparation of her Employees Clearance (a public document) for the release
of her salary for the months of August and September 2000. Such being a requirement, and she
being a public officer, she was duty-bound to prepare, accomplish and submit said
document. Were it not for her position and employment in the ARMM, she could not have
accomplished said Employees Clearance. In a falsification of public document, the offender is
considered to have taken advantage of his official position when (1) he had the duty to make or
prepare or otherwise intervene in the preparation of the document; or (2) he had official custody
of the document which he falsified.[69] It being her duty to prepare and submit said document, she
clearly took advantage of her position when she falsified or caused the falsification of her
Employees Clearance by imitating the signature of Laura Pangilan.

Going now to the penalties imposed on petitioner, we find the same proper. The penalty for
falsification under Article 171 of the Revised Penal Code is prision mayorand a fine not
exceeding P5,000.00. There being no mitigating or aggravating circumstance in the commission
of the felony, the imposable penalty is prision mayor in its medium period, or within the range of
eight (8) years and one (1) day to ten (10) years. Applying the Indeterminate Sentence Law, the
maximum penalty to be imposed shall be taken from the medium period of prision mayor, while
the minimum shall be taken from within the range of the penalty next lower in degree, which
is prision correccional or from six (6) months and one (1) day to six (6) years.

WHEREFORE, premises considered, the decision of the Sandiganbayan in Crim. Case No. 27483
dated 7 August 2007 and its resolution dated 22 October 2007 are hereby AFFIRMED. SO
ORDERED.
[G.R. No. 142284. June 8, 2005]

REPUBLIC OF THE PHILIPPINES, petitioner, vs. EL GOBIERNO DE LAS ISLAS


FILIPINAS, contra,
ENEMESIA ACASO, et al., reclamantes,
SEVERIANA GACHO, respondent.

DECISION
AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari seeking the reversal of the decision[1] dated
February 29, 2000 of the Court of Appeals in CA-G.R. CV No. 56966 which affirmed in toto the
decision of the Regional Trial Court (RTC), Branch 54, Lapu-Lapu City[2] granting reconstitution of
title for Lot No. 1499 in the name of Tirso Tumulak, married to Engracia Pongasi.
On June 21, 1995, respondent Severiana Gacho[3] filed a petition for reconstitution of lost
certificate of title before the RTC, Lapu-Lapu City. Her petition alleged the following:

1. That Petitioner Severiana Gacho, is single, Filipino, of legal age, and a resident of Pleasant
Homes, Labangon, Cebu City;

2. That she is the owner, by purchase, of a portion of Lot No. 1499 of the Opon Cadastre, situated
in Barangay Babag, Municipality of Opon (now Lapu-Lapu City) described and bounded as follows
--

NW., by a provincial Road; by Lot 1492, owned by Filomena Palugot,

NE., by Lot 1492, owned by Melecio Tumulak;

SE., by Lot 1500, owned by Laureano Tumulak;

AREA 5,409 square meters, more or less;

All adjacent owners are residents of Barangay Babag, Lapu-Lapu City, with no house numbers.

3. That the said Lot No. 1499, above-described, was owned by Tirso Tumulak, married to Engracia
Pongasi, both now deceased, which was adjudged to them by virtue of a decision, dated March
31, 1929, rendered in the above-entitled registration case, copy of which decision is hereto
attached and marked as Annex A;

4. That pursuant to the said decision (Annex A), Decree 365835 was issued to said Lot 1499, in
the name of said Tirso Tumulak, married to Engracia Pongasi, but which decree was not salvaged
from the last World War, but its existence appears in Cadastral Records, a copy of a page therein
is hereto attached and marked as Annex B;

5. That pursuant to said Decree No. 565855, (sic) an Original Certificate of Title has been issued
to Lot No. 1499 in the name of said Tirso Tumulak, married to Engracia Pongasi;

6. That the owners duplicate copy of the said Original Certificate of Title issued to Lot No. 1499,
has been lost during the last World War; and its copy on file in the office of the Register of Deeds
of Lapu-Lapu City, was also either lost or destroyed during the said last World War, as shown in a
certificate issued by the Register of Deeds of Lapu-Lapu City, copy of which is hereto attached and
marked as Annex C;

7. That no co-owners copy of said certificate of title lost has been issued to a co-owner, mortgagee,
or lessee;

8. That no deed or any kind of involuntary document affecting said Lot No. 1499 has ever been
registered, or pending registration in the office of the Register of Deeds of Lapu-Lapu City;

9. That the land Lot No. 1499 is not or has never been the subject of any Court litigation;
10. That your Petitioner, having purchased a portion of said Lot No. 1499 is initiating this Petition
for reconstitution for the reason that she wants her portion to be issued a certificate of title in her
name, but could not do so, if the lost original certificate of title which was lost during the last
World War, be reconstituted first; . . .

11. That attached hereto is the approved plan of the land, consisting of a tracing cloth plan, hereto
attached marked as Annex D, blue print plan, as Annex D-1, and its approved technical description
marked as Annex E, as additional basis for the reconstitution of the said lost certificate of title of
Lot No. 1499; and deed of conveyance in favor of petitioner marked as Annex F.[4]

In an Order dated September 6, 1995, the trial court set the initial hearing of the petition on
February 12, 1996.[5] Notices of hearing were published in two successive issues of the Official
Gazette[6] and also posted[7] in conspicuous places in the Provincial Capitol Building of Cebu City,
the Lapu-Lapu City Hall and the barangay where the property was situated, and the Lapu-Lapu
Public Market. The Register of Deeds of Lapu-Lapu City,[8] the Administrator of the Land
Registration Authority,[9] the Director of the Bureau of Lands,[10] and the Office of the Solicitor
General[11] in Manila were also furnished copies of the notice of hearing.
After the jurisdictional facts had been established, the Branch Clerk of Court was commissioned
to receive the evidence for the respondent.[12]
Respondent, in an ex-parte hearing, testified that she had purchased a portion of Lot No. 1499
from Aguinaldo and Restituto Tumulak Perez , the legal heirs of the late Concepcion Tumulak, as
evidenced by a Deed of Extra-Judicial Declaration of Heirs with Sale executed on February 12,
1979; that Concepcion Tumulak was the only daughter of Tirso Tumulak, married to Engracia
Pongasi, both deceased, the decreed owners of the lot by virtue of a decision dated March 31,
1929; that Lot No. 1499 was issued Decree No. 365835, the existence of which appeared in the
cadastral record; that she acquired an area of 901 square meters from the 5,000 sq. meters of
Lot No. 1499 and is in possession of the same; that there was no adverse claimant on the portion
she purchased and the lot had not been the subject of any court litigation; that she has no
knowledge that a co-owners copy of the certificate of title had been issued to any co-owner,
mortgagee or lessee nor that any document voluntarily issued to Lot No. 1499 had been presented
for registration in the Office of the Register of Deeds, Lapu-Lapu City: that the owners duplicate
copy of the title was lost as evidenced by an affidavit of Conchita Oyao.[13]
Respondent Gacho offered as bases for reconstitution the following documents:

(i) Xerox copy of the Decision dated March 31, 1929 in Exp. Cad. No. 17, Record No. 946
(Exhibit I).

(ii) Index of decrees, (Exhibit J).

(iii) Deed of Extra-Judicial Declaration of Heirs with Sale dated February 12, 1979 (Exhibit K).

(iv) Affidavit of Conchita Oyao dated February 22, 1996 (Exhibit L).

(v) Certification from the Register of Deeds, Lapu-Lapu City, dated June 9, 1995 (Exhibit M).

(vi) Sketch plan of Lot No. 1499 (Exhibit N).

(vii) Certified Xerox copy of the technical description of Lot No. 1499 (Exhibit N-1).

On January 13, 1997, the Land Registration Authority submitted a Report[14] signed by
Benjamin M. Bustos, its Reconstituting Officer & Chief, Reconstitution Division, as follows:

REPORT

COMES NOW the Land Registration Authority and to the Honorable Court respectfully reports that:

(1) The present petition seeks the reconstitution of Original Certificate of Title No. (N.A.),
allegedly lost or destroyed and supposedly covering Lot 1499, Opon Cadastre, situated at
the Municipality of Opon, Province of Cebu.

(2) From Book 38 of the Record Book of Cadastral Lots, on file at the Cadastral Decree Section,
this Authority, it appears that Decree No. 365835 was issued for Lot 1499 on October 28,
1929 in Cadastral Case No. 17, GLRO Cad. Record No. 946, copy of said decree, however,
is no longer available in this Authority.
(3) The plan and technical description of Lot 1499, Opon Cadastre were verified correct by
this Authority to represent the aforesaid lot and the same have been approved under
(LRA) PR-16366 pursuant to the provisions of Section 12 of Republic Act No. 26.

WHEREFORE, the foregoing information anent the property in question is respectfully submitted
for consideration in the resolution of the instant petition, and if the Honorable Court, after notice
and hearing, finds justification pursuant to Section 15 of Republic Act No. 26 to grant the same,
the plan and technical description having been approved, may be used as basis for the inscription
of the technical description on the reconstituted certificate. Provided, however, that in case the
petition is granted, the reconstituted title being an original certificate should be made subject to
a first lien in favor of the National Government to guarantee the payment of the special taxes
assessed pursuant to Section 18 of Act 2259, as amended, and to a lien in favor of E. Bunagan
Surveying Co. to guarantee the payment of the costs of cadastral survey and monumenting
pursuant to Act 3327, as amended, unless the same has previously been cancelled; and provided,
further that no certificate of title covering the same parcel of land exists in the office of the Register
of Deeds concerned.

On March 11, 1997, the trial court rendered its decision as follows:

After a thorough examination of all the evidence, the Court is of the belief that the allegations in
the petition have been sufficiently established and that therefore the petitioner is entitled to the
relief prayed for.

WHEREFORE, all premises considered, the Court hereby grants the petition and renders judgment
directing the Register of Deeds of Lapu-Lapu City to reconstitute the title for Lot No. 1499 in the
name of Tirso Tumulak, married to Engracia Pongasi, which reconstituted title must conform
strictly with the technical description of the lot (Exhibit N-2).

SO ORDERED.[15]

Petitioner Republic, through the Office of the Solicitor General, filed its notice of appeal with
the trial court and the records were forwarded to the Court of Appeals. In its appellants brief,
petitioner alleged that the trial court erred:

In granting the petition for reconstitution on the basis of index of decree, sketch plan, certification,
among other documents, which documents are non-acceptable and insufficient bases for
reconstitution under RA 26.[16]

On February 29, 2000, the Court of Appeals rendered its assailed decision affirming the
judgment of the trial court. It disposed petitioner Republics appeal in this wise:

The appeal lacks merit.

Under Section 2 of Republic Act No. 26, the following are the acceptable sources for reconstitution
of an original certificate of title:

Sec. 2. Original Certificates of title shall be reconstituted from such of the sources hereunder
enumerated as may be available, in the following order:

(a) The owners duplicate of the certificate of title;

(b) The co-owners, mortgagees or lessees duplicate of the certificate of title;

(c) A certified copy of the certificate of title, previously issued by the Register of Deeds or by a
legal custodian thereof;

(d) An authenticated copy of the decree of registration or patent, as the case may be, pursuant to
which the original certificate of title was issued;

(e) A document, on file in the Registry of Deeds by which the property, the description of which is
given in said document, is mortgaged, leased or encumbered, or an authenticated copy of said
document showing that its original has been registered; and

(f) Any other document which, in the judgment of the court is sufficient and proper basis for
reconstituting the lost or destroyed certificate of title.
Appellant contends that the enumerated documents acceptable as evidence of ownership are
either issued by or registered in the Registry of Deeds, and thus should only be the ones to be
considered as official sources recognizing ownership of an applicant in a reconstitution case, but
that they are not among those presented herein. However appellant neglected to mention that
petitioner had presented the Decision of the Juzgado de Primera Instancia de la Prov. de Cebu in
EXP Cat. No. 17 entitled El Gobierno De Las Islas Filipinas, peticionario contra Enemesia Acaso et
al., reclamantes, Record, No. 946 dated March 31, 1929, a certified copy of which had been
admitted in evidence as Exh. I, found on p. 4 of the Record stating Lote No. 1499, -- a favor de
Tirso Tumulak, casado con Engracia Pongasi, as well as the Cadastral Record which contains the
annotation for Decree No. 365835 for Lot No. 1499 marked Exhibit J and J-1 found on page 5 of
the Record. The authenticity and due execution of the foregoing documents marked Exhibit I and
J have not been questioned, hence deemed admitted.

There is sufficient evidence showing how ownership had been transferred over Lot No. 1499 as
afore-stated; Concepcion Tumulak was the uncontested only heir of Tirso Tumulak. In a Deed of
Extra-Judicial Declaration of Heirs with Sale (Exhibit K, Record, p. 10) Aguinaldo and Restituto
Perez, heirs to the intestate estate of Concepcion Tumulak, sold the 901 square meters of Lot No.
1499 to the petitioner Severiana Gacho. It is clear that petitioner was able to show valid title over
the property in question (Esso Standard Eastern Lab. vs. Lim, 123 SCRA 465).

There is ample basis therefore to sustain reconstitution ordered by the court a quo considering
that it was also shown by a certification of the Register of Deeds of Lapu-Lapu City that the Original
Certificate of Title of Lot No. 1499 had been lost or destroyed during the last Global War (Exhibit
M, Record, p. 6).[17]

Hence, the instant petition for review wherein petitioner Republic raises the following issues:
I

THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMNG THE DECISION OF THE COURT A QUO
WHICH GRANTED RECONSTITUTION ON THE BASES ALONE OF A XEROX COPY OF A PAPER
CAPTIONED DECISION (BUT WHICH DOES NOT APPEAR TO BE ONE), AN ENTRY IN THE INDEX OF
DECREES, SKETCH PLAN, CERTIFICATIONS, TECHNICAL DESCRIPTION AND DEED OF SALE,
WHICH DOCUMENTS ARE NOT ACCEPTABLE SOURCES FOR RECONSTITUTION UNDER RA 26.

II

THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE COURT A QUO
GRANTING RECONSTITUTION OF AN ALLEGEDLY LOST CERTIFICATE OF TITLE DESPITE THE
DEARTH OF EVIDENCE ON THE PREVIOUS ISSUANCE OF SAID CERTIFICATE OF TITLE.

Respondent Gacho submitted her Comment and petitioner filed a Reply. Parties filed their
respective memoranda.
In its Memorandum, petitioner contends that no decree of registration was ever presented by
respondent that can support her claim that since a decree was already issued for Lot No. 1499,
there was already a certificate of title issued pursuant thereto; that the decision dated March 31,
1929, on which the Court of Appeals based its assailed decision, was unsigned and contained no
discussion or reference as to matters of what transpired therein except the phrase Lote
No. 1499. A favor de Tirso Tumulak, casado con Engrasia Pongasi which cannot be considered a
valid judgment under Section 1, Rule 36[18] of the Rules of Court from which a valid decree can
emanate; that the decision is inadmissible since only a geodetic engineer certified as to its
authenticity in violation of Section 7, Rule 130[19] of the Rules on Evidence; that the entry in the
index of decree is not the authenticated copy of the decree of registration referred to in Section
2(d) of R.A. No. 26 and the name of Tirso Tumulak from whom respondent traced her ownership
did not appear on the said index; and that these documents together with the other documents
which respondent presented in the trial court, do not qualify as sources for reconstitution of lost
or destroyed titles.
We agree.
Section 2 of R.A. No. 26[20] quoted in the Court of Appeals decision enumerates the sources
as bases of reconstitution of the original certificate of title. To reiterate, they are as follows:

Sec. 2. Original Certificates of title shall be reconstituted from such of the sources hereunder
enumerated as may be available, in the following order:

(a) The owners duplicate of the certificate of title;


(b) The co-owners, mortgagees or lessees duplicate of the certificate of title;

(c) A certified copy of the certificate of title, previously issued by the Register of Deeds or by a
legal custodian thereof;

(d) An authenticated copy of the decree of registration or patent, as the case may be, pursuant to
which the original certificate of title was issued;

(e) A document, on file in the Registry of Deeds by which the property, the description of which is
given in said document, is mortgaged, leased or encumbered, or an authenticated copy of said
document showing that its original has been registered; and

(f) Any other document which, in the judgment of the court is sufficient and proper basis for
reconstituting the lost or destroyed certificate of title.

The Court of Appeals relied on a one page, two-liner Decision dated March 31, 1929 as well
as the index of decree which contained the annotation for Decree No. 365835 for Lot No. 1499 in
affirming the decision of the trial court granting respondents petition for reconstitution. These
documents would naturally not fall under Sec 2(a) to (e) of R.A. No. 26 but may be considered
under Sec 2(f) of R.A. No. 26, as any other document which, in the judgment of the court, is
sufficient and proper basis for reconstituting the lost or destroyed certificate of title. However, we
find that they are not enough bases for reconstitution of lost original certificate of title.
The entire text of the 1929 decision attached to the petition for reconstitution is reproduced,
in verbatim as follows:

ESTADOS UNIDOS DE AMERICA


ISLAS FILIPINAS

EN EL JUZGADO DE PRIMERA INSTANCIA DE LA


PROV. DE CEBU
20.0 Distrito
Sala Auxiliar

EL GOBIERNO DE LAS ISLAS EXP. CAD. No. 17


FILIPINAS, Record No. 946

Peticionario,

- contra -

ENEMESIA ACASO, et al.,

Reclamantes.

x - - - - - - - - - - - - - - - - - - - -x

DECISION

xxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxx

Lote No. 1499. A favor de Tirso Tumulak, casado con Engrasia Pongasi.

xxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxx

ASI SE ORDENA.

Cebu, Cebu, 31 de Marzo de 1929.

(Fdo.) GUILLERMO F. PABLO


Juez Auxiliar del 20.0 Distrito
A certified true copy:
Cebu City, April 19, 1995

BENITO F. BUNAGAN
Geodetic Engineer

Significantly, only a certain Geodetic Engineer certified that the copy of the decision attached
to the petition was a true copy of the same. It was not established that the Geodetic Engineer is
the public officer who is in custody thereof. Section 7, Rule 130, Revised Rules on Evidence
provides:

SEC. 7. Evidence admissible when original document is a public record. When the original of a
document is in the custody of a public officer or is recorded in a public office, its contents may be
proved by certified copy issued by the public officer in custody thereof. (2a)

Thus, in the absence of proof that the Geodetic Engineer is a public officer in custody thereof, such
piece of evidence has no probative value.
We also find insufficient the index of decree showing that Decree No. 365835 was issued for
Lot No. 1499, as a basis for reconstitution. We noticed that the name of the applicant as well as
the date of the issuance of such decree was illegible. While Decree No. 365835 existed in the
Record Book of Cadastral Lots in the Land Registration Authority as stated in the Report submitted
by it, however, the same report did not state the number of the original certificate of title, which
is not sufficient evidence in support of the petition for reconstitution. The deed of extrajudicial
declaration of heirs with sale executed by Aguinaldo and Restituto Tumulak Perez and respondent
on February 12, 1979 did not also mention the number of the original certificate of title but only
Tax Declaration No. 00393. As we held in Tahanan Development Corp. vs. Court of Appeals,[21] the
absence of any document, private or official, mentioning the number of the certificate of title and
the date when the certificate of title was issued, does not warrant the granting of such petition.
Respondent Gacho argues that contrary to petitioners claim that there is no certificate of title
to be reconstituted, it had been shown that the 1929 decision adjudicated Lot No. 1499 to Tirso
Tumulak, married to Engracia Pongasi which was the foundation of the issuance of the decree and
consequently the issuance of the original certificate of title. We are not persuaded. As we have
discussed above, we cannot give any probative value to the 1929 decision which cannot be
considered as a valid source for reconstitution.
Respondent Gacho also submitted the plan, the technical description of Lot No. 1499 as well
as the certification from the Register of Deeds of Lapu-Lapu City, Dioscoro Y. Sanchez, Jr., stating
that the Original Certificate of Title of Lot No. 1499 of Opon Cadastre as per records on file has
been lost or destroyed during the last Global War. However, these are not the documents referred
to under Section 2(f) of R.A. No. 26 but are mere additional documents that will accompany the
petition to be forwarded to the Land Registration Authority. In Heirs of Felicidad Dizon vs.
Discaya,[22] we held:

We now tackle the theory that the "other documents" mentioned in Section 3(f) of RA 26 refer to
those enumerated in paragraph 5 of LRC Circular No. 35 dated June 13, 1983, to wit:

5. In case the reconstitution is to be made exclusively from sources enumerated in Sections 2 (f)
and 3 (f) of Republic Act No. 26 in relation to section 12 thereof, the signed duplicate copy of the
petition to be forwarded to this Commission shall be accompanied by the following:

(a) A duly prepared plan of said parcel of land in tracing cloth, with two (2) print copies thereof,
prepared by the government agency which issued the certified technical description, or by a duly
licensed Geodetic Engineer who shall certify thereon that he prepared the same on the basis of a
duly certified technical description. Where the plan as submitted is certified by the government
agency which issued the same, it is sufficient that the technical description be prepared by a duly
licensed Geodetic Engineer on the basis of said certified plan.

(b) The original, two (2) duplicate copies, and a xerox copy of the original of the technical
description of the parcel of land covered by the certificate of title, duly certified by the authorized
officer of the Bureau of Lands or the Land Registration Commission who issued the technical
description.

(c) A signed copy of the certification of the Register of Deeds concerned that the original of the
certificate of title on file in the Registry was either lost or destroyed, indicating the name of the
registered owner, if known from the other records on file in said office."
Petitioners maintain that since they submitted before the lower court Exhibits "N" 5 , "S" 6 and
"S-1" 7 , and "T" 8 , consisting of the certification from the register of Deeds, technical
descriptions, and tracing cloth plan, respectively, their petition for reconstitution should have been
granted by the lower court.

Untenable is petitioners' contention. Paragraph 5 of LRC Circular No. 35 specifically states that
"[i]n case the reconstitution is to be made exclusively from sources enumerated in sections 2(f)
and 3(f) of Republic Act No. 26, in relation to section 12 thereof, the signed duplicate copy of the
petition to be forwarded to this Commission shall be accompanied by the following: . . ." From the
foregoing, it is clear that subparagraphs (a), (b), and (c) of paragraph 5 of LRC Circular No. 35
are merely additional documents that must accompany the petition to be forwarded to the Land
Registration Commission (now Land Registration Authority). There is nothing in LRC Circular No.
35 to support petitioners' stance that the documents therein enumerated are those referred to in
Section 3(f) of RA 26.

It has been held by the Court that when Section 2(f) of Republic Act No. 26 speaks of "any other
document," the same must refer to similar documents previously enumerated therein 9 , that is,
those mentioned in Sections 2(a), (b), (c), and (d). Having failed to provide a sufficient and proper
basis for reconstitution, petitioners cannot assail the respondent court for dismissing their petition
for reconstitution.[23] (Emphasis supplied).

Furthermore, the affidavit of a certain Conchita Oyao, an alleged neighbor of the Tumulaks,
attesting to the fact that there existed an original certificate of title, the number of which she did
not mention, issued to Lot 1499 as she personally saw the owners duplicate copy during the
lifetime of the registered owners, does not help the case of respondent Gacho. In the first place,
said affidavit is inadmissible in evidence under the hearsay rule[24] since Oyao was not presented
in court to testify on such alleged loss of the original certificate of title. Secondly, even if we were
to consider the contents of the affidavit, the same do not likewise help respondents case. While
Oyao attested to the fact of the loss of such title by Aguinaldo Tumulak Perez during the Japanese
invasion, respondent, however, failed to show why Oyao was the one who attested to the fact of
loss and not Aguinaldo who was allegedly in possession of the owners duplicate copy at the time
it was lost. It is also noted that Aguinaldo or his brother Restituto did not bother to reconstitute
the title after it was lost during the Japanese invasion.
In fine, we are not convinced that respondent Gacho had adduced competent evidence to
warrant reconstitution of allegedly lost original certificate of title since she had not proven the
existence of the same. The courts must be cautious and careful in granting reconstitution of lost
or destroyed certificates of titles. [25] It is the duty of the trial court to scrutinize and verify carefully
all supporting documents, deeds and certifications. Each and every fact, circumstance or incident
which corroborates or relates to the existence and loss of the title should be examined.[26]
WHEREFORE, the petition is hereby GRANTED. The assailed decision of the Court of Appeals
dated February 29, 2000, affirming the RTC order granting respondents petition for reconstitution,
is REVERSED and SET ASIDE. Another judgment is entered denying the petition for reconstitution.
SO ORDERED.
ALLIED BANKING CORPORATION, G.R. No. 151040

Petitioner,

- versus - Promulgated:

CHENG YONG and LILIA GAW, October 6, 2005

Respondents.

x--------------------------------------------x

CHENG YONG and LILIA GAW, G.R. No. 154109

Petitioners,

- versus -

ALLIED BANKING CORPORATION and


EX-OFFICIO SHERIFF OF MALABON,
METRO MANILA,

Respondents.

x---------------------------------------------------------------------------------x
DECISION

GARCIA, J.:

Before us are these two (2) petitions for review on certiorari under Rule 45 of the Rules of
Court to nullify and set aside the following issuances of the Court of Appeals (CA) in CA-G.R. CV
41280, to wit:
1. Decision dated 11 December 2001,[1] partially reversing and setting aside
an earlier decision of the Regional Trial Court at Makati, Branch 145, in its Civil
Case No. 10947; and

2. Resolution dated 01 July 2002,[2] denying Cheng Yong and Lilia Gaws
motion for reconsideration.

The material facts:

Sometime before 1981, Philippine Pacific Fishing Company, Inc. (Philippine Pacific), through
its then Vice-Chairman of the Board and concurrent President Marilyn Javier, obtained from Allied
Banking Corporation (Allied Bank), a packing credit accommodation amounting to One Million
Seven Hundred Fifty Two Thousand Pesos (P1,752,000.00).

To secure the obligation, Marilyn Javier and the spouses Cheng Yong and Lilia Gaw (spouses
Cheng, for short), executed a Continuing Guaranty/Comprehensive Surety bearing date 27 March
1981.[3]
Later, Philippine Pacific, due to business reverses and alleged misuse of corporate funds by its
operating officers, defaulted in the payment of said obligation.

An intra-corporate dispute among its stockholders followed, prompting the filing against Philippine
Pacific of a petition for receivership before the Securities and Exchange Commission (SEC), which
petition was docketed as SEC Case No. 2042. Likewise, a criminal case for Estafa was filed against
Marilyn Javier.
Thereafter, the corporation was reorganized, following which the spouses Cheng Yong and Lilia
Gaw were elected as its president and treasurer, respectively. The spouses Cheng also hold similar
positions in another company, the Glee Chemicals Phils., Inc. (GCPI), which, incidentally, also had
a credit line with Allied Bank.

Meanwhile, on 27 July 1981, the parties in SEC Case No. 2042 agreed to create and constitute a
management committee, instead of placing Philippine Pacific under receivership. Hence, in an
order dated 14 August 1981, the SEC formally created a management committee whose functions,
include, among others, the following:

1. To take custody and possession of all assets, funds, properties and records of
the corporation and to prepare an inventory thereof;

2. To administer, manage and preserve such assets, funds and records;

xxx xxx xxx

7. To acquire, lease, sell, mortgage or otherwise encumber such assets with the
prior approval of the Commission.[4]

It appears, however, that two (2) days prior to the constitution of the management committee,
Allied Bank and Philippine Pacific agreed to restructure and convert the packing credit
accommodation into a simple loan. Accordingly, Philippine Pacific executed in favor of Allied Bank
a promissory note dated 12 August 1981[5] in the same amount as the packing credit
accommodation. Aside from affixing their signatures on the same promissory note in their capacity
as officers of Philippine Pacific, the spouses Cheng also signed the note in their personal capacities
and as co-makers thereof.

As it turned out, Philippine Pacific failed to pay according to the schedule of payments set out in
the promissory note of 12 August 1981, prompting the spouses Cheng to secure the note with
substantial collateral by executing a deed of chattel mortgage in favor of Allied Bank over a fishing
vessel, Jean III, a Japanese- manufactured vessel with refrigerated hatches and glass freezers,
owned by the spouses and registered in their names.

Philippine Pacific again defaulted payment. Hence, on 18 September 1984, Allied Bank filed with
the sheriff of Navotas an application for extra-judicial foreclosure of the chattel mortgage
constituted on Jean III.

Pursuant thereto, notices of extra-judicial sale dated 21 September 1981 were served on the
concerned parties by the Ex-Officio sheriff of Malabon while the vessel was moored at the Navotas
Fishing Port Complex and under a charter contract with Lig Marine Products, Inc.

On 27 September 1984, the spouses Cheng, to prevent the auction sale of the vessel, filed with
the Regional Trial Court at Quezon City an action for declaratory relief with prayer for injunctive
remedies. Initially, that court issued a writ of preliminary injunction restraining the sale but later
lifted it upon dismissal of the main case for declaratory relief on 29 March 1985.
In the meantime, the vessel sank at the port of Navotas on 22 June 1985, resulting to its total
loss. As per certification of the Harbor Master of the Philippine Fisheries Development Authority,
the vessel sank due to unnoticed defects caused by its prolonged stay in the fish port and the
abandonment thereof. Shortly before the loss, charterer Lig Marine Products, Inc. offered to
purchase the vessel for Four Million Pesos (P4,000,000.00).

On 26 June 1985, the spouses Cheng filed with the Regional Trial Court at Makati a complaint
for Injunction, Annulment of Contracts and Damages with the provisional remedy of Preliminary
Injunction, against Allied Bank and the Ex-Officio Sheriff of Malabon, therein praying, inter
alia, that the promissory note dated 12 August 1981 be declared void and unenforceable because
it was executed without the prior approval or ratification of the SEC-created management
committee in SEC Case No. 2042, and to declare invalid the deed of chattel mortgage over the
vessel Jean III for having been constituted to secure a void or unenforceable obligation. The
complaint was docketed as Civil Case No. 10947 and raffled to Branch 145 of the court.

Meanwhile, on 02 August 1985, Allied Bank filed with the Ex-Officio Sheriff of Pasig an application
for extrajudicial foreclosure of the real estate mortgage[6] constituted by the Cheng spouses over
their parcel of land covered by TCT No. (222143) 23843, located in San Juan, Metro Manila
(hereinafter referred to as the San Juan property), together with the improvement thereon,
consisting of a two-storey building belonging to GCPI. It appears that said property was mortgaged
by the spouses in favor of Allied Bank on 31 May 1983 to partially secure the payment of the time
loan granted by the Bank to GCPI. Despite GCPIs full payment of said loan, Allied Bank refused to
release the mortgage on the San Juan property, theorizing that it also secured the obligation of
the spouses Cheng as Philippine Pacifics co-makers of the promissory note dated 12 August 1981,
in accordance with the stipulation in the deed of mortgage extending coverage of the guaranty to
any other obligation owing to the mortgagee.

On 22 August 1985, the spouses Cheng filed in Civil Case No. 10947 an amended complaint
praying, among others, that: (a) the promissory note of 12 August 1981 be declared void and
unenforceable; (b) the vessel be declared a total loss; and (c) Allied Bank be ordered to pay them
the value of the loss. And, in order to prevent Allied Bank and the Ex-Officio Sheriff of Pasig from
foreclosing the real estate mortgage over their San Juan property, the spouses Cheng filed a
supplemental complaint with an application for a writ of preliminary injunction. A writ of
preliminary injunction was, thereafter, issued by the trial court.

On 17 October 1985, Allied Bank filed a motion to dismiss the amended as well as the supplemental
complaints.

In its order of 12 March 1986, the trial court denied the motion with respect to the amended
complaint, for lack of merit, while deferring the resolution thereof as regards the supplemental
complaint until after trial because the ground alleged did not appear to be indubitable.

Eventually, in a decision dated 08 February 1989,[7] the trial court declared both the promissory
note dated 12 August 1981 and the deed of chattel mortgage over the vessel Jean III invalid and
unenforceable. Dispositively, the decision reads:

WHEREFORE, premises considered, the Court renders judgment declaring both the
promissory Note (Exh. M) and the Deed of Chattel Mortgage (Exh. 5) not valid and
unenforceable; permanently enjoining defendants Allied Banking Corporation and the
ex-officio sheriff of Malabon and his deputies, agents and representatives from
proceeding with the foreclosure and auction sale of the fishing vessel JEAN III;
permanently enjoining the defendants-bank and ex-officio sheriff of Pasig from
proceeding with the foreclosure and auction sale of the plaintiffs real property covered
by TCT No. (222143) 23843 including the building thereon owned by Glee Chemicals
Philippines, Inc.; ordering defendant bank to pay plaintiffs the sum of Four Million
Pesos (P4,000,000.00), Philippine Currency, for the loss of the aforementioned
vessel, the sum of Thirty Thousand Pesos (P30,000.00), Philippine Currency as moral
and exemplary damages, the further sum of Thirty Thousand Pesos (P30,000.00),
Philippine Currency, as attorneys fees; and the costs of the suit.

The motion to dismiss the supplemental complaint filed by defendant is denied for
lack of merit.

Finally, within three (3) days from the finality of this decision, defendant bank is
hereby compelled to execute the necessary release or cancellation of mortgage
covering the aforesaid parcels of land, and deliver the two torrens titles in its
possession to herein plaintiffs.

SO ORDERED.

Therefrom, Allied Bank went to the Court of Appeals (CA) via ordinary appeal under Rule
41 of the Rules of Court, which appellate recourse was docketed as CA-G.R. CV No. 41280.

As stated at the outset hereof, the Court of Appeals, in its Decision dated 11 December
2001, partially reversed and set aside the appealed decision of the trial court insofar as it (a)
declared the promissory note as not valid and unenforceable and (b) ordered Allied Bank to pay
the spouses Cheng the amount of Four Million Pesos (P4,000,000.00) for the loss of the fishing
vessel and the sum of Thirty Thousand Pesos (P30,000.00) as moral and exemplary damages. In
all other respects, the appellate court affirmed the trial court, thus:

WHEREFORE, the foregoing considered, the appealed decision


is REVERSED and SET ASIDE insofar as it (1) DECLARED the Promissory Note
dated 12 August 1981 as NOT VALID and unenforceable, and
(2) ORDERED appellant Bank to pay to appellee-spouses Cheng the amount of Four
Million Pesos (P4,000,000.00) for the loss of the fishing vessel JEAN III and the
amount of Thirty Thousand Pesos (P30,000.00) for moral and exemplary damages.
In all other respects, the decision is AFFIRMED. SO ORDERED.

Dissatisfied, Allied Bank immediately filed with this Court its petition for review
on certiorari in G.R. No. 151040, seeking to set aside and reverse only that portion of the
appellate courts decision which affirmed certain aspects of the trial courts decision, i.e., (a)
enjoining Allied Bank and the Ex-Officio Sheriff of Pasig from proceeding with the foreclosure of
the Real Estate Mortgage over the San Juan property; (b) ordering Allied Bank to execute a release
of the same mortgage in favor of the spouses Cheng; (c) ordering Allied Bank to deliver the two
(2) torrens titles in favor of the spouses; and (d) ordering Allied Bank to pay attorneys fees and
costs. In short, Allied Bank faults the Court of Appeals for not reversing the trial courts decision
in its entirety. More specifically, it submits:

In General, THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT

DID NOT REVERSE AND SET ASIDE THE DECISION OF THE REGIONAL TRIAL COURT

OF MAKATI CITY, BRANCH 145 IN ITS ENTIRETY.


In Particular, THE HONORABLE COURT OF APPEALS PATENTLY ERRED WHEN

IT UPHELD RESPONDENTS ASSERTION THAT THE REAL ESTATE MORTGAGE DATED

MAY 31, 1983 CANNOT BE FORECLOSED WITH RESPECT TO THE OBLIGATION OF

PHILIPPINE PACIFIC TO PETITIONER.

For their part, the spouses Cheng filed with the Court of Appeals a motion for
reconsideration, disputing the appellate courts pronouncement that the August 12, 1981
promissory note and the deed of chattel mortgage over the fishing vessel Jean III are valid and
enforceable and that the loss of said vessel must be borne by them. In its resolution of 1 July
2002, the appellate court denied the motion.

Hence, the spouses Chengs own petition for review on certiorari in G.R. No. 154109,
seeking the reversal and setting aside of both the appellate courts decision of 11 December 2001
and resolution of 01 July 2002, it being their submission that said court committed a grave and
serious reversible error in not holding that:

1. the subject Promissory Note is not valid and enforceable for non-

fulfillment of a suspensive condition and consequently, the Deed of Chattel Mortgage,

being a mere accessory agreement, is likewise not valid and enforceable in the

absence of a valid principal contract; and

2. the Loss of the mortgaged Fishing Vessel Jean III must be borne by the

respondent bank considering that the vessel was in its possession and control at the

time of the loss.

Per this Courts Resolution dated 20 November 2002,[8] the two (2) separate petitions
were ordered consolidated, involving, as they do, the same decision of the appellate court.

As we see it, the common issues to be resolved are:

I. Whether or not the promissory note dated 12 August 1981 is valid;

II. Whether or not the chattel mortgage over the fishing vessel Jean III
can be foreclosed for Philippine Pacifics failure to comply with its obligation
under the promissory note dated 12 August 1981; and

III. Whether or not the real estate mortgage constituted over spouses
Chengs parcel of land covered by TCT No. (222143) 23843 [San Juan property]
also secured the spouses obligation as co-makers of the promissory note dated
12 August 1981.
In justifying its reversal of the trial courts finding that the validity and effectivity of the
promissory note dated 12 August 1981 were conditioned upon the ratification thereof by the SEC-
created management committee in SEC Case No. 2042, the appellate court explained that the
terms of the subject promissory note are clear and leave no doubt upon the intention of the parties.
On this score, it ruled that the parole evidence introduced by the Cheng spouses to the effect that
the validity and enforceability of the note are conditioned upon its approval and ratification by the
management committee should have been discarded by the trial court, consistent with the parole
evidence rule embodied in Rule 130, Section 9 of the Rules of Court.[9] Says the appellate court in
its challenged decision:

Instead, We agree with [Allied Bank] that there is no evidence to support the
court a quos finding that the effectivity of the promissory note was dependent upon
the prior ratification or confirmation of the management committee formed by the
SEC in SEC Case No. 2042.

To begin with, there is nothing on the face of the promissory note requiring
said prior ratification for it to become valid. Basic is the rule that if the terms of the
contract are clear and leave no doubt upon the intention of the parties, the literal
meaning of its stipulations shall control (Article 1370, Civil Code; Honrado, Jr. vs. CA,
198 SCRA 326).
This basic rule notwithstanding, the court a quo admitted in evidence the
alleged verbal stipulation made by [the spouses Cheng] to the effect that the validity
of the promissory note was dependent upon its ratification by the management
committee. Such parole evidence should not have been allowed as it had the effect
of altering the provisions of the promissory note which are in clear and unequivocal
terms.

Under the parole evidence rule, the terms of a contract are conclusive upon
the parties and evidence which shall vary a complete and enforceable agreement
embodied in a document is inadmissible (Magellan Manufacturing Corporation vs. CA,
201 SCRA 106).[10] (Words in bracket ours).

We agree.

The appellate court is correct in declaring that under the parole evidence rule, when the
parties have reduced their agreement into writing, they are deemed to have intended such written
agreement to be the sole repository and memorial of everything that they have agreed upon. All
their prior and contemporaneous agreements are deemed to be merged in the written document
so that, as between them and their successors-in-interest, such writing becomes exclusive
evidence of the terms thereof and any verbal agreement which tends to vary, alter or modify the
same is not admissible.[11]

Here, the terms of the subject promissory note and the deed of chattel mortgage are clear
and explicit and devoid of any conditionality upon which its validity depends. To be sure, Allied
Bank was not a party to SEC Case No. 2042 where the management committee was ordered
created; hence, it would not be correct to presume that it had notice of the existence of the
management committee which, incidentally, was still to be created when the subject promissory
note was executed on 12 August 1981. Notably, while the parties in SEC Case No. 2042 agreed to
form the management committee on 27 July 1981, it was only on 14 August 1981 when the
committee was actually created and its members appointed. Clearly then, the subject promissory
note was outside the realm of authority of the management committee. Corollarily, the chattel
mortgage accessory to it is likewise valid.

We thus declare and so hold that Allied Banks foreclosure of the chattel mortgage
constituted over the vessel Jean III was justified. On this score, we also rule that the loss of the
mortgaged chattel brought about by its sinking must be borne not by Allied Bank but by the
spouses Cheng. As owners of the fishing vessel, it was incumbent upon the spouses to insure it
against loss. Thus, when the vessel sank before the chattel mortgage could be foreclosed,
uninsured as it is, its loss must be borne by the spouses Cheng.

We proceed to the third issue. Both the trial court and the appellate court are unanimous
in finding that the real estate mortgage executed by the spouses Cheng over their San Juan
property to secure the loan of GCPI cannot be held to secure the spouses obligation as co-makers
of the promissory note dated 12 August 1981. We see no reason to depart from the findings of
the two courts below.

Article 2126 of the Civil Code is explicit:

ART. 2126. The mortgage directly and immediately subjects the property upon
which it is imposed, whoever the possessor may be, to the fulfillment of the obligation
for whose security it was constituted.

The agreement between the Cheng spouses and Allied Bank as evidenced by the receipt
signed by Allied Banks representative is that the San Juan property shall collateralize the approved
loan of GCPI, thus indicating the specific loan to be secured and nothing else. To be sure, the
obligation of GCPI was already paid in full. Hence the real estate mortgage accessory to it was
inevitably extinguished.

All told, we find no reversible error committed by the appellate court in rendering the
assailed 11 December 2001 Decision and subsequent 01 July 2002 Resolution in CA-G.R. CV
41280.

WHEREFORE, the consolidated petitions are DENIED and the challenged decision and
resolution of the Court of Appeals AFFIRMED in toto. SO ORDERED.
NORTON RESOURCES AND DEVELOPMENT G.R. No. 162523
CORPORATION,
Petitioner,
November 25, 2009

- versus -

ALL ASIA BANK CORPORATION,*


Respondent.
x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Civil
Procedure, seeking the reversal of the Court of Appeals (CA) Decision[2] dated November 28, 2002
which set aside the Decision[3] of the Regional Trial Court (RTC) of Davao City, Branch 14, dated
August 27, 1999.

The Facts

Petitioner Norton Resources and Development Corporation (petitioner) is a domestic corporation


engaged in the business of construction and development of housing subdivisions based in Davao
City, while respondent All Asia Bank Corporation (respondent), formerly known as Banco Davao-
Davao City Development Bank, is a domestic banking corporation operating in Davao City.

On April 13, 1982, petitioner applied for and was granted a loan by respondent in the amount of
Three Million Eight Hundred Thousand Pesos (P3,800,000.00) as evidenced by a Loan
Agreement.[4] The loan was intended for the construction of 160 housing units on a 3.9 hectare
property located in Matina Aplaya, Davao Citywhich was subdivided by petitioner per Subdivision
Sketch Plan.[5] To speed up the processing of all documents necessary for the release of the funds,
petitioner allegedly offered respondent a service/commitment fee of P320,000.00 for the
construction of 160 housing units, or at P2,000.00 per unit. The offer having been accepted, both
parties executed a Memorandum of Agreement[6] (MOA) on the same date.

As guarantor, the Home Financing Corporation (HFC), a government entity tasked to encourage
lending institutions to participate in the government's housing programs, extended security
coverage obligating itself to pay the said loan upon default of petitioner. Out of the loan proceeds
in the amount of P3,800,000.00, respondent deducted in advance the amount of P320,000.00 as
commitment/service fee.

Unfortunately, petitioner was only able to construct 35 out of the 160 housing units proposed to
be constructed under the contract. In addition, petitioner defaulted in the payment of its loan
obligation. Thus, respondent made a call on the unconditional cash guarantee of HFC. In order to
recover from HFC, respondent assigned to HFC its interest over the mortgage by virtue of a Deed
of Assignment[7] on August 28, 1983 coupled with the delivery of the Transfer Certificate of Title.

As of August 2, 1983, the outstanding obligation of petitioner amounted to P3,240,757.99. HFC


paid only P2,990,757.99, withholding the amount of P250,000.00.Upon payment, HFC executed a
Deed of Release of Mortgage[8] on February 14, 1984, thereby canceling the mortgage of all
properties listed in the Deed of Assignment. Respondent made several demands from HFC for the
payment of the amount of P250,000.00 but HFC continued to withhold the same upon the request
of petitioner. Thus, respondent filed an action to recover the P250,000.00 with the RTC, Branch
15, of Davao City, docketed as Civil Case No. 17048.[9] On April 13, 1987, said RTC rendered a
Decision[10] in favor of respondent, the dispositive portion thereof reads as follows:

IN VIEW WHEREOF, judgment is hereby rendered as follows:

1. The defendant shall return to the plaintiff the P250,000.00 with legal interest to
be computed from April 12, 1984 until fully paid.

2. The defendant shall pay the plaintiff fifty thousand pesos (P50,000.00) as
attorneys fees and P7,174.82 as collection expenses.

3. The defendant shall pay the costs of this suit.

SO ORDERED.[11]

HFC appealed to the CA which, in turn, sustained the decision of the RTC. The CA decision became
final and executory.

However, on February 22, 1993, petitioner filed a Complaint[12] for Sum of Money, Damages and
Attorneys Fees against respondent with the RTC, docketed as Civil Case No. 21-880-93. Petitioner
alleged that the P320,000.00 commitment/service fee mentioned in the MOA was to be paid on a
per-unit basis at P2,000.00 per unit. Inasmuch as only 35 housing units were constructed,
petitioner posited that it was only liable to pay P70,000.00 and not the whole amount
of P320,000.00, which was deducted in advance from the proceeds of the loan. As such, petitioner
demanded the return of P250,000.00, representing the commitment fee for the 125 housing units
left unconstructed and unduly collected by respondent.

In its Answer,[13] respondent denied that the P320,000.00 commitment/service fee provided in the
MOA was broken down into P2,000.00 per housing unit for 160 units. Moreover, respondent
averred that petitioners action was already barred by res judicata considering that the present
controversy had already been settled in a previous judgment rendered by RTC, Branch 15,
of Davao City in Civil Case No. 17048.

The RTC's Ruling

After trial on the merits, the RTC rendered a Decision[14] on August 27, 1999 in favor of
petitioner. It held that the amount of P320,000.00, as commitment/service fee provided in the
MOA, was based on the 160 proposed housing units at P2,000.00 per unit. Since petitioner was
able to

construct only 35 units, there was overpayment to respondent in the amount of P250,000.00.
Thus, the RTC disposed of the case in this wise:

THE FOREGOING CONSIDERED, judgment is hereby rendered for the plaintiff and
against the defendant ordering the said defendant:

1. To pay the plaintiff the amount of TWO HUNDRED FIFTY THOUSAND PESOS
(P250,000.00) with interest at the legal rate reckoned from February 22, 1993, the
date of the filing of the plaintiffs complaint until the same shall have been fully paid
and satisfied;

2. To pay the plaintiff the sum of THIRTY THOUSAND PESOS (P30,000.00)


representing litigation expenses;

3. To pay the plaintiff the sum of SIXTY TWO THOUSAND FIVE HUNDRED PESOS
(P62,500.00) as and for attorneys fees; and

4. To pay the costs.

SO ORDERED.[15]

Aggrieved, respondent appealed to the CA.[16]

The CA's Ruling

On November 28, 2002, the CA reversed the ruling of the RTC. The CA held that from the literal
import of the MOA, nothing was mentioned about the arrangement that the payment of the
commitment/service fee of P320,000.00 was on a per unit basis valued at P2,000.00 per housing
unit and dependent upon the actual construction or completion of said units. The CA opined that
the MOA duly contained all the terms agreed upon by the parties.

Undaunted, petitioner filed a Motion for Reconsideration[17] which was, however, denied by the CA
in its Resolution[18] dated February 13, 2004.

Hence, this Petition which raised the following issues:

1. WHETHER OR NOT THE MEMORANDU[M] OF AGREEMENT (MOA) REFLECTS THE


TRUE INTENTION OF THE PARTIES[;]

2. WHETHER OR NOT HEREIN PETITIONER IS ENTITLED TO RECOVER THE AMOUNT


OF TWO HUNDRED [FIFTY] THOUSAND PESOS REPRESENTING THE ONE
HUNDRED TWENTY FIVE (125) UNCONSTRUCTED HOUSING UNITS AT TWO
THOUSAND PESOS (PHP. 2,000.00) EACH AS AGREED [; AND]

3. WHETHER OR NOT VICTOR FACUNDO AS THE VICE PRESIDENT AND GENERAL


MANAGER AT THE TIME THE AFOREMENTIONED MOA WAS EXECUTED, WAS
AUTHORIZED TO ENTER INTO [AN] AGREEMENT AND TO NEGOTIATE THE
TERMS AND CONDITIONS THEREOF TO THEIR CLIENTELE.[19]

Our Ruling

The instant Petition is bereft of merit.

Our ruling in Benguet Corporation, et al. v. Cesar Cabildo[20] is instructive:

The cardinal rule in the interpretation of contracts is embodied in the first paragraph
of Article 1370 of the Civil Code: "[i]f the terms of a contract are clear and leave no
doubt upon the intention of the contracting parties, the literal meaning of its
stipulations shall control." This provision is akin to the "plain meaning rule" applied
by Pennsylvania courts, which assumes that the intent of the parties to an
instrument is "embodied in the writing itself, and when the words are clear and
unambiguous the intent is to be discovered only from the express language of the
agreement." It also resembles the "four corners" rule, a principle which allows courts
in some cases to search beneath the semantic surface for clues to meaning. A court's
purpose in examining a contract is to interpret the intent of the contracting parties,
as objectively manifested by them. The process of interpreting a contract requires
the court to make a preliminary inquiry as to whether the contract before it is
ambiguous. A contract provision is ambiguous if it is susceptible of two reasonable
alternative interpretations. Where the written terms of the contract are not
ambiguous and can only be read one way, the court will interpret the contract as a
matter of law. If the contract is determined to be ambiguous, then the interpretation
of the contract is left to the court, to resolve the ambiguity in the light of the intrinsic
evidence.
In our jurisdiction, the rule is thoroughly discussed in Bautista v. Court of Appeals:

The rule is that where the language of a contract is plain and


unambiguous, its meaning should be determined without reference to
extrinsic facts or aids. The intention of the parties must be gathered
from that language, and from that language alone. Stated differently,
where the language of a written contract is clear and unambiguous, the
contract must be taken to mean that which, on its face, it purports to
mean, unless some good reason can be assigned to show that the words
should be understood in a different sense. Courts cannot make for the
parties better or more equitable agreements than they themselves have
been satisfied to make, or rewrite contracts because they operate
harshly or inequitably as to one of the parties, or alter them for the
benefit of one party and to the detriment of the other, or by
construction, relieve one of the parties from the terms which he
voluntarily consented to, or impose on him those which he did not.[21]

Moreover, Section 9, Rule 130 of the Revised Rules of Court clearly provides:

SEC. 9. Evidence of written agreements. When the terms of an agreement have


been reduced to writing, it is considered as containing 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.

However, a party may present evidence to modify, explain or add to the terms of
the written agreement if he puts in issue in his pleading:

(a) An intrinsic ambiguity, mistake, or imperfection in the written agreement;

(b) The failure of the written agreement to express the true intent and agreement
of the parties thereto;

(c) The validity of the written agreement; or

(d) The existence of other terms agreed to by the parties or their successors in
interest after the execution of the written agreement.

The parol evidence rule forbids any addition to or contradiction of the terms of a written instrument
by testimony or other evidence purporting to show that, at or before the execution of the parties'
written agreement, other or different terms were agreed upon by the parties, varying the purport
of the written contract. When an agreement has been reduced to writing, the parties cannot be
permitted to adduce evidence to prove alleged practices which, to all purposes, would alter the
terms of the written agreement. Whatever is not found in the writing is understood to have been
waived and abandoned.[22] None of the above-cited exceptions finds application in this case, more
particularly the alleged failure of the MOA to express the true intent and agreement of the parties
concerning the commitment/service fee of P320,000.00.

In this case, paragraph 4 of the MOA plainly states:

4. That the CLIENT offers and agrees to pay a commitment and service fee of THREE
HUNDRED TWENTY THOUSAND PESOS (P320,000.00), which shall be paid in two (2)
equal installments, on the same dates as the first and second partial releases of the
proceeds of the loan.[23]

As such, we agree with the findings of the CA when it aptly and judiciously held, to wit:

Unmistakably, the testimonies of Antonio Soriano and Victor Facundo jibed in


material points especially when they testified that the P320,000.00
commitment/service fee mentioned in Paragraph 4 of Exhibit B is not to be paid in
lump sum but on a per unit basis valued at P2,000.00 per housing unit. But a careful
scrutiny of such testimonies discloses that they are not in accord with the
documentary evidence on record. It must be stressed that both Antonio Soriano and
Victor Facundo testified that the P320,000.00 commitment/service fee was arrived
at by multiplying P2,000.00, the cost per housing unit; by 160, the total number of
housing units proposed to be constructed by the [petitioner] as evidenced by a
certain subdivision survey plan of [petitioner] marked as Exhibit C.

xxxx

Looking closely at Exhibit C, noticeable are the date of survey of the subdivision
which is May 15-31, 1982 and the date of its approval which is June 25, 1982, which
dates are unmistakably later than the execution of the Loan Agreement (Exhibit A)
and Exhibit B which was on April 13, 1982. With these dates, we cannot lose sight
of the fact that it was impossible for Victor Facundo to have considered Exhibit C as
one of the documents presented by [petitioner] to support its proposal that the
commitment/service fee be paid on a per unit basis at P2,000.00 a unit. x x x.

xxxx
To stress, there is not even a slim possibility that said blue print (referring to Exhibit
C) was submitted to [respondent] bank during the negotiation of the terms of Exhibit
B and was made the basis for the computation of P320,000.00 commitment/service
fee. As seen on its face, Exhibit C was approved in a much later date than the
execution of Exhibit B which was on April 13, 1982. In addition, as viewed from the
foregoing testimony, no less than Victor Facundo himself admitted that there were
only 127 proposed housing units instead of 160. Considering these factual milieus,
there is sufficient justification to discredit the stance of [petitioner] that Exhibit B
was not reflective of the true intention or agreement of the parties. Paragraph 4 of
Exhibit B is clear and explicit in its terms, leaving no room for different interpretation.
Considering the absence of any credible and competent evidence of the alleged true
and real intention of the parties, the terms of Paragraph 4 of Exhibit B remains as it
was written. Therefore, the payment of P320,000.00 commitment/service fee
mentioned in Exhibit B must be paid in lump sum and not on a per unit
basis. Consequently, we rule that [petitioner] is not entitled to the return
of P250,000.00.[24]

The agreement or 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. Thus, when
the terms of an agreement have been reduced to writing, it is considered as containing all the
terms agreed upon and there can be no evidence of such terms other than the contents of the
written agreement between the parties and their successors in interest. [25] Time and again, we
have stressed the rule that a contract is the law between the parties, and courts have no choice
but to enforce such contract so long as it is not contrary to law, morals, good customs or public
policy. Otherwise, courts would be interfering with the freedom of contract of the parties. Simply
put, courts cannot stipulate for the parties or amend the latter's agreement, for to do so would be
to alter the real intention of the contracting parties when the contrary function of courts is to give
force and effect to the intention of the parties.[26]

Finally, as correctly observed by respondent, petitioner's claim that the MOA is a contract of
adhesion was never raised by petitioner before the lower courts. Settled is the rule that points of
law, theories, issues, and arguments not adequately brought to the attention of the trial court
need not be, and ordinarily will not be, considered by a reviewing court. They cannot be raised for
the first time on appeal. To allow this would be offensive to the basic rules of fair play, justice and
due process.[27]

A contract of adhesion is defined as one in which one of the parties imposes a ready-made form
of contract, which the other party may accept or reject, but which the latter cannot modify. One
party prepares the stipulation in the contract, while the other party merely affixes his signature
or his "adhesion" thereto, giving no room for negotiation and depriving the latter of the opportunity
to bargain on equal footing.[28] It must be borne in mind, however, that contracts of adhesion are
not invalid per se. Contracts of adhesion, where one party imposes a ready-made form of contract
on the other, are not entirely prohibited. The one who adheres to the contract is, in reality, free
to reject it entirely; if he adheres, he gives his consent.[29]

All told, we find no reason to disturb, much less, to reverse the assailed CA Decision.
WHEREFORE, the instant Petition is DENIED and the assailed Court of Appeals Decision
is AFFIRMED. Costs against petitioner. SO ORDERED.
LYNN MAAGAD and the G.R. No. 171762
DIRECTOR OF LANDS,
Petitioners,

- versus - Promulgated:

JUANITO MAAGAD, June 5, 2009


Respondent.

x-----------------------------------------------------------------------------------------x

DECISION

PUNO, C.J.:

This petition for review on certiorari[1] assails the Decision of the Court of Appeals (CA)[2] in CA-
G.R. CV No. 56663. The CA reversed and set aside the Decision of the Regional Trial Court
(RTC)[3] of Misamis Oriental, which dismissed for lack of evidence the Complaint for Annulment
and/or Reconveyance of Title with Damages filed by herein respondent.
The parcel of land in dispute is Lot No. 6297, Cad-237, C-5 (Lot 6297) with an area of five
thousand, one hundred thirty-four square meters (5,134 sq. m.) located in Bulua, Cagayan de Oro
City. Lot 6297 formed part of the estate of Proceso Maagad. Upon his death sometime in 1963[4] or
1965,[5] he was survived by his children Amadeo, Adelo (father of petitioner Lynn), Loreto and
Juanito (respondent), all surnamed Maagad.

On 20 June 1972, the heirs of Proceso executed an Extrajudicial Partition of Real Estate
(Partition)[6] dividing among themselves their fathers properties. In the Partition, Lot 6297 was
conveyed to Adelo while Lot No. 6270[7] was allotted to respondent Juanito.

Respondent Juanito claimed that the Partition mistakenly adjudicated Lot 6297 to Adelo,
and Lot No. 6270 to himself, when it should have been the reverse. He asserted that: (1) he had
been in continuous possession of Lot 6297 even before the death of their father, Proceso; (2) the
lot was given to him by their father when Juanito married in 1952; (3) he had been religiously
paying the realty taxes due the land; and (4) Adelo, up to his death in 1989, recognized and
respected Juanitos possession and ownership over Lot 6297 and, in turn, possessed and paid
realty taxes for Lot No. 6270.

To rectify the alleged mistake, respondent Juanito and the children of Adelo, namely: Dina,
Ely and petitioner Lynn, executed on 29 January 1990 a Memorandum of Exchange which stated
in part:

xxx
2. That the ownership of the parties over the said properties [is] not absolute
considering the fact that there was a mistake in designating the owner of the
respective properties. Lot No. 6270 should have been given to the Party of the
Second Part and Lot No. 6297 should have been allotted to the Party of the First
Part. This wrong designation was committed in the settlement and partition of the
estate of the late Proceso Maagad.
3. That the parties herein in order to correct the foregoing error, do hereby
covenanted and/or agreed to EXCHANGE THE SAID PROPERTIES in such a way that
LOT NO. 6270 shall now belong or [be] exclusively owned by the Party of the Second
Par[t], while LOT NO. 6297 shall be owned and belong to the Party of the First
Part. That proper transfer of tax declarations shall be made in accordance with this
agreement of exchange.[8]

However, an erroneous assignment of the Party of the First Part and the Party of the Second Part
resulted in a repeat of the mistake attendant in the Partition which the parties had intended to
correct. Thus, once again, Lot 6297 was allotted to the heirs of the now deceased Adelo while Lot
No. 6270 was partitioned to respondent Juanito. The latter only discovered the error later on in
the year when petitioner Lynn caused the publication of the Partition in a local newspaper.

Unbeknownst to respondent Juanito, on 15 October 1992, petitioner Lynn, representing his


siblings, applied for a free patent over Lot 6297 with the Bureau of Lands, Cagayan de Oro City. On
6 January 1993, he wrote respondent demanding the surrender of the possession of Lot 6297
which the latter ignored, believing in good faith that the demand had no basis.

Subsequently, petitioner Lynns free patent application was approved and Free Patent No. 104305-
93-932 was issued on 4 August 1993. Pursuant thereto, OCT No. P-3614,[9] in the name of the
Heirs of Adelo Maagad represented by Lynn V. Maagad, was issued and recorded in the Register
of Deeds of Cagayan de Oro City on 10 August 1993.
Thus, on 21 February 1994, respondent Juanito filed a Complaint for Annulment of Title with
Damages before the RTC, which was later amended to include a prayer for the alternative relief of
reconveyance of title.

Trial ensued. After presentation of the plaintiffs evidence, then defendant and herein
petitioner, Lynn Maagad, filed a demurrer to evidence alleging that based on the facts established
and the laws applicable to the case, then plaintiff and herein respondent, Juanito Maagad, had not
shown any right to the reliefs prayed for.

On 6 March 1997, the RTC granted the demurrer and dismissed the case for lack of
evidence. It ratiocinated, viz.:

When the heirs of Proceso Maagad executed the Extra-judicial Partition, all the
four (4) heirs signed the document on the agreement that what was adjudicated to
them should now belong to each of them. The allegation of the witnesses for plaintiff
[now respondent] that Lot No. 6297 was only mistakenly adjudicated to Adelo
Maagad as plaintiffs children were in possession of the property is belied by the fact
that plaintiff signed the Extra-judicial Partition. Whatever right plaintiff may have had
over the property had been waived by his signing the document.

It is worthy to note that a Deed of Exchange was executed at the instance of


plaintiff 18 years after the partition. But still, it is clear under the terms of the
document that Lot No. 6297 belongs to Adelo Maagad and Lot No. 6270 belongs to
Juanito. [The] [p]ertinent provision of law applicable to the aforestated issue is
Section 9 of Rule 130 which states:
SECTION 9. Evidence of written agreements. When the terms of
an agreement have been reduced to writing, i[t] i[s] considered as
containing all the terms agreed upon and there can be, between the
parties and their successors in interest, no evidence of such terms other
tha[n] the contents of the written agreement.

Plaintiff is not allowed to alter the contents of the extra-judicial partition by


parol evidence. Parol evidence rule forbids any addition to or contradiction of the
terms of a written instrument. x x x

Even granting arguendo that there was a mistake in the extra-judicial partition,
plaintiffs evidence still fall[s] short of justifying the reformation of the
instrument. The testimonies of its witnesses have not proved by clear and convincing
evidence that the alleged mistake did not express the true intention of the parties.

xxxx

WHEREFORE, premises considered, judgment is hereby rendered dismissing


the above-entitled case for lack of evidence.[10]

On appeal, the CA reversed and set aside the ruling of the RTC, viz.:

WHEREFORE, all the foregoing considered, the appeal is hereby GRANTED and the
assailed decision is REVERSED AND SET ASIDE. OCT No. P-3614 issued to the
Heirs of Adelo Maagad is hereby declared NULL AND VOID and plaintiff-appellant
declared the rightful owner and possessor of Lot No. 6297, Cad 237, C-5.[11]

Hence, this petition for review on certiorari which calls upon the Court to resolve the
following issues: (1) whether Juanito Maagad has a superior right over Lot6297; (2) whether OCT
No. P-3614, issued pursuant to the free patent application, should be declared null and void; and
corollarily, (3) whether the title can be reconveyed to respondent.
On the question of whether respondent Juanito Maagad has a superior right over Lot 6297,
the CA ruled in the affirmative, viz.:

The records of the case indubitably show that the Deed of Extrajudicial Partition
executed in 1972 between and among the heirs of Proce[s]o Maagad, namely Adelo,
Juanito, Loreto and Amadeo, contained a patent mistake by the erroneous
adjudication of Lot No. 6297 to Adelo, herein defendant-appellees [now petitioners]
father, considering that the said lot had long been in the actual possession of plaintiff-
appellant [now respondent], through his father, and of the adjudication of Lot No.
6270 to plaintiff-appellant when the same had already been declared in Adelos name.

Consequently, the necessity to rectify the error arose. Hence, on January 29, 1990,
plaintiff-appellant together with Adelos heirs, including herein defendant-
appellee Lynn, executed a Memorandum of Exchange to conform to the real intention
of the extra-judicial partition. The instrument intended to exchange [Lot Nos.] 6297
and 6270; specifically, to transfer Lot No. 6297 from the heirs of Adelo Maagad to
plaintiff-appellant, and in turn, to effect the transfer of Lot No. 6270 from the latter
to the former. But for reasons beyond the intervention of the parties, the
Memorandum of Exchange reflected the same mistake, thus, no exchange of property
was in reality effected.

We find, however, that notwithstanding the failure to effect the exchange of the
properties, defendant-appellees voluntary and active participation in the execution of
the Memorandum of Exchange clearly demonstrated his recognition of the mistake in
the instrument of partition. The intent to effect the exchange in order to correct the
defect in the partition was strongly manifested when defendant-appellee voluntarily
subscribed to the instrument. By his act, the latter is estopped from negating the
existence of the mistake in the adjudication of the properties and of plaintiff-
appellants pre-existing rights over Lot No. 6297.
Hence, We find defendant-appellees contention tenuous that Lot No. 6297
belonged to him and his siblings by way of inheritance from their father
Adelo, who in turn obtained the same through the Extrajudicial Partition. It
would be highly illogical and absurd for the parties to execute a
Memorandum of Exchange in the first place if there was nothing to exchange
at all, unless the purpose of said exchange was precisely to rectify and effect
the correct adjudication of the two lots in question.[12](emphasis added)

The parol evidence rule, [13] as relied on by the RTC to decide in favor of Lynn Maagad,
proscribes any addition to or contradiction of the terms of a written agreement by testimony
purporting to show that, at or before the signing of the document, other or different terms were
orally agreed upon by the parties.[14]However, the rule is not absolute and admits of
exceptions. Thus, among other grounds, a party may present evidence to modify, explain, or add
to the terms of the written agreement if he puts in issue in his pleading a mistake in the written
agreement. For the mistake to validly constitute an exception to the parol evidence rule, the
following elements must concur: (1) the mistake should be of fact; (2) the mistake should be
mutual or common to both parties to the instrument; and (3) the mistake should be alleged and
proved by clear and convincing evidence.[15]

We find that all the elements are present in the case at bar and there was indeed a mistake
in the terms of the Partition, thus exempting respondent Juanito from the general application of
the parol evidence rule.

We agree with the CA that [i]t would be highly illogical and absurd for the parties to execute
a Memorandum of Exchange in the first place if there was nothing to exchange at all, unless the
purpose of said exchange was precisely to rectify and effect the correct adjudication of the two
lots in question.[16] The mere fact of execution of a Memorandum of Exchange itself
indicates the existence of a mistake in the Partition which the parties sought to
correct. The existence of such mistake is further cemented with statements in the Memorandum
of Exchange, viz.:

xxx

2. That the ownership of the parties over the said properties [is] not absolute
considering the fact that there was a mistake in designating the owner of the
respective properties. x x x

3. That the parties herein in order to correct the foregoing error, do


hereby covenanted and/or agreed to EXCHANGE THE SAID PROPERTIES x x
x.[17] (emphases added)
The strongest evidence of mistake, however, is the admission by the petitioner
himself. In his Petition for Review on Certiorari, petitioner admits that, because of mutual
mistake, the Memorandum of Exchange failed to express the agreement of the parties to exchange
the properties. Moreover, he quotes, and agrees with, the decision of the CA and even refers to
the reformation of the original contract. Petitioner states:
In the case at bar, it became apparent that there was failure of the
Memorandum of Exchange to disclose the real agreement of the parties brought
about by the mutual mistakes of the parties as reflected in the said instrument (Article
1361, Civil Code of the Philipp[in]es).[18]

Thus[,] by reason of the mutual mistake which did not express the true
intent and agreement of the parties from a prior oral agreement to exchange
the propertybefore they have attempted to reduce it in writing, which attempt fails
by reason of such mistake, hence reformation enforces the original contract, if
necessary.

As aptly quoted from the basic decision, p. 15, thus:

Hence, WE find defendant-appellees contention tenuous that Lot


No. 6297 belonged to him and his siblings by way of inheritance from
their father, Adelo, who in turn obtained the same through Extra-judicial
Partition. It would be highly illogical and absurd for the parties to
execute a Memorandum of Exchange in the first place if there was
nothing to exchange at all, unless the purpose of said exchange was
precisely to rectify and effect the correct adjudication of the two lots in
question.

Indeed there was an attempt to rectify and effect the correct


adjudication of the two lots in question.[19] (emphases added)

It is well-settled that a judicial admission conclusively binds the party making it. He cannot
thereafter take a position contradictory to, or inconsistent with his pleadings. Acts or facts
admitted do not require proof and cannot be contradicted unless it is shown that the admission
was made through palpable mistake or that no such admission was made.[20] In the case at bar,
there is no proof of such exceptional circumstances, nor were they even alleged or availed of by
the petitioner.

Therefore, with the mistake in both the Partition and the Memorandum of Exchange duly
shown and admitted, we agree with the CA that respondent Juanito Maagad has a superior right
over Lot 6297 pursuant to the intended distribution of properties in the Partition.

We now proceed to the second and third issues of whether OCT No. P-3614 should be
declared null and void; and corollarily, whether it can be reconveyed to respondent. The CA held
that the certificate of title, having been issued pursuant to an invalid free patent, is null and
void. Being null and void, it cannot be reconveyed as it produced no legal effect.

Again, we agree with the CA.

The pertinent provision of the Public Land Act,[21] as amended by Republic Act No.
6940,[22] explicitly states the requirements for a free patent to be issued, viz.:

Sec. 44. Any natural-born citizen of the Philippines who is not the owner of
more than twelve (12) hectares and who, for at least thirty (30) years prior to the
effectivity of this amendatory Act, has continuously occupied and cultivated, either
by himself or through his predecessors-in-interest a tract or tracts of agricultural
public lands subject to disposition, who shall have paid the real estate tax thereon
while the same has not been occupied by any person shall be entitled, under the
provisions of this Chapter, to have a free patent issued to him for such tract or tracts
of such land not to exceed twelve (12) hectares.
The Order approving the free patent application of petitioner Lynn, representing the Heirs
of Adelo Maagad, stated that the applicant ha[d] already complied with all the requirements of the
law for the issuance of patent to the land.[23] As clearly provided by Sec. 44 of the Public Land Act,
the requirements include, among others, that: (1) the applicant has continuously
occupied and cultivated, either by himself or through his predecessors-in-interest, the tract or
tracts of agricultural public lands; (2) he shall have paid the real estate tax thereon; and (3) the
land has not been occupied by any person.

A perusal of the records clearly shows, however, that petitioner is not entitled to apply for,
much less be granted, a free patent over Lot 6297. When petitioner filed his free patent application
on 15 October 1992, he claimed prior, actual, and continuous possession and cultivation of the
lot. Yet such claim is belied by the letter, dated 6 January 1993, he subsequently sent to
respondent demanding surrender of the possession of the property. The letter reads:

January 6, 1993

Mr. Juanito Maagad


Zone 8, Bulua,
Cagayan de Oro City

Dear Mr. Maagad,

Please be informed that the parcel of land, Lot No. 6297 which has been occupied
by your children situated at Bulua, Cagayan de Oro City had been the same
property adjudicated in favor of ADELO MAAGAD as per Extra-Judicial Partition of
Real Estate executed by and between the Heirs of Proceso Maagad before Notary
Public, Ricardo A. Tapia per Doc. No. 433, Page No. 88, Book No. IV, series of 1972.
In this connection, my client, Lynn V. Maagad, one of the Heirs of Adelo Maagad,
desires to recover possession over the said Lot No. 6297. And, being close
relatives it is hoped that you could peacefully turn-over possession over the said
property to Lynn V. Maagad, without resorting to the costly avenue of litigation.
Anticipating your kind cooperation on the matter.

Very truly yours,

(SGD.) ELIZER C. FLORES

At my instance:

(SGD.) LYNN V. MAAGAD[24] (emphases added)

The letter proves that (1) petitioner Lynn was not in possession, much less occupation,
of Lot 6297; and (2) he had knowledge that the same was occupied by another person, contrary
to the claims he made when he applied for the free patent. Moreover, the records show that it
was, in fact, respondent who had possessed, occupied and cultivated Lot 6297 by planting coconut
trees thereon since around 1950.

Petitioner also claims that he had been religiously paying the realty taxes due Lot 6297 presenting,
as evidence, Tax Declaration No. 9365-140001 in the name of the Heirs of Adelo Maagad[25] and
an Official Receipt.[26] The claim is again belied by a perusal of the evidence. The tax declaration
and official receipt were issued only on 15 September 1993 and 8 October 1993, respectively,
both after the land title to the subject property had already been issued on 10 August
1993. In fact, the tax declaration notes that it was transferred by virtue of such land title. The
records again show that it was respondent Juanito who had been paying the realty taxes.

In view of the foregoing, we hold that petitioner Lynn Maagad committed fraud and gross
misrepresentation in his free patent application. Actual or positive fraud proceeds from an
intentional deception practiced by means of misrepresentation of material facts,[27] which in this
case was the conscious misrepresentation by petitioner that he was a fully qualified applicant
possessing all the requirements provided by law. Moreover, failure and intentional omission of the
petitioner-applicant to disclose the fact of actual physical possession by the respondent constitutes
an allegation of actual fraud. It is likewise fraud to knowingly omit or conceal a fact, upon which
benefit is obtained to the prejudice of a third person.[28]

Petitioner Lynn Maagad was never qualified to apply for a free patent. Hence, the free patent
granted on the bases of fraud and misrepresentation is null and void.Consequently, OCT No. P-
3614 issued pursuant thereto is likewise null and void. Being such, it cannot be reconveyed. Quod
nullum est, nullum producit effectum.That which is a nullity produces no effect.
IN VIEW WHEREOF, the instant petition for review on certiorari is DENIED. The assailed
7 February 2006 Decision of the Court of Appeals in CA-G.R. CV No. 56663 is AFFIRMED.

Costs against petitioner.

SO ORDERED.
G.R. No. 73039 October 9, 1987

PERFECTA CAVILI, PRIMITIVO CAVILI and QUIRINO CAVILI, petitioners,


vs.
HON. TEODORO N. FLORENDO, Presiding Judge, Branch XXXVI, Regional Trial Court of
Negros Oriental, 7th Judicial Region, CLARITA CAVILI, ULPIANO CAVILI, ESTRELLA
CAVILI, PLACIDA CAVILI, ET AL., respondents.

No. L-68680 October 9, 1987

PERFECTA CAVILI, PRIMITIVO CAVILI and QUIRINO CAVILI, petitioners,


vs.
HON. TEODORO N. FLORENDO, Presiding Judge, Branch XXXVI, Regional Trial Court,
7th Judicial Region, CLARITA CAVILI, ULPIANO CAVILI, ESTRELLA CAVILI, PLACIDA
CAVILI, GREGORIA CAVILI, FORTUNATA CAVILI, AMILITA CAVILI, APAD CAVILI,
AQUILINA CAVILI, CRESENCIO CAVILI, ALMA CAVILI, ET AL., respondents.

No. L-57771 October 9, 1987

QUIRINO CAVILI, PRIMITIVO, CAVILI, and PERFECTA CAVILI, petitioners,


vs.
HON. CIPRIANO VAMENTA, JR., as Presiding Judge, Branch III Court of First Instance
of Negros Oriental; ULPIANO CAVILI, CLARITA CAVILI, ESTRELLA CAVILI, RAMONA
TAKANG COSME TAKANG FABIAN TAKANG, LEODEGARIO TAKANG ET AL., respondents.

GUTIERREZ, JR., J.:

This is a petition to review and set aside two orders of the then Court of First Instance of Negros
Oriental, namely: (1) the order dated October 11, 1985, disqualifying Perfects Cavili dela Cruz as
a witness in Civil Case No. 6880 entitled "Clarita Cavili, et al. v. Perfecta Cavili, Quirino Cavili, and
Primitivo Cavili" and (2) the order dated November 26, 1985, refusing to reconsider the previous
orders of disqualification and resetting the reception of evidence for the defendants to December
19 and 20, 1985 with a warning that should defendants' witnesses fail to appear in court on said
date, they will be deemed to have waived their right to be witnesses in this case.

The private respondents filed Civil Case No. 6880 with the Court of First Instance of Negros Oriental
against herein petitioners for Partition, Accounting, and Damages. After the case was raffled to
Branch I presided over by Judge Augusto S. Villarin, summons was issued to the three petitioners,
all at Bayawan Negros Oriental which was the address indicated in the complaint.

After trying to effect service, the process server went back to the court with the following return
of service to Quirino and Primitivo Cavili not contacted, according to Perfecta Cavili, subject
persons is (sic) staying in Kabangkalan, Negros Occidental."

Meanwhile, Atty. Jose P. Alamino filed a motion for extension to answer in behalf of the defendants,
manifesting the representation of his client Perfecta Cavili that she will inform her brothers
Primitivo and Quirino about the case.

The defendants, however, failed to file their answer within the request period and upon motion of
the plaintiffs, the defendants were declared in default, and on October 5, 1979, a judgment by
default was promulgated by Judge Augusto S. Villarin.

The records of the case, however, show that a Manifestation was filed by Atty. Jose P. Alamino
informing the court that since he never met Primitivo and Quirino Cavili, who are residents of
another province, he desisted from further appearing in the case in their behalf.

On November 7, 1979, Atty. Jose P. Alamillo received a copy of the decision. On December 7,
1979, he filed a motion for new trial in behalf of the defendants on grounds of lack of jurisdiction
and, with a meritorious defense that the properties sought to be partitioned have already been
the subject of a written partition agreement between the direct heirs of the late Bernardo Cavili
who are the predecessors of the parties in this case. In/an order dated April 23, 1980, the court
granted said motion.
The plaintiffs filed a motion for reconsideration of the order granting new trial and at the same
time prayed that a writ of execution be issued but only in so far as defendant Perfecta Cavili was
concerned.

In an order dated July 21, 1981, Judge Cipriano Vamenta of Branch III of the Court of First
Instance of Negros Oriental to whom the case had been assigned after a re-raffle, set aside the
order of April 23, 1980 and directed the execution of the October 5, 1979 decision without
qualification ruling that the petitioners' remedy should have been appeal rather than new trial.

Their motion for reconsideration having been denied on August 11, 1981, the defendants, now
petitioners, brought the case to this Court through a petition for certiorari, G.R. No. 57771, entitled
"Quirino Cavili, et al., Petitioners vs. Hon. Cipriano Vamenta, et al., Respondents "

On May 31, 1982, this Court rendered a decision, the dispositive portion of which reads:

WHEREFORE, Our resolution dismissing the petition is hereby reconsidered; the


petition is granted; and the order dated July 21, 1981, is set aside while that of April
23, 1980, is revived. (No special pronouncement as to costs. Rollo p. 21)

Thereafter, the pre-trial and trial of Civil Case No. 6880 was scheduled on October 9, 10, and 11,
1985 before Branch XXXVI of the Regional Trial Court, presided by respondent Judge Teodoro N.
Florendo. The defendants, (now petitioners), presented Perfects Cavili dela Cruz as their first
witness. The respondents, through counsel moved for her disqualification as a witness on the
ground that having been declared in default, Perfects Cavili has lost her standing in court and she
cannot be allowed to participate in all premise the even as a witness. The court, through the
respondent judge, sustained the respondents' contention and disqualified her from testifying.

The petitioners, through counsel, moved for a reconsideration of the ruling.

On November 26, 1985, the lower court issued an order denying reconsideration of its Order dated
October 11, 1985 disqualifying Perfecta Cavili dela Cruz as a witness in Civil Case No. 6880.

Hence, this petition.

Petitioner Perfecta Cavili's competence as a witness is put in issue by the private respondents.

Section 18, Rule 130 of the Revised Rules of Court states who are qualified to be witnesses. It
provides:

Section 18. Witnesses; their qualifications. — Except as provided in the next succeeding section,
all persons who, having organs of sense, can perceive, and perceiving, can make known their
perception to others, may be witnesses. Neither parties nor other persons interested in the
outcome of a case shall be excluded; nor those who have been convicted of crime; nor any person
on account of his opinion on matters of religious belief.

The generosity with which the Rule allows people to testify is apparent. Interest in the outcome of
a case, conviction of a crime unless otherwise provided by law, and religious belief are not grounds
for disqualification.

Sections 19 and 20 of Rule 130 provide for specific disqualifications. Section 19 disqualifies those
who are mentally incapacitated and children whose tender age or immaturity renders them
incapable of being witnesses. Section 20 provides for disqualification based on conflicts of interest
or on relationship. Section 21 provides for disqualifications based on privileged communications.
Section 15 of Rule 132 may not be a rule on disqualification of witnesses but it states the grounds
when a witness may be impeached by the party against whom he was called.

There is no provision of the Rules disqualifying parties declared in default from taking the witness
stand for non-disqualified parties. The law does not provide default as an exception. The specific
enumeration of disqualified witnesses excludes the operation of causes of disability other than
those mentioned in the Rules. It is a maxim of recognized utility and merit in the construction of
statutes that an express exception, exemption, or saving clause excludes other exceptions. (In Re
Estate of Enriquez, 29 Phil. 167) As a general rule, where there are express exceptions these
comprise the only limitations on the operation of a statute and no other exception will be implied.
(Sutherland on Statutory Construction, Fourth Edition, Vol. 2A, p. 90) The Rules should not be
interpreted to include an exception not embodied therein.
The respondents, however, cite Section 2, Rule 18 on Defaults, to wit:

Section 2. Effect of order of default. — Except as provided in section 9 of Rule 13, a party declared
in default shall not be entitled to notice of subsequent proceedings nor to take part in the trial.

They advance the argument that to allow Perfecta Cavili to stand as witness would be to permit a
party in default "to take part in the trial."

An explanation of the Rule is in order.

Loss of standing in court is the consequence of an order of default. Thus, a party declared in
default is considered out of court and cannot appear therein, adduce evidence, and be heard and
for that reason he is not entitled to notice. (Rule 18, Rules of Court; Lim Toco v. Go Fay, 80 Phil.
166) However, "loss of pending" must be understood to mean only the forfeiture of one's rights
as a party litigant, contestant or legal adversary. A party in default loses his right to present his
defense, control the proceedings, and examine or cross-examine witnesses. He has no right to
expect that his pleadings would be acted upon by the court nor may he object to or refute evidence
or motions filed against him. There is nothing in the rule, however, which contemplates a
disqualification to be a witness or a opponent in a case. Default does not make him an incompetent.

As opposed to a party litigant, a witness is merely a beholder, a spectator or onlooker, called upon
to testify to what he has seen, heard, or observed. As such, he takes no active part in the contest
of rights between the parties. Cast in the cited role of witness, a party in default cannot be
considered as " a part in the trial." He remains suffering the effects of an order of default.

A party in default may thus be cited as a witness by his co-defendants who have the standing and
the right to present evidence which the former may provide. The incidental benefit giving the party
in default the opportunity to present evidence which may eventually redound to his advantage or
bring about a desired result, through his co-defendants, is of minor consequence.

Of greater concern or importance in allowing the presence of Perfecta Cavili as a witness in the
case at bar, is the preservation of the right of petitioners Quirino and Primitivo Cavili to secure the
attendance of witnesses and the production of evidence in their behalf. To reject Perfects Cavili's
presentation of testimonial evidence would be to treat Primitivo and Quirino, as if they too were
in default. There is no reason why the latter should also be made to bear the consequences of
Perfecta's omission. Moreover, we cannot deprive Quirino and Primitivo of the only instrument of
proof available to them, as Perfecta alone has been in possession and administration of the claim.

WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The order of the
respondent court disqualifying. Perfects Cavili dela Cruz as a witness in Civil Case No. 6880 is
hereby SET ASIDE. The case is remanded to the court a quo for Wither proceedings. The temporary
restraining order issued on January 6, 1986 is LIFTED. SO ORDERED.
G.R. No. L-39012 January 31, 1975

AVELINO ORDOÑO, petitioner,


vs.
HON. ANGEL DAQUIGAN, presiding Judge of the Court of First Instance of La Union,
Branch I and CONRADO V. POSADAS, First Assistant Provincial Fiscal of La Union and
the PEOPLE OF THE PHILIPPINES, respondents.

Pedro G. Peralta for petitioner.

Conrado V. Posadas for and in behalf of other respondents.

AQUINO, J.:

Avelino Ordoño was charged in the municipal court of San Gabriel, La Union with having raped his
daughter, Leonora, on October 11, 1970. The verified complaint dated November 7, 1973 was
signed by the twenty four year old victim (Criminal Case No. 104).

In support of that complaint, Catalina Balanon Ordoño, the mother of Leonora, executed a sworn
statement wherein she disclosed that on that same date, October 11th, Leonora had apprised her
of the outrage but no denunciation was filed because Avelino Ordoño threatened to kill Leonora
and Catalina (his daughter and wife, respectively) if they reported the crime to the police.

Catalina Ordoño in her sworn statement further revealed that her husband had also raped their
other daughter, Rosa, on March 25 and April 7, 1973. He was charged in court with that offense.

Catalina Ordoño said that the rape committed by Avelino Ordoño against Leonora was mentioned
during the investigation and trial of Avelino Ordoño for the rape committed against Rosa Ordoño.
Catalina's statement on this point is as follows:

Q — Why did you not file the complaint against your husband concerning the incident
involving Leonora Ordoño?

A — We Also narrated the incident during the investigation in the Fiscal's Office and
also when I testified in court in the case of my daughter Rosa Ordoño but then my
daughter Leonora Ordoño was still in Manila, sir.

During the preliminary investigation of the rape committed against Leonora, Catalina manifested
that she was no longer afraid to denounce Avelino Ordoño because he was already in jail for having
raped Rosa Ordoño.

The case against Avelino Ordoño, where Leonora Ordoño was the complainant, was elevated to
the Court of First Instance of La Union, San Fernando, Branch (Criminal Case No. 356). On May
29, 1974 the Fiscal presented Catalina Ordoño as the second prosecution witness. After she had
stated her personal circumstances, the defense counsel objected to her competency. He invoked
the marital disqualification rule found in Rule 130 of the Rules of Court which provides:

Sec. 20. Disqualification by reason of interest or relationship. — The following persons


cannot testify as to matters in which they are interested, directly or indirectly, as
herein enumerated:

xxx xxx xxx

(b) A husband cannot be examined for or against his wife without her consent; nor a
wife for or against her husband without his consent, except in a civil case by one
against the other or in a criminal case for a crime committed by one against the
other;

xxx xxx xxx

Counsel claimed that Avelino Ordoño had not consented expressly or impliedly to his wife's
testifying against him.
The trial court overruled the objection. After the denial of Avelino Ordoño's motion for the
reconsideration of the adverse ruling, he filed the instant action for certiorari and prohibition. He
was allowed to sue in forma pauperis.

The issue is whether the rape committed by the husband against his daughter is a crime committed
by him against his wife within the meaning of the exception found in the marital disqualification
rule.

Should the phrase "in a criminal case for a crime committed by one against the other" be restricted
to crimes committed by one spouse against the other, such as physical injuries, bigamy, adultery
or concubinage, or should it be given a latitudinarian interpretation as referring to any offense
causing marital discord?

There is a dictum that "where the marital and domestic relations are so strained that there is no
more harmony to be preserved nor peace and tranquility which may be disturbed, the reason
based upon such harmony and tranquility fails. In such a case identity of interests disappears and
the consequent danger of perjury based on that identity is non-existent. Likewise, in such a
situation, the security and confidences of private life which the law aims at protecting will be
nothing but ideals which, through their absence, merely leave a void in the unhappy home" (People
vs. Francisco, 78 Phil. 694, 704).

In the Francisco case, the wife, as a rebuttal witness, was allowed to testify against the husband
who was charged with having killed his son and who testified that it was the wife who killed their
son.

We think that the correct rule, which may be adopted in this jurisdiction, is that laid down in Cargill
vs. State, 35 ALR 133, 220 Pac. 64, 25 Okl. 314, wherein the court said:

The rule that the injury must amount to a physical wrong upon the person is too
narrow; and the rule that any offense remotely or indirectly affecting domestic
harmony comes within the exception is too broad. The better rule is that, when an
offense directly attack or directly and vitally impairs, the conjugal relation, it comes
within the exception to the statute that one shall not be a witness against the other
except in a criminal prosecution for a crime committed (by) one against the other.

Using the criterion thus judiciously enunciated in the Cargill case, it can be concluded that in the
law of evidence the rape perpetrated by the father against his daughter is a crime committed by
him against his wife (the victim's mother). *

That conclusion is in harmony with the practices and traditions of the Filipino family where,
normally, the daughter is close to the mother who, having breast-fed and reared her offspring, is
always ready to render her counsel and assistance in time of need. Indeed, when the daughter is
in distress or suffers moral or physical pain, she usually utters the word Inay (Mother) before she
invokes the name of the Lord.

Thus, in this case, when Avelino Ordoño, after having raped his daughter Leonora in the early
morning of October 11, 1970, tried to repeat the beastly act in the evening of that date, Leonora
shouted "Mother" and, on hearing that word, Avelino desisted.

That the rape of the daughter by the father, an undeniably abominable and revolting crime with
incestuous implications, positively undermines the connubial relationship, is a proposition too
obvious to require much elucidation.

In Wilkinson vs. People, 282 Pac. 257, it was held that the wife was a competent witness against
the husband in a prosecution for rape committed by the husband against his stepdaughter, who
is the wife's natural daughter because the crime was "an outrage upon nature in its dearest and
tenderest relations as well as a crime against humanity itself". The court adopted the interpretation
that "a criminal action or proceeding for a crime committed by one against the other" may refer
to a crime where the wife is the individual particularly and directly injured or affected by the crime
for which the husband is being prosecuted (See Dill vs. People, 19 Colo. 469, 475, 36 Pac. 229,
232).

In State vs. Chambers, 87 Iowa 1, 53 N.W. 1090, it was held under the statutory provision that
husband or wife shall in no case be a witness for or against the other, except in a criminal
proceeding for a crime committed by one against the other, that the wife was competent to testify
against the husband in a case where he was prosecuted for incest committed against his
stepdaughter.

In State vs. Shultz, 177 Iowa 321, 158 N.W. 539, it was held that the wife may testify against the
husband in a case where he was prosecuted for incest committed against their eleven-year old
daughter because incest is a "crime committed against the wife". (See Owens vs. State, 32 Neb.
167, 49 N.W. 226; Lord vs. State, 23 N.W. 507, 17 Neb. 526; People vs. Segura, 60 Phil. 933).

The trial court did not err in holding that Catalina Ordoño could testify against her husband, Avelino
Ordoño, in the case where he is being tried for having raped their daughter, Leonora. WHEREFORE,
the petition for certiorari and prohibition is dismissed. No costs. SO ORDERED.
PEOPLE OF G.R. No. 177572
THE PHILIPPINES,
Plaintiff-Appellee,
Promulgated:

-versus February 26, 2008

JUANITO DELA CRUZ Y


RIVERA,
Accused-Appellant.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

Of the so-called heinous crimes, none perhaps more deeply provokes feelings
of outrage, detestation, and disgust than incestuous rape. It is indeed difficult to find
a more perverted form of sexual aberration than this bestial felony. It is undeserving
of societys compassion or tolerance.[1]

We are called here to review the Decision rendered by the Court of Appeals in CA-G.R. CR-
HC No. 02407 dated 26 October 2006,[2] affirming with modification the Decision of the Manila
Regional Trial Court (RTC), Branch 163, in Criminal Cases No. 115031-H, No. 115032-H, No.
115033-H, and No. 115034-H dated 21 February 2000,[3] convicting the accused-
appellant Juanito R. dela Cruz of raping his own daughter, AAA,[4] with the use of force and
intimidation.

The records bear the following facts:

On 9 November 1998, four separate informations[5] were filed with the RTC against
appellant for rape, allegedly committed as follows:

CRIMINAL CASE NO. 115031-H

That sometime in March 1995, in XXX, Philippines, and within the jurisdiction of this
Honorable Court, above-named accused, with lewd designs and by taking advantage
of his moral ascendancy over his own daughter, AAA, then sixteen (16) years old and
by means of force, threat and intimidation, did, then and there, willfully, unlawfully,
and feloniously lie and have sexual intercourse with AAA, against her will.

CRIMINAL CASE NO. 115032-H

That during the period January to December 1996, in XXX, Philippines, and within
the jurisdiction of this Honorable Court, above-named accused, with lewd designs
and by taking advantage of his moral ascendancy over his own daughter, AAA, then
seventeen (17) years old and by means of force, threat and intimidation did, then
and there, willfully, unlawfully, and feloniously lie and have sexual intercourse with
AAA, against her will.

CRIMINAL CASE NO. 115033-H

That during the period January to December 1997, in XXX, Philippines, and within
the jurisdiction of this Honorable Court, above-named accused, with lewd designs
and by taking advantage of his moral ascendancy over his own daughter, AAA, and
by means of force, threat and intimidation did, then and there, willfully, unlawfully,
and feloniously lie and have sexual intercourse with AAA, against her will.
CRIMINAL CASE NO. 115034-H

That on or about July 24, 1998, in XXX, Philippines, and within the jurisdiction of
this Honorable Court, above-named accused, with lewd designs and by taking
advantage of his moral ascendancy over his own daughter, AAA, and by means of
force, threat and intimidation did, then and there, willfully, unlawfully, and feloniously
lie and have sexual intercourse with AAA, against her will.

Subsequently, these cases were consolidated for joint trial. When arraigned on 21 April
1999, appellant, with the assistance of counsel de oficio, pleaded Not Guilty to each of the
charges.[6] Thereafter, trial on the merits ensued.

The prosecution presented as witnesses AAA and Dr. Armie Soreto-Umil (Dr. Umil). Their
testimonies are as follows:

AAA testified that appellant is her father and BBB is her mother; that appellant and BBB are
married; that she is the fourth child in a brood of five children born to appellant and BBB; and
that she resided with her family at XXX.[7]

On 8 March 1995, AAA went home from work to celebrate with her family the birthday of
her younger brother, CCC. Later that evening, she slept inside the house, while appellant had a
drinking session with some friends outside the house. BBB was then peddling several merchandise
at the Quirino Memorial Hospital (QMH). Subsequently, appellant entered the house and lay down
beside her. Appellant fondled her breast and vagina. She resisted but to no avail because appellant
punched her in the stomach and slapped her face. Appellant then placed himself on top of her and
inserted his penis into her vagina. Thereafter, DDD, her elder brother, entered the house and saw
appellant on top of her. Afraid of appellant, DDD ignored the two. The following day, DDD told
AAA that he saw the incident and that he will report it to appellants sister, EEE. AAA did not inform
BBB of the incident because of her fear that appellant would make good his threat to kill her and
the rest of the family members.[8]

Again, in 1996, appellant, with the use of force, threat and intimidation, raped AAA six
times on several occasions inside the house. BBB was selling goods at the QMH during the
commission of these rapes.[9]

Likewise, in 1997, appellant, by applying the same physical harm, threat and intimidation,
sexually assaulted her several times inside the house. BBB was also out of the house when these
bestial acts transpired.[10]

On 24 July 1998, at about 1:00 in the morning, AAA and her siblings were sleeping inside
a nipa hut owned by her family and located in front of their house, while appellant was drinking
liquor with a certain Rey and Benito Casaljay outside the house. After the drinking
session, Rey and Benito left appellant. Appellant then entered the nipa hut, woke her up, and
started to make sexual advances on her. She tried to resist appellants onslaught but failed because
appellant punched her in the stomach. Appellant went on top of her and inserted his penis into
her vagina. After satisfying his lust, appellant warned her not to tell anyone of the incident or he
would kill her and the rest of the family members.[11]

Upon being informed by EEE of the incidents, BBB, on 30 July 1998, accompanied AAA to
the National Bureau of Investigation (NBI) office at Taft Avenue, Manila, and reported the heinous
acts of appellant. AAA also executed a Sinumpaang Salaysay regarding the incidents. Thereupon,
appellant was arrested and charged with rape.[12]

Dr. Umil narrated that she conducted a genital examination on AAA upon the request of NBI
Supervising Agent Rosalina Espina-Chiong. Her findings as stated in her medico-legal report are:
(1) no evident sign of any extra-genital physical injuries noted on the body of the subject at the
time of the examination; and (2) hymen, intact, but distensible, and its orifice wide (2.5 cm. in
diameter) as to allow complete penetration by an average-sized adult Filipino male organ in full
erection without producing hymenal injury.[13]

The prosecution also adduced documentary evidence to buttress the foregoing testimonies
of prosecution witnesses, to wit: (1) Sinumpaang Salaysay of AAA;[14] (2) Medico-Legal Report
regarding AAA signed and issued by Dr. Umali;[15] and (3) a letter written by appellant in a
Marlboro cigarette wrapper addressed to AAA asking her forgiveness.[16]

For its part, the defense proffered the lone testimony of appellant to refute the foregoing
accusations.

Appellant divulged that AAA is his daughter and BBB is his wife; that he did not rape AAA
on 8 March 1995; that a birthday celebration for one of his children, CCC, was held at their house
on 8 March 1995 which was attended by several friends; that he did not rape AAA in 1996, 1997,
and on 24 July 1998; that BBB, AAA and his other children resided with him in their house at XXX
from 8 March 1995 to 24 July 1998; that he had a drinking spree with Rey and Benito at nighttime
during the said periods; and that he wrote a letter to AAA but denied that it was the same one
presented by the prosecution.[17]

The defense also offered as its sole documentary evidence the Medico-Legal Report issued
and signed by Dr. Umil.

After trial, the RTC rendered a Decision finding appellant guilty of rape as alleged in the
four informations. In Criminal Cases No. 115031-H and No. 115032-H, the Court imposed on
appellant the penalty of death. In Criminal Cases No. 115033-H and No. 115034-H, appellant was
sentenced to reclusion perpetua. The dispositive portion of the decision reads:

WHEREFORE, this Court finds accused Juanito dela Cruz y Rivera, as follows:

1. In Criminal Case No. 115031-H, GUILTY as principal of the offense of qualified


rape penalized under then Article 335 of the Revised Penal Code, as amended by R.A.
7659, and sentences him to suffer the supreme penalty of DEATH. Accused is further
ordered to pay the offended person, AAA, the amount of Seventy-Five Thousand
Pesos (P75,000.00) as civil indemnity plus Fifty Thousand Pesos (P50,000.00) as
moral damages.
2. In Criminal Case No. 115032-H, GUILTY as principal of the offense of qualified
rape penalized under Article 335 of the Revised Penal Code, as amended by R.A.
7659, and sentences him to suffer the supreme penalty of DEATH. Accused is further
ordered to pay AAA the amount of Seventy-Five Thousand Pesos (P75,000.00) as
civil indemnity plus Fifty Thousand Pesos (P50,000.00) as moral damages.

3. In Criminal Case No. 115033-H, GUILTY as principal of the offense of simple rape
penalized under Article 335 of the Revised Penal Code, as amended by R.A. 7659
[Now Art. 266-A and Art. 266-B under R.A. 8353], and sentences him to suffer the
penalty of reclusion perpetua. Accused is further ordered to pay AAA the amount of
Fifty Thousand Pesos (P50,000.00) as civil indemnity plus the amount of Fifty
Thousand Pesos (P50,000.00) as moral damages.

4. In Criminal Case No. 115034-H, GUILTY as principal of the offense of simple rape
penalized under Article 266-B of the Revised Penal Code, as amended, and sentences
him to suffer the penalty of reclusion perpetua. Accused is further ordered to pay
AAA the sum of Fifty Thousand Pesos (P50,000.00) as civil indemnity and the amount
of Fifty Thousand Pesos (P50,000.00) as moral damages.[18]

In view of the death penalty it imposed on appellant in Criminal Cases No. 115031-H and
115032-H, the RTC forwarded the records of the cases to us for automatic review. However,
pursuant to our ruling in People v. Mateo,[19] we remanded the cases to the Court of Appeals for
disposition. On 26 October 2006, the appellate court promulgated its Decision affirming with
modifications the RTC decision. It held that appellant is liable only for simple rape and not qualified
rape in Criminal Cases No. 115031-H and No. 115032-H because the qualifying circumstance of
AAAs minority was not duly proven by the prosecution. Thus:

WHEREFORE, the February 12, 2000 Joint Decision, as far as Criminal Case No.
115033-H and Criminal Case No. 115034-H are concerned, is hereby AFFIRMED.

In Criminal Case No. 115031-H and Criminal Case No. 115032-H, finding the accused
guilty beyond reasonable doubt of two acts of simple rape, the Court hereby
sentences him to suffer the penalty of Reclusion Perpetua, to pay civil indemnity in
the amount of P50,000.00, and to pay moral damages in the amount of P50,000.00
in each case.[20]

In his Brief, appellant assigns the following errors:


I.

THE TRIAL COURT ERRED IN GIVING CREDENCE TO THE UNBELIEVABLE AND


UNCORROBORATED TESTIMONY OF COMPLAINANT AAA;
II.

THE TRIAL COURT ERRED IN CONVICTING ACCUSED-APPELLANT JUANITO DELA


CRUZ OF FOUR (4) COUNTS OF RAPE DESPITE FAILURE OF THE PROSECUTION TO
PROVE HIS GUILT BEYOND REASONABLE DOUBT.[21]

Rape is committed when the accused has carnal knowledge of the victim by force or
intimidation and without consent.[22]

In determining the guilt or innocence of the accused in cases of rape, the victims testimony
is crucial in view of the intrinsic nature of the crime in which only two persons are normally
involved. The accused may be convicted on the basis of the victims lone and uncorroborated
testimony provided it is clear, positive, convincing, and consistent with human nature.[23]
We have painstakingly reviewed the records and found that appellant had carnal knowledge
of AAA through force and intimidation on the dates stated in the informations. In her court
testimony, AAA positively and categorically identified the appellant as the one who ravished
her, viz:

Q. Now, on July 24, 1998 at about 1:00 in the morning, do you remember where
[you were]?
A. Yes, mam.

Q. Where were you then?


A. I was in our house, mam.

Q. Where is your house located?


A. At XXX.

Q. Do you recall of an unusual incident that happened on July 24, 1998 at your
house?
A. Yes, mam.

Q. What was that unusual incident?


A. At 1:00 in the early morning my father ginapangan niya ako.

Q. What do you mean ginapangan ka?


A. He raped me, mam.

Q. How did your father rape you?


A. He inserted his penis inside my vagina.

Q. When he inserted his penis into your vagina, what did you do?
A. I was not able to do anything because he already hurt me.

Q. What do you mean he hurt you?


A. I was struggling and he boxed me on my stomach.

Q. And, after that raped (sic) incident, what happened?


A. I was shocked, mam.

Q. Was that the first time that your father raped you?
A. No, mam.

Q. When was the first time?


A. On March 8, 1995, mam.

Q Why do you recall March 8, 1995 as the first time that your father raped you?
A That time I was at my work and I went home because my brother is (sic)
celebrating his birthday.

Q When did that rape that happened on March 8, 1995?


A In our house, mam.

xxxx

Q Now, on March 8, 1995 when your father raped you, what did you do, if any?
A I cannot do anything, mam, because he get (sic) what he wants.

COURT:

Q When you were raped on March 8, 1995, what did you do when you were being
raped?
A I was struggling away from him but he harmed me.

FISCAL:

Q How did your father hurt you?


A He boxed me on my stomach.

Q And, after that raped (sic) incident, what happened?


A I keep silent, mam.

Q Did you not try to tell your mother about that incident?
A No, mam.

Q Why did you not tell your mother?


A I was afraid, mam.

Q Why?
A Because he was threatening to kill my family.
xxxx

Q. What about in the year 1996, was there an unusual incident that happened
between you and your father?
A. Yes, mam, there is.

Q. Can you recall on what month?


A. I cannot remember, mam.

Q. But the same incident happened in 1996?


A. Yes, mam.

Q. If you can recall, how many times did he rape you in the year 1996?
A. Six (6) times, mam.

xxxx

Q. Was that six (6) times done on one occasion?


A. No, mam.

Q. So, there were several rapes?


A. Yes, mam.

Q. And, where did these six (6) rapes that happened in 1996 took place?
A. In our house also, mam.

Q. Also in XXX?
A. Yes, mam.

xxxx

Q. What about in 1997, do you recall of an unusual incident that happened between
you and your father?
A. Yes, mam.

Q. What was that unusual incident?


A. About the rape, mam.

Q. When was that if you can recall?


A. I cannot remember, mam, what I remember was only the last raped (sic).

COURT:

Q. But, how many times have you been raped in 1997?


A. Many times, your Honor.

Q. You cannot count it?


A. No, your Honor.

xxxx

Q. Now, madam witness, in the first occasion that you were raped by your father, did
he tell you anything before raping you?
A. None, sir.

Q. In other words, you would like to tell the court that he does not say anything he
just raped you without saying anything?
A. First, he was not able to say anything but after he raped me he said something.

Q. And, what did he tell you?


A. She (sic) told me not to report the incident because she (sic) will kill my family.

Q. Is that all what your father told you?


A. Yes, your Honor.

xxxx

Q. You did not tell (sic) your father why he is doing it to you?
A. I told him but he did not listen to me.

xxxx

Q. You said that you were punched in the stomach by your father prior to the sexual
attacked (sic) on you on July 24, 1998, isnt it? Other than being punched at
the stomach, what else did he do, if any?
A. Sinasampal po.

Q. How did you describe the pain when you were hit at the stomach?
A. I lost consciousness, sir.

Q. So, it was very strong, is that correct?


A. Yes, sir.

Q. And, he did it with the clench[ed] fist, is that correct?


A. Yes, sir.

Q. And, how many times did he club you?


A. Two (2) times, sir.[24]

It is a well-settled doctrine that the testimony of a youthful rape victim is given full weight
and credence considering that when a girl says that she has been raped, she says in effect all that
is necessary to show that rape was indeed committed.[25] It is against human nature for a young
girl to fabricate a story that would expose herself as well as her family to a lifetime of shame,
especially when her charge could mean the death or lifetime imprisonment of her own father.[26]

Further, the testimony of Dr. Umil corroborated the testimony of AAA on relevant and
substantial points.[27]

The testimonies of AAA and Dr. Umil are in harmony with the documentary evidence
submitted by the prosecution. The RTC and the Court of Appeals found their testimonies to be
credible, true and sufficiently reliable. Both courts also found no ill motive on their part to testify
against appellant.[28]

The rule is that the findings of the trial court, its calibration of the testimonies of the
witnesses and its assessment of the probative weight thereof, as well as its conclusions anchored
on said findings are accorded respect if not conclusive effect. This is more true if such findings
were affirmed by the appellate court. When the trial courts findings have been affirmed by the
appellate court, said findings are generally binding upon this Court.[29]
Appellant, however, alleges in his first assigned error several inconsistencies in the
testimony of AAA, to wit: (1) AAA testified that she was with her five siblings inside the house
when she was raped by appellant on 8 March 1995, while in her subsequent testimony she stated
that only DDD was present when she was raped by appellant on the said date; (2) AAA told the
court that she was with her five siblings inside the house when she was raped by appellant on 24
July 1998, while in her later testimony she narrated that her siblings were out of the house when
she was raped by appellant on the said date; and (3) AAA disclosed that during the rape on 24
July 1998 she saw Rey and Benito outside the house staring at appellant who was then on top of
her, while in her other testimony she recounted that she merely learned from EEE that Rey and
Benito saw appellant on top of her on the same date.[30]

The credibility of a rape victim is not impaired by some inconsistencies in her


testimony.[31] Such inconsistencies are inconsequential when they refer to minor details that have
nothing to do with the essential fact of the commission of the crime carnal knowledge through
force and intimidation.[32]

The supposed contradictions cited by appellant refer to minor details and are evidently
beyond the essential fact of the commission of rape because they do not pertain to the actual
sexual assault itself that very moment when appellant was forcing himself on AAA. Besides, these
minor inconsistencies even bolster the credibility of AAA as one could hardly doubt that her
testimony was contrived.[33]

Appellant further claims that AAAs testimony does not jibe with
her Sinumpaang Salaysay and with the testimony of Dr. Umil as shown by the following: (1) In
her Sinumpaang Salaysay, AAA stated that she was raped by appellant on 8 March 1995 and on
24 July 1998, while in her court testimony she revealed that she was raped by appellant six times
in 1996 and several times in 1997; and (2) AAA divulged that appellant punched her in the stomach
and slapped her during the incidents but Dr. Umil testified that no contusions, abrasions or other
physical injuries were found on AAAs body during the latters physical examination.[34]

We have steadfastly ruled that the alleged inconsistencies between the testimony of a
witness in open court and his sworn statement are not fatal defects to justify a reversal of
judgment of conviction. Such discrepancies do not necessarily discredit the witness since ex-
parte affidavits are almost always incomplete. Sworn statements taken ex-parte are generally
considered to be inferior to the testimony given in open court.[35]

The fact that Dr. Umil found no contusions or abrasions on AAAs body during the latters
physical examination does not render improbable the occurrence of rape because settled is the
doctrine that absence of external signs or physical injuries does not negate the commission of
rape.[36]

Anent the second assignment of error, appellant argues that it is improbable for appellant
to rape AAA in the presence of the latters siblings; that the informations in Criminal Cases No.
115032-H and 115033-H which allege that the rapes were committed during the period January
to December 1996, and during the period January to December 1997, respectively, are defective
because it does not specifically state the exact dates of the commission of rapes; that AAA is not
a credible witness because she did not immediately inform BBB nor the police authorities of the
incidents; that the failure of AAA to immediately report the incidents implies that no rapes were
committed and that the sexual contacts between him and AAA were voluntary and consensual;
that AAAs testimony that she reported the 8 March 1995 incident to EEE is unbelievable because
if such was true then the instant case would have been filed earlier and the subsequent rapes
could have been avoided; that he never admitted having written the letter on a Marlboro cigarette
wrapper to AAA and thus the said letter cannot be used as evidence against him because its due
execution and authenticity was not proven; and that the qualifying circumstance of minority of
AAA during the incidents was not proven because the latters birth certificate was not presented in
court.[37]

Lust is no respecter of time and place. Thus, we held that rape can be committed inside a
house where there are other occupants, and even in the same room where other members of the
family are also sleeping.[38] It is not impossible, nor incredible, for AAAs siblings to be in deep
slumber and not to be awakened while appellant was raping her.[39]

Failure to specify the exact dates or time when the rapes occurred does not ipso facto make
the information defective on its face. The reason is obvious. The date or time of the commission
of rape is not a material ingredient of the said crime because the gravamen of rape is carnal
knowledge of a woman through force and intimidation. As such, the date or time need not be
stated with absolute accuracy. It is sufficient that the complaint or information states that the
crime has been committed at any time as near as possible to the date of its actual commission.[40]

In several cases, we sustained complaints and informations in prosecutions for rape which
merely alleged the month and year of its commission.[41] Hence, the allegations in
the informations regarding Criminal Cases No. 115032-H and 115033-H which state that rapes
were committed during the period January to December 1996 and during the period January to
December 1997 are sufficient to affirm the conviction of appellant.

We have ruled that the failure of the rape victim to immediately report the rape is not
necessarily an indication of a fabricated charge.[42] It is not uncommon for young girls like AAA to
conceal for some time the assault on their virtues because of the rapists threat on their lives, more
so when the rapist is living with her as in this case.[43] AAA testified that appellant threatened to
kill her and the other family members should she report what he had done to her. AAAs delay in
reporting the sexual violations is therefore understandable and cannot undermine her credibility.

Appellants letter written on a Marlboro cigarette wrapper asking AAAs forgiveness is


admissible in evidence against him. AAA testified that after the instant case was filed in the RTC,
BBB visited appellant once in jail. During the said visit, appellant handed to BBB a letter written
on a Marlboro cigarette wrapper and thereafter instructed BBB to give the said letter to her. BBB
gave her the said letter and told her pinaabot ng tatay mo. In the said letter, appellant asked her
to forgive him for what he did to her as he was only drunk at that time. She knows that the letter
was written by appellant because she is familiar with his handwriting and signature.[44] AAA
positively identified the letter itself during her direct examination and this was formally offered as
documentary evidence for the prosecution.[45]

More importantly, appellant himself readily admitted that the letter is the same letter he
wrote for AAA.[46] He also confirmed that the handwriting therein is his.[47] Although later, he would
deny the same on the basis that he does not use the Marlboro cigarette brand, but only Winston
cigarette brand,[48] we still give more weight to his admission of the said letter since it was given
voluntarily and spontaneously. His subsequent denial is not only based on flimsy grounds but also
an obvious attempt to cover-up his earlier damaging testimony. As to the contents of the letter,
verily, no one would ask for forgiveness unless he has committed a wrong and a plea for
forgiveness may be considered analogous to an attempt to compromise, which offer of compromise
by the appellant may be received in evidence as an implied admission of guilt pursuant to Section
27, Rule 130 of the Revised Rules on Evidence.[49]

We agree, however, with appellants contention, as affirmed by the Office of the Solicitor
General and the Court of Appeals, that the RTC erred in appreciating the qualifying circumstance
of minority of AAA and in imposing the maximum penalty of death in Criminal Cases No. 115031-
H and 115032-H.

Republic Act No. 7659 is the law applicable for the rapes committed in March 1995 and on
several occasions during the period of January to December 1996, as respectively alleged in
Criminal Cases No. 115031-H and 115032-H. The said law states that the death penalty shall be
imposed if the rape victim is a minor and the offender is a parent. The qualifying circumstances of
minority of the victim and the latters relationship with the offender must
be alleged and proven to warrant the imposition of death penalty.[50]

The informations specifically alleged that AAA was a minor when she was raped by
appellant. Nonetheless, the prosecution failed to prove such allegation with sufficient evidence.

AAA solely testified that she was fifteen years old when appellant raped her on March 1995,
and sixteen years old when appellant defiled her again six times during the period of January to
December 1996.[51] Appellant neither denied nor objected to the said testimony of AAA.

In People v. Tabanggay,[52] a case almost identical herein, we held as insufficient evidence


of minority the bare testimony of the two rape victims, who were sisters, that they were 13 and
14 years of age, respectively, when their father raped them. We emphasized therein that there
must be independent evidence proving the age of the victims other than their own testimonies
and the absence of denial by the accused. The victims original or duly certified birth certificate, or
baptismal certificate, or school records would suffice as competent evidence of their age. The
prosecution presented a photocopy of one of the victims birth certificate but we gave no probative
value to it because it was neither duly certified nor formally offered in evidence. In conclusion, we
ruled therein that the prosecution failed to prove the minority of the rape victims.

Applying the foregoing jurisprudence to the case at bar, the bare testimony of AAA as to
her age is not sufficient proof that she was a minor when appellant raped her on the given
dates. There must be independent evidence showing her minority other than her bare testimony
and the absence of denial by the appellant. The independent proof may consist of her original or
duly certified birth certificate, or her baptismal certificate or school records.

A photocopy of AAAs birth certificate is included in the records of the present


case.[53] Nevertheless, the same was neither properly identified nor formally offered in
evidence. Hence, no probative value can be given to it. Aside from the said birth certificate, no
other documentary evidence was adduced to prove the age of AAA.

With respect to appellants failure to object on the aforesaid testimony of AAA, we decreed
in People v. Pruna,[54] that the failure of the accused to object to the testimonial evidence
regarding the rape victims age shall not be taken against him. In People v. Tipay[55] and People
v. Pecayo, Sr.,[56] we also pronounced that the lack of denial on the part of accused as regards the
rape victims age does not excuse the prosecution from discharging its burden of proving the
minority of the rape victim. As the qualifying circumstance of minority alters the nature of the
crime of rape and increases the penalty thereof, it must be proved with equal certainty and
clearness as the crime itself.[57]

Since the qualifying circumstance of AAAs minority was not duly proven by the prosecution,
appellant should be held liable only for simple rape in Criminal Cases No. 115031-H and 115032-
H.[58] Consequently, the penalty therein should be reduced to reclusion perpetua pursuant to
Article 335 of the Revised Penal Code, as amended by Republic Act No. 7659.[59]

Finally, we concur with the disposition of the Court of Appeals that appellant should pay
AAA civil indemnity in the amount of P50,000.00 and moral damages in the amount of P50,000.00
pursuant to prevailing jurisprudence.[60] However, aside from these damages, appellant should
also pay AAA exemplary damages in the amount of P25,000.00 in order to deter other fathers with
perverse tendencies or aberrant sexual behaviors from sexually abusing their own daughters.[61]

WHEREFORE, after due deliberation, the Decision of the Court of Appeals in CA-G.R. CR-
HC No. 02407 dated 26 October 2006 is hereby AFFIRMED with the MODIFICATION that
appellant is also ordered to pay AAA exemplary damages in the amount of P25,000.00 for each of
the four cases. SO ORDERED.
DELIA PREAGIDO and ULRICO
BOLOTAULO,

Petitioners,

- versus -

THE SANDIGANBAYAN and THE


PEOPLE OF THE PHILIPPINES,

Respondents.

x-----------------------------------------------------------x

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court filed by
petitioners Delia Preagido and Ulrico Bolotaulo seeking annulment of the Decision[1] dated
December 28, 1979 of the Sandiganbayan rendered in Criminal Case Nos. 195, 196, 197, 198,
199 and 200 finding them guilty of 6 and 3 counts, respectively, of estafa thru falsification of
official and commercial documents.

In a Resolution dated July 4, 1991, the instant petition was consolidated with another group
of cases which were all petitions for review on certiorari from the joint decision of the
Sandiganbayan dated October 24, 1990 in Criminal Case Nos. 1143-1341 and 5585-5782 finding
accused-petitioners therein guilty on different counts of violation of Republic Act No. 3019, as
amended, otherwise known as the Anti-Graft and Corrupt Practices Act.

However, the records of Criminal Case Nos. 195-200 were not included in the voluminous
records of the consolidated cases. We learned from our Judicial Records Office that the original
records of Criminal Case Nos. 195-200 were with the First Division of the Sandiganbayan. Thus,
in a Resolution dated May 6, 2003,[2] we directed the Clerk of Court of the First Division of the
Sandiganbayan to elevate the records of the instant petition. In the same Resolution, we also
effected the separation of the herein petition of Preagido and Bolotaulo from the other consolidated
cases so as not to delay the disposition of the latter and considering that the instant petition
involves the alleged anomalous transactions in the Tagbilaran City Engineering Office (CEO)
committed in 1978 which are entirely different from the other consolidated cases which involved
anomalous transactions in the Cebu Second Highway Engineering District in 1977 wherein neither
of herein petitioners were accused.

Later, the Executive Clerk of Court III of the Sandiganbayan, Atty. Estela Teresita C. Rosete,
submitted the original records and the transcripts of stenographic notes. She also filed a
Manifestation wherein she informed us that despite her earnest efforts to locate some
documentary exhibits, the same could no longer be found. Thus, in a Resolution dated March 23,
2004,[3] we asked the Solictor General to furnish us copies of the other unlocated exhibits listed
in said Resolution as well as the counsel of herein petitioners to furnish us copies of their exhibits
offered and marked for petitioners. We also directed them to manifest whether they are willing to
dispense with the other unlocated exhibits and to submit the case for resolution on the basis of
the evidence already with us.
The Office of the Solicitor General (OSG) filed a Manifestation dated July 13, 2004
submitting the case for decision. Atty. Epifanio Bolando, petitioner Bolotaulos new counsel, entered
his appearance on December 19, 2004. Atty. Bolando filed his Compliance dated April 15, 2005
dispensing with the other exhibits and for submission of the case for resolution. He also informed
us that petitioner Preagido had died on December 16, 2003.

On June 21, 2005, the Solicitor General, pursuant to our Resolution dated March 8, 2005
requiring him to verify and report the alleged death of petitioner Preagido, submitted a certified
true copy of petitioner Preagidos death certificate issued by the Office of the City Civil Registrar,
Cebu City. Petitioner Preagidos death during the pendency of her appeal extinguishes her criminal
and civil liabilities. Thus, we will only resolve the appeal of petitioner Senior Civil Engineer
Bolotaulo.

It is noteworthy to mention that when the instant petition was filed in 1980, the other co-
accused of petitioner Bolotaulo in Criminal Case Nos. 195, 198 and 199 had separately filed their
respective appeals which had been decided by us, to wit:
(1) Valentino G. Castillo vs. Sandiganbayan and the People of the Philippines,
G.R.Nos. L-52352-57,[4]

(2) Jose C. Bagasao vs. Sandiganbayan and the People of the Philippines, G.R.
Nos. L-53813-53818,[5]

(3) Isidoro Recamadas vs. Sandiganbayan and the People of the Philippines,
G.R. Nos. L-53694-99,[6]

(4) Rolando R. Mangubat vs. Sandiganbayan and the People of the Philippines,
G.R.Nos. L-53724-29[7]

where we affirmed the decision of the Sandiganbayan.

We adopt our factual findings in those cases which we now incorporate as an integral part
of herein decision, to wit:

In the regional level, the requisition of funds for public works


purposes, especially in the matter of road and bridge repairs, involves a
graduated series of steps. As found by the respondent Sandiganbayan,
it begins with the Sub-Allotment Advices (SAAs), as well as the Advices
of Cash Disbursement Ceilings (ACDCs), issued by the Ministry of Public
Highways in favor of its Highways Regional Offices. These serve as the
Regional Offices' authority to obligate and disburse funds. In turn, these
become the sources of funds of the various Engineering Districts
apportioned throughout each region.

The Engineering District then requests for the release of these


funds from the Regional Director through a Program of Work. The
Regional Finance Officer issues a Letter of Advice of Allotment (LAA),
certified as to availability of funds by the Regional Accountant
countersigned by the Regional Director, and addressed to the District
(or City, as the case may be) Engineer. At the same time, he (the
Regional Finance Officer) prepares a Sub-Advice of Cash Disbursement
Ceiling (SACDC) for the Regional Director.

The LAA and SACDC are subsequently entered in a logbook. The


funds requested are then released.

On the strength of such LAA and SACDC, the District then


prepares a Requisition for Supplies or Equipment (RSE) as well as a
Request for Obligation of Allotment (ROA), pursuant to the Program of
Work. Both are likewise certified as to availability of funds by the
Regional Accountant and approved by the Regional Director.

Thereafter, the Property Custodian or the Purchasing Officer, as


the case may be, addresses Requests for Sealed Quotations to various
suppliers, usually through newspaper advertisements or notices posted
in conspicuous places in the District concerned. After ten days, the
Sealed Quotations are submitted to the Price Verification Committee
which determines the lowest bid in the presence of representatives of
the District Engineer and the Auditor. An Abstract of Sealed Quotations
is then signed by the members of the Committee as well as the said
local representatives. Thereafter, and subject to the approval of the
District Engineer, the proper award is made in favor of the lowest bidder.
On the basis thereof, the Property Custodian issues a Purchase Order
(PO) in favor of the winning bidder, again subject to the approval of the
District Engineer and certified as to availability of funds by the Regional
Accountant.

The supplies thus to be delivered are thereafter inspected


(through Request for Inspection) by the Property Custodian. The
deliveries themselves are recorded in a Tally Sheet after which a Record
of Inspection, certified by the Property Custodian, is prepared by the
representative of the Auditor and the Property Custodian.

Payment to the supplier is evidenced by a General Voucher (GV).


Among others, the GV contains five parts; (1) a certification of receipt
of supplies to be accomplished by the Property Custodian; (2) a
certification of correctness, that is, that the expenses are necessary and
lawful, and that the prices are not in excess of the current rates in the
locality, to be accomplished by the Project Engineer; (3) approval by the
District Engineer; (4) a certification, to be accomplished by the Auditor,
that the GV has been properly approved, its account codes proper, and
that it is supported by the proper documents; and (5) a certification that
the GV has undergone pre-audit, to be accomplished by the Auditor.

The GV itself must carry with it the following: the RSE, ROA,
Program of Work, Detailed Estimates, Request for Sealed Quotations,
Abstract of Sealed Quotations, PO, Delivery Receipts, Request for
Inspection, Record of Inspection, Test Reports, and Tax Clearance of the
supplier.

The process winds up with the issuance of the check by the


Cashier in the name of the supplier. Like the GV, the check is pre-
audited and then released.
The District Accountant thereafter prepares a Report of Obligation
Incurred (ROI) and a Report of Checks Issued (RCI) to be submitted to
the Regional Office and entered in the journals and the General Ledger
thereof. On the basis thereof, the Regional Accountant prepares a trial
balance to be recommended by the Finance Officer and approved by the
Regional Director. The same is then submitted to the Ministry of Public
Highways.

It appears that from May through June, 1978, the Tagbilaran City Engineering
Office (CEO) embarked on certain projects involving the restoration of various roads
and bridges in Tagbilaran City. Pursuant to five LAAs addressed to the Ministry of
Public Highways purportedly issued by the Seventh Regional Highways Office on
behalf of the Tagbilaran CEO, more specifically described as follows:

LAA No. Date Amount

107-780-05- April 29, 1978 P 150,000.00


78

107-0780-07- No date 26,000.00


78

107-780-012- April 24, 1978 48,100.00


78

107-780-014- April 24, 1978 150,000.00


78

107-780-011- No date 100,000.00


78

TOTAL P 474,100.00

as well as six SACDCs, as follows:

SACDC No. Amount

022-78 P 26,000.00

167-78 48,100.00

180-78 48,100.00

193-78 150,000.00

222-78 150,000.00

086-78 225,830.00

TOTAL P 699,930.00

the Tagbilaran CEO prepared RSEs and ROAs for the procurement of materials and
supplies, specifically, anapog binder, for the projects aforementioned. All five LAAs
were certified as to availability of funds by Rolando Mangubat, allegedly on behalf of
Angelina Escao, Finance Officer of the Seventh Regional Highways Office (Mangubat
signed over her typewritten name) and countersigned by Jose Bagasao. The six
SACDs were likewise signed by Mangubat for the Regional Director. The materials
requisitioned were supplied by JV Sand & Gravel & Construction Supply, a private
contractorship owned by James Tiu. Six GVs were prepared therefor, as follows:
GV No. Program of Work Amount

01-780601 Restoration of Shoulders, P 49,980.00


Tagbiliaran North Road (TNR),
Junction TNR-Airport Road,
Junction TNR-Wharf Road and
TCSR

01-780606 Restoration of Shoulders, 49,980.00


Tagbilaran North Road
(TNR), Junction TNR-Wharf Road

01-780641 Restoration of 49,980.00


Shourders, Tagbilaran Corella-
Sikatuna Road

01-780682 Restoration, Totulan-Ubos-Dauis 49,980.00


Bridge Approaches

01-780684 Restoration, Totulan, Ubos-Dauis 49,980.00


Bridge Approaches

01-780694 Restoration, Junction, Tagbilaran 49,980.00


East Road-Dauis Paulao Central
Road Shoulders and Bridge
Approaches

TOTAL P 299,880.00

========

representing partial payments in favor of JV Sand & Gravel & Construction Supply,
which has been named as a creditor therein. The GVs themselves were accompanied
by various supporting papers, among them, the RSEs and ROAs earlier referred to.[8]

Eventually, the matter reached the Commission on Audit which constituted two
teams to mount an inquiry.

The investigation disclosed that the above mentioned LAAs as well as SACDCs
were spurious documents, and that the six GVs were in fact based on only two LAAs,
Nos. 107-780-05-78 and 107-780-014-78. It was further established that the total
sum requested under the said LAAs P474,100.00 supposedly to cover the Tagbilaran
CEO's unliquidated obligations were not in fact supported by its statement of
accounts, under which its total obligations totalled but P160,639.55. Moreover, the
payee, JV Sand & Gravel & Construction Supply, was not listed in the City's books as
a creditor, for which it could have been entitled to the sums released.

The Audit Commission likewise observed certain discrepancies in the GVs in


question, notably, that the Programs of Work had been "split"; that they were dated
after the dates of the RSEs; that while the POs called for 9,369 to 9,375 cubic meters
of anapog binder, the GVs specified but 3,123 to 3,125 cubic meters thereof apiece;
that the Delivery Receipts had been issued "in lump quantities," did not bear
acknowledgment signatures or were not initialled by the auditor or dated after the
dates of the pre-audit; that the biddings were irregular; and that anapog had been
short-delivered.

The Commission on Audit moreover found that the Highways Regional Office,
as of this period, had in fact released "doubtful" allotments to ten districts, the
Tagbilaran CEO among them, in the total sum of P24,052,750.00 supposedly to cover
unliquidated obligations, although the statements of account thereof showed a total
of only P2,735,181.98 as and for unliquidated obligations.

The very books of the Regional Office appeared furthermore to have been
doctored. For while the total unliquidated obligations totalled only P2,586,306.78,
the entry in the Regional Office's general ledger was P35,509,002.99. And in payment
of such doubtful obligations, the checks issued exceeded the cash disbursement
ceiling by P6,837,971.35. Apparently, it was Rolando Mangubat who recorded these
entries by way of seven Journal Vouchers (JVs).

It likewise turned out that James Tiu subsequently opened certain savings
accounts at the Allied Bank in favor of Nio Pilayre, Praxedes Lopena, and Miguel Bulac,
although Lopena insists that as far as she was concerned, she knew nothing about
it.[9]

The Tanodbayan filed six Informations for estafa through falsification of public and
commercial documents against nine public officials[10] and two private individuals[11] on the basis
of conspiracy. Later, additional public officials[12] were included in some of these Informations. It
is only in Criminal Case Nos. 195, 198 and 199 that petitioner Bolotaulo is a co-accused. Except
for the amounts involved, the quantities of anapog binder allegedly requisitioned and delivered,
the six Informations were uniformly worded as follows:

That, in or about and during the period from the months of April to June, 1978,
in the City of Tagbilaran, Philippines, and within the jurisdiction of this Honorable
Court, the public officials, who by reason of the duties of their office, are accountable
officers, and conspiring and conniving among themselves, as well as with their private
party co-accused, after having falsified or caused to have falsified Letters of Advice
of Allotment No. 107-780-05-78 and No. 107-780-014-78, both dated April 24, 1978
and Sub-Advices of Cash Disbursement Ceiling No. 193-78 dated April 28, 1978 and
No. 222-78 dated May 2, 1978, which are all public documents, whereby said accused
made it appear that an amount of Three Hundred Thousand (P300,000.00) had been
lawfully allocated for the City of Tagbilaran from the MPH Regional Highway Office
No. VII, Cebu City, and made available For the maintenance of existing and
unabandoned roads and bridges in the City of Tagbilaran, which falsifications had
been committed in connection with the functions of their respective offices, then
taking advantage of their official positions and committing in relation to the functions
of their respective offices, did then and there willfully, unlawfully and feloniously
falsify or cause to have falsified General Voucher,[13] covering the sum of Forty-Nine
Thousand Nine Hundred Eighty Pesos (P49,980.00) for the payment of road
shouldering materials (anapog binder), with the use of the aforesaid falsified Letters
of Advice of Allotment and Sub-advices of Cash Disbursement Ceiling to support
thereof and other documents, such as the Program of Work/Budget Cost for Roads
and Bridges dated May 8, 1978, Request for Obligation of Allotment dated May 16,
1978, Abstract of Sealed Quotations, Purchase Orders dated June 9, 1978, Record of
Inspection dated June 9, 1978, and other papers in support thereof, by making it
appear that the request for obligation of allotment was regularly prepared and
approved, that the bidding of materials was properly conducted, that the
corresponding purchase order was prepared in favor of the lowest bidder, and that
the materials purchased were duly and fully delivered in accordance with
specifications and duly inspected, when in truth and in fact, as the accused fully knew
well, the foregoing transactions were false and simulated, except that, with the
amount of 3,123 cubic meters of anapog binder having been purchased for the sum
of P49,980.00 at the rate of P16.00 per cubic meter, accused Jimmy Tiu and his
representative accused Engracio Quiroz, by previous understanding with the accused
officials, had caused the delivery only of (quantity) cubic meters of anapog binders,
hence causing the Government to lose (quantity) cubic meters and worth (amount)
at the rate of P16.00 per cubic meter; thus, the said accused having in said manner
in a narration of facts; and that, by means of the aforesaid falsifications, the said
accused were able to demand, collect and receive from the government thru the
Tagbilaran City Engineers Office, MPH Regional office No. VII, the value of the
vouchers in question although the amount due should have been only the value of
the actual quantities delivered, and that, after the accused after having demanded,
collected and received, did then and there willfully, unlawfully and feloniously
misapply, misappropriate and convert to their own personal use and benefit, and/or
consent or, through negligence, permit other persons to take, misapply,
misappropriate, and convert to their own personal use and benefit, to the damage
and prejudice of the Government.

All the accused pleaded not guilty to the charges against them. Joint trial thereafter ensued.
In a decision dated December 28, 1979, the Sandiganbayan acquitted accused Sayson, Budget
Examiner II and Quiroz, the employee of accused contractor Tiu; and convicted the rest of the
accused, including Bolotaulo, of estafa thru falsification of official and commercial documents to
six years of prision correccional to ten years, eight months and one day of prision mayor each
case with the accessories provided by law, pay the fine of P3,500.00 for each count and ordered
them to pay certain amounts.[14]

The Sandiganbayan convicted petitioners and the other accused on the basis of conspiracy.
It found that they were guilty of conspiring in the falsification of the following documents, to wit:
(1) Letters of Advice of Allotment (LAAs); (2) Sub-Advice of Cash Disbursement Ceiling (SACDCs);
(3) Programs of Work (PWs); (4) General Vouchers (GVs); (5) Requests for Obligation of Allotment
(ROAs); (6) Abstract of Sealed Quotations; (7) Purchase Orders (POs); (8) Delivery Receipts and
(9) Records of Inspections (ROIs); that such falsification facilitated the unauthorized release of
funds; and, the supplies allegedly requisitioned under them were short delivered or not delivered
at all.

As we have stated earlier, the separate appeals of petitioner Bolotaulos co-accused Castillo
(City Engineer), Bagasao (Assistant Regional Director), Recamadas (Property Custodian), and
Mangubat (Regional Chief Accountant), were denied and the decision of the Sandiganbayan was
affirmed in Castillo vs. Sandiganbayan,[15] Bagasao vs. Sandiganbayan,[16] Recamadas vs.
Sandiganbayan,[17] and Mangubat vs. Sandiganbayan.[18] We found in those cases that the
projects turned out to be ghost projects since they did not carry the imprimatur of the then Public
Highways Ministry, the various requisition papers having been falsified to enable the accused to
acquire the necessary funding. Furthermore, the supplies ordered were either short delivered or
not delivered at all. As a result, the government suffered losses in the total sum of P240,058.00[19]

We now resolve the appeal of petitioner Ulrico Bolotaulo, Senior Civil Engineer, Tagbilaran
CEO, Ministry of Public Highways, who was convicted in Criminal Case Nos. 195, 198 and 199.
Petitioner comes to us raising both questions of law and of fact. The OSG filed its Answer
praying for the denial of the instant petition for review.[20]

The questions of law are as follows: (1) whether Presidential Decree No. 1486 as amended by P.D.
No. 1606 creating the Sandiganbayan is an ex post facto law and violates the rights of the accused
to due process and equal protection of law; (2) whether the Sandiganbayan was validly created
and constituted.

The first legal issue had already been settled in Nuez vs. Sandiganbayan,[21] the very first case
which upheld the constitutionality of the P.D. No. 1486 as amended, creating the Sandiganbayan.
We declared that P.D. No. 1486 as amended was not an ex post facto law and does not violate
the due process and equal protection clauses of the Constitution. Such ruling was reiterated in
many subsequent cases.[22]

As to the second legal issue, petitioner claims that the Sandiganbayan was not validly
constituted since at the time it rendered the judgment, it was only composed of one Presiding
Justice and two Associate Justices, thus how could it possibly act in division when it was never
constituted as a whole?

This issue had already been put to rest in De Guzman vs. People,[23] where we held:

Although the Sandiganbayan is composed of a Presiding Justice and


eight Associate Justices, it does not mean that it cannot validly function
without all of the Divisions constituted. Section 3 of PD 1606 provides
that the Sandiganbayan shall sit in three divisions of three justices each.
While Section 5 thereof provides that the unanimous vote of the three
justices in a division shall be necessary for the pronouncement of a
judgment.

Thus, the Sandiganbayan functions in Divisions of three Justices


each and each Division functions independently of the other. As long as
a Division has been duly constituted it is a judicial body whose
pronouncements are binding as judgments of the Sandiganbayan.

The judgment convicting petitioner was a unanimous Decision of


the First Division duly constituted. It thus met the requirement for the
pronouncement of a judgment as required by Section 5 PD
1606 supra.[24]

Petitioner next raises the issue of the sufficiency of evidence upon which his conviction was
predicated. He argues that estafa cannot be committed in the absence of any statement from the
government of fund loss; that the checks covering the questioned transactions in the Tagbilaran
CEO were not dishonored by the drawee bank; and that there was no concrete evidence shown by
the prosecution to establish under deliveries.

We are not impressed.


The prosecution had clearly established that because of the fake LAAs, SACDCs and the
general vouchers with all its supporting documents, the government through the Tagbilaran CEO
had disbursed funds for projects which were short delivered. Since there were short deliveries
of anapog binder to the alleged projects sites, it resulted to the government suffering losses. We
quote with approval the findings of the Sandiganbayan on this matter, thus:

It is only logical that, if funds are disbursed without any


appropriation, there is actually a payment of money out of the Treasury
without any sanction in law. In such case, the Government suffers a loss
of so much as is disbursed. Of course, in the cases at bar, the People
adopted a more realistic approach to the situation. It opted to hold the
perpetrators of the fraudulent transactions liable only up to the amount
of the actual loss sustained, evidently because it concedes that there
had been some deliveries, albeit minimal. And, there can be no question
that, if a contract is entered into with the Government for a given
quantity of materials and the entire contract price is paid but only a
quantity less than that contracted for is actually delivered, the
Government would naturally be prejudiced to the extent of the value of
the materials not delivered. This is precisely what happened here.
Therefore, it is altogether off-tangent for the accused to contend that,
because no statement of loss consequent to the transactions here
involved had been presented from the National Treasury or from the
Philippine National Bank, no justifiable finding of damage to the
Government can be made. This would be closing ones eyes to reality.
For, the stark reality is that certain amounts have in fact been paid by
the Government for materials that were short-delivered. Accordingly,
we hold that damage to the extent of the value of said short-delivery
was sustained. Considering that it is undeniable that the damage came
about thru the deceitful medium of the multiple falsifications here found
to have been perpetrated, it is ineluctably clear that said falsifications
were the means to the perpetration of a crime of estafa. As correctly
formulated in the Informations herein, the crime committed in each of
the cases at bar is estafa thru falsification of public documents.

This ushers the Court to the determination of the extent of the


damage caused to the Government. On this score, the evidence bears
looking into. Restituto Castro, testifying for the People, detailed the
volume of deliveries made to various sections of the roads and bridge
approaches covered by the projects here involved based on his counting
of truckloads of anapog extracted from the Belderol Co and Picmao
quarries and brought to the restoration sites. On the other hand,
Assistant Provincial Engineer Sarmiento also made documented
estimates of the volume of anapog delivered and significantly, enough,
even after reckoning with pertinent factors bearing on the matter-
including the time lapse between the date of spreading and the date of
inspection, the effect of erosion, and a shrinkage factor of 20% and 30%
as the case may be- came up with figures higher than those arrived at
by Castro. So much so that, giving the defense the benefit of the doubt,
the Court elects to go by the figures furnished by Engineer Sarmiento
as bases for reckoning the damage caused. For this purpose, the amount
to be considered as starting point should be the face value of the
respective checks actually paid to accused Tiu, that is to say, deducting
the amount paid to the City Treasurer for Mining Fees. And, the value
of anapog delivered should be taken at the price it was supposed to
have been sold to the Government, that is P16.00 per cubic meter. On
this (sic) bases, the damage may be computed as follows -
Case Amount Delivery Value of DAMAGE

No. Paid Volume Delivery

195- P 47,637.75 566- P9,056.00- P 38,581.75

196- 47,636.25 12- 192.00- 47,444.25

197- 47,636.25 624- 9,984.00- 37,652.25

198- 47,637.75 none- none- 47,637.75

199- 47,637.75 1,496- 23,936.00- 23,701.75

200- 47,636.25 106- 1,696.00- 45,940.25

P 240,958.00[25]

It bears stressing that the fraudulent issuances of the LAAs, SACDCs, GVs and its supporting
documents and the journal vouchers and short deliveries are now settled issues. As we have earlier
stated, we upheld the findings of the Sandiganbayan in four petitions brought to us by the four
co-accused of herein petitioners which involved the same decision of the Sandiganbayan in
Criminal Case Nos. 195 to 200 covering the same transactions.[26]

Thus, the only issue now is whether the Sandiganbayan is correct in finding petitioner
Bolotaulo guilty of conspiracy in committing the crime charged.

Petitioner Bolotaulo was convicted for his signature in the RSEs, in the abstract of sealed
quotations and for signing the general voucher certifying that the expenses are necessary, lawful
and incurred under his direct supervision, and that the price is just and reasonable and not in
excess of the current rates in the locality. He, however, contends that he merely performed his
duties and responsibilities in affixing his signatures on those documents.

We are not persuaded.

Petitioner, as the Senior Civil Engineer of the Tagbilaran CEO, was the one who prepared
the three Request for Supplies or Equipment (RSEs)[27] which were all dated April 11, 1978
allegedly on the basis of three programs of work he recommended for approval which were all
dated May 8, 1978. Notably, however, the RSEs antedated the programs of work which is an
anomalous circumstance since the RSEs needed for the prosecution of the projects are only based
on the programs of work. In fact, petitioner, in his cross-examination, admitted that he cannot
prepare a RSE without an approved program of work[28] and that it is the normal and regular
procedure;[29] that if the program of work is prepared later than the RSE, there must be something
irregular about it.[30]

No satisfactory explanation was advanced by petitioner on why the RSEs antedated the programs
of work as all he could say was that it was not his concern which of these two came ahead as long
as that at the time he was signing the general voucher, the program of work was there.[31] As the
Sandiganbayan found, it unmasks the RSEs and/or Programs of Work as falsificiations since the
former cannot be said to be O.K. as to program of work, as therein stated since at the time of
their preparation, no program of work was yet in existence and that the latter can only be said to
have been subsequently prepared to plug a veritable loophole.[32]

In fact, the RSEs are not even in accord with the program of work. While petitioner
recommended the approval of the three programs of work each calling for the use of 3,123 cubic
meters of selected borrow (Item 108) as well as the detailed estimates which also called for the
use of selected borrow, the three RSEs which petitioner prepared called for the use of anapog
binder. No explanation was offered as to why there was such a discrepancy.

Notably, petitioner Bolotaulo recommended for approval three programs of work which all
cost not more than P50,000.00 each. As established by the testimony of prosecution witness,
Miguel V. Bulac, this was so since petitioner Bolotaulos co-accused City Engineer Castillo could not
approve program of work exceeding P50,000.00 because in excess of that amount, the program
of work has to be approved by the Regional Director.[33] In fact, Engr. Castillo admitted that
program of work in excess of P50,000.00 needs the approval of the region.[34] As we earlier stated,
we affirmed the conviction of City Engineer Castillo.[35]

Petitioner Bolotaulo signed three GVs certifying that the expenses are necessary, lawful and
incurred under his direct supervision, and that the price is just and reasonable and not in excess
of the current rates in the locality. Attached to these GVs as supporting documents are the
programs of work, the RSEs, the requests for sealed quotations and the purchase orders among
others. He signed the GVs despite the fact that the RSEs antedated the programs of work. He
could not have failed to notice that there was only one set of request for sealed quotation for the
total of 9,369 cubic meters of anapog binders and one purchase order which supported the three
GVs all for amounts less than P50,000.00 each to the same contractor/ supplier James Tiu. The
issuance of three GVs for amounts less than P50,000.00 each was resorted to since a higher
amount would have required the vouchers to be forwarded to the Regional Auditor for action and
review. The RSEs and the GVs had been split into uniform amounts of not more than P50,000.00
each which is a clear case of splitting of requisitions and general vouchers prohibited by the
Commission on Audit Circular No. 76- 41 dated July 30, 1976.

As defined by the Circular, splitting in its literal sense means dividing or breaking up into
separate parts or portions, or an act resulting in a fissure, rupture, breach. Within the sphere of
government procurement, splitting is associated with requisitions, purchase orders, deliveries and
payments.

Splitting may be in the form of (1) Splitting of Requisi3tions which consists in the non-
consolidation of requisitions for one or more items needed at about the same time by the
requisitioner; (2) Splitting of Purchase orders which consists in the issuance of two or more
purchase orders based on two or more requisitions for the same or at about the same time by the
different requisitioners; and (3) Splitting of payments which consists in making two or more
payments for one or more items involving one purchase order. These forms of splitting are resorted
to in order to avoid (a) inspection of deliveries, (b) action, review or approval by higher authorities;
or (c) public bidding.
There is also no truth to petitioner Bolotaulos certification in the general voucher that the
price of the materials requisitioned is just and reasonable and not in excess of the current rates
in the locality considering that it was established that there was irregularity in the bidding held on
May 24, 1978.[36] As the Sandiganbayan found:
In the same vein, the record is clear that, prior to the pre-audit of all GVs here
involved, defects and irregularties respecting the bidding conducted in connection
with the procurement of the materials purchased were brought home to the
knowledge of all concerned, particularly the District Auditor. A letter was actually
written by accused Lopea to accused Castillo officially bringing to his attention the
defects and irregularities aforesaid (Exhibit G-22). Another letter was also written by
accused Lopea to accused Castillo returning the GVs (Exhibits D, E and H) because
of defects like splitting, lack of ROA, and others. And yet, without anything being
done to correct the defects and/or supply the deficiencies except the mere
explanation of accused Castillo that the defects are mere clerical errors or that the
objections are tardy, the GVs involved herein were nevertheless eventually passed
on pre-audit. Since the bidding is defective, necessarily, the certification as to the
justness and reasonableness of the price and that it is not in excess of the current
price in the locality becomes a falsehood.

We likewise find no merit in petitioners claim that the Sandiganbayan erred in finding the
existence of conspiracy in the alleged commission of the crime. We are indeed convinced that
conspiracy has been clearly established by the evidence presented by the prosecution. The whole
scheme started with the issuances of fake LAAs, which give the authority to obligate, and the
SACDCs, the authority to disburse funds, to the Tagbilaran CEO for the alleged purpose of
prosecuting certain projects. The Tagbilaran Office which was fully aware of the fake LAAs and
SACDCs, made it appear that there were valid requisitions, public bidding and purchase order
which all turned out to be also falsified. General vouchers were prepared and checks pursuant
thereto were issued in payment to the supplier/contractor for materials which turned out to be
short delivered or not delivered at all. As correctly held by the Sandiganbayan:
It will readily be discerned from the facts in the case at bar that the
defraudation perpetrated upon the Government was launched with the
issuance of the fake LAAs in the Regional office, gained momentum as
it wound its way thru the intricate paces of the procurement and
payment processes in the District Office, and was put to rest with the
execution of the fake JVs also in the Regional office. A veritable umbilical
cord that ties the accused in the Regional office with those in the District
Office is thus unmistakable. Such that even if the acts imputed to each
accused may, at first blush, appear disconnected and separate from
those of the others, there is nevertheless that common thread of
sentiment, intent and purpose to attain the same end that runs thru the
entire gamut of acts separately perpetrated by them. After all,
conspiracy implies concert of design more than participation in every act
of execution. Like links in a chain, the role played by each accused is so
indispensable to the success of the fraud that, without any of them, the
scheme would have failed. In this posture, a conspiracy is made out that
as a result, the act of one is the act of all.[37]

Finally, petitioner argues that assuming that there were admissions from the other co-
accused, the alleged conspiracy must first be proven by evidence other than the declaration of a
co-conspirator citing Section 27 of Rule 130, Rules of Court, to wit:
Sec. 27. Admission by conspirator- The act or declaration of a conspirator
relating to the conspiracy and during its existence, may be given in evidence against
the co-conspirator after the conspiracy is shown by evidence other than such act or
declaration.
The argument is devoid of merit.

Section 27 of Rule 130 of the Rules of Court applies only to extrajudicial acts or declarations
but not to testimony given on the witness stand at the trial where the defendant has the
opportunity to cross-examine the declarant.[38]

All told, we are convinced that the prosecution has successfully established beyond doubt
that petitioner Bolotaulo is guilty of the crimes charged.

WHEREFORE, the petition is DENIED for lack of merit. The Decision of the Sandiganbayan
dated December 28, 1979 insofar as petitioner Ulrico Bolotaulo is concerned is AFFIRMED. The
cases against petitioner Delia Preagido are DISMISSED in view of her demise on December 16,
2003. SO ORDERED.
HAROLD V. TAMARGO, G.R. No. 177727

Petitioner,

-versus-

ROMULO AWINGAN, LLOYD

ANTIPORDA and LICERIO

ANTIPORDA, JR.,

Respondents. Promulgated:

January 19, 2010

x---------------------------------------------------x

DECISION
CORONA, J.:

This is a petition for review on certiorari[1] of the November 10, 2006 decision[2] and May 18, 2007

resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 93610.

Atty. Franklin V. Tamargo and his eight-year-old daughter, Gail Franzielle, were shot and killed at

around 5:15 p.m. of August 15, 2003 along Nueva Street corner Escolta Street, Binondo, Manila.

The police had no leads on the perpetrators of the crime until a certain Reynaldo Geron surfaced

and executed an affidavit dated September 12, 2003. He stated that a certain Lucio Columna told

him during a drinking spree that Atty. Tamargo was ordered killed by respondent Lloyd Antiporda

and that he (Columna) was one of those who killed Atty. Tamargo. He added that he told the

Tamargo family what he knew and that the sketch of the suspect closely resembled Columna.[4]

After conducting a preliminary investigation and on the strength of Gerons affidavit, the

investigating prosecutor[5] issued a resolution dated December 5, 2003 finding probable cause

against Columna and three John Does.[6] On February 2, 2004, the corresponding Informations for

murder were filed against them in the Regional Trial Court (RTC) of Manila, one assigned to Branch

27 for the death of Atty. Franklin Tamargo, and the other to Branch 29 for the death of the minor

Gail Franzielle.[7] Columna was arrested in the province of Cagayan on February 17, 2004 and

brought to Manila for detention and trial.[8]

On March 8, 2004, Columna (whose real name was Manuel, Jr.) executed an affidavit

wherein he admitted his participation as look out during the shooting and implicated respondent

Romulo Awingan (alias Mumoy) as the gunman and one Richard Mecate. He also tagged as

masterminds respondent Licerio Antiporda, Jr. and his son, respondent Lloyd Antiporda.[9] The
former was the ex-mayor and the latter the mayor of Buguey, Cagayan at that time. When the

killing took place, Licerio Antiporda was in detention for a kidnapping case in which Atty. Tamargo

was acting as private prosecutor.

Pursuant to this affidavit, petitioner Harold V. Tamargo (brother of Atty. Tamargo) filed a

complaint against those implicated by Columna in the Office of the City Prosecutor of Manila.[10]

On April 19, 2004, Columna affirmed his affidavit before the investigating prosecutor[11] who

subjected him to clarificatory questions.[12]

Respondents denied any involvement in the killings. They alleged that Licerio was a

candidate for mayor in Buguey, Cagayan during the May 2004 elections and that the case was

instituted by his political opponents in order to derail his candidacy. The Antipordas admitted that

Atty. Tamargo was their political rival for the mayoralty post of Buguey. Atty. Tamargo had been

defeated twice by Lloyd and once by Licerio. Before the killing, Atty. Tamargo filed an election

case against Lloyd and a kidnapping case in the Sandiganbayan against Licerio. However, they

claimed that both cases were dismissed as Lloyd emerged as the winner in the elections and Licerio

was acquitted by the Sandiganbayan.[13]

During the preliminary investigation, respondent Licerio presented Columnas unsolicited

handwritten letter dated May 3, 2004 to respondent Lloyd, sent from Columnas jail cell in

Manila. In the letter, Columna disowned the contents of his March 8, 2004 affidavit and narrated

how he had been tortured until he signed the extrajudicial confession. He stated that those he

implicated had no participation in the killings.[14] Respondent Licerio also submitted an affidavit of

Columna dated May 25, 2004 wherein the latter essentially repeated the statements in his

handwritten letter.

Due to the submission of Columnas letter and affidavit, the investigating prosecutor set a

clarificatory hearing, to enable Columna to clarify his contradictory affidavits and his unsolicited

letter. During the hearing held on October 22, 2004, Columna categorically admitted the

authorship and voluntariness of the unsolicited letter. He affirmed the May 25, 2004 affidavit and

denied that any violence had been employed to obtain or extract the affidavit from him.[15]

Thus, on November 10, 2004, the investigating prosecutor recommended the dismissal of

the charges. This was approved by the city prosecutor.


Meanwhile, in another handwritten letter addressed to City Prosecutor Ramon Garcia dated

October 29, 2004, Columna said that he was only forced to withdraw all his statements against

respondents during the October 22, 2004 clarificatory hearing because of the threats to his life

inside the jail. He requested that he be transferred to another detention center.[16]

Aggrieved by the dismissal of the charges, petitioner filed an appeal to the Department of

Justice (DOJ).[17] On May 30, 2005, the DOJ, through then Secretary Raul M. Gonzalez, reversed

the dismissal and ordered the filing of the Informations for murder.[18] He opined that the March

8, 2004 extrajudicial confession was not effectively impeached by the subsequent recantation and

that there was enough evidence to prove the probable guilt of respondents.[19] Accordingly, the

Informations were filed and the cases were consolidated and assigned to the RTC of Manila, Branch

29.[20]

However, on August 12, 2005, Secretary Gonzales granted the Antipordas motion for

reconsideration (MR) and directed the withdrawal of the Informations.[21] This time, he declared

that the extrajudicial confession of Columna was inadmissible against respondents and that, even

if it was admissible, it was not corroborated by other evidence.[22] As a result, on August 22, 2005,

the trial prosecutor filed a motion to withdraw the Informations. On October 4, 2005, Secretary

Gonzalez denied petitioners MR.

The RTC, through Judge Cielito Mindaro-Grulla, granted the motion to withdraw the

Informations in an order dated October 26, 2005.[23] Petitioner filed an MR but the judge

voluntarily inhibited herself without resolving the same. The cases were re-raffled to Branch 19,

presided by Judge Zenaida R. Daguna. Judge Daguna granted the MR of petitioner in a resolution

dated December 9, 2005. She ruled that, based on Columnas March 8, 2004 affidavit which he

affirmed before the investigating prosecutor, there was probable cause to hold the accused for

trial. She denied the MR of the Antipordas in an order dated February 6, 2006.

Consequently, respondent Awingan filed a special civil action for certiorari and prohibition

in the CA docketed as CA-G.R. SP No. 93610. The Antipordas separately filed another certiorari

case docketed as CA-G.R. SP No. 94188.

In a decision dated November 10, 2006 in CA-G.R. SP No. 93610, the CA ruled that the RTC

judge gravely abused her discretion because she arbitrarily left out of her assessment and

evaluation the substantial matters that the DOJ Secretary had fully taken into account in
concluding that there was no probable cause against all the accused. It also held that Columnas

extrajudicial confession was not admissible against the respondents because, aside from the

recanted confession, there was no other piece of evidence presented to establish the existence of

the conspiracy. Additionally, the confession was made only after Columna was arrested and not

while the conspirators were engaged in carrying out the conspiracy.

After this decision was promulgated, CA-G.R. SP No. 93610 was consolidated with CA-G.R.

SP No. 94188. The CA denied reconsideration in a resolution dated May 18, 2007. In a decision

dated August 24, 2007, the CA likewise granted the petition for certiorari of respondents

Antiporda.[24]

Petitioner filed this petition assailing the decision in CA-G.R. SP No. 93610. Later on, he filed an

amended petition impleading respondents Antiporda and likewise assailing the CA decision in CA-

G.R. SP No. 94188. The Court treated this as a supplemental petition.

The main issue for our resolution is whether or not the CA erred in finding that Judge Daguna had

committed grave abuse of discretion in denying the withdrawal of the Informations for murder

against respondents.

Petitioner argues that, based on the independent assessment of Judge Daguna, there was

probable cause based on the earlier affidavit of Columna. She considered all the pieces of evidence

but did not give credit to Columnas recantation.

Respondents counter that Judge Daguna committed grave abuse of discretion by limiting

her evaluation and assessment only to evidence that supported probable cause while completely

disregarding contradicting evidence. They also contend that Columnas extrajudicial confession was

inadmissible against respondents because of the rule on res inter alios acta.

We find no merit in the petition.

It is settled that, when confronted with a motion to withdraw an Information (on the ground

of lack of probable cause to hold the accused for trial based on a resolution of the DOJ Secretary),

the trial court has the duty to make an independent assessment of the merits of the motion.[25] It

may either agree or disagree with the recommendation of the Secretary. Reliance alone on the

resolution of the Secretary would be an abdication of the trial courts duty and jurisdiction to
determine a prima facie case.[26] The court must itself be convinced that there is indeed no

sufficient evidence against the accused.[27]

We agree with the CA that Judge Daguna limited herself only to the following: (1) Columnas

affidavit dated March 8, 2004 wherein he implicated the respondents in the murders; (2) his

affirmation of this affidavit during the April 19, 2004 clarificatory hearing; (3) his letter dated

October 29, 2004 and (4) the May 30, 2005 DOJ resolution upholding the prosecutors

recommendation to file the murder charges.[28]

She completely ignored other relevant pieces of evidence such as: (1) Columnas May 3,

2004 letter to respondent Lloyd Antiporda narrating the torture he suffered to force him to admit

his participation in the crimes and to implicate the respondents; (2) his May 25, 2004 affidavit

where he stated that neither he nor the respondents had any involvement in the murders and (3)

his testimony during the October 22, 2004 clarificatory hearing wherein he categorically affirmed

his May 3, 2004 letter and May 25, 2004 affidavit.

We declared in Jimenez v. Jimenez[29] that

[although] there is no general formula or fixed rule for the determination of probable

cause since the same must be decided in the light of the conditions obtaining in given

situations and its existence depends to a large degree upon the finding or opinion of

the judge conducting the examination, such a finding should not disregard the

facts before the judge nor run counter to the clear dictates of reason. The

judge or fiscal, therefore, should not go on with the prosecution in the hope

that some credible evidence might later turn up during trial for this would

be a flagrant violation of a basic right which the courts are created to

uphold.[30] (Emphasis supplied)

Had Judge Daguna reviewed the entire records of the investigation, she would have seen

that, aside from the pieces of evidence she relied on, there were others which cast doubt on

them. We quote with approval the reflections of the CA on this point:

The selectivity of respondent RTC Judge for purposes of resolving the motion

to withdraw the informations effectively sidetracked the guidelines for an


independent assessment and evaluation of the merits of the case. Respondent RTC

Judge thus impaired the substantial rights of the accused. Instead, she should have

made a circumspect evaluation by looking at everything made available to her at that

point of the cases. No less than that was expected and required of her as a judicial

officer. According to Santos v. Orda, Jr., the trial judge may make an independent

assessment of the merits of the case based on the affidavits and counter-affidavits,

documents, or evidence appended to the Information; the records of the public

prosecutor which the court may order the latter to produce before the court; or any

evidence already adduced before the court by the accused at the time the motion is

filed by the public prosecutor.[31]

Moreover, Judge Daguna failed to consider that Columnas extrajudicial confession in his

March 8, 2004 affidavit was not admissible as evidence against respondents in view of the rule

on res inter alios acta.

Res inter alios acta alteri nocere non debet. The rule on res inter alios acta provides that

the rights of a party cannot be prejudiced by an act, declaration, or omission of

another.[32] Consequently, an extrajudicial confession is binding only on the confessant, is not

admissible against his or her co-accused[33] and is considered as hearsay against them.[34] The

reason for this rule is that:


on a principle of good faith and mutual convenience, a mans own acts are binding
upon himself, and are evidence against him. So are his conduct and declarations. Yet
it would not only be rightly inconvenient, but also manifestly unjust, that a man
should be bound by the acts of mere unauthorized strangers; and if a party ought
not to be bound by the acts of strangers, neither ought their acts or conduct be used
as evidence against him.[35]

An exception to the res inter alios acta rule is an admission made by a conspirator under

Section 30, Rule 130 of the Rules of Court:


Admission by conspirator. The act or declaration of a conspirator relating to
the conspiracy and during its existence, may be given in evidence against the co-
conspirator after the conspiracy is shown by evidence other than such act or
declaration.

This rule prescribes that the act or declaration of the conspirator relating to the conspiracy

and during its existence may be given in evidence against co-conspirators provided that the

conspiracy is shown by independent evidence aside from the extrajudicial confession.[36] Thus, in

order that the admission of a conspirator may be received against his or her co-conspirators, it is

necessary that (a) the conspiracy be first proved by evidence other than the admission itself (b)
the admission relates to the common object and (c) it has been made while the declarant was

engaged in carrying out the conspiracy.[37] Otherwise, it cannot be used against the alleged co-

conspirators without violating their constitutional right to be confronted with the witnesses against

them and to cross-examine them.[38]

Here, aside from the extrajudicial confession, which was later on recanted, no other piece

of evidence was presented to prove the alleged conspiracy. There was no other prosecution

evidence, direct or circumstantial, which the extrajudicial confession could corroborate. Therefore,

the recanted confession of Columna, which was the sole evidence against respondents, had no

probative value and was inadmissible as evidence against them.

Considering the paucity and inadmissibility of the evidence presented against the respondents, it

would be unfair to hold them for trial. Once it is ascertained that no probable cause exists to form

a sufficient belief as to the guilt of the accused, they should be relieved from the pain of going

through a full blown court case.[39]When, at the outset, the evidence offered during the preliminary

investigation is nothing more than an uncorroborated extrajudicial confession of an alleged

conspirator, the criminal complaint should not prosper so that the system would be spared from

the unnecessary expense of such useless and expensive litigation.[40]The rule is all the more

significant here since respondent Licerio Antiporda remains in detention for the murder charges

pursuant to the warrant of arrest issued by Judge Daguna.[41]

Indeed, at that stage of the proceedings, the duty of Judge Daguna was only to satisfy

herself whether there was probable cause or sufficient ground to hold respondents for trial as co-

conspirators. Given that she had no sufficient basis for a finding of probable cause against

respondents, her orders denying the withdrawal of the Informations for murder against them were

issued with grave abuse of discretion.


Hence, we hold that the CA committed no reversible error in granting the petitions for

certiorari of respondents. WHEREFORE, the petition is hereby DENIED. No pronouncement as to

costs. SO ORDERED.
EDUARDO BUGHAW, JR., G.R. No. 173151

Petitioner,

- versus -

Promulgated:
TREASURE ISLAND INDUSTRIAL
CORPORATION,
Respondent. March 28, 2008

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of
Court, filed by petitioner Eduardo Bughaw, Jr., seeking to reverse and set aside the
Decision,[1] dated 14 June 2005 and the Resolution,[2] dated 8 May 2006 of the Court of Appeals
in CA-G.R. SP No. 85498. The appellate court reversed the Decision dated 28 August 2003 and
Resolution dated 27 February 2004 of the National Labor Relations Commission (NLRC) in NLRC
Case No. V-000231-02 that found the petitioner to be illegally dismissed from employment by
respondent Treasure Island Industrial Corporation. The dispositive portion of the assailed appellate
courts Decision thus reads:

WHEREFORE, discussion considered, the decision dated August 28, 2003 of


the National Labor Relations Commission, Fourth Division, Cebu City, in NLRC Case
No. V-000231-02 (RAB VII-06-1171-01), is hereby VACATED and SET ASIDE en
toto.

The award of money claims to [herein petitioner]


is NULLIFIED and RECALLED.[3]

The factual and procedural antecedents of the instant Petition are as follows:

Sometime in March 1986, petitioner was employed as production worker by


respondent. Respondent was receiving information that many of its employees were using
prohibited drugs during working hours and within the company premises.[4]

On 5 June 2001, one of its employees, Erlito Loberanes (Loberanes) was caught in flagrante
delicto by the police officers while in possession of shabu.Loberanes was arrested and sent to
jail. In the course of police investigation, Loberanes admitted the commission of the crime. He
implicated petitioner in the crime by claiming that part of the money used for buying the illegal
drugs was given by the latter, and the illegal drugs purchased were for their consumption for the
rest of the month.[5]
In view of Loberaness statement, respondent, on 29 June 2001, served a Memo for
Explanation[6] to petitioner requiring him to explain within 120 hours why no disciplinary action
should be imposed against him for his alleged involvement in illegal drug activities. Petitioner was
further directed to appear at the office of respondents legal counsel on 16 June 2001 at 9:00
oclock in the morning for the hearing on the matter. For the meantime, petitioner was placed
under preventive suspension for the period of 30 days effective upon receipt of the Notice.

Notwithstanding said Memo, petitioner failed to appear before the respondents legal counsel
on the scheduled hearing date and to explain his side on the matter.

On 19 July 2001, respondent, through legal counsel, sent a second letter[7] to petitioner directing
him to attend another administrative hearing scheduled on 23 July 2001 at 11:00 oclock in the
morning at said legal counsels office but petitioner once again failed to show up.

Consequently, respondent, in a third letter[8] dated 21 August 2001 addressed to petitioner,


terminated the latters employment retroactive to 11 June 2001 for using illegal drugs within
company premises during working hours, and for refusal to attend the administrative hearing and
submit written explanation on the charges hurled against him.

On 20 July 2001, petitioner filed a complaint[9] for illegal dismissal against respondent and
its President, Emmanuel Ong, before the Labor Arbiter. Petitioner alleged that he had been
working for the respondent for 15 years and he was very conscientious with his job. He was
suspended for 30 days on 11 June 2001 based on the unfounded allegation of his co-worker that
he used illegal drugs within company premises. When petitioner reported back to work after the
expiration of his suspension, he was no longer allowed by respondent to enter the work premises
and was told not to report back to work.

On 8 January 2002, the Labor Arbiter rendered a Decision[10] in favor of petitioner since the
respondent failed to present substantial evidence to establish the charge leveled against the
petitioner. Apart from Loberaness statements on petitioners alleged illegal drug use, no other
corroborating proof was offered by respondent to justify petitioners dismissal. Further, respondent
failed to comply with due process when it immediately suspended petitioner and eventually
dismissed him from employment. Petitioners immediate suspension was not justified since no
evidence was submitted by the respondent to establish that petitioners continued employment
pending investigation poses a serious and imminent threat to respondents life or property or to
the life or property of petitioners co-workers. Finally, the Labor Arbiter observed that the notices
of hearing sent by respondent to petitioner were not duly received by the latter. The Labor Arbiter
was not swayed by respondents explanation that the reason therefor was that petitioner refused
to receive said notices. The Labor Arbiter thus ruled:

WHEREFORE, premises considered, judgment is hereby


rendered ordering [herein respondent] to pay [herein petitioner] the following:

1. Separation pay P 74,100.00


2. Backwages P 27,550.00

3. Unpaid wages P 4,940.00

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

Total P 106,590.00

The case against respondent Emmanuel Ong is dismissed for lack of merit.[11]

On appeal, the NLRC affirmed the Labor Arbiters Decision in its Decision dated 28 August
2003. The NLRC decreed that respondent failed to accord due process to petitioner when it
dismissed him from employment. The use of illegal drugs can be a valid ground for terminating
employment only if it is proven true. An accusation of illegal drug use, standing alone, without any
proof or evidence presented in support thereof, would just remain an accusation.[12]

The Motion for Reconsideration filed by respondent was denied by the NLRC in a
Resolution[13] dated 27 February 2004.

Resolving respondents Petition for Certiorari, the Court of Appeals reversed the Decisions
of the Labor Arbiter and NLRC on the grounds of patent misappreciation of evidence and
misapplication of law. The appellate court found that petitioner was afforded the opportunity to
explain and defend himself from the accusations against him when respondents gave him notices
of hearing, but petitioner repeatedly ignored them, opting instead to file an illegal dismissal case
against respondent before the Labor Arbiter. The essence of due process in administrative
proceedings is simply an opportunity to explain ones side or to seek reconsideration of the action
or ruling complained of. Due process is not violated where one is given the opportunity to be heard
but he chooses not to explain his side.[14]

Similarly ill-fated was petitioners Motion for Reconsideration which was denied by the Court
of Appeals in its Resolution[15] dated 8 May 2006.

Hence, this instant Petition for Review on Certiorari[16] under Rule 45 of the Revised Rules
of Court filed by petitioner impugning the foregoing Court of Appeals Decision and Resolution, and
raising the sole issue of:

WHETHER OR NOT PETITIONER WAS ILLEGALLY DISMISSED FROM EMPLOYMENT.

Time and again we reiterate the established rule that in the exercise of the Supreme Courts
power of review, the Court is not a trier of facts[17] and does not routinely undertake the
reexamination of the evidence presented by the contending parties during the trial of the case
considering that the findings of facts of labor officials who are deemed to have acquired expertise
in matters within their respective jurisdiction are generally accorded not only respect, but even
finality, and are binding upon this Court,[18] when supported by substantial evidence.[19]
The Labor Arbiter and the NLRC both ruled that petitioner was illegally dismissed from
employment and ordered the payment of his unpaid wages, backwages, and separation pay, while
the Court of Appeals found otherwise. The Labor Arbiter and the NLRC, on one hand, and the Court
of Appeals, on the other, arrived at divergent conclusions although they considered the very same
evidences submitted by the parties. It is, thus, incumbent upon us to determine whether there is
substantial evidence to support the finding of the Labor Arbiter and the NLRC that petitioner was
illegally dismissed. Substantial evidence is such amount of relevant evidence which a reasonable
mind might accept as adequate to support a conclusion, even if other equally reasonable minds
might conceivably opine otherwise.[20]

Under the Labor Code, the requirements for the lawful dismissal of an employee are two-
fold, the substantive and the procedural aspects. Not only must the dismissal be for a just[21] or
authorized cause,[22] the rudimentary requirements of due process - notice and hearing[23] must,
likewise, be observed before an employee may be dismissed. Without the concurrence of the two,
the termination would, in the eyes of the law, be illegal,[24] for employment is a property right of
which one cannot be deprived of without due process.[25]

Hence, the two (2) facets of a valid termination of employment are: (a) the legality of the
act of dismissal, i.e., the dismissal must be under any of the just causes provided under Article
282 of the Labor Code; and (b) the legality of the manner of dismissal, which means that there
must be observance of the requirements of due process, otherwise known as the two-notice
rule.[26]

Article 282 of the Labor Code enumerates the just causes for terminating the services of an
employee:
ART. 282. Termination by employer. - An employer may terminate an
employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of


the lawful orders of his employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in


him by his employer or his duly authorized representative;

(d) Commission of a crime or offense by the employee against the


person of his employer or any immediate member of his family or his duly authorized
representative; and

(e) Other causes analogous to the foregoing.

The charge of drug abuse inside the companys premises and during working hours
against petitioner constitutes serious misconduct, which is one of the just causes for
termination. Misconduct is improper or wrong conduct. It is the transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in character,
and implies wrongful intent and not merely an error in judgment. The misconduct to be serious
within the meaning of the Act must be of such a grave and aggravated character and not
merely trivial or unimportant. Such misconduct, however serious, must nevertheless, in
connection with the work of the employee, constitute just cause for his separation.[27] This
Court took judicial notice of scientific findings that drug abuse can damage the mental faculties
of the user.It is beyond question therefore that any employee under the influence of drugs
cannot possibly continue doing his duties without posing a serious threat to the lives and
property of his co-workers and even his employer.

Loberaness statements given to police during investigation is evidence which can be


considered by the respondent against the petitioner. Petitioner failed to controvert Loberanes
claim that he too was using illegal drugs. Records reveal that respondent gave petitioner a first
notice dated 11 June 2001, giving him 120 hours within which to explain and defend himself from
the charge against him and to attend the administrative hearing scheduled on 16 June 2001. There
is no dispute that petitioner received said notice as evidenced by his signature appearing on the
lower left portion of a copy thereof together with the date and time of his receipt.[28] He also
admitted receipt of the first notice in his Memorandum before this Court.[29] Despite his receipt of
the notice, however, petitioner did not submit any written explanation on the charge against him,
even after the lapse of the 120-day period given him. Neither did petitioner appear in the
scheduled administrative hearing to personally present his side. Thus, the respondent cannot be
faulted for considering only the evidence at hand, which was Loberanes statement, and conclude
therefrom that there was just cause for petitioners termination.

We thus quote with approval the disquisition of the Court of Appeals:

The [NLRC] did not find substantial evidence in order to establish the charge
leveled against [herein petitioner] claiming that the statement of Loberanes is legally
infirm as it was an admission made under custodial investigation; and there has been
no corroborating evidence. In administrative proceedings, technical rules of
procedure and evidence are not strictly applied and administrative due process
cannot be fully equated with due process in its strict judicial sense. Xxx It is sufficient
that [herein petitioner] was implicated in the use of illegal drugs and, more
importantly, there is no counter-statement from [herein petitioner] despite
opportunities granted to him submit to an investigation.[30]

It was by petitioners own omission and inaction that he was not able to present evidence to refute
the charge against him.

Now we proceed to judge whether the manner of petitioners dismissal was legal; stated
otherwise, whether petitioner was accorded procedural due process.

In Pastor Austria v. National Labor Relations Commission,[31] the Court underscored the
significance of the two-notice rule in dismissing an employee:
The first notice, which may be considered as the proper charge, serves to
apprise the employee of the particular acts or omissions for which his dismissal is
sought. The second notice on the other hand seeks to inform the employee of the
employers decision to dismiss him. This decision, however, must come only after the
employee is given a reasonable period from receipt of the first notice within which to
answer the charge and ample opportunity to be heard and defend himself with the
assistance of a representative if he so desires. This is in consonance with the express
provision of the law on the protection to labor and the broader dictates of procedural
due process. Non-compliance therewith is fatal because these requirements
are conditions sine qua non before dismissal may be validly
effected. (Emphases supplied.)

While there is no dispute that respondent fully complied with the first-notice requirement
apprising petitioner of the cause of his impending termination and giving him the opportunity to
explain his side, we find that it failed to satisfy the need for a second notice informing petitioner
that he was being dismissed from employment.

We cannot give credence to respondents allegation that the petitioner refused to receive
the third letter dated 21 August 2001 which served as the notice of termination. There is nothing
on record that would indicate that respondent even attempted to serve or tender the notice of
termination to petitioner. No affidavit of service was appended to the said notice attesting to the
reason for failure of service upon its intended recipient. Neither was there any note to that effect
by the server written on the notice itself.

The law mandates that it is incumbent upon the employer to prove the validity of the
termination of employment.[32] Failure to discharge this evidentiary burden would necessarily
mean that the dismissal was not justified and, therefore, illegal.[33] Unsubstantiated claims as to
alleged compliance with the mandatory provisions of law cannot be favored by this Court. In case
of doubt, such cases should be resolved in favor of labor, pursuant to the social justice policy of
our labor laws and Constitution.[34]

The burden therefore is on respondent to present clear and unmistakable proof that
petitioner was duly served a copy of the notice of termination but he refused receipt. Bare and
vague allegations as to the manner of service and the circumstances surrounding the same would
not suffice. A mere copy of the notice of termination allegedly sent by respondent to petitioner,
without proof of receipt, or in the very least, actual service thereof upon petitioner, does not
constitute substantial evidence. It was unilaterally prepared by the petitioner and, thus, evidently
self-serving and insufficient to convince even an unreasonable mind.

We cannot overemphasize the importance of the requirement on the notice of termination,


for we have ruled in a number of cases[35] that non-compliance therewith is tantamount to
deprivation of the employees right to due process.
This is not the first time that the Court affirmed that there was just cause for dismissal, but
held the employer liable for non-compliance with the procedural due process. In Agabon v.
National Labor Relations Commission,[36] we found that the dismissal of the employees therein was
for valid and just cause because their abandonment of their work was firmly
established. Nonetheless, the employer therein was held liable because it was proven that it did
not comply with the twin procedural requirements of notice and hearing for a legal
dismissal. However, in lieu of payment of backwages, we ordered the employer to pay indemnity
to the dismissed employees in the form of nominal damages, thus:

The violation of the petitioners right to statutory due process by the private
respondent warrants the payment of indemnity in the form of nominal damages. The
amount of such damages is addressed to the sound discretion of the court, taking
into account the relevant circumstances. We believe this form of damages would
serve to deter employers from future violations of the statutory due process rights of
employees. At the very least, it provides a vindication or recognition of this
fundamental right granted to the latter under the Labor Code and its Implementing
Rules.[37]

The above ruling was further clarified in Jaka Food Processing Corporation v. Pacot.[38]

In Jaka, the employees were terminated because the corporation was financially
distressed. However, the employer failed to comply with Article 283 of the Labor Code which
requires the employer to serve a written notice upon the employees and the Department of Labor
and Employment (DOLE) at least one month before the intended date of termination. We first
distinguished the case from Agabon, to wit:
The difference between Agabon and the instant case is that in the former, the
dismissal was based on a just cause under Article 282 of the Labor Code while in the
present case, respondents were dismissed due to retrenchment, which is one of the
authorized causes under Article 283 of the same Code.

xxxx

A dismissal for just cause under Article 282 implies that the employee
concerned has committed, or is guilty of, some violation against the employer, i.e.,
the employee has committed some serious misconduct, is guilty of some fraud
against the employer, or, as in Agabon, he has neglected his duties. Thus, it can be
said that the employee himself initiated the dismissal process.

On another breath, a dismissal for an authorized cause under Article 283 does
not necessarily imply delinquency or culpability on the part of the employee. Instead,
the dismissal process is initiated by the employers exercise of his management
prerogative, i.e., when the employer opts to install labor saving devices, when he
decides to cease business operations or when, as in this case, he undertakes to
implement a retrenchment program.[39]
Then we elucidated on our ruling in Agabon in this wise:
Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause
under Article 282 but the employer failed to comply with the notice requirement, the
sanction to be imposed upon him should be tempered because the dismissal process
was, in effect, initiated by an act imputable to the employee; and (2) if the dismissal
is based on an authorized cause under Article 283 but the employer failed to comply
with the notice requirement, the sanction should be stiffer because the dismissal
process was initiated by the employers exercise of his management prerogative.[40]

The Agabon doctrine enunciates the rule that if the dismissal was for just cause but procedural
due process was not observed, the dismissal should be upheld. Where the dismissal is for just
cause, as in the instant case, the lack of statutory due process should not nullify the dismissal or
render it illegal or ineffectual. However, the employer should indemnify the employee for the
violation of his right to procedural due process. The indemnity to be imposed should be stiffer to
discourage the abhorrent practice of dismiss now, pay later, which we sought to deter in
the Serrano[41] ruling. In Agabon[42] the nominal damages awarded was P30,000.00.

Conformably, the award of backwages by the Labor Arbiter and the NLRC should be deleted
and, instead, private respondent should be indemnified in the amount of P30,000.00 as nominal
damages.[43]

WHEREFORE, premises considered, the instant Petition is DENIED. The Court of Appeals
Decision dated 14 June 2005 is hereby AFFIRMED WITH MODIFICATION in the sense that
while there was a valid ground for dismissal, the procedural requirements for termination as
mandated by law and jurisprudence were not observed. Respondent Treasure Island Corporation
is ORDERED to pay the amount of P30,000.00 as nominal damages. No costs. SO ORDERED.
OFFICE OF THE COURT A.M. No. P-04-1917
ADMINISTRATOR, (Formerly A.M. No. 04-10-
Complainant, 297-MTCC)

- versus - Promulgated:

December 10, 2007

MRS. ELADIA T. CUNTING,


former Clerk of Court, Office of
the Clerk of Court, Municipal Trial
Court in Cities, Zamboanga City,
Respondent.
x-----------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

This administrative case is the result of the financial audit conducted by the Office of the
Court Administrator (OCA) in the Municipal Trial Court in Cities (MTCC) of Zamboanga City, the
antecedents of which are as follows:
On September 4, 2003, the OCA received a copy of the letter of Atty. Linda Lim, complaining
about the Clerk of Court of the MTCC of Zamboanga City, respondent Eladia T. Cunting, who
allegedly caused the delay in the release of the full amount adjudged in favor of her client, and
the dishonor of the checks due to insufficiency of funds. This letter-complaint prompted the Fiscal
Monitoring Division of the OCA to form an audit team to investigate the financial state of the said
court. The team audited the books of accounts of the MTCC of Zamboanga City from September
15 to 19, 2003.
On November 10, 2003, the respondent wrote a letter to Hon. Efren S. Mariano, Executive
Judge, MTCC, Zamboanga City, stating as follows:

In anticipation that I will be obliged to answer for the amount of money that
have not been fully accounted for as a result of the audit, I wish to request you that
said amount be charged to whatever retirement benefits I may be entitled to,
including the commutation of all my leave balances accumulated over the years that
I was an employee of the Supreme Court of the Philippines.

It may likewise be informed that a number of parties have been coming to my


residence, accordingly upon advice of some court employees, seeking the refund of
bail bonds posted in the respective cases that these parties were involved in, which
cases have been either provisionally or permanently dismissed. For this reason, I
thus request that my salaries, which I learned have been held in abeyance, be used
to answer for such refund of bail bonds. It may be informed that since payment of
my salaries and other remunerations is currently suspended, I am not in a position
to personally answer for such refund.[1]

On October 6, 2004, the audit team submitted its report to the OCA. The audit team found
that respondent had been remiss in the performance of her duties and that there were massive
shortages in the courts funds.

In accordance with the recommendation of the OCA, the Court issued a


Resolution [2]
dated December 1, 2004, directing the respondent to deposit the amounts
of P10,049,496.60 to the Fiduciary Trust Fund account, P972,634.02 to Judiciary Development
Fund account, and P117,093.36 to the Special Allowance for Judiciary account. She was also
directed to submit the court orders, acknowledgment receipts and other documents showing the
unauthorized withdrawals from the said accounts. In the same Resolution, the Court resolved to
issue a Hold Departure Order against the respondent and to suspend her pending the resolution
of the case. The Court, likewise, directed the Legal Office of the OCA to file the appropriate criminal
charges against the respondent.

In a letter[3] dated January 17, 2005, the respondent asked for an additional period of thirty (30)
days within which to comply with the December 1, 2004 Resolution. She averred that she needed
additional time to produce the documents required to be submitted and to prepare her answer to
the charges imputed to her. The Court granted the request for extension of time. However, the
respondent did not submit any document within the extended period.

On July 18, 2005, the Court issued a Resolution[4] directing the respondent to show cause
why she should not be disciplinarily dealt with for failure to file her answer and submit the required
documents. When the respondent failed to comply, the Court issued another
Resolution[5] on December 14, 2005, imposing upon the respondent a fine of P1,000.00, or
imprisonment of five (5) days, and requiring her to comply with the previous orders of the Court.
Still, the respondent failed to comply. In a Resolution[6] dated March 19, 2007, the Court imposed
upon the respondent an additional fine of P2,000.00. She was also directed to show cause why
she should not be held in contempt of court for failure to comply with the Courts orders.

Thereafter, the OCA reevaluated the case and reassessed the respondents liability to include
the withdrawals which the respondent failed to substantiate. The OCA reported, thus:

First, the respondent left open the vault. On the day the audit team arrived at the
MTCC of Zamboanga City, respondent was attending a seminar in Dipolog City. The
audit team noticed that the vault was open making it accessible to any person in
court.

Second, the audit team found cash amounting to P10,670.30 stored in the
vault. The team had to presume that this amount forms part of the court collections
because the source of the money can not be confirmed from the respondent who did
not report for work during the entire period of the audit notwithstanding the
instruction of Judge Mariano for her to cut short her attendance in the seminar in
Dipolog City so she can attend to the needs of the audit team.

Third, there were missing accountable forms. The Office of the Clerk of Court
of the MTCC of Zamboanga City requisitioned several booklets of official receipts from
this Court which the audit team can not find among the records of the said
court. These are:

O.R. Serial Numbers No. of Booklet Date Mailed


Packed/Mailed
80501 to 81000 10 08.01.86
2653001 to 2653500 10 08.13.92
10438951 to 10439000 01 12.16.98
11148051 to 11148100 01 05.19.99
11148901 to 11148950 01 05.19.99
13217801 to 13217850 01 07.14.00
13218551 to 13218750 04 07.14.00
13218801 to 13218850 01 07.14.00
14126101 to 14126250 03 01.31.01
15067151 to 15067250 02 07.31.01
15561151 to 15561250 02 11.07.01
16574151 to 16574250 02 06.04.02
17220501 to 17220800 06 11.07.01
18110151 to 18110250 02 04.23.03
Total 46
Fourth, the audit team found out that the Office of the Clerk of Court of the
MTCC of Zamboanga City issued receipts which were not requisitioned from this
Court.

Fifth, the audit team discovered a shortage in the collections for the Clerk of
Court General Fund in the amount of P116,431.30. The total collections for this fund
from November 1996 to June 2003 is P537,069.54. Deducted therefrom is the
amount of P493,452.49 representing the amount properly deposited or remitted to
the bank. This left an unremitted balance of P43,617.05. The audit team did not
consider as valid deposits or remittances those amounts reflected in several deposit
slips without any machine validation.These amounted to P72,814.25. Thus, insofar
as these amounts are concerned, there are doubts as to whether these deposits were
actually made, hence, these have to be treated as unremitted collections and added
to the unremitted balance of P43,617.05. The total accountability of respondent
is P116,431.30. This is summarized as follows:

Total collections, November 1996 to June 2003 P 537,069.54


Less: Total Remittances/Deposits 493,452.49
Unremitted Collections 43,617.05
Add: Unconfirmed Deposits per Deposit Slips 72,814.25
Without
Machine Validations (Schedule 1)
Shortage P 116,431.30

The deposit slips without any machine validation are:

Date Monthly Report Deposit Slip


Amount
12-03-96 Nov. 1996 P 3,352.00
01-13-97 Dec. 1996 1,850.00
02-03-97 Jan. 1997 1,535.00
04-10-97 Mar. 1997 8.00
07-07-97 June 1997 1,840.40
11-12-97 Oct. 1997 9,080.00
09-13-99 Aug. 1999 9,000.00
02-02-00 Nov. 1999 3,928.05
2-23-00 Jan. 2000 6,160.00
2-23-00 Jan. 2000 4,309.00
2-23-00 Jan. 2000 2.80
3-15-00 Feb. 2000 13,725.00
6-02-00 May 2000 3,333.32
6-02-00 May 2000 334.68
11-07-00 Oct. 2000 4,323.92
11-07-00 Oct. 2000 354.08
7-18-01 June 2001 3,267.00
01-08-02 Jan. 2002 3,515.00
04-21-03 March 2003 2,896.00
TOTAL P 72,814.25

Sixth, the audit team found out that respondent did not maintain a cash book for the
Clerk of Court General Fund for the period of September 1999 to June 2003. The
team also noticed that respondent did not regularly submit the monthly reports of
collections for the Clerk of Court General Fund. The lacking monthly reports pertain
to the months of November 2000, June 2001, October 2002, December 2002, May
2003 and June 2003. As a result, the Accounting Division of this Court was not able
to prepare the Subsidiary Ledger for the corresponding months.

Seventh, the audit team noticed numerous mistakes in reporting to this Court the
collections in the Clerk of Court General Fund. The team observed discrepancies
between the amount indicated in the official receipts and the amount in the monthly
reports, to wit:
DATE O.R. NO. AMOUNT AMOUNT SHORT
PER PER OVER
MONTHLY OFFICIAL
REPORT RECEIPT
01-13- 3782807 1.00 5.00 5.00
00
01-17- 3782822 1.00 2.00 1.00
00
01-18- 3782846 1.00 2.00 1.00
00
01-18- 3782849 1.00 5.00 4.00
00
01-19- 3782855 1.00 10.00 9.00
00
02-07- 3783002 10.00 1.00 (9.00)
00
02-08- 3783017 5.00 250.00 245.00
00
02-08- 3783024 1.00 2.00 1.00
00
02-08- 3783026 2.00 1.00 (1.00)
00
02-08- 3783053 5.00 1.00 (4.00)
00
02-17- 3783100 1.00 10.00 9.00
00
02-17- 3783101 10.00 1.00 (9.00)
00
02-18- 3783107 1.00 10.00 9.00
00
02-18- 3783122 5.00 1.00 (4.00)
00
02-18- 3783124 5.00 1.00 (4.00)
00
02-22- 3783178 1.00 2.50 1.50
00
02-23- 3783185 1.00 2.00 1.00
00
02-23- 3781393 2.00 1.00 ( 1.00)
00
02-23- 3781394 1,970.00 2.00 (1,968.00)
00
02-23- 3781395 1.00 1,970.00 1,969.00
00
02-23- 3781397 2.00 1.00 (1.00)
00
02-23- 3781399 1.00 2.00 1.00
00
03-93- 3783314 1.00 10.00 9.00
00
03-07- 3783356 5.00 1.00 (4.00)
00
03-22- 3783461 4.00 28.00 24.00
00
03-22- 3784533 1.00 5.00 4.00
00
03-22- 3784534 1.00 2.00 1.00
00
07-12- 3784636 48.00 52.00 4.00
00
07-19- 3784718 208.00 68.00 (140.00)
00
08-14- 12356849 2.00 4.00 2.00
00
08-14- 12356850 2.00 4.00 2.00
00
08-16- 12356858 210.00 200.00 (10.00)
00
09-14- 12356972 8.00 4.00 (4.00)
00
09-27- 12356998 2.00 204.00 202.00
00
10-04- 13218778 2.00 399.00 397.00
00
TOTALS 2,522.00 3,263.00 741.50

Eighth, there was also a shortage in the collections for the Judiciary Development
Fund in the amount of P574,927.47. The total collection for this fund from November
1996 to June 2003 is P2,531,283.06. The audit team deducted therefrom the amount
of P2,259,358.67 representing the valid remittances/deposits to the bank. This left
an unaccounted balance of P271,924.39. The team added to the accountability of
respondent the amount of P303,003.08 which was summed up from the deposit slips
without any machine validation. Under Administrative Circular No. 3-2000 (June 15,
2000), it was stated that [d]eposit slips that are not machine validated shall not be
considered as deposits. The total shortage was arrived at in this manner.

Total collections, November 1996 to June 2003


P 2,531,283.06
Less: Total Remittances/Deposits 2,259,358.67
Unremitted Collections 271,924.39
Add: Unconfirmed Deposits per Deposit
Slips Without 303,003.08
Machine Validations (Schedule 2)
Shortage P 574,927.47

The deposit slips without machine validation are:

Date Monthly Report Deposit Slip


Amount
03-03-97 February 1997 P 7,288.60
04-03-97 March 1997 242.00
11-12-97 October 1997 7,270.00
03-12-98 February 1998 21,218.00
02-23-00 January 2000 7,760.00
02-23-00 January 2000 2,197.68
03-08-00 February 2000 26,366.70
03-15-00 February 2000 1,327.75
03-15-00 February 2000 756.15
04-10-00 March 2000 12,027.00
06-02-00 May 2000 55,179.35
06-02-00 May 2000 52.65
11-07-00 October 2000 5,185.00
11-07-00 October 2000 128.00
08-17-01 September 2001 146.00
11-29-01 November 2001 10,000.00
01-09-02 December 2001 28,357.39
02-08-02 January 2002 49,632.00
03-07-02 February 2002 11,740.60
09-25-02 September 2002 8,260.60
10-07-02 September 2002 19,500.25
12-13-02 November 2002 8,440.00
03-25-03 March 2003 130.00
05-05-03 April 2003 9,500.00
05-05-03 April 2003 5,212.67
05-09-03 April 2003 2,108.46
05-29-03 April 2003 541.23
08-06-03 June 2003 2,435.00
TOTAL P 303.003.08

The audit team discovered a discrepancy in the amount indicated in a deposit


slip. The deposit slip dated August 4, 1998, which was attached to the monthly report
for July 1998, showed a deposit of P11,400.00 while the machine validated slip
indicated a deposit of P10,958.33 or a difference of P481.67.

The collections for the Judiciary Development Fund were not accurately recorded in
the monthly reports. The audit team discovered discrepancies between the amount
indicated in the official receipts and those indicated in the cash book, the net effect
of which is that the collections reported to the Accounting Division of this Court were
understated. These discrepancies are:

DATE O.R. NO. AMOUNT AMOUNT SHORT


PER PER (OVER)
MONTHLY OFFICIAL
REPORT REPORT

02-06-97 647427 46.00 96.00 50.00


02-25-97 647578 10.00 50.00 40.00
04-07-97 749837 174.00 446.00 272.00
05-26-97 6641025 0.00 48.00 48.00
09-02-97 6717806 48.00 10.00 (38.00)
09-04-97 6717827 50.00 10.00 (40.00)
09-04-97 6717828 50.00 10.00 (40.00)
09-04-97 6717831 48.00 10.00 (38.00)
09-11-97 6717860 48.00 2.00 (46.00)
11-05-97 6799025 10.00 50.00 40.00
12-02-97 6799361 48.00 10.00 (38.00)
12-02-97 6799362 48.00 10.00 (38.00)
11-17-98 8205617 84.00 116.00 32.00
11-20-98 8205639 2.00 48.00 46.00
06-09-00 12355457 232.00 222.00 (10.00)
06-09-00 12358578 15.00 50.00 35.00
TOTALS P913.00 P1,188.00 P275.00

Still in connection with the Judiciary Development Fund, there was no cash book for
the months of January to June 2003. There were no monthly reports for December
1996, November 1997, for the entire year of 1999, November 2000, November and
December 2002, and January to June 2003.

Finally, the audit team discovered the biggest shortage in the Fiduciary Fund
amounting to P11,338,382.54. This was a result of a variety of irregular transactions.
First, cash bail in the total amount of P12,400.00 was released without any
supporting court orders authorizing the release thereof. Neither were these
accompanied by acknowledgment receipts whereby the accused acknowledges
his/her receipt of the released cash bail. These involve three (3) transactions, to wit:

DATE O.R. CASE NO. PAYEE AMOUNT


NO.
12-02-96 559919 96-34 E. Teodoro P 4,000.00
03-10-97 647322 39250 A. Garcia 4,200.00
03-10-97 647323 39250 L. Tingkasan 4,200.00
TOTAL P 12,400.00

There were also twenty-six (26) instances wherein the cash bail amounting
to P264,000.00 was released without any supporting court orders authorizing the
release. These are:
DATE O.R. NO. CASE PAYEE AMOUNT
NO.
04-16-97 749661 39712 L. Visitacion P 4,500.00
04-25-00 3784223 42805- Atty. S. Sotto, 90,000.00
815 Jr.
06-11-98 8081383 40995- T. Kwan 52,500.00
001
10-24-98 8083093 41541 R. Liguitan 4,500.00
08-18-98 8083105 40893 O. Aizon 1,000.00
11-10-98 8083163 41367 L. Isidro 1,000.00
03-15-99 8206378 41680 L. Rodriguez 7,500.00
02-09-99 8206426 41994 A. Isahac 4,500.00
02-11-99 8206428 41272- H. Concepcion 2,000.00
73
04-15-99 8206554 41965 R. Alfaro 6,000.00
12-07-98 8206605 41669 T. Raz 2,000.00
11-25-99 8403623 41758 P. Bello 1,000.00
11-26-99 8403624 42511- E. Canseco 24,000.00
12
11-25-99 11148923 41758 P. Bello 1,000.00
11-26-99 11148924 42511- E. Canseco 24,000.00
12
01-05-01 13218554 43501 F. Dionisio 4,500.00
01-09-01 13218556 43402 I. Galvez 5,000.00
01-23-01 13218566 43658 V. Alam-alam 7,500.00
02-14-01 13218593 42181 R. 2,000.00
Ramasamyalios
02-26-01 13218654 42180- R. de Mesa 4,000.00
81
04-02-01 13218674 35569 R. Luisito 100.00
04-24-02 14126198 44530- R. Fernando 4,000.00
31
03-27-03 17220712 45440 R. Soler 6,000.00
03-28-03 17220713 45470 K. Lukman 6,000.00
04-16-97 749661 39712 L. Visitacion 4,500.00
04-25-00 3784223 42805- Atty. S. Sotto, 90,000.00
815 Jr.
TOTAL P264,600.00

In eleven (11) transactions, cash bail amounting to P237,700.00 was released


without any acknowledgment receipt. Since there was no proof that the accused
actually received the released cash bail, this amount shall be considered as part of
the accountability of the respondent. These transactions are:

DATE O.R. NO. CASE NO. PAYEE AMOUNT


08-19-97 6641702 40140-143 R. P 6,000.00
Jalandoni
09-02-97 6641724 39632 M. Akmad 1,000.00
09-08-97 6641730 34895-896 S. 4,000.00
Benasing
07-31-97 6641766 39457 L. 2,000.00
Dayaganon
08-06-97 6641778 40060 M. Chiong 2,000.00
08-14-97 6641790 30326 N. Polalon 100.00
08-14-97 6641792 40146 C/S 9,000.00
Candido
08-19-97 6641800 26201-06 L. Basid 203,000.00
07-11-97 6641822 40002-04 C. Gestoso 6,000.00
09-26-97 6718274 40198-99 P. Perez 4,000.00
01-26-99 8206670 37717 C. Culs 600.00
TOTAL P237,700.00
Court fines were collected but not remitted to the Fiduciary Fund. This
amounted to P321.50, the details of which are:

DATE O.R. NO. CASE NO. PAYEE AMOUNT


09-07-99 3520447 14126 J. Aminula P 110.00
09-07-99 3520448 15141 J. Aminula 110.00
04-22-03 13219738 35694 N. Martinez 101.50
TOTAL P 321.50

Confiscated cash bail amounting to P554,400.00 were withdrawn from the Fiduciary
Fund account but were not remitted to the [J]udiciary [Development] [F]und account.

The audit team discovered that respondent was collecting a fee of 1% for every
money received by the court such as cash bail, consignments, rental deposits, etc.
However, there are no records that the fees collected were remitted to the bank. The
total fees collected by respondent amounted to P219,464.44.

Finally, the audit team computed the total cash bail, supersedeas bonds,
consignations and rental deposits that were supposedly unwithdrawn from the
bank. This amounted to P10,212,693.75. However, the total balance in the bank
accounts maintained by respondent for the MTCC of Zamboanga City is nowhere near
this amount. Current Account No. 1952-0007-28 has a balance of only P160,436.55
while Savings Account No. 1951-0113-94 has only P1,761.20 for a total
of P162,197.75. This should be deducted from P10,212,693.75 leaving a balance
of P10,049,496.60. This represents the amount of unwithdrawn and unaccounted
Fiduciary Fund collections for which the respondent is responsible.

All in all, the liability of the respondent for the Fiduciary Fund is P11,338,382.54
which is broken down as follows:

No Court Order and P 12,400.00


Acknowledgment Receipt
No Court Order 264,600.00
No Acknowledgment Receipt 237,700.00
Court fines collected but not 321.50
remitted
Confiscated Bonds which were
withdrawn but 554,400.00
Not remitted
Commission on Cash Held in Trust
but not 219,464.44
Remitted
Unwithdrawn Cash Bond 10,049,496.60
Total Unwithdrawn Fiduciary Fund P 11,338,382.54

Based on the foregoing, the OCA recommended that:

1. Ms. Eladia T. Cunting, Clerk of Court, Municipal Trial Court in


Cities, Zamboanga City, be FOUND GUILTY of gross neglect of duty, dishonesty
and gross misconduct;

2. The Financial Management Office, Office of the Court Administrator, be


DIRECTED to process the terminal leave benefits of the respondent, dispensing
with the documentary requirements, and to remit the said benefit to the Fiduciary
Fund account of the MTCC of Zamboanga City;

3. Ms. Cunting be FOUND GUILTY of contempt of court for failing to return the
missing funds despite repeated demands;

4. Ms. Cunting be DIRECTED to restitute the following amounts to their respective


accounts:
a. P116,431.30 Clerk of Court General Fund
b. P574,927.47 Judiciary Development Fund
c. P10,899,019.03[7] Fiduciary Fund

5. Director Nestor M. Mantaring, National Bureau of Investigation, be DIRECTED


to cause the arrest of Ms. Eladia T. Cunting and to detain her until she complies
with the directive of this Court to restitute the above-mentioned shortages.

The findings and recommendations of the OCA are well taken.

The administration of justice is circumscribed with a heavy burden of responsibility. It


requires everyone involved in its dispensation -- from the justices and judges to the lowliest clerks
-- to live up to the strictest standards of competence, integrity and diligence in the public
service.[8] As frontliners in the administration of justice, they should live up to the strictest
standards of honesty and integrity. They must bear in mind that the image of a court of justice is
necessarily mirrored in the conduct, official or otherwise, of the men and women who work there.[9]

Clerks of court, in particular, must be individuals of competence, honesty and probity,


charged as they are with safeguarding the integrity of the court and its proceedings.[10] They
perform a delicate function as designated custodians of the court's funds, revenues, records,
properties and premises.[11] As such, they are responsible for ensuring that the courts funds are
promptly deposited with an authorized government depositary bank. Thus, they are liable for any
loss, shortage, destruction or impairment of such funds and property.[12] This Court will not
countenance dishonesty and malversation, for these offenses diminish the faith of the people in
the Judiciary.[13]

The respondent failed to live up to these exacting standards. She had been grossly negligent
in her duties as shown by the following incidents: (1) she left open the courts vault while attending
a seminar in Dipolog City; (2) she left P10,670.30 inside the vault; (3) forty-six (46) booklets of
official receipts were missing; and (4) she used receipts not requisitioned from the Property
Division of the OCA.

Her most serious infractions were the shortages in the Clerk of Court General Fund, Judiciary
Development Fund, and the Fiduciary Fund, which amounted to P12,029,741.31. Several
irregularities contributed to the accumulation of these shortages: (1) respondent did not deposit
some amount of the courts collections as shown by deposit slips which were not machine validated
by the bank; (2) monthly reports were not regularly submitted to the Court; (3) reports submitted
to the Court contained numerous discrepancies between the amounts reported and the amounts
appearing in the official receipts, deposit slips or cash books; (4) she did not maintain a cash book
for the Judiciary Development Fund; (5) respondent withdrew cash bail from the Fiduciary Fund
without court orders or without any acknowledgment receipts; (6) fines imposed on the cash bail
were not remitted; (7) confiscated cash bails were not remitted to the Judiciary Development
Fund; and (8) respondent did not remit the 1% commission she collected on money received by
the court.

The fact that respondent failed to exert any effort to defend herself from the charges against
her exacerbates her predicament. The natural instinct of a man is to resist an unfounded claim or
imputation and defend himself, for it is totally against human nature to remain silent and say
nothing in the face of false accusations. Silence, in such cases, is almost always construed as an
implied admission of the truth thereof. Thus, in the absence of any compelling reason to hold
otherwise, we take respondents silence as a waiver to file her comment and an acknowledgment
of the truthfulness of the charges against her.[14]
Worse, she had effectively admitted her accountability for the shortages in the courts funds
when she wrote the letter to Judge Mariano requesting that her accrued leave credits be used to
answer for any amount which the audit team would find unaccounted for. Dishonesty, particularly
that which amounts to malversation of public funds, will not be tolerated. Otherwise, courts of
justice may come to be regarded as mere havens of thievery and corruption.[15]

The seriousness of respondents infractions amounts to gross neglect of duty, dishonesty


and grave misconduct, and merits dismissal from the service. However, on July 26, 2007, the
Court already dismissed respondent from the service also for gross dishonesty and grave
misconduct with forfeiture of all benefits, except accrued leave credits, and with prejudice to
reemployment in the government service.[16] Nonetheless, this does not render the case
moot.[17] Respondent cannot avoid administrative liability by her previous dismissal from the
service. For this case involving additional serious offenses, in lieu of dismissal from the service,
the Court finds it proper to impose on her a fine of P40,000.00 to be deducted from her accrued
leave credits.

The recommendation to hold the respondent in contempt of court is likewise warranted.


Indifference to the Courts Resolutions requiring the production of certain documents makes
respondent guilty of contempt of court. Such cavalier attitude disregards the duty of every
employee in the Judiciary to obey the orders and processes of this Court without delay.[18] When
the contempt consists in the refusal to do an act which is still within the power of respondent to
perform, she may be imprisoned by order of the court until she performs it.[19]

WHEREFORE, respondent Eladia T. Cunting is found GUILTY of gross neglect of duty,


dishonesty and grave misconduct. In view of her previous dismissal from the service, a FINE in
the amount of P40,000.00 is imposed on respondent to be deducted from her accrued leave
credits.

Respondent is further ordered to RESTITUTE the following amounts to their respective


accounts:

a. P116,431.30 Clerk of Court General Fund


b. P574,927.47 Judiciary Development Fund
c. P11,338,382.54 Fiduciary Fund

The Employees Leave Division, Office of Administrative Services-OCA, is


likewise DIRECTED to compute the respondents earned leave credits and to forward it to the
Finance Division, Fiscal Management Office-OCA, which shall compute the money value of the
balance, as well as other benefits that she may be entitled to, to be included as payment of the
fine and partial restitution of the computed shortages.

In addition, the respondent is found GUILTY of contempt of court for her failure to comply
with the Courts orders. For this reason, the National Bureau of Investigation is DIRECTED to
cause the arrest of respondent Eladia T. Cunting and to detain her until she complies with the
directive of this Court to restitute the balance of the shortages, after deduction of the balance of
her accrued leave credits. SO ORDERED.
G.R. No. 165647 March 26, 2009

PHILIPPINES FIRST INSURANCE CO., INC., Petitioner,


vs.
WALLEM PHILS. SHIPPING, INC., UNKNOWN OWNER AND/OR UNKNOWN CHARTERER
OF THE VESSEL M/S "OFFSHORE MASTER" AND "SHANGHAI FAREAST SHIP BUSINESS
COMPANY," Respondents.

DECISION

TINGA, J.:

Before us is a Rule 45 petition1 which seeks the reversal of the Decision2 and Resolution3 of the
Court of Appeals in CA-G.R. No. 61885. The Court of Appeals reversed the Decision4 of the
Regional Trial Court (RTC) of Manila, Branch 55 in Civil Case No. 96-80298, dismissing the
complaint for sum of money.

The facts of the case follow.5

On or about 2 October 1995, Anhui Chemicals Import & Export Corporation loaded on board M/S
Offshore Master a shipment consisting of 10,000 bags of sodium sulphate anhydrous 99 PCT Min.
(shipment), complete and in good order for transportation to and delivery at the port of Manila for
consignee, L.G. Atkimson Import-Export, Inc. (consignee), covered by a Clean Bill of Lading. The
Bill of Lading reflects the gross weight of the total cargo at 500,200 kilograms.6 The Owner and/or
Charterer of M/V Offshore Master is unknown while the shipper of the shipment is Shanghai Fareast
Ship Business Company. Both are foreign firms doing business in the Philippines, thru its local ship
agent, respondent Wallem Philippines Shipping, Inc. (Wallem).7

On or about 16 October 1995, the shipment arrived at the port of Manila on board the vessel M/S
Offshore Master from which it was subsequently discharged. It was disclosed during the discharge
of the shipment from the carrier that 2,426 poly bags (bags) were in bad order and condition,
having sustained various degrees of spillages and losses. This is evidenced by the Turn Over
Survey of Bad Order Cargoes (turn-over survey) of the arrastre operator, Asian Terminals, Inc.
(arrastre operator).8 The bad state of the bags is also evinced by the arrastre operator’s Request
for Bad Order Survey.9

Asia Star Freight Services, Inc. undertook the delivery of the subject shipment from the pier to
the consignee’s warehouse in Quezon City,10 while the final inspection was conducted jointly by
the consignee’s representative and the cargo surveyor. During the unloading, it was found and
noted that the bags had been discharged in damaged and bad order condition. Upon inspection, it
was discovered that 63,065.00 kilograms of the shipment had sustained unrecovered spillages,
while 58,235.00 kilograms had been exposed and contaminated, resulting in losses due to
depreciation and downgrading.11

On 29 April 1996, the consignee filed a formal claim with Wallem for the value of the damaged
shipment, to no avail. Since the shipment was insured with petitioner Philippines First Insurance
Co., Inc. against all risks in the amount of ₱2,470,213.50,12 the consignee filed a formal
claim13 with petitioner for the damage and losses sustained by the shipment. After evaluating the
invoices, the turn-over survey, the bad order certificate and other documents,14petitioner found
the claim to be in order and compensable under the marine insurance policy. Consequently,
petitioner paid the consignee the sum of ₱397,879.69 and the latter signed a subrogation receipt.

Petitioner, in the exercise of its right of subrogation, sent a demand letter to Wallem for the
recovery of the amount paid by petitioner to the consignee. However, despite receipt of the letter,
Wallem did not settle nor even send a response to petitioner’s claim.15

Consequently, petitioner instituted an action before the RTC for damages against respondents for
the recovery of ₱397,879.69 representing the actual damages suffered by petitioner plus legal
interest thereon computed from the time of the filing of the complaint until fully paid and attorney’s
fees equivalent to 25% of the principal claim plus costs of suit.

In a decision16 dated 3 November 1998, the RTC ordered respondents to pay petitioner
₱397,879.69 with 6% interest plus attorney’s fees and costs of the suit. It attributed the damage
and losses sustained by the shipment to the arrastre operator’s mishandling in the discharge of
the shipment. Citing Eastern Shipping Lines, Inc. v. Court of Appeals,17 the RTC held the shipping
company and the arrastre operator solidarily liable since both the arrastre operator and the carrier
are charged with and obligated to deliver the goods in good order condition to the consignee. It
also ruled that the ship functioned as a common carrier and was obliged to observe the degree of
care required of a common carrier in handling cargoes. Further, it held that a notice of loss or
damage in writing is not required in this case because said goods already underwent a joint
inspection or survey at the time of receipt thereof by the consignee, which dispensed with the
notice requirement.

The Court of Appeals reversed and set aside the RTC’s decision.18 According to the appellate court,
there is no solidary liability between the carrier and the arrastre operator because it was clearly
established by the court a quo that the damage and losses of the shipment were attributed to the
mishandling by the arrastre operator in the discharge of the shipment. The appellate court ruled
that the instant case falls under an exception recognized in Eastern

Shipping Lines.19 Hence, the arrastre operator was held solely liable to the consignee.

Petitioner raises the following issues:

1. Whether or not the Court of Appeals erred in not holding that as a common carrier, the
carrier’s duties extend to the obligation to safely discharge the cargo from the vessel;

2. Whether or not the carrier should be held liable for the cost of the damaged shipment;

3. Whether or not Wallem’s failure to answer the extra judicial demand by petitioner for the
cost of the lost/damaged shipment is an implied admission of the former’s liability for said
goods;

4. Whether or not the courts below erred in giving credence to the testimony of Mr. Talens.

It is beyond question that respondent’s vessel is a common carrier.20 Thus, the standards for
determining the existence or absence of the respondent’s liability will be gauged on the degree of
diligence required of a common carrier. Moreover, as the shipment was an exercise of international
trade, the provisions of the Carriage of Goods

by Sea Act21 (COGSA), together with the Civil Code and the Code of Commerce, shall apply.22

The first and second issues raised in the petition will be resolved concurrently since they are
interrelated.

It is undisputed that the shipment was damaged prior to its receipt by the insured consignee. The
damage to the shipment was documented by the turn-over survey23 and Request for Bad Order
Survey.24 The turn-over survey, in particular, expressly stipulates that 2,426 bags of the shipment
were received by the arrastre operator in damaged condition. With these documents, petitioner
insists that the shipment incurred damage or losses while still in the care and responsibility of
Wallem and before it was turned over and delivered to the arrastre operator.

The trial court, however, found through the testimony of Mr. Maximino Velasquez Talens, a cargo
surveyor of Oceanica Cargo Marine Surveyors Corporation, that the losses and damage to the
cargo were caused by the mishandling of the arrastre operator. Specifically, that the torn cargo
bags resulted from the use of steel hooks/spikes in piling the cargo bags to the pallet board and
in pushing the bags by the stevedores of the arrastre operator to the tug boats then to the
ports.25 The appellate court affirmed the finding of mishandling in the discharge of cargo and it
served as its basis for exculpating respondents from liability, rationalizing that with the fault of
the arrastre operator in the unloading of the cargo established it should bear sole liability for the
cost of the damaged/lost cargo.

While it is established that damage or losses were incurred by the shipment during the unloading,
it is disputed who should be liable for the damage incurred at that point of transport. To address
this issue, the pertinent laws and jurisprudence are examined.

Common carriers, from the nature of their business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over the goods transported by them.26 Subject to
certain exceptions enumerated under Article 173427 of the Civil Code, common carriers are
responsible for the loss, destruction, or deterioration of the goods. The extraordinary responsibility
of the common carrier lasts from the time the goods are unconditionally placed in the possession
of, and received by the carrier for transportation until the same are delivered, actually or
constructively, by the carrier to the consignee, or to the person who has a right to receive them.28
For marine vessels, Article 619 of the Code of Commerce provides that the ship captain is liable
for the cargo from the time it is turned over to him at the dock or afloat alongside the vessel at
the port of loading, until he delivers it on the shore or on the discharging wharf at the port of
unloading, unless agreed otherwise. In Standard Oil Co. of New York v. Lopez Castelo,29 the Court
interpreted the ship captain’s liability as ultimately that of the shipowner by regarding the captain
as the representative of the ship owner.

Lastly, Section 2 of the COGSA provides that under every contract of carriage of goods by sea,
the carrier in relation to the loading, handling, stowage, carriage, custody, care, and discharge of
such goods, shall be subject to the responsibilities and liabilities and entitled to the rights and
immunities set forth in the Act.30 Section 3 (2) thereof then states that among the carriers’
responsibilities are to properly and carefully load, handle, stow, carry, keep, care for, and
discharge the goods carried.

The above doctrines are in fact expressly incorporated in the bill of lading between the shipper
Shanghai Fareast Business Co., and the consignee, to wit:

4. PERIOD OF RESPONSIBILITY. The responsibility of the carrier shall commence from the time
when the goods are loaded on board the vessel and shall cease when they are discharged from
the vessel.

The Carrier shall not be liable of loss of or damage to the goods before loading and after
discharging from the vessel, howsoever such loss or damage arises.31

On the other hand, the functions of an arrastre operator involve the handling of cargo deposited
on the wharf or between the establishment of the consignee or shipper and the ship's
tackle.32 Being the custodian of the goods discharged from a vessel, an arrastre operator's duty is
to take good care of the goods and to turn them over to the party entitled to their possession.33

Handling cargo is mainly the arrastre operator's principal work so its drivers/operators or
employees should observe the standards and measures necessary to prevent losses and damage
to shipments under its custody.34

In Fireman’s Fund Insurance Co. v. Metro Port Service, Inc.35 the Court explained the relationship
and responsibility of an arrastre operator to a consignee of a cargo, to quote:

The legal relationship between the consignee and the arrastre operator is akin to that of a depositor
and warehouseman. The relationship between the consignee and the common carrier is similar to
that of the consignee and the arrastre operator. Since it is the duty of the ARRASTRE to take good
care of the goods that are in its custody and to deliver them in good condition to the consignee,
such responsibility also devolves upon the CARRIER. Both the ARRASTRE and the CARRIER are
therefore charged with and obligated to deliver the goods in good condition to the
consignee.(Emphasis supplied) (Citations omitted)

The liability of the arrastre operator was reiterated in Eastern Shipping Lines, Inc. v. Court of
Appeals36 with the clarification that the arrastre operator and the carrier are not always and
necessarily solidarily liable as the facts of a case may vary the rule.

Thus, in this case the appellate court is correct insofar as it ruled that an arrastre operator and a
carrier may not be held solidarily liable at all times. But the precise question is which entity had
custody of the shipment during its unloading from the vessel?

The aforementioned Section 3(2) of the COGSA states that among the carriers’ responsibilities are
to properly and carefully load, care for and discharge the goods carried. The bill of lading covering
the subject shipment likewise stipulates that the carrier’s liability for loss or damage to the goods
ceases after its discharge from the vessel. Article 619 of the Code of Commerce holds a ship
captain liable for the cargo from the time it is turned over to him until its delivery at the port of
unloading.

In a case decided by a U.S. Circuit Court, Nichimen Company v. M./V. Farland,37 it was ruled that
like the duty of seaworthiness, the duty of care of the cargo is non-delegable,38 and the carrier is
accordingly responsible for the acts of the master, the crew, the stevedore, and his other agents.
It has also been held that it is ordinarily the duty of the master of a vessel to unload the cargo
and place it in readiness for delivery to the consignee, and there is an implied obligation that this
shall be accomplished with sound machinery, competent hands, and in such manner that no
unnecessary injury shall be done thereto.39 And the fact that a consignee is required to furnish
persons to assist in unloading a shipment may not relieve the carrier of its duty as to such
unloading.40

The exercise of the carrier’s custody and responsibility over the subject shipment during the
unloading actually transpired in the instant case during the unloading of the shipment as testified
by Mr. Talens, the cargo surveyor, to quote:

Atty. Repol:

- Do you agree with me that Wallem Philippines is a shipping [company]?

A Yes, sir.

Q And, who hired the services of the stevedores?

A The checker of the vessel of Wallem, sir.41

xxx

Q Mr. Witness, during the discharging operation of this cargo, where was the master of the
vessel?

A On board the vessel, supervising, sir.

Q And, observed the discharging operation?

A Yes, sir.

Q And, what did the master of the vessel do when the cargo was being unloaded from the
vessel?

A He would report to the head checker, sir.

Q He did not send the stevedores to what manner in the discharging of the cargo from the
vessel?

A And head checker po and siyang nagpapatakbo ng trabaho sa loob ng barko, sir.42

xxx

Q Is he [the head checker] an employee of the company?

A He is a contractor/checker of Wallem Philippines, sir.43

Moreover, the liability of Wallem is highlighted by Mr. Talen’s notes in the Bad Order Inspection,
to wit:

"The bad order torn bags, was due to stevedores[‘] utilizing steel hooks/spikes in piling the cargo
to [the] pallet board at the vessel’s cargo holds and at the pier designated area before and after
discharged that cause the bags to torn [sic]."44 (Emphasis supplied)

The records are replete with evidence which show that the damage to the bags happened before
and after their discharge45 and it was caused by the stevedores of the arrastre operator who were
then under the supervision of Wallem.1awphi1.net

It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain
under the custody of the carrier. In the instant case, the damage or losses were incurred during
the discharge of the shipment while under the supervision of the carrier. Consequently, the carrier
is liable for the damage or losses caused to the shipment. As the cost of the actual damage to the
subject shipment has long been settled, the trial court’s finding of actual damages in the amount
of ₱397,879.69 has to be sustained.

On the credibility of Mr. Talens which is the fourth issue, the general rule in assessing credibility
of witnesses is well-settled:
x x x the trial court's evaluation as to the credibility of witnesses is viewed as correct and entitled
to the highest respect because it is more competent to so conclude, having had the opportunity
to observe the witnesses' demeanor and deportment on the stand, and the manner in which they
gave their testimonies. The trial judge therefore can better determine if such witnesses were telling
the truth, being in the ideal position to weigh conflicting testimonies. Therefore, unless the trial
judge plainly overlooked certain facts of substance and value which, if considered, might affect
the result of the case, his assessment on credibility must be respected.46

Contrary to petitioner’s stance on the third issue, Wallem’s failure to respond to its demand letter
does not constitute an implied admission of liability. To borrow the words of Mr. Justice Oliver
Wendell Holmes, thus:

A man cannot make evidence for himself by writing a letter containing the statements that he
wishes to prove. He does not make the letter evidence by sending it to the party against whom
he wishes to prove the facts [stated therein]. He no more can impose a duty to answer a charge
than he can impose a duty to pay by sending goods. Therefore a failure to answer such adverse
assertions in the absence of further circumstances making an answer requisite or natural has no
effect as an admission.47

With respect to the attorney’s fees, it is evident that petitioner was compelled to litigate this matter
to protect its interest. The RTC’s award of ₱20,000.00 as attorney’s fees is reasonable.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated 22 June 2004
and its Resolution dated 11 October 2004 are REVERSED and SET ASIDE. Wallem is ordered to
pay petitioner the sum of ₱397,879.69, with interest thereon at 6% per annum from the filing of
the complaint on 7 October 1996 until the judgment becomes final and executory. Thereafter, an
interest rate of 12% per annum shall be imposed.48Respondents are also ordered to pay petitioner
the amount of ₱20,000.00 for and as attorney’s fees, together with the costs of the suit. SO
ORDERED.
FRANCISCO N. VILLANUEVA, G.R. No. 180197
Petitioner,

- versus –

VIRGILIO P. BALAGUER and


INTERCONTINENTAL BROADCASTING
CORPORATION CHANNEL-13,
Respondents. Promulgated:
June 23, 2009
x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

Assailed is the August 10, 2007 Decision[1] of the Court of Appeals in CA-G.R. CV No. 81657 which
reversed the October 29, 2003 Decision and February 2, 2004 Resolution of the Regional Trial
Court of Quezon City, Branch 89 finding petitioner Francisco N. Villanueva entitled to
damages. Also assailed is the October 16, 2007 Resolution[2] denying the motion for
reconsideration.

On March 31, 1992, petitioner Francisco N. Villanueva, then Assistant Manager for
Operations of Intercontinental Broadcasting Corporation-Channel 13 (IBC-13) was dismissed from
employment on the ground of loss of confidence for purportedly selling forged certificates of
performance. Contesting his termination, petitioner filed a complaint for illegal dismissal before
the National Labor Relations Commission.

During the pendency of the labor case, news articles about irregularities in IBC-13 were
published in the July 18, 1992 issue of the Manila Times and the Philippine Star, and in the July
19, 1992 issue of the Manila Bulletin.

In these news articles, respondent Virgilio P. Balaguer, then President of IBC-13, was quoted to
have said that he uncovered various anomalies in IBC-13 during his tenure which led to the
dismissal of an operations executive for selling forged certificates of performance.

In the Manila Times, on July 18, 1992:[3]

Anomalies at IBC-13 uncovered

INSIDER pilferage, malversation, overpricing and other irregularities have cost


government-owned Intercontinental Broadcasting Corporation (IBC) 13 more than
P108 million in losses for the period 1986-1989.

Gil P. Balaguer, IBC president, uncovered the anomalies after a long and
painstaking investigation when he took over the company in 1990.

The investigation uncovered irregularities ranging from selling forged


certificates of performance (CPs) to non-remittance of sales collections, illegal and
unauthorized airing of movie trailer advertisements (MTAs), illegal leasing of
electricity and machines to friendly clients, millions worth of undocumented
transactions to movie suppliers, exorbitant fees against in-house productions, abused
overtime charges by certain employees.

The anomalies did not escape Balaguer when he came to IBC-13 backed by
hands-on experience in television management work.
IBC has had four presidents since 1986 after the EDSA revolution. Balaguer is
the fifth president.

A special investigative committee helped Balaguer uncover the anomalies in


IBC. It led to the dismissal of an operations executive who sold forged
certificates of performance, a former supervisor who pocketed IBCs sales
collections, and station managers who did not remit payments on radio
advertisements.

Other anomalies committed against the government station include the loose
issuance of technical facilities orders (TFOs) which practically leased the networks
broadcast facilities to a friendly client for free.

Balaguer, sources said, succeeded in staying as president because of his


technical expertise in media and communications and his managerial will to cleanse
the ranks of the firm. (Emphasis supplied)

In the Philippine Star, on July 18, 1992:[4]

IBC president uncovers anomalies at tv network

The government-owned International Broadcasting Corp.-Channel 13 lost


more than P108 million due to insider pilferage, malversation, overpricing and other
irregularities from 1986 to 1989.

IBC president Gil P. Balaguer uncovered the anomalies after a long and
painstaking investigation when he took over the television station in 1990.

Balaguer, in a statement, said the irregularities uncovered included the sale of


forged certificates of performance, non-remittance of sales collections, illegal and
unauthorized airing of movie advertisements, illegal lease of equipment to friendly
clients, exorbitant fees on in-house productions and abused overtime charges by
some employees.

Balaguer, the fifth IBC president since 1986, easily detected the anomalies as
he has a vast experience in television management work.

A special investigative committee helped Balaguer uncover the anomalies at


IBC, which has resulted in the dismissal of an operations executive who sold
forged certificates of performance, a former supervisor who pocketed sales
collections and a station manager who did not remit payments on radio
advertisements. (Emphasis supplied)

In the Manila Bulletin, on July 19, 1992:[5]

Sequestered firms losses bared

The Intercontinental Broadcasting Corp. (IBC) 13, a sequestered firm, lost


more than P108 million for the period 1986-1989 due to pilferage, malversation,
over-pricing, and other irregularities perpetrated by a syndicate, according to Gil P.
Balaguer, IBC president, who took over the company in 1990.

He said the irregularities ranged from selling forged certificates of performance


to non-remittance of sales collections, illegal and unauthorized airing of movie trailer
advertisements, illegal leasing of electricity and machines to friendly clients, millions
worth of undocumented transactions to movie suppliers, exorbitant fees against in-
house productions, and abused overtime charges by certain employees.

IBC has had four presidents since 1986, Balaguer being the fifth.

A special probe committee that helped Balaguer said one dismissed


executive sold forged certificates of performance, a former supervisor pocketed
IBC sales collections, and some station managers did not remit payments on radio
advertisements.
The loose issuance of technical facilities orders practically leased the networks
broadcast facilities to a friendly client for free.

Balaguer is credited with accelerating the networks rank from number five in
1988 to number two or three under current ratings, despite the efforts of some
holdouts who tried to derail his administration. (Emphasis supplied)

In a letter dated July 20, 1992, petitioner urged respondents to confirm or deny if he was
the person alluded to in the news article as the operations executive of IBC-13 who was dismissed
for selling forged certificates of performance.[6] None of the respondents replied to the letter.

On September 25, 1992, petitioner filed before the Regional Trial Court of Quezon City a
complaint for damages against Balaguer,[7] which was later amended by impleading IBC-13 as
additional defendant.[8]

Petitioner claimed that respondents caused the publication of the subject news articles
which defamed him by falsely and maliciously referring to him as the IBC-13 operations executive
who sold forged certificates of performance.[9] He alleged that in causing these false and malicious
publications, respondents violated Articles 19, 20, 21, and 26 of the Civil Code.[10]

Balaguer denied that he had anything to do with the publications.[11] However, he argued
that the publications are not actionable because they are true and without malice;[12] are of
legitimate public concern and interest because IBC-13 is under sequestration; that petitioner is a
newsworthy and public figure;[13] and that they are privileged communication.[14] Balaguer filed a
counterclaim against petitioner for alleged malicious filing of the civil case.[15]

IBC-13 also denied participation in the publications. It claimed that assuming press
statements were issued during a press conference, the same was done solely by Balaguer without
its authority or sanction.[16] IBC-13 also filed a counterclaim against petitioner[17] and a cross-
claim against Balaguer.[18]

On August 31, 1993, the Labor Arbiter rendered a Decision[19] finding petitioners dismissal
as illegal, which was affirmed by the National Labor Relations Commission. The Commission,
however, declared respondents to be acting in good faith, hence, it deleted the award of moral
and exemplary damages. On December 6, 1994, the parties entered into a Compromise
Agreement,[20] with IBC-13 proposing a scheme of payment for petitioners monetary claims, and
with IBC-13 and petitioner waiving any and all claims against each other arising out of the labor
case.

On October 29, 2003, the Regional Trial Court[21] of Quezon City held that petitioner is
entitled to an award of damages,[22] thus:

WHEREFORE, premises considered, judgment is rendered in favor of plaintiff


Francisco N. Villanueva and against defendants Balaguer and Intercontinental
Broadcasting Corporation (IBC-13).

Accordingly, defendants are hereby ordered to pay the plaintiff jointly and
severally, as follows:

1) the sum of Five Hundred Thousand (P500,000.00) Pesos by way of


moral damages;
2) the sum of One Hundred Thousand (P100,000.00) Pesos as and by
way of exemplary damages;
3) the sum of Thirty Thousand (P30,000.00) Pesos by way of nominal
damages;
4) the sum of Ten Thousand (P10,000.00) Pesos by way of temperate or
moderate damages; and
5) the sum of One Hundred Thousand (P100,000.00) Pesos as and by
way of attorneys fees.

With costs against defendants.

SO ORDERED.[23]

Respondents moved for reconsideration but it was denied.[24] Hence, they appealed to the
Court of Appeals which rendered the herein assailed Decision on August 10, 2007, disposing thus:

WHEREFORE, premises considered, the appeal is hereby GRANTED. The


October 29, 2003 Decision and the February 2, 2004 Resolution with Clarification
issued by the Regional Trial Court, Br. 89, National Capital Judicial Region, Quezon
City, are hereby REVERSED. The Complaint, the Counterclaim, and the Cross-claim
in Civil Case No. Q-92-13680 are hereby DISMISSED.

SO ORDERED.[25]

Petitioners motion for reconsideration was denied. Hence, the instant petition raising the
following issues:[26]

a) Does the failure of the addressee to respond to a letter containing


statements attributing to him commission of acts constituting actionable
wrong, hence, adverse to his interest, and of such nature as would call for his
reaction, reply, or comment if untrue, constitute his admission of said
statements, consequently, may be used in evidence against him?

b) Is the admission by a principal admissible against its agent? Is the


admission by a person jointly interested with a party admissible against the
latter?

c) Does the failure of an individual to disown the attribution to him by


newspaper publications, as the source of defamatory newspaper reports, when
he is free and very able to do so, constitute admission that he, indeed, was
the source of the said defamatory news reports?

The petition lacks merit.

As early as 1905, this Court has declared that it is the duty of the party seeking to enforce
a right to prove that their right actually exists. In varying language, our Rules of Court, in speaking
of burden of proof in civil cases, states that each party must prove his own affirmative allegations
and that the burden of proof lies on the party who would be defeated if no evidence were given
on either side.[27] Thus, in civil cases, the burden of proof is generally on the plaintiff, with respect
to his complaint.[28]

In proving his claim, petitioner relied on the July 20, 1992 letter, the newspaper articles,
and the alleged admission of respondents. Based on the above pieces of evidence, the Court finds
that petitioner was unable to discharge his burden of proof. As such, the Court of Appeals properly
dismissed the complaint for damages.

The July 20, 1992 letter sent by petitioner to respondents reads as follows:[29]

20 July 1992

Mr. Virgilio Balaguer


Intercontinental Broadcasting Corporation
Broadcast City, Capitol Hills
Diliman, Quezon City

Dear Mr. Balaguer:

We write on behalf of our client, Mr. Francisco N. Villanueva.

You have caused to be published in the 18 July 1992 issue of The Philippine
Star and 19 July 1992 issue of Manila Bulletin, a news item wherein you stated that
you dismissed an Operations Executive because he sold forged Certificate of
Performance. Our immediate impression is, you are referring to our client, Francisco
N. Villanueva, because he is the only Operations Executive in IBC, Channel 13 you
have illegally and despotically dismissed.

We urge you, therefore, to inform us, within forty-eight (48) hours from your
receipt of this letter that the Operations Executive you referred to in your press
statement is not our client, Francisco N. Villanueva. We shall construe your
failure/refusal to reply as your unequivocal admission that you are, in fact, actually
referring to our client, Mr. Francisco N. Villanueva, as the operations executive who
sold forged Certificate of Performance. Accordingly, we shall immediately proceed to
take appropriate criminal and civil court actions against you without further notice.

Very truly yours,

(signed)
REX G. RICO

cc: Mr. Francisco N. Villanueva


Board of Administrators, IBC-13

Petitioner argues that by not responding to the above letter which expressly urged them to
reply if the statements therein contained are untrue, respondents in effect admitted the matters
stated therein, pursuant to the rule on admission by silence in Sec. 32, Rule 130, [30] and the
disputable presumption that acquiescence resulted from a belief that the thing acquiesced in was
conformable to the law or fact.[31]

Petitioners argument lacks merit. One cannot prove his claim by placing the burden of proof
on the other party. Indeed, (a) man cannot make evidence for himself by writing a letter
containing the statements that he wishes to prove. He does not make the letter evidence by
sending it to the party against whom he wishes to prove the facts [stated therein]. He no more
can impose a duty to answer a charge than he can impose a duty to pay by sending
goods. Therefore a failure to answer such adverse assertions in the absence of further
circumstances making an answer requisite or natural has no effect as an admission.[32]

Moreover, the rule on admission by silence applies to adverse statements in writing if the
party was carrying on a mutual correspondence with the declarant.However, if there was no such
mutual correspondence, the rule is relaxed on the theory that while the party would have
immediately reacted by a denial if the statements were orally made in his presence, such prompt
response can generally not be expected if the party still has to resort to a written reply.[33]

In the same manner, we also cannot assume an admission by silence on the part of Balaguer
by virtue of his failure to protest or disclaim the attribution to him by the newspapers that he is
the source of the articles. As explained above, the rule on admission by silence is relaxed when
the statement is not made orally in ones presence or when one still has to resort to a written reply,
or when there is no mutual correspondence between the parties.
As for the publications themselves, newspaper articles purporting to state what the
defendant said are inadmissible against him, since he cannot be held responsible for the writings
of third persons.[34] As correctly observed by the Court of Appeals, while the subject news items
indicated that Balaguer was the source of the columnists, proving that he truly made such
statements is another matter.[35] Petitioner failed to prove that Balaguer did make such
statements.

Notably, petitioner did not implead the editorial staff and the publisher of the alleged
defamatory articles.[36] Contrary to petitioners assertion, he should have at least presented the
authors of the news articles as witnesses to prove his case against respondents in the absence of
an express admission by the latter that the subject news articles have been caused by them.
Petitioner also claims that respondents have admitted that they held a press conference
and caused the publication of the news articles, based on the following testimony of Balaguer:[37]

ATTY. JIMENEZ:
Okay, Let me ask another question. Now Mr. Balaguer this publication referred
to so called anomalies of 1986 to 1989 now how about the termination.

A: 1991.

ATTY. JIMENEZ:
Yes.

WITNESS:
I think the termination of Mr. Villanueva has nothing to do with that press
statement release because the period that covers that report is from specific date
1986 to 1989.(TSN, 07 November 2000, p. 19)

Admissions, however, should be clear and unambiguous[38] which can hardly be said of
Balaguers above testimony. If Balaguer intended to admit the allegation that he conducted a press
conference and caused the publication of the news articles, he could have done so. Instead,
Balaguer specifically denied these allegations in paragraphs 4 and 5 of his Answer.[39]

Petitioner next argues that IBC-13s Cross-Claim against Balaguer, in that:[40]

11. The acts complained of by the plaintiff were done solely by co-defendant
Balaguer.

Balaguer resorted to these things in his attempt to stave off his impending
removal from IBC.

is an admission by IBC-13, which is admissible against Balaguer pursuant to Sec. 29, Rule
130[41] as an admission by a co-partner or an agent.

Petitioner is mistaken. IBC-13s cross-claim against Balaguer effectively created an adverse


interest between them. Hence, the admission of one defendant is not admissible against his co-
defendant. Besides, as already discussed, the alleged acts imputed to Balaguer were never proven
to have been committed, much less maliciously, by Balaguer. Malice or bad faith implies a
conscious and intentional design to do a wrongful act for a dishonest purpose or moral
obliquity. Such must be substantiated by evidence.[42]

In sum, we find that petitioner failed to discharge his burden of proof. No satisfactory
evidence was presented to prove by preponderance of evidence that respondents committed the
acts imputed against them. As such, there is no more need to discuss whether the assailed
statements are defamatory.

WHEREFORE, the petition is DENIED. The August 10, 2007 Decision of the Court of
Appeals in CA-G.R. CV No. 81657 reversing the October 29, 2003 Decision and February 2, 2004
Resolution of the Regional Trial Court of Quezon City, Branch 89, finding petitioner entitled to
damages, as well as the October 16, 2007 Resolution denying the motion for reconsideration,
are AFFIRMED. SO ORDERED.