1
Republic of the Philippines 1. That on August 13, 1992, respondent judge issued an Order
SUPREME COURT
Manila
EN BANC
A.M. No. RTJ-92-876 September 19, 1994
STATE PROSECUTORS, complainants,
vs.
JUDGE MANUEL T. MURO, Regional Trial Court, Branch 54,
Manila, respondent.
PER CURIAM:
In assaying the requisite norms for qualifications and eminence of a magistrate,
legal authorities place a premium on how he has complied with his continuing duty
to know the law. A quality thus considered essential to the judicial character is
that of "a man of learning who spends tirelessly the weary hours after midnight
acquainting himself with the great body of traditions and the learning of the law;
is profoundly learned in all the learning of the law; and knows how to use that
learning." 1
Obviously, it is the primary duty of a judge, which he owes to the public and to
the legal profession, to know the very law he is supposed to apply to a given
controversy. He is called upon to exhibit more than just a cursory acquaintance
with the statutes and procedural rules. Party litigants will have great faith in the
administration of justice if judges cannot justly be accused of apparent
deficiency in their grasp of the legal principles. For, service in the judiciary
means a continuous study and research on the law from beginning to end. 2
In a letter-complaint 3 dated August 19, 1992, respondent Judge Manuel T. Muro
of the Regional Trial Court (RTC) of Manila, Branch 54, was charged by State
Prosecutors Nilo C. Mariano, George C. Dee and Paterno V. Tac-an with ignorance
of the law, grave misconduct and violations of Rules 2.01, 3.01 and 3.02 of the
Code of Judicial Conduct, committed as follows:
dismissing eleven (11) cases (docketed as Crim. Cases Nos. 92-
101959 to 92- 101969, inclusive) filed by the undersigned
complainant prosecutors (members of the DOJ Panel of
Prosecutors) against the accused Mrs. Imelda Romualdez
Marcos, for Violation of Central Bank Foreign Exchange
Restrictions, as consolidated in CB Circular No. 960, in relation
to the penal provisions of Sec. 34 of R.A. 265, as amended, . . .;
2. That respondent Judge issued his Order solely on the basis
of newspaper reports (August 11, 1992 issues of the Philippine
Daily Inquirer and the Daily Globe) concerning the
announcement on August 10, 1992 by the President of the
Philippines of the lifting by the government of all foreign
exchange restrictions and the arrival at such decision by the
Monetary Board as per statement of Central Bank Governor
Jose Cuisia;
3. That claiming that the reported announcement of the
Executive Department on the lifting of foreign exchange
restrictions by two newspapers which are reputable and of
national circulation had the effect of repealing Central Bank
Circular No. 960, as allegedly supported by Supreme Court
decisions . . ., the Court contended that it was deprived of
jurisdiction, and, therefore, motu, prop(r)io had to dismiss all
the eleven cases aforementioned "for not to do so opens this
Court to charges of trying cases over which it has no more
jurisdiction;"
4. That in dismissing aforecited cases on August 13, 1992 on
the basis of a Central Bank Circular or Monetary Board
Resolution which as of date hereof, has not even been officially
issued, and basing his Order/decision on a mere newspaper
account of the advance announcement made by the President of
the said fact of lifting or liberalizing foreign exchange controls,
respondent judge acted prematurely and in indecent haste, as
he had no way of determining the full intent of the new CB
Circular or Monetary Board resolution, and whether the same
provided for exception, as in the case of persons who had
pending criminal cases before the courts for violations of
Central Bank Circulars and/or regulations previously issued on
the matter;
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5. That respondent Judge's arrogant and cavalier posture in
taking judicial notice purportedly as a matter of public
knowledge a mere newspaper account that the President had
announced the lifting of foreign exchange restrictions as basis
for his assailed order of dismissal is highly irregular, erroneous
and misplaced. For the respondent judge to take judicial notice
thereof even before it is officially released by the Central Bank
and its full text published as required by law to be effective
shows his precipitate action in utter disregard of the
fundamental precept of due process which the People is also
entitled to and exposes his gross ignorance of the law, thereby
tarnishing public confidence in the integrity of the judiciary.
How can the Honorable Judge take judicial notice of something
which has not yet come into force and the contents, shape and
tenor of which have not yet been published and ascertained to
be the basis of judicial action? The Honorable Judge had
miserably failed to "endeavor diligently to ascertain the facts"
in the case at bar contrary to Rule 3.02 of the Code of Judicial
Conduct constituting Grave Misconduct;
6. That respondent Judge did not even ha(ve) the prudence of
requiring first the comment of the prosecution on the effect of
aforesaid Central Bank Circular/Monetary Board resolution on
the pending cases before dismissing the same, thereby denying
the Government of its right to due process;
7. That the lightning speed with which respondent Judge acted
to dismiss the cases may be gleaned from the fact that such
precipitate action was undertaken despite already scheduled
continuation of trial dates set in the order of the court (the
prosecution having started presenting its evidence . . .) dated
August 11, 1992 to wit: August 31, September 3, 10, 21, & 23
and October 1, 1992, all at 9:30 o'clock in the morning, in
brazen disregard of all notions of fair play, thereby depriving
the Government of its right to be heard, and clearly exposing
his bias and partiality; and
8. That, in fact, the motive of respondent Judge in dismissing
the case without even waiting for a motion to quash filed by the
counsel for accused has even placed his dismissal Order
suspect.
Pursuant to a resolution of this Court dated September 8, 1992, respondent
judge filed his comment, 4 contending, inter alia, that there was no need to await
publication of the Central Bank (CB) circular repealing the existing law on foreign
exchange controls for the simple reason that the public announcement made by
the President in several newspapers of general circulation lifting foreign
exchange controls was total, absolute, without qualification, and was immediately
effective; that having acted only on the basis of such announcement, he cannot
be blamed for relying on the erroneous statement of the President that the new
foreign exchange rules rendered moot and academic the cases filed against Mrs.
Marcos, and which was corrected only on August 17, 1992 but published in the
newspapers on August 18, 1992, and only after respondent judge had issued his
order of dismissal dated August 13, 1992; that the President was ill-advised by
his advisers and, instead of rescuing the Chief Executive from embarrassment
by assuming responsibility for errors in the latter's announcement, they chose to
toss the blame for the consequence of their failures to respondent judge who
merely acted on the basis of the announcements of the President which had
become of public knowledge; that the "saving clause" under CB Circular No. 1353
specifically refers only to pending actions or investigations involving violations of
CB Circular No. 1318, whereas the eleven cases dismissed involved charges for
violations of CB Circular No. 960, hence the accused cannot be tried and
convicted under a law different from that under which she was charged; that
assuming that respondent judge erred in issuing the order of dismissal, the
proper remedy should have been an appeal therefrom but definitely not an
administrative complaint for his dismissal; that a mistake committed by a judge
should not necessarily be imputed as ignorance of the law; and that a "court can
reverse or modify a doctrine but it does not show ignorance of the justices or
judges whose decisions were reversed or modified" because "even doctrines
initiated by the Supreme Court are later reversed, so how much more for the
lower courts?"
He further argued that no hearing was necessary since the prosecution had
nothing to explain because, as he theorized, "What explanation could have been
given? That the President was talking 'through his hat' (to use a colloquialism)
and should not be believed? That I should wait for the publication (as now
alleged by complainants), of a still then non-existent CB circular? . . . As it turned
out, CB Circular No. 3153 (sic) does not affect my dismissal order because the
said circular's so-called saving clause does not refer to CB Circular 960 under
which the charges in the dismissed cases were based;" that it was discretionary
on him to take judicial notice of the facts which are of public knowledge,
pursuant to Section 2 of Rule 129; that the contention of complainants that he
acted prematurely and in indecent haste for basing his order of dismissal on a
mere newspaper account is contrary to the wordings of the newspaper report
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wherein the President announced the lifting of controls as an accomplished fact,
not as an intention to be effected in the future, because of the use of the
present perfect tense or past tense "has lifted," not that he "intends to lift,"
foreign exchange controls.
Finally, respondent judge asseverates that complainants who are officers of the
Department of Justice, violated Section 6, Rule 140 of the Rules of Court which
provides that "proceedings against judges of first instance shall be private and
confidential" when they caused to be published in the newspapers the filing of
the present administrative case against him; and he emphasizes the fact that he
had to immediately resolve a simple and pure legal matter in consonance with the
admonition of the Supreme Court for speedy disposition of cases.
In their reply 5 and supplemental reply, 6 complainants aver that although the
saving clause under Section 16 of CB Circular No. 1353 made specific reference
to CB Circular No. 1318, it will be noted that Section 111 of Circular No. 1318,
which contains a saving clause substantially similar to that of the new circular, in
turn refers to and includes Circular No. 960. Hence, whether under Circular No.
1318 or Circular No. 1353, pending cases involving violations of Circular No. 960
are excepted from the coverage thereof. Further, it is alleged that the
precipitate dismissal of the eleven cases, without according the prosecution the
opportunity to file a motion to quash or a comment, or even to show cause why
the cases against accused Imelda R. Marcos should not be dismissed, is clearly
reflective of respondent's partiality and bad faith. In effect, respondent judge
acted as if he were the advocate of the accused.
On December 9, 1993, this Court issued a resolution referring the complaint to
the Office of the Court Administrator for evaluation, report and
recommendation, pursuant to Section 7, Rule 140 of the Rules of Court, as
revised, there being no factual issues involved. The corresponding report and
recommendation, 7 dated February 14, 1994, was submitted by Deputy Court
Administrator Juanito A. Bernad, with the approval of Court Administrator
Ernani Cruz-Paño.
The questioned order 8 of respondent judge reads as follows:
These eleven (11) cases are for Violation of Central Bank
Foreign Exchange Restrictions as consolidated in CB Circular
No. 960 in relation to the penal provision of Sec. 34 of R.A.
265, as amended.
The accused Mrs. Imelda R. Marcos pleaded not guilty to all
these cases; apparently the other accused in some of these
cases, Roberto S. Benedicto, was not arrested and therefore
the Court did not acquire jurisdiction over his person; trial was
commenced as against Mrs. Marcos.
His Excellency, the President of the Philippines, announced on
August 10, 1992 that the government has lifted all foreign
exchange restrictions and it is also reported that Central Bank
Governor Jose Cuisia said that the Monetary Board arrived at
such decision (issue of the Philippine Daily Inquirer, August 11,
1992 and issue of the Daily Globe of the same date). The Court
has to give full confidence and credit to the reported
announcement of the Executive Department, specially from the
highest official of that department; the Courts are charged
with judicial notice of matters which are of public knowledge,
without introduction of proof, the announcement published in at
least the two newspapers cited above which are reputable and
of national circulation.
Per several cases decided by the Supreme Court (People vs.
Alcaras, 56 Phil. 520, People vs. Francisco, 56 Phil. 572, People
vs. Pastor, 77 Phil. 1000, People vs. Crisanto Tamayo, 61 Phil.
225), among others, it was held that the repeal of a penal law
without re-enactment extinguishes the right to prosecute or
punish the offense committed under the old law and if the law
repealing the prior penal law fails to penalize the acts which
constituted the offense defined and penalized in the repealed
law, the repealed law carries with it the deprivation of the
courts of jurisdiction to try, convict and sentence persons
charged with violations of the old law prior to its repeal. Under
the aforecited decisions this doctrine applies to special laws
and not only to the crimes punishable in the Revised Penal Code,
such as the Import Control Law. The Central Bank Circular No.
960 under which the accused Mrs. Marcos is charged is
considered as a penal law because violation thereof is penalized
with specific reference to the provision of Section 34 of
Republic Act 265, which penalizes violations of Central Bank
Circular No. 960, produces the effect cited in the Supreme
Court decisions and since according to the decisions that repeal
deprives the Court of jurisdiction, this Court motu
proprio dismisses all the eleven (11) cases as a forestated in the
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caption, for not to do so opens this Court to charges of trying
cases over which it has no more jurisdiction.
This order was subsequently assailed in a petition for certiorari filed with the
Court of Appeals, entitled "People of the Philippines vs. Hon. Manuel T. Muro,
Judge, RTC of Manila, Br. 54 and Imelda R. Marcos," docketed as CA-G.R. SP No.
29349. When required to file her comment, private respondent Marcos failed to
file any. Likewise, after the appellate court gave due course to the petition,
private respondent was ordered, but again failed despite notice, to file an answer
to the petition and to show cause why no writ of preliminary injunction should
issue. Eventually, on April 29, 1993, the Court of Appeals rendered a
decision 9 setting aside the order of August 13, 1992, and reinstating Criminal
Cases Nos. 92-101959 to 92-101969.
In finding that respondent judge acted in excess of jurisdiction and with grave
abuse of discretion in issuing the order of dismissal, the appellate court held
that:
The order was issued motu proprio, i.e., without any motion to
dismiss filed by counsel for the accused, without giving an
opportunity for the prosecution to be heard, and solely on the
basis of newspaper reports announcing that the President has
lifted all foreign exchange restrictions.
The newspaper report is not the publication required by law in
order that the enactment can become effective and binding.
Laws take effect after fifteen days following the completion of
their publication in the Official Gazette or in a newspaper of
general circulation unless it is otherwise provided (Section 1,
Executive Order No. 200). The full text of CB Circular 1353,
series of 1992, entitled "Further Liberalizing Foreign Exchange
Regulation" was published in the August 27, 1992 issue of the
Manila Chronicle, the Philippine Star and the Manila Bulletin. Per
certification of the CB Corporate Affairs Office, CB Circular
No. 1353 took effect on September 2 . . . .
Considering that respondent judge admittedly had not seen the
official text of CB Circular No. 1353, he was in no position to
rule judiciously on whether CB Circular No. 960, under which
the accused Mrs. Marcos is charged, was already repealed by
CB Circular No. 1353. . . .
xxx xxx xxx
A cursory reading of the . . . provision would have readily shown
that the repeal of the regulations on non-trade foreign
exchange transactions is not absolute, as there is a provision
that with respect to violations of former regulations that are
the subject of pending actions or investigations, they shall be
governed by the regulations existing at the time the cause of
action (arose). Thus his conclusion that he has lost jurisdiction
over the criminal cases is precipitate and hasty. Had he awaited
the filing of a motion to dismiss by the accused, and given
opportunity for the prosecution to comment/oppose the same,
his resolution would have been the result of deliberation, not
speculation.
I. The doctrine of judicial notice rests on the wisdom and discretion of the
courts. The power to take judicial notice is to be exercised by courts with
caution; care must be taken that the requisite notoriety exists; and every
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reasonable doubt on the subject should be promptly resolved in the negative.
Generally speaking, matters of judicial notice have three material requisites: (1)
the matter must be one of common and general knowledge; (2) it must be well and
authoritatively settled and not doubtful or uncertain; and (3) it must be known to
be within the limits of the jurisdiction of the court. 11 The provincial guide in
determining what facts may be assumed to be judicially known is that of
notoriety. 12 Hence, it can be said that judicial notice is limited to facts
evidenced by public records and facts of general notoriety. 13
To say that a court will take judicial notice of a fact is merely another way of
saying that the usual form of evidence will be dispensed with if knowledge of the
fact can be otherwise acquired. 14 This is because the court assumes that the
matter is so notorious that it will not be disputed. 15 But judicial notice is not
judicial knowledge. The mere personal knowledge of the judge is not the judicial
knowledge of the court, and he is not authorized to make his individual knowledge
of a fact, not generally or professionally known, the basis of his action. Judicial
cognizance is taken only of those matters which are "commonly" known. 16
Things of "common knowledge," of which courts take judicial notice, may be
matters coming to the knowledge of men generally in the course of the ordinary
experiences of life, or they may be matters which are generally accepted by
mankind as true and are capable of ready and unquestioned
demonstration. 17 Thus, facts which are universally known, and which may be
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found in encyclopedias, dictionaries or other publications, are judicially noticed,
provided they are of such universal notoriety and so generally understood that
they may be regarded as forming part of the common knowledge of every
person. 18
Respondent judge, in the guise of exercising discretion and on the basis of a
mere newspaper account which is sometimes even referred to as hearsay
evidence twice removed, took judicial notice of the supposed lifting of foreign
exchange controls, a matter which was not and cannot be considered of common
knowledge or of general notoriety. Worse, he took cognizance of an
administrative regulation which was not yet in force when the order of dismissal
was issued. Jurisprudence dictates that judicial notice cannot be taken of a
statute before it becomes effective. 19 The reason is simple. A law which is not
yet in force and hence, still inexistent, cannot be of common knowledge capable
of ready and unquestionable demonstration, which is one of the requirements
before a court can take judicial notice of a fact.
Evidently, it was impossible for respondent judge, and it was definitely not
proper for him, to have taken cognizance of CB Circular No. 1353, when the same
was not yet in force at the time the improvident order of dismissal was issued.
II. Central Bank Circular No. 1353, which took effect on September 1, 1992,
further liberalized the foreign exchange regulations on receipts and
disbursements of residents arising from non-trade and trade transactions.
Section 16 thereof provides for a saving clause, thus:
Sec. 16. Final Provisions of CB Circular No. 1318. - All the
provisions in Chapter X of CB Circular No. 1318 insofar as they
are not inconsistent with, or contrary to the provisions of this
Circular, shall remain in full force and effect: Provided,
however, that any regulation on non-trade foreign exchange
transactions which has been repealed, amended or modified by
this Circular, violations of which are the subject of pending
actions or investigations, shall not be considered repealed
insofar as such pending actions or investigations are concerned,
it being understood that as to such pending actions or
investigations, the regulations existing at the time the cause of
action accrued shall govern.
Respondent judge contends that the saving clause refers only to the provisions
of Circular No. 1318, whereas the eleven criminal cases he dismissed involve a
violation of CB Circular No. 960. Hence, he insists, Circular No. 960 is deemed
repealed by the new circular and since the former is not covered by the saving
clause in the latter, there is no more basis for the charges involved in the
criminal cases which therefore warrant a dismissal of the same. The contention
is patently unmeritorious.
Firstly, the second part of the saving clause in Circular No. 1353 explicitly
provides that "any regulation on non-trade foreign transactions which has been
repealed, amended or modified by this Circular, violations of which are the
subject of pending actions or investigations, shall not be considered repealed
insofar as such pending actions or investigations are concerned, it being
understood that as to such pending actions or investigations, the regulations
existing at the time the cause of action accrued shall govern." The terms of the
circular are clear and unambiguous and leave no room for interpretation. In the
case at bar, the accused in the eleven cases had already been arraigned, had
pleaded not guilty to the charges of violations of Circular No. 960, and said cases
had already been set for trial when Circular No. 1353 took effect. Consequently,
the trial court was and is supposed to proceed with the hearing of the cases in
spite of the existence of Circular No. 1353.
Secondly, had respondent judge only bothered to read a little more carefully the
texts of the circulars involved, he would have readily perceived and known that
Circular No. 1318 also contains a substantially similar saving clause as that found
in Circular No. 1353, since Section 111 of the former provides:
Sec. 111. Repealing clause. - All existing provisions of Circulars
365, 960 and 1028, including amendments thereto, with the
exception of the second paragraph of Section 68 of Circular
1028, as well as all other existing Central Bank rules and
regulations or parts thereof, which are inconsistent with or
contrary to the provisions of this Circular, are hereby repealed
or modified accordingly: Provided, however, that regulations,
violations of which are the subject of pending actions or
investigations, shall be considered repealed insofar as such
pending actions or investigations are concerned, it being
understood that as to such pending actions or investigations,
the regulations existing at the time the cause of action accrued
shall govern.
It unequivocally appears from the section above quoted that although Circular
No. 1318 repealed Circular No. 960, the former specifically excepted from its
purview all cases covered by the old regulations which were then pending at the
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time of the passage of the new regulations. Thus, any reference made to Circular
No. 1318 necessarily involves and affects Circular No. 960.
III. It has been said that next in importance to the duty of rendering a
righteous judgment is that of doing it in such a manner as will beget no suspicion
of the fairness and integrity of the judge. 20 This means that a judge should not
only render a just, correct and impartial decision but should do so in such a
manner as to be free from any suspicion as to its fairness and impartiality and as
to his integrity. While a judge should possess proficiency in law in order that he
can competently construe and enforce the law, it is more important that he
should act and behave in such a manner that the parties before him should have
confidence in his impartiality. Thus, it is not enough that he decides cases
without bias and favoritism. Nor is it sufficient that he in fact rids himself of
prepossessions. His actuations should moreover inspire that belief. Like Caesar's
wife, a judge must not only be pure but beyond suspicion. 21
Moreover, it has always heretofore been the rule that in disposing of
controverted cases, judges should show their full understanding of the case,
avoid the suspicion of arbitrary conclusion, promote confidence in their
intellectual integrity and contribute useful precedents to the growth of the
law. 22 A judge should be mindful that his duty is the application of general law to
particular instances, that ours is a government of laws and not of men, and that
he violates his duty as a minister of justice under such a system if he seeks to
do what he may personally consider substantial justice in a particular case and
disregards the general law as he knows it to be binding on him. Such action may
have detrimental consequences beyond the immediate controversy. He should
administer his office with due regard to the integrity of the system of the law
itself, remembering that he is not a depository of arbitrary power, but a judge
under the sanction of the law. 23 These are immutable principles that go into the
very essence of the task of dispensing justice and we see no reason why they
should not be duly considered in the present case.
The assertion of respondent judge that there was no need to await publication of
Circular No. 1353 for the reason that the public announcement made by the
President in several newspapers of general circulation lifting foreign exchange
controls is total, absolute, without qualification, and immediately effective, is
beyond comprehension. As a judge of the Regional Trial Court of Manila,
respondent is supposed to be well-versed in the elementary legal mandates on
the publication of laws before they take effect. It is inconceivable that
respondent should insist on an altogether different and illogical interpretation of
an established and well-entrenched rule if only to suit his own personal opinion
and, as it were, to defend his indefensible action. It was not for him to indulge
or even to give the appearance of catering to the at-times human failing of
yielding to first impressions. 24 He having done so, in the face of the foregoing
premises, this Court is hard put to believe that he indeed acted in good faith.
IV. This is not a simple case of a misapplication or erroneous interpretation of
the law. The very act of respondent judge in altogether dismissing sua
sponte the eleven criminal cases without even a motion to quash having been filed
by the accused, and without at least giving the prosecution the basic opportunity
to be heard on the matter by way of a written comment or on oral argument, is
not only a blatant denial of elementary due process to the Government but is
palpably indicative of bad faith and partiality.
The avowed desire of respondent judge to speedily dispose of the cases as early
as possible is no license for abuse of judicial power and discretion, 25 nor does
such professed objective, even if true, justify a deprivation of the prosecution's
right to be heard and a violation of its right to due process of
law. 26
The lightning speed, to borrow the words of complainants, with which respondent
judge resolved to dismiss the cases without the benefit of a hearing and without
reasonable notice to the prosecution inevitably opened him to suspicion of having
acted out of partiality for the accused. Regardless of how carefully he may have
evaluated changes in the factual situation and legal standing of the cases, as a
result of the newspaper report, the fact remains that he gave the prosecution no
chance whatsoever to show or prove that it had strong evidence of the guilt of
the accused. To repeat, he thereby effectively deprived the prosecution of its
right to due process. 27 More importantly, notwithstanding the fact that
respondent was not sure of the effects and implications of the President's
announcement, as by his own admission he was in doubt whether or not he should
dismiss the cases, 28 he nonetheless deliberately refrained from requiring the
prosecution to comment thereon. In a puerile defense of his action, respondent
judge can but rhetorically ask: "What explanation could have been given? That
the President was talking 'through his hat' and should not be believed? That I
should wait for the publication of a still then non- existent CB Circular?" The
pretended cogency of this ratiocination cannot stand even the minutest legal
scrutiny.
In order that bias may not be imputed to a judge, he should have the patience
and circumspection to give the opposing party a chance to present his evidence
even if he thinks that the oppositor's proofs might not be adequate to
overthrow the case for the other party. A display of petulance and impatience in
the conduct of the trial is a norm of conduct which is inconsistent with the "cold
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neutrality of an impartial judge." 29 At the very least, respondent judge acted
injudiciously and with unjustified haste in the outright dismissal of the eleven
cases, and thereby rendered his actuation highly dubious.
V. It bears stressing that the questioned order of respondent judge could have
seriously and substantially affected the rights of the prosecution had the
accused invoked the defense of double jeopardy, considering that the dismissal
was ordered after arraignment and without the consent of said accused. This
could have spawned legal complications and inevitable delay in the criminal
proceedings, were it not for the holding of the Court of Appeals that respondent
judge acted with grave abuse of discretion amounting to lack of jurisdiction. This
saved the day for the People since in the absence of jurisdiction, double
jeopardy will not set in. To stress this point, and as a caveat to trial courts
against falling into the same judicial error, we reiterate what we have
heretofore declared:
It is settled doctrine that double jeopardy cannot be invoked
against this Court's setting aside of the trial court's judgment
of dismissal or acquittal where the prosecution which
represents the sovereign people in criminal cases is denied due
process. . . . .
Where the prosecution is deprived of a fair opportunity to
prosecute and prove its case, its right to due process is
thereby violated.
The cardinal precept is that where there is a violation of basic
constitutional rights, courts are ousted of their jurisdiction.
Thus, the violation of the State's right to due process raises a
serious jurisdictional issue . . . which cannot be glossed over or
disregarded at will. Where the denial of the fundamental right
of due process is apparent, a decision rendered in disregard of
that right is void for lack of jurisdiction . . . . 30
It is also significant that accused Marcos, despite due notice, never submitted
either her comment on or an answer to the petition for certiorari as required by
the Court of Appeals, nor was double jeopardy invoked in her defense. This
serves to further underscore the fact that the order of dismissal was clearly
unjustified and erroneous. Furthermore, considering that the accused is a
prominent public figure with a record of influence and power, it is not easy to
allay public skepticism and suspicions on how said dismissal order came to be, to
the consequent although undeserved discredit of the entire judiciary.
VI. To hold a judge liable for rendering a manifestly unjust order through
inexcusable negligence or ignorance, it must be clearly shown that although he
has acted without malice, he failed to observe in the performance of his duty
that diligence, prudence and care which the law is entitled to exact in the
rendering of any public service. Negligence and ignorance are inexcusable if they
imply a manifest injustice which cannot be explained by a reasonable
interpretation, and even though there is a misunderstanding or error of the law
applied, it nevertheless results logically and reasonably, and in a very clear and
indisputable manner, in the notorious violation of the legal precept. 31
In the present case, a cursory perusal of the comment filed by respondent judge
reveals that no substantial argument has been advanced in plausible justification
of his act. He utterly failed to show any legal, factual, or even equitable
justification for the dismissal of the eleven criminal cases. The explanation given
is no explanation at all. The strained and fallacious submissions therein do not
speak well of respondent and cannot but further depreciate his probity as a
judge. On this point, it is best that pertinent unedited excerpts from his
comment 32 be quoted by way of graphic illustration and emphasis:
On the alleged ignorance of the law imputed to me, it is said
that I issued the Order dismissing the eleven (11) cases against
Mrs. Imelda R. Marcos on the basis of newspaper reports
referred to in paragraph 2 of the letter complaint without
awaiting the official publication of the Central Bank Circular.
Ordinarily a Central Bank Circular/Resolution must be published
in the Official Gazette or in a newspaper of general circulation,
but the lifting of "all foreign exchange controls" was announced
by the President of the Philippines WITHOUT
QUALIFICATIONS; as published in the Daily Globe, August 11,
1992" the government has lifted ALL foreign exchange
controls," and in the words of the Philippine Daily Inquirer
report of the same date "The government yesterday LIFTED
the LAST remaining restrictions on foreign exchange
transactions, . . ." (emphasis in both quotations supplied) not
only the President made the announcement but also the Central
Bank Governor Jose Cuisia joined in the announcement by saying
that "the Monetary Board arrived at the decision after noting
how the "partial liberalization" initiated early this year worked."
Therefore, because of the ABSOLUTE lifting of ALL
restrictions on foreign exchange transactions, there was no
need to await the publication of the repealing circular of the
8
Central Bank. The purpose of requiring publication of laws and
administrative rules affecting the public is to inform the latter
as to how they will conduct their affairs and how they will
conform to the laws or the rules. In this particular case, with
the total lifting of the controls, there is no need to await
publication. It would have been different if the circular that in
effect repealed Central Bank Circular No. 960, under which the
accused was charged in the cases dismissed by me, had provided
for penalties and/or modified the provisions of said Circular No.
960.
The Complainants state that the lifting of controls was not yet
in force when I dismissed the cases but it should be noted that
in the report of the two (2) newspapers aforequoted, the
President's announcement of the lifting of controls was stated
in the present perfect tense (Globe) or past tense (Inquirer).
In other words, it has already been lifted; the announcement
did not say that the government INTENDS to lift all foreign
exchange restrictions but instead says that the government
"has LIFTED all foreign exchange controls," and in the other
newspaper cited above, that "The government yesterday lifted
the last remaining restrictions on foreign exchange
transactions". The lifting of the last remaining exchange
regulations effectively cancelled or repealed Circular No. 960.
The President, who is the Chief Executive, publicly announced
the lifting of all foreign exchange regulations. The President
has within his control directly or indirectly the Central Bank of
the Philippines, the Secretary of Finance being the Chairman of
the Monetary Board which decides the policies of the Central
Bank.
No official bothered to correct or qualify the President's
announcement of August 10, published the following day, nor
made an announcement that the lifting of the controls do not
apply to cases already pending, not until August 17 (the fourth
day after my Order, and the third day after report of said
order was published) and after the President said on August 17,
reported in the INQUIRER's issue of August 18, 1992, that the
"new foreign exchange rules have nullified government cases
against Imelda R. Marcos, telling reporters that the charges
against the widow of former President Marcos "have become
moot and academic" because of new ruling(s) which allow free
flow of currency in and out of the country" (Note,
parenthetically, the reference to "new rules" not to "rules still
to be drafted"). The INQUIRER report continues: "A few hours
later, presidential spokeswoman Annabelle Abaya said, RAMOS
(sic) had "corrected himself'." "He had been belatedly advised
by the Central Bank Governor Jose Cuisia and Justice
Secretary Franklin Drilon that the Monetary Board Regulation
excluded from its coverage all criminal cases pending in court
and such a position shall stand legal scrutiny', Mrs. Abaya, said."
I will elaborate on two points:
1. If the President was wrong in making the August 10
announcement (published in August 11, 1992, newspapers) and in
the August 17 announcement, SUPRA, and thus I should have
relied on the Presidential announcements, and there is basis to
conclude that the President was at the very least ILL-SERVED
by his financial and legal advisers, because no one bothered to
advise the President to correct his announcements, not until
August 17, 1992, a few hours after the President had made
another announcement as to the charges against Imelda Marcos
having been rendered moot and academic. The President has a
lot of work to do, and is not, to my knowledge, a financier,
economist, banker or lawyer. It therefore behooved his
subalterns to give him timely (not "belated") advice, and brief
him on matters of immediate and far-reaching concerns (such
as the lifting of foreign exchange controls, designed, among
others to encourage the entry of foreign investments). Instead
of rescuing the Chief Executive from embarrassment by
assuming responsibility for errors in the latter's announcement,
these advisers have chosen to toss the blame for the
consequence of their failing to me, who only acted on the basis
of announcements of their Chief, which had become of public
knowledge.
xxx xxx xxx
The Court strongly feels that it has every right to assume and expect that
respondent judge is possessed with more than ordinary credentials and
qualifications to merit his appointment as a presiding judge in the Regional Trial
Court of the National Capital Judicial Region, stationed in the City of Manila
9

itself. It is, accordingly, disheartening and regrettable to note the nature of the
arguments and the kind of logic that respondent judge would want to impose on
this Court notwithstanding the manifest lack of cogency thereof. This calls to
mind similar scenarios and how this Court reacted thereto.
In one case, an RTC Judge was administratively charged for acquitting the
accused of a violation of CB Circular No. 960 despite the fact that the accused
was apprehended with US$355,349.00 while boarding a plane for Hongkong,
erroneously ruling that the State must first prove criminal intent to violate the
law and benefit from the illegal act, and further ordering the return of
US$3,000.00 out of the total amount seized, on the mistaken interpretation
that the CB circular exempts such amount from seizure. Respondent judge
therein was ordered dismissed from the government service for gross
incompetence and ignorance of the law. 33
Subsequently, the Court dismissed another RTC judge, with forfeiture of
retirement benefits, for gross ignorance of the law and for knowingly rendering
an unjust order or judgment when he granted bail to an accused charged with
raping an 11-year old girl, despite the contrary recommendation of the
investigating judge, and thereafter granted the motion to dismiss the case
allegedly executed by the complainant. 34
him guilty of gross ignorance of the law, his error of judgment being almost
deliberate and tantamount to knowingly rendering an incorrect and unjust
judgment. 37
ACCORDINGLY, on the foregoing premises and considerations, the Court finds
respondent Judge Manuel T. Muro guilty of gross ignorance of the law. He is
hereby DISMISSED from the service, such dismissal to carry with it
cancellation of eligibility, forfeiture of leave credits and retirement benefits,
and disqualification from reemployment in the government service. 38
Respondent is hereby ordered to CEASE and DESIST immediately from
rendering any judgment or order, or continuing any judicial action or proceeding
whatsoever, effective upon receipt of this decision.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

Similarly, an RTC judge who was described by this Court as one "who is ignorant
of fairly elementary and quite familiar legal principles and administrative
regulations, has a marked penchant for applying unorthodox, even strange
G.R. No. 104235 November 18, 1993
theories and concepts in the adjudication of controversies, exhibits indifference
to and even disdain for due process and the rule of law, applies the law
SPOUSES CESAR & SUTHIRA ZALAMEA and LIANA
whimsically, capriciously and oppressively, and displays bias and impartiality," was
ZALAMEA, petitioners,
dismissed from the service with forfeiture of all retirement benefits and with
vs.
prejudice to reinstatement in any branch of the government or any of its
HONORABLE COURT OF APPEALS and TRANSWORLD AIRLINES,
agencies or instrumentalities. 35
INC., respondents.

Still in another administrative case, an RTJ judge was also dismissed by this
Sycip, Salazar, Hernandez, Gatmaitan for petitioners.
Court for gross ignorance of the law after she ordered, in a probate proceeding,
the cancellation of the certificates of title issued in the name of the
complainant, without affording due process to the latter and other interested Quisumbing, Torres & Evangelista for private-respondent.
parties. 36

Only recently, an RTC judge who had been reinstated in the service was
dismissed after he acquitted all the accused in four criminal cases for illegal NOCON, J.:
possession of firearms, on the ground that there was no proof of malice or
deliberate intent on the part of the accused to violate the law. The Court found
10
Disgruntled over TransWorld Airlines, Inc.'s refusal to accommodate them in
TWA Flight 007 departing from New York to Los Angeles on June 6, 1984
despite possession of confirmed tickets, petitioners filed an action for damages
before the Regional Trial Court of Makati, Metro Manila, Branch 145. Advocating
petitioner's position, the trial court categorically ruled that respondent
TransWorld Airlines (TWA) breached its contract of carriage with petitioners
and that said breach was "characterized by bad faith." On appeal, however, the
appellate court found that while there was a breach of contract on respondent
TWA's part, there was neither fraud nor bad faith because under the Code of
Federal Regulations by the Civil Aeronautics Board of the United States of
America it is allowed to overbook flights.
The factual backdrop of the case is as follows:
Petitioners-spouses Cesar C. Zalamea and Suthira Zalamea, and their daughter,
Liana Zalamea, purchased three (3) airline tickets from the Manila agent of
respondent TransWorld Airlines, Inc. for a flight to New York to Los Angeles on
June 6, 1984. The tickets of petitioners-spouses were purchased at a discount
of 75% while that of their daughter was a full fare ticket. All three tickets
represented confirmed reservations.
While in New York, on June 4, 1984, petitioners received notice of the
reconfirmation of their reservations for said flight. On the appointed date,
however, petitioners checked in at 10:00 a.m., an hour earlier than the scheduled
flight at 11:00 a.m. but were placed on the wait-list because the number of
passengers who had checked in before them had already taken all the seats
available on the flight. Liana Zalamea appeared as the No. 13 on the wait-list
while the two other Zalameas were listed as "No. 34, showing a party of two."
Out of the 42 names on the wait list, the first 22 names were eventually allowed
to board the flight to Los Angeles, including petitioner Cesar Zalamea. The two
others, on the other hand, at No. 34, being ranked lower than 22, were not able
to fly. As it were, those holding full-fare tickets were given first priority among
the wait-listed passengers. Mr. Zalamea, who was holding the full-fare ticket of
his daughter, was allowed to board the plane; while his wife and daughter, who
presented the discounted tickets were denied boarding. According to Mr.
Zalamea, it was only later when he discovered the he was holding his daughter's
full-fare ticket.
Even in the next TWA flight to Los Angeles Mrs. Zalamea and her daughter,
could not be accommodated because it was also fully booked. Thus, they were
constrained to book in another flight and purchased two tickets from American
Airlines at a cost of Nine Hundred Eighteen ($918.00) Dollars.
Upon their arrival in the Philippines, petitioners filed an action for damages
based on breach of contract of air carriage before the Regional Trial Court of
Makati, Metro Manila, Branch 145. As aforesaid, the lower court ruled in favor
of petitioners in its decision 1 dated January 9, 1989 the dispositive portion of
which states as follows:
WHEREFORE, judgment is hereby rendered ordering the
defendant to pay plaintiffs the following amounts:
(1) US $918.00, or its peso equivalent at the time of payment
representing the price of the tickets bought by Suthira and
Liana Zalamea from American Airlines, to enable them to fly to
Los Angeles from New York City;
(2) US $159.49, or its peso equivalent at the time of payment,
representing the price of Suthira Zalamea's ticket for TWA
Flight 007;
(3) Eight Thousand Nine Hundred Thirty-Four Pesos and Fifty
Centavos (P8,934.50, Philippine Currency, representing the
price of Liana Zalamea's ticket for TWA Flight 007,
(4) Two Hundred Fifty Thousand Pesos (P250,000.00), Philippine
Currency, as moral damages for all the plaintiffs'
(5) One Hundred Thousand Pesos (P100,000.00), Philippine
Currency, as and for attorney's fees; and
(6) The costs of suit.
SO ORDERED. 2
On appeal, the respondent Court of Appeals held that moral damages are
recoverable in a damage suit predicated upon a breach of contract of
carriage only where there is fraud or bad faith. Since it is a matter of record
that overbooking of flights is a common and accepted practice of airlines in the
United States and is specifically allowed under the Code of Federal Regulations
by the Civil Aeronautics Board, no fraud nor bad faith could be imputed on
respondent TransWorld Airlines.
11
Moreover, while respondent TWA was remiss in not informing petitioners that
the flight was overbooked and that even a person with a confirmed reservation
may be denied accommodation on an overbooked flight, nevertheless it ruled that
such omission or negligence cannot under the circumstances be considered to be
so gross as to amount to bad faith.
Finally, it also held that there was no bad faith in placing petitioners in the wait-
list along with forty-eight (48) other passengers where full-fare first class
tickets were given priority over discounted tickets.
The dispositive portion of the decision of respondent Court of Appeals 3 dated
October 25, 1991 states as follows:
WHEREFORE, in view of all the foregoing, the decision under
review is hereby MODIFIED in that the award of moral and
exemplary damages to the plaintiffs is eliminated, and the
defendant-appellant is hereby ordered to pay the plaintiff the
following amounts:
(1) US$159.49, or its peso equivalent at the time of the
payment, representing the price of Suthira Zalamea's ticket
for TWA Flight 007;
(2) US$159.49, or its peso equivalent at the time of the
payment, representing the price of Cesar Zalamea's ticket for
TWA Flight 007;
(3) P50,000.00 as and for attorney's fees.
(4) The costs of suit.
SO ORDERED.4
Not satisfied with the decision, petitioners raised the case on petition for
review on certiorari and alleged the following errors committed by the
respondent Court of Appeals, to wit:
I.
. . . IN HOLDING THAT THERE WAS NO FRAUD OR BAD
FAITH ON THE PART OF RESPONDENT TWA BECAUSE IT
HAS A RIGHT TO OVERBOOK FLIGHTS.
II.
. . . IN ELIMINATING THE AWARD OF EXEMPLARY
DAMAGES.
III.
. . . IN NOT ORDERING THE REFUND OF LIANA ZALAMEA'S
TWA TICKET AND PAYMENT FOR THE AMERICAN
AIRLINES
TICKETS.5
That there was fraud or bad faith on the part of respondent airline when it did
not allow petitioners to board their flight for Los Angeles in spite of confirmed
tickets cannot be disputed. The U.S. law or regulation allegedly authorizing
overbooking has never been proved. Foreign laws do not prove themselves nor can
the courts take judicial notice of them. Like any other fact, they must be alleged
and proved.6 Written law may be evidenced by an official publication thereof or
by a copy attested by the officer having the legal custody of the record, or by
his deputy, and accompanied with a certificate that such officer has custody.
The certificate may be made by a secretary of an embassy or legation, consul
general, consul, vice-consul, or consular agent or by any officer in the foreign
service of the Philippines stationed in the foreign country in which the record is
kept, and authenticated by the seal of his office.7
Respondent TWA relied solely on the statement of Ms. Gwendolyn Lather, its
customer service agent, in her deposition dated January 27, 1986 that the Code
of Federal Regulations of the Civil Aeronautics Board allows overbooking. Aside
from said statement, no official publication of said code was presented as
evidence. Thus, respondent court's finding that overbooking is specifically
allowed by the US Code of Federal Regulations has no basis in fact.
Even if the claimed U.S. Code of Federal Regulations does exist, the same is not
applicable to the case at bar in accordance with the principle of lex loci
contractus which require that the law of the place where the airline ticket was
issued should be applied by the court where the passengers are residents and
nationals of the forum and the ticket is issued in such State by the defendant
12
airline.8 Since the tickets were sold and issued in the Philippines, the applicable
law in this case would be Philippine law.
Existing jurisprudence explicitly states that overbooking amounts to bad faith,
entitling the passengers concerned to an award of moral damages. In Alitalia
Airways v. Court of Appeals,9 where passengers with confirmed bookings were
refused carriage on the last minute, this Court held that when an airline issues a
ticket to a passenger confirmed on a particular flight, on a certain date, a
contract of carriage arises, and the passenger has every right to expect that he
would fly on that flight and on that date. If he does not, then the carrier opens
itself to a suit for breach of contract of carriage. Where an airline had
deliberately overbooked, it took the risk of having to deprive some passengers of
their seats in case all of them would show up for the check in. For the indignity
and inconvenience of being refused a confirmed seat on the last minute, said
passenger is entitled to an award of moral damages.
Similarly, in Korean Airlines Co., Ltd. v. Court of Appeals, 10 where private
respondent was not allowed to board the plane because her seat had already
been given to another passenger even before the allowable period for passengers
to check in had lapsed despite the fact that she had a confirmed ticket and she
had arrived on time, this Court held that petitioner airline acted in bad faith in
violating private respondent's rights under their contract of carriage and is
therefore liable for the injuries she has sustained as a result.
In fact, existing jurisprudence abounds with rulings where the breach of
contract of carriage amounts to bad faith. In Pan American World Airways, Inc.
v. Intermediate Appellate Court, 11 where a would-be passenger had the
necessary ticket, baggage claim and clearance from immigration all clearly and
unmistakably showing that she was, in fact, included in the passenger manifest of
said flight, and yet was denied accommodation in said flight, this Court did not
hesitate to affirm the lower court's finding awarding her damages.
A contract to transport passengers is quite different in kind and degree from
any other contractual relation. So ruled this Court in Zulueta v. Pan American
World Airways, Inc. 12 This is so, for a contract of carriage generates a relation
attended with public duty — a duty to provide public service and convenience to
its passengers which must be paramount to self-interest or enrichment. Thus, it
was also held that the switch of planes from Lockheed 1011 to a smaller Boeing
707 because there were only 138 confirmed economy class passengers who could
very well be accommodated in the smaller planes, thereby sacrificing the
comfort of its first class passengers for the sake of economy, amounts to bad
faith. Such inattention and lack of care for the interest of its passengers who
are entitled to its utmost consideration entitles the passenger to an award of
moral damages. 13
Even on the assumption that overbooking is allowed, respondent TWA is still
guilty of bad faith in not informing its passengers beforehand that it could
breach the contract of carriage even if they have confirmed tickets if there was
overbooking. Respondent TWA should have incorporated stipulations on
overbooking on the tickets issued or to properly inform its passengers about
these policies so that the latter would be prepared for such eventuality or would
have the choice to ride with another airline.
Respondent TWA contends that Exhibit I, the detached flight coupon upon
which were written the name of the passenger and the points of origin and
destination, contained such a notice. An examination of Exhibit I does not bear
this out. At any rate, said exhibit was not offered for the purpose of showing
the existence of a notice of overbooking but to show that Exhibit I was used for
flight 007 in first class of June 11, 1984 from New York to Los Angeles.
Moreover, respondent TWA was also guilty of not informing its passengers of its
alleged policy of giving less priority to discounted tickets. While the petitioners
had checked in at the same time, and held confirmed tickets, yet, only one of
them was allowed to board the plane ten minutes before departure time because
the full-fare ticket he was holding was given priority over discounted tickets.
The other two petitioners were left behind.
It is respondent TWA's position that the practice of overbooking and the airline
system of boarding priorities are reasonable policies, which when implemented do
not amount to bad faith. But the issue raised in this case is not the
reasonableness of said policies but whether or not said policies were
incorporated or deemed written on petitioners' contracts of carriage.
Respondent TWA failed to show that there are provisions to that effect.
Neither did it present any argument of substance to show that petitioners were
duly apprised of the overbooked condition of the flight or that there is a
hierarchy of boarding priorities in booking passengers. It is evident that
petitioners had the right to rely upon the assurance of respondent TWA, thru
its agent in Manila, then in New York, that their tickets represented confirmed
seats without any qualification. The failure of respondent TWA to so inform
them when it could easily have done so thereby enabling respondent to hold on to
them as passengers up to the last minute amounts to bad faith. Evidently,
respondent TWA placed its self-interest over the rights of petitioners under
their contracts of carriage. Such conscious disregard of petitioners' rights
makes respondent TWA liable for moral damages. To deter breach of contracts
13

by respondent TWA in similar fashion in the future, we adjudge respondent WHEREFORE, the petition is hereby GRANTED and the decision of the
TWA liable for exemplary damages, as well. respondent Court of Appeals is hereby MODIFIED to the extent of adjudging
respondent TransWorld Airlines to pay damages to petitioners in the following
Petitioners also assail the respondent court's decision not to require the refund amounts, to wit:
of Liana Zalamea's ticket because the ticket was used by her father. On this
score, we uphold the respondent court. Petitioners had not shown with certainty (1) US$918.00 or its peso equivalent at the time of payment representing the
that the act of respondent TWA in allowing Mr. Zalamea to use the ticket of her price of the tickets bought by Suthira and Liana Zalamea from American
daughter was due to inadvertence or deliberate act. Petitioners had also failed Airlines, to enable them to fly to Los Angeles from New York City;
to establish that they did not accede to said agreement. The logical conclusion,
therefore, is that both petitioners and respondent TWA agreed, albeit impliedly, (2) P50,000.00 as moral damages;
to the course of action taken.
(3) P50,000.00 as exemplary damages;
The respondent court erred, however, in not ordering the refund of the
American Airlines tickets purchased and used by petitioners Suthira and Liana. (4) P50,000.00 as attorney's fees; and
The evidence shows that petitioners Suthira and Liana were constrained to take
the American Airlines flight to Los Angeles not because they "opted not to use (5) Costs of suit.
their TWA tickets on another TWA flight" but because respondent TWA could
not accommodate them either on the next TWA flight which was also fully
SO ORDERED.
booked. 14 The purchase of the American Airlines tickets by petitioners Suthira
and Liana was the consequence of respondent TWA's unjustifiable breach of its
Republic of the Philippines
contracts of carriage with petitioners. In accordance with Article 2201, New
SUPREME COURT
Civil Code, respondent TWA should, therefore, be responsible for all damages
Manila
which may be reasonably attributed to the non-performance of its obligation. In
the previously cited case of Alitalia Airways v. Court of Appeals, 15 this Court
explicitly held that a passenger is entitled to be reimbursed for the cost of the SECOND DIVISION
tickets he had to buy for a flight to another airline. Thus, instead of simply
being refunded for the cost of the unused TWA tickets, petitioners should be G.R. Nos. 172760-61 October 15, 2007
awarded the actual cost of their flight from New York to Los Angeles. On this
score, we differ from the trial court's ruling which ordered not only the KAREN and KRISTY FISHING INDUSTRY and SPS. HELIODORO TUVILLA
reimbursement of the American Airlines tickets but also the refund of the and AQUILINA TUVILLA,Petitioners,
unused TWA tickets. To require both prestations would have enabled petitioners vs.
to fly from New York to Los Angeles without any fare being paid. THE HONORABLE COURT OF TINGA, and APPEALS, Fifth Division and
VELASCO, JR., NATIONAL LABOR RELATIONS COMMISSION, Third
The award to petitioners of attorney's fees is also justified under Article Division, Respondents
2208(2) of the Civil Code which allows recovery when the defendant's act or
omission has compelled plaintiff to litigate or to incur expenses to protect his DECISION
interest. However, the award for moral damages and exemplary damages by the
trial court is excessive in the light of the fact that only Suthira and Liana TINGA, J.:
Zalamea were actually "bumped off." An award of P50,000.00 moral damages and
another P50,000.00 exemplary damages would suffice under the circumstances This is a special civil action for certiorari under Rule 65 of the Rules of Civil
obtaining in the instant case. Procedure which seeks to nullify two resolutions of the Court of Appeals in CA-
G.R. SP No. 63286 and 63750 for having been issued without or in excess of
14
jurisdiction and/or with grave abuse of discretion. The 06 March 2006
Resolution1 denied petitioners’ motion for time to file a motion for
reconsideration of the Court of Appeals Decision2 dated 29 December 2005 in
the aforementioned cases. The 10 April 2006 Resolution3 denied petitioners’
motion for reconsideration of the 06 March 2006 Resolution.
The following factual antecedents are undisputed.
Petitioners spouses Heliodoro Tuvilla, now deceased, and Aquilina Tuvilla
("spouses Tuvilla") were the proprietors of Karen & Kristy Fishing Industry which
operated the fishing vessels M/V Karen and M/V Kristy. On 11 August 1998,
several fishermen-crew members of said vessels filed a complaint for illegal
dismissal, unfair labor practice and money claims against Spouses Tuvilla and
Karen & Kristy Fishing Industry (herein collectively referred to as petitioners).
The Labor Arbiter rendered a Decision4 on 1 December 1999 ordering
petitioners to pay the money claims but dismissed the complaint for illegal
dismissal and unfair labor practice. Petitioners elevated the matter to the
National Labor Relations Commission (NLRC) which affirmed5 the Labor Arbiter’s
ruling, except for the computation of the salary differentials, 13th month pay
and service incentive leave. Both parties sought reconsideration of the NLRC
decision but were rebuffed.
Both parties again filed separate petitions for certiorari with the Court of
Appeals.6 In view of the substantial identity of the parties and the issues, the
separate petitions were ordered consolidated. During the pendency of the
appeal, petitioner Heliodoro Tuvilla passed away.7
On 29 December 2005, the Court of Appeals rendered a Decision the dispositive
portion of which reads:
WHEREFORE, the petition of Karen & Kristy and the Tuvillas docketed as CA-
G.R. SP No. 63286, is DENIED DUE COURSE and DISMISSED. On the other
hand, the petition of the Employees docketed as CA-G.R. SP No. 63750 is GIVEN
DUE COURSE and GRANTED. Accordingly the assailed Decision dated
September 29, 2000 and Resolution dated January 19, 2001 of the NLRC are
SET ASIDE and VACATED while the Decision of the Labor Arbiter is
REINSTATED.
SO ORDERED.8
A copy of the said decision was sent by registered mail to Atty. Eugenio Dela
Cruz, petitioners’ counsel of record, but it was returned as said counsel had
moved out of the address of record. Thus, the Court of Appeals Clerk of Court
resent another copy of the decision by registered mail to spouses Tuvilla. The
registry return receipt showed that the copy was delivered to their address in
Olongapo City on 27 January 2006.
On 6 February 2006, petitioner Aquilina Tuvilla filed with the Court of Appeals a
motion captioned "Motion to Allow Petitioner/Movant a Period Within Which to
Search for Her Counsel; In the Alternative to Look for a New Counsel and Time
to File Necessary Pleading or Motion for Reconsideration of the Decision
Received by the Movant/Petitioner last January 27, 2006,"9 manifesting that
she had difficulty finding their counsel of record as it was her deceased husband
who was handling the case prior to his death.
The following day, she filed a notice of appearance and urgent motion for
extension of time to file motion for reconsideration,10 asking for an additional 15
days within which to file a motion for reconsideration.
On 8 February 2006, she filed a motion captioned "Application for Substitution
of Counsel or Employment of New Counsel with Notice to the Original Counsel of
Record,"11 asking that petitioners’ counsel of record be replaced by Atty. Rutillo
B. Pasok.
On 21 February 2006, petitioners filed a Motion to Admit Attached Motion for
Reconsideration and Notice of Death of Petitioner, Heliodoro Albotra Tuvilla.12
On 6 March 2006, the Court of Appeals issued the first assailed
Resolution,13 denying the first three motions. The appellate court ruled that a
motion for extension of the period to file the motion for reconsideration is not
allowed by the Rules of Court. Petitioners’ failure to file a motion for
reconsideration of the 29 December 2005 Decision within the reglementary
period rendered said decision final and executory, the Court of Appeals stated.
Petitioners filed another motion for reconsideration but it was denied in a
Resolution dated 10 April 2006.
Petitioner Tuvilla elevated the denial of her motions to this Court via a special
civil action for certiorari, raising the following grounds in support of her
petition:
1. THE HONORABLE COURT OF APPEALS, FIFTH DIVISION GRAVELY
ABUSED ITS DISCRETION WHICH IS TANTAMOUNT TO LACK OF
15
JURISDICTION WHEN IT REFUSED TO SEE THE LIGHT THAT THE
TIME AND PERIOD TO FILE A MOTION FOR RECONSIDERATION
BY THE PETITIONER HAS NOT YET STARTED TO RUN FOR REASON
THAT THE DECISION WAS NOT YET SERVED OR RECEIVED BY HER
COUNSEL OF RECORD AS MANDATED BY THE RULES AND, IT
PREFERRED TO APPLY THE TECHNICALITIES OF THE RULES OF
COURT IN EXCHANGE OF SUBSTANTIAL JUSTICE AND THE RIGHT
OF THE PETITIONER TO BE ASSISTED BY A COUNSEL;
2. THE DEATH OF MOVANT’S HUSBAND REQUIRES THE
SUBSTITUTION OF THE HEIRS, AND WITHOUT THE PROPER
SUBSTITUTION AS REQUIRED BY THE RULES, THE HEIRS ARE
BASICALLY DENIED OF THEIR CONSTITUTIONAL RIGHT TO
THEIR PROPERTY WITHOUT DUE PROCESS;
3. THE NEGLIGENCE AND LACK OF INTEREST OF HER PREVIOUS
COUNSEL OF HIS DUTY AS THE COUNSEL OF THE MOVANT
CANNOT BIND THE MOVANT, AS SHE HAS NO WAY UPON WHICH
SHE CAN CONTROL THE ACTS OF HER COUNSEL;
4. THE MOVANT RAISED A VALID AND SUBSTANTIALLY NEW
ISSUES IN HER MOTION FOR RECONSIDERATION AND THAT THE
LIBERAL INTERPRETATION OF THE PROCEDURAL RULES WILL BE
IN KEEPING THE DEMANDS OF SUBSTANTIAL JUSTICE
CONSIDERING THE AMOUNT OF THREE MILLION TWO HUNDRED
THIRTY THOUSAND FIVE HUNDRED TEN AND 46/100 PESOS
(₱3,235,510.46), PHILIPPINE CURRENCY WOULD BE A WINDFALL
AND UNJUST ENRICHMENT AT THE EXPENSE OF THE MOVANT.14
Petitioner Tuvilla argues that the reglementary period for filing a motion for
reconsideration of the Court of Appeals decision had not commenced because
Atty. Dela Cruz, petitioners’ counsel of record at the time of the promulgation of
the decision, did not receive a copy of said decision. Petitioner Tuvilla adds that
neither should the reglementary period be counted from the date of receipt of
the decision by petitioners in view of the rule that where a party appears by
attorney in an action or proceeding in a court of record, all notices and orders
must be given to the attorney of record.15
The records show that the failure of Atty. Dela Cruz, petitioners’ counsel of
record, to receive a copy of the Court of Appeals decision was caused by his
failure to inform the appellate court of the change of his address of record.
Thus, the Clerk of Court had to resend a copy of the decision, this time to the
address of record of spouses Tuvilla.
If counsel moves to another address without informing the court of that change,
such omission or neglect is inexcusable and will not stay the finality of the
decision. The court cannot be expected to take judicial notice of the new
address of a lawyer who has moved or to ascertain on its own whether or not the
counsel of record has been changed and who the new counsel could possibly be or
where he probably resides or holds office.161âwphi1
Jurisprudence is replete with pronouncements that clients are bound by the
actions of their counsel in the conduct of their case. If it were otherwise, and a
lawyer’s mistake or negligence were admitted as a reason for the opening of a
case, there would be no end to litigation so long as counsel had not been
sufficiently diligent or experienced or learned.17
In Macondray & Co., Inc. v. Provident Insurance Corporation,18 petitioner’s
previous counsel moved to a new address without informing the appellate court,
eventually causing the appellate court’s decision to become final and executory.
The Court ruled that the counsel’s omission was an inexcusable neglect binding
upon petitioner therein for the following reasons:
In the present case, there is no compelling reason to overturn well-settled
jurisprudence or to interpret the rules liberally in favor of petitioner, who is not
entirely blameless. It should have taken the initiative of periodically keeping in
touch with its counsel, checking with the court, and inquiring about the status of
its case. In so doing, it could have taken timely steps to neutralize the negligence
of its chosen counsel and to protect its interests. Litigants represented by
counsel should not expect that all they need to do is sit back, relax and await the
outcome of their case.19
As pointed out by respondent, after the death of petitioner Tuvilla’s husband,
more than a year had elapsed before the promulgation of the Court of Appeals
decision, but she failed to coordinate with the counsel of record and check the
status of the case in the interim.
Moreover, the general rule is that when a party is represented by counsel of
record, service of orders and notices must be made upon said attorney and
notice to the client and to any other lawyer than the counsel of record is not
notice in law.20 The Court of Appeals did not strictly apply this rule and was even
liberal when it did not consider the service on the counsel of record as notice to
petitioner. It even counted the 15-day reglementary period for filing a motion of
16
reconsideration from the later receipt by petitioner Aquilina Tuvilla of a copy of
the decision instead of from the earlier service on petitioners’ counsel of record.
Unfortunately, she squandered the new period as she failed to file the motion
for reconsideration within the said period.1âwphi1
Thus, the Court of Appeals did not commit grave abuse of discretion when it
denied petitioners’ motion for additional time to file the motion for
reconsideration in accordance with the well-settled principle that no extension
for filing said motion may be granted. As a rule, periods prescribed to do certain
acts must be followed with fealty as they are designed primarily to speed up the
final disposition of the case. Such reglementary periods are indispensable
interdictions against needless delays and for an orderly discharge of judicial
business. Deviations from the rules cannot be tolerated. More importantly, their
observance cannot be left to the whims and caprices of the parties. What is
worrisome is that parties who fail to file their pleading within the periods
provided for by the Rules of Court, through their counsel’s inexcusable neglect,
resort to beseeching the Court to bend the rules in the guise of a plea for a
liberal interpretation thereof, thus, sacrificing efficiency and order.21
On the merits, petitioners contend that the motion for reconsideration raised
substantially new issues. Suffice it to say that a petition for certiorari is not a
remedy to correct errors of judgment. Certiorari will issue only to correct
errors of jurisdiction. As already pointed out, the Court of Appeals did not
commit any grave abuse of discretion in denying a motion for reconsideration
which was filed out of time. In any case, the Court of Appeals did not commit
grave abuse of discretion in setting aside the decision of the NLRC on the
ground that the latter’s ruling to remand the case to the Labor Arbiter for the
recomputation of the monetary award was tainted with grave abuse of
discretion. As found by the appellate court, the NLRC had no basis in ruling that
petitioners paid monthly allowances and commissions to their workers because no
proof to this effect was adduced by petitioners.
WHEREFORE, the instant petition for certiorari is DISMISSED. Costs against
petitioners.
SO ORDERED.
G.R. No. 124642 February 23, 2004
ALFREDO CHING and ENCARNACION CHING, petitioners
vs.
THE HON. COURT OF APPEALS and ALLIED BANKING
CORPORATION, respondents.
DECISION
CALLEJO, SR., J.:
This petition for review, under Rule 45 of the Revised Rules of Court, assails the
Decision1 of the Court of Appeals (CA) dated November 27, 1995 in CA-G.R. SP
No. 33585, as well as the Resolution2 on April 2, 1996 denying the petitioners’
motion for reconsideration. The impugned decision granted the private
respondent’s petition for certiorariand set aside the Orders of the trial court
dated December 15, 19933 and February 17, 19944 nullifying the attachment of
100,000 shares of stocks of the Citycorp Investment Philippines under the name
of petitioner Alfredo Ching.
The following facts are undisputed:
On September 26, 1978, the Philippine Blooming Mills Company, Inc. (PBMCI)
obtained a loan of ₱9,000,000.00 from the Allied Banking Corporation (ABC). By
virtue of this loan, the PBMCI, through its Executive Vice-President Alfredo
Ching, executed a promissory note for the said amount promising to pay on
December 22, 1978 at an interest rate of 14% per annum.5 As added security for
the said loan, on September 28, 1978, Alfredo Ching, together with Emilio
Tañedo and Chung Kiat Hua, executed a continuing guaranty with the ABC binding
themselves to jointly and severally guarantee the payment of all the PBMCI
obligations owing the ABC to the extent of ₱38,000,000.00.6 The loan was
subsequently renewed on various dates, the last renewal having been made on
December 4, 1980.7
Earlier, on December 28, 1979, the ABC extended another loan to the PBMCI in
the amount of ₱13,000,000.00 payable in eighteen months at 16% interest per
annum. As in the previous loan, the PBMCI, through Alfredo Ching, executed a
promissory note to evidence the loan maturing on June 29, 1981.8 This was
renewed once for a period of one month.9
The PBMCI defaulted in the payment of all its loans. Hence, on August 21, 1981,
the ABC filed a complaint for sum of money with prayer for a writ of preliminary
attachment against the PBMCI to collect the ₱12,612,972.88 exclusive of
interests, penalties and other bank charges. Impleaded as co-defendants in the
complaint were Alfredo Ching, Emilio Tañedo and Chung Kiat Hua in their capacity
as sureties of the PBMCI.
17
The case was docketed as Civil Case No. 142729 in the Regional Trial Court of
Manila, Branch XVIII.10 In its application for a writ of preliminary attachment,
the ABC averred that the "defendants are guilty of fraud in incurring the
obligations upon which the present action is brought11 in that they falsely
represented themselves to be in a financial position to pay their obligation upon
maturity thereof."12 Its supporting affidavit stated, inter alia, that the
"[d]efendants have removed or disposed of their properties, or [are] ABOUT to
do so, with intent to defraud their creditors."13
On August 26, 1981, after an ex-parte hearing, the trial court issued an Order
denying the ABC’s application for a writ of preliminary attachment. The trial
court decreed that the grounds alleged in the application and that of its
supporting affidavit "are all conclusions of fact and of law" which do not warrant
the issuance of the writ prayed for.14On motion for reconsideration, however,
the trial court, in an Order dated September 14, 1981, reconsidered its previous
order and granted the ABC’s application for a writ of preliminary attachment on
a bond of ₱12,700,000. The order, in relevant part, stated:
With respect to the second ground relied upon for the grant of the writ of
preliminary attachment ex-parte, which is the alleged disposal of properties by
the defendants with intent to defraud creditors as provided in Sec. 1(e) of Rule
57 of the Rules of Court, the affidavits can only barely justify the issuance of
said writ as against the defendant Alfredo Ching who has allegedly bound himself
jointly and severally to pay plaintiff the defendant corporation’s obligation to
the plaintiff as a surety thereof.
WHEREFORE, let a writ of preliminary attachment issue as against the
defendant Alfredo Ching requiring the sheriff of this Court to attach all the
properties of said Alfredo Ching not exceeding ₱12,612,972.82 in value, which
are within the jurisdiction of this Court and not exempt from execution upon,
the filing by plaintiff of a bond duly approved by this Court in the sum of Twelve
Million Seven Hundred Thousand Pesos (₱12,700,000.00) executed in favor of
the defendant Alfredo Ching to secure the payment by plaintiff to him of all the
costs which may be adjudged in his favor and all damages he may sustain by
reason of the attachment if the court shall finally adjudge that the plaintiff was
not entitled thereto.
SO ORDERED.15
Upon the ABC’s posting of the requisite bond, the trial court issued a writ of
preliminary attachment. Subsequently, summonses were served on the
defendants,16 save Chung Kiat Hua who could not be found.
Meanwhile, on April 1, 1982, the PBMCI and Alfredo Ching jointly filed a petition
for suspension of payments with the Securities and Exchange Commission (SEC),
docketed as SEC Case No. 2250, at the same time seeking the PBMCI’s
rehabilitation.17
On July 9, 1982, the SEC issued an Order placing the PBMCI’s business, including
its assets and liabilities, under rehabilitation receivership, and ordered that "all
actions for claims listed in Schedule "A" of the petition pending before any court
or tribunal are hereby suspended in whatever stage the same may be until
further orders from the Commission."18 The ABC was among the PBMCI’s
creditors named in the said schedule.
Subsequently, on January 31, 1983, the PBMCI and Alfredo Ching jointly filed a
Motion to Dismiss and/or motion to suspend the proceedings in Civil Case No.
142729 invoking the PBMCI’s pending application for suspension of payments
(which Ching co-signed) and over which the SEC had already assumed
jurisdiction.19 On February 4, 1983, the ABC filed its Opposition thereto.20
In the meantime, on July 26, 1983, the deputy sheriff of the trial court levied
on attachment the 100,000 common shares of Citycorp stocks in the name of
Alfredo Ching.21
Thereafter, in an Order dated September 16, 1983, the trial court partially
granted the aforementioned motion by suspending the proceedings only with
respect to the PBMCI. It denied Ching’s motion to dismiss the complaint/or
suspend the proceedings and pointed out that P.D. No. 1758 only concerns the
activities of corporations, partnerships and associations and was never intended
to regulate and/or control activities of individuals. Thus, it directed the
individual defendants to file their answers.22
Instead of filing an answer, Ching filed on January 14, 1984 a Motion to Suspend
Proceedings on the same ground of the pendency of SEC Case No. 2250. This
motion met the opposition from the ABC.23
On January 20, 1984, Tañedo filed his Answer with counterclaim and cross-
claim.24 Ching eventually filed his Answer on July 12, 1984.25
On October 25, 1984, long after submitting their answers, Ching filed an
Omnibus Motion,26 again praying for the dismissal of the complaint or suspension
of the proceedings on the ground of the July 9, 1982 Injunctive Order issued in
SEC Case No. 2250. He averred that as a surety of the PBMCI, he must also
18
necessarily benefit from the defenses of his principal. The ABC opposed Ching’s
omnibus motion.
Emilio Y. Tañedo, thereafter, filed his own Omnibus Motion27 praying for the
dismissal of the complaint, arguing that the ABC had "abandoned and waived" its
right to proceed against the continuing guaranty by its act of resorting to
preliminary attachment.
On December 17, 1986, the ABC filed a Motion to Reduce the amount of his
preliminary attachment bond from ₱12,700,000 to ₱6,350,000.28 Alfredo Ching
opposed the motion,29 but on April 2, 1987, the court issued an Order setting the
incident for further hearing on May 28, 1987 at 8:30 a.m. for the parties to
adduce evidence on the actual value of the properties of Alfredo Ching levied on
by the sheriff.30
On March 2, 1988, the trial court issued an Order granting the motion of the
ABC and rendered the attachment bond of ₱6,350,000.31
On November 16, 1993, Encarnacion T. Ching, assisted by her husband Alfredo
Ching, filed a Motion to Set Aside the levy on attachment. She alleged inter alia
that the 100,000 shares of stocks levied on by the sheriff were acquired by her
and her husband during their marriage out of conjugal funds after the Citycorp
Investment Philippines was established in 1974. Furthermore, the indebtedness
covered by the continuing guaranty/comprehensive suretyship contract executed
by petitioner Alfredo Ching for the account of PBMCI did not redound to the
benefit of the conjugal partnership. She, likewise, alleged that being the wife of
Alfredo Ching, she was a third-party claimant entitled to file a motion for the
release of the properties.32 She attached therewith a copy of her marriage
contract with Alfredo Ching.33
The ABC filed a comment on the motion to quash preliminary attachment and/or
motion to expunge records, contending that:
2.1 The supposed movant, Encarnacion T. Ching, is not a party to this
present case; thus, she has no personality to file any motion before this
Honorable Court;
2.2 Said supposed movant did not file any Motion for Intervention
pursuant to Section 2, Rule 12 of the Rules of Court;
2.3 Said Motion cannot even be construed to be in the nature of a
Third-Party Claim conformably with Sec. 14, Rule 57 of the Rules of
Court.
3. Furthermore, assuming in gracia argumenti that the supposed movant has the
required personality, her Motion cannot be acted upon by this Honorable Court
as the above-entitled case is still in the archives and the proceedings thereon
still remains suspended. And there is no previous Motion to revive the same.34
The ABC also alleged that the motion was barred by prescription or by laches
because the shares of stocks were in custodia legis.
During the hearing of the motion, Encarnacion T. Ching adduced in evidence her
marriage contract to Alfredo Ching to prove that they were married on January
8, 1960;35 the articles of incorporation of Citycorp Investment Philippines dated
May 14, 1979;36 and, the General Information Sheet of the corporation showing
that petitioner Alfredo Ching was a member of the Board of Directors of the
said corporation and was one of its top twenty stockholders.
On December 10, 1993, the Spouses Ching filed their Reply/Opposition to the
motion to expunge records.
Acting on the aforementioned motion, the trial court issued on December 15,
1993 an Order37 lifting the writ of preliminary attachment on the shares of
stocks and ordering the sheriff to return the said stocks to the petitioners. The
dispositive portion reads:
WHEREFORE, the instant Motion to Quash Preliminary Attachment, dated
November 9, 1993, is hereby granted. Let the writ of preliminary attachment
subject matter of said motion, be quashed and lifted with respect to the
attached 100,000 common shares of stock of Citycorp Investment Philippines in
the name of the defendant Alfredo Ching, the said shares of stock to be
returned to him and his movant-spouse by Deputy Sheriff Apolonio A. Golfo who
effected the levy thereon on July 26, 1983, or by whoever may be presently in
possession thereof.
SO ORDERED.38
The plaintiff Allied Banking Corporation filed a motion for the reconsideration of
the order but denied the same on February 17, 1994. The petitioner bank
forthwith filed a petition for certiorari with the CA, docketed as CA-G.R. SP No.
33585, for the nullification of the said order of the court, contending that:
19
1. The respondent Judge exceeded his authority thereby acted without
jurisdiction in taking cognizance of, and granting a "Motion" filed by a
complete stranger to the case.
2. The respondent Judge committed a grave abuse of discretion in
lifting the writ of preliminary attachment without any basis in fact and
in law, and contrary to established jurisprudence on the matter.39
On November 27, 1995, the CA rendered judgment granting the petition and
setting aside the assailed orders of the trial court, thus:
WHEREFORE, premises considered, the petition is GRANTED, hereby setting
aside the questioned orders (dated December 15, 1993 and February 17, 1994)
for being null and void.
SO ORDERED.40
The CA sustained the contention of the private respondent and set aside the
assailed orders. According to the CA, the RTC deprived the private respondent
of its right to file a bond under Section 14, Rule 57 of the Rules of Court. The
petitioner Encarnacion T. Ching was not a party in the trial court; hence, she had
no right of action to have the levy annulled with a motion for that purpose. Her
remedy in such case was to file a separate action against the private respondent
to nullify the levy on the 100,000 Citycorp shares of stocks. The court stated
that even assuming that Encarnacion T. Ching had the right to file the said
motion, the same was barred by laches.
Citing Wong v. Intermediate Appellate Court,41 the CA ruled that the
presumption in Article 160 of the New Civil Code shall not apply where, as in this
case, the petitioner-spouses failed to prove the source of the money used to
acquire the shares of stock. It held that the levied shares of stocks belonged to
Alfredo Ching, as evidenced by the fact that the said shares were registered in
the corporate books of Citycorp solely under his name. Thus, according to the
appellate court, the RTC committed a grave abuse of its discretion amounting to
excess or lack of jurisdiction in issuing the assailed orders. The petitioners’
motion for reconsideration was denied by the CA in a Resolution dated April 2,
1996.
The petitioner-spouses filed the instant petition for review on certiorari,
asserting that the RTC did not commit any grave abuse of discretion amounting
to excess or lack of jurisdiction in issuing the assailed orders in their favor;
hence, the CA erred in reversing the same. They aver that the source of funds in
the acquisition of the levied shares of stocks is not the controlling factor when
invoking the presumption of the conjugal nature of stocks under Art. 160, 42 and
that such presumption subsists even if the property is registered only in the
name of one of the spouses, in this case, petitioner Alfredo Ching.43 According to
the petitioners, the suretyship obligation was not contracted in the pursuit of
the petitioner-husband’s profession or business.44 And, contrary to the ruling of
the CA, where conjugal assets are attached in a collection suit on an obligation
contracted by the husband, the wife should exhaust her motion to quash in the
main case and not file a separate suit.45 Furthermore, the petitioners contend
that under Art. 125 of the Family Code, the petitioner-husband’s gratuitous
suretyship is null and void ab initio,46 and that the share of one of the spouses in
the conjugal partnership remains inchoate until the dissolution and liquidation of
the partnership.47
In its comment on the petition, the private respondent asserts that the CA
correctly granted its petition for certiorari nullifying the assailed order. It
contends that the CA correctly relied on the ruling of this Court in Wong v.
Intermediate Appellate Court. Citing Cobb-Perez v. Lantin and G-Tractors, Inc. v.
Court of Appeals, the private respondent alleges that the continuing guaranty
and suretyship executed by petitioner Alfredo Ching in pursuit of his profession
or business. Furthermore, according to the private respondent, the right of the
petitioner-wife to a share in the conjugal partnership property is merely
inchoate before the dissolution of the partnership; as such, she had no right to
file the said motion to quash the levy on attachment of the shares of stocks.
The issues for resolution are as follows: (a) whether the petitioner-wife has the
right to file the motion to quash the levy on attachment on the 100,000 shares
of stocks in the Citycorp Investment Philippines; (b) whether or not the RTC
committed a grave abuse of its discretion amounting to excess or lack of
jurisdiction in issuing the assailed orders.
On the first issue, we agree with the petitioners that the petitioner-wife had
the right to file the said motion, although she was not a party in Civil Case No.
142729.48
In Ong v. Tating,49 we held that the sheriff may attach only those properties of
the defendant against whom a writ of attachment has been issued by the court.
When the sheriff erroneously levies on attachment and seizes the property of a
third person in which the said defendant holds no right or interest, the superior
authority of the court which has authorized the execution may be invoked by the
aggrieved third person in the same case. Upon application of the third person,
the court shall order a summary hearing for the purpose of determining whether
20
the sheriff has acted rightly or wrongly in the performance of his duties in the
execution of the writ of attachment, more specifically if he has indeed levied on
attachment and taken hold of property not belonging to the plaintiff. If so, the
court may then order the sheriff to release the property from the erroneous
levy and to return the same to the third person. In resolving the motion of the
third party, the court does not and cannot pass upon the question of the title to
the property with any character of finality. It can treat the matter only insofar
as may be necessary to decide if the sheriff has acted correctly or not. If the
claimant’s proof does not persuade the court of the validity of the title, or right
of possession thereto, the claim will be denied by the court. The aggrieved third
party may also avail himself of the remedy of "terceria" by executing an
affidavit of his title or right of possession over the property levied on
attachment and serving the same to the office making the levy and the adverse
party. Such party may also file an action to nullify the levy with damages
resulting from the unlawful levy and seizure, which should be a totally separate
and distinct action from the former case. The above-mentioned remedies are
cumulative and any one of them may be resorted to by one third-party claimant
without availing of the other remedies.50
In this case, the petitioner-wife filed her motion to set aside the levy on
attachment of the 100,000 shares of stocks in the name of petitioner-husband
claiming that the said shares of stocks were conjugal in nature; hence, not liable
for the account of her husband under his continuing guaranty and suretyship
agreement with the PBMCI. The petitioner-wife had the right to file the motion
for said relief.
On the second issue, we find and so hold that the CA erred in setting aside and
reversing the orders of the RTC. The private respondent, the petitioner in the
CA, was burdened to prove that the RTC committed a grave abuse of its
discretion amounting to excess or lack of jurisdiction. The tribunal acts without
jurisdiction if it does not have the legal purpose to determine the case; there is
excess of jurisdiction where the tribunal, being clothed with the power to
determine the case, oversteps its authority as determined by law. There is grave
abuse of discretion where the tribunal acts in a capricious, whimsical, arbitrary
or despotic manner in the exercise of its judgment and is equivalent to lack of
jurisdiction.51
It was incumbent upon the private respondent to adduce a sufficiently strong
demonstration that the RTC acted whimsically in total disregard of evidence
material to, and even decide of, the controversy before certiorari will lie. A
special civil action for certiorari is a remedy designed for the correction of
errors of jurisdiction and not errors of judgment. When a court exercises its
jurisdiction, an error committed while so engaged does not deprive it of its
jurisdiction being exercised when the error is committed.52
After a comprehensive review of the records of the RTC and of the CA, we find
and so hold that the RTC did not commit any grave abuse of its discretion
amounting to excess or lack of jurisdiction in issuing the assailed orders.
Article 160 of the New Civil Code provides that all the properties acquired
during the marriage are presumed to belong to the conjugal partnership, unless it
be proved that it pertains exclusively to the husband, or to the wife. In Tan v.
Court of Appeals,53 we held that it is not even necessary to prove that the
properties were acquired with funds of the partnership. As long as the
properties were acquired by the parties during the marriage, they are presumed
to be conjugal in nature. In fact, even when the manner in which the properties
were acquired does not appear, the presumption will still apply, and the
properties will still be considered conjugal. The presumption of the conjugal
nature of the properties acquired during the marriage subsists in the absence of
clear, satisfactory and convincing evidence to overcome the same.54
In this case, the evidence adduced by the petitioners in the RTC is that the
100,000 shares of stocks in the Citycorp Investment Philippines were issued to
and registered in its corporate books in the name of the petitioner-husband
when the said corporation was incorporated on May 14, 1979. This was done
during the subsistence of the marriage of the petitioner-spouses. The shares of
stocks are, thus, presumed to be the conjugal partnership property of the
petitioners. The private respondent failed to adduce evidence that the
petitioner-husband acquired the stocks with his exclusive money.55 The
barefaced fact that the shares of stocks were registered in the corporate
books of Citycorp Investment Philippines solely in the name of the petitioner-
husband does not constitute proof that the petitioner-husband, not the conjugal
partnership, owned the same.56 The private respondent’s reliance on the rulings
of this Court in Maramba v. Lozano57 and Associated Insurance & Surety Co., Inc.
v. Banzon58 is misplaced. In the Maramba case, we held that where there is no
showing as to when the property was acquired, the fact that the title is in the
wife’s name alone is determinative of the ownership of the property. The
principle was reiterated in the Associated Insurance case where the
uncontroverted evidence showed that the shares of stocks were acquired during
the marriage of the petitioners.
Instead of fortifying the contention of the respondents, the ruling of this Court
in Wong v. Intermediate Appellate Court59 buttresses the case for the
petitioners. In that case, we ruled that he who claims that property acquired by
21
the spouses during their marriage is not conjugal partnership property but
belongs to one of them as his personal property is burdened to prove the source
of the money utilized to purchase the same. In this case, the private respondent
claimed that the petitioner-husband acquired the shares of stocks from the
Citycorp Investment Philippines in his own name as the owner thereof. It was,
thus, the burden of the private respondent to prove that the source of the
money utilized in the acquisition of the shares of stocks was that of the
petitioner-husband alone. As held by the trial court, the private respondent
failed to adduce evidence to prove this assertion.
The CA, likewise, erred in holding that by executing a continuing guaranty and
suretyship agreement with the private respondent for the payment of the
PBMCI loans, the petitioner-husband was in the exercise of his profession,
pursuing a legitimate business. The appellate court erred in concluding that the
conjugal partnership is liable for the said account of PBMCI under Article 161(1)
of the New Civil Code.
Article 161(1) of the New Civil Code (now Article 121[2 and 3]60 of the Family
Code of the Philippines) provides:
Art. 161. The conjugal partnership shall be liable for:
(1) All debts and obligations contracted by the husband for the benefit of the
conjugal partnership, and those contracted by the wife, also for the same
purpose, in the cases where she may legally bind the partnership.
The petitioner-husband signed the continuing guaranty and suretyship agreement
as security for the payment of the loan obtained by the PBMCI from the private
respondent in the amount of ₱38,000,000. In Ayala Investment and Development
Corp. v. Court of Appeals,61 this Court ruled "that the signing as surety is
certainly not an exercise of an industry or profession. It is not embarking in a
business. No matter how often an executive acted on or was persuaded to act as
surety for his own employer, this should not be taken to mean that he thereby
embarked in the business of suretyship or guaranty."
For the conjugal partnership to be liable for a liability that should appertain to
the husband alone, there must be a showing that some advantages accrued to the
spouses. Certainly, to make a conjugal partnership responsible for a liability that
should appertain alone to one of the spouses is to frustrate the objective of the
New Civil Code to show the utmost concern for the solidarity and well being of
the family as a unit. The husband, therefore, is denied the power to assume
unnecessary and unwarranted risks to the financial stability of the conjugal
partnership.62
In this case, the private respondent failed to prove that the conjugal
partnership of the petitioners was benefited by the petitioner-husband’s act of
executing a continuing guaranty and suretyship agreement with the private
respondent for and in behalf of PBMCI. The contract of loan was between the
private respondent and the PBMCI, solely for the benefit of the latter. No
presumption can be inferred from the fact that when the petitioner-husband
entered into an accommodation agreement or a contract of surety, the conjugal
partnership would thereby be benefited. The private respondent was burdened
to establish that such benefit redounded to the conjugal partnership.63
It could be argued that the petitioner-husband was a member of the Board of
Directors of PBMCI and was one of its top twenty stockholders, and that the
shares of stocks of the petitioner-husband and his family would appreciate if the
PBMCI could be rehabilitated through the loans obtained; that the petitioner-
husband’s career would be enhanced should PBMCI survive because of the
infusion of fresh capital. However, these are not the benefits contemplated by
Article 161 of the New Civil Code. The benefits must be those directly resulting
from the loan. They cannot merely be a by-product or a spin-off of the loan
itself.64
This is different from the situation where the husband borrows money or
receives services to be used for his own business or profession. In the Ayala
case, we ruled that it is such a contract that is one within the term "obligation
for the benefit of the conjugal partnership." Thus:
(A) If the husband himself is the principal obligor in the contract, i.e., he
directly received the money and services to be used in or for his own business or
his own profession, that contract falls within the term "… obligations for the
benefit of the conjugal partnership." Here, no actual benefit may be proved. It is
enough that the benefit to the family is apparent at the time of the signing of
the contract. From the very nature of the contract of loan or services, the
family stands to benefit from the loan facility or services to be rendered to the
business or profession of the husband. It is immaterial, if in the end, his
business or profession fails or does not succeed. Simply stated, where the
husband contracts obligations on behalf of the family business, the law
presumes, and rightly so, that such obligation will redound to the benefit of the
conjugal partnership.65
22
The Court held in the same case that the rulings of the Court in Cobb-Perez and
G-Tractors, Inc. are not controlling because the husband, in those cases,
contracted the obligation for his own business. In this case, the petitioner-
husband acted merely as a surety for the loan contracted by the PBMCI from
the private respondent.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision
and Resolution of the Court of Appeals are SET ASIDE AND REVERSED. The
assailed orders of the RTC are AFFIRMED.
SO ORDERED.
EN BANC
[G.R. Nos. 137297 & 138547-48. December 11, 2001]
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. RICARDO
AGRAVANTE y ZANTUA, accused-appellant.
D E C I S I O N
MENDOZA, J.:
These cases are here on automatic appeal from the decision,[1] dated October
16, 1998, of the Regional Trial Court, Branch 40, Daet, Camarines Sur, finding
accused-appellant Ricardo Agravante guilty of three counts of rape committed
against his daughter Maria and sentencing him in each case to death and to pay
the victim the sum of P50,000.00 as moral damages.
The facts are as follows:
On November 26, 1994, the Provincial Prosecutor of Camarines Norte filed
three informations for rape against accused-appellant in the RTC, Branch 40 of
Daet, Camarines Norte. Except for the allegations of the dates and times of the
rapes, the informations in the three cases, docketed as Criminal Case Nos. 8430-
32, were similarly worded. They alleged
That on or about ___________________[2] at the Resettlement Area,
Barangay Matacong, San Lorenzo Ruiz, Camarines Norte, and within the
jurisdiction of this Honorable Court, the above-named accused, with lewd design
and by means of force and intimidation, did, then and there willfully, unlawfully,
and feloniously commit sexual intercourse with one Maria Agravante y Vargas, a
minor fourteen years of age, against the latters will, to her damage and
prejudice.
That the crime was committed with the aggravating circumstance of relationship,
the accused being the father of the offended party.
CONTRARY TO LAW.[3]
Thereafter, the cases were jointly tried. The prosecution presented as its
witnesses the complainant, Maria Agravante; Dr. Marcelito Abas, the medico-legal
officer of the Camarines Norte Provincial Hospital; and Adelina Racho.
Maria testified that she was born on August 27, 1980, the child of accused-
appellant by his wife, Evelyn Vargas.[4] In 1994, she was a freshman at the
Matacong (San Lorenzo Ruiz National) High School located seven kilometers from
their house in Matacong, San Lorenzo Ruiz, Camarines Norte. Because of the
distance of their house to the high school, Maria stayed in a boarding house owned
by Adelina Racho, going home only on Saturday mornings.
Maria testified that on the night of November 5, 1994, she was home with
her father, herein accused-appellant, and the latters ward, Gary Fraga. Accused-
appellant and Gary Fraga slept in the living room, while Maria slept in her room.
Accused-appellants common-law wife, Virginia Bangayciso, had gone to a dance
party. At around 7 oclock in the evening, Maria woke up to find accused-appellant
on top of her. She tried to push him, but accused-appellant proved too strong for
her. She was slapped and then forced to have sexual intercourse with accused-
appellant. After he was through, accused-appellant left. Maria lighted a lamp and
went to the kitchen, where she washed off blood and a whitish substance from
her private parts. She then returned to her bedroom and went to sleep. At around
midnight, however, accused-appellant was back and raped her again.She tried to
resist him, but he punched her on the thighs. The following day, Maria returned to
her boarding house. She saw the owner, Adelina Racho, but did not tell her what
had happened for fear of her father.
On November 19, 1994, Maria came home for the weekend. Because she did
not arrive until noon, she was scolded and given some lashes by accused-appellant.
After lunch, her fathers common-law wife left to attend a birthday party in a
place about a kilometer away from their house. On the pretext that he wanted her
to pick lice from his hair, accused-appellant assaulted her when she came to
him. Maria pleaded with him, reminding him, I am your daughter, why are you doing
23
this to me?, but her pleas fell on deaf ears. Accused-appellant just the same raped
her. After he was through, accused-appellant left and went to fetch his common-
law wife, leaving his daughter sobbing. He returned with his common-law wife at 4
oclock in the afternoon.
Maria did not tell anyone about her misfortune until November 26, 1994,
when she told Susan Racho, the daughter of the owner of the boarding house, that
she was not going home that weekend because of what had happened to her. Susan
told Marias story to her mother, Adelina Racho, who took Maria to Danny Manabat,
a minister of the Iglesia ni Kristo (INK). Manabat and Enrico Amor, a police
captain, in turn took them to the Philippine National Police headquarters at Camp
Wenceslao Q. Vinzons in Dogongan, Daet, Camarines, where she gave a sworn
statement (Exh. A).[5] Maria was examined at the Camarines Provincial
Hospital.[6] The results of her examination (Exh. C) showed the following:
GENITAL EXAMINATION:
= Hymenal laceration[s] (old) 3:00, 6:00, 9:00 oclock
LABORATORY RESULT: Negative for sperm cells.[7]
According to the examining physician, Dr. Marcelito Abas, the three hymenal
lacerations could have been caused by the forcible penetration of a turgid or
erected penis. He explained that the old lacerations were at least five to seven
days old since lacerations heal after three days. As for the absence of sperm, Dr.
Abas opined that the same might have been washed away during urination.[8]
Adelina Racho was the last prosecution witness to testify. She was a day care
worker at the Department of Social Work and Development (DSWD) and Maria
was a boarder in their house located near the high school where Maria was
studying. According to Adelina Racho, she was told that Maria did not want to go
home on November 26, 1994, and that when she inquired about the reason, she was
told it was because Maria had been raped by her father. Adelina Racho said she
took Maria to the PNP at Camp Wenceslao Q. Vinzons, where they gave their
statements. She said it was Marias decision to have a medical examination at the
Provincial Hospital. Afterwards, Maria went to live with INK elder Danny Manabat
until the DSWD in Sorsogon, Sorsogon took custody of her.[9]
The defense presented as witnesses Marias high school adviser, Rosalia
Merca; the barangay captain of Guinobatan, Bacud, Camarines Norte, Noel Gadil;
accused-appellant; and the latters neighbor, Lilia Fraga Medollar.
Rosalia Merca affirmed her certification (Exh. 1),[10] dated November 28,
1994, that in 1994, Maria was absent from class six times in September, i.e.,
September 7, 8, 12, 13, 24, and 26, four times in October, i.e., October 4, 5, 6,
and 17, and eight times in November, i.e., November 2, 3, 4, 11, 16, 18, 25, and
28.[11]
Barangay Captain Noel Gadil affirmed the certification (Exh. 2)[12] he issued
on January 8, 1997 to the effect that there was no dance party held in his
barangay on November 5, 1994.[13]
Testifying in his behalf, accused-appellant Ricardo Agravante stated that
after he and Marias mother, Evelyn Vargas, had separated in 1985, Maria remained
in his custody. From February to November 20, 1994, he worked as a laborer of
the Philippine National Oil Company (PNOC) assigned to a job site in the
municipality of San Lorenzo Ruiz. He and his common-law wife, Virginia Bangayciso,
and Maria lived in a resettlement area 50 kilometers away. Accused-appellant
claimed that he stayed at the job site from Monday to Saturday and went home
only when shuttle service was available. For this reason, he seldom saw Maria, who
came home from the boarding house only on weekends. Accused-appellant
estimated the boarding house to be eight kilometers from his house at barangay
Matacong.
Accused-appellant denied having raped his daughter. He claimed that she
filed rape charges against him because she was given lashes by him on November
19, 1994. He said he did this only because she did not attend school and joined the
Iglesia ni Kristo and seldom came home.Accused-appellant claimed that after he
had punished Maria, a friend fetched him and his common-law wife to attend a
neighbors party. Accused-appellant admitted that in the evening of November 5
and 19, 1994, he slept in their house. He claimed, however, that Maria slept in a
separate room which had a lock. He said he only came to know about the charges
against him in the evening of November 26, 1994 when the police took him for
questioning.[14]
Lilia Fraga Medollar was a neighbor of the Agravantes. She corroborated
accused-appellants claim that in the afternoon of November 19, 1994, she fetched
accused-appellant and the latters common-law wife and the three of them went to
a birthday party of the child of a neighbor, Pacita Catayon, staying there until 8
oclock in the evening. Lilia Fraga Medollar belied Marias testimony that her (Lilias)
son Gary Fraga[15] slept in the house of the Agravantes the night of November 5,
1994, because, according to her, she took her son from them on October 25, 1994,
after he had run away from home.[16]
On October 16, 1998, the trial court rendered its decision, the dispositive
portion of which reads:
IN THE CIRCUMSTANCES, the Court finds the accused Ricardo Agravante y
Zantua guilty of the crime[s] charged beyond reasonable doubt and is hereby
24
sentenced to suffer the penalty of death in each of the criminal cases No. 8430,
8431 and 8432 [sic].
Accordingly, said accused is hereby condemned to pay Maria Agravante the sum
of P50,000.00 in each of the three cases or a total sum of P150,000.00 as moral
damages.
IT IS SO ORDERED.[17]
On December 13, 1999, accused-appellant filed a motion for new trial on the
ground of newly discovered evidence based on an affidavit executed by his niece,
Criselda Agravante, on November 27, 1999. In her affidavit, Criselda stated that,
like Maria, she was recruited into the INK and persuaded by Adelina Racho to work
as a househelp because she might just become the victim of incestuous rape which
was the trend of the times; that she stayed in Adelina Rachos house until her
father Roberto came to take her; that in several conversations, Maria told her
how much she enjoyed her membership in the INK and how she hated her
stepmother, who beat her, and her father, who did not protect her from being
abused; and that she knew that Maria had been sleeping with her boyfriend Nio.
In its resolution of January 25, 2000, this Court denied accused-appellants
motion for new trial on the ground that the affidavit did not constitute newly
discovered evidence. It was explained:
Rule 121, 2 of the 1988 Rules on Criminal Procedure allows a new trial to be held
on the ground of newly discovered evidence on the following conditions: (a) the
evidence was discovered after the trial, (b) it could not have been discovered
and produced at the trial despite reasonable diligence, and (c) it is of such
weight that, if admitted, would probably change the judgment.
In this case, the evidence supporting accused-appellants motion cannot be
considered newly discovered. It had been in existence even before the trial, only
that the witness, Criselda Agravante, who knew about the matter was not
presented during the trial. In effect, it amounts to no more than forgotten
proof which would not justify an order to conduct new trial. (People v. Penesa, 81
Phil. 398 (1948)) Even if Criselda told accused-appellant what she knew only
after he had been convicted, still it has not been shown that her testimony
constitutes evidence that could not have been unearthed without the exercise of
reasonable diligence. After all, Criselda is a niece of accused-appellant. Although
she had moved to Pampanga, it appears that she and accused-appellant had
maintained contact. By her own admission, she was aware of the filing of the rape
charges against accused-appellant. Yet it took her five years from learning of
the charges against accused-appellant to signify her willingness to give evidence
in his favor.
Finally, the Court does not think that her testimony is of such weight that it
would probably cause the acquittal of herein accused-appellant because the
affidavit is merely of corroborative value and does not really concern facts
constituting the crimes subject of these cases. (People v. Samaniego and Ong
Inc., 95 Phil. 218 (1954)) It does not incontrovertibly show that accused-
appellant did not commit the crimes with which he was charged.[18]
Accused-appellant then filed his brief in which he alleged that
1) The trial court grossly failed to consider facts and circumstances of
the case indicating that private complainants charge of Rape and
testimony are tainted by a semblance of being a malicious concoction.
2) The trial court erred in giving undue weight and credence to the
testimony of private complainant despite the fact that her
testimony indicates inconsistency, lies, and improbabilities.
3) The trial court erred when it engages in giving undue weight to the
evidence presented by the prosecution despite the existence of
clear, positive and credible evidence effectively controverting the
evidence presented by the prosecution.
4) The trial court erred when it engages in wild conjectures and harped
on alleged weakness of appellants evidence to demolish the cause and
the strong and credible defense raised by the Accused.
5) The trial court erred in not acquitting the accused-appellant on
ground of reasonable doubt and for failing to appreciate facts
indicating that the instant case is merely a malicious concoction
perpetrated by the private complainant and her cohorts.[19]
I. The sole issue presented by accused-appellant concerns the credibility of
complainant Maria Agravante.
A. Accused-appellant contends that Maria Agravante simply concocted the
rape charges against him. He says that his daughter was bitter towards him
because he gave her lashes when he learned that she had been skipping classes in
order to attend INK activities. Proof of this, he claims, is the fact that it was an
INK member, Adelina Racho, who helped his daughter lodge a complaint in the PNP.
We find the contention to be without merit. First of all, as pointed out by
the Solicitor General, the members of the INK who helped Maria file charges
against accused-appellant are responsible members of the community: Adelina
25
Racho is a day care worker of the DSWD, Danilo Manabat is an INK minister, while
Enrico Amor is a police captain. If they helped Maria, it was because, as she
said, she did not have any relative to help her.[20] Indeed, the claim that Maria had
been brainwashed into filing the charges is belied by her steadfastness in seeking
the prosecution of her father even after she was no longer living in the house of
INK minister Danny Manabat and her refusal to give in to pressure from her
relatives to desist.[21] Second, when Maria was asked by the public prosecutor:
Now, you were repeatedly asked by the counsel for the accused that if ever
your father is found guilty by this Honorable Court in these three (3) cases, he
might be meted out the death penalty and you said you are aware of that. And you
also said when asked by the counsel for the accused that you also love your
father. So, may I ask you, what is your motive in filing these cases against your
father?,
[22]
she answered: Because he raped me, sir.
No woman, much less one who is of tender age, would concoct a charge of sexual
abuse and endure the degradation and humiliation of a public trial, where she
would be forced to reveal the lurid details of her misfortune, if she had not
really been raped. This is particularly so where, as in these cases, the accused is
complainants own father for whom, it may be assumed, every child has the
deepest reverence and respect in our culture.[23]
B. Accused-appellant points out alleged improbabilities and inconsistencies in
the testimony of Maria, to wit:
1. It is contended that the fact that Maria went back to sleep after she had
been raped on November 5, 1994 as if nothing happened to her cannot be the
reaction of one who had just gone through a harrowing experience.
What accused-appellant perceives to be a cavalier reaction (going back to
sleep as if nothing happened to her) appears more to be a desperate attempt on
her part to deny what had happened. This reaction is consistent with her other
actions after the first rape, i.e., the washing of her private parts and changing her
underwear. Indeed, there is no standard reaction of a victim to the crime of
rape. Rape is both a physical and emotional assault causing tremendous stress on
the victim.[24] After her harrowing experience, Maria found solace in sleep.
2. It is contended that Marias claim that accused-appellant whipped her on
November 19, 1994 because she came home late is improbable because accused-
appellant was aware of the distance which Maria had to travel to reach
home. According to accused-appellant, what is more probable is that he gave her
some lashings because she had been absent from class many times attending INK
activities.
But accused-appellant knew even before this incident of Marias absences
because, as Marias adviser testified, Marias stepmother saw her twice about
Marias school attendance.[25] As for accused-appellants claimed opposition to
Marias joining the INK, Maria testified that in fact she had obtained his
permission.[26]
Thus, it appears that accused-appellant chastised his daughter because the
latter did not come home the previous weekend (November 12-13,
1994).[27] Accused-appellant himself admitted this when he testified that one of
the reasons he whipped Maria is that she seldom came home.[28]
3. It is contended that Marias claim that she did not miss any class before
the rape incidents[29] is belied by the certification (Exh. 1) issued by her adviser
showing that Maria indeed incurred absences in September and October, 1994.
This inconsistency concerns only a minor collateral matter and does not
detract from Marias testimony that she had been raped by accused-appellant in
November. For the same reason, accused-appellants claim that the certification
(Exh. 2) of Barangay Captain Noel Gadil that there was no dance held on November
5, 1994 contradicts Marias testimony that accused-appellants common-law wife
attended the said affair has little relevance to the rape charges. In any case, Gadil
himself admitted that he issued the certification only on January 8, 1997, three
years after the supposed event, not on the basis of any record kept by him or his
office but only from memory.[30]
4. According to accused-appellant, Marias testimony that Gary Fraga slept in
their house on November 5, 1994 is contradicted by the testimony of Lilia Fraga
Medollar that earlier, on October 25, 1994, she took her son Gary from the
Agravantes.
However, Lilia Fraga Medollar herself testified that it took six months from
the time her son Gary ran away sometime in October 1994 before she came to
know his whereabouts and subsequently took him from the Agravantes.[31]
Thus, accused-appellant has not shown any compelling reason for this Court
to depart from the trial courts finding that Maria was telling the truth when she
accused accused-appellant of raping her. The inconsistencies and improbabilities
in her testimony relate to minor, trivial, and inconsequential matters which do not
alter the essential fact in the crime of rape, which is carnal knowledge through
force or intimidation.[32] In fact, they may even be considered a badge of
truthfulness which erases any suspicion that Maria is a rehearsed witness. [33] On
the other hand, Marias claim that she had been raped is corroborated by the
26

medical finding that she suffered hymenal lacerations at the 3, 6, and 9 o clock the victim is 10 years old or below,[41] but not where, as in this case, the victim is
positions.[34] alleged to be 14 years old when she was raped.

II. Art. 335 of the Revised Penal Code, as amended by R.A. No. 7659, As no independent evidence was presented by the prosecution to prove the
provides for the imposition of the death penalty on the offender in rape cases if minority of complainant, it was error for the trial court to find accused-appellant
the victim is under eighteen (18) years of age and the offender is, among others, guilty of qualified rape and to sentence him to death.
a parent of the victim. As a qualifying circumstance which increases the range of
However, the award of moral damages in the amount of P50,000.00 in each
the penalty, the concurrence of the minority of the victim and her relationship to
case must be sustained. There is no need to prove during trial that the victim
the offender must be both alleged and proven.[35]
suffered mental, physical, and psychological trauma as these are presumed. In
In these cases, while the informations allege that complainant was a minor addition, an award of P50,000.00 in civil indemnity must also be made in each case
fourteen years of age at the time of the commission of the rapes and that in accordance with case law.[42] Because of the aggravating circumstance of
accused-appellant is the father of the offended party, only the relationship of relationship, an award of exemplary damages in the amount of P25,000.00 should
accused-appellant to the complainant has been sufficiently established.[36] To be also be given.[43]
sure, the minority of complainant (14 years of age at the time of the commission
WHEREFORE, the decision of the Regional Trial Court, Branch 49, Daet,
of the rapes) was the subject of the parties stipulation of facts.[37] However, the
Camarines Sur is MODIFIED by finding accused-appellant Ricardo Agravante y
stipulation of facts was not signed by accused-appellant as required by Rule 118, 2
Zantua guilty of three counts of simple rape and accordingly sentencing him in each
of the Revised Rules of Criminal Procedure which provides that No agreement or
case to suffer the penalty of reclusion perpetua and to pay complainant Maria
admission made or entered during the pre-trial conference shall be used in
Agravante P50,000.00 as civil indemnity and P25,000.00 as exemplary damages in
evidence against the accused unless reduced to writing and signed by him and his
addition to the amount of P50,000.00 awarded by the trial court as moral damages.
counsel. This requirement is mandatory. As held in Fule v. Court of Appeals: [38]
SO ORDERED.
The conclusion is inevitable, therefore, that the omission of the signature of
the accused and his counsel, as mandatorily required by the Rules, renders the EN BANC
Stipulation of Facts inadmissible in evidence. The fact that the lawyer of the
accused, in his memorandum, confirmed the Stipulation of Facts does not cure the
defect because Rule 118 requires both the accused and his counsel to sign the
Stipulation of Facts. What the prosecution should have done, upon discovering [G.R. No. 131516. March 5, 2003]
that the accused did not sign the Stipulation of Facts, as required by Rule 118, was
to submit evidence to establish the elements of the crime, instead of relying solely
on the supposed admission of the accused in the Stipulation of Facts.
PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. RONNIE RULLEPA y
The stipulation of facts, therefore, cannot be used as evidence of GUINTO, accused-appellant.
complainants age at the time of the rapes in question.

Nor is there sufficient evidence of complainants age. The testimonies of D E C I S I O N

complainant concerning her age and that of her father, herein accused-appellant,
CARPIO-MORALES, J.:
concerning this matter are insufficient. In People v. Tundag,[39] in which the
complaints alleged that the victim was 13 years old at the time of the rapes, it was
On complaint of Cyra May Francisco Buenafe, accused-appellant Ronnie
held that it was error for the trial court to take judicial notice of the victims age
Rullepa y Guinto was charged with Rape before the Regional Trial Court (RTC) of
even if the defense admitted the victims minority. The Court emphasized that
Quezon City allegedly committed as follows:
there must be independent proof, such as a birth certificate, of the age of the
victim. In People v. San Agustin,[40]this Court held that the latters minority had
not been sufficiently established notwithstanding the appellants admission that That on or about the 17th day of November, 1995, in Quezon City, Philippines, the
the victim was 13 years of age. Judicial notice of the victims age may be taken if said accused, by means of force and intimidation, to wit: by then and there
27
willfully, unlawfully and feloniously removing her panty, kissing her lips and vagina
and thereafter rubbing his penis and inserting the same to the inner portion of
the vagina of the undersigned complainant, 3 years of age, a minor, against her
will and without her consent.[1]
Arraigned on January 15, 1996, accused-appellant pleaded not guilty.[2]
From the testimonies of its witnesses, namely Cyra May,[3] her mother Gloria
Francisco Buenafe, Dr. Cristina V. Preyra, and SPO4 Catherine Borda, the
prosecution established the following facts:
On November 20, 1995, as Gloria was about to set the table for dinner at her
house in Quezon City, Cyra May, then only three and a half years old, told her,
Mama, si kuya Ronnie lagay niya titi niya at sinaksak sa puwit at sa bibig ko.
Kuya Ronnie is accused-appellant Ronnie Rullepa, the Buenafes house boy, who
was sometimes left with Cyra May at home.
Gloria asked Cyra May how many times accused-appellant did those things to
her, to which she answered many times. Pursuing, Gloria asked Cyra May what else
he did to her, and Cyra May indicated the room where accused-appellant slept and
pointed at his pillow.
As on the night of November 20, 1995 accused-appellant was out with Glorias
husband Col. Buenafe,[4] she waited until their arrival at past 11:00 p.m. Gloria then
sent accused-appellant out on an errand and informed her husband about their
daughters plaint.Buenafe thereupon talked to Cyra May who repeated what she
had earlier told her mother Gloria.
When accused-appellant returned, Buenafe and Gloria verified from him
whether what Cyra May had told them was true. Ronnie readily admitted doing
those things but only once, at 4:00 p.m. of November 17, 1995 or three days
earlier. Unable to contain her anger, Gloria slapped accused-appellant several
times.
Since it was already midnight, the spouses waited until the following morning
to bring accused-appellant to Camp Karingal where he admitted the imputations
against him, on account of which he was detained. Glorias sworn statement[5] was
then taken.[6]
Recalling what accused-appellant did to her, Cyra May declared at the witness
stand: Sinaksak nya ang titi sa pepe ko, sa puwit ko, at sa bunganga, thus causing
her pain and drawing her to cry. She added that accused-appellant did these to
her twice in his bedroom.
Dr. Ma. Cristina V. Preyra, the Medico-Legal Officer and Chief of the
Biological Science Branch of the Philippine National Police Crime Laboratory who
examined Crya May, came up with her report dated November 21,
1995,[7] containing the following findings and conclusions:
FINDINGS:
GENERAL AND EXTRA GENITAL:
Fairly developed, fairly nourished and coherent female child subject. Breasts are
undeveloped. Abdomen is flat and soft.
GENITAL:
There is absence of pubic hair. Labia majora are full, convex and coaptated
with congested and abraded labia minora presenting in between. On separating
the same is disclosed an abraded posterior fourchette and an elastic, fleshy type
intact hymen. External vaginal orifice does not admit the tip of the examining
index finger.
xxx
CONCLUSION:
Subject is in virgin state physically.
There are no external signs of recent application of any form of trauma at
the time of examination. (Emphasis supplied.)
By Dr. Preyras explanation, the abrasions on the labia minora could have been
caused by friction with an object, perhaps an erect penis. She doubted if riding
on a bicycle had caused the injuries.[8]
The defenses sole witness was accused-appellant, who was 28 and single at
the time he took the witness stand on June 9, 1997. He denied having anything to
do with the abrasions found in Cyra Mays genitalia, and claimed that prior to the
alleged incident, he used to be ordered to buy medicine for Cyra May who had
difficulty urinating. He further alleged that after he refused to answer Glorias
queries if her husband Buenafe, whom he usually accompanied whenever he went
out of the house, was womanizing, Gloria would always find fault in him. He
suggested that Gloria was behind the filing of the complaint. Thus:
q- According to them you caused the abrasions found in her genital?
28

a- That is not true, sir.
q- If that is not true, what is the truth?
a- As I have mentioned earlier that before I started working with the
family I was sent to Crame to buy medicine for the daughter
because she had difficulty in urinating.
q- Did you know why the child has difficulty in urinating?
a- No, I do not know, sir.
THE COURT A QUO ERRED ON (sic) RULING THAT THE ACCUSED-
APPELLANTS SILENCE DURING TRIAL AMOUNTED TO AN IMPLIED
ADMISSION OF GUILT.
III
THE COURT A QUO ERRED IN FINDING THAT THE GUILT OF THE
ACCUSED-APPELLANT FOR THE CRIME CHARGED HAS BEEN PROVEN
BEYOND REASONABLE DOUBT.

q- And how about the present complaint filed against you, the complaint
IV
filed by the mother of the victim?

a- I did not do it, sir.
q- What is the truth, what can you say about this present complaint
filed against you?
a- As I said Mrs. Buenafe got mad at me because after I explained to
her that I was going with her gusband (sic) to the children of the
husband with a former marriage.[9]
Finding for the prosecution, Branch 96 of the Quezon City RTC rendered
judgment, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered finding accused RONNIE
RULLEPA y GUINTO guilty beyond reasonable doubt of rape, and he is
accordingly sentenced to death.
THE COURT A QUO GRAVELY ERRED IN IMPOSING THE SUPREME PENALTY
OF DEATH UPON THE ACCUSED-APPELLANT.[11] (Emphasis supplied.)
Accused-appellant assails the crediting by the trial court, as the following
portion of its decision shows, of his admission to Gloria of having sexually assaulted
Cyra May:
In addition, the mother asserted that Rullepa had admitted Cyra Ma[y]s
complaint during the confrontation in the house. Indeed, according to the
mother, the admission was even expressly qualified by Rullepas insistence that he
had committed the sexual assault only once, specifying the time thereof as
4:00 pm of November 17, 1995. That qualification proved that the admission was
voluntary and true. An uncoerced and truthful admission like this should be
absolutely admissible and competent.

The accused is ordered to pay CYRA MAE BUENAFE the amount of P40,000.00
xxx
as civil indemnity.

Costs to be paid by the accused.[10] (Italics in the original.)
Hence, this automatic review, accused-appellant assigning the following
errors to the trial court:
I since they were made out of fear, having been elicited only after Cyra Mays
THE COURT A QUO ERRED IN CONSIDERING AS ADMISSIBLE IN
EVIDENCE THE ACCUSED-APPELLANTS ADMISSION.
Remarkably, the admission was not denied by the accused during trial despite his
freedom to deny it if untrue. Hence, the admission became conclusive upon
him.[12] (Emphasis supplied.)
To accused-appellant, the statements attributed to him are inadmissible
parents bullied and questioned him. He thus submits that it was error for the trial
court to take his failure to deny the statements during the trial as an admission
of guilt.

Accused-appellants submission does not persuade. The trial court considered

II his admission merely as an additional ground to convince itself of his
culpability. Even if such admission, as well as the implication of his failure to deny
29

the same, were disregarded, the evidence suffices to establish his guilt beyond a- Sinaksak nga yong titi nya. He inserted his penis to my organ and to
reasonable doubt. my mouth, sir.

The plain, matter-of-fact manner by which Cyra May described her abuse in xxx
the hands of her Kuya Ronnie is an eloquent testament to the truth of her
q- When you said that your kuya Ronnie inserted his penis into your
accusations. Thus she testified on direct examination:
organ, into your mouth, and into your anus, would you describe what
q- Do you recall if Ronnie Rullepa did anything to you? his penis?

a- Yes, sir. a- It is a round object, sir.

q- What did he do to you? C o u r t:

a- Sinaksak nya ang titi sa pepe ko, sa puwit ko, at sa bunganga Is this titi of your kuya Ronnie a part of his body?

q- How many times did he do that to you? a- Opo.

a- Twice, sir. q- Was that in the head of kuya Ronnie?

xxx a- No, sir.

q- Do you remember when he did these things to you? q- Which part of his body that titi located?

a- Opo. (Witness pointing to her groin area)

q- When was that? C o u r t:

a- When my mother was asleep, he put he removed my panty and Continue

inserted his penis inside my vagina, my anus and my mouth, sir.
xxx
xxx
q- Why were you in that room?
q- After your Kuya Ronnie did those things to you what did you feel?
a- Gusto nya po matulog ako sa kuwarto niya.
a- Sabi nya ganito (Witness putting her finger in her lips) Nasaktan po
q- When you were in that room, what did Kuya Ronnie do to you?
ako at umiyak po ako.
a- Hinubo po niya ang panty ko.
q- Did you cry because of hurt?
q- And after he remove your panty, what did Kuya Ronnie do, what did
a- Yes.
he do to you?
q- What part of your body hurt?
a- He inserted his penis to my organ, sir.
a- Pepe ko po. When I went to the bathroom to urinate, I felt pain in my
q- Why did kuya Ronnie, was kuya Ronnie already naked or he was already
organ, sir.[13]
wearing any clothing?
Cyra May reiterated her testimony during cross-examination, providing more
a- Still had his clothing on, sir.
revolting details of her ordeal:
q- So, where did his penis, saan lumabas ang penis ni Kuya Ronnie?
q- So, you said that Kuya Ronnie did something to you what did he do to
you on November 17, 1995? a- Dito po, (Witness referring or pointing to her groin area)
30
xxx
q- So, thats the and at the time, you did not cry and you did not shout
for help?
a- Sabi nya po, not to make any noise because my mother might be
roused from sleep.
q- How long was kuya Ronnie did that to you?
a- Matagal po.
q- After kuya Ronnie scrub his penis to your vagina, what other things
did he do?
a- After that he inserted his penis to my mouth, and to my anus, sir.
q- You did not complain and you did not shout?
a- I cried, sir.[14]
Accused-appellant draws attention to the statement of Cyra May that he was
not in the house on November 17 (1995), as reflected in the following transcript
of her testimony:
q- Is it not a fact that you said a while ago that when your father leaves
the house, he [was] usually accompanied by your kuya Ronnie?
a- Opo.
q- Why is it that Kuya Ronnie was in the house when you father left the
house at that time, on November 17?
a- He was with Kuya Ronnie, sir.
q- So, it is not correct that kuya Ronnie did something to you because
your kuya Ronnie [was] always with your Papa?
a- Yes, sir.[15]
The above-quoted testimony of Cyra May does not indicate the time when
her father Col. Buenafe left their house on November 17, 1995 with accused-
appellant and, thus, does not preclude accused-appellants commission of rape on
the same date. In any event, a young child is vulnerable to suggestion, hence, her
affirmative response to the defense counsels above-quoted leading questions.
As for the variance in the claim regarding when Gloria was informed of the
rape, Gloria having testified that she learned of it on November 20, 1995[16] while
Cyra May said that immediately after the incident, she awakened her mother who
was in the adjacent room and reported it:[17] This is a minor matter that does not
detract from Cyra Mays categorical, material testimony that accused-appellant
inserted his penis into her vagina.
Accused-appellant goes on to contend that Cyra May was coached, citing the
following portion of her testimony:
q- Yong sinabi mong sinira nya ang buhay mo, where did you get that
phrase?
a- It was the word of my Mama, sir.[18]
On the contrary, the foregoing testimony indicates that Cyra May was really
narrating the truth, that of hearing her mother utter sinira niya ang buhay mo.
Accused-appellants suggestion that Cyra May merely imagined the things of
which he is accused, perhaps getting the idea from television programs, is
preposterous. It is true that the ordinary child is a great weaver of romances, and
her imagination may induce (her) to relate something she has heard or read in a
story as personal experience.[19] But Cyra Mays account is hardly the stuff of
romance or fairy tales. Neither is it normal TV fare, if at all.
This Court cannot believe that a victim of Cyra Mays age could concoct a tale
of defloration, allow the examination of her private parts, and undergo the
expense, trouble, inconvenience, not to mention the trauma of public trial.[20]
Besides, her testimony is corroborated by the findings of Dr. Preyra that
there were abrasions in her labia minora, which she opined, could have been caused
by friction with an erect penis.
This Court thus accords great weight to the following assessment of the trial
court regarding the competency and credibility of Cyra May as a witness:
Her very tender age notwithstanding, Cyra Ma(y) nonetheless appeared to
possess the necessary intelligence and perceptiveness sufficient to invest her
with the competence to testify about her experience. She might have been an
impressionable child as all others of her age are but her narration
of Kuya Ronnies placing his titi in her pepe was certainly one which could not be
considered as a common childs tale. Her responses during the examination of
counsel and of the Court established her consciousness of
the distinction between good and bad, which rendered inconceivable for her to
describe a bad act of the accused unless it really happened to her. Needless to
state, she described the act of the accused as bad. Her demeanor as a witness
manifested during trial by her unhesitant, spontaneous, and plain responses to
questions further enhanced her claim to credit and trustworthiness.[21] (Italics in
the original.)
31

In a futile attempt at exculpation, accused-appellant claims that even before
the alleged incident Cyra May was already suffering from pain in urinating. He
surmises that she could have scratched herself which caused the abrasions. Dr.
Preyra, however, was quick to rule out this possibility. She stated categorically
that that part of the female organ is very sensitive and rubbing or scratching it
is painful.[22] The abrasions could not, therefore, have been self-inflicted.
That the Medical-Legal Officer found no external signs of recent application
of any form of trauma at the time of the examination does not preclude accused-
appellants conviction since the infliction of force is immaterial in statutory
rape.[23]
More. That Cyra May suffered pain in her vagina but not in her anus despite
her testimony that accused-appellant inserted his penis in both orifices does not
diminish her credibility. It is possible that accused-appellants penis failed to
penetrate her anus as deeply as it did her vagina, the former being more resistant
to extreme forces than the latter.
The two elements of statutory rape are (1) that the accused had carnal
knowledge of a woman, and (2) that the woman is below twelve years of age.[28] As
shown in the previous discussion, the first element, carnal knowledge, had been
established beyond reasonable doubt. The same is true with respect to the second
element.
The victims age is relevant in rape cases since it may constitute an element of
the offense. Article 335 of the Revised Penal Code, as amended by Republic Act
No. 7659,[29] provides:
Art. 335. When and how rape is committed. Rape is committed by having carnal
knowledge of a woman under any of the following circumstances:
x x x.
3. When the woman is under twelve years of age x x x.

Accused-appellants imputation of ill motive on the part of Gloria is puerile. No x x x.

mother in her right mind would subject her child to the humiliation, disgrace and
trauma attendant to a prosecution for rape if she were not motivated solely by
The crime of rape shall be punished by reclusion perpetua.
the desire to incarcerate the person responsible for the childs
defilement.[24] Courts are seldom, if at all, convinced that a mother would stoop so
x x x.
low as to subject her daughter to physical hardship and shame concomitant to a
rape prosecution just to assuage her own hurt feelings.[25]
Furthermore, the victims age may constitute a qualifying circumstance,
Alternatively, accused-appellant prays that he be held liable for acts of warranting the imposition of the death sentence. The same Article states:
lasciviousness instead of rape, apparently on the basis of the following testimony
of Cyra May, quoted verbatim, that he merely scrubbed his penis against her The death penalty shall also be imposed if the crime of rape is committed with
vagina: any of the following attendant circumstances:
q- Is it not a fact that kuya Ronnie just made some scrubbed his penis
into your vagina? 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
a- Yes, sir. with the third civil degree, or the common-law spouse of the parent of the
victim.
q- And when he did not actually penetrated your vagina?

a- Yes, sir.[26] x x x.
Dr. Preya, however, found abrasions in the labia minora, which is directly beneath
the labia majora,[27] proving that there was indeed penetration of the vagina, not 4. when the victim is x x x a child below seven (7) years old.
just a mere rubbing or scrubbing of the penis against its surface.
x x x.
In fine, the crime committed by accused-appellant is not merely acts of
lasciviousness but statutory rape.
32
Because of the seemingly conflicting decisions regarding the sufficiency of
evidence of the victims age in rape cases, this Court, in the recently decided case
of People v. Pruna,[30] established a set of guidelines in appreciating age as an
element of the crime or as a qualifying circumstance, to wit:
1. The best evidence to prove the age of the offended party is an original or
certified true copy of the certificate of live birth of such party.
2. In the absence of a certificate of live birth, similar authentic documents such
as baptismal certificate and school records which show the date of birth of the
victim would suffice to prove age.
3. If the certificate of live birth or authentic document is shown to have been
lost or destroyed or otherwise unavailable, the testimony, if clear and credible,
of the victims 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 victims mother or relatives concerning the victims age, the
complainants testimony will suffice provided that it is expressly and clearly
admitted by the accused.
5. It is the prosecution that has the burden of proving the age of the offended
party. The failure of the accused to object to the testimonial evidence regarding
age shall not be taken against him.
6. The trial court should always make a categorical finding as to the age of the
victim.
Applying the foregoing guidelines, this Court in the Pruna case held that the
therein accused-appellant could only be sentenced to suffer the penalty
of reclusion perpetua since:
x x x no birth certificate or any similar authentic document, such as a baptismal
certificate of LIZETTE, was presented to prove her age. x x x.
x x x.
However, the Medico-Legal Report relied upon by the trial court does not in any
way prove the age of LIZETTE, for there is nothing therein which even mentions
her age. Only testimonial evidence was presented to establish LIZETTEs
age. Her mother, Jacqueline, testified (that the victim was three years old at
the time of the commission of the crime).
xxx
Likewise, LIZETTE testified on 20 November 1996, or almost two years after
the incident, that she was 5 years old. However, when the defense counsel asked
her how old she was on 3 January 1995, or at the time of the rape, she replied
that she was 5 years old. Upon further question as to the date she was born, she
could not answer.
For PRUNA to be convicted of rape in its qualified form and meted the supreme
penalty of death, it must be established with certainty that LIZETTE was below
7 years old at the time of the commission of the crime. It must be stressed that
the severity of the death penalty, especially its irreversible and final nature
once carried out, makes the decision-making process in capital offenses aptly
subject to the most exacting rules of procedure and evidence.
In view of the uncertainty of LIZETTEs exact age, corroborative evidence such
as her birth certificate, baptismal certificate or any other authentic document
should be introduced in evidence in order that the qualifying circumstance of
below seven (7) years old is appreciated against the appellant. The lack of
objection on the part of the defense as to her age did not excuse the
prosecution from discharging its burden. That the defense invoked LIZETTEs
tender age for purposes of questioning her competency to testify is not
necessarily an admission that she was below 7 years of age when PRUNA raped
her on 3 January 1995. Such being the case, PRUNA cannot be convicted of
qualified rape, and hence the death penalty cannot be imposed on him.
33
However, conformably with no. 3 (b) of the foregoing guidelines, the testimony
of LIZETTEs mother that she was 3 years old at the time of the commission of
the crime is sufficient for purposes of holding PRUNA liable for statutory rape,
or rape of a girl below 12 years of age. Under the second paragraph of Article
335, as amended by R.A. No. 7659, in relation to no. 3 of the first paragraph
thereof, having carnal knowledge of a woman under 12 years of age is punishable
by reclusion perpetua. Thus, the penalty to be imposed on PRUNA should
be reclusion perpetua, and not death penalty. (Italics in the original.)
Several cases[31] suggest that courts may take judicial notice of the
appearance of the victim in determining her age. For example, the Court, in People
v. Tipay,[32] qualified the ruling in People v. Javier,[33] which required the
presentation of the birth certificate to prove the rape victims age, with the
following pronouncement:
This does not mean, however, that the presentation of the certificate of birth is
at all times necessary to prove minority. The minority of a victim of tender age
who may be below the age of ten is quite manifest and the court can take judicial
notice thereof. The crucial years pertain to the ages of fifteen to seventeen
where minority may seem to be dubitable due to ones physical appearance. In
this situation, the prosecution has the burden of proving with certainty the fact
that the victim was under 18 years of age when the rape was committed in order
to justify the imposition of the death penalty under the above-cited provision.
(Emphasis supplied.)
On the other hand, a handful of cases[34] holds that courts, without the
requisite hearing prescribed by Section 3, Rule 129 of the Rules of
Court,[35] cannot take judicial notice of the victims age.
Judicial notice signifies that there are certain facta probanda, or
propositions in a partys case, as to which he will not be required to offer evidence;
these will be taken for true by the tribunal without the need of
evidence.[36] Judicial notice, however, is a phrase sometimes used in a loose way to
cover some other judicial action. Certain rules of Evidence, usually known under
other names, are frequently referred to in terms of judicial notice.[37]
The process by which the trier of facts judges a persons age from his or her
appearance cannot be categorized as judicial notice. Judicial notice is based upon
convenience and expediency for it would certainly be superfluous, inconvenient,
and expensive both to parties and the court to require proof, in the ordinary way,
of facts which are already known to courts.[38] As Tundag puts it, it is the
cognizance of certain facts which judges may properly take and act on without
proof because they already know them. Rule 129 of the Rules of Court, where the
provisions governing judicial notice are found, is entitled What Need Not Be
Proved. When the trier of facts observes the appearance of a person to ascertain
his or her age, he is not taking judicial notice of such fact; rather, he is conducting
an examination of the evidence, the evidence being the appearance of the
person. Such a process militates against the very concept of judicial notice, the
object of which is to do away with the presentation of evidence.
This is not to say that the process is not sanctioned by the Rules of Court;
on the contrary, it does. A persons appearance, where relevant, is admissible
as object evidence, the same being addressed to the senses of the court. Section
1, Rule 130 provides:
SECTION 1. Object as evidence. Objects as evidence are those addressed to
the senses of the court. When an object is relevant to the fact in issue, it may
be exhibited to, examined or viewed by the court.
To be sure, one author writes, this practice of inspection by the court of
objects, things or persons relevant to the fact in dispute, has its roots in ancient
judicial procedure.[39] The author proceeds to quote from another authority:
Nothing is older or commoner in the administration of law in all countries than
the submission to the senses of the tribunal itself, whether judge or jury, of
objects which furnish evidence. The view of the land by the jury, in real actions,
of a wound by the judge where mayhem was alleged, and of the person of one
alleged to be an infant, in order to fix his age, the inspection and comparison
of seals, the examination of writings, to determine whether they are
()blemished,() the implements with which a crime was committed or of a person
alleged, in a bastardy proceeding, to be the child of another, are few
illustrations of what may be found abundantly in our own legal records and
textbooks for seven centuries past.[40] (Emphasis supplied.)
A persons appearance, as evidence of age (for example, of infancy, or of
being under the age of consent to intercourse), is usually regarded as relevant;
and, if so, the tribunal may properly observe the person brought before
it.[41] Experience teaches that corporal appearances are approximately an index of
the age of their bearer, particularly for the marked extremes of old age and
youth. In every case such evidence should be accepted and weighed for what it
may be in each case worth. In particular, the outward physical appearance of an
alleged minor may be considered in judging his age; a contrary rule would for such
an inference be pedantically over-cautious.[42] Consequently, the jury or the court
trying an issue of fact may be allowed to judge the age of persons in court by
observation of such persons.[43] The formal offer of the person as evidence is not
necessary. The examination and cross-examination of a party before the jury are
34
equivalent to exhibiting him before the jury and an offer of such person as an
exhibit is properly refused. [44]
This Court itself has sanctioned the determination of an aliens age from his
appearance. In Braca v. Collector of Customs,[45] this Court ruled that:
The customs authorities may also determine from the personal appearance of
the immigrant what his age is. The person of a Chinese alien seeking admission
into the Philippine Islands is evidence in an investigation by the board of special
inquiry to determine his right to enter; and such body may take into
consideration his appearance to determine or assist in determining his age and a
finding that the applicant is not a minor based upon such appearance is not
without evidence to support it.
This Court has also implicitly recognized the same process in a criminal
case. Thus, in United States v. Agadas,[46] this Court held:
Rosario Sabacahan testified that he was 17 years of age; that he had never
purchased a cedula; and that he was going to purchase a cedula the following
january. Thereupon the court asked this defendant these questions: You are a
pretty big boy for seventeen. Answer: I cannot tell exactly because I do not
remember when I was born, but 17 years is my guess. Court: If you are going to
take advantage of that excuse, you had better get some positive evidence to
that effect. Answer: I do not remember, as I already stated on what date and in
what year I was born. The court, in determining the question of the age of the
defendant, Rosario Sabacahan, said:
The defendant, Rosario Sabacahan, testified that he thought that he was about
17 years of age, but judging by his appearance he is a youth 18 or 19 years
old. He has shown that he has no positive information on the subject and no
effort was made by the defense to prove the fact that he is entitled to the
mitigating circumstance of article 9, paragraph 2, of the Penal code, which fact
it is held to be incumbent upon the defense to establish by satisfactory evidence
in order to enable the court to give an accused person the benefit of the
mitigating circumstance.
In United States vs. Estavillo and Perez (10 Off. Gaz., 1984) Estavillo testified,
when the case was tried in the court below, that he then was only 16 years of
age. There was no other testimony in the record with reference to his age. But
the trial judge said: The accused Estavillo, notwithstanding his testimony giving
his age as 16 years, is, as a matter of fact, not less than 20. This court, in
passing upon the age of Estavillo, held:
We presume that the trial court reached this conclusion with reference to the
age of Estavillo from the latters personal appearance. There is no proof in the
record, as we have said, which even tends to establish the assertion that this
appellant understated his age. * * * It is true that the trial court had an
opportunity to note the personal appearance of Estavillo for the purpose of
determining his age, and by so doing reached the conclusion that he was at least
20, just two years over 18. This appellant testified that he was only 16, and this
testimony stands uncontradicted. Taking into consideration the marked
difference in the penalties to be imposed upon that age, we must, therefore,
conclude (resolving all doubts in favor of the appellants) that the appellants ages
were 16 and 14 respectively.
While it is true that in the instant case Rosario testified that he was 17 years of
age, yet the trial court reached the conclusion, judging from the personal
appearance of Rosario, that he is a youth 18 or 19 years old. Applying the rule
enunciated in the case just cited, we must conclude that there exists a
reasonable doubt, at least, with reference to the question whether Rosario was,
in fact 18 years of age at the time the robbery was committed. This doubt must
be resolved in favor of the defendant, and he is, therefore, sentenced to six
months of arresto mayor in lieu of six years ten months and one day of presidio
mayor. x x x.
There can be no question, therefore, as to the admissibility of a persons
appearance in determining his or her age. As to the weight to accord such
appearance, especially in rape cases, Pruna laid down guideline no. 3, which is again
reproduced hereunder:
3. If the certificate of live birth or authentic document is shown to have been
lost or destroyed or otherwise unavailable, the testimony, if clear and credible,
of the victims 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;
35
c. If the victim is alleged to be below 12 years of age and what is sought to be
proved is that she is less than 18 years old.
Under the above guideline, the testimony of a relative with respect to the
age of the victim is sufficient to constitute proof beyond reasonable doubt in
cases (a), (b) and (c) above. In such cases, the disparity between the allegation
and the proof of age is so great that the court can easily determine from the
appearance of the victim the veracity of the testimony. The appearance
corroborates the relatives testimony.
As the alleged age approaches the age sought to be proved, the persons
appearance, as object evidence of her age, loses probative value. Doubt as to her
true age becomes greater and, following Agadas, supra, such doubt must be
resolved in favor of the accused.
This is because in the era of modernism and rapid growth, the victims mere
physical appearance is not enough to gauge her exact age. For the extreme
penalty of death to be upheld, nothing but proof beyond reasonable doubt of
every fact necessary to constitute the crime must be substantiated.Verily, the
minority of the victim should be not only alleged but likewise proved with equal
certainty and clearness as the crime itself. Be it remembered that the proof of
the victims age in the present case spells the difference between life and
death.[47]
In the present case, the prosecution did not offer the victims certificate of
live birth or similar authentic documents in evidence. The victim and her mother,
however, testified that she was only three years old at the time of the rape. Cyra
Mays testimony goes:
q- Your name is Cyra Mae is that correct?
a- Yes, sir.
q- And you are 3 years old?
a- Yes, sir.[48]
That of her mother goes:
Q How old was your daughter when there things happened?
A 3 and years old.
Q When was she born?
A In Manila, May 10, 1992.[49]
Because of the vast disparity between the alleged age (three years old) and
the age sought to be proved (below twelve years), the trial court would have had
no difficulty ascertaining the victims age from her appearance. No reasonable
doubt, therefore, exists that the second element of statutory rape, i.e., that the
victim was below twelve years of age at the time of the commission of the offense,
is present.
Whether the victim was below seven years old, however, is another
matter. Here, reasonable doubt exists. A mature three and a half-year old can
easily be mistaken for an underdeveloped seven-year old. The appearance of the
victim, as object evidence, cannot be accorded much weight and, following Pruna,
the testimony of the mother is, by itself, insufficient.
As it has not been established with moral certainty that Cyra May was below
seven years old at the time of the commission of the offense, accused-appellant
cannot be sentenced to suffer the death penalty. Only the penalty of reclusion
perpetua can be imposed upon him.
In line with settled jurisprudence, the civil indemnity awarded by the trial
court is increased to P50,000.00. In addition, Cyra May is entitled to an award of
moral damages in the amount of P50,000.00.[50]
WHEREFORE, the Decision of the Regional Trial Court of Quezon City,
Branch 96, is AFFIRMED with MODIFICATION. Accused-appellant Ronnie
Rullepa y Guinto is found GUILTY of Statutory Rape, defined and punished by
Article 335 (3) of the Revised Penal Code, as amended, and is sentenced to suffer
the penalty of reclusion perpetua. He is ordered to pay private complainant, Cyra
May Buenafe y Francisco, the amount of P50,000.00 as civil indemnity
and P50,000.00 as moral damages.
SO ORDERED.
SECOND DIVISION
[G.R. No. L-36638. June 28, 1974.]
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. ALEXANDER
SACABIN @ "ROMEO", Defendant-Appellant.
Solicitor General Estelito P. Mendoza, Assistant Solicitor General Jaime M.
Lantin and Solicitor Renato S. Puno for Plaintiff-Appellee.
Pio A. Sepulveda, for Defendant-Appellant.
36

D E C I S I O N x x x

FERNANDEZ, J.: "A Sacabin went near me and wrestled me.

Q What did you do when Romeo Sacabin wrestled you?

Convicted of rape and sentenced to suffer the penalty of reclusion perpetua 1
and to pay the offended party, Erlinda Montibon, P3,000.00 for moral damages A I wanted to get away from his hold.
and P3,000.00 for exemplary damages, appellant Alexander Sacabin has appealed
to this Court and now pleads for acquittal on the ground, which the lower court Q Did you shout for help?
overruled, that although he really had sexual intercourse with the offended
party, she voluntarily and willingly acceded to it because they were sweethearts. A Yes, I shouted for help.

This is a classic case of rape where, on the issue of whether or not the woman x x x
was raped, the only eye-witnesses testifying are the offended party for the
prosecution and the accused in his defense. Thus, the judicial observation has
been made long ago, that rape is hard to be proved, but still harder to be Q Did you submit to the urgings of the accused in this case?
defended. And in the case at bar, We cannot be aided by the general rule that
the findings of fact of the trial judge must be sustained on appeal because he A No, sir.
has had the opportunity to hear and see the witnesses when they testified
before him, for all the witnesses for the prosecution testified before one trial Q What did you do?
Judge 2 , while the appellant presented his evidence consisting of his lone
testimony before another Judge 3 , and the latter was the one that rendered A We were wrestling for sometime. In fact he smell(ed) wine.
the decision appealed from. We, therefore, reviewed and evaluated all the
evidence on record with extra care. Q Could you inform this Court more how long did you wrestle with Sacabin?

On the date of the commission of the offense, November 23, 1968, Erlinda
Montibon was barely over 15 years old. She finished sixth grade. She was then
living in the house of the spouses Patrolman and Mrs. Constancio Villondo as a
helper. She knew the appellant, then single and 22 years old. He was a laborer in
the Laya Building in Iligan City, then under construction, and was a usual buyer of
native bread and cakes which Erlinda used to sell at the supermarket nearby.
A Quite a long time before he got me.
Q During all the time that you were wrestling with him, did you not cry out for
help outside?
A I shouted for help but nobody hear me because all the windows were closed.

Erlinda testified that around 8:00 o’clock in the evening of November 23, 1968, Q What about the door?
she was enticed by one Teodelita Dagondon to go to the supermarket. Teodelita
said she was going to buy for her birthday the following day all of Erlinda’s bread A It was also closed.
and cakes. They went upstairs to one of the rooms of the Laya Building where
they would agree on the price of the bread and cakes. The appellant was then Q Please inform this Honorable Court if after all the wrestling by Sacabin and
there inside. The door was closed and appellant was able to have sexual your feminine resistance if Sacabin was able to have a sexual intercourse with
intercourse with her two times. you.

This is the version of Erlinda on how the rape was consummated: 4 A Yes, he trapped one of my legs and I fell on the ground and then he sat on me.
37

Q What did you feel when Romeo Sacabin was able to introduce his sexual organ
into your vagina? A Nearing dawn.

A Pain. Q In the same place?

Q After he made the insertion, what did he do if any? A In the same place.

A He also kissed me and squeezed my mammary gland. Q The second time when the accused tried to make sexual intercourse with you
your already yielded your body to him.
COURT:chanrob1es virtual 1aw library
A No, sir.
Make it on record that the witness is crying.
Q What did you do?
Q When he succeeded in introducing his penis into your vagina, what did he do if
any? A I also wrestled with him because I felt the pain.

A He also pushed and pull his organ. Q When you wrestled with him, did you not occur to your mind to renew your call
for help from outside?
Q For how long was the push and pull motion made by this Romeo Sacabin?
A I also shouted for help . . .
A Quite a few minutes . . .
Q Was Sacabin able to introduce his sexual organ into your vagina for the second
Q Please inform this Honorable Court if after the introduction of the penis and time?
the push and pull motion if you felt some liquid getting inside your vagina.
A Yes, because he rode on me for the second time and I was already weak and I
A There was, sir. don’t want it because it was painful.

Q After that, what happened? Please inform this Honorable Court.
A After that Romeo Sacabin left the room but be was in the other room.
Q What did you do after he left?
Q Did it not occur to your mind to appeal to this Alexander Sacabin to please
pity you because you were feeling pain in your body?
A I asked Romeo not to because it was painful and then Romeo said never mind
just allow me because anyway I will marry you.

A I was still crying . . . Appellant Alexander Sacabin declared that he was 22 years old, single and a
mason by occupation. He saw Erlinda in the evening of that date. The two of
Q Was that the only sexual intercourse that was done on you by the accused them ate and drank at Eliza’s restaurant, which was at the Iligan Supermarket, in
Alexander Sacabin? front of which was the Laya Building. From the restaurant, they went to her
house owned by her master, Patrolman Villondo. While in the house, Erlinda told
A Two times. him that she wanted to go with him. He left and Erlinda followed him to the Laya
Building where he used to sleep. He was working there as a laborer and the
COURT:chanrob1es virtual 1aw library building was still under construction. When they arrived at the Laya Building, he
told Erlinda that he would go to Cagayan upon the termination of his work.
When was the second time? Erlinda told him that she would go with him to Cagayan. 5
38
"q What was your answer, if any, when she told you that she is going to Cagayan
with you?
a I answered, ‘yes, really you love me?
q What was her answer, if any?
a ‘Yes, I love you.’
q By the way, you have stated before this Court that you are sweethearts with
Erlinda, when did you become sweethearts?
a While I was working at Laya building this Erlinda was selling refreshments.
q Where was she selling refreshments?
a Sometime she bring refreshments at Laya building.
q More or less, can you tell the Court what time when was that when your love
was accepted by Erlinda?
a August 2, 1968.
q Did you consider that you were sweethearts, did you receive anything from her,
some sort of letters or tokens?
a I did not ask anything because we used to see each other and I did not ask any
remembrance from her because she is poor like myself."cralaw virtua1aw library
Erlinda then told appellant that she loved him. They slept together in a room
upstairs in the Laya Building. In the room where they slept, there were no
tenants for that particular unit of the apartment. But there were already
electric lights inside that room. They slept on a bed made of plywood. They had
two sexual intercourse, the first time from 8:00 to 9:00 o’clock p.m., and the
second in the early morning. They had already one sexual intercourse about one
week prior to November 23, 1968, also at the Laya Building. At that time, she
was getting water. 6
After a very careful review of the evidence, We affirm the lower court’s finding
that the version of the offended party is the one that should be believed over
that of the Appellant.
The offended party, Erlinda, was a young provinciana, barely over 15 years of
age, uncouth and almost unlettered, was a mere household helper but at the same
time engaged in the selling of native bread and cakes. She belonged to the poor
and was one of them, and was still possessed of the traditional and proverbial
modesty of the Filipina, especially the provinciana. She would not have filed a
complaint for rape and suffered the torment if not the ignominy of having to
testify in a court of justice about the wrong done to her, if in truth she was not
really raped.
Early in the morning of November 24, 1968, she was brought by the appellant to
his father’s house in Rosario Heights. She went with him because she was
threatened with death if she would not do so. Patrolman Villondo was already
there because he was previously informed that Erlinda failed to return to their
house and that appellant was the one that brought her. And according to Erlinda,
she did not tell Patrolman Villondo that she was raped as she was "ashamed to
tell him because he is a man." And at that time, Villondo’s wife was in Cebu. But
when she arrived about six days later, she was at once informed by Erlinda that
appellant raped her.
And immediately thereafter, he was brought to the medico legal officer of Iligan
City, Dr. Manuel Simon, who testified that on December 2, 1968, he examined
the offended party, found lacerations in her hymen, in positions 10 and 8 o’clock,
which had just recently healed (a laceration heals in 7 days). The lacerations
could not have been more than one month old "because at the edge of the
lacerations, the color was reddish and therefore they have healed
recently."cralaw virtua1aw library
Physical evidence is evidence of the highest order. It speaks more eloquently
than a hundred witnesses. And the physical evidence in this case strongly
corroborates the testimony of the offended party that she was raped. They
consist of the green color dress and the panty that Erlinda was wearing at the
time she was raped and which show a torn portion of the left side of the dress
and a torn portion of the panty. According to Erlinda, they were torn when
appellant forcibly pulled her dress up and removed her panty shortly before she
was raped. Surprisingly. appellant did not at all rebut the testimony of Erlinda on
this point.
Francisco Bagohin, who was then also residing in the house of Patrolman and Mrs.
Constancio Villondo, he being the drive of the rig owned by the latter,
corroborated the testimony of the offended party, Erlinda, that Teodelita
Dagondon was the one who fetched Erlinda "because the puto and bread that she
is selling will all be bought by Teodelita for the next day would be her
birthday."cralaw virtua1aw library
39

The testimony of the appellant that he and Erlinda were sweethearts is still denied for the most part the Motion for Reconsideration of herein
unworthy of belief. Erlinda denied vehemently this testimony of the appellant petitioners.
and even stated that he never courted her. And if they were really sweethearts,
Erlinda would not have filed this serious charge of rape against him.

IN VIEW OF ALL THE FOREGOING, the decision appealed from is hereby

affirmed in its entirety with costs against Appellant.

FIRST DIVISION Petitioner Citibank, N.A. (formerly known as the First National City Bank) is a

CITIBANK, N.A. (Formerly G.R. No. 156132 banking corporation duly authorized and existing under the laws of the United
First National City Bank) and
States of America and licensed to do commercial banking activities and perform
INVESTORS FINANCE Present:
CORPORATION, doing business trust functions in the Philippines.
under the name and style of FNCB PANGANIBAN, C.J.
Finance, Chairperson,
Petitioners, YNARES-SANTIAGO,
Petitioner Investors Finance Corporation, which did business under the
AUSTRIA-MARTINEZ,
CALLEJO, SR., and name and style of FNCB Finance, was an affiliate company of petitioner Citibank,
- versus- CHICO-NAZARIO, JJ.
specifically handling money market placements for its clients. It is now, by virtue
Promulgated:
of a merger, doing business as part of its successor-in-interest, BPI Card Finance
MODESTA R. SABENIANO,
Respondent. October 16, 2006 Corporation. However, so as to consistently establish its identity in the Petition at
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
bar, the said petitioner shall still be referred to herein as FNCB Finance.[4]

DECISION
Respondent Modesta R. Sabeniano was a client of both petitioners

Citibank and FNCB Finance. Regrettably, the business relations among the parties
CHICO-NAZARIO, J.:
subsequently went awry.

Before this Court is a Petition for Review on Certiorari,[1] under Rule 45
of the Revised Rules of Court, of the Decision[2] of the Court of Appeals in CA-
[3]
G.R. CV No. 51930, dated 26 March 2002, and the Resolution,
November 2002, of the same court which, although modifying its earlier Decision,
On 8 August 1985, respondent filed a Complaint[5] against petitioners,
docketed as Civil Case No. 11336, before the Regional Trial Court (RTC) of Makati
dated 20 City. Respondent claimed to have substantial deposits and money market
placements with the petitioners, as well as money market placements with the
40
Ayala Investment and Development Corporation (AIDC), the proceeds of which
were supposedly deposited automatically and directly to respondents accounts
with petitioner Citibank.Respondent alleged that petitioners refused to return her
deposits and the proceeds of her money market placements despite her repeated
demands, thus, compelling respondent to file Civil Case No. 11336 against
petitioners for Accounting, Sum of Money and Damages. Respondent eventually
filed an Amended Complaint[6] on 9 October 1985 to include additional claims to
deposits and money market placements inadvertently left out from her original
Complaint.
In their joint Answer[7] and Answer to Amended Complaint,[8] filed on 12
September 1985 and 6 November 1985, respectively, petitioners admitted that
respondent had deposits and money market placements with them, including dollar
accounts in the Citibank branch in Geneva, Switzerland (Citibank-
Geneva). Petitioners further alleged that the respondent later obtained several
loans from petitioner Citibank, for which she executed Promissory Notes (PNs),
and secured by (a) a Declaration of Pledge of her dollar accounts in Citibank-
Geneva, and (b) Deeds of Assignment of her money market placements with
petitioner FNCB Finance. When respondent failed to pay her loans despite
repeated demands by petitioner Citibank, the latter exercised its right to off-set
or compensate respondents outstanding loans with her deposits and money market
placements, pursuant to the Declaration of Pledge and the Deeds of Assignment
executed by respondent in its favor. Petitioner Citibank supposedly informed
respondent Sabeniano of the foregoing compensation through letters, dated 28
September 1979 and 31 October 1979. Petitioners were therefore surprised when
six years later, in 1985, respondent and her counsel made repeated requests for
the withdrawal of respondents deposits and money market placements with
petitioner Citibank, including her dollar accounts with Citibank-Geneva and her
money market placements with petitioner FNCB Finance. Thus, petitioners prayed
for the dismissal of the Complaint and for the award of actual, moral, and
exemplary damages, and attorneys fees.
When the parties failed to reach a compromise during the pre-trial
hearing,[9] trial proper ensued and the parties proceeded with the presentation of
their respective evidence. Ten years after the filing of the Complaint on 8 August
1985, a Decision[10] was finally rendered in Civil Case No. 11336 on 24 August 1995
by the fourth Judge[11] who handled the said case, Judge Manuel D. Victorio, the
dispositive portion of which reads
WHEREFORE, in view of all the foregoing, decision is
hereby rendered as follows:
(1) Declaring as illegal, null and void the setoff effected
by the defendant Bank [petitioner Citibank] of plaintiffs
[respondent Sabeniano] dollar deposit with Citibank,
Switzerland, in the amount of US$149,632.99, and ordering the
said defendant [petitioner Citibank] to refund the said amount
to the plaintiff with legal interest at the rate of twelve percent
(12%) per annum, compounded yearly, from 31 October 1979 until
fully paid, or its peso equivalent at the time of payment;
(2) Declaring the plaintiff [respondent Sabeniano]
indebted to the defendant Bank [petitioner Citibank] in the
amount of P1,069,847.40 as of 5 September 1979 and ordering
the plaintiff [respondent Sabeniano] to pay said amount,
however, there shall be no interest and penalty charges from the
time the illegal setoff was effected on 31 October 1979;
41
(3) Dismissing all other claims and counterclaims
interposed by the parties against each other.
Costs against the defendant Bank.
All the parties appealed the foregoing Decision of the RTC to the Court of Appeals,
docketed as CA-G.R. CV No. 51930. Respondent questioned the findings of the RTC
that she was still indebted to petitioner Citibank, as well as the failure of the RTC
to order petitioners to render an accounting of respondents deposits and money
market placements with them. On the other hand, petitioners argued that
petitioner Citibank validly compensated respondents outstanding loans with her
dollar accounts with Citibank-Geneva, in accordance with the Declaration of Pledge
she executed in its favor. Petitioners also alleged that the RTC erred in not
declaring respondent liable for damages and interest.
On 26 March 2002, the Court of Appeals rendered its Decision [12] affirming with
modification the RTC Decision in Civil Case No. 11336, dated 24 August 1995, and
ruling entirely in favor of respondent in this wise
Wherefore, premises considered, the assailed 24
August 1995 Decision of the court a quo is hereby AFFIRMED
with MODIFICATION, as follows:
1. Declaring as illegal, null and void the set-off effected
by the defendant-appellant Bank of the plaintiff-appellants
dollar deposit with Citibank, Switzerland, in the amount of
US$149,632.99, and ordering defendant-appellant Citibank to
refund the said amount to the plaintiff-appellant with legal
interest at the rate of twelve percent (12%) per annum,
compounded yearly, from 31 October 1979 until fully paid, or its
peso equivalent at the time of payment;
2. As defendant-appellant Citibank failed to establish by
competent evidence the alleged indebtedness of plaintiff-
appellant, the set-off of P1,069,847.40 in the account of Ms.
Sabeniano is hereby declared as without legal and factual basis;
3. As defendants-appellants failed to account the
following plaintiff-appellants money market placements, savings
account and current accounts, the former is hereby ordered to
return the same, in accordance with the terms and conditions
agreed upon by the contending parties as evidenced by the
certificates of investments, to wit:
(i) Citibank NNPN Serial No. 023356
(Cancels and Supersedes NNPN No. 22526)
issued on 17 March 1977, P318,897.34 with
14.50% interest p.a.;
(ii) Citibank NNPN Serial No. 23357
(Cancels and Supersedes NNPN No. 22528)
issued on 17 March 1977, P203,150.00 with
14.50 interest p.a.;
(iii) FNCB NNPN Serial No. 05757
(Cancels and Supersedes NNPN No. 04952),
issued on 02 June 1977, P500,000.00 with 17%
interest p.a.;
(iv) FNCB NNPN Serial No. 05758
(Cancels and Supersedes NNPN No. 04962),
issued on 02 June 1977, P500,000.00 with 17%
interest per annum;
(v) The Two Million (P2,000,000.00)
money market placements of Ms. Sabeniano
with the Ayala Investment & Development
Corporation (AIDC) with legal interest at the
rate of twelve percent (12%) per annum
compounded yearly, from 30 September 1976
until fully paid;
4. Ordering defendants-appellants to jointly and
severally pay the plaintiff-appellant the sum of FIVE HUNDRED
THOUSAND PESOS (P500,000.00) by way of moral damages,
FIVE HUNDRED THOUSAND PESOS (P500,000.00) as
42
exemplary damages, and ONE HUNDRED THOUSAND PESOS
(P100,000.00) as attorneys fees.
Apparently, the parties to the case, namely, the respondent, on one hand, and the
petitioners, on the other, made separate attempts to bring the aforementioned
Decision of the Court of Appeals, dated 26 March 2002, before this Court for
review.
G.R. No. 152985
Respondent no longer sought a reconsideration of the Decision of the Court of
Appeals in CA-G.R. CV No. 51930, dated 26 March 2002, and instead, filed
immediately with this Court on 3 May 2002 a Motion for Extension of Time to File
a Petition for Review,[13] which, after payment of the docket and other lawful fees,
was assigned the docket number G.R. No. 152985. In the said Motion, respondent
alleged that she received a copy of the assailed Court of Appeals Decision on 18
April 2002 and, thus, had 15 days therefrom or until 3 May 2002 within which to
file her Petition for Review. Since she informed her counsel of her desire to
pursue an appeal of the Court of Appeals Decision only on 29 April 2002, her
counsel neither had enough time to file a motion for reconsideration of the said
Decision with the Court of Appeals, nor a Petition for Certiorari with this
Court. Yet, the Motion failed to state the exact extension period respondent was
requesting for.
Since this Court did not act upon respondents Motion for Extension of
Time to file her Petition for Review, then the period for appeal continued to run
and still expired on 3 May 2002.[14] Respondent failed to file any Petition for
Review within the prescribed period for appeal and, hence, this Court issued a
Resolution,[15] dated 13 November 2002, in which it pronounced that
G.R. No. 152985 (Modesta R. Sabeniano vs. Court of
Appeals, et al.). It appearing that petitioner failed to file the
intended petition for review on certiorari within the period which
expired on May 3, 2002, the Court Resolves to DECLARE THIS
CASE TERMINATED and DIRECT the Division Clerk of Court
to INFORM the parties that the judgment sought to be
reviewed has become final and executory.
The said Resolution was duly recorded in the Book of Entries of Judgments on 3
January 2003.
G.R. No. 156132
Meanwhile, petitioners filed with the Court of Appeals a Motion for
Reconsideration of its Decision in CA-G.R. CV No. 51930, dated 26 March
2002. Acting upon the said Motion, the Court of Appeals issued the
Resolution,[16] dated 20 November 2002, modifying its Decision of 26 March 2002,
as follows
WHEREFORE, premises considered, the instant Motion
for Reconsideration is PARTIALLY GRANTED as Sub-paragraph
(V) paragraph 3 of the assailed Decisions dispositive portion is
hereby ordered DELETED.
The challenged 26 March 2002 Decision of the Court
is AFFIRMED with MODIFICATION.
43

Assailing the Decision and Resolution of the Court of Appeals in CA-G.R. 2002, had already become final and executory by virtue of the Resolution of this

CV No. 51930, dated 26 March 2002 and 20 November 2002, respectively, Court in G.R. No. 152985, dated 13 November 2002.

petitioners filed the present Petition, docketed as G.R. No. 156132. The Petition G.R. No. 152985 was the docket number assigned by this Court to

was initially denied[17] by this Court for failure of the petitioners to attach thereto respondents Motion for Extension of Time to File a Petition for

a Certification against Forum Shopping. However, upon petitioners Motion and Review. Respondent, though, did not file her supposed Petition. Thus, after the

compliance with the requirements, this Court resolved[18] to reinstate the Petition. lapse of the prescribed period for the filing of the Petition, this Court issued the

Resolution, dated 13 November 2002, declaring the Decision of the Court of

The Petition presented fourteen (14) assignments of errors allegedly Appeals, dated 26 March 2002, final and executory. It should be pointed out,

committed by the Court of Appeals in its Decision, dated 26 March 2002, involving however, that the Resolution, dated 13 November 2002, referred only to G.R. No.

both questions of fact and questions of law which this Court, for the sake of 152985, respondents appeal, which she failed to perfect through the filing of a

expediency, discusses jointly, whenever possible, in the succeeding paragraphs. Petition for Review within the prescribed period. The declaration of this Court in

the same Resolution would bind respondent solely, and not petitioners which filed

I their own separate appeal before this Court, docketed as G.R. No. 156132, the

Petition at bar. This would mean that respondent, on her part, should be bound by
The Resolution of this Court,
dated 13 November 2002, in the findings of fact and law of the Court of Appeals, including the monetary
G.R. No. 152985, declaring
amounts consequently awarded to her by the appellate court in its Decision, dated
the Decision of the Court of
Appeals, dated 26 March 26 March 2002; and she can no longer refute or assail any part thereof. [19]
2002, final and executory,
pertains to respondent
Sabeniano alone.
This Court already explained the matter to respondent when it issued a

Resolution[20] in G.R. No. 156132, dated 2 February 2004, which addressed her

Before proceeding to a discussion of the merits of the instant Petition, Urgent Motion for the Release of the Decision with the Implementation of the

this Court wishes to address first the argument, persistently advanced by Entry of Judgment in the following manner
[A]cting on Citibanks and FNCB Finances Motion for
respondent in her pleadings on record, as well as her numerous personal and
Reconsideration, we resolved to grant the motion, reinstate the
unofficial letters to this Court which were no longer made part of the record, that petition and require Sabeniano to file a comment thereto in
our Resolution of June 23, 2003. Sabeniano filed
the Decision of the Court of Appeals in CA-G.R. CV No. 51930, dated 26 March a Comment dated July 17, 2003 to which Citibank and FNCB
Finance filed a Reply dated August 20, 2003.
44

From the foregoing, it is clear that Sabeniano had knowledge of, Petitioners contend that respondent committed forum shopping on the basis of
and in fact participated in, the proceedings in G.R. No. the following facts:
156132. She cannot feign ignorance of the proceedings therein
and claim that the Decision of the Court of Appeals has become
final and executory. More precisely, the Decision became final
and executory only with regard to Sabeniano in view of her While petitioners Motion for Reconsideration of the Decision in CA-G.R.
failure to file a petition for review within the extended period
CV No. 51930, dated 26 March 2002, was still pending before the Court of
granted by the Court, and not to Citibank and FNCB Finance
whose Petition for Review was duly reinstated and is now Appeals, respondent already filed with this Court on 3 May 2002 her Motion for
submitted for decision.
Extension of Time to File a Petition for Review of the same Court of Appeals
Accordingly, the instant Urgent Motion is hereby DENIED.
Decision, docketed as G.R. No. 152985. Thereafter, respondent continued to
(Emphasis supplied.)
participate in the proceedings before the Court of Appeals in CA-G.R. CV No.

51930 by filing her Comment, dated 17 July 2002, to petitioners Motion for
To sustain the argument of respondent would result in an unjust and incongruous
Reconsideration; and a Rejoinder, dated 23 September 2002, to petitioners Reply.
situation wherein one party may frustrate the efforts of the opposing party to
Thus, petitioners argue that by seeking relief concurrently from this Court and
appeal the case by merely filing with this Court a Motion for Extension of Time to
the Court of Appeals, respondent is undeniably guilty of forum shopping, if not
File a Petition for Review, ahead of the opposing party, then not actually filing the
indirect contempt.
intended Petition.[21] The party who fails to file its intended Petition within the

reglementary or extended period should solely bear the consequences of such

This Court, however, finds no sufficient basis to hold respondent liable for forum
failure.
shopping.

Respondent Sabeniano did Forum shopping has been defined as the filing of two or more suits involving the
not commit forum shopping.
same parties for the same cause of action, either simultaneously or successively,

for the purpose of obtaining a favorable judgment.[22] The test for determining

Another issue that does not directly involve the merits of the present Petition, forum shopping is whether in the two (or more) cases pending, there is an identity

but raised by petitioners, is whether respondent should be held liable for forum of parties, rights or causes of action, and relief sought.[23] To guard against this

shopping. deplorable practice, Rule 7, Section 5 of the revised Rules of Court imposes the

following requirement
45

SEC. 5. Certification against forum shopping. The

plaintiff or principal party shall certify under oath in the this Court was prompted to issue a Resolution, dated 13 November 2002, declaring
complaint or other initiatory pleading asserting a claim for relief, G.R. No. 152985 terminated, and the therein assailed Court of Appeals Decision
or in a sworn certification annexed thereto and simultaneously
filed therewith: (a) that he has not theretofore commenced any final and executory. G.R. No. 152985, therefore, did not progress and respondents
action or filed any claim involving the same issues in any court,
tribunal or quasi-judicial agency and, to the best of his appeal was unperfected.
knowledge, no such other action or claim is pending therein; (b)
if there is such other pending action or claim, a complete
statement of the present status thereof; and (c) if he should The Petition for Review would constitute the initiatory pleading before
thereafter learn that the same or similar action or claim has been
filed or is pending, he shall report that fact within five (5) days this Court, upon the timely filing of which, the case before this Court commences;
therefrom to the court wherein his aforesaid complaint or
much in the same way a case is initiated by the filing of a Complaint before the
initiatory pleading has been filed.
trial court.The Petition for Review establishes the identity of parties, rights or
Failure to comply with the foregoing requirements shall
not be curable by mere amendment of the complaint or other causes of action, and relief sought from this Court, and without such a Petition,
initiatory pleading but shall be cause for the dismissal of the
there is technically no case before this Court. The Motion filed by respondent
case without prejudice, unless otherwise provided, upon motion
and after hearing. The submission of a false certification or non- seeking extension of time within which to file her Petition for Review does not
compliance with any of the undertakings therein shall constitute
indirect contempt of court, without prejudice to the serve the same purpose as the Petition for Review itself. Such a Motion merely
corresponding administrative and criminal actions. If the acts of
presents the important dates and the justification for the additional time
the party or his counsel clearly constitute willful and deliberate
forum shopping, the same shall be ground for summary dismissal requested for, but it does not go into the details of the appealed case.
with prejudice and shall constitute direct contempt, as well as
cause for administrative sanctions.

Without any particular idea as to the assignments of error or the relief

respondent intended to seek from this Court, in light of her failure to file her
Although it may seem at first glance that respondent was simultaneously seeking
Petition for Review, there is actually no second case involving the same parties,
recourse from the Court of Appeals and this Court, a careful and closer scrutiny
rights or causes of action, and relief sought, as that in CA-G.R. CV No. 51930.
of the details of the case at bar would reveal otherwise.
It should also be noted that the Certification against Forum Shopping is

required to be attached to the initiatory pleading, which, in G.R. No. 152985,

It should be recalled that respondent did nothing more in G.R. No. 152985
should have been respondents Petition for Review. It is in that Certification
than to file with this Court a Motion for Extension of Time within which to file
wherein respondent certifies, under oath, that: (a) she has not commenced any
her Petition for Review. For unexplained reasons, respondent failed to submit to
action or filed any claim involving the same issues in any court, tribunal or quasi-
this Court her intended Petition within the reglementary period. Consequently,
46

judicial agency and, to the best of her knowledge, no such other action or claim is It is already a well-settled rule that the jurisdiction of this Court in cases

pending therein; (b) if there is such other pending action or claim, that she is brought before it from the Court of Appeals by virtue of Rule 45 of the Revised

presenting a complete statement of the present status thereof; and (c) if she Rules of Court is limited to reviewing errors of law. Findings of fact of the Court

should thereafter learn that the same or similar action or claim has been filed or of Appeals are conclusive upon this Court. There are, however, recognized

is pending, she shall report that fact within five days therefrom to this exceptions to the foregoing rule, namely: (1) when the findings are grounded

Court. Without her Petition for Review, respondent had no obligation to execute entirely on speculation, surmises, or conjectures; (2) when the interference made

and submit the foregoing Certification against Forum Shopping. Thus, respondent is manifestly mistaken, absurd, or impossible; (3) when there is grave abuse of

did not violate Rule 7, Section 5 of the Revised Rules of Court; neither did she discretion; (4) when the judgment is based on a misapprehension of facts; (5) when

mislead this Court as to the pendency of another similar case. the findings of fact are conflicting; (6) when in making its findings, the Court of

Appeals went beyond the issues of the case, or its findings are contrary to the

Lastly, the fact alone that the Decision of the Court of Appeals, dated admissions of both the appellant and the appellee; (7) when the findings are

26 March 2002, essentially ruled in favor of respondent, does not necessarily contrary to those of the trial court; (8) when the findings are conclusions without

preclude her from appealing the same. Granted that such a move is ostensibly citation of specific evidence on which they are based; (9) when the facts set forth

irrational, nonetheless, it does not amount to malice, bad faith or abuse of the in the petition as well as in the petitioners main and reply briefs are not disputed

court processes in the absence of further proof. Again, it should be noted that by the respondent; and (10) when the findings of fact are premised on the

the respondent did not file her intended Petition for Review. The Petition for supposed absence of evidence and contradicted by the evidence on record.[24]

Review would have presented before this Court the grounds for respondents

appeal and her arguments in support thereof. Without said Petition, any reason Several of the enumerated exceptions pertain to the Petition at bar.

attributed to the respondent for appealing the 26 March 2002 Decision would be It is indubitable that the Court of Appeals made factual findings that are

grounded on mere speculations, to which this Court cannot give credence. contrary to those of the RTC,[25] thus, resulting in its substantial modification of

the trial courts Decision, and a ruling entirely in favor of the respondent. In

II addition, petitioners invoked in the instant Petition for Review several exceptions

As an exception to the that would justify this Courts review of the factual findings of the Court of
general rule, this Court Appeals, i.e., the Court of Appeals made conflicting findings of fact; findings of
takes cognizance of
questions of fact raised in fact which went beyond the issues raised on appeal before it; as well as findings
the Petition at bar.
47
of fact premised on the supposed absence of evidence and contradicted by the
evidence on record.
On the basis of the foregoing, this Court shall proceed to reviewing and
re-evaluating the evidence on record in order to settle questions of fact raised in
the Petition at bar.
The fact that the trial judge
who rendered the RTC
Decision in Civil Case No.
11336, dated 24 August
1995, was not the same
judge who heard and tried
the case, does not, by
itself, render the said
Decision erroneous.
The Decision in Civil Case No. 11336 was rendered more than 10 years from the
institution of the said case. In the course of its trial, the case was presided over
by four (4) different RTC judges.[26] It was Judge Victorio, the fourth judge
assigned to the case, who wrote the RTC Decision, dated 24 August 1995. In his
Decision,[27] Judge Victorio made the following findings
After carefully evaluating the mass of evidence adduced
by the parties, this Court is not inclined to believe the plaintiffs
assertion that the promissory notes as well as the deeds of
assignments of her FNCB Finance money market placements were
simulated. The evidence is overwhelming that the plaintiff
received the proceeds of the loans evidenced by the various
promissory notes she had signed. What is more, there was not an
iota of proof save the plaintiffs bare testimony that she had
indeed applied for loan with the Development Bank of the
Philippines.
More importantly, the two deeds of assignment were
notarized, hence they partake the nature of a public
document. It makes more than preponderant proof to overturn
the effect of a notarial attestation. Copies of the deeds of
assignments were actually filed with the Records Management
and Archives Office.
Finally, there were sufficient evidence wherein the
plaintiff had admitted the existence of her loans with the
defendant Bank in the total amount of P1,920,000.00 exclusive
of interests and penalty charges (Exhibits 28, 31, 32, and 33).
In fine, this Court hereby finds that the defendants had
established the genuineness and due execution of the various
promissory notes heretofore identified as well as the two deeds
of assignments of the plaintiffs money market placements with
defendant FNCB Finance, on the strength of which the said
money market placements were applied to partially pay the
plaintiffs past due obligation with the defendant Bank. Thus, the
total sum of P1,053,995.80 of the plaintiffs past due obligation
was partially offset by the said money market placement leaving
a balance of P1,069,847.40 as of 5 September 1979 (Exhibit 34).
Disagreeing in the foregoing findings, the Court of Appeals stressed, in its
Decision in CA-G.R. CV No. 51930, dated 26 March 2002, that the ponente of the
herein assailed Decision is not the Presiding Judge who heard and tried the
case.[28] This brings us to the question of whether the fact alone that the RTC
Decision was rendered by a judge other than the judge who actually heard and
tried the case is sufficient justification for the appellate court to disregard or
set aside the findings in the Decision of the court a quo?
This Court rules in the negative.
What deserves stressing is that, in this jurisdiction, there exists a disputable
presumption that the RTC Decision was rendered by the judge in the regular
performance of his official duties. While the said presumption is only disputable,
48
it is satisfactory unless contradicted or overcame by other
evidence.[29] Encompassed in this presumption of regularity is the presumption
that the RTC judge, in resolving the case and drafting his Decision, reviewed,
evaluated, and weighed all the evidence on record.That the said RTC judge is not
the same judge who heard the case and received the evidence is of little
consequence when the records and transcripts of stenographic notes (TSNs) are
complete and available for consideration by the former.
In People v. Gazmen,[30] this Court already elucidated its position on such an issue
Accused-appellant makes an issue of the fact that the
judge who penned the decision was not the judge who heard and
tried the case and concludes therefrom that the findings of the
former are erroneous. Accused-appellants argument does not
merit a lengthy discussion. It is well-settled that the decision of
a judge who did not try the case is not by that reason alone
erroneous.
It is true that the judge who ultimately decided the
case had not heard the controversy at all, the trial having been
conducted by then Judge Emilio L. Polig, who was indefinitely
suspended by this Court. Nonetheless, the transcripts of
stenographic notes taken during the trial were complete and
were presumably examined and studied by Judge Baguilat before
he rendered his decision. It is not unusual for a judge who did
not try a case to decide it on the basis of the record. The fact
that he did not have the opportunity to observe the demeanor of
the witnesses during the trial but merely relied on the transcript
of their testimonies does not for that reason alone render the
judgment erroneous.
(People vs. Jaymalin, 214 SCRA 685, 692 [1992])
Although it is true that the judge who heard the
witnesses testify is in a better position to observe the witnesses
on the stand and determine by their demeanor whether they are
telling the truth or mouthing falsehood, it does not necessarily
follow that a judge who was not present during the trial cannot
render a valid decision since he can rely on the transcript of
stenographic notes taken during the trial as basis of his decision.
Accused-appellants contention that the trial judge did
not have the opportunity to observe the conduct and demeanor
of the witnesses since he was not the same judge who conducted
the hearing is also untenable. While it is true that the trial judge
who conducted the hearing would be in a better position to
ascertain the truth and falsity of the testimonies of the
witnesses, it does not necessarily follow that a judge who was not
present during the trial cannot render a valid and just decision
since the latter can also rely on the transcribed stenographic
notes taken during the trial as the basis of his decision.
(People vs. De Paz, 212 SCRA 56, 63 [1992])
At any rate, the test to determine the value of the
testimony of the witness is whether or not such is in conformity
with knowledge and consistent with the experience of mankind
(People vs. Morre, 217 SCRA 219 [1993]). Further, the credibility
of witnesses can also be assessed on the basis of the substance
of their testimony and the surrounding circumstances (People v.
Gonzales, 210 SCRA 44 [1992]). A critical evaluation of the
testimony of the prosecution witnesses reveals that their
testimony accords with the aforementioned tests, and carries
with it the ring of truth end perforce, must be given full weight
and credit.
Irrefragably, by reason alone that the judge who penned the RTC Decision was not
the same judge who heard the case and received the evidence therein would not
render the findings in the said Decision erroneous and unreliable. While the
conduct and demeanor of witnesses may sway a trial court judge in deciding a case,
it is not, and should not be, his only consideration. Even more vital for the trial
court judges decision are the contents and substance of the witnesses
49
testimonies, as borne out by the TSNs, as well as the object and documentary
evidence submitted and made part of the records of the case.
This Court proceeds to
making its own findings of
fact.
Since the Decision of the Court of Appeals in CA-G.R. CV No. 51930, dated
26 March 2002, has become final and executory as to the respondent, due to her
failure to interpose an appeal therefrom within the reglementary period, she is
already bound by the factual findings in the said Decision. Likewise, respondents
failure to file, within the reglementary period, a Motion for Reconsideration or an
appeal of the Resolution of the Court of Appeals in the same case, dated 20
November 2002, which modified its earlier Decision by deleting paragraph 3(v) of
its dispositive portion, ordering petitioners to return to respondent the proceeds
of her money market placement with AIDC, shall already bar her from questioning
such modification before this Court. Thus, what is for review before this Court is
the Decision of the Court of Appeals, dated 26 March 2002, as modified by the
Resolution of the same court, dated 20 November 2002.
Respondent alleged that she had several deposits and money market
placements with petitioners. These deposits and money market placements, as
determined by the Court of Appeals in its Decision, dated 26 March 2002, and as
modified by its Resolution, dated 20 November 2002, are as follows
Deposit/Placement Amount
Dollar deposit with Citibank-Geneva $ 149,632.99
Money market placement with Citibank, evidenced
by Promissory Note (PN) No. 23356 (which cancels
and supersedes PN No. 22526), earning 14.5%
interest per annum (p.a.) P 318,897.34
Money market placement with Citibank, evidenced
by PN No. 23357 (which cancels and supersedes PN
No. 22528), earning 14.5% interest p.a. P 203,150.00
Money market placement with FNCB Finance,
evidenced by PN No. 5757 (which cancels and
supersedes PN No. 4952), earning 17% interest p.a. P 500,000.00
Money market placement with FNCB Finance,
evidenced by PN No. 5758 (which cancels and
supersedes PN No. 2962), earning 17% interest p.a. P 500,000.00
This Court is tasked to determine whether petitioners are indeed liable to return
the foregoing amounts, together with the appropriate interests and penalties, to
respondent. It shall trace respondents transactions with petitioners, from her
money market placements with petitioner Citibank and petitioner FNCB Finance,
to her savings and current accounts with petitioner Citibank, and to her dollar
accounts with Citibank-Geneva.
Money market placements with petitioner Citibank
The history of respondents money market placements with petitioner
Citibank began on 6 December 1976, when she made a placement of P500,000.00
as principal amount, which was supposed to earn an interest of 16% p.a. and for
which PN No. 20773 was issued. Respondent did not yet claim the proceeds of her
placement and, instead, rolled-over or re-invested the principal and proceeds
several times in the succeeding years for which new PNs were issued by petitioner
Citibank to replace the ones which matured. Petitioner Citibank accounted for
respondents original placement and the subsequent roll-overs thereof, as follows
50

such as a seal, an acknowledgment, or revenue stamp, which it

lacks, are waived by him. Hence, such defenses as that the
Maturity signature is a forgery (Puritan Mfg. Co. vs. Toti & Gradi, 14 N. M.,
Date PN Cancels Date Amount Interest 425; Cox vs. Northwestern Stage Co., 1 Idaho, 376;
(mm/dd/yyyy) No. PN No. (mm/dd/yyyy) (P) (p.a.) Woollen vs. Whitacre, 73 Ind., 198; Smith vs. Ehnert, 47 Wis.,
12/06/1976 20773 None 01/13/1977 500,000.00 16% 479; Faelnar vs. Escao, 11 Phil. Rep., 92); or that it was
01/14/1977 21686 20773 02/08/1977 508,444.44 15% unauthorized, as in the case of an agent signing for his principal,
02/09/1977 22526 21686 03/16/1977 313,952.59 15-3/4% or one signing in behalf of a partnership (Country
22528 21686 03/16/1977 200,000.00 15-3/4% Bank vs. Greenberg, 127 Cal., 26; Henshaw vs. Root, 60 Inc., 220;
03/17/1977 23356 22526 04/20/1977 318,897.34 14-1/2% Naftzker vs. Lantz, 137 Mich., 441) or of a corporation
(Merchant vs. International Banking Corporation, 6 Phil Rep., 314;
23357 22528 04/20/1977 203,150.00 14-1/2%
Wanita vs. Rollins, 75 Miss., 253; Barnes vs. Spencer & Barnes
Co., 162 Mich., 509); or that, in the case of the latter, that the
corporation was authorized under its charter to sign the
Petitioner Citibank alleged that it had already paid to respondent the instrument (Merchant vs. International Banking
Corporation, supra); or that the party charged signed the
principal amounts and proceeds of PNs No. 23356 and 23357, upon their
instrument in some other capacity than that alleged in the
maturity. Petitioner Citibank further averred that respondent used pleading setting it out (Payne vs. National Bank, 16 Kan., 147); or
that it was never delivered (Hunt vs. Weir, 29 Ill., 83;
the P500,000.00 from the payment of PNs No. 23356 and 23357, Elbring vs. Mullen, 4 Idaho, 199; Thorp vs. Keokuk Coal Co., 48
N.Y., 253; Fire Association of Philadelphia vs. Ruby, 60 Neb., 216)
plus P600,000.00 sourced from her other funds, to open two time deposit (TD)
are cut off by the admission of its genuineness and due
accounts with petitioner Citibank, namely, TD Accounts No. 17783 and 17784. execution.

The effect of the admission is such that in the case of

Petitioner Citibank did not deny the existence nor questioned the
authenticity of PNs No. 23356 and 23357 it issued in favor of respondent for her
money market placements. In fact, it admitted the genuineness and due execution
of the said PNs, but qualified that they were no longer outstanding.[31] In Hibberd
v. Rohde and McMillian,[32] this Court delineated the consequences of such an
a promissory note a prima facie case is made for the plaintiff
which dispenses with the necessity of evidence on his part and
entitles him to a judgment on the pleadings unless a special
defense of new matter, such as payment, is interposed by the
defendant (Papa vs. Martinez, 12 Phil. Rep., 613; Chinese Chamber
of Commerce vs. Pua To Ching, 14 Phil. Rep., 222; Banco Espaol-
Filipino vs. McKay & Zoeller, 27 Phil. Rep., 183). x x x

admission
Since the genuineness and due execution of PNs No. 23356 and 23357 are
By the admission of the genuineness and due execution
uncontested, respondent was able to establish prima facie that petitioner Citibank
of an instrument, as provided in this section, is meant that the
party whose signature it bears admits that he signed it or that is liable to her for the amounts stated therein. The assertion of petitioner
it was signed by another for him with his authority; that at the
time it was signed it was in words and figures exactly as set out Citibank of payment of the said PNs is an affirmative allegation of a new matter,
in the pleading of the party relying upon it; that the document
the burden of proof as to such resting on petitioner Citibank. Respondent having
was delivered; and that any formal requisites required by law,
51
proved the existence of the obligation, the burden of proof was upon petitioner
Citibank to show that it had been discharged.[33] It has already been established
by this Court that
As a general rule, one who pleads payment has the
burden of proving it. Even where the plaintiff must allege non-
payment, the general rule is that the burden rests on the
defendant to prove payment, rather than on the plaintiff to
prove non-payment. The debtor has the burden of showing with
legal certainty that the obligation has been discharged by
payment.
When the existence of a debt is fully established by the
evidence contained in the record, the burden of proving that it
has been extinguished by payment devolves upon the debtor who
offers such defense to the claim of the creditor. Where the
debtor introduces some evidence of payment, the burden of
going forward with the evidence as distinct from the general
burden of proof shifts to the creditor, who is then under the
duty of producing some evidence of non-payment.[34]
Reviewing the evidence on record, this Court finds that petitioner
Citibank failed to satisfactorily prove that PNs No. 23356 and 23357 had already
been paid, and that the amount so paid was actually used to open one of
respondents TD accounts with petitioner Citibank.
Petitioner Citibank presented the testimonies of two witnesses to support
its contention of payment: (1) That of Mr. Herminio Pujeda,[35] the officer-in-
charge of loans and placements at the time when the questioned transactions took
place; and (2) that of Mr. Francisco Tan,[36] the former Assistant Vice-President
of Citibank, who directly dealt with respondent with regard to her deposits and
loans.
The relevant portion[37] of Mr. Pujedas testimony as to PNs No. 23356
and 23357 (referred to therein as Exhibits No. 47 and 48, respectively) is
reproduced below
Atty. Mabasa:
Okey [sic]. Now Mr. Witness, you were asked to testify in this
case and this case is [sic] consist [sic] of several
documents involving transactions between the plaintiff
and the defendant. Now, were you able to make your own
memorandum regarding all these transactions?
A Yes, based on my recollection of these facts, I did come up of
[sic] the outline of the chronological sequence of events.
Court:
Are you trying to say that you have personal knowledge or
participation to these transactions?
A Yes, your Honor, I was the officer-in charge of the unit that
was processing these transactions. Some of the
documents bear my signature.
Court:
And this resume or summary that you have prepared is based on
purely your recollection or documents?
A Based on documents, your Honor.
Court:
Are these documents still available now?
52

A Yes, your honor. Q So all in all Mr. Witness, sometime in April of 1978 Mrs.
Modesta Sabeneano [sic] had time deposit placements
Court: with Citibank in the amount of P500,000.00 which is the
proceeds of Exh. 47 and 48 and another P600,000.00, is
Better present the documents. it not?

Atty. Mabasa: A Yes, sir.

Yes, your Honor, that is why your Honor. Q And would you know where did the other P600,000 placed by
Mrs. Sabeneano [sic] in a time deposit with Citibank,
Atty. Mabasa: N.A. came [sic] from?

Q Now, basing on the notes that you prepared, Mr. Witness, and A She funded it directly.
according to you basing also on your personal
recollection about all the transactions involved between Q What are you saying Mr. Witness is that the P600,000 is a
Modesta Sabeniano and defendant City Bank [sic] in this [sic] fresh money coming from Mrs. Modesta Sabeneano
case. Now, would you tell us what happened to the money [sic]?
market placements of Modesta Sabeniano that you have
earlier identified in Exhs. 47 and 48? A That is right.

A The transactions which I said earlier were terminated and

booked to time deposits. In his deposition in Hong Kong, Mr. Tan recounted what happened to PNs

Q And you are saying time deposits with what bank? No. 23356 and 23357 (referred to therein as Exhibits E and F, respectively), as

A With First National Citibank. follows

Q Is it the same bank as Citibank, N.A.?

Atty. Mabasa : Now from the Exhibits that you have identified
Mr. Tan from Exhibits A to F, which are
A Yes, sir.
Exhibits of the plaintiff. Now, do I
understand from you that the original
Q And how much was the amount booked as time deposit with
amount is Five Hundred Thousand and
defendant Citibank?
thereafter renewed in the succeeding
exhibits?
A In the amount of P500,000.00.
Mr. Tan : Yes, Sir.
Q And outside this P500,000.00 which you said was booked out
of the proceeds of Exhs. 47 and 48, were there other
Atty. Mabasa : Alright, after these Exhibits E and F matured,
time deposits opened by Mrs. Modesta Sabeniano at
what happened thereafter?
that time.
Mr. Tan : Split into two time deposits.
A Yes, she also opened another time deposit for P600,000.00.
53
Atty. Mabasa : Exhibits E and F?
Before anything else, it should be noted that when Mr. Pujedas testimony
before the RTC was made on 12 March 1990 and Mr. Tans deposition in Hong Kong
was conducted on 3 September 1990, more than a decade had passed from the
time the transactions they were testifying on took place. This Court had previously
recognized the frailty and unreliability of human memory with regards to figures
[38]
after the lapse of five years. Taking into consideration the substantial length
of time between the transactions and the witnesses testimonies, as well as the
undeniable fact that bank officers deal with multiple clients and process numerous
transactions during their tenure, this Court is reluctant to give much weight to
the testimonies of Mr. Pujeda and Mr. Tan regarding the payment of PNs No.
23356 and 23357 and the use by respondent of the proceeds thereof for opening
TD accounts. This Court finds it implausible that they should remember, after all
these years, this particular transaction with respondent involving her PNs No.
23356 and 23357 and TD accounts. Both witnesses did not give any reason as to
why, from among all the clients they had dealt with and all the transactions they
had processed as officers of petitioner Citibank, they specially remembered
respondent and her PNs No. 23356 and 23357. Their testimonies likewise lacked
details on the circumstances surrounding the payment of the two PNs and the
opening of the time deposit accounts by respondent, such as the date of payment
of the two PNs, mode of payment, and the manner and context by which respondent
relayed her instructions to the officers of petitioner Citibank to use the proceeds
of her two PNs in opening the TD accounts.
Moreover, while there are documentary evidences to support and trace
respondents money market placements with petitioner Citibank, from the original
PN No. 20773, rolled-over several times to, finally, PNs No. 23356 and 23357,
there is an evident absence of any documentary evidence on the payment of these
last two PNs and the use of the proceeds thereof by respondent for opening TD
accounts. The paper trail seems to have ended with the copies of PNs No. 23356
and 23357.Although both Mr. Pujeda and Mr. Tan said that they based their
testimonies, not just on their memories but also on the documents on file, the
supposed documents on which they based those portions of their testimony on the
payment of PNs No. 23356 and 23357 and the opening of the TD accounts from
the proceeds thereof, were never presented before the courts nor made part
of the records of the case. Respondents money market placements were of
substantial amounts consisting of the principal amount of P500,000.00, plus the
interest it should have earned during the years of placement and it is difficult for
this Court to believe that petitioner Citibank would not have had documented the
payment thereof.
When Mr. Pujeda testified before the RTC on 6 February
1990,[39] petitioners counsel attempted to present in evidence a document that
would supposedly support the claim of petitioner Citibank that the proceeds of
PNs No. 23356 and 23357 were used by respondent to open one of her two TD
accounts in the amount of P500,000.00. Respondents counsel objected to the
presentation of the document since it was a mere xerox" copy, and was blurred
and hardly readable. Petitioners counsel then asked for a continuance of the
hearing so that they can have time to produce a better document, which was
granted by the court. However, during the next hearing and continuance of Mr.
54

Pujedas testimony on 12 March 1990, petitioners counsel no longer referred to the

said document. According to petitioners, respondents TD Accounts No. 17783 and 17784, in the

As respondent had established a prima facie case that petitioner Citibank total amount of P1,100,000.00, were supposed to mature on 15 March

is obligated to her for the amounts stated in PNs No. 23356 and 23357, and as 1978. However, respondent, through a letter dated 28 April 1977,[40] pre-

petitioner Citibank failed to present sufficient proof of payment of the said PNs terminated the said TD accounts and transferred all the proceeds thereof to

and the use by the respondent of the proceeds thereof to open her TD accounts, petitioner FNCB Finance for money market placement. Pursuant to her

this Court finds that PNs No. 23356 and 23357 are still outstanding and instructions, TD Accounts No. 17783 and 17784 were pre-terminated and

petitioner Citibank is still liable to respondent for the amounts stated therein. petitioner Citibank (then still named First National City Bank) issued Managers

Checks (MC) No. 199253[41] and 199251[42] for the amounts of P500,000.00

The significance of this Courts declaration that PNs No. 23356 and 23357 are and P600,00.00, respectively. Both MCs were payable to Citifinance (which,

still outstanding becomes apparent in the light of petitioners next contentions according to Mr. Pujeda,[43] was one with and the same as petitioner FNCB

that respondent used the proceeds of PNs No. 23356 and 23357, together with Finance), with the additional notation that A/C MODESTA R.

additional money, to open TD Accounts No. 17783 and 17784 with petitioner SABENIANO. Typewritten on MC No. 199253 is the phrase Ref. Proceeds of TD

Citibank; and, subsequently, respondent pre-terminated these TD accounts and 17783, and on MC No. 199251 is a similar phrase, Ref. Proceeds of TD

transferred the proceeds thereof, amounting to P1,100,000.00, to petitioner 17784. These phrases purportedly established that the MCs were paid from the

FNCB Finance for money market placements. While respondents money market proceeds of respondents pre-terminated TD accounts with petitioner

placements with petitioner FNCB Finance may be traced back with definiteness to Citibank. Upon receipt of the MCs, petitioner FNCB Finance deposited the same

TD Accounts No. 17783 and 17784, there is only flimsy and unsubstantiated to its account with Feati Bank and Trust Co., as evidenced by the rubber stamp

connection between the said TD accounts and the supposed proceeds paid from mark of the latter found at the back of both MCs. In exchange, petitioner FNCB

PNs No. 23356 and 23357. With PNs No. 23356 and 23357 still unpaid, then they Finance booked the amounts received as money market placements, and

represent an obligation of petitioner Citibank separate and distinct from the accordingly issued PNs No. 4952 and 4962, for the amounts of P500,000.00

obligation of petitioner FNCB Finance arising from respondents money market and P600,000.00, respectively, payable to respondents savings account with

placements with the latter. petitioner Citibank, S/A No. 25-13703-4, upon their maturity on 1 June

1977. Once again, respondent rolled-over several times the principal amounts of

Money market placements with petitioner FNCB Finance her money market placements with petitioner FNCB Finance, as follows
55

Petitioner FNCB Finance presented four checks as proof of payment of the

Maturity
Date principal amounts and interests of PNs No. 8167 and 8169 upon their maturity. All
PN Cancels Date Amount Interest
(mm/dd/yyyy) No. PN No. (mm/dd/yyyy) (P) (p.a.) the checks were payable to respondents savings account with petitioner Citibank,
04/29/1977 4952 None 06/01/1977 500,000.00 17%
with the following details
4962 None 06/01/1977 600,000.00 17%
06/02/1977 5757 4952 08/31/1977 500,000.00 17%
5758 4962 08/31/1977 500,000.00 17% Date of Amount
08/31/1977 8167 5757 08/25/1978 500,000.00 14% Issuance Check (P) Notation
8169 5752 08/25/1978 500,000.00 14% (mm/dd/yyyy) No.
09/01/1978 76962 12,833.34 Interest payment on
PN#08167
As presented by the petitioner FNCB Finance, respondent rolled-over only the 09/01/1978 76961 12,833.34 Interest payment on
PN#08169
principal amounts of her money market placements as she chose to receive the 09/05/1978 77035 500,000.00 Full payment of principal on
PN#08167 which is hereby
interest income therefrom. Petitioner FNCB Finance also pointed out that when
cancelled
PN No. 4962, with principal amount of P600,000.00, matured on 1 June 1977, 09/05/ 1978 77034 500,000.00 Full payment of principal on
PN#08169 which is hereby
respondent received a partial payment of the principal which, together with the cancelled

interest, amounted to P102,633.33;[44] thus, only the amount of P500,000.00 from

PN No. 4962 was rolled-over to PN No. 5758. Then again, Checks No. 77035 and 77034 were later returned to petitioner FNCB

Finance together with a memo,[47] dated 6 September 1978, from Mr. Tan of
Based on the foregoing records, the principal amounts of PNs No. 5757 and 5758, petitioner Citibank, to a Mr. Bobby Mendoza of petitioner FNCB
upon their maturity, were rolled over to PNs No. 8167 and 8169, respectively. PN Finance. According to the memo, the two checks, in the total amount
[45]
No. 8167 expressly canceled and superseded PN No. 5757, while PN No. of P1,000,000.00, were to be returned to respondents account with instructions
[46]
8169 also explicitly canceled and superseded PN No. 5758. Thus, it is patently to book the said amount in money market placements for one more year. Pursuant
erroneous for the Court of Appeals to still award to respondent the principal to the said memo, Checks No. 77035 and 77034 were invested by petitioner FNCB
amounts and interests covered by PNs No. 5757 and 5758 when these were already Finance, on behalf of respondent, in money market placements for which it issued
canceled and superseded. It is now incumbent upon this Court to determine what PNs No. 20138 and 20139. The PNs each covered P500,000.00, to earn 11%
subsequently happened to PNs No. 8167 and 8169. interest per annum, and to mature on 3 September 1979.
56

On 3 September 1979, petitioner FNCB Finance issued Check No. 100168, pay to Although the RTC and the Court of Appeals did not make any definitive findings

the order of Citibank N.A. A/C Modesta Sabeniano, in the amount as to the status of respondents savings and current accounts with petitioner

of P1,022,916.66, as full payment of the principal amounts and interests of both Citibank, the Decisions of both the trial and appellate courts effectively

PNs No. 20138 and 20139 and, resultantly, canceling the said PNs.[48] Respondent recognized only the P31,079.14 coming from respondents savings account which

actually admitted the issuance and existence of Check No. 100168, but with the was used to off-set her alleged outstanding loans with petitioner Citibank.[50]

qualification that the proceeds thereof were turned over to petitioner

Citibank.[49] Respondent did not clarify the circumstances attending the supposed Since both the RTC and the Court of Appeals had consistently recognized only

turn over, but on the basis of the allegations of petitioner Citibank itself, the the P31,079.14 of respondents savings account with petitioner Citibank, and that

proceeds of PNs No. 20138 and 20139, amounting to P1,022,916.66, was used by it respondent failed to move for reconsideration or to appeal this particular finding

to liquidate respondents outstanding loans.Therefore, the determination of of fact by the trial and appellate courts, it is already binding upon this

whether or not respondent is still entitled to the return of the proceeds of PNs Court. Respondent is already precluded from claiming any greater amount in her

No. 20138 and 20139 shall be dependent on the resolution of the issues raised as savings and current accounts with petitioner Citibank. Thus, this Court shall limit

to the existence of the loans and the authority of petitioner Citibank to use the itself to determining whether or not respondent is entitled to the return of the

proceeds of the said PNs, together with respondents other deposits and money amount of P31,079.14 should the off-set thereof by petitioner Citibank against

market placements, to pay for the same. her supposed loans be found invalid.

Savings and current accounts with petitioner Citibank

Dollar accounts with Citibank-Geneva

Respondent presented and submitted before the RTC deposit slips and

bank statements to prove deposits made to several of her accounts with petitioner Respondent made an effort of preparing and presenting before the RTC her own

Citibank, particularly, Accounts No. 00484202, 59091, and 472-751, which would computations of her money market placements and dollar accounts with Citibank-

have amounted to a total of P3,812,712.32, had there been no withdrawals or Geneva, purportedly amounting to a total of United States (US) $343,220.98, as

debits from the said accounts from the time the said deposits were made. of 23 June 1985.[51] In her Memorandum filed with the RTC, she claimed a much

bigger amount of deposits and money market placements with Citibank-Geneva,

totaling US$1,336,638.65.[52] However, respondent herself also submitted as part

57

of her formal offer of evidence the computation of her money market placements According to the foregoing computation, by 25 October 1979, respondent had a

and dollar accounts with Citibank-Geneva as determined by the latter.[53] Citibank- total of US$156,942.70, from which, US$149,632.99 was transferred by

Geneva accounted for respondents money market placements and dollar accounts Citibank-Geneva to petitioner Citibank in Manila, and was used by the latter to

as follows off-set respondents outstanding loans. The balance of respondents accounts with

Citibank-Geneva, after the remittance to petitioner Citibank in Manila, amounted

MODESTA SABENIANO &/OR
================== to US$7,309.71, which was subsequently expended by a transfer to another

account with Citibank-Zuerich, in the amount of US$6,998.84, and by payment of

US$ 30000.-- Principal Fid. Placement
+ US$ 339.06 Interest at 3,875% p.a. from 12.07. 25.10.79 various bank charges, including closing charges, in the amount of
- US$ 95.-- Commission (minimum)
US$310.87. Rightly so, both the RTC and the Court of Appeals gave more credence
US$ 30244.06 Total proceeds on 25.10.1979 to the computation of Citibank-Geneva as to the status of respondents accounts

with the said bank, rather than the one prepared by respondent herself, which
US$ 114000.-- Principal Fid. Placement
+ US$ 1358.50 Interest at 4,125% p.a. from 12.07. 25.10.79 was evidently self-serving. Once again, this Court shall limit itself to determining
- US$ 41.17 Commission whether or not respondent is entitled to the return of the amount of

US$ 115317.33 Total proceeds on 25.10.1979 US$149,632.99 should the off-set thereof by petitioner Citibank against her

alleged outstanding loans be found invalid. Respondent cannot claim any greater
US$ 145561.39 Total proceeds of both placements on amount since she did not perfect an appeal of the Decision of the Court of Appeals,
25.10.1979
+ US$ 11381.31 total of both current accounts dated 26 March 2002, which found that she is entitled only to the return of the

said amount, as far as her accounts with Citibank-Geneva is concerned.

US$ 156942.70 Total funds available

- US$ 149632.99 Transfer to Citibank Manila on 26.10.1979

(counter value of Pesos 1102944.78) III

US$ 7309.71 Balance in current accounts

Petitioner Citibank was able
to establish by
- US$ 6998.84 Transfer to Citibank Zuerich ac no. 121359 on
preponderance of evidence
March
the existence of respondents
13, 1980
loans.

US$ 310.87 various charges including closing charges

58

(mm/dd/yyyy) (mm/dd/yyyy) Amount

Petitioners version of events
32935 07/20/1978 09/18/1978 P 400,000.00 07/20/1978
33751 10/13/1978 12/12/1978 100,000.00 Unrecov
33798 10/19/1978 11/03/1978 100,000.00 10/19/1978
In sum, the following amounts were used by petitioner Citibank to liquidate
34025 11/15/1978 01/15/1979 150,000.00 11/16/1978
respondents purported outstanding loans 34079 11/21/1978 01/19/1979 250,000.00 11/21/1978
34192 12/04/1978 01/18/1979 100,000.00 12/05/1978
34402 12/26/1978 02/23/1979 300,000.00 12/26/1978
Description Amount 34534 01/09/1979 03/09/1979 150,000.00 01/09/1979
Principal and interests of PNs No. 20138 and 34609 01/17/1979 03/19/1979 150,000.00 01/17/1979
20139 34740 01/30/1979 03/30/1979 220,000.00 01/30/1979
(money market placements with petitioner FNCB P 1,022,916.66
Finance) Total P1,920,000.00
Savings account with petitioner Citibank 31,079.14
Dollar remittance from Citibank-Geneva (peso
equivalent
When respondent was unable to pay the first set of PNs upon their maturity, these
Of US$149,632.99) 1,102,944.78
were rolled-over or renewed several times, necessitating the execution by
Total P 2,156,940.58
respondent of new PNs in favor of petitioner Citibank. As of 5 April 1979,

respondent had the following outstanding PNs (second set),[56] the principal
According to petitioner Citibank, respondent incurred her loans under the
amount of which remained at P1,920,000.00
circumstances narrated below.

As early as 9 February 1978, respondent obtained her first loan from Date of Issuance Date of Maturity
PN No. (mm/dd/yyyy) (mm/dd/yyyy) Principal Amount
petitioner Citibank in the principal amount of P200,000.00, for which she executed
34510 01/01/1979 03/02/1979 P 400,000.00
PN No. 31504.[54] Petitioner Citibank extended to her several other loans in the 34509 01/02/1979 03/02/1979 100,000.00
34534 01/09/1979 03/09/1979 150,000.00
succeeding months. Some of these loans were paid, while others were rolled-over 34612 01/19/1979 03/16/1979 150,000.00
or renewed. Significant to the Petition at bar are the loans which respondent 34741 01/26/1979 03/12/1979 100,000.00
35689 02/23/1979 05/29/1979 300,000.00
obtained from July 1978 to January 1979, appropriately covered by PNs (first 35694 03/19/1979 05/29/1979 150,000.00
[55] 35695 03/19/1979 05/29/1979 100,000.00
set). The aggregate principal amount of these loans was P1,920,000.00, which
356946 03/20/1979 05/29/1979 250,000.00
could be broken down as follows 35697 03/30/1979 05/29/1979 220,000.00

Total P 1,920,000.00
Date of Date of Date of Release
PN No. Issuance Maturity Principal (mm/dd/yyyy) MC No.
59
All the PNs stated that the purpose of the loans covered thereby is To liquidate
existing obligation, except for PN No. 34534, which stated for its purpose
personal investment.
Respondent secured her foregoing loans with petitioner Citibank by
executing Deeds of Assignment of her money market placements with petitioner
FNCB Finance. On 2 March 1978, respondent executed in favor of petitioner
Citibank a Deed of Assignment[57] of PN No. 8169, which was issued by petitioner
FNCB Finance, to secure payment of the credit and banking facilities extended to
her by petitioner Citibank, in the aggregate principal amount of P500,000.00. On
9 March 1978, respondent executed in favor of petitioner Citibank another Deed
of Assignment,[58] this time, of PN No. 8167, also issued by petitioner FNCB
Finance, to secure payment of the credit and banking facilities extended to her
by petitioner Citibank, in the aggregate amount of P500,000.00. When PNs No.
8167 and 8169, representing respondents money market placements with
petitioner FNCB Finance, matured and were rolled-over to PNs No. 20138 and
20139, respondent executed new Deeds of Assignment,[59] in favor of petitioner
Citibank, on 25 August 1978. According to the more recent Deeds, respondent
assigned PNs No. 20138 and 20139, representing her rolled-over money market
placements with petitioner FNCB Finance, to petitioner Citibank as security for
the banking and credit facilities it extended to her, in the aggregate principal
amount of P500,000.00 per Deed.
In addition to the Deeds of Assignment of her money market placements with
petitioner FNCB Finance, respondent also executed a Declaration of Pledge, [60] in
which she supposedly pledged [a]ll present and future fiduciary placements held
in my personal and/or joint name with Citibank, Switzerland, to secure all claims
the petitioner Citibank may have or, in the future, acquire against respondent. The
petitioners copy of the Declaration of Pledge is undated, while that of the
respondent, a copy certified by a Citibank-Geneva officer, bore the date 24
September 1979.[61]
When respondent failed to pay the second set of PNs upon their maturity, an
exchange of letters ensued between respondent and/or her representatives, on
one hand, and the representatives of petitioners, on the other.
The first letter[62] was dated 5 April 1979, addressed to respondent and signed
by Mr. Tan, as the manager of petitioner Citibank, which stated, in part, that
Despite our repeated requests and follow-up, we regret you have
not granted us with any response or payment.
We, therefore, have no alternative but to call your loan
of P1,920,000.00 plus interests and other charges due and
demandable. If you still fail to settle this obligation by 4/27/79,
we shall have no other alternative but to refer your account to
our lawyers for legal action to protect the interest of the bank.
Respondent sent a reply letter[63] dated 26 April 1979, printed on paper bearing
the letterhead of respondents company, MC Adore International Palace, the body
of which reads
This is in reply to your letter dated April 5, 1979 inviting my
attention to my loan which has become due. Pursuant to our
representation with you over the telephone through Mr. F. A.
Tan, you allow us to pay the interests due for the meantime.
60

Please accept our Comtrust Check in the amount of P62,683.33.

Counsel. The telegram acknowledged receipt of the telegram sent by petitioner
Please bear with us for a little while, at most ninety days. As you Citibank regarding the re-past due obligation of McAdore International
know, we have a pending loan with the Development Bank of the
Philippines in the amount of P11-M. This loan has already been Palace. However, it reported that respondent, the President and Chairman of MC
recommended for approval and would be submitted to the Board
of Governors. In fact, to further facilitate the early release of Adore International Palace, was presently abroad negotiating for a big loan. Thus,
this loan, we have presented and furnished Gov. J. Tengco a
he was requesting for an extension of the due date of the obligation until
xerox copy of your letter.
respondents arrival on or before 31 July 1979.
You will be doing our corporation a very viable service, should you
grant us our request for a little more time.
The next letter,[66] dated 21 June 1979, was signed by respondent herself

and addressed to Mr. Bobby Mendoza, a Manager of petitioner FNCB

A week later or on 3 May 1979, a certain C. N. Pugeda, designated as
Finance. Respondent wrote therein
Executive Secretary, sent a letter[64] to petitioner Citibank, on behalf of

respondent. The letter was again printed on paper bearing the letterhead of MC Re: PN No. 20138 for P500,000.00 &
PN No. 20139
Adore International Palace. The pertinent paragraphs of the said letter are for P500,000.00 totalling P1
Million, both PNs will mature
reproduced below
on 9/3/1979.

Per instructions of Mrs. Modesta R. Sabeniano, we would like to

This is to authorize you to release the accrued quarterly
request for a re-computation of the interest and penalty charges
interests payment from my captioned placements and forward
on her loan in the aggregate amount of P1,920,000.00 with
directly to Citibank, Manila Attention: Mr. F. A. Tan, Manager, to
maturity date of all promissory notes at June 30, 1979. As she
apply to my interest payable on my outstanding loan with Citibank.
has personally discussed with you yesterday, this date will more
or less assure you of early settlement.
Please note that the captioned two placements are
continuously pledged/hypothecated to Citibank, Manila to
In this regard, please entrust to bearer, our Comtrust check
support my personal outstanding loan. Therefore, please do not
for P62,683.33 to be replaced by another check with amount
release the captioned placements upon maturity until you have
resulting from the new computation. Also, to facilitate the
received the instruction from Citibank, Manila.
processing of the same, may we request for another set of
promissory notes for the signature of Mrs. Sabeniano and to On even date, respondent sent another letter[67] to Mr. Tan of petitioner
cancel the previous ones she has signed and forwarded to you.
Citibank, stating that

Re: S/A No. 25-225928

This was followed by a telegram,[65] dated 5 June 1979, and received by petitioner and C/A No. 484-946

Citibank the following day. The telegram was sent by a Dewey G. Soriano, Legal
61

This letter serves as an authority to debit whatever the

outstanding balance from my captioned accounts and respondent that she still had a remaining past-due obligation in the amount
credit the amount to my loan outstanding account with of P1,069,847.40, as of 5 September 1979, and should respondent fail to pay the
you.
amount by 15 October 1979, then petitioner Citibank shall proceed to off-set the

unpaid amount with respondents other collateral, particularly, a money market

Unlike respondents earlier letters, both letters, dated 21 June 1979, are printed
placement in Citibank-Hongkong.
on plain paper, without the letterhead of her company, MC Adore International

Palace.
On 5 October 1979, respondent wrote Mr. Tan of petitioner Citibank, on paper

bearing the letterhead of MC Adore International Palace, as regards

By 5 September 1979, respondents outstanding and past due obligations to
the P1,920,000.00 loan account supposedly of MC Adore Finance & Investment,
petitioner Citibank totaled P2,123,843.20, representing the principal amounts plus
Inc., and requested for a statement of account covering the principal and interest
interests. Relying on respondents Deeds of Assignment, petitioner Citibank
of the loan as of 31 October 1979. She stated therein that the loan obligation
applied the proceeds of respondents money market placements with petitioner
shall be paid within 60 days from receipt of the statement of account.
FNCB Finance, as well as her deposit account with petitioner Citibank, to partly

liquidate respondents outstanding loan balance,[68] as follows

Almost three weeks later, or on 25 October 1979, a certain Atty. Moises Tolentino

Respondents outstanding obligation (principal and P 2,123,843.20 dropped by the office of petitioner Citibank, with a letter, dated 9 October 1979,
interest)
and printed on paper with the letterhead of MC Adore International Palace, which
Less: Proceeds from respondents money market
placements authorized the bearer thereof to represent the respondent in settling the
with petitioner FNCB Finance (principal and (1,022,916.66)
interest) overdue account, this time, purportedly, of MC Adore International Palace
Deposits in respondents bank accounts with
Hotel. The letter was signed by respondent as the President and Chairman of the
petitioner
Citibank (31,079.14) Board.

Balance of respondents obligation P 1,069,847.40

Eventually, Atty. Antonio Agcaoili of Agcaoili & Associates, as counsel of petitioner

Citibank, sent a letter to respondent, dated 31 October 1979, informing her that
Mr. Tan of petitioner Citibank subsequently sent a letter,[69] dated 28 September
petitioner Citibank had effected an off-set using her account with Citibank-
1979, notifying respondent of the status of her loans and the foregoing
Geneva, in the amount of US$149,632.99, against her outstanding, overdue,
compensation which petitioner Citibank effected. In the letter, Mr. Tan informed
62

demandable and unpaid obligation to petitioner Citibank. Atty. Agcaoili claimed

therein that the compensation or off-set was made pursuant to and in accordance Respondent denied outright executing the first set of PNs, except for one (PN

with the provisions of Articles 1278 through 1290 of the Civil Code. He further No. 34534 in particular). Although she admitted that she obtained several loans

declared that respondents obligation to petitioner Citibank was now fully paid and from petitioner Citibank, these only amounted to P1,150,000.00, and she had

liquidated. already paid them. She secured from petitioner Citibank two loans of P500,000.00

each. She executed in favor of petitioner Citibank the corresponding PNs for the

Unfortunately, on 7 October 1987, a fire gutted the 7 th floor of petitioner loans and the Deeds of Assignment of her money market placements with

Citibanks building at Paseo de Roxas St., Makati, Metro Manila. Petitioners petitioner FNCB Finance as security.[72] To prove payment of these loans,

submitted a Certification[70] to this effect, dated 17 January 1991, issued by the respondent presented two provisional receipts of petitioner Citibank No.

Chief of the Arson Investigation Section, Fire District III, Makati Fire Station, 19471,[73] dated 11 August 1978, and No. 12723,[74] dated 10 November 1978 both

Metropolitan Police Force. The 7th floor of petitioner Citibanks building housed its signed by Mr. Tan, and acknowledging receipt from respondent of several checks

Control Division, which was in charge of keeping the necessary documents for in the total amount of P500,744.00 and P500,000.00, respectively, for liquidation

cases in which it was involved. After compiling the documentary evidence for the of loan.

present case, Atty. Renato J. Fernandez, internal legal counsel of petitioner

Citibank, forwarded them to the Control Division. The original copies of the MCs, She borrowed another P150,000.00 from petitioner Citibank for personal

which supposedly represent the proceeds of the first set of PNs, as well as that investment, and for which she executed PN No. 34534, on 9 January 1979. Thus,

of other documentary evidence related to the case, were among those burned in she admitted to receiving the proceeds of this loan via MC No. 228270. She

the said fire.[71] invested the loan amount in another money market placement with petitioner FNCB

Finance. In turn, she used the very same money market placement with petitioner

Respondents version of events FNCB Finance as security for her P150,000.00 loan from petitioner Citibank. When

she failed to pay the loan when it became due, petitioner Citibank allegedly

Respondent disputed petitioners narration of the circumstances surrounding her forfeited her money market placement with petitioner FNCB Finance and, thus,

loans with petitioner Citibank and the alleged authority she gave for the off-set the loan was already paid.[75]

or compensation of her money market placements and deposit accounts with

petitioners against her loan obligation.

63

Respondent likewise questioned the MCs presented by petitioners, except for one thereof; this might persuade DBP to approve respondents loan application. Mr. Tan

(MC No. 228270 in particular), as proof that she received the proceeds of the made the respondent sign the second set of PNs, so that he may have something

loans covered by the first set of PNs. As recounted in the preceding paragraph, to show the DBP investigator who might inquire with petitioner Citibank as to

respondent admitted to obtaining a loan of P150,000.00, covered by PN No. 34534, respondents loans with the latter. On her own copies of the said PNs, respondent

and receiving MC No. 228270 representing the proceeds thereof, but claimed that wrote by hand the notation, This isa (sic) simulated non-negotiable note, signed

she already paid the same. She denied ever receiving MCs No. 220701 (for the copy given to Mr. Tan., (sic) per agreement to be shown to DBP representative.

loan of P400,000.00, covered by PN No. 33935) and No. 226467 (for the loan itwill (sic) be returned to me if the P11=M (sic) loan for MC Adore Palace Hotel is

of P250,000.00, covered by PN No. 34079), and pointed out that the checks did approved by DBP.[77]

not bear her indorsements. She did not deny receiving all other checks but she

interposed that she received these checks, not as proceeds of loans, but as Findings of this Court as to the existence of the loans

payment of the principal amounts and/or interests from her money market

placements with petitioner Citibank. She also raised doubts as to the notation on After going through the testimonial and documentary evidence presented by both

each of the checks that reads RE: Proceeds of PN#[corresponding PN No.], saying sides to this case, it is this Courts assessment that respondent did indeed have

that such notation did not appear on the MCs when she originally received them outstanding loans with petitioner Citibank at the time it effected the off-set or

and that the notation appears to have been written by a typewriter different from compensation on 25 July 1979 (using respondents savings deposit with petitioner

that used in writing all other information on the checks (i.e., date, payee, and Citibank), 5 September 1979 (using the proceeds of respondents money market

amount).[76] She even testified that MCs were not supposed to bear notations placements with petitioner FNCB Finance) and 26 October 1979 (using

indicating the purpose for which they were issued. respondents dollar accounts remitted from Citibank-Geneva). The totality of

As to the second set of PNs, respondent acknowledged having signed them petitioners evidence as to the existence of the said loans preponderates over

all. However, she asserted that she only executed these PNs as part of the respondents. Preponderant evidence means that, as a whole, the evidence adduced

simulated loans she and Mr. Tan of petitioner Citibank concocted. Respondent by one side outweighs that of the adverse party.[78]

explained that she had a pending loan application for a big amount with the

Development Bank of the Philippines (DBP), and when Mr. Tan found out about this, Respondents outstanding obligation for P1,920,000.00 had been sufficiently

he suggested that they could make it appear that the respondent had outstanding documented by petitioner Citibank.

loans with petitioner Citibank and the latter was already demanding payment
64
The second set of PNs is a mere renewal of the prior loans originally covered by
the first set of PNs, except for PN No. 34534. The first set of PNs is supported,
in turn, by the existence of the MCs that represent the proceeds thereof received
by the respondent.
It bears to emphasize that the proceeds of the loans were paid to respondent in
MCs, with the respondent specifically named as payee. MCs checks are drawn by
the banks manager upon the bank itself and regarded to be as good as the money
it represents.[79] Moreover, the MCs were crossed checks, with the words Payees
Account Only.
In general, a crossed check cannot be presented to the drawee bank for payment
in cash. Instead, the check can only be deposited with the payees bank which, in
turn, must present it for payment against the drawee bank in the course of normal
banking hours. The crossed check cannot be presented for payment, but it can only
be deposited and the drawee bank may only pay to another bank in the payees or
indorsers account.[80] The effect of crossing a check was described by this Court
in Philippine Commercial International Bank v. Court of Appeals[81]
[T]he crossing of a check with the phrase Payees Account Only
is a warning that the check should be deposited in the account of
the payee. Thus, it is the duty of the collecting bank PCI Bank to
ascertain that the check be deposited in payees account only. It
is bound to scrutinize the check and to know its depositors
before it can make the clearing indorsement all prior
indorsements and/or lack of indorsement guaranteed.
The crossed MCs presented by petitioner Bank were indeed deposited in several
different bank accounts and cleared by the Clearing Office of the Central Bank
of the Philippines, as evidenced by the stamp marks and notations on the said
checks. The crossed MCs are already in the possession of petitioner Citibank, the
drawee bank, which was ultimately responsible for the payment of the amount
stated in the checks. Given that a check is more than just an instrument of credit
used in commercial transactions for it also serves as a receipt or evidence for the
drawee bank of the cancellation of the said check due to payment, [82] then, the
possession by petitioner Citibank of the said MCs, duly stamped Paid gives rise to
the presumption that the said MCs were already paid out to the intended payee,
who was in this case, the respondent.
This Court finds applicable herein the presumptions that private transactions have
been fair and regular,[83] and that the ordinary course of business has been
followed.[84] There is no question that the loan transaction between petitioner
Citibank and the respondent is a private transaction. The transactions revolving
around the crossed MCs from their issuance by petitioner Citibank to respondent
as payment of the proceeds of her loans; to its deposit in respondents accounts
with several different banks; to the clearing of the MCs by an independent
clearing house; and finally, to the payment of the MCs by petitioner Citibank as
the drawee bank of the said checks are all private transactions which shall be
presumed to have been fair and regular to all the parties concerned. In addition,
the banks involved in the foregoing transactions are also presumed to have
followed the ordinary course of business in the acceptance of the crossed MCs
65

for deposit in respondents accounts, submitting them for clearing, and their

eventual payment and cancellation. Respondent denied ever receiving MCs No. 220701 and 226467. However,

The afore-stated presumptions are disputable, meaning, they are satisfactory if considering that the said checks were crossed for payees account only, and that

uncontradicted, but may be contradicted and overcome by other they were actually deposited, cleared, and paid, then the presumption would be

evidence.[85] Respondent, however, was unable to present sufficient and credible that the said checks were properly deposited to the account of respondent, who

evidence to dispute these presumptions. was clearly named the payee in the checks. Respondents bare allegations that she

did not receive the two checks fail to convince this Court, for to sustain her, would

It should be recalled that out of the nine MCs presented by petitioner Citibank, be for this Court to conclude that an irregularity had occurred somewhere from

respondent admitted to receiving one as proceeds of a loan (MC No. 228270), the time of the issuance of the said checks, to their deposit, clearance, and

denied receiving two (MCs No. 220701 and 226467), and admitted to receiving all payment, and which would have involved not only petitioner Citibank, but also BPI,

the rest, but not as proceeds of her loans, but as return on the principal amounts which accepted the checks for deposit, and the Central Bank of the Philippines,

and interests from her money market placements. which cleared the checks. It falls upon the respondent to overcome or dispute the

presumption that the crossed checks were issued, accepted for deposit, cleared,

Respondent admitted receiving MC No. 228270 representing the proceeds of her and paid for by the banks involved following the ordinary course of their business.

loan covered by PN No. 34534. Although the principal amount of the loan

is P150,000.00, respondent only received P146,312.50, because the interest and The mere fact that MCs No. 220701 and 226467 do not bear respondents

handling fee on the loan transaction were already deducted therefrom.[86] Stamps signature at the back does not negate deposit thereof in her account. The liability

and notations at the back of MC No. 228270 reveal that it was deposited at the for the lack of indorsement on the MCs no longer fall on petitioner Citibank, but

Bank of the Philippine Islands (BPI), Cubao Branch, in Account No. 0123-0572- on the bank who received the same for deposit, in this case, BPI Cubao

28.[87] The check also bore the signature of respondent at the back.[88] And, Branch. Once again, it must be noted that the MCs were crossed, for payees

although respondent would later admit that she did sign PN No. 34534 and account only, and the payee named in both checks was none other than respondent.

received MC No. 228270 as proceeds of the loan extended to her by petitioner The crossing of the MCs was already a warning to BPI to receive said checks for

Citibank, she contradicted herself when, in an earlier testimony, she claimed that deposit only in respondents account. It was up to BPI to verify whether it was

PN No. 34534 was among the PNs she executed as simulated loans with petitioner receiving the crossed MCs in accordance with the instructions on the face

Citibank.[89]
66

thereof. If, indeed, the MCs were deposited in accounts other than respondents, respondent to claim having received the proceeds of checks deposited in an

then the respondent would have a cause of action against BPI.[90] account, and then deny receiving the proceeds of another check deposited in the

very same account.

BPI further stamped its guarantee on the back of the checks to the effect that,

All prior endorsement and/or Lack of endorsement guaranteed. Thus, BPI became Another inconsistency in respondents denial of receipt of MC No. 226467 and her

the indorser of the MCs, and assumed all the warranties of an deposit of the same in her account, is her presentation of Exhibit HHH, a

indorser,[91] specifically, that the checks were genuine and in all respects what provisional receipt which was supposed to prove that respondent turned

they purported to be; that it had a good title to the checks; that all prior parties over P500,000.00 to Mr. Tan of petitioner Citibank, that the said amount was split

had capacity to contract; and that the checks were, at the time of their into three money market placements, and that MC No. 226467 represented the

indorsement, valid and subsisting.[92] So even if the MCs deposited by BPI's client, return on her investment from one of these placements.[94] Because of her Exhibit

whether it be by respondent herself or some other person, lacked the necessary HHH, respondent effectively admitted receipt of MC No. 226467, although for

indorsement, BPI, as the collecting bank, is bound by its warranties as an indorser reasons other than as proceeds of a loan.

and cannot set up the defense of lack of indorsement as against petitioner

Citibank, the drawee bank.[93] Neither can this Court give credence to respondents contention that the notations

on the MCs, stating that they were the proceeds of particular PNs, were not there

Furthermore, respondents bare and unsubstantiated denial of receipt of the MCs when she received the checks and that the notations appeared to be written by a

in question and their deposit in her account is rendered suspect when MC No. typewriter different from that used to write the other information on the

220701 was actually deposited in Account No. 0123-0572-28 of BPI Cubao Branch, checks. Once more, respondents allegations were uncorroborated by any other

the very same account in which MC No. 228270 (which respondent admitted to evidence. Her and her counsels observation that the notations on the MCs appear

receiving as proceeds of her loan from petitioner Citibank), and MCs No. 228203, to be written by a typewriter different from that used to write the other

228357, and 228400 (which respondent admitted to receiving as proceeds from information on the checks hardly convinces this Court considering that it

her money market placements) were deposited. Likewise, MC No. 226467 was constitutes a mere opinion on the appearance of the notation by a witness who

deposited in Account No. 0121-002-43 of BPI Cubao Branch, to which MCs No. does not possess the necessary expertise on the matter. In addition, the notations

226285 and 226439 (which respondent admitted to receiving as proceeds from on the MCs were written using both capital and small letters, while the other

her money market placements) were deposited. It is an apparent contradiction for information on the checks were written using capital letters only, such difference
67

could easily confuse an untrained eye and lead to a hasty conclusion that they were

written by different typewriters. Respondent further submitted handwritten notes that purportedly

computed and presented the returns on her money market placements,

Respondents testimony, that based on her experience transacting with banks, the corresponding to the amount stated in the MCs she received from petitioner

MCs were not supposed to include notations on the purpose for which the checks Citibank. Exhibit HHH-1[96] was a handwritten note, which respondent attributed

were issued, also deserves scant consideration. While respondent may have to Mr. Tan of petitioner Citibank, showing the breakdown of her BPI Check

extensive experience dealing with banks, it still does not qualify her as a for P500,000.00 into three different money market placements with petitioner

competent witness on banking procedures and practices. Her testimony on this Citibank. This Court, however, noticed several factors which render the note

matter is even belied by the fact that the other MCs issued by petitioner Citibank highly suspect. One, it was written on the reversed side of Provisional Receipt No.

(when it was still named First National City Bank) and by petitioner FNCB Finance, 12724 of petitioner Citibank which bore the initials of Mr. Tan acknowledging

the existence and validity of which were not disputed by respondent, also bear receipt of respondents BPI Check No. 120989 for P500,000.00; but the initials on

similar notations that state the reason for which they were issued. the handwritten note appeared to be that of Mr. Bobby Mendoza of petitioner

FNCB Finance.[97] Second, according to Provisional Receipt No. 12724, BPI Check

Respondent presented several more pieces of evidence to substantiate her claim No. 120989 for P500,000.00 was supposed to be invested in three money market

that she received MCs No. 226285, 226439, 226467, 226057, 228357, and placements with petitioner Citibank for the period of 60 days. Since all these

228400, not as proceeds of her loans from petitioner Citibank, but as the return money market placements were made through one check deposited on the same

of the principal amounts and payment of interests from her money market day, 10 November 1978, it made no sense that the handwritten note at the back

placements with petitioners. Part of respondents exhibits were personal of Provisional Receipt No. 12724 provided for different dates of maturity for each

checks[95] drawn by respondent on her account with Feati Bank & Trust Co., which of the money market placements (i.e., 16 November 1978, 17 January 1979, and 21

she allegedly invested in separate money market placements with both petitioners, November 1978), and such dates did not correspond to the 60 day placement

the returns from which were paid to her via MCs No. 226285 and 228400. Yet, to period stated on the face of the provisional receipt. And third, the principal

this Court, the personal checks only managed to establish respondents issuance amounts of the money market placements as stated in the handwritten

thereof, but there was nothing on the face of the checks that would reveal the note P145,000.00, P145,000.00 and P242,000.00 totaled P532,000.00, and was

purpose for which they were issued and that they were actually invested in money obviously in excess of the P500,000.00 acknowledged on the face of Provisional

market placements as respondent claimed. Receipt No. 12724.

68

by either petitioner Citibank or petitioner FNCB Finance, acknowledging the

Exhibits III and III-1, the front and bank pages of a handwritten note principal amounts of the investments, and stating the applicable interest rates, as

of Mr. Bobby Mendoza of petitioner FNCB Finance, [98] also did not deserve much well as the dates of their of issuance and maturity. After respondent had so

evidentiary weight, and this Court cannot rely on the truth and accuracy of the meticulously reconstructed her other money market placements with petitioners

computations presented therein. Mr. Mendoza was not presented as a witness and consolidated the documentary evidence thereon, she came surprisingly short

during the trial before the RTC, so that the document was not properly of offering similar details and substantiation for these particular money market

authenticated nor its contents sufficiently explained. No one was able to placements.

competently identify whether the initials as appearing on the note were actually

Mr. Mendozas. Since this Court is satisfied that respondent indeed received the proceeds of the

first set of PNs, then it proceeds to analyze her evidence of payment thereof.

Also, going by the information on the front page of the note, this Court

observes that payment of respondents alleged money market placements with In support of respondents assertion that she had already paid whatever

petitioner FNCB Finance were made using Citytrust Checks; the MCs in question, loans she may have had with petitioner Citibank, she presented as evidence

including MC No. 228057, were issued by petitioner Citibank. Although Citytrust Provisional Receipts No. 19471, dated 11 August 1978, and No. 12723, dated 10

(formerly Feati Bank & Trust Co.), petitioner FNCB Finance, and petitioner November 1978, both of petitioner Citibank and signed by Mr. Tan, for the

Citibank may be affiliates of one another, they each remained separate and amounts of P500,744.00 and P500,000.00, respectively. While these provisional

distinct corporations, each having its own financial system and records. Thus, this receipts did state that Mr. Tan, on behalf of petitioner Citibank, received

Court cannot simply assume that one corporation, such as petitioner Citibank or respondents checks as payment for her loans, they failed to specifically identify

Citytrust, can issue a check to discharge an obligation of petitioner FNCB which loans were actually paid. Petitioner Citibank was able to present evidence

Finance. It should be recalled that when petitioner FNCB Finance paid for that respondent had executed several PNs in the years 1978 and 1979 to cover

respondents money market placements, covered by its PNs No. 8167 and 8169, as the loans she secured from the said bank. Petitioner Citibank did admit that

well as PNs No. 20138 and 20139, petitioner FNCB Finance issued its own checks. respondent was able to pay for some of these PNs, and what it identified as the

first and second sets of PNs were only those which remained unpaid. It thus

As a last point on this matter, if respondent truly had money market became incumbent upon respondent to prove that the checks received by Mr. Tan

placements with petitioners, then these would have been evidenced by PNs issued were actually applied to the PNs in either the first or second set; a fact that,
69

unfortunately, cannot be determined from the provisional receipts submitted by

respondent since they only generally stated that the checks received by Mr. Tan As for PN No. 34534, respondent asserted payment thereof at two separate

were payment for respondents loans. instances by two different means. In her formal offer of exhibits, respondent

submitted a deposit slip of petitioner Citibank, dated 11 August 1978, evidencing

Mr. Tan, in his deposition, further explained that provisional receipts the deposit of BPI Check No. 5785 for P150,000.00.[101] In her Formal Offer of

were issued when payment to the bank was made using checks, since the checks Documentary Exhibits, dated 7 July 1989, respondent stated that the purpose for

would still be subject to clearing. The purpose for the provisional receipts was the presentation of the said deposit slip was to prove that she already paid her

merely to acknowledge the delivery of the checks to the possession of the bank, loan covered by PN No. 34534.[102] In her testimony before the RTC three years

but not yet of payment.[99] This bank practice finds legitimacy in the later, on 28 November 1991, she changed her story. This time she narrated that

pronouncement of this Court that a check, whether an MC or an ordinary check, is the loan covered by PN No. 34534 was secured by her money market placement

not legal tender and, therefore, cannot constitute valid tender of with petitioner FNCB Finance, and when she failed to pay the said PN when it

payment. In Philippine Airlines, Inc. v. Court of Appeals, [100] this Court elucidated became due, the security was applied to the loan, therefore, the loan was

that: considered paid.[103] Given the foregoing, respondents assertion of payment of PN

Since a negotiable instrument is only a substitute for No. 34534 is extremely dubious.
money and not money, the delivery of such an instrument does
not, by itself, operate as payment (Sec. 189, Act 2031 on Negs.
Insts.; Art. 1249, Civil Code; Bryan Landon Co. v. American Bank, According to petitioner Citibank, the PNs in the second set, except for
7 Phil. 255; Tan Sunco, v. Santos, 9 Phil. 44; 21 R.C.L. 60, 61). A
check, whether a manager's check or ordinary check, is not legal PN No. 34534, were mere renewals of the unpaid PNs in the first set, which was
tender, and an offer of a check in payment of a debt is not a valid
why the PNs stated that they were for the purpose of liquidating existing
tender of payment and may be refused receipt by the obligee or
creditor. Mere delivery of checks does not discharge the obligations. PN No. 34534, however, which was part of the first set, was still valid
obligation under a judgment. The obligation is not extinguished
and remains suspended until the payment by commercial and subsisting and so it was included in the second set without need for its renewal,
document is actually realized (Art. 1249, Civil Code, par. 3).
and it still being the original PN for that particular loan, its stated purpose was

for personal investment.[104] Respondent essentially admitted executing the

In the case at bar, the issuance of an official receipt by petitioner Citibank would second set of PNs, but they were only meant to cover simulated loans. Mr. Tan

have been dependent on whether the checks delivered by respondent were actually supposedly convinced her that her pending loan application with DBP would have a

cleared and paid for by the drawee banks. greater chance of being approved if they made it appear that respondent urgently
70

needed the money because petitioner Citibank was already demanding payment for

her simulated loans. Mr. Tan, then an account officer with the Marketing Department of

petitioner Citibank, testified that he dealt directly with respondent; he

Respondents defense of simulated loans to escape liability for the second set of facilitated the loans; and the PNs, at least in the second set, were signed by

PNs is truly a novel one. It is regrettable, however, that she was unable to respondent in his presence.[105]

substantiate the same. Yet again, respondents version of events is totally based

on her own uncorroborated testimony. The notations on the second set of PNs, Mr. Pujeda, the officer who was previously in charge of loans and

that they were non-negotiable simulated notes, were admittedly made by placements, confirmed that the signatures on the PNs were verified against

respondent herself and were, thus, self-serving. Equally self-serving was respondents specimen signature with the bank.[106]

respondents letter, written on 7 October 1985, or more than six years after the

execution of the second set of PNs, in which she demanded return of the simulated Ms. Cristina Dondoyano, who worked at petitioner Citibank as a loan

or fictitious PNs, together with the letters relating thereto, which Mr. Tan processor, was responsible for booking respondents loans. Booking the loans means

purportedly asked her to execute. Respondent further failed to present any proof recording it in the General Ledger. She explained the procedure for booking loans,

of her alleged loan application with the DBP, and of any circumstance or as follows: The account officer, in the Marketing Department, deals directly with

correspondence wherein the simulated or fictitious PNs were indeed used for their the clients who wish to borrow money from petitioner Citibank. The Marketing

supposed purpose. Department will forward a loan booking checklist, together with the borrowing

clients PNs and other supporting documents, to the loan pre-processor, who will

In contrast, petitioner Citibank, as supported by the testimonies of its officers check whether the details in the loan booking checklist are the same as those in

and available documentation, consistently treated the said PNs as regular loans the PNs. The documents are then sent to Signature Control for verification of the

accepted, approved, and paid in the ordinary course of its business. clients signature in the PNs, after which, they are returned to the loan pre-

processor, to be forwarded finally to the loan processor. The loan processor shall

The PNs executed by the respondent in favor of petitioner Citibank to cover her book the loan in the General Ledger, indicating therein the client name, loan

loans were duly-filled out and signed, including the disclosure statement found at amount, interest rate, maturity date, and the corresponding PN number. Since she

the back of the said PNs, in adherence to the Central Bank requirement to disclose booked respondents loans personally, Ms. Dondoyano testified that she saw the

the full finance charges to a loan granted to borrowers. original PNs. In 1986, Atty. Fernandez of petitioner Citibank requested her to
71

prepare an accounting of respondents loans, which she did, and which was to the Personnel Group Head; a Service Assistant with the Marketing Group, in

presented as Exhibit 120 for the petitioners. The figures from the said exhibit 1972 to 1974, dealing directly with corporate and individual clients who, among

were culled from the bookings in the General Ledger, a fact which respondents other things, secured loans from petitioner Citibank; the Head of the Collection

counsel was even willing to stipulate.[107] Group of the Foreign Department in 1974 to 1976; the Head of the Money

Transfer Unit in 1976 to 1978; the Head of the Loans and Placements Unit up to

Ms. Teresita Glorioso was an Investigation and Reconcilement Clerk at the Control the early 1980s; and, thereafter, she established operations training for

Department of petitioner Citibank. She was presented by petitioner Citibank to petitioner Citibank in the Asia-Pacific Region responsible for the training of the

expound on the microfilming procedure at the bank, since most of the copies of officers of the bank. She testified on the standard loan application process at

the PNs were retrieved from microfilm. Microfilming of the documents are petitioner Citibank. According to Ms. Rubio, the account officer or marketing

actually done by people at the Operations Department. At the end of the day or person submits a proposal to grant a loan to an individual or corporation. Petitioner

during the day, the original copies of all bank documents, not just those pertaining Citibank has a worldwide policy that requires a credit committee, composed of a

to loans, are microfilmed. She refuted the possibility that insertions could be minimum of three people, which would approve the loan and amount thereof. There

made in the microfilm because the microfilm is inserted in a cassette; the cassette can be no instance when only one officer has the power to approve the loan

is placed in the microfilm machine for use; at the end of the day, the cassette is application. When the loan is approved, the account officer in charge will obtain

taken out of the microfilm machine and put in a safe vault; and the cassette is the corresponding PNs from the client. The PNs are sent to the signature verifier

returned to the machine only the following day for use, until the spool is full. This who would validate the signatures therein against those appearing in the signature

is the microfilming procedure followed everyday. When the microfilm spool is cards previously submitted by the client to the bank. The Operations Unit will

already full, the microfilm is developed, then sent to the Control Department, check and review the documents, including the PNs, if it is a clean loan, and

which double checks the contents of the microfilms against the entries in the securities and deposits, if it is collateralized. The loan is then recorded in the

General Ledger. The Control Department also conducts a random comparison of General Ledger. The Loans and Placements Department will not book the loans

the contents of the microfilms with the original documents; a random review of without the PNs. When the PNs are liquidated, whether they are paid or rolled-

the contents is done on every role of microfilm.[108] over, they are returned to the client.[109] Ms. Rubio further explained that she was

familiar with respondents accounts since, while she was still the Head of the Loan

Ms. Renee Rubio worked for petitioner Citibank for 20 years. She rose from the and Placements Unit, she was asked by Mr. Tan to prepare a list of respondents

ranks, initially working as a secretary in the Personnel Group; then as a secretary outstanding obligations.[110] She thus calculated respondents outstanding loans,
72
which was sent as an attachment to Mr. Tans letter to respondent, dated 28
September 1979, and presented before the RTC as Exhibits 34-B and 34-C.[111]
Lastly, the exchange of letters between petitioner Citibank and respondent, as
well as the letters sent by other people working for respondent, had consistently
recognized that respondent owed petitioner Citibank money.
In consideration of the foregoing discussion, this Court finds that the
preponderance of evidence supports the existence of the respondents loans, in
the principal sum of P1,920,000.00, as of 5 September 1979. While it is well-
settled that the term preponderance of evidence should not be wholly dependent
on the number of witnesses, there are certain instances when the number of
witnesses become the determining factor
The preponderance of evidence may be determined,
under certain conditions, by the number of witnesses testifying
to a particular fact or state of facts. For instance, one or two
witnesses may testify to a given state of facts, and six or seven
witnesses of equal candor, fairness, intelligence, and
truthfulness, and equally well corroborated by all the remaining
evidence, who have no greater interest in the result of the suit,
testify against such state of facts. Then the preponderance of
evidence is determined by the number of witnesses. (Wilcox vs.
Hines, 100 Tenn. 524, 66 Am. St. Rep., 761.)[112]
Best evidence rule
This Court disagrees in the pronouncement made by the Court of Appeals
summarily dismissing the documentary evidence submitted by petitioners based on
its broad and indiscriminate application of the best evidence rule.
In general, the best evidence rule requires that the highest available
degree of proof must be produced. Accordingly, for documentary evidence, the
contents of a document are best proved by the production of the document
itself,[113] to the exclusion of any secondary or substitutionary evidence.[114]
The best evidence rule has been made part of the revised Rules of Court,
Rule 130, Section 3, which reads
SEC. 3. Original document must be produced;
exceptions. When the subject of inquiry is the contents of a
document, no evidence shall be admissible other than the original
document itself, except in the following cases:
(a) When the original has been lost or destroyed, or
cannot be produced in court, without bad faith on the part of the
offeror;
(b) When the original is in the custody or under the
control of the party against whom the evidence is offered, and
the latter fails to produce it after reasonable notice;
(c) When the original consists of numerous accounts or
other documents which cannot be examined in court without
great loss of time and the fact sought to be established from
them is only the general result of the whole; and
(d) When the original is a public record in the custody
of a public officer or is recorded in a public office.
As the afore-quoted provision states, the best evidence rule applies only when the
subject of the inquiry is the contents of the document. The scope of the rule is
more extensively explained thus
But even with respect to documentary evidence, the
best evidence rule 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,
73

the best evidence rule does not apply and testimonial evidence is
admissible (5 Moran, op. cit., pp. 76-66; 4 Martin, op. cit., p. contention in the Petition at bar. It was respondents position that the PNs in the
78). Any other substitutionary evidence is likewise admissible
first set (with the exception of PN No. 34534) never existed, while the PNs in the
without need for accounting for the original.
second set (again, excluding PN No. 34534) were merely executed to cover
Thus, when a document is presented to prove its
existence or condition it is offered not as documentary, but as simulated loan transactions. As for the MCs representing the proceeds of the
real, evidence. Parol evidence of the fact of execution of the
loans, the respondent either denied receipt of certain MCs or admitted receipt of
documents is allowed (Hernaez, et al. vs. McGrath, etc., et al., 91
Phil 565). x x x [115] the other MCs but for another purpose.Respondent further admitted the letters

she wrote personally or through her representatives to Mr. Tan of petitioner

In Estrada v. Desierto,[116] this Court had occasion to rule that Citibank acknowledging the loans, except that she claimed that these letters were

It is true that the Court relied not upon the original but just meant to keep up the ruse of the simulated loans. Thus, respondent questioned
only copy of the Angara Diary as published in the Philippine Daily
the documents as to their existence or execution, or when the former is admitted,
Inquirer on February 4-6, 2001. In doing so, the Court, did not,
however, violate the best evidence rule. Wigmore, in his book on as to the purpose for which the documents were executed, matters which are,
evidence, states that:
undoubtedly, external to the documents, and which had nothing to do with the
Production of the original may be dispensed with, in the
contents thereof.
trial courts discretion, whenever in the case in hand the opponent
does not bona fide dispute the contents of the document and no Alternatively, even if it is granted that the best evidence rule should
other useful purpose will be served by requiring production.24
apply to the evidence presented by petitioners regarding the existence of
xxxx
respondents loans, it should be borne in mind that the rule admits of the following

In several Canadian provinces, the principle of
unavailability has been abandoned, for certain documents in
which ordinarily no real dispute arised. This measure is a sensible
and progressive one and deserves universal adoption (post, sec.
1233). Its essential feature is that a copy may be used
unconditionally, if the opponent has been given an opportunity to
inspect it. (Emphasis supplied.)
This Court did not violate the best evidence rule when it considered and
exceptions under Rule 130, Section 5 of the revised Rules of Court
SEC. 5. When the original document is unavailable. When
the original document has been lost or destroyed, or cannot be
produced in court, the offeror, upon proof of its execution or
existence and the cause of its unavailability without bad faith on
his part, may prove its contents by a copy, or by a recital of its
contents in some authentic document, or by the testimony of
witnesses in the order stated.

weighed in evidence the photocopies and microfilm copies of the PNs, MCs, and
The execution or existence of the original copies of the documents was
letters submitted by the petitioners to establish the existence of respondents
established through the testimonies of witnesses, such as Mr. Tan, before whom
loans. The terms or contents of these documents were never the point of
74
most of the documents were personally executed by respondent. The original PNs
also went through the whole loan booking system of petitioner Citibank from the
account officer in its Marketing Department, to the pre-processor, to the
signature verifier, back to the pre-processor, then to the processor for
booking.[117] The original PNs were seen by Ms. Dondoyano, the processor, who
recorded them in the General Ledger. Mr. Pujeda personally saw the original MCs,
proving respondents receipt of the proceeds of her loans from petitioner Citibank,
when he helped Attys. Cleofe and Fernandez, the banks legal counsels, to
reconstruct the records of respondents loans. The original MCs were presented
to Atty. Cleofe who used the same during the preliminary investigation of the case,
sometime in years 1986-1987. The original MCs were subsequently turned over to
the Control and Investigation Division of petitioner Citibank.[118]
It was only petitioner FNCB Finance who claimed that they lost the
original copies of the PNs when it moved to a new office. Citibank did not make a
similar contention; instead, it explained that the original copies of the PNs were
returned to the borrower upon liquidation of the loan, either through payment or
roll-over. Petitioner Citibank proffered the excuse that they were still looking for
the documents in their storage or warehouse to explain the delay and difficulty in
the retrieval thereof, but not their absence or loss. The original documents in this
case, such as the MCs and letters, were destroyed and, thus, unavailable for
presentation before the RTC only on 7 October 1987, when a fire broke out on the
7th floor of the office building of petitioner Citibank. There is no showing that the
fire was intentionally set. The fire destroyed relevant documents, not just of the
present case, but also of other cases, since the 7th floor housed the Control and
Investigation Division, in charge of keeping the necessary documents for cases in
which petitioner Citibank was involved.
The foregoing would have been sufficient to allow the presentation of
photocopies or microfilm copies of the PNs, MCs, and letters by the petitioners as
secondary evidence to establish the existence of respondents loans, as an
exception to the best evidence rule.
The impact of the Decision of the Court of Appeals in the Dy case
In its assailed Decision, the Court of Appeals made the following pronouncement
Besides, We find the declaration and conclusions of this
Court in CA-G.R. CV No. 15934 entitled Sps. Dr. Ricardo L. Dy
and Rosalind O. Dy vs. City Bank, N.A., et al, promulgated on 15
January 1990, as disturbing taking into consideration the
similarities of the fraud, machinations, and deceits employed by
the defendant-appellant Citibank and its Account Manager
Francisco Tan.
Worthy of note is the fact that Our declarations and
conclusions against Citibank and the person of Francisco Tan
in CA-G.R. CV No. 15934 were affirmed in toto by the Highest
Magistrate in a Minute Resolution dated 22 August 1990
entitled Citibank, N.A., vs. Court of Appeals, G.R. 93350.
As the factual milieu of the present appeal created
reasonable doubts as to whether the nine (9) Promissory Notes
were indeed executed with considerations, the doubts, coupled
by the findings and conclusions of this Court in CA-G.R. CV No.
15934 and the Supreme Court in G.R. No. 93350. should be
construed against herein defendants-appellants Citibank and
FNCB Finance.
75

What this Court truly finds disturbing is the significance given by the Court of Mr. Tan personally responsible for the forgeries, which, in the narration of the

Appeals in its assailed Decision to the Decision[119] of its Third Division in CA-G.R. facts, were more likely committed by Caedo.

CV No. 15934 (or the Dy case), when there is an absolute lack of legal basis for

doing such. In the Petition at bar, respondent dealt with Mr. Tan directly, there was no third

party involved who could have perpetrated any fraud or forgery in her loan

Although petitioner Citibank and its officer, Mr. Tan, were also involved in the Dy transactions. Although respondent attempted to raise suspicion as to the

case, that is about the only connection between the Dy case and the one at authenticity of her signatures on certain documents, these were nothing more than

bar. Not only did the Dy case tackle transactions between parties other than the naked allegations with no corroborating evidence; worse, even her own allegations

parties presently before this Court, but the transactions are absolutely were replete with inconsistencies. She could not even establish in what manner or

independent and unrelated to those in the instant Petition. under what circumstances the fraud or forgery was committed, or how Mr. Tan

could have been directly responsible for the same.

In the Dy case, Severino Chua Caedo managed to obtain loans from herein

petitioner Citibank amounting to P7,000,000.00, secured to the extent While the Court of Appeals can take judicial notice of the Decision of its Third

of P5,000,000.00 by a Third Party Real Estate Mortgage of the properties of Division in the Dy case, it should not have given the said case much weight when it

Caedos aunt, Rosalind Dy. It turned out that Rosalind Dy and her husband were rendered the assailed Decision, since the former does not constitute a

unaware of the said loans and the mortgage of their properties. The transactions precedent. The Court of Appeals, in the challenged Decision, did not apply any legal

were carried out exclusively between Caedo and Mr. Tan of petitioner argument or principle established in the Dy case but, rather, adopted the findings

Citibank. The RTC found Mr. Tan guilty of fraud for his participation in the therein of wrongdoing or misconduct on the part of herein petitioner Citibank and

questionable transactions, essentially because he allowed Caedo to take out the Mr. Tan. Any finding of wrongdoing or misconduct as against herein petitioners

signature cards, when these should have been signed by the Dy spouses personally should be made based on the factual background and pieces of evidence submitted

before him. Although the Dy spouses signatures in the PNs and Third Party Real in this case, not those in another case.

Estate Mortgage were forged, they were approved by the signature verifier since

the signature cards against which they were compared to were also It is apparent that the Court of Appeals took judicial notice of the Dy case not as

forged. Neither the RTC nor the Court of Appeals, however, categorically declared a legal precedent for the present case, but rather as evidence of similar acts

committed by petitioner Citibank and Mr. Tan. A basic rule of evidence, however,
76
states that, Evidence that one did or did not do a certain thing at one time is not
admissible to prove that he did or did not do the same or similar thing at another
time; but it may be received to prove a specific intent or knowledge, identity, plan,
system, scheme, habit, custom or usage, and the like.[120] The rationale for the rule
is explained thus
The rule is founded upon reason, public policy, justice
and judicial convenience. The fact that a person has committed
the same or similar acts at some prior time affords, as a general
rule, no logical guaranty that he committed the act in
question. This is so because, subjectively, a mans mind and even
his modes of life may change; and, objectively, the conditions
under which he may find himself at a given time may likewise
change and thus induce him to act in a different way. Besides, if
evidence of similar acts are to be invariably admitted, they will
give rise to a multiplicity of collateral issues and will subject the
defendant to surprise as well as confuse the court and prolong
the trial.[121]
The factual backgrounds of the two cases are so different and unrelated that the
Dy case cannot be used to prove specific intent, knowledge, identity, plan, system,
scheme, habit, custom or usage on the part of petitioner Citibank or its officer,
Mr. Tan, to defraud respondent in the present case.
IV
The liquidation of
respondents outstanding
loans were valid in so far as
petitioner Citibank used
respondents savings account
with the bank and her money
market placements with
petitioner FNCB Finance; but
illegal and void in so far as
petitioner Citibank used
respondents dollar accounts
with Citibank-Geneva.
Savings Account with petitioner Citibank
Compensation is a recognized mode of extinguishing obligations. Relevant
provisions of the Civil Code provides
Art. 1278. Compensation shall take place when two
persons, in their own right, are creditors and debtors of each
other.
Art. 1279. In order that compensation may be proper, it
is necessary;
(1) That each one of the obligors be bound principally,
and that he be at the same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the
things due are consumable, they be of the same kind, and also of
the same quality if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention
or controversy, commenced by third persons and communicated
in due time to the debtor.
There is little controversy when it comes to the right of petitioner
Citibank to compensate respondents outstanding loans with her deposit
account. As already found by this Court, petitioner Citibank was the creditor of
respondent for her outstanding loans. At the same time, respondent was the
creditor of petitioner Citibank, as far as her deposit account was concerned, since
bank deposits, whether fixed, savings, or current, should be considered as simple
77

loan or mutuum by the depositor to the banking institution.[122] Both debts consist debtor. Consequently, legal compensation, under Article 1278 of the Civil Code,

in sums of money. By June 1979, all of respondents PNs in the second set had would not apply since the first requirement for a valid compensation, that each

matured and became demandable, while respondents savings account was one of the obligors be bound principally, and that he be at the same time a principal

demandable anytime. Neither was there any retention or controversy over the PNs creditor of the other, was not met.

and the deposit account commenced by a third person and communicated in due

time to the debtor concerned. Compensation takes place by operation of What petitioner Citibank actually did was to exercise its rights to the

law,[123] therefore, even in the absence of an expressed authority from proceeds of respondents money market placements with petitioner FNCB Finance

respondent, petitioner Citibank had the right to effect, on 25 June 1979, the by virtue of the Deeds of Assignment executed by respondent in its favor.

partial compensation or off-set of respondents outstanding loans with her deposit

account, amounting to P31,079.14. The Court of Appeals did not consider these Deeds of Assignment

because of petitioners failure to produce the original copies thereof in violation

Money market placements with FNCB Finance of the best evidence rule. This Court again finds itself in disagreement in the

application of the best evidence rule by the appellate court.

Things though are not as simple and as straightforward as regards to the

money market placements and bank account used by petitioner Citibank to To recall, the best evidence rule, in so far as documentary evidence is

complete the compensation or off-set of respondents outstanding loans, which concerned, requires the presentation of the original copy of the document only

came from persons other than petitioner Citibank. when the context thereof is the subject of inquiry in the case. Respondent does

not question the contents of the Deeds of Assignment. While she admitted the

Respondents money market placements were with petitioner FNCB existence and execution of the Deeds of Assignment, dated 2 March 1978 and 9

Finance, and after several roll-overs, they were ultimately covered by PNs No. March 1978, covering PNs No. 8169 and 8167 issued by petitioner FNCB Finance,

20138 and 20139, which, by 3 September 1979, the date the check for the she claimed, as defense, that the loans for which the said Deeds were executed

proceeds of the said PNs were issued, amounted to P1,022,916.66, inclusive of the as security, were already paid. She denied ever executing both Deeds of

principal amounts and interests. As to these money market placements, respondent Assignment, dated 25 August 1978, covering PNs No. 20138 and 20139. These are

was the creditor and petitioner FNCB Finance the debtor; while, as to the again issues collateral to the contents of the documents involved, which could be

outstanding loans, petitioner Citibank was the creditor and respondent the proven by evidence other than the original copies of the said documents.
78

acknowledgment and certificate in the Deeds.[126] But again, respondent admitted

Moreover, the Deeds of Assignment of the money market placements with executing the Deeds of Assignment, dated 2 March 1978 and 9 March 1978,

petitioner FNCB Finance were notarized documents, thus, admissible in although claiming that the loans for which they were executed as security were

evidence. Rule 132, Section 30 of the Rules of Court provides that already paid. And, she assailed the Deeds of Assignment, dated 25 August 1978,

with nothing more than her bare denial of execution thereof, hardly the clear and

SEC. 30. Proof of notarial documents. Every instrument convincing evidence required to trounce the presumption of due execution of a
duly acknowledged or proved and certified as provided by law, notarized document.
may be presented in evidence without further proof, the
certificate of acknowledgement being prima facie evidence of
the execution of the instrument or document involved.
Petitioners not only presented the notarized Deeds of Assignment, but even
Significant herein is this Courts elucidation in De Jesus v. Court of
secured certified literal copies thereof from the National Archives.[127] Mr.
Appeals,[124] which reads
Renato Medua, an archivist, working at the Records Management and Archives
On the evidentiary value of these documents, it should
Office of the National Library, testified that the copies of the Deeds presented
be recalled that the notarization of a private document converts
it into a public one and renders it admissible in court without before the RTC were certified literal copies of those contained in the Notarial
further proof of its authenticity (Joson vs. Baltazar, 194 SCRA
114 [1991]). This is so because a public document duly executed Registries of the notary publics concerned, which were already in the possession
and entered in the proper registry is presumed to be valid and
of the National Archives.He also explained that he could not bring to the RTC the
genuine until the contrary is shown by clear and convincing proof
(Asido vs. Guzman, 57 Phil. 652 [1918]; U.S. vs. Enriquez, 1 Phil Notarial Registries containing the original copies of the Deeds of Assignment,
241 [1902]; Favor vs. Court of Appeals, 194 SCRA 308 [1991]). As
such, the party challenging the recital of the document must because the Department of Justice (DOJ) Circular No. 97, dated 8 November
prove his claim with clear and convincing evidence (Diaz vs. Court
1968, prohibits the bringing of original documents to the courts to prevent the
of Appeals, 145 SCRA 346 [1986]).
loss of irreplaceable and priceless documents.[128]

The rule on the evidentiary weight that must be accorded a notarized

Accordingly, this Court gives the Deeds of Assignment grave importance in
document is clear and unambiguous. The certificate of acknowledgement in the
establishing the authority given by the respondent to petitioner Citibank to use as
notarized Deeds of Assignment constituted prima facie evidence of the execution
security for her loans her money her market placements with petitioner FNCB
thereof. Thus, the burden of refuting this presumption fell on respondent. She
Finance, represented by PNs No. 8167 and 8169, later to be rolled-over as PNs No.
could have presented evidence of any defect or irregularity in the execution of
20138 and 20139. These Deeds of Assignment constitute the law between the
the said documents[125] or raised questions as to the verity of the notary publics
79

parties, and the obligations arising therefrom shall have the force of law between were, in reality, more of a pledge by respondent to petitioner Citibank of her

the parties and should be complied with in good faith.[129] Standard clauses in all credit due from petitioner FNCB Finance by virtue of her money market

of the Deeds provide that placements with the latter. According to Article 2118 of the Civil Code

The ASSIGNOR and the ASSIGNEE hereby further

agree as follows: ART. 2118. If a credit has been pledged becomes due
before it is redeemed, the pledgee may collect and receive the
xxxx amount due. He shall apply the same to the payment of his claim,
and deliver the surplus, should there be any, to the pledgor.
2. In the event the OBLIGATIONS are not paid at
maturity or upon demand, as the case may be, the ASSIGNEE is
fully authorized and empowered to collect and receive the PNs No. 20138 and 20139 matured on 3 September 1979, without them being
PLACEMENT (or so much thereof as may be necessary) and apply
the same in payment of the OBLIGATIONS. Furthermore, the redeemed by respondent, so that petitioner Citibank collected from petitioner
ASSIGNOR agrees that at any time, and from time to time, upon
request by the ASSIGNEE, the ASSIGNOR will promptly FNCB Finance the proceeds thereof, which included the principal amounts and
execute and deliver any and all such further instruments and
interests earned by the money market placements, amounting to P1,022,916.66,
documents as may be necessary to effectuate this Assignment.
and applied the same against respondents outstanding loans, leaving no surplus to
xxxx
be delivered to respondent.
5. This Assignment shall be considered as sufficient
authority to FNCB Finance to pay and deliver the PLACEMENT
or so much thereof as may be necessary to liquidate the Dollar accounts with Citibank-Geneva
OBLIGATIONS, to the ASSIGNEE in accordance with terms and
provisions hereof.[130]
Despite the legal compensation of respondents savings account and the total

application of the proceeds of PNs No. 20138 and 20139 to respondents

Petitioner Citibank was only acting upon the authority granted to it under the
outstanding loans, there still remained a balance of P1,069,847.40. Petitioner
foregoing Deeds when it finally used the proceeds of PNs No. 20138 and 20139,
Citibank then proceeded to applying respondents dollar accounts with Citibank-
paid by petitioner FNCB Finance, to partly pay for respondents outstanding loans.
Geneva against her remaining loan balance, pursuant to a Declaration of Pledge
Strictly speaking, it did not effect a legal compensation or off-set under Article
supposedly executed by respondent in its favor.
1278 of the Civil Code, but rather, it partly extinguished respondents obligations

through the application of the security given by the respondent for her
Certain principles of private international law should be considered herein because
loans. Although the pertinent documents were entitled Deeds of Assignment, they
the property pledged was in the possession of an entity in a foreign country,
80
namely, Citibank-Geneva. In the absence of any allegation and evidence presented
by petitioners of the specific rules and laws governing the constitution of a pledge
in Geneva, Switzerland, they will be presumed to be the same as Philippine local or
domestic laws; this is known as processual presumption.[131]
Upon closer scrutiny of the Declaration of Pledge, this Court finds the same
exceedingly suspicious and irregular.
First of all, it escapes this Court why petitioner Citibank took care to have the
Deeds of Assignment of the PNs notarized, yet left the Declaration of Pledge
unnotarized. This Court would think that petitioner Citibank would take greater
cautionary measures with the preparation and execution of the Declaration of
Pledge because it involved respondents all present and future fiduciary placements
with a Citibank branch in another country, specifically, in Geneva,
Switzerland. While there is no express legal requirement that the Declaration of
Pledge had to be notarized to be effective, even so, it could not enjoy the
same prima facie presumption of due execution that is extended to notarized
documents, and petitioner Citibank must discharge the burden of proving due
execution and authenticity of the Declaration of Pledge.
Second, petitioner Citibank was unable to establish the date when the Declaration
of Pledge was actually executed. The photocopy of the Declaration of Pledge
submitted by petitioner Citibank before the RTC was undated.[132] It presented
only a photocopy of the pledge because it already forwarded the original copy
thereof to Citibank-Geneva when it requested for the remittance of respondents
dollar accounts pursuant thereto. Respondent, on the other hand, was able to
secure a copy of the Declaration of Pledge, certified by an officer of Citibank-
Geneva, which bore the date 24 September 1979.[133] Respondent, however,
presented her passport and plane tickets to prove that she was out of the country
on the said date and could not have signed the pledge. Petitioner Citibank insisted
that the pledge was signed before 24 September 1979, but could not provide an
explanation as to how and why the said date was written on the pledge. Although
Mr. Tan testified that the Declaration of Pledge was signed by respondent
personally before him, he could not give the exact date when the said signing took
place. It is important to note that the copy of the Declaration of Pledge submitted
by the respondent to the RTC was certified by an officer of Citibank-Geneva,
which had possession of the original copy of the pledge. It is dated 24 September
1979, and this Court shall abide by the presumption that the written document is
truly dated.[134] Since it is undeniable that respondent was out of the country on
24 September 1979, then she could not have executed the pledge on the said date.
Third, the Declaration of Pledge was irregularly filled-out. The pledge was in a
standard printed form. It was constituted in favor of Citibank, N.A., otherwise
referred to therein as the Bank. It should be noted, however, that in the space
which should have named the pledgor, the name of petitioner Citibank was
typewritten, to wit
The pledge right herewith constituted shall secure all claims
which the Bank now has or in the future acquires against Citibank,
N.A., Manila (full name and address of the Debtor), regardless of
the legal cause or the transaction (for example current account,
securities transactions, collections, credits, payments,
documentary credits and collections) which gives rise thereto,
81
and including principal, all contractual and penalty interest,
commissions, charges, and costs.
The pledge, therefore, made no sense, the pledgor and pledgee being the same
entity. Was a mistake made by whoever filled-out the form? Yes, it could be a
possibility. Nonetheless, considering the value of such a document, the mistake as
to a significant detail in the pledge could only be committed with gross
carelessness on the part of petitioner Citibank, and raised serious doubts as to
the authenticity and due execution of the same. The Declaration of Pledge had
passed through the hands of several bank officers in the country and abroad, yet,
surprisingly and implausibly, no one noticed such a glaring mistake.
Lastly, respondent denied that it was her signature on the Declaration of
Pledge. She claimed that the signature was a forgery. When a document is assailed
on the basis of forgery, the best evidence rule applies
Basic is the rule of evidence that when the subject of
inquiry is the contents of a document, no evidence is admissible
other than the original document itself except in the instances
mentioned in Section 3, Rule 130 of the Revised Rules of Court.
Mere photocopies of documents are inadmissible pursuant to the
best evidence rule. This is especially true when the issue is
that of forgery.
As a rule, forgery cannot be presumed and must be
proved by clear, positive and convincing evidence and the burden
of proof lies on the party alleging forgery. The best evidence of
a forged signature in an instrument is the instrument itself
reflecting the alleged forged signature. The fact of forgery can
only be established by a comparison between the alleged forged
signature and the authentic and genuine signature of the person
whose signature is theorized upon to have been forged. Without
the original document containing the alleged forged signature,
one cannot make a definitive comparison which would establish
forgery. A comparison based on a mere xerox copy or
reproduction of the document under controversy cannot produce
reliable results.[135]
Respondent made several attempts to have the original copy of the pledge
produced before the RTC so as to have it examined by experts. Yet, despite
several Orders by the RTC,[136] petitioner Citibank failed to comply with the
production of the original Declaration of Pledge. It is admitted that Citibank-
Geneva had possession of the original copy of the pledge. While petitioner Citibank
in Manila and its branch in Geneva may be separate and distinct entities, they are
still incontestably related, and between petitioner Citibank and respondent, the
former had more influence and resources to convince Citibank-Geneva to return,
albeit temporarily, the original Declaration of Pledge. Petitioner Citibank did not
present any evidence to convince this Court that it had exerted diligent efforts
to secure the original copy of the pledge, nor did it proffer the reason why
Citibank-Geneva obstinately refused to give it back, when such document would
have been very vital to the case of petitioner Citibank.There is thus no
justification to allow the presentation of a mere photocopy of the Declaration of
Pledge in lieu of the original, and the photocopy of the pledge presented by
petitioner Citibank has nil probative value.[137] In addition, even if this Court
cannot make a categorical finding that respondents signature on the original copy
of the pledge was forged, it is persuaded that petitioner Citibank willfully
suppressed the presentation of the original document, and takes into consideration
the presumption that the evidence willfully suppressed would be adverse to
petitioner Citibank if produced.[138]
82

Without the Declaration of Pledge, petitioner Citibank had no authority No. 23356 and 23357, amounting to P318,897.34 and P203,150.00, respectively,

to demand the remittance of respondents dollar accounts with Citibank-Geneva earning an interest of 14.5% per annum as stipulated in the PNs, [139] beginning 17

and to apply them to her outstanding loans. It cannot effect legal compensation March 1977, the date of the placements.

under Article 1278 of the Civil Code since, petitioner Citibank itself admitted that

Citibank-Geneva is a distinct and separate entity. As for the dollar accounts, Petitioner Citibank is also ordered to refund to respondent the amount of

respondent was the creditor and Citibank-Geneva is the debtor; and as for the US$149,632.99, or its equivalent in Philippine currency, which had been remitted

outstanding loans, petitioner Citibank was the creditor and respondent was the from her Citibank-Geneva accounts. These dollar accounts, consisting of two

debtor. The parties in these transactions were evidently not the principal creditor fiduciary placements and current accounts with Citibank-Geneva shall continue

of each other. earning their respective stipulated interests from 26 October 1979, the date of

their remittance by Citibank-Geneva to petitioner Citibank in Manila and applied

Therefore, this Court declares that the remittance of respondents dollar against respondents outstanding loans.

accounts from Citibank-Geneva and the application thereof to her outstanding

loans with petitioner Citibank was illegal, and null and void. Resultantly, petitioner As for respondent, she is ordered to pay petitioner Citibank the balance

Citibank is obligated to return to respondent the amount of US$149,632,99 from of her outstanding loans, which amounted to P1,069,847.40 as of 5 September

her Citibank-Geneva accounts, or its present equivalent value in Philippine 1979. These loans continue to earn interest, as stipulated in the corresponding

currency; and, at the same time, respondent continues to be obligated to petitioner PNs, from the time of their respective maturity dates, since the supposed payment

Citibank for the balance of her outstanding loans which, as of 5 September 1979, thereof using respondents dollar accounts from Citibank-Geneva is deemed illegal,

amounted to P1,069,847.40. null and void, and, thus, ineffective.

V

The parties shall be liable VI

for interests on their
monetary obligations to each Petitioner Citibank shall be
other, as determined herein. liable for damages to
respondent.

In summary, petitioner Citibank is ordered by this Court to pay Petitioners protest the award by the Court of Appeals of moral damages,

respondent the proceeds of her money market placements, represented by PNs exemplary damages, and attorneys fees in favor of respondent. They argued that
83
the RTC did not award any damages, and respondent, in her appeal before the
Court of Appeals, did not raise in issue the absence of such.
While it is true that the general rule is that only errors which have been stated
in the assignment of errors and properly argued in the brief shall be considered,
this Court has also recognized exceptions to the general rule, wherein it
authorized the review of matters, even those not assigned as errors in the appeal,
if the consideration thereof is necessary in arriving at a just decision of the case,
and there is a close inter-relation between the omitted assignment of error and
those actually assigned and discussed by the appellant. [140] Thus, the Court of
Appeals did not err in awarding the damages when it already made findings that
would justify and support the said award.
Although this Court appreciates the right of petitioner Citibank to effect legal
compensation of respondents local deposits, as well as its right to the proceeds of
PNs No. 20138 and 20139 by virtue of the notarized Deeds of Assignment, to
partly extinguish respondents outstanding loans, it finds that petitioner Citibank
did commit wrong when it failed to pay and properly account for the proceeds of
respondents money market placements, evidenced by PNs No. 23356 and 23357,
and when it sought the remittance of respondents dollar accounts from Citibank-
Geneva by virtue of a highly-suspect Declaration of Pledge to be applied to the
remaining balance of respondents outstanding loans. It bears to emphasize that
banking is impressed with public interest and its fiduciary character requires high
standards of integrity and performance.[141] A bank is under the obligation to treat
the accounts of its depositors with meticulous care whether such accounts consist
only of a few hundred pesos or of millions of pesos.[142] The bank must record every
single transaction accurately, down to the last centavo, and as promptly as
possible.[143] Petitioner Citibank evidently failed to exercise the required degree
of care and transparency in its transactions with respondent, thus, resulting in the
wrongful deprivation of her property.
Respondent had been deprived of substantial amounts of her investments
and deposits for more than two decades. During this span of years, respondent
had found herself in desperate need of the amounts wrongfully withheld from
her. In her testimony[144] before the RTC, respondent narrated
Q By the way Mrs. Witness will you kindly tell us again, you said
before that you are a businesswoman, will you tell us
again what are the businesses you are engaged into [sic]?
A I am engaged in real estate. I am the owner of the Modesta
Village 1 and 2 in San Mateo, Rizal. I am also the
President and Chairman of the Board of Macador [sic]
Co. and Business Inc. which operates the Macador [sic]
International Palace Hotel. I am also the President of
the Macador [sic] International Palace Hotel, and also
the Treasures Home Industries, Inc. which I am the
Chairman and president of the Board and also operating
affiliated company in the name of Treasures Motor
Sales engaged in car dealers [sic] like Delta Motors, we
are the dealers of the whole Northern Luzon and I am
the president of the Disto Company, Ltd., based in
Hongkong licensed in Honkong [sic] and now operating in
Los Angeles, California.
Q What is the business of that Disto Company Ltd.?
A Disto Company, Ltd., is engaged in real estate and construction.
Q Aside from those businesses are you a member of any national
or community organization for social and civil activities?
84
A Yes sir.
Q What are those?
A I am the Vice-President of thes [sic] Subdivision Association
of the Philippines in 1976, I am also an officer of the
Chamber of Real Estate Business Association; I am also
an officer of the Chatholic [sic] Womens League and I
am also a member of the CMLI, I forgot the definition.
Q How about any political affiliation or government position held
if any?
A I was also a candidate for Mayo last January 30, 1980.
Q Where?
A In Dagupan City, Pangasinan.
Q What else?
A I also ran as an Assemblywoman last May, 1984, Independent
party in Regional I, Pangasinan.
Q What happened to your businesses you mentioned as a result
of your failure to recover you [sic] investments and bank
deposits from the defendants?
A They are not all operating, in short, I was hampered to push
through the businesses that I have.
A [sic] Of all the businesses and enterprises that you mentioned
what are those that are paralyzed and what remain
inactive?
A Of all the company [sic] that I have, only the Disto Company
that is now operating in California.
Q How about your candidacy as Mayor of Dagupan, [sic] City, and
later as Assemblywoman of Region I, what happened to
this?
A I won by voting but when election comes on [sic] the counting
I lost and I protested this, it is still pending and because
I dont have financial resources I was not able to push
through the case. I just have it pending in the Comelec.
Q Now, do these things also affect your social and civic
activities?
A Yes sir, definitely.
Q How?
A I was embarrassed because being a businesswoman I would like
to inform the Honorable Court that I was awarded as
the most outstanding businesswoman of the year in 1976
but when this money was not given back to me I was not
able to comply with the commitments that I have
promised to these associations that I am engaged into
[sic], sir.
For the mental anguish, serious anxiety, besmirched reputation, moral shock and
social humiliation suffered by the respondent, the award of moral damages is but
proper. However, this Court reduces the amount thereof to P300,000.00, for the
award of moral damages is meant to compensate for the actual injury suffered by
the respondent, not to enrich her.[145]
Having failed to exercise more care and prudence than a private individual
in its dealings with respondent, petitioner Citibank should be liable for exemplary
damages, in the amount of P250,000.00, in accordance with Article 2229 [146] and
2234[147] of the Civil Code.
With the award of exemplary damages, then respondent shall also be entitled to
an award of attorneys fees.[148] Additionally, attorney's fees may be awarded when
85

a party is compelled to litigate or to incur expenses to protect his interest by 2. The remittance of One Hundred Forty-Nine Thousand Six Hundred

reason of an unjustified act of the other party.[149] In this case, an award Thirty Two US Dollars and Ninety-Nine Cents (US$149,632.99) from respondents

of P200,000.00 attorneys fees shall be satisfactory. Citibank-Geneva accounts to petitioner Citibank in Manila, and the application of

the same against respondents outstanding loans with the latter,

In contrast, this Court finds no sufficient basis to award damages to is DECLARED illegal, null and void. Petitioner Citibank is ORDERED to refund to

petitioners. Respondent was compelled to institute the present case in the respondent the said amount, or its equivalent in Philippine currency using the

exercise of her rights and in the protection of her interests. In fact, although exchange rate at the time of payment, plus the stipulated interest for each of the

her Complaint before the RTC was not sustained in its entirety, it did raise fiduciary placements and current accounts involved, beginning 26 October 1979;

meritorious points and on which this Court rules in her favor. Any injury resulting

from the exercise of ones rights is damnum absque injuria.[150] 3. Petitioner Citibank is ORDERED to pay respondent moral damages in

the amount of Three Hundred Thousand Pesos (P300,000.00); exemplary damages

IN VIEW OF THE FOREGOING, the instant Petition is PARTLY in the amount of Two Hundred Fifty Thousand Pesos (P250,000.00); and attorneys

GRANTED. The assailed Decision of the Court of Appeals in CA-G.R. No. 51930, fees in the amount of Two Hundred Thousand Pesos (P200,000.00); and

dated 26 March 2002, as already modified by its Resolution, dated 20 November

2002, is hereby AFFIRMED WITH MODIFICATION, as follows 4. Respondent is ORDERED to pay petitioner Citibank the balance of her

outstanding loans, which, from the respective dates of their maturity to 5

1. PNs No. 23356 and 23357 are DECLARED subsisting and September 1979, was computed to be in the sum of One Million Sixty-Nine

outstanding. Petitioner Citibank is ORDERED to return to respondent the principal Thousand Eight Hundred Forty-Seven Pesos and Forty Centavos (P1,069,847.40),

amounts of the said PNs, amounting to Three Hundred Eighteen Thousand Eight inclusive of interest. These outstanding loans shall continue to earn interest, at

Hundred Ninety-Seven Pesos and Thirty-Four Centavos (P318,897.34) and Two the rates stipulated in the corresponding PNs, from 5 September 1979 until

Hundred Three Thousand One Hundred Fifty Pesos (P203,150.00), respectively, payment thereof.
SO ORDERED.
plus the stipulated interest of Fourteen and a half percent (14.5%) per annum,

beginning 17 March 1977;

Republic of the Philippines

Supreme Court
86

Baguio City
Regional Trial Court (RTC) in a Complaint for Sum of Money in favor of the

plaintiff.
THIRD DIVISION
The antecedents are as follows:

CONCEPCION CHUA GAW,

Petitioner, G.R. No. 160855
Spouses Chua Chin and Chan Chi were the founders of three business

Present: enterprises[3] namely: Hagonoy Lumber, Capitol Sawmill Corporation, and Columbia
- versus - YNARES-SANTIAGO, J., Wood Industries. The couple had seven children, namely, Santos Chua; Concepcion
Chairperson,
AUSTRIA-MARTINEZ, Chua; Suy Ben Chua; Chua Suy Phen; Chua Sioc Huan; Chua Suy Lu; and Julita Chua.
CHICO-NAZARIO,
NACHURA, and On June 19, 1986, Chua Chin died, leaving his wife Chan Chi and his seven children
SUY BEN CHUA and REYES, JJ.
as his only surviving heirs. At the time of Chua Chins death, the net worth of
FELISA CHUA,
Respondents. Hagonoy Lumber was P415,487.20.[4]
Promulgated:
April 16, 2008
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
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
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
DECISION
in equal pro indiviso shares equivalent to P25,967.00 each.[6] In said document,

Chan Chi and the six children likewise agreed to voluntarily renounce and waive
NACHURA, J.:
their shares over Hagonoy Lumber in favor of their co-heir, Chua Sioc Huan.

This is a Petition for Review on Certiorari from the Decision[1] of the

In May 1988, petitioner Concepcion Chua Gaw and her husband, Antonio
Court of Appeals (CA) in CA-G.R. CV No. 66790 and Resolution[2] denying the
Gaw, asked respondent, Suy Ben Chua, to lend them P200,000.00 which they will
motion for reconsideration. The assailed decision affirmed the ruling of the
use for the construction of their house in Marilao, Bulacan. The parties agreed
87

that the loan will be payable within six (6) months without interest.[7] On June 7, an accounting, and payment of her share in the profits, of Capital Sawmills

1988, respondent issued in their favor China Banking Corporation Check No. Corporation, Columbia Wood Industries Corporation, and Hagonoy Lumber. They

240810[8] for P200,000.00 which he delivered to the couples house in Marilao, claimed that respondent persuaded petitioner to temporarily forego her demand

Bulacan. Antonio later encashed the check. 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

On August 1, 1990, their sister, Chua Sioc Huan, executed a Deed of Sale her P200,000.00 as her share in the profits of Hagonoy Lumber.[12]

over all her rights and interests in Hagonoy Lumber for a consideration

of P255,000.00 in favor of respondent.[9] In his Reply, respondent averred that the spouses Gaw did not demand

from him an accounting of Capitol Sawmills Corporation, Columbia Wood

Meantime, the spouses Gaw failed to pay the amount they borrowed from Industries, and Hagonoy Lumber. He asserted that the spouses Gaw, in fact, have

respondent within the designated period. Respondent sent the couple a demand no right whatsoever in these businesses that would entitle them to an accounting

letter,[10] dated March 25, 1991, requesting them to settle their obligation with thereof. Respondent insisted that the P200,000.00 was given to and accepted by

the warning that he will be constrained to take the appropriate legal action if they them as a loan and not as their share in Hagonoy Lumber.[13]

fail to do so.

With leave of court, the spouses Gaw filed an Answer (with Amended

Failing to heed his demand, respondent filed a Complaint for Sum of Money Compulsory Counterclaim) wherein they insisted that petitioner, as one of the

against the spouses Gaw with the RTC. The complaint alleged that on June 7, 1988, compulsory heirs, is entitled to one-sixth (1/6) of Hagonoy Lumber, which the

he extended a loan to the spouses Gaw for P200,000.00, payable within six months respondent has arrogated to himself. They claimed that, despite repeated

without interest, but despite several demands, the couple failed to pay their demands, respondent has failed and refused to account for the operations of

obligation.[11] 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

In their Answer (with Compulsory Counterclaim), the spouses Gaw to petitioner her one-sixth (1/6) share thereof, which was estimated to be worth

contended that the P200,000.00 was not a loan but petitioners share in the profits not less than P500,000.00.[14]

of Hagonoy Lumber, one of her familys businesses. According to the spouses, when

they transferred residence to Marilao, Bulacan, petitioner asked respondent for

88

In his Answer to Amended Counterclaim, respondent explained that his

sister, Chua Sioc Huan, became the sole owner of Hagonoy Lumber when the heirs On cross-examination, respondent explained that he ceased to be a

executed the Deed of Partition on December 8, 1986. In turn, he became the sole stockholder of Capitol Sawmill when he sold his shares of stock to the other

owner of Hagonoy Lumber when he bought it from Chua Sioc Huan, as evidenced stockholders on January 1, 1991. He further testified that Chua Sioc Huan

by the Deed of Sale dated August 1, 1990.[15] 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

Defendants, in their reply,[16] countered that the documents on which the same from Chua Sioc Huan through a Deed of Sale dated August 1, 1990. [19]

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 On re-direct examination, respondent stated that he sold his shares of

claimed that these documents are mere paper arrangements which were prepared stock in Capitol Sawmill for P254,000.00, which payment he received in cash. He

only upon the advice of a counsel until all the heirs could reach and sign a final and also paid the purchase price of P255,000.00 for Hagonoy Lumber in cash, which

binding agreement, which, up to such time, has not been executed by the heirs.[17] 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

During trial, the spouses Gaw called the respondent to testify as several accounts at Planters Bank, Paluwagan ng Bayan, and China Bank, the amount

adverse witness under Section 10, Rule 132. On direct examination, respondent he paid to Chua Sioc Huan was not taken from any of them. He kept the amount in

testified that Hagonoy Lumber was the conjugal property of his parents Chua Chin the house because he was engaged in rediscounting checks of people from the

and Chan Chi, who were both Chinese citizens. He narrated that, initially, his public market. [20]

father leased the lots where Hagonoy Lumber is presently located from his

godfather, Lu Pieng, and that his father constructed the two-storey concrete On December 10, 1998, Antonio Gaw died due to cardio vascular and

building standing thereon. According to respondent, when he was in high school, it respiratory failure.[21]

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 On February 11, 2000, the RTC rendered a Decision in favor of the

their other brothers and sisters. He stated that he also managed Hagonoy Lumber respondent, thus:

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]
89

WHEREFORE, in the light of all the foregoing, the Court

hereby renders judgement ordering defendant Concepcion Chua put in issue, the non-presentation of the original document is not fatal so as to
Gaw to pay the [respondent] the following: affect its authenticity as well as the truth of its contents. Also, the parties to
1. P200,000.00 representing the
principal obligation with legal interest from the documents themselves do not contest their validity. Ultimately, petitioner
judicial demand or the institution of the
complaint on November 19, 1991; failed to establish her right to demand an accounting of the operations of Hagonoy
2. P50,000.00 as attorneys fees;
Lumber nor the delivery of her 1/6 share therein.
and
3. Costs of suit.
The defendants counterclaim is hereby dismissed for
being devoid of merit. As for petitioners claim that an accounting be done on Capitol Sawmill

Corporation and Columbia Wood Industries, the trial court held that respondent
SO ORDERED.[22]
is under no obligation to make such an accounting since he is not charged with

operating these enterprises.[23]

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 Aggrieved, petitioner appealed to the CA, alleging that the trial court erred (1)

No. 240810 to petitioner and her husband upon their request to lend them the when it considered the amount of P200,000.00 as a loan obligation and not

aforesaid amount. The trial court concluded that the P200,000.00 was a loan Concepcions share in the profits of Hagonoy Lumber; (2) when it considered as

advanced by the respondent from his own funds and not remunerations for evidence for the defendant, plaintiffs testimony when he was called to testify as

services rendered to Hagonoy Lumber nor petitioners advance share in the profits an adverse party under Section 10 (e), Rule 132 of the Rules of Court; and (3) when

of their parents businesses. 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]

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 On May 23, 2003, the CA affirmed the Decision of the RTC. [25] The

Hagonoy Lumber from Chua Sioc Huan to respondent, was never appellate court found baseless the petitioners argument that the RTC should not

impugned. Although respondent failed to produce the originals of the documents, have included respondents testimony as part of petitioners evidence. The CA noted

petitioner judicially admitted the due execution of the Deed of Partition, and even that the petitioner went on a fishing expedition, the taking of respondents

acknowledged her signature thereon, thus constitutes an exception to the best testimony having taken up a total of eleven hearings, and upon failing to obtain

evidence rule. As for the Deed of Sale, since the contents thereof have not been favorable information from the respondent, she now disclaims the same. Moreover,
90

LOWER COURTS APPEALED DECISIONS

the CA held that the petitioner failed to show that the inclusion of respondents OBJECTIVITY, ANNEX C.
testimony in the statement of facts in the assailed decision unduly prejudiced her
II. THAT ON THE IMPORTANT LEGAL ISSUE
defense and counterclaims. In fact, the CA noted that the facts testified to by RELATIVE TO THE AFORESAID TWO OPPOSING
CLAIMS OF RESPONDENT AND PETITIONER, CLEAR
respondent were deducible from the totality of the evidence presented. AND PALPABLE LEGAL ERROR HAS BEEN
COMMITTED UNDER THE LOWER COURTS
DECISION ANNEX C AND THE QUESTIONED
The CA likewise found untenable petitioners claim that Exhibits H (Deed DECISION OF MAY 23, 2003 (ANNEX A) AND THE
RESOLUTION OF DECEMBER 2, 2003, (ANNEX B) IN
of Sale) and Exhibit I (Deed of Partition) were merely temporary paper DEVIATING FROM AND DISREGARDING
ESTABLISHED SUPREME COURT DECISIONS
arrangements. The CA agreed with the RTC that the testimony of petitioner
ENJOINING COURTS NOT TO OVERLOOK OR
regarding the matter was uncorroborated she should have presented the other MISINTERPRET IMPORTANT FACTS AND
CIRCUMSTANCES, SUPPORTED BY CLEAR AND
heirs to attest to the truth of her allegation. Instead, petitioner admitted the due CONVINCING EVIDENCE ON RECORD, AND WHICH
ARE OF GREAT WEIGHT AND VALUE, WHICH
execution of the said documents. Since petitioner did not dispute the due
WOULD CHANGE THE RESULT OF THE CASE AND
execution and existence of Exhibits H and I, there was no need to produce the ARRIVE AT A JUST, FAIR AND OBJECTIVE
DECISION. (Citations omitted)
originals of the documents in accordance with the best evidence rule.[26]
III. THAT FINALLY, AS TO THE OTHER LEGAL
IMPORTANT ISSUE RELATIVE TO CLAIM OR
On December 2, 2003, the CA denied the petitioners motion for reconsideration OWNERSHIP OF THE HAGONOY LUMBER FAMILY
BUSINESS, CLEAR AND PALPABLE LEGAL ERROR HAS
for lack of merit.[27] BEEN COMMITTED ON THE REQUIREMENTS AND
CORRECT APPLICATION OF THE BEST EVIDENCE
RULE UNDER SECTION 3, RULE 130 OF THE REVISED
Petitioner is before this Court in this petition for review on certiorari, RULES OF COURT.[28]

raising the following errors:

The petition is without merit.

I. THAT ON THE PRELIMINARY IMPORTANT

RELATED ISSUE, CLEAR AND PALPABLE LEGAL Petitioner contends that her case was unduly prejudiced by the RTCs
ERROR HAS BEEN COMMITTED IN THE
APPLICATION AND LEGAL SIGNIFICANCE OF THE treatment of the respondents testimony as adverse witness during cross-
RULE ON EXAMINATION OF ADVERSE PARTY OR
examination by his own counsel as part of her evidence. Petitioner argues that the
HOSTILE WITNESS UNDER SECTION 10 (d) AND (e)
OF RULE 132, CAUSING SERIOUS DOUBT ON THE adverse witness testimony elicited during cross-examination should not be
91

considered as evidence of the calling party. She contends that the examination of counsel, it constitute a harmless error which would not, in any way, change the

respondent as adverse witness did not make him her witness and she is not bound result of the case.

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 In the first place, the delineation of a piece of evidence as part of the

adverse witness should not be considered as her evidence: 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
(11.a) That RESPONDENT-Appellee became owner of the of evidence needed to discharge the burden. In civil cases, that burden devolves
HAGONOY LUMBER business when he bought the same
from Chua Sioc Huan through a Deed of Sale upon the plaintiff who must establish her case by preponderance of evidence. The
dated August 1, 1990 (EXH.H);
rule is that the plaintiff must rely on the strength of his own evidence and not
(11.b) That the HAGONOY LUMBER, on the other hand, was
upon the weakness of the defendants evidence. Thus, it barely matters who with
acquired by the sister Chua Sioc Huan, by virtue of
Extrajudicial Partition and Renunciation of Hereditary a piece of evidence is credited. In the end, the court will have to consider the
Rights in favor of a Co-Heir (EXH. I);
entirety of the evidence presented by both parties. Preponderance of evidence is
(11.c) That the 3 lots on which the HAGONOY LUMBER business
then determined by considering all the facts and circumstances of the case, culled
is located were acquired by Lu Pieng from
the Santos family under the Deed of Absolute Sale from the evidence, regardless of who actually presented it.[31]
(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
That the witness is the adverse party does not necessarily mean that the
sold them to RESPONDENT-Appellee (EXHS. Q and P);
that after he acquired the 3 Lots, he has not sold them calling party will not be bound by the formers testimony. The fact remains that it
to anyone and he is the owner of the lots.[30]
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

We do not agree that petitioners case was prejudiced by the RTCs as if he had been called by the adverse party,[32] except by evidence of his bad

treatment of the respondents testimony during cross-examination as her character.[33] Under a rule permitting the impeachment of an adverse witness,

evidence. 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

If there was an error committed by the RTC in ascribing to the petitioner unrebutted.[34]

the respondents testimony as adverse witness during cross-examination by his own

92

A party who calls his adversary as a witness is, therefore, not bound by evidence was properly attributed to one party, but whether it was accorded the

the latters testimony only in the sense that he may contradict him by introducing apposite probative weight by the court. The testimony of an adverse witness is

other evidence to prove a state of facts contrary to what the witness testifies evidence in the case and should be given its proper weight, and such evidence

on.[35] A rule that provides that the party calling an adverse witness shall not be becomes weightier if the other party fails to impeach the witness or contradict

bound by his testimony does not mean that such testimony may not be given its his testimony.

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 Significantly, the RTCs finding that the P200,000.00 was given to the

do. 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

In the present case, the petitioner, by her own testimony, failed to certain facts of great weight and value in arriving at its decision. The RTC merely

discredit the respondents testimony on how Hagonoy Lumber became his sole took into consideration evidence which it found to be more credible than the self-

property. The petitioner admitted having signed the Deed of Partition but she serving and uncorroborated testimony of the petitioner.

insisted that the transfer of the property to Chua Siok Huan was only temporary. At this juncture, we reiterate the well-entrenched doctrine that the

On cross-examination, she confessed that no other document was executed to findings of fact of the CA affirming those of the trial court are accorded great

indicate that the transfer of the business to Chua Siok Huan was a temporary respect, even finality, by this Court. Only errors of law, not of fact, may be

arrangement. She declared that, after their mother died in 1993, she did not reviewed by this Court in petitions for review on certiorari under Rule 45.[39] A

initiate any action concerning Hagonoy Lumber, and it was only in her counterclaim departure from the general rule may be warranted where the findings of fact of

in the instant that, for the first time, she raised a claim over the business. 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

Due process requires that in reaching a decision, a tribunal must consider exception in the instant case because the findings and conclusions of the CA are

the entire evidence presented.[37] All the parties to the case, therefore, are in full accord with those of the trial court. These findings are buttressed by the

considered bound by the favorable or unfavorable effects resulting from the evidence on record. Moreover, the issues and errors alleged in this petition are

evidence.[38] As already mentioned, in arriving at a decision, the entirety of the substantially the very same questions of fact raised by petitioner in the appellate

evidence presented will be considered, regardless of the party who offered them court.

in evidence. In this light, the more vital consideration is not whether a piece of
93

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 It is also worthy to note that both the Deed of Partition and the Deed of

of which are in writing, could prove a loan transaction.[42] It is pure naivet to insist Sale were acknowledged before a Notary Public. The notarization of a private

that an entrepreneur who has several sources of income and has access to document converts it into a public document, and makes it admissible in court

considerable bank credit, no longer has any reason to borrow any amount. 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

The petitioners allegation that the P200,000.00 was advance on her share execution, and documents acknowledged before a notary public have in their favor

in the profits of Hagonoy Lumber is implausible. It is true that Hagonoy Lumber the presumption of regularity. Such a document must be given full force and

was originally owned by the parents of petitioner and respondent. However, on effect absent a strong, complete and conclusive proof of its falsity or nullity on

December 8, 1986, the heirs freely renounced and waived in favor of their sister account of some flaws or defects recognized by law.[45] A public document

Chua Sioc Huan all their hereditary shares and interest therein, as shown by the executed and attested through the intervention of a notary public is, generally,

Deed of Partition which the petitioner herself signed. By virtue of this deed, Chua evidence of the facts therein express in clear unequivocal manner.[46]

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, Petitioner, however, maintains that the RTC erred in admitting in evidence

1988, Chua Sioc Huan was already the sole owner of Hagonoy Lumber. At that time, a mere copy of the Deed of Partition and the Deed of Sale in violation of the best

both petitioner and respondent no longer had any interest in the business evidence rule. In addition, petitioner insists that the Deed of Sale was not the

enterprise; neither had a right to demand a share in the profits of the business. result of bona fide negotiations between a true seller and buyer.

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 The best evidence rule as encapsulated in Rule 130, Section 3,[47] of the

petitioner the P200,000.00 check on June 7, 1988, it could not have been given as Revised Rules of Civil Procedure applies only when the content of such document

an advance on petitioners share in the business, because at that moment in time is the subject of the inquiry. Where the issue is only as to whether such document

both of them had no participation, interest or share in Hagonoy Lumber. Even was actually executed, or exists, or on the circumstances relevant to or

assuming, arguendo, that the check was an advance on the petitioners share in the surrounding its execution, the best evidence rule does not apply and testimonial

profits of the business, it was highly unlikely that the respondent would deliver a evidence is admissible. Any other substitutionary evidence is likewise admissible

check drawn against his personal, and not against the business enterprises account. without need to account for the original.[48] Moreover, production of the original
94
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
[53]
the intention of the parties. 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.
FIRST DIVISION
[G.R. No. 80505 : December 4, 1990.]
192 SCRA 28
THE PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs. MARIO
TANDOY y LIM, Defendant-Appellant.
D E C I S I O N
CRUZ, J.:
The decision of the Regional Trial Court of Makati, Branch 133 dated October 13,
1987, convicting Mario Tandoy of the crime of violation of Art. II, Sec. 4 of Rep.
Act No. 6425 known as the Dangerous Drugs Act of 1972, is before us on appeal.
The information against the accused-appellant read as follows:
That on or about the 27th day of May 1986, in the Municipality of Makati, Metro
Manila, Philippines, and within the jurisdiction of this Honorable Court, the above-
named accused without being authorized by law, did then and there willfully,
unlawfully and feloniously sell eight (8) pieces of dried marijuana flowering tops,
two (2) pieces of dried marijuana flowering tops and crushed dried marijuana
flowering tops, which are prohibited drug, for and in consideration of P20.00.
Upon arraignment, Tandoy entered a plea of not guilty. After trial, Judge
Buenaventura J. Guerrero rendered a decision the dispositive portion of which
declared:
95
WHEREFORE, the Court finds Mario Tandoy y Lim guilty beyond
reasonable doubt of violation of Sec. 4, Art. II, Rep. Act No. 6425, as
amended, and is hereby sentenced to life imprisonment and to pay a fine
of P20,000.00 and cost.: nad
The marijuana confiscated in this case is declared confiscated and
forfeited and ordered turned over to the Dangerous Drugs Board for
proper disposal.
SO ORDERED.
The accused-appellant raises the following assignment of errors in this appeal:
1. The Court a quo erred in finding accused guilty beyond reasonable doubt
of the crime charged despite lack of evidence to prove that he sold
marijuana to the poseur-buyer.
2. The Court a quo erred in admitting in evidence against the accused Exh.
"E-2-A" which is merely a xerox copy of the P10.00 bill allegedly used as
buy-bust money.
The evidence of the prosecution may be summarized as follows:
On May 27, 1986, at about 3:30 p.m. Lt. Salido, Jr. of the Makati Police Station
dispatched Pfc. Herino de la Cruz, and Detectives Pablo R. Singayan, Nicanor
Candolesas, Luisito de la Cruz, Estanislao Dalumpines, Antonio Manalastas and
Virgilio Padua to conduct a buy-bust operation at Solchuaga St., Barangay
Singkamas, Makati.
The target area was a store along the said street, and Singayan was to pose as the
buyer. He stood alone near the store waiting for any pusher to approach. The other
members of the team strategically positioned themselves. Soon, three men
approached Singayan. One of them was the accused-appellant, who said without
preamble: "Pare, gusto mo bang umiskor?" Singayan said yes. The exchange was
made then and there — two rolls/pieces of marijuana for one P10.00 and two P5.00
bills marked ANU (meaning Anti-Narcotics Unit).
The team then moved in and arrested Tandoy. Manalastas and Candolesas made a
body search of the accused-appellant and took from him the marked money, as
well as eight more rolls/foils of marijuana and crushed leaves.: nad
The arresting officers brought Tandoy to the Office of the Anti-Narcotics Unit,
Makati Police Station, for investigation by Detective Marvin Pajilan. The accused-
appellant chose to remain silent after having been informed of his constitutional
rights.
These events were narrated under oath by De la Cruz, Singayan and Pajilan. 1
Microscopic, chemical and chromotographic examination was performed on the
confiscated marijuana by Raquel P. Angeles, forensic chemist of the National
Bureau of Investigation, who later testified that the findings were positive. The
marijuana was offered as an exhibit. 2
As might be expected, the accused-appellant had a different story. His testimony
was that from 1:30 to 4:00 p.m. of the day in question, he was playing "cara y cruz"
with 15 other persons along Solchuaga St. when somebody suddenly said that
policemen were making arrests. The players grabbed the bet money and
scampered. However, he and a certain Danny (another "cara y cruz" player) were
caught and taken to the Narcotics Command headquarters in Makati. There they
were mauled and warned that if they did not point to their fellow pushers, they
would rot in jail. The accused-appellant denied he had sold marijuana to Singayan
and insisted the bills taken from him were the bet money he had grabbed at the
"cara y cruz" game. 3
The trial court, which had the opportunity to observe the demeanor of the
witnesses and to listen to their respective testimonies, gave more credence to the
statements of the arresting officers. Applying the presumption that they had
performed their duties in a regular manner, it rejected Tandoy's uncorroborated
allegation that he had been manhandled and framed. Tandoy had not submitted
sufficient evidence of his charges, let alone his admission that he had no quarrel
with the peace officers whom he had met only on the day of his arrest.
In People v. Patog, 4 this Court held:
When there is no evidence and nothing to indicate the principal witness for the
prosecution was actuated by improper motives, the presumption is that he was not
so actuated and his testimony is entitled to full faith and credit.
Tandoy submits that "one will not sell this prohibited drug to another who is a total
stranger until the seller is certain of the identity of the buyer."
The conjecture must be rejected.: nad
In People v. Paco, 5 this Court observed:
Drug-pushing when done on a small level as in this case belongs to that class of
crimes that may be committed at anytime and at any place. After the offer to buy
is accepted and the exchange is made, the illegal transaction is completed in a few
minutes. The fact that the parties are in a public place and in the presence of
other people may not always discourage them from pursuing their illegal trade as
these factors may even serve to camouflage the same. Hence, the Court has
sustained the conviction of drug pushers caught selling illegal drugs in a billiard
hall (People v. Rubio, G.R. No. 66875, June 19, 1986, 142 SCRA 329; People v.
Sarmiento, G.R. No. 72141, January 12, 1987, 147 SCRA 252), in front of a store
(People vs. Khan, supra) along a street at 1:45 p.m. (People v. Toledo, G.R. No.
96
67609, November 22, 1985, 140 SCRA 259), and in front of a house (People v.
Policarpio, G.R. No. 69844, February 23, 1988).
As the Court has also held, "What matters is not an existing familiarity between
the buyer and the seller but their agreement and the acts constituting the sale
and delivery of the marijuana leaves." 6
Under the second assigned error, the accused-appellant invokes the best evidence
rule and questions the admission by the trial court of the xerox copy only of the
marked P10.00 bill.
The Solicitor General, in his Comment, correctly refuted that contention thus:
This assigned error centers on the trial court's admission of the P10.00 bill
marked money (Exh. E-2-A) which, according to the appellant, is excluded under
the best evidence rule for being a mere xerox copy. Apparently, appellant
erroneously thinks that said marked money is an ordinary document falling under
Sec. 2, Rule 130 of the Revised Rules of Court which excludes the introduction of
secondary evidence except in the five (5) instances mentioned therein.:-cralaw
The best evidence rule applies only when the contents of the document are the
subject of inquiry. Where the issue is only as to whether or not such document
was actually executed, or exists, or in the circumstances relevant to or
surrounding its execution, the best evidence rule does not apply and testimonial
evidence is admissible. (Cf. Moran, op. cit., pp. 76-77; 4 Martin, op. cit., p. 78.)
Since the aforesaid marked money was presented by the prosecution solely for
the purpose of establishing its existence and not its contents, other
substitutionary evidence, like a xerox copy thereof, is therefore admissible
without the need of accounting for the original.
Moreover, the presentation at the trial of the "buy-bust money" was not
indispensable to the conviction of the accused-appellant because the sale of the
marijuana had been adequately proved by the testimony of the police officers. So
long as the marijuana actually sold by the accused-appellant had been submitted
as an exhibit, the failure to produce the marked money itself would not constitute
a fatal omission.
We are convinced from the evidence on record that the prosecution has overcome
the constitutional presumption of innocence in favor of the accused-appellant with
proof beyond reasonable doubt of his guilt. He must therefore suffer the penalty
prescribed by law for those who would visit the scourge of drug addiction upon our
people.
WHEREFORE, the appeal is DISMISSED and the challenged decision AFFIRMED
in toto, with costs against the accused-appellant.: nad
SO ORDERED
SECOND DIVISION
G.R. No. 142641 July 17, 2006
PACIFICO B. ARCEO, JR., petitioner,
vs.
PEOPLE OF THE PHILIPPINES, respondent.
DECISION
CORONA, J.:
This petition for review on certiorari assails the April 28, 1999 decision1 and
March 27, 2000 resolution2 of the Court of Appeals in CA-G.R. CR No. 19601
affirming the trial court’s judgment finding petitioner Pacifico B. Arceo, Jr.
liable for violation of Batas Pambansa Blg. (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 Cenizal’s 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
97
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 court’s 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.
Petitioner’s 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, Cenizal’s 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
Petitioner’s 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
98
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 drawee bank 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 drawee bank 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 petitioner’s claim, Cenizal’s counsel had
informed petitioner in writing of the check’s 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, petitioner’s 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 petitioner’s 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.
99
SO ORDERED.
THIRD DIVISION
[G.R. No. 152807. August 12, 2003]
HEIRS OF LOURDES SAEZ SABANPAN: BERNARDO S. SABANPAN, RENE
S. SABANPAN, DANILO S. SABANPAN and THELMA S. CHU;
HEIRS OF ADOLFO SAEZ: MA. LUISA SAEZ TAPIZ, MA. VICTORIA
SAEZ LAPITAN, MA. BELEN SAEZ and EMMANUEL SAEZ; and
HEIRS OF CRISTINA SAEZ GUTIERREZ: ROY SAEZ GUTIERREZ
and LUIS SAEZ JR., petitioners, vs. ALBERTO C. COMORPOSA,
HERDIN C. COMORPOSA, OFELIA C. ARIEGO,[1] REMEDIOS
COMORPOSA, VIRGILIO A. LARIEGO,1-a BELINDA M. COMORPOSA
and ISABELITA H. COMORPOSA, respondents.
D E C I S I O N
PANGANIBAN, J.:
The admissibility of evidence should be distinguished from its probative
value. Just because a piece of evidence is admitted does not ipso facto mean that
it conclusively proves the fact in dispute.
The Case
Before us is a Petition for Review[2] under Rule 45 of the Rules of Court,
seeking to set aside the August 7, 2001 Decision and the February 27, 2002
Resolution of the Court of Appeals[3](CA) in CA-GR SP No. 60645. The dispositive
portion of the assailed Decision reads as follows:
WHEREFORE, in view of all the foregoing, the Court hereby AFFIRMS the
Decision dated 22 June 2000 rendered by Branch 18 of the Regional Trial Court
of Digos, Davao del Sur, REVERSING and SETTING ASIDE the Decision of the
Municipal Trial Court of Sta. Cruz, Davao del Su[r].[4]
The assailed Resolution[5] denied petitioners Motion for Reconsideration.
The Facts
The CA summarized the factual antecedents of the case as follows:
A [C]omplaint for unlawful detainer with damages was filed by [petitioners]
against [respondents] before the Santa Cruz, Davao del Sur Municipal Trial
Court.
The [C]omplaint alleged that Marcos Saez was the lawful and actual possessor of
Lot No. 845, Land 275 located at Darong, Sta. Cruz, Davao del Sur with an area
of 1.2 hectares. In 1960, he died leaving all his heirs, his children and
grandchildren.
In 1965, Francisco Comorposa who was working in the land of Oboza was
terminated from his job. The termination of his employment caused a problem in
relocating his house. Being a close family friend of [Marcos] Saez, Francisco
Comorposa approached the late Marcos Saezs son, [Adolfo] Saez, the husband of
Gloria Leano Saez, about his problem. Out of pity and for humanitarian
consideration, Adolfo allowed Francisco Comorposa to occupy the land of Marcos
Saez. Hence, his nipa hut was carried by his neighbors and transferred to a
portion of the land subject matter of this case. Such transfer was witnessed by
several people, among them, Gloria Leano and Noel Oboza. Francisco Comorposa
occupied a portion of Marcos Saez property without paying any rental.
Francisco Comorposa left for Hawaii, U.S.A. He was succeeded in his possession
by the respondents who likewise did not pay any rental and are occupying the
premises through petitioners tolerance.
On 7 May 1998, a formal demand was made upon the respondents to vacate the
premises but the latter refused to vacate the same and claimed that they [were]
the legitimate claimants and the actual and lawful possessor[s] of the
premises. A [C]omplaint was filed with the barangay office of Sta. Cruz[,] Davao
del Sur, but the parties failed to arrive at an amicable settlement. Thus, the
corresponding Certificate to File Action was issued by the said barangay and an
action for unlawful detainer was filed by petitioners against respondents.
Respondents, in their Answer, denied the material allegations of the [C]omplaint
and alleged that they entered and occupied the premises in their own right as
true, valid and lawful claimants, possessors and owners of the said lot way back
in 1960 and up to the present time; that they have acquired just and valid
ownership and possession of the premises by ordinary or extraordinary
100

prescription, and that the Regional Director of the DENR, Region XI has already
upheld their possession over the land in question when it ruled that they [were]
the rightful claimants and possessors and [were], therefore, entitled to the
issuance of a title.
The Municipal Trial Court of Sta. Cruz, Davao del Sur rendered judgment in
favor of petitioners but the Regional Trial Court of Digos, Davao del Sur, on
appeal, reversed and set aside the said decision. x x x[6]
II
Did the Court of Appeals gravely abuse its discretion and err in sustaining the
Regional Trial Courts ruling giving weight to the CENR Officers Certification,
which only bears the facsimile of the alleged signature of a certain Jose F.
Tagorda and, [worse], it is a new matter raised for the first time on appeal?
III

Did the Court of Appeals gravely abuse its discretion and err in holding that the
Ruling of the Court of Appeals land subject matter of this case has been acquired by means of adverse
possession and prescription?

Affirming the Regional Trial Court (RTC), the CA upheld the right of IV
respondents as claimants and possessors. The appellate court held that -- although
not yet final -- the Order issued by the regional executive director of the
Did the Court of Appeals gravely abuse its discretion, and err in declaring that,
Department of Environment and Natural Resources (DENR) remained in full force
neither is there error on the part of the Regional Trial Court, when it did not
and effect, unless declared null and void. The CA added that the Certification
give importance to the affidavits by Gloria Leano Saez, Noel [Oboza], and Paulina
issued by the DENRs community environment and natural resources (CENR) officer
Paran for allegedly being self serving?[8]
was proof that when the cadastral survey was conducted, the land was still
alienable and was not yet allocated to any person.
To facilitate the discussion, the fourth and the third issues shall be
According to the CA, respondents had the better right to possess alienable discussed in reverse sequence.
and disposable land of the public domain, because they have suffiently proven their
actual, physical, open, notorious, exclusive, continuous and uninterrupted
possession thereof since 1960. The appellate court deemed as self-serving, and The Courts Ruling
therefore incredible, the Affidavits executed by Gloria Leano Saez, Noel Oboza
and Paulina Paran.
The Petition has no merit.
Hence, this Petition.[7]

First Issue:
The Issue
The DENR Order of April 2, 1998

In their Memorandum, petitioners raise the following issues for the Courts
Petitioners claim that the reliance of the CA upon the April 2, 1998 Order
consideration:
issued by the regional director of the DENR was erroneous. The reason was that
I the Order, which had upheld the claim of respondents, was supposedly not yet
final and executory. Another Order dated August 23, 1999,[9] issued later by the
Did the Court of Appeals gravely abuse its discretion and [err] in sustaining the DENR regional director, allegedly held in abeyance the effectivity of the earlier
ruling of the Regional Trial Court giving credence to the Order dated 2 April one.
1998 issued by the regional executive director?
101
Under the Public Land Act,[10] the management and the disposition of public
land is under the primary control of the director of lands[11] (now the director of
the Lands Management Bureau or LMB),[12] subject to review by the DENR
secretary.[13] As a rule, then, courts have no jurisdiction to intrude upon matters
properly falling within the powers of the LMB.
The powers given to the LMB and the DENR to alienate and dispose of public
land does not, however, divest regular courts of jurisdiction over possessory
actions instituted by occupants or applicants to protect their respective
possessions and occupations.[14] The power to determine who has actual physical
possession or occupation of public land and who has the better right of possession
over it remains with the courts.[15] But once the DENR has decided, particularly
through the grant of a homestead patent and the issuance of a certificate of title,
its decision on these points will normally prevail.[16]
Therefore, while the issue as to who among the parties are entitled to a piece
of public land remains pending with the DENR, the question of recovery of
possession of the disputed property is a matter that may be addressed to the
courts.
Second Issue:
CENR Officers Certification
Petitioners contend that the CENR Certification dated July 22, 1997 is a
sham document, because the signature of the CENR officer is a mere facsimile. In
support of their argument, they cite Garvida v. Sales Jr.[17] and argue that the
Certification is a new matter being raised by respondents for the first time on
appeal.
We are not persuaded.
In Garvida, the Court held:
A facsimile or fax transmission is a process involving the transmission and
reproduction of printed and graphic matter by scanning an original copy, one
elemental area at a time, and representing the shade or tone of each area by a
specified amount of electric current. x x x[18]
Pleadings filed via fax machines are not considered originals and are at best
exact copies. As such, they are not admissible in evidence, as there is no way of
determining whether they are genuine or authentic.[19]
The Certification, on the other hand, is being contested for bearing a
facsimile of the signature of CENR Officer Jose F. Tagorda. The facsimile
referred to is not the same as that which is alluded to in Garvida. The one
mentioned here refers to a facsimile signature, which is defined as a signature
produced by mechanical means but recognized as valid in banking, financial, and
business transactions.[20]
Note that the CENR officer has not disclaimed the Certification. In fact,
the DENR regional director has acknowledged and used it as reference in his
Order dated April 2, 1998:
x x x. CENR Officer Jose F. Tagorda, in a CERTIFICATION dated 22 July 1997,
certified among others, that: x x x per records available in his Office, x x x the
controverted lot x x x was not allocated to any person x x x.[21]
If the Certification were a sham as petitioner claims, then the regional
director would not have used it as reference in his Order. Instead, he would have
either verified it or directed the CENR officer to take the appropriate action, as
the latter was under the formers direct control and supervision.
Petitioners claim that the Certification was raised for the first time on
appeal is incorrect. As early as the pretrial conference at the Municipal Trial Court
(MTC), the CENR Certification had already been marked as evidence for
respondents as stated in the Pre-trial Order.[22] The Certification was not
formally offered, however, because respondents had not been able to file their
position paper.
Neither the rules of procedure[23] nor jurisprudence[24] would sanction the
admission of evidence that has not been formally offered during the trial. But this
evidentiary rule is applicable only to ordinary trials, not to cases covered by the
rule on summary procedure -- cases in which no full-blown trial is held.[25]
Third Issue:
Affidavit of Petitioners Witnesses
Petitioners assert that the CA erred in disregarding the Affidavits of their
witnesses, insisting that the Rule on Summary Procedure authorizes the use of
affidavits. They also claim that the failure of respondents to file their position
paper and counter-affidavits before the MTC amounts to an admission by silence.
102
The admissibility of evidence should not be confused with its probative
value. Admissibility refers to the question of whether certain pieces of evidence
are to be considered at all, while probative value refers to the question of whether
the admitted evidence proves an issue.[26] Thus, a particular item of evidence may
be admissible, but its evidentiary weight depends on judicial evaluation within the
guidelines provided by the rules of evidence.[27]
While in summary proceedings affidavits are admissible as the witnesses
respective testimonies, the failure of the adverse party to reply does not ipso
facto render the facts, set forth therein, duly proven. Petitioners still bear the
burden of proving their cause of action, because they are the ones asserting an
affirmative relief.[28]
Fourth Issue:
Defense of Prescription
Petitioners claim that the court a quo erred in upholding the defense of
prescription proffered by respondents. It is the formers contention that since
the latters possession of the land was merely being tolerated, there was no basis
for the claim of prescription. We disagree.
For the Court to uphold the contention of petitioners, they have first to
prove that the possession of respondents was by mere tolerance. The only pieces
of evidence submitted by the former to support their claim were a technical
description and a vicinity map drawn in accordance with the survey dated May 22,
1936.[29] Both of these were discredited by the CENR Certification, which
indicated that the contested lot had not yet been allocated to any person when
the survey was conducted.[30] The testimony of petitioners witnesses alone cannot
prevail over respondents continued and uninterrupted possession of the subject
lot for a considerable length of time.
Furthermore, this is an issue of fact that cannot, as a rule, be raised in a
petition for review under Rule 45.[31]
WHEREFORE, the Petition is DENIED and the assailed
Decision AFFIRMED. Costs against petitioners.
SO ORDERED.
THIRD DIVISION
[G.R. No. 191696, April 10, 2013]
ROGELIO DANTIS, Petitioner, v. JULIO MAGHINANG, JR., Respondent.
D E C I S I O N
MENDOZA, J.:
This is a petition for review on certiorari seeking to reverse and set aside the
January 25, 2010 Decision1and the March 23, 2010 Resolution2 of the Court of
Appeals (CA), in CA-G.R. CV No. 85258, reversing the March 2, 2005 Decision3 of
the Regional Trial Court, Branch 18, Malolos, Bulacan (RTC), in an action for
quieting of title and recovery of possession with damages.
The Facts
The case draws its origin from a complaint4 for quieting of title and recovery of
possession with damages filed by petitioner Rogelio Dantis (Rogelio) against
respondent Julio Maghinang, Jr. (Julio, Jr.) before the RTC, docketed as Civil
Case No. 280-M-2002. Rogelio alleged that he was the registered owner of a
parcel of land covered by Transfer Certificate of Title (TCT) No. T-125918, with
an area of 5,657 square meters, located in Sta. Rita, San Miguel, Bulacan; that he
acquired ownership of the property through a deed of extrajudicial partition of
the estate of his deceased father, Emilio Dantis (Emilio), dated December 22,
1993; that he had been paying the realty taxes on the said property; that Julio,
Jr. occupied and built a house on a portion of his property without any right at
all; that demands were made upon Julio, Jr. that he vacate the premises but the
same fell on deaf ears; and that the acts of Julio, Jr. had created a cloud of
doubt over his title and right of possession of his property. He, thus, prayed
that judgment be rendered declaring him to be the true and real owner of the
parcel of land covered by TCT No. T-125918; ordering Julio, Jr. to deliver the
possession of that portion of the land he was occupying; and directing Julio, Jr.
to pay rentals from October 2000 and attorney’s fees of P100,000.00.
He added that he was constrained to institute an ejectment suit against Julio,
Jr. before the Municipal Trial Court of San Miguel, Bulacan (MTC), but the
complaint was dismissed for lack of jurisdiction and lack of cause of action.
In his Answer,5 Julio, Jr. denied the material allegations of the complaint. By way
of an affirmative defense, he claimed that he was the actual owner of the 352
square meters (subject lot) of the land covered by TCT No. T-125918 where he
was living; that he had been in open and continuous possession of the property
for almost thirty (30) years; the subject lot was once tenanted by his ancestral
relatives until it was sold by Rogelio’s father, Emilio, to his father, Julio
103
Maghinang, Sr. (Julio, Sr.); that later, he succeeded to the ownership of the
subject lot after his father died on March 10, 1968; and that he was entitled to
a separate registration of the subject lot on the basis of the documentary
evidence of sale and his open and uninterrupted possession of the property.
As synthesized by the RTC from the respective testimonies of the principal
witnesses, their diametrically opposed positions are as
follows:chanroblesvirtuallawlibrary
Plaintiff Rogelio Dantis testified that he inherited 5,657 square meters of land,
identified as Lot 6-D-1 of subdivision plan Psd-031421-054315, located at Sta.
Rita, San Miguel, Bulacan, through an Extrajudicial Partition of Estate of Emilio
Dantis, executed in December 1993 which land was titled later on under his
name, Rogelio Dantis, married to Victoria Payawal, as shown by copy of Transfer
Certificate of Title No. T-125918, issued by the Register of Deeds of Bulacan on
September 29, 1998, declared for taxation purposes as Tax Declaration with
ARP No. C20-22-043-07-046. According to him, defendant and his predecessor-
in-interest built the house located on said lot. When he first saw it, it was only a
small hut but when he was about 60 years old, he told defendant not to build a
bigger house thereon because he would need the land and defendant would have
to vacate the land. Plaintiff, however, has not been in physical possession of the
premises.
Defendant Julio Maghinang, Jr., presented by plaintiff as adverse witness,
testified that he has no title over the property he is occupying. He has not paid
realty taxes thereon. He has not paid any rental to anybody. He is occupying
about 352 square meters of the lot. He presented an affidavit executed on
September 3, 1953 by Ignacio Dantis, grandfather of Rogelio Dantis and the
father of Emilio Dantis. The latter was, in turn, the father of Rogelio Dantis.
The affidavit, according to affiant Ignacio Dantis, alleged that Emilio Dantis
agreed to sell 352 square meters of the lot to Julio Maghinang on installment.
Defendant was then 11 years old in 1952.
Defendant Julio Maghinang, Jr. likewise testified for the defendant’s case as
follows: He owns that house located at Sta. Rita, San Miguel, Bulacan, on a 352
square meter lot. He could not say that he is the owner because there is still
question about the lot. He claimed that his father, Julio Maghinang (Sr.), bought
the said lot from the parents of Rogelio Dantis. He admitted that the affidavit
was not signed by the alleged vendor, Emilio Dantis, the father of Rogelio Dantis.
The receipt he presented was admittedly a mere photocopy. He spent
P50,000.00 as attorney’s fees. Since 1953, he has not declared the property as
his nor paid the taxes thereon because there is a problem.6
On March 2, 2005, the RTC rendered its decision declaring Rogelio as the true
owner of the entire 5,657-square meter lot located in Sta. Rita, San Miguel,
Bulacan, as evidenced by his TCT over the same. The RTC did not lend any
probative value on the documentary evidence of sale adduced by Julio, Jr.
consisting of: 1) an affidavit allegedly executed by Ignacio Dantis (Ignacio),
Rogelio’s grandfather, whereby said affiant attested, among others, to the sale
of the subject lot made by his son, Emilio, to Julio, Sr. (Exhibit “3”)7; and 2) an
undated handwritten receipt of initial downpayment in the amount of P100.00
supposedly issued by Emilio to Julio, Sr. in connection with the sale of the
subject lot (Exhibit “4”).8 The RTC ruled that even if these documents were
adjudged as competent evidence, still, they would only serve as proofs that the
purchase price for the subject lot had not yet been completely paid and, hence,
Rogelio was not duty-bound to deliver the property to Julio, Jr. The RTC found
Julio, Jr. to be a mere possessor by tolerance. The dispositive portion of the
RTC decision reads:chanroblesvirtuallawlibrary
WHEREFORE, Judgment is hereby rendered as follows:
1. quieting the title and removing whatever cloud over the title on
the parcel of land, with area of 5,647 sq. meters, more or less,
located at Sta. Rita, San Miguel, Bulacan, covered by Transfer
Certificate of Title No. T-125918 issued by the Register of
Deeds of Bulacan in the name of “Rogelio Dantis, married to
Victoria Payawal”;cralawlibrary
2. declaring that Rogelio Dantis, married to Victoria Payawal, is
the true and lawful owner of the aforementioned real property;
and
3. ordering defendant Julio Maghinang, Jr. and all persons claiming
under him to peacefully vacate the said real property and
surrender the possession thereof to plaintiff or latter’s
successors-in-interest.
No pronouncement as to costs in this instance.
SO ORDERED.9
Julio, Jr. moved for a reconsideration of the March 2, 2005 Decision, but the
motion was denied by the RTC in its May 3, 2005 Order.10 Feeling aggrieved,
Julio, Jr. appealed the decision to the CA.
104
On January 25, 2010, the CA rendered the assailed decision in CA-G.R. CV NO.
85258, finding the appeal to be impressed with merit. It held that Exhibit “4”
was an indubitable proof of the sale of the 352-square meter lot between Emilio
and Julio, Sr. It also ruled that the partial payment of the purchase price,
coupled with the delivery of the res, gave efficacy to the oral sale and brought
it outside the operation of the statute of frauds. Finally, the court a quo
declared that Julio, Jr. and his predecessors-in-interest had an equitable claim
over the subject lot which imposed on Rogelio and his predecessors-in-interest a
personal duty to convey what had been sold after full payment of the selling
price. The decretal portion of the CA decision reads:chanroblesvirtuallawlibrary
IN VIEW OF THE FOREGOING, the decision appealed from is reversed. The
heirs of Julio Maghinang Jr. are declared the owners of the 352-square meter
portion of the lot covered by TCT No. T-125968 where the residence of
defendant Julio Maghinang is located, and the plaintiff is ordered to reconvey
the aforesaid portion to the aforesaid heirs, subject to partition by agreement
or action to determine the exact metes and bounds and without prejudice to any
legal remedy that the plaintiff may take with respect to the unpaid balance of
the price.
SO ORDERED.11
The motion for reconsideration12 filed by Rogelio was denied by the CA in its
March 23, 2010 Resolution. Unfazed, he filed this petition for review on
certiorari before this Court.
Issues:
The fundamental question for resolution is whether there is a perfected
contract of sale between Emilio and Julio, Sr. The determination of this issue
will settle the rightful ownership of the subject lot.
Rogelio submits that Exhibit “3” and Exhibit “4” are devoid of evidentiary value
and, hence, deserve scant consideration. He stresses that Exhibit “4” is
inadmissible in evidence being a mere photocopy, and the existence and due
execution thereof had not been established. He argues that even if Exhibit “4”
would be considered as competent and admissible evidence, still, it would not be
an adequate proof of the existence of the alleged oral contract of sale because
it failed to provide a description of the subject lot, including its metes and
bounds, as well as its full price or consideration.13cralawvllred
Rogelio argues that while reconveyance may be availed of by the owner of a real
property wrongfully included in the certificate of title of another, the remedy is
not obtainable herein since he is a transferee in good faith, having acquired the
land covered by TCT No. T-125918, through a Deed of Extrajudicial Partition of
Estate.14 He asserts that he could not be considered a trustee as he was not
privy to Exhibit “4.” In any event, he theorizes that the action for reconveyance
on the ground of implied trust had already prescribed since more than 10 years
had lapsed since the execution of Exhibit “4” in 1953. It is the petitioner’s
stance that Julio, Jr. did not acquire ownership over the subject lot by
acquisitive prescription contending that prescription does not lie against a real
property covered by a Torrens title. He opines that his certificate of title to
the subject lot cannot be collaterally attacked because a Torrens title is
indefeasible and must be respected unless challenged in a direct
proceeding.15cralawvllred
The Court’s Ruling
In the case at bench, the CA and the RTC reached different conclusions on the
question of whether or not there was an oral contract of sale. The RTC ruled
that Rogelio Dantis was the sole and rightful owner of the parcel of land covered
by TCT No. T-125918 and that no oral contract of sale was entered into between
Emilio Dantis and Julio Maghinang, Sr. involving the 352-square meter portion of
the said property. The CA was of the opposite view. The determination of
whether there existed an oral contract of sale is essentially a question of fact.
In petitions for review under Rule 45, the Court, as a general rule, does not
venture to re-examine the evidence presented by the contending parties during
the trial of the case considering that it is not a trier of facts and the findings
of fact of the CA are conclusive and binding upon this Court. The rule, however,
admits of several exceptions. One of which is when the findings of the CA are
contrary to those of the trial court.16 Considering the incongruent factual
conclusions of the CA and the RTC, this Court is constrained to reassess the
factual circumstances of the case and reevaluate them in the interest of justice.
The petition is meritorious.
It is an age-old rule in civil cases that he who alleges a fact has the burden of
proving it and a mere allegation is not evidence.17 After carefully sifting through
the evidence on record, the Court finds that Rogelio was able to establish a
prima facie case in his favor tending to show his exclusive ownership of the
parcel of land under TCT No. T-125918 with an area of 5,657 square meters,
which included the 352-square meter subject lot. From the records, it appears
that TCT No. T-125918 is a derivative of TCT No. T-256228, which covered a
bigger area of land measuring 30,000 square meters registered in the name of
105
Emilio Dantis; that Emilio died intestate on November 13, 1952; that Emilio’s five
heirs, including Rogelio, executed an extra-judicial partition of estate on
December 22, 1993 and divided among themselves specific portions of the
property covered by TCT No. T-256228, which were already set apart by metes
and bounds; that the land known as Lot 6-D-1 of the subdivision plan Psd-031421-
054315 with an area of 5,657 sq. m. went to Rogelio, the property now covered
by TCT No. T-125918; and that the property was declared for realty tax purpose
in the name of Rogelio for which a tax declaration was issued in his name; and
that the same had not been transferred to anyone else since its issuance.
In light of Rogelio’s outright denial of the oral sale together with his insistence
of ownership over the subject lot, it behooved upon Julio, Jr. to contravene the
former’s claim and convince the court that he had a valid defense. The burden of
evidence shifted to Julio, Jr. to prove that his father bought the subject lot
from Emilio Dantis. In Jison v. Court of Appeals,18 the Court
held:chanroblesvirtuallawlibrary
Simply put, he who alleges the affirmative of the issue has the burden of proof,
and upon the plaintiff in a civil case, the burden of proof never parts. However,
in the course of trial in a civil case, once plaintiff makes out a prima facie case in
his favor, the duty or the burden of evidence shifts to defendant to controvert
plaintiff’s prima facie case, otherwise, a verdict must be returned in favor of
plaintiff. Moreover, in civil cases, the party having the burden of proof must
produce a preponderance of evidence thereon, with plaintiff having to rely on the
strength of his own evidence and not upon the weakness of the defendant’s. The
concept of “preponderance of evidence” refers to evidence which is of greater
weight, or more convincing, that which is offered in opposition to it; at bottom, it
means probability of truth.19
Julio, Jr. failed to discharge this burden. His pieces of evidence, Exhibit “3” and
Exhibit “4,” cannot prevail over the array of documentary and testimonial
evidence that were adduced by Rogelio. The totality of Julio, Jr.’s evidence
leaves much to be desired.
To begin with, Exhibit “3,” the affidavit of Ignacio, is hearsay evidence and,
thus, cannot be accorded any evidentiary weight. Evidence is hearsay when its
probative force depends on the competency and credibility of some persons
other than the witness by whom it is sought to be produced. The exclusion of
hearsay evidence is anchored on three reasons: 1) absence of cross-examination;
2) absence of demeanor evidence; and 3) absence of oath.20cralawvllred
Jurisprudence dictates that an affidavit is merely hearsay evidence where its
affiant/maker did not take the witness stand.21 The sworn statement of Ignacio
is of this kind. The affidavit was not identified and its averments were not
affirmed by affiant Ignacio. Accordingly, Exhibit “3” must be excluded from the
judicial proceedings being an inadmissible hearsay evidence. It cannot be deemed
a declaration against interest for the matter to be considered as an exception to
the hearsay rule because the declarant was not the seller (Emilio), but his father
(Ignacio).
Exhibit “4,” on the other hand, is considered secondary evidence being a mere
photocopy which, in this case, cannot be admitted to prove the contents of the
purported undated handwritten receipt. The best evidence rule requires that the
highest available degree of proof must be produced. For documentary evidence,
the contents of a document are best proved by the production of the document
itself to the exclusion of secondary or substitutionary evidence, pursuant to Rule
130, Section 322.
A secondary evidence is admissible only upon compliance with Rule 130, Section 5,
which states that: when the original has been lost or destroyed, or cannot be
produced in court, the offeror, upon proof of its 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. Accordingly, the offeror of the
secondary evidence is burdened to satisfactorily prove the predicates thereof,
namely: (1) the execution or existence of the original; (2) the loss and
destruction of the original or its non-production in court; and (3) the
unavailability of the original is not due to bad faith on the part of the
proponent/offeror. Proof of the due execution of the document and its
subsequent loss would constitute the basis for the introduction of secondary
evidence.23 In MCC Industrial Sales Corporation v. Ssangyong Corporation,24 it
was 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.
Guided by these norms, the Court holds that Julio, Jr. failed to prove the due
execution of the original of Exhibit “4” as well as its subsequent loss. A nexus of
logically related circumstance rendered Julio, Jr.’s evidence highly suspect. Also,
his testimony was riddled with improbabilities and contradictions which tend to
erode his credibility and raise doubt on the veracity of his evidence.
First, the claim of Julio, Jr. that Emilio affixed his signature on the original of
Exhibit “4” in 1953 is highly improbable because record shows that Emilio died
even before that year, specifically, on November 13, 1952. Excerpts from Julio,
Jr.’s testimony relative to this matter are as follows:chanroblesvirtuallawlibrary
106

Atty. Vicente Millora of the document was lost while it was in the possession of his parents. During
(On Cross-examination) cross-examination, however, he testified that it was lost while it was in his
possession.
Q: You don’t remember how old you were when this according to you you
witnessed Emilio Dantis signed this? Atty. Vicente Millora
A: Eleven years old, Sir. (On Cross-examination)

Q: So that was 1953? Q: x x x Where did you keep that document?

A: Yes, Sir. A: I was the one keeping that document because I live in different places,
[the said] it was lost or misplaced, Sir.
Q: And you were then…?
A: I was born October 1942, Sir. Q: In other words, it was lost while the same was in your possession??
A: Yes, Sir.27 (Emphasis supplied)
Q: You were eleven (11) years old?
A: Yes, Sir. Still, later, Julio, Jr. claimed that his sister was the one responsible for the loss
of the original of Exhibit “4” after borrowing the same from him.
Q: And you mean to say that you witnessed the signing allegedly of the original
of Exhibit “4” when you were eleven (11) years old? Atty. Vicente Millora
A: Yes, Sir. (On Cross-examination)

Q: And you remember what was signed in this receipt. From your memory can
you tell the title of this Exhibit “4”?
A: What I can say that it is a Sale, Sir.
Q: So, when you said that you witnessed an alleged sale you are referring to
Exhibit “4”?
A: Yes, Sir.25 (Emphasis supplied)
Second, Julio, Jr.’s testimony pertinent to the alleged loss of the original of
Exhibit “4” is laden with inconsistencies that detract from his credibility. His
testimony bears the earmarks of falsehood and, hence, not reliable. Julio, Jr.
testified in this wise:chanroblesvirtuallawlibrary
Q: So, who is your sister to whom you gave the original?
A: Benedicta Laya, Sir.
Q: In other words now, you did not lost the document or the original of Exhibit
“4” but you gave it to your sister, am I correct?
A: I just lent to her the original copy, Sir.
Q: So, you lent this original of Exhibit “4” to your sister and your sister never
returned the same to you?
A: Yes, Sir, because it was lost, that was the only one left in her custody.
Interpreter:cralaw

Atty. Roldan Villacorta Witness referring to the xerox copy.

(On Direct examination)
Q: Mr. Witness, I noticed that this document marked as Exhibit “4” is only a
photocopy, where is the original of this document?
A: The original was with the safekeeping of my parents because of the lapse of
time the original was misplaced, Sir.26
The above testimony of Julio, Jr. tends to give the impression that the original
Atty. Vicente Millora
Q: In other words, it was your sister who lost the original, is that correct?
A: Yes, Sir, when I lent the original.28 (Emphasis supplied)
The Court also notes the confused narration of Julio, Jr. regarding the last time
he saw the original of Exhibit “4.”
107
Atty. Vicente Millora
(On Cross-examination)
Q: And when did you last see the original?
A: When my mother died in 1993 that was the last time I tried to see the
original of the document after her interment, Sir.
Q: Where did you see this document?
A: From the safekeeping of my mother, Sir.29cralawvllred
xxxx
Q: When did you get this Exhibit “4” now, the photocopy from your sister?
A: When the interment of my mother in September 1993, Sir.
Q: Now, let us reform. Which one did you get after the interment of your
mother, this Exhibit “4” or the original?
A: I asked that xerox copy because I have lost the original and I could not find
the same, Sir.
Q: So, from the safe of your mother after her interment, what used you found
and got this Exhibit “4”?
A: Yes, Sir, from my sister.
Q: So, not from your mother safe?
A: The original was taken from the safe of my mother, Sir.
Q: So after your mother’s death you never saw the original?
A: I did not see it anymore because the original was lost before she died,
Sir.30(Underscoring supplied)
Third, it is quite strange that two receipts were prepared for the initial payment
of P100.00 in connection with the sale of the subject lot. The Court notes that
the contents of Exhibit “4” were similar to those of Annex “A” 31 of Julio, Jr.’s
Answer, dated June 9, 2002. Annex “A,” however, was typewritten and the name
of the recipient indicated therein was a certain Cornelio A. Dantis, whose
identity and participation in the alleged sale was never explained.
Fourth, apart from the lone testimony of Julio, Jr., no other witness who knew or
read Exhibit “4,” much less saw it executed, was presented. In the absence of
any shred of corroborative evidence, the Court cannot help but entertain doubts
on the truthfulness of Julio, Jr.’s naked assertion.
Assuming, in gratia argumenti, that Exhibit “4” is admissible in evidence, there
will still be no valid and perfected oral contract for failure of Julio, Jr. to prove
the concurrence of the essential requisites of a contract of sale by adequate and
competent evidence.
By the contract of sale, one of the contracting parties obligates himself to
transfer the ownership of, and to deliver, a determinate thing, and the other to
pay therefor a price certain in money or its equivalent.32A contract of sale is a
consensual contract and, thus, is perfected by mere consent which is manifested
by the meeting of the offer and the acceptance upon the thing and the cause
which are to constitute the contract.33 Until the contract of sale is perfected, it
cannot, as an independent source of obligation, serve as a binding juridical
relation between the parties.34 The essential elements of a contract of sale are:
a) consent or meeting of the minds, that is, consent to transfer ownership in
exchange for the price; b) determinate subject matter; and c) price certain in
money or its equivalent.35 The absence of any of the essential elements shall
negate the existence of a perfected contract of sale.36cralawvllred
Seemingly, Julio, Jr. wanted to prove the sale by a receipt when it should be the
receipt that should further corroborate the existence of the sale. At best, his
testimony only alleges but does not prove the existence of the verbal agreement.
Julio, Jr. miserably failed to establish by preponderance of evidence that there
was a meeting of the minds of the parties as to the subject matter and the
purchase price.
The chief evidence of Julio, Jr. to substantiate the existence of the oral
contract of sale is Exhibit “4.” For a better understanding and resolution of the
issue at hand, Exhibit “4” is being reproduced here:chanroblesvirtuallawlibrary
Alamin ng sino mang
Makababasa
Akong si Emilio Dantis may sapat na Gulang may asawa naninirahan sa Sta Rita
San Miguel Bul. ay kusang nagsasasay ng sumosunod.
Na ako Tumanggap Kay Julio Maghinang ng P100.00 peso cuartang Pilipino, bilang
paunang bayad sa Lupa niyang nilote sa akin 400 apat na raan mahigit na metro
cudrado.
Testigo Tumangap,
Emilio a Dantis
108

Julio, Jr. happened to be there, it was because his ancestors tenanted the
A perusal of the above document would readily show that it does not specify a land. It must be noted that when Julio, Jr. built his house, Rogelio protested.
determinate subject matter. Nowhere does it provide a description of the
property subject of the sale, including its metes and bounds, as well as its total WHEREFORE, the petition is GRANTED. The assailed January 25, 2010 Decision
area. The Court notes that while Julio, Jr. testified that the land subject of the and the March 23, 2010 Resolution of the Court Appeals, in CA-G.R. CV No.
sale consisted of 352 square meters, Exhibit “4,” however, states that it’s more 85258, are REVERSED and SET ASIDE. The March 2, 2005 Decision of the
than 400 square meters. Moreover, Exhibit “4” does not categorically declare Regional Trial Court of Malolos, Bulacan, Branch 18, in Civil Case No. 280-M-
the price certain in money. Neither does it state the mode of payment of the 2002, is REINSTATED.
purchase price and the period for its payment.
SO ORDERED.
In Swedish Match, AB v. Court of Appeals,37 the Court ruled that the manner of
payment of the purchase price was an essential element before a valid and Republic of the Philippines
binding contract of sale could exist. Albeit the Civil Code does not explicitly SUPREME COURT
provide that the minds of the contracting parties must also meet on the terms Manila
or manner of payment of the price, the same is needed, otherwise, there is no
sale.38 An agreement anent the manner of payment goes into the price so much so FIRST DIVISION
that a disagreement on the manner of payment is tantamount to a failure to
agree on the price.39 Further, in Velasco v. Court of Appeals,40 where the parties
already agreed on the object of sale and on the purchase price, but not on how
and when the downpayment and the installment payments were to be paid, this
G.R. No. 108453 July 11, 1994
Court ruled:chanroblesvirtuallawlibrary

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

Such being the situation, it cannot, therefore, be said that a definite and firm
vs.
sales agreement between the parties had been perfected over the lot in
DONALD DISMUKE Y PAMARITO, accused-appellant.
question. Indeed, this Court has already ruled before that a definite agreement
on the manner of payment of the purchase price is an essential element in the
formation of a binding and enforceable contract of sale. The fact, therefore, The Solicitor General for plaintiff-appellee.
that the petitioners delivered to the respondent the sum of P10,000.00 as part
of the down-payment that they had to pay cannot be considered as sufficient Public Attorney's Office for accused-appellant.
proof of the perfection of any purchase and sale agreement between the parties
herein under Art. 1482 of the new Civil Code, as the petitioners themselves
admit that some essential matter – the terms of payment – still had to be
mutually covenanted.41 DAVIDE, JR., J.:

The CA held that partial performance of the contract of sale – giving of a
downpayment coupled with the delivery of the res - took the oral contract out of
the scope of the Statute of Frauds. This conclusion arose from its erroneous
finding that there was a perfected contract of sale. The above disquisition,
however, shows that there was none. There is, therefore, no basis for the
application of the Statute of Frauds. The application of the Statute of Frauds
presupposes the existence of a perfected contract.42 As to the delivery of the
res, it does not appear to be a voluntary one pursuant to the purported sale. If
In an information1 filed with the Regional Trial Court of Valenzuela, Metro
Manila, and docketed therein as Criminal Case No. 994-V-92, accused Donald
Dismuke y Pamarito was charged with the violation of Section 4, Article II of
R.A. No. 6425, as amended, committed in this wise:
That on or about the 8th day of February 1992 in Valenzuela,
MM. and within the jurisdiction of this Honorable Court, the
above-named accused, without having been authorized by law,
109
did then and there wilfully, unlawfully and feloniously deliver,
sell and give away to one PO2 Nelson Labrador two tea bags of
marijuana flowering tops for one Twenty peso bill with SN
QB65721, knowing the same to be a prohibited drug under the
provision of the above-cited law.
CONTRARY TO LAW.
The accused pleaded not guilty at his arraignment on 24 February 1992.
After trial on the merits, the lower court promulgated on 28 August 1992 its
decision2 finding the accused guilty of the crime charged and sentencing him to
suffer the penalty of reclusion perpetua, to pay a fine of P20,000.00, and to pay
the costs.
In the main, the prosecution's case drew its support from the uncorroborated
testimony of PO3 Nelson Labrador of the Northern Police District Anti-
Narcotics Unit (NPD-ANU). He had joined the National Police Service on 5
November 1991.3 According to him, at about 3:00 p.m. of 8 February 1992
(barely three months after he had joined the service), he was at the office of
the NPD-ANU at Sangandaan, Caloocan City, when an informer arrived and told
him that a certain "Donald" was selling marijuana.4 He then decided to conduct a
buy-bust operation, with himself acting as the buyer, and with PO3 Eliseo
Gargaritano and PO3 Wilfredo Lumba as the other team members. Together with
the informer, they proceeded to Consuelo Street, Doña Ata Subdivision, Marulas,
Valenzuela, Metro Manila. They arrived at their destination at about 5:00 p.m.
and while cruising around, their informer pointed to a man near a sari-sari store
as Donald, the accused in this case. Labrador, who was in plainclothes,
approached Donald and told the latter of his "intention to buy P20.00 worth of
marijuana." Since Donald "trusted" him, he (Labrador) "gave him the buy/bust
money" and Donald in turn gave the former "two teabags of marijuana."5 Then,
pursuant to the team's pre-arranged signal, Labrador held Donald's right hand.
Responding thereto, the other members of the team came out from their
strategic locations, identified themselves, and assisted Labrador in arresting
Donald. The team then brought Donald to the NPD-ANU office in Sangandaan,
Caloocan City, where he was turned over to the unit's investigator, a certain
Reynaldo Lichido, for proper disposition and investigation. The latter prepared a
referral-letter to the PC Laboratory for examination of the tea bags.
Labrador, however, could only produce in court a photocopy of the alleged
marked money (Exhibit "E") because the bill itself was allegedly in the custody of
PO3 Gargaritano. The bill had supposedly been marked by Gargaritano on the
"Saligang Batas" portion thereof.6 The latter, despite subpoenas sent to him,
failed to appear, thereby causing the postponement of the hearing and prompting
the trial court to issue orders requiring him to show cause why he should not be
held in contempt of court.7 Although he subsequently appeared, the prosecution
did not present him as a witness in the case.
Through Ms. Tita V. Advincula, a forensic chemist of the PNP Central Laboratory
Section, Central Police District, Manila, the prosecution also proved that the
contents of the two heat-sealed transparent plastic bags (Exhibits "B-1" and "B-
2"), which were transmitted to her office by PNP Inspector Asuncion S. Santos
of the District Dangerous Drug Enforcement Division of the Northern Police
District Command, were found positive "for marijuana, a prohibited drug."8
On the other hand, through the testimonies of the accused and Dennis Pinpin,
the defense presented a different version of the incident. According to the
accused, in the afternoon of 8 February 1992, he and his friends, namely, Dennis
Pinpin, Ricky Pinpin, and Erwin Soriano were at Consuelo Street, Marulas,
Valenzuela, helping their friend, Allan Olequino, transfer residence.9 Suddenly, a
tricycle stopped, and PO3 Nelson Labrador and his two companions, Erning and
Vicente, alighted from the tricycle. Labrador asked who among them had
quarreled with his brother. Labrador's companions pointed to the accused and so
Nelson told him to board the tricycle and picked up a piece of wood of which he
brandished at him. The three forced him to board the tricycle. The accused
protested that he had not done anything, but he was told to do his explaining at
the police headquarters. He was not, however, brought to the headquarters but
to a place near the barangay hall at F. Bautista Street in Marulas where he was
questioned about the identities of the pushers in the area. When he failed to
name or pinpoint any pusher, he was taken to the Sangandaan police headquarters
where PO3 Labrador took out two plastic teabags of marijuana which Labrador
threatened to use against him if he would still refuse to name the pushers.
Nonetheless, he insisted that he did not know any pusher. He was detained at
the said headquarters for about two days. Thereafter, he was brought before a
fiscal in Caloocan City after being warned not to say anything against them.10
The accused further testified that during his school days at the Valenzuela
Municipal High School in 1990, he intervened in a fight between his neighbor and
Noel Labrador, a brother of PO3 Labrador. When he failed to pacify them, he
boxed Noel, hitting him on the chin. This incident came to the knowledge of the
school principal who then called them to a conference, which PO3 Labrador
attended. He had personally known PO3 Labrador for a long time because the
latter's residence is at F. Bautista Street, Marulas, Valenzuela, which is merely
within "walking distance" from where he, the accused, lived.11
110
Dennis Pinpin, a neighbor, friend, and former schoolmate of Donald, corroborated
the latter's testimony on the incident of 8 February 1992,12 He also testified
that he was the one who had a misunderstanding with Noel Labrador in 1990. He
reported the matter to Donald who tried to settle their differences but Donald
ended up fighting with Noel. He, Donald, and Noel were called to the principal's
office and were reprimanded by the principal. At the said conference, Noel's
parents and PO3 Labrador were present. Thereafter, Noel threatened them by
saying that the fight was not yet over.13
The lower court found the testimony of PO3 Labrador to be credible and positive
and dismissed the accused's claim that he was framed and that the charge was
ill-motivated. It said:
The alleged quarrel happened in 1990 almost two years ago and
was allegedly patched up and settled by the school principal in
the presence of PO2 Nelson Labrador. If it is true that there
was a fight/quarrel, the Labradors will not wait that long a time
to take the alleged vindictive
move.14
In his Appellant's Brief, the accused asserts that the trial court erred:
I against the accused. The trial court is of the view that it could not have, because
. . . IN GIVING WEIGHT AND CREDENCE TO THE
IMPROBABLE AND INCREDIBLE TESTIMONY OF THE
PROSECUTION LONE EYEWITNESS.
II
. . . IN ADMITTING IN EVIDENCE THE TWO TEA BAGS OF
MARIJUANA WHICH WAS PLANTED BY POLICE OFFICER
NELSON LABRADOR IN BLATANT VIOLATION OF THE
ACCUSED ['S] CONSTITUTIONAL RIGHTS.
III
. . . IN NOT HOLDING THAT THE PROSECUTION
MISERABLY FAILED TO PROVE THE GUILT OF THE
ACCUSED BEYOND REASONABLE DOUBT.15
At the heart of these assigned errors is the issue of credibility of witnesses. It
is well-settled that this Court will not interfere with the judgment of the trial
court in passing on the credibility of the witnesses, unless there appears in the
record some fact or circumstance of weight and influence which has been
overlooked or the significance of which has been misapprehended or
misinterpreted.16 The reason for this is that the trial court is in a better
position to decide the question, having heard the witnesses themselves and
observed their deportment and manner of testifying during the trial.17
A careful review of the records of this case and a meticulous evaluation of the
evidence of the parties reveal vital facts and circumstances which the trial court
overlooked or misapprehended and which if taken into account would alter the
result of this case.
For one thing, the accused personally knew PO3 Labrador; they had met in 1990
in the principal's office of the Valenzuela Municipal High School during a
confrontation between PO3 Labrador's brother, Nelson, on the one hand, and
Dennis Pinpin and the accused on the other, after the accused had intervened in
the fight between Nelson and Dennis and boxed Nelson on his chin. It is,
therefore, most unlikely that the accused would sell a prohibited drug to a
brother of a former foe who, after the confrontation, had warned that the fight
was not yet over.18 This incident could have provided PO3 Labrador with a motive
the incident happened two years earlier, the dispute was settled by the principal,
and if Labrador desired revenge, he would not have waited for two years. We do
not agree. While time may heal wounds of conflict, it does not necessarily
extinguish the desire for vengeance, which may just hibernate until the
circumstances become favorable.
In the instant case, the favorable circumstances could have arisen when PO3
Labrador joined the PNP in November of 1991. Within three months thereafter,
he conducted the alleged buy-bust operation against the accused solely on the
basis of an alleged tip from an informer given two hours before he conducted the
operation. It may be noted that PO3 Labrador did not testify that he had
obtained other derogatory information against the accused or that he had known
the accused to be a drug dealer, pusher, or user. His conduct in this case tainted
the presumption of regularity in the performance of his duty.
For another, we have serious doubts on the existence of the alleged marked
money. There is no evidence as to who provided it and as to when and where it
was allegedly marked by PO3 Gargaritano. What Labrador produced was a mere
photocopy of the alleged marked money (Exhibit "E"). He claimed that the
111
marked money itself was in the possession of Gargaritano. If it was in
Gargaritano's possession, we cannot understand why he was not called anymore
to the witness stand to testify for the prosecution when he finally appeared in
court in compliance with its orders.
While the presentation in evidence of the marked money in drugs cases resulting
from buy-bust operations may not be indispensable,19 the peculiar circumstances
of this case, heightened by the attempt of the alleged poseur-buyer to present a
photocopy of what he claims to be the buy-bust money and the unexplained
failure of the prosecution to call to the witness stand the claimed custodian of
the marked money although the latter had already appeared in court, only taint
further the veracity of PO3 Labrador's story.
Exhibit "E" is not admissible in evidence under the best evidence rule.20 To be
admissible as secondary evidence, the prosecution should have shown that the
original marked money has been lost or destroyed or cannot be produced in court
or that it is in the custody of the adverse party.21 The prosecution did not.
Then too, the prosecution failed to prove that the specimens examined by the
forensic chemist were the ones purportedly sold by the accused to PO3
Labrador. According to the latter, when they arrived at their headquarters
after the buy-bust operation, he turned over the accused to their investigator, a
certain Reynaldo Lichido, for proper disposition and investigation. Lichido also
"immediately prepared the referral to the PC Laboratory for examination in
order to be sure if the specimen is positive."22 What the forensic chemist
examined were the contents of "two transparent plastic bag [sic] containing
flowering tops with rolling papers suspected to be marijuana" transmitted by PNP
Inspector Asuncion Santos, Officer-in-Charge of the District Dangerous Drugs
Enforcement Division of the Northern Police District Command. 23 Both Lichido
and Santos were not presented by the prosecution to testify in this case. Thus,
there is no evidence to prove that what were allegedly sold by the accused to
PO3 Labrador were actually the ones turned over to Lichido, that what the latter
received were turned over to Santos, and that what Santos transmitted to the
forensic chemist were those allegedly sold by the accused. The failure to
establish the evidence's chain of custody is damaging to the prosecution's case.
On the whole then, the scanty evidence for the prosecution casts serious doubts
as to the guilt of the accused. It does not pass the test of moral certainty and is
insufficient to rebut the presumption of innocence which the Bill of Rights
guarantees the accused. It is apropos to repeat the doctrine that an accusation
is not, according to the fundamental law, synonymous with guilt; the prosecution
must overthrow the presumption of innocence with proof of guilt beyond
reasonable doubt.24
In the light of the above disquisition, it is apparent that the law enforcement
agency charged with the enforcement of the Dangerous Drugs Act is partly to be
blamed for the result of this case, assuming that it does have a case against the
accused. In People vs. Tantiado,25 we exhorted "the law enforcement agencies,
especially those assigned to enforce the Dangerous Drugs Act, to carefully
prepare their plans for buy-bust operations and to efficiently and effectively
carry them out, ever mindful of the possibility that their blunders may not only
frustrate the efforts to eradicate the drug menace but worse, embolden drug
lords, pushers or users into defying the authorities." Equally at fault is the
prosecuting arm of the Government, whose ineptitude in prosecuting the case
warrants that its attention be likewise directed, as in the Tantiado case and the
recent case of People vs. Camba,26 to what was said in People vs. Esquivel:27
In this connection it may not be out of place to bring to the
attention of prosecuting attorneys the absolute necessity of
laying before the court the pertinent facts at their disposal
with methodical and meticulous attention, clarifying
contradictions and filling up gaps and loopholes in their
evidence, to the end that the court's mind may not be tortured
by doubts, that the innocent may not suffer and the guilty not
escape unpunished. Obvious to all, this is the prosecution's
prime duty to the court, to the accused, and to the state.
Again, just like in People vs. Camba,28 we cannot help but notice that the trial
court imposed the penalty of reclusion perpetua which was not the penalty
provided for by law at the time the offense charged was allegedly committed.
Although the penalty imposable is now immaterial, we call the trial court's
attention to the fact that the penalty then imposable was life imprisonment, if
only to underscore the need to impose only the penalty which the law prescribes.
WHEREFORE, the appealed decision of Branch 171 of the Regional Trial Court of
Valenzuela, Metro Manila, in Criminal Case No. 994-V-92 is REVERSED and, on
the ground of reasonable doubt, accused-appellant DONALD DISMUKE y
PAMARITO is hereby ACQUITTED. His immediate release from detention is
hereby ordered, unless further detention for any lawful cause is warranted.
Costs de oficio.
SO ORDERED.
112
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-43955-56 July 30, 1979
RENATO LAZATIN alias RENATO STA. CLARA, petitioner,
vs.
HONORABLE JUDGE JOSE C. CAMPOS, JR., NORA L. DE LEON,
BERNARDO DE LEON, ARLENE DE LEON and IRMA L.
VELOSO, respondents.
Ernesto T. Zshornack, Jr. for petitioner.
Jose W. Diokno Law Office private respondents the Leons.
Arturo E. Balbastro for privates respondent Veloso.
TEEHANKEE, J.:1äwphï1.ñët
The Court dismisses the petition which seeks to overrule respondent judge's
orders declaring that petitioner has failed to establish by competent evidence
his alleged status as an adopted child of the deceased Lazatin spouses and prays
for judgment of this Court "declaring as established the fact of (his) adoption as
a son of the deceased spouses entitling him to succeed in their estates as such."
Respondent judge correctly ruled that he could not allow petitioner (who had
filed a motion to intervene in the proceedings to probate the will of the late
Margarita de Asis Vda. de Lazatin and to settle her estate as her adopted son,
after having earlier filed a motion to intervene in the intestate proceedings of
her pre-deceased husband as his admitted illegitimate [not natural] son), over
the opposition of private respondents, to introduce evidence that he had
"enjoyed ... the status of an adopted child of the without his first producing
competent and documentary that there had been judicial proceedings for his by
the said spouses which resulted in the final judgment of a competent court
decreeing his adoption.
On January 13, 1974, Dr. Mariano M. Lazatin diamond intestate in Pasay City,
survived by his wife, Margarita de Asis, and his adopted twin daughters,
respondent Nora L. de Leon, married to respondent Bernardo de Leon, and
respondent Irma Lazatin, married to Francisco Veloso.
One month after Mariano's death, his widow, Margarita de Asis, commenced an
intestate proceeding before the Court of First Instance of Pasay, docketed as
Sp. Proc. No. 2326-P. Mariano, Oscar, Virgilio and Yvonne, claiming to be
admitted illegitimate (not natural) children of Dr. Lazatin with one Helen Munoz,
intervened. Subsequently, one Lily Lazatin also intervened, claiming to be another
admitted illegitimate (not natural) child.
Two months after or on April 11, 1974, the widow, Margarita de Asis, also died,
leaving a & holographic will executed on May 29, 1970, providing, among others,
for a legacy of cash, jewelry, and stocks to respondent Arlene de Leon, a
granddaughter; a legacy of support to Rodolfo Gallardo, a son of her late sister;
and a legacy of education to Ramon Sta. Clara, son of petitioner Renato Lazatin
alias Renato Sta. Clara.
During her lifetime, Margarita de Asis kept a safety deposit box at the People's
Bank and Trust Company, Roxas Boulevard branch, which either she or
respondent Nora L. de Leon could open. Five days after Margarita's death,
respondent Nora L. de Leon, accompanied by her husband, respondent Bernardo
de Leon, opened the safety deposit box and removed its contents: (a) shares of
stock; (b) her adoption papers and those of her sister, respondent Irma L.
Veloso; and (c) jewelry belonging to her and to her mother. Respondent Nora L.
de Leon claims that she opened the safety deposit box in good faith, believing
that it was held jointly by her and her deceased mother. Her sole reason for
opening the box was to get her stock certificates and other small items
deposited therein. When she was to close the deposit box, the bank personnel
informed her that she needed an authority from the court to do so, in view of
her mother's death and so, she removed everything from the box.
On June 3, 1974, private respondents filed a petition to probate the will of the
late Margarita de Asis, before docketed as Sp. Proc. No. 2341-P of respondent
Court, Days after having learned that respondent Nora L. de Leon had opened
this safety deposit box, petitioner's son, Ramon Sta. Clara, filed a motion in the
probate court, claiming that the deceased had executed a will subsequent to that
submitted for probate and demanding its production. He likewise prayed for the
opening of the safety deposit box. Respondent Nora L. de Leon admitted that
she opened the box but there was no will or any document resembling a will
therein.
113
Upon the order of the probate court, presided over by Judge Arsenio B.
Alcantara, the safety deposit box was opened on November 6, 1974, at which
time it was found to be empty, because prior thereto respondent Nora L. de Leon
had already removed its contents.
On November 22, 1974, or seven months after, the death of Margarita de Asis,
petitioner intervened for the first time in the proceedings to settle the estate
of the late Dr. Mariano M. Lazatin (Sp. Proc. No. 2326- P), as an admitted
illegitimate (not natural) child.
Under the same date of November 22, 1974, petitioner's son, Ramon, filed a
petition in the estate proceedings of Margarita de Asis to examine private
respondents on the contents of the safety deposit box, Whereupon, on January
31, 1975, the probate court ordered respondent Nora L. de Leon to deliver the
properties taken from the safety deposit box to the Clerk of Court.
Subsequently, however, the two cases (Sp. Proc. No. 2326-P, Mariano Lazatin,
and 2341-P, Margarita de Asis) were transferred to the sala of respondent
Judge Jose C. Campos, Jr.
On May 29, 1975, Judge Campos issued an order requiring counsel for
respondents Nora L. de Leon and Bernardo de Leon to produce all those papers
and items removed from the safety deposit box and to deliver the same to the
custody of the court within one week. Within the period ordered, respondent
Nora L. de Leon deposited with the Clerk of Court, not the items themselves, but
two keys to a new safety deposit box which could only be opened upon order of
the court.
On August 20, 1975, petitioner Renato to Lazatin alias Renato Sta. Clara filed a
motion to intervene in the estate of Margarita de Asis, Sp. Proc. No. 2341-P, as
an adopted child, on the basis of an affidavit executed by Benjamin Lazatin,
brother of the deceased Dr. Mariano M. Lazatin, the petitioner was an
"illegitimate son" of Dr. Lazatin and was later adopted by him. This affidavit was
later modified on August 19, 1975 to state that petitioner was adopted by both
Mariano M. Lazatin and his wife Margarita de Asis.
On September 29, 1975, Judge Campos found respondent' Nora L. de Leon guilty
of contempt of court for not complying with the orders of January 31, 1975 and
May 29, 1975, requiring her to produce and deliver to the court an the papers
and items removed from the safety deposit box. Her former counsel was also
found guilty of contempt, sentenced to pay a fine of P00.00 and suspended from
appearing in the two cases (Sp. Proc. No. 2326-P, Mariano M. Lazatin, and Sp.
Proc. No. 2341-P, Margarita de Asis), on her testimony that she, Nora L. de Leon,
acted upon his advice.
Respondent court heard petitioner's motion to intervene as an adopted son in the
estate of Margarita de Asis, Sp. Proc. No. 2341-P, at which hearings petitioner
presented no decree of adoption in his, favor. Instead, petitioner attempted to
prove, over private respondents' objections, that he had recognized the
deceased spouses as his parents; he had been supported by them until their
death; formerly he was known as "Renato Lazatin" but was compelled to change
his surname to "Sta. Clara" when the deceased spouses refused to give consent
to his marriage to his present wife; that at first, he and his wife stayed at the
residence of Engracio de Asis, father of Margarita, but a few months later, they
transferred to the Mercy Hospital at Taft Avenue, Manila, owned by the
deceased spouses, where they continuously resided up to the present.
Photographs were also intended to be presented by petitioner, e.g., photograph
of Irma Veloso where she addressed herself as sister of petitioner; photograph
of deceased Margarita de Asis and petitioner when he was a boy; document
showing that petitioners real name is "Renato Lazatin." 1
Respondent court first reserved its ruling on private respondents' objections to
the admission of petitioner's evidence, but on November 14, 1975, when
petitioner could not present evidence on the issue of his alleged legal adoption,
respondent court discontinued the hearing and gave the parties time to file
memoranda on the question of the admissibility of the evidence sought to be
introduced by petitioner.
On March 4, 1976, respondent court barred the introduction of petitioner's
evidence because: têñ.£îhqwâ£
All the evidence submitted by Renato and Ramon Sta. Clara
through their counsel do not prove or have no tendency to prove
the existence of any judicial proceeding where the adoption of
the parties above named were taken up by any court. Neither do
the evidence tend to establish the presence of any record of a
proceeding in court where the adoption of the above named
persons was held. The evidence, however, tends to prove a
status of a recognized natural child which, however, is not the
legal basis for which Renato and Ramon seek to intervene in this
proceedings. In view thereof, and taking into consideration the
evidence heretofore presented by the petitioners, any further
introduction of similar evidence, documentary or oral, would not
114
prove or tend to prove the fact of their adoption but rather of
a recognized natural child.
Petitioner then filed on March 16, 1976, in both cases, a motion to declare as
established the fact of adoption in view of respondent Nora L. de Leon's refusal
to comply with the orders of respondent court to deposit the items she had
removed from the safety deposit box of Margarita de Asis. As authority
therefor, petitioner invokes the sanction of Rule 29, Section 3 of the Rules of
Court, since according to him, the order of the court for the production of the
items in the safety deposit box can be considered as an order for production and
inspection of documents under Rule 27.
Private respondents opposed the motion, and on March 26, 1976, respondent
court denied petitioner's motion. On April 26, 1976, respondent Nora L. de Leon
deposited with respondent court the items she had removed from the safety
deposit box. An inventory was conducted by respondent court, with notice to the
parties, and the items surrendered consisted only of pieces of jewelry and stock
certificates.
On June 3,1976, respondent court, ruling on petitioners motion for definite
resolution on his previous n declare as established the fact of adoption, issued
the f order: têñ.£îhqwâ£
As far as the case of Renato Sta. Clara is his Petition to
establish his status as an adopted child, The Court has ruled
that he has failed to establish such status. The any motion for
reconsideration unless based on some documentary proof.
Hence, the petition at bar.
We find the ruling of the respondent court to be in conformity with law and
jurisprudence.
1. Adoption is a juridical act, a proceeding in rem 2 which creates between two
persons a relationship similar to that which results from legitimate paternity and
filiation. 3 Only an adoption made through the court, or in pursuance with the
procedure laid down under Rule 99 of the Rules of Court is valid in this
jurisdiction. 4 It is not of natural law at all, but is wholly and entirely
artificial. 5 To establish the relation, the statutory requirements must be
strictly carried out, otherwise, the adoption is an absolute nullity. 6 The fact of
adoption is never presumed, but must be affirmatively proved by the person
claiming its existence. The destruction by fire of a public building in which the
adoption papers would have been filed if existent does not give rise to a
presumption of adoption nor is the destruction of the records of an adoption
proceeding to be presumed. On the contrary, the absence of a record of
adoption has been said to evolve a presumption of its non-existence. 7 Where,
under the provisions of the statute, an adoption is effected by a court order,
the records of such court constitute the evidence by which such adoption may be
established. 8
2. Petitioner's flow of evidence in the case below does not lead us to any proof
of judicial adoption. We can not pluck from his chain of evidence any link to the
real existence of a court decree of adoption in his favor. Petitioner's proofs do
not show or tend to show that at one time or another a specific court of
competent jurisdiction rendered in an adoption proceeding initiated by the late
spouses an order approving his adoption as a child of the latter. No judicial
records of such adoption or copies thereof are presented or attempted to be
presented. Petitioner merely proceeds from a nebulous assumption that he was
judicially adopted between the years 1928 and 1932. By what particular court
was the adoption decreed or by whom was the petition heard, petitioner does not
even manifest, much less show. There are no witnesses cited to that adoption
proceeding or to the adoption decree. Apparently on the assumption that the
adoption was commenced in Manila, petitioner's counsel secured a certification
from the Court of first Instance of Manila which, however, negatively reported
"(T)hat among the salvaged records now available in this Office, there has not
been found, after a diligent search, any record regarding the adoption of Mr.
Renato Lazatin alias Renato Sta. Clara allegedly filed sometime in the years 1928
to 1931 by the spouses Dr. Mariano M. Lazatin and Margarita de Asis Lazatin."
The certification of the Local Civil Registrar of Manila "(T)hat our pre-war
records relative to decisions of the Court of First Instance were either
destroyed or burned during the Liberation of the City of Manila," does not
furnish any legal basis for a presumption of adoption in favor of petitioner. This
is because there was no proof that petitioner was really adopted in Manila or
that an adoption petition was filed in the Court of first Instance of Manila by
the deceased spouses, where, after hearing, a judgment of approval was
rendered by said court. Moreover, if there was really such adoption, petitioner
could have conveniently secured a copy of the newpaper publication of the
adoption as required under Section 4, Rule 99 of the Rules of Court (formerly
Section 4, Rule 100) or a certification of the publishing house to that effect.
Petitioner's failure on this point is anotherer strong indication of the non-
existence of the one who gave the written consent of the non-existence of the
adoption paper. We also observed to the adoption (Section 3, Rule 99, Rules of
Court), whether the parents or orphanage, does not appear on this point is not so
difficult and such proof must be presented if only to prove the real existence of
115
the adoption. And of course, if the war, the clear right and duty of petitioner
was to duly reconstitute the records as provided by law.
3. The absence of proof of such order of adoption by the court, as provided by
the statute, cannot be substituted by parol evidence that a child has lived with a
person, not his parent, and has been treated as a child to establish such
adoption. 9 Even evidence of declaration of the deceased, made in his lifetime,
that he intended to adopt a child as his heir, and that he had adopted him, and of
the fact that the child resided with the deceased, as a member of his family,
from infancy until he attained his majority, is not sufficient to establish the
fact of adoption.10 Nor does the fact that the deceased spouses fed, clothed,
educated, recognized and referred to one like petitioner as an adopted child,
recognized and referred to one like petitioner as an adopted child, necessarily
establish adoption of the child. 11 Withal, the attempts of petitioner to prove his
adoption by acts and declarations of the deceased do not discharge the
mandatory presentation of the judicial decree of adoption. The thrust of
petitioner's evidence is rather to establish his status as an admitted illegitimate
child, not an adopted child which status of an admitted illegitimate child was —
the very basis of his petitioner for intervention in the estate proceedings of the
late Dr. Lazatin, as above stated. (Supra, at page 3 hereof)
We do not discount though that declarations in regard to pedigree, although
hearsay, are admitted on the principle that they are natural expressions of
persons who must know the truth. 12 Pedigree testimony is admitted because it is
the best that the nature of the case admits and because greater evil might arise
from the rejection of such proof than from its admission. 13 But, in proving an
adoption, there is a better proof available and it should be produced. The
whereabouts of the child's family and circulation of the jurisdiction in which
they resided and investigation in those courts where adoption are usually granted
would surely produce an adoption order, if indeed there was an order. 14 Besides,
since the point in favor of receiving hearsay evidence upon matters of family
history or pedigree is its reliability, it has been set forth as a condition upon
which such evidence is received that it emanate from a source within the family.
Pursuant to this view, before a declaration of a deceased person can be admitted
to prove pedigree, or ancestry, the relationship of the declarant, by either of
blood or affinity to the family in question, or a branch thereof, must ordinarily
be established by competent evidence. 15 Section 33 of Rule 130 states: "The act
or declaration of a person deceased, or outside of the Philippines, or unable to
testify, in respect to the pedigree of another person related to him by birth or
marriage, may be received in evidence where it occurred before the controversy,
and the relationship between the two persons is shown by evidence other than
such actor declaration ..."
4. Secondary evidence is nonetheless admissible where the records of adoption
proceedings were actually lost or destroyed. But, prior to the introduction of
such secondary evidence, the proponent must establish the former existence of
the instrument. The correct order of proof is as follows: Existence; execution;
loss; contents; although this order may be changed if necessary in the discretion
of the court. 16 The sufficiency of the proof offered as a predicate for the
admission of an alleged lost deed lies within the judicial discretion of the trial
court under all the circumstances of the particular case.17 As earlier pointed out,
petitioner failed to establish the former existence of the adoption paper and its
subsequent loss or destruction. Secondary proof may only be introduced if it has
first beer. established that such adoption paper really existed and was lost. This
is indispensable. 18 Petitioner's supposed adoption was only testified to by him
and is allegedly to be testified to a brother of the deceased Mariano M. Lazatin
or others who have witnessed that the deceased spouses treated petitioner as
their child. If adoption was really made, the records thereof should have existed
and the same presented at the hearing or subsequent thereto or a reasonable
explanation of loss or destruction thereof, if that be the case, adduced. 19
Assuming the mere fact that the deceased spouses treated petitioner as their
child does not justify the conclusion that petitioner had been in fact judicially
adopted by the spouses nor does it constitute admissible proof of adoption.
We cannot entertain the plea of petitioner that the sanction of Rule 29 should
be applied to consider as established the fact of his adoption due to the refusal
of respondent Nora L. de Leon to produce the document of adoption,
because first, the fact or real existence of petitioner's adoption had not been
established; second, there is no proof that such document of adoption is in the
possession of respondent Nora L. de Leon; third, the motu proprio order of the
court for Nora de Leon to produce the items retrieved from the safety deposit
box cannot be treated as a mode of discovery of production and inspection of
documents under Rule 27; and fourth, the items deposited in the safety deposit
box have already been surrendered by respondent Nora L. de Leon on April 26;
1976 and no document of adoption in favor of petitioner was listed as found in
the safety deposit box.
5. As a necessary consequence, petitioner Renato Lazatin alias Renato Sta. Clara
cannot properly intervene in the settlement of the estate of Margarita de Asis,
Sp. Proc. No. 2341-P as an adopted child because of lack of proof thereof. For
one to intervene in an estate proceeding, it is a requisite that he has an interest
in the estate, either as one who would be benefited as an heir or one who has a
claim against the estate like a creditor. 20 A child by adoption cannot inherit
from the parent creditor. by adoption unless the act of adoption has been done
116
in strict accord with the statue. Until this is done, no rights are acquired by the
child and neither the supposed adopting parent or adopted child could be bound
thereby. 21 The burden of proof in establishing adoption is upon the person
claiming such relationship. He must prove compliance with the statutes relating
to adoption in the jurisdiction where the adoption occurred. 22 A fortiori if no
hereditary interest in the estate can be gained by a claimant who failed to
submit proof thereof, whether the will is probated or not, intervention should be
denied as it would merely result in unnecessary complication. 23 To succeed, a
child must be ligitimate, legitimated, adopted, acknowledged illegitimate natural
child or natural child by legal fiction or recognized spurious child. 24
In the face of the verified pleadings of record (constituting judicial admissions)
which show that petitioner sought to intervene on November 22, 1974 in the
estate proceedings of his alleged adoptive father Dr. Mariano M. Lazatin (Sp.
Proc. No. 2326-P) as an admitted illegitimate (not natural) child, 25 while his
intervention on August 20, 1975 in the estate of Margarita de Asis, widow of the
deceased Dr. Lazatin (Sp. Proc. No. 2341-P) was as her adopted child on the basis
of the affidavit of a brother of the deceased Dr. Lazatin, Benjamin Lazatin,
executed August 19, 1975 (which affidavit modified a first affidavit executed on
May 31, 1975, which failed to estate by "oversight" petitioner, but stated that
affiant knew petitioner to be "an illegitimate son" of Dr. Lazatin who later
"legally adopted (him) as a son before the Court of First Instance of Manila
sometime between the years 1928 and 1921") and prescinding from the question
of whether a natural or spurious child may be legally adopted by the putative
father, we hold that no grave abuse of discretion nor error of law as committed
by respondent judge in issuing the questioned orders of March 4, 1976, March
26, 1976 and June 3, 1976 denying petitioner's petition "to declare as
established in this proceeding the fact of adoption" and denying "any motion for
reconsideration unless based on some documentary proof." The Court finds no
basis to grant the affirmative relief sought in this proceeding by petitioner for a
rendition of judgment "declaring as established the fact of your petitioner's
adoption as a son of the deceased spouses entitling him to succeed in their
estates as such in accordance with the applicable law on succession as to his
inheritance."
Upon the filing of the petition, the Court issued on June 16, 1976 a temporary
restraining order; which as amended on July 21, 1976, restrained respondent
judge "from proceeding with the hearing scheduled on June 17, 1976 at 8:30
a.m., requiring the submission of evidence to establish heirship in Special
Proceedings No. 2326-P entitled 'Intestate Estate of the Late Mariano M.
Lazatin' and Special Proceedings No. 2341-P, entitled 'Testate Estate of the
late Margarita de Asis Vda. de Lazatin,' and from proceeding with the probate of
the alleged holographic will of the deceased Doñ;a Margarita de Asis Vda. de
Lazatin scheduled on June 29, 1976, August 10 and 12, 1976 and on any other
dates." With the Court's determination of the issues as herein set forth, there
is no longer any need for restraining the proceedings below and the said
restraining order shall be immediately lifted.
On January 24, 1977, the Court upon petitioner's motion resolved to
conditionally allow respondent judge "to take the deposition of petitioner's
witnesses to perpetuate their testimonies pursuant to Rule 134, Section 7 of the
Rules of Court, subject to the Court's ruling in due course on the admissibility of
such testimonies." The Court thereby permitted in effect the advance
testimonies of petitioner's witnesses, principally among them Rafael Lazatin and
Esteban L. Lazatin, both brothers of the deceased Dr. Mariano L. Lazatin and as
stated in petitioner's motion of January 11, 1977: têñ.£îhqwâ£
Substantially, the testimony of the above-named witnesses will
be on the fact that they had been informed by the deceased
spouses, Mariano and Margarita Lazatin that your petitioner
was their [Mariano's and Margarita's] judicially adopted son
and to elicit further from them the fact that your petitioner
enjoys the reputation of being their judicially adopted son in
the Lazatin family.
The Court's resolution allowing the advance testimonies of petitioner's witnesses
was but in application of the Court's long standing admonition to trial courts is
reaffirmed in Lamagan vs. De la Cruz, 26, "to be liberal in accepting proferred
evidence since even if they were to refuse to accept the evidence, the affected
party will nevertheless be allowed to spread the excluded evidence on the
record, for review on appeal." The Court therein once again stressed the
established rule that "it is beyond question that rulings of the trial court on
procedural questions and on admissibility of evidence during the course of the
trial are interlocutory in nature and may not be the subject of separate appeal
or review on certiorari, but are to be assigned as errors and reviewed in the
appeal properly taken from the decision rendered by the trial court on the
merits of the case," 27 and that a party's recourse when proferred evidence is
rejected by the trial court is to make a offer stating on the record what a party
or witness would have testified to were his testimony not excluded, as well as to
attach to the record any rejected exhibits.
At the continuation of the proceedings below for declaration of heirship and for
probate of the alleged holographic the deceased Margarita de Asis Vda. de
Lazatin, pet who has failed to establish his status as an alleged ;m child of
117
Margarita de Asis (unless, as reserved to him by the court below, he can show
some documentary proof),and whose intervention in the estate of the deceased
Dr. Mariano Lazatin is as an admitted illegitimate child, win have to decide
whether he will pursue his first theory of having the of such admitted
illegitimate child of said deceased. Whatever be his theory and his course of
action and whether or not he may be duly snowed to intervene in the proceedings
below as such alleged admitted illegitimate child, his recourse in the event of an
adverse ruling against him is to make a formal offer of proof and of his excluded
evidence, oral and documentary, and seek a reversal on an appeal in due course.
ACCORDINGLY, the petition is dismissed and the questioned orders denying
petitioner's petition below "to declare as established in this proceeding the fact
of [his] adoption" are hereby affirmed. The temporary restraining order issued
on June 16, 1976 and amended on July 21, 1976 is ordered lifted, effective
immediately. Without costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-29575 April 30, 1971
THE DIRECTOR OF LANDS, and ADRIANO CARPIO, MARTIN AGUILAR
and PEDRO AGUILAR, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and MARIANO
RAYMUNDO, respondents.
Barrera and Recto Law Office for private petitioners.
Dominador I. Reyes for private respondent.
Office of the Solicitor General Felix V. Makasiar, Assistant Solicitor General
Antonio G. Ibarra and Solicitor Hector C. Fule for petitioner Director of Lands.
REYES, J.B.L., J.:
Petition for review of the decision of the Court of Appeals, in its Case CA-G.R.
No. 29461-R, recognizing the registerable title of respondent Mariano Raymundo
over certain parcels of land in Mabitac, Laguna, on the basis of an unsigned copy
of a deed of sale, the original of which was said to have been lost.
The records show that on 16 June 1950, Mariano B. Raymundo filed in the Court
of First Instance of Laguna an application1 for registration of his imperfect or
incomplete title over five parcels of land (Lots Nos. 461, 462, 463, 480 and 483,
Mabitac Cadastre) situated in Mabitac, Laguna, allegedly acquired by actual,
open, adverse and continuous occupation of the properties, by himself and by his
predecessors-in-interest since time immemorial.
The application for registration was opposed by several parties, specifically, (a)
by the Director of Lands, on the ground of applicant's lack of registerable title;
and (b) by Adriano Carpio, Martin Aguilar and Pedro Aguilar, as regards the
northern portion of Lot No. 463, for the reason that they were the actual
possessors thereof and had filed homestead applications therefor since 1935.
After hearing, the registration court rendered judgment declaring applicant
Raymundo to have established proprietary rights over Lots Nos. 461, 462, 480,
483 and the southern portion of Lot No. 463; and ruling oppositors Carpio and
Aguilar brothers to have likewise proved their title as regards the northern
portion of Lot No. 463, with an area of 72 hectares.
Both Raymundo and the Director of Lands appealed to the Court of Appeals. In
its decision of 11 July 1968, the appellate court modified the judgment of the
trial court, by recognizing Raymundo's registerable title, not only over Lots Nos.
461, 462, 480, 483 and the southern portion of Lot No. 463 but even over the
northern part of Lot No. 463 adjudicated to oppositors Carpio and Aguilar
brothers. Raymundo's claim over the whole Lot No. 463 was declared proved by a
Deed of Absolute Sale (Exhibit "E-1") dated August, 1936, covering 10 hectares,
executed in his favor by Gerardo Olarte and by a deed of sale (Exhibit "O")
involving around 80 hectares, allegedly executed by Mariano Castro on 18
September 1929. Overruling the objection of the oppositors to the admissibility
of Exhibit "O," which is merely an unsigned copy of the supposed deed, the Court
of Appeals said:
118
... However, applicant Raymundo satisfactorily explained the
presentation of said copy in lieu of the original by proving that
the original document together with other pertinent papers
were entrusted by him to his lawyer, Judge Mariano C.
Melendres, sometime before the war in connection with
registration proceedings over the said parcels of land.
Unfortunately, these documents were burned during the last
World War and no official copy could be obtained from the
Register of Deeds of Mabitac, Laguna. (Exhibit K, certification
of Municipal Treasurer). The testimony of Raymundo was
corroborated by Judge Melendres on the witness stand when he
declared that he was indeed entrusted with the custody of
these papers and that upon his appointment to the Judiciary he
turned over all these papers to a certain Atty. Facundo San
Agustin who was killed by the Japanese during the war and no
trace of the aforesaid documents has been found. Moreover,
Raymundo submitted a receipt, duly signed by Mariano Castro
attesting to the fact that the latter received the amount of
P100.00 as down payment on the purchase price of the property
sold by him to Raymundo on 27 August 1929 (Exhibit O-1). This
receipt, taken in conjunction with the copy of the deed of sale
and the testimony of Judge Melendres, clearly indicates that
applicant Raymundo did in fact buy some 80 hectares of land
from Castro of Lot No. 463.
The Director of Lands and oppositors Adriano Carpio Martin Aguilar and Pedro
Aguilar then come to this court, questioning the correctness and legality of the
above ruling of the Court of Appeals, effecting solely the northern portion of
Lot No. 463, that was allegedly made in contravention of the express provisions
of the Rules of Court.
Section 51 of the old Rule 123, Rules of Court, referred to by herein petitioners,
reads as follows:
SEC. 51. Secondary evidence when original is lost or destroyed.
— When the original writing has been lost or destroyed, upon
proof of its execution and loss or destruction, its contents may
be proved by a copy, or by a recital of its contents in some
authentic document, or by the recollection of witnesses.
There is merit in the petitioners' contention. From the enactment of Act No.
190 to the present Rules of Court, the rule governing the sale of real property
has remained unchanged: it can be proved only by the very instrument reciting
the transaction, duly subscribed by the proper party or his authorized agent, or
else by secondary evidence of the contents of such document.2 However, before
the terms of a transaction in realty may be established by secondary evidence, it
is necessary that the due execution and subsequent loss of the original
instrument evidencing the transaction be proved.3 For it is the due execution,
and loss thereafter, of the document that would warrant or constitute basis for
the introduction of secondary evidence to prove the contents of such
document.4 And the due execution of the document should be proved through the
testimony of (1) the person or persons who executed it; (2) the person before
whom its execution was acknowledged; or (3) any person who was present and saw
it executed and delivered, or who, after its execution and delivery, saw it and
recognized the signatures, or by a person to whom the parties to the
instruments had previously confessed the execution thereof.5 Thus, in one
case,6the admission of the certified copy of the record of a deed in a public
registry as secondary evidence of the terms of the deed of sale, was declared
improper and invalid, the Court pointing to the party's failure to present the
notary and those persons who must have seen the signing of the document as
witnesses to testify on its due execution.
In the present case, the declaration of applicant Raymundo's former counsel,
Mariano C. Melendres, does not satisfy the requirements of the Rules. As
mentioned in the decision of the Court of Appeals, this witness testified that
the alleged original deed of sale, together with other pertinent papers, were
entrusted to him by applicant sometime before the war, that upon his
appointment to the bench all those papers were turned over to one Attorney
Facundo San Agustin; that Attorney San Agustin, however, was killed by the
Japanese and no trace of the documents could be found thereafter. It may be
noted from the foregoing finding of the Court of Appeals that Judge Melendres
did not state that he was present when the deed of sale was supposedly
executed by Mariano Castro, or that the fact of its execution was acknowledged
or admitted to him by the latter. It appears simply that the deed, perhaps then
already accomplished, was delivered to him by applicant, together with other
papers. Even assuming, therefore, that this witness could have read the contents
of the document, yet if it is considered that there is no showing that the witness
knew and recognized the signatures affixed thereon, such knowledge of the
terms would not qualify him to testify on the due execution of the document.
The same thing may be said of the receipt signed by Mariano Castro,
acknowledging payment by Raymundo of the sum of P100.00. It has nothing to do
at all with the execution of the supposed deed of sale. Hence, the Court of
Appeals clearly committed reversible error in declaring Raymundo's title over
119
the northern portion of Lot No. 463 to have been proven, on the basis of the
foregoing evidence.
The applicant, having failed to establish his right or title over the northern
portion of Lot No. 463 involved in the present controversy, and there being no
showing that the same has been acquired by any private person from the
Government, either by purchase or by grant, the property is and remains part of
the public domain.7
WHEREFORE, the decision of the Court of Appeals under review is reversed,
only insofar as it decreed to applicant Mariano Raymundo title to and ownership
of the northern portion of Lot No. 463, Mabitac Cadastre, subject of this
proceeding, which is hereby declared part of the public domain, subject to the
possessory rights of oppositors Adriano Carpio, Martin Aguilar and Pedro Aguilar.
No pronouncement as to costs.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-23893 October 29, 1968
VILLA REY TRANSIT, INC., plaintiff-appellant,
vs.
EUSEBIO E. FERRER, PANGASINAN TRANSPORTATION CO., INC. and
PUBLIC SERVICE COMMISSION,defendants.
EUSEBIO E. FERRER and PANGASINAN TRANSPORTATION CO.,
INC., defendants-appellants.
PANGASINAN TRANSPORTATION CO., INC., third-party plaintiff-
appellant,
vs.
JOSE M. VILLARAMA, third-party defendant-appellee.
Chuidian Law Office for plaintiff-appellant.
Bengzon, Zarraga & Villegas for defendant-appellant / third-party plaintiff-
appellant.
Laurea & Pison for third-party defendant-appellee.
ANGELES, J.:
This is a tri-party appeal from the decision of the Court of First Instance of
Manila, Civil Case No. 41845, declaring null and void the sheriff's sale
of two certificates of public convenience in favor of defendant Eusebio E. Ferrer
and the subsequent sale thereof by the latter to defendant Pangasinan
Transportation Co., Inc.; declaring the plaintiff Villa Rey Transit, Inc., to be the
lawful owner of the said certificates of public convenience; and ordering the
private defendants, jointly and severally, to pay to the plaintiff, the sum of
P5,000.00 as and for attorney's fees. The case against the PSC was dismissed.
The rather ramified circumstances of the instant case can best be understood
by a chronological narration of the essential facts, to wit:
Prior to 1959, Jose M. Villarama was an operator of a bus transportation, under
the business name of Villa Rey Transit, pursuant to certificates of public
convenience granted him by the Public Service Commission (PSC, for short) in
Cases Nos. 44213 and 104651, which authorized him to operate a total of thirty-
two (32) units on various routes or lines from Pangasinan to Manila, and vice-
versa. On January 8, 1959, he sold the aforementioned two certificates of public
convenience to the Pangasinan Transportation Company, Inc. (otherwise known as
Pantranco), for P350,000.00 with the condition, among others, that the seller
(Villarama) "shall not for a period of 10 years from the date of this sale, apply
for any TPU service identical or competing with the buyer."
Barely three months thereafter, or on March 6, 1959: a corporation called Villa
Rey Transit, Inc. (which shall be referred to hereafter as the Corporation) was
organized with a capital stock of P500,000.00 divided into 5,000 shares of the
par value of P100.00 each; P200,000.00 was the subscribed stock; Natividad R.
Villarama (wife of Jose M. Villarama) was one of the incorporators, and she
subscribed for P1,000.00; the balance of P199,000.00 was subscribed by the
brother and sister-in-law of Jose M. Villarama; of the subscribed capital stock,
P105,000.00 was paid to the treasurer of the corporation, who was Natividad R.
Villarama.
In less than a month after its registration with the Securities and Exchange
Commission (March 10, 1959), the Corporation, on April 7, 1959,
bought five certificates of public convenience, forty-nine buses, tools and
equipment from one Valentin Fernando, for the sum of P249,000.00, of which
P100,000.00 was paid upon the signing of the contract; P50,000.00 was payable
upon the final approval of the sale by the PSC; P49,500.00 one year after the
final approval of the sale; and the balance of P50,000.00 "shall be paid by the
BUYER to the different suppliers of the SELLER."
120
The very same day that the aforementioned contract of sale was executed, the
parties thereto immediately applied with the PSC for its approval, with a prayer
for the issuance of a provisional authority in favor of the vendee Corporation to
operate the service therein involved.1 On May 19, 1959, the PSC granted the
provisional permit prayed for, upon the condition that "it may be modified or
revoked by the Commission at any time, shall be subject to whatever action that
may be taken on the basic application and shall be valid only during the pendency
of said application." Before the PSC could take final action on said application for
approval of sale, however, the Sheriff of Manila, on July 7, 1959, levied on two
of the five certificates of public convenience involved therein, namely, those
issued under PSC cases Nos. 59494 and 63780, pursuant to a writ of execution
issued by the Court of First Instance of Pangasinan in Civil Case No. 13798, in
favor of Eusebio Ferrer, plaintiff, judgment creditor, against Valentin Fernando,
defendant, judgment debtor. The Sheriff made and entered the levy in the
records of the PSC. On July 16, 1959, a public sale was conducted by the Sheriff
of the said two certificates of public convenience. Ferrer was the highest
bidder, and a certificate of sale was issued in his name.
Thereafter, Ferrer sold the two certificates of public convenience to Pantranco,
and jointly submitted for approval their corresponding contract of sale to the
PSC.2 Pantranco therein prayed that it be authorized provisionally to operate the
service involved in the said two certificates.
The applications for approval of sale, filed before the PSC, by Fernando and the
Corporation, Case No. 124057, and that of Ferrer and Pantranco, Case No.
126278, were scheduled for a joint hearing. In the meantime, to wit, on July 22,
1959, the PSC issued an order disposing that during the pendency of the cases
and before a final resolution on the aforesaid applications, the Pantranco shall be
the one to operate provisionally the service under the twocertificates embraced
in the contract between Ferrer and Pantranco. The Corporation took issue with
this particular ruling of the PSC and elevated the matter to the Supreme
Court,3 which decreed, after deliberation, that until the issue on the ownership
of the disputed certificates shall have been finally settled by the proper court,
the Corporation should be the one to operate the lines provisionally.
On November 4, 1959, the Corporation filed in the Court of First Instance of
Manila, a complaint for the annulment of the sheriff's sale of the
aforesaid two certificates of public convenience (PSC Cases Nos. 59494 and
63780) in favor of the defendant Ferrer, and the subsequent sale thereof by
the latter to Pantranco, against Ferrer, Pantranco and the PSC. The plaintiff
Corporation prayed therein that all the orders of the PSC relative to the
parties' dispute over the said certificates be annulled.
In separate answers, the defendants Ferrer and Pantranco averred that the
plaintiff Corporation had no valid title to the certificates in question because
the contract pursuant to which it acquired them from Fernando was subject to a
suspensive condition — the approval of the PSC — which has not yet been
fulfilled, and, therefore, the Sheriff's levy and the consequent sale at public
auction of the certificates referred to, as well as the sale of the same by Ferrer
to Pantranco, were valid and regular, and vested unto Pantranco, a superior right
thereto.
Pantranco, on its part, filed a third-party complaint against Jose M. Villarama,
alleging that Villarama and the Corporation, are one and the same; that Villarama
and/or the Corporation was disqualified from operating the two certificates in
question by virtue of the aforementioned agreement between said Villarama and
Pantranco, which stipulated that Villarama "shall not for a period of 10 years
from the date of this sale, apply for any TPU service identical or competing with
the buyer."
Upon the joinder of the issues in both the complaint and third-party complaint,
the case was tried, and thereafter decision was rendered in the terms, as above
stated.
As stated at the beginning, all the parties involved have appealed from the
decision. They submitted a joint record on appeal.
Pantranco disputes the correctness of the decision insofar as it holds that Villa
Rey Transit, Inc. (Corporation) is a distinct and separate entity from Jose M.
Villarama; that the restriction clause in the contract of January 8, 1959 between
Pantranco and Villarama is null and void; that the Sheriff's sale of July 16, 1959,
is likewise null and void; and the failure to award damages in its favor and against
Villarama.
Ferrer, for his part, challenges the decision insofar as it holds that the sheriff's
sale is null and void; and the sale of the two certificates in question by Valentin
Fernando to the Corporation, is valid. He also assails the award of P5,000.00 as
attorney's fees in favor of the Corporation, and the failure to award moral
damages to him as prayed for in his counterclaim.
The Corporation, on the other hand, prays for a review of that portion of the
decision awarding only P5,000.00 as attorney's fees, and insisting that it is
entitled to an award of P100,000.00 by way of exemplary damages.
121

After a careful study of the facts obtaining in the case, the vital issues to be
resolved are: (1) Does the stipulation between Villarama and Pantranco, as
contained in the deed of sale, that the former "SHALL NOT FOR A PERIOD OF
10 YEARS FROM THE DATE OF THIS SALE, APPLY FOR ANY TPU SERVICE
IDENTICAL OR COMPETING WITH THE BUYER," apply to new lines only or
does it include existing lines?; (2) Assuming that said stipulation covers all kinds
of lines, is such stipulation valid and enforceable?; (3) In the affirmative, that
said stipulation is valid, did it bind the Corporation?
A. Because sometimes she uses my money, and sometimes the money
given to her she gives to me and I deposit the money.
Q. Actually, aside from your wife, you were also the custodian of
some of the incorporators here, in the beginning?
A. Not necessarily, they give to my wife and when my wife hands to
me I did not know it belonged to the incorporators.

For convenience, We propose to discuss the foregoing issues by starting with the Q. It supposes then your wife gives you some of the money received
last proposition. by her in her capacity as treasurer of the corporation?

The evidence has disclosed that Villarama, albeit was not an incorporator or A. Maybe.
stockholder of the Corporation, alleging that he did not become such, because he
did not have sufficient funds to invest, his wife, however, was an incorporator Q. What did you do with the money, deposit in a regular account?
with the least subscribed number of shares, and was elected treasurer of the
Corporation. The finances of the Corporation which, under all concepts in the law,
A. Deposit in my account.
are supposed to be under the control and administration of the treasurer
keeping them as trust fund for the Corporation, were, nonetheless, manipulated
Q. Of all the money given to your wife, she did not receive any
and disbursed as if they were the private funds of Villarama, in such a way and
check?
extent that Villarama appeared to be the actual owner-treasurer of the business
without regard to the rights of the stockholders. The following testimony of
Villarama,4together with the other evidence on record, attests to that effect: A. I do not remember.

Q. Doctor, I want to go back again to the incorporation of the Villa Q. Is it usual for you, Doctor, to be given Fifty Thousand Pesos
Rey Transit, Inc. You heard the testimony presented here by the bank without even asking what is this?
regarding the initial opening deposit of ONE HUNDRED FIVE
THOUSAND PESOS, of which amount Eighty-Five Thousand Pesos was a xxx xxx xxx
check drawn by yourself personally. In the direct examination you told
the Court that the reason you drew a check for Eighty-Five Thousand JUDGE: Reform the question.
Pesos was because you and your wife, or your wife, had spent the money
of the stockholders given to her for incorporation. Will you please tell Q. The subscription of your brother-in-law, Mr. Reyes, is Fifty-Two
the Honorable Court if you knew at the time your wife was spending the Thousand Pesos, did your wife give you Fifty-two Thousand Pesos?
money to pay debts, you personally knew she was spending the money of
the incorporators? A. I have testified before that sometimes my wife gives me money
and I do not know exactly for what.
A. You know my money and my wife's money are one. We never talk
about those things. The evidence further shows that the initial cash capitalization of the
corporation of P105,000.00 was mostly financed by Villarama. Of the
Q. Doctor, your answer then is that since your money and your P105,000.00 deposited in the First National City Bank of New York, representing
wife's money are one money and you did not know when your wife was the initial paid-up capital of the Corporation, P85,000.00 was covered by
paying debts with the incorporator's money? Villarama's personal check. The deposit slip for the said amount of P105,000.00
122
was admitted in evidence as Exh. 23, which shows on its face that P20,000.00
was paid in cash and P85,000.00 thereof was covered by Check No. F-50271 of
the First National City Bank of New York. The testimonies of Alfonso
Sancho5 and Joaquin Amansec,6 both employees of said bank, have proved that
the drawer of the check was Jose Villarama himself.
Another witness, Celso Rivera, accountant of the Corporation, testified that
while in the books of the corporation there appears an entry that the treasurer
received P95,000.00 as second installment of the paid-in subscriptions, and,
subsequently, also P100,000.00 as the first installment of the offer for second
subscriptions worth P200,000.00 from the original subscribers, yet Villarama
directed him (Rivera) to make vouchers liquidating the sums.7 Thus, it was made
to appear that the P95,000.00 was delivered to Villarama in payment for
equipment purchased from him, and the P100,000.00 was loaned as advances to
the stockholders. The said accountant, however, testified that he was not aware
of any amount of money that had actually passed hands among the parties
involved,8 and actually the only money of the corporation was the P105,000.00
covered by the deposit slip Exh. 23, of which as mentioned above, P85,000.00
was paid by Villarama's personal check.
Further, the evidence shows that when the Corporation was in its initial months
of operation, Villarama purchased and paid with his personal checks Ford trucks
for the Corporation. Exhibits 20 and 21 disclose that the said purchases were
paid by Philippine Bank of Commerce Checks Nos. 992618-B and 993621-B,
respectively. These checks have been sufficiently established by Fausto Abad,
Assistant Accountant of Manila Trading & Supply Co., from which the trucks
were purchased9 and Aristedes Solano, an employee of the Philippine Bank of
Commerce,10as having been drawn by Villarama.
Exhibits 6 to 19 and Exh. 22, which are photostatic copies of ledger entries and
vouchers showing that Villarama had co-mingled his personal funds and
transactions with those made in the name of the Corporation, are very
illuminating evidence. Villarama has assailed the admissibility of these exhibits,
contending that no evidentiary value whatsoever should be given to them since
"they were merely photostatic copies of the originals, the best evidence being
the originals themselves." According to him, at the time Pantranco offered the
said exhibits, it was the most likely possessor of the originals thereof because
they were stolen from the files of the Corporation and only Pantranco was able
to produce the alleged photostat copies thereof.
Section 5 of Rule 130 of the Rules of Court provides for the requisites for the
admissibility of secondary evidence when the original is in the custody of the
adverse party, thus: (1) opponent's possession of the original; (2) reasonable
notice to opponent to produce the original; (3) satisfactory proof of its
existence; and (4) failure or refusal of opponent to produce the original in
court.11 Villarama has practically admitted the second and fourth requisites.12As
to the third, he admitted their previous existence in the files of the Corporation
and also that he had seen some of them.13 Regarding the first element,
Villarama's theory is that since even at the time of the issuance of the subpoena
duces tecum, the originals were already missing, therefore, the Corporation was
no longer in possession of the same. However, it is not necessary for a party
seeking to introduce secondary evidence to show that the original is in the actual
possession of his adversary. It is enough that the circumstances are such as to
indicate that the writing is in his possession or under his control. Neither is it
required that the party entitled to the custody of the instrument should, on
being notified to produce it, admit having it in his possession.14 Hence, secondary
evidence is admissible where he denies having it in his possession. The party
calling for such evidence may introduce a copy thereof as in the case of loss. For,
among the exceptions to the best evidence rule is "when the original has been
lost, destroyed, or cannot be produced in court."15 The originals of the vouchers
in question must be deemed to have been lost, as even the Corporation admits
such loss. Viewed upon this light, there can be no doubt as to the admissibility in
evidence of Exhibits 6 to 19 and 22.
Taking account of the foregoing evidence, together with Celso Rivera's
testimony,16 it would appear that: Villarama supplied the organization expenses
and the assets of the Corporation, such as trucks and equipment;17 there was no
actual payment by the original subscribers of the amounts of P95,000.00 and
P100,000.00 as appearing in the books;18 Villarama made use of the money of the
Corporation and deposited them to his private accounts;19 and the Corporation
paid his personal accounts.20
Villarama himself admitted that he mingled the corporate funds with his own
money.21 He also admitted that gasoline purchases of the Corporation were made
in his name22 because "he had existing account with Stanvac which was properly
secured and he wanted the Corporation to benefit from the rebates that he
received."23
The foregoing circumstances are strong persuasive evidence showing that
Villarama has been too much involved in the affairs of the Corporation to
altogether negative the claim that he was only a part-time general manager. They
show beyond doubt that the Corporation is his alter ego.
123
It is significant that not a single one of the acts enumerated above as proof of
Villarama's oneness with the Corporation has been denied by him. On the
contrary, he has admitted them with offered excuses.
Villarama has admitted, for instance, having paid P85,000.00 of the initial capital
of the Corporation with the lame excuse that "his wife had requested him to
reimburse the amount entrusted to her by the incorporators and which she had
used to pay the obligations of Dr. Villarama (her husband) incurred while he was
still the owner of Villa Rey Transit, a single proprietorship." But with his
admission that he had received P350,000.00 from Pantranco for the sale of
the two certificates and one unit,24 it becomes difficult to accept Villarama's
explanation that he and his wife, after consultation,25 spent the money of their
relatives (the stockholders) when they were supposed to have their own money.
Even if Pantranco paid the P350,000.00 in check to him, as claimed, it could have
been easy for Villarama to have deposited said check in his account and issued
his own check to pay his obligations. And there is no evidence adduced that the
said amount of P350,000.00 was all spent or was insufficient to settle his prior
obligations in his business, and in the light of the stipulation in the deed of sale
between Villarama and Pantranco that P50,000.00 of the selling price was
earmarked for the payments of accounts due to his creditors, the excuse
appears unbelievable.
On his having paid for purchases by the Corporation of trucks from the Manila
Trading & Supply Co. with his personal checks, his reason was that he was only
sharing with the Corporation his credit with some companies. And his main reason
for mingling his funds with that of the Corporation and for the latter's paying
his private bills is that it would be more convenient that he kept the money to be
used in paying the registration fees on time, and since he had loaned money to
the Corporation, this would be set off by the latter's paying his bills. Villarama
admitted, however, that the corporate funds in his possession were not only for
registration fees but for other important obligations which were not specified.26
Indeed, while Villarama was not the Treasurer of the Corporation but was,
allegedly, only a part-time manager,27 he admitted not only having held the
corporate money but that he advanced and lent funds for the Corporation, and
yet there was no Board Resolution allowing it.28
Villarama's explanation on the matter of his involvement with the corporate
affairs of the Corporation only renders more credible Pantranco's claim that his
control over the corporation, especially in the management and disposition of its
funds, was so extensive and intimate that it is impossible to segregate and
identify which money belonged to whom. The interference of Villarama in the
complex affairs of the corporation, and particularly its finances, are much too
inconsistent with the ends and purposes of the Corporation law, which, precisely,
seeks to separate personal responsibilities from corporate undertakings. It is
the very essence of incorporation that the acts and conduct of the corporation
be carried out in its own corporate name because it has its own personality.
The doctrine that a corporation is a legal entity distinct and separate from the
members and stockholders who compose it is recognized and respected in all
cases which are within reason and the law.29 When the fiction is urged as a
means of perpetrating a fraud or an illegal act or as a vehicle for the evasion of
an existing obligation, the circumvention of statutes, the achievement or
perfection of a monopoly or generally the perpetration of knavery or crime,30 the
veil with which the law covers and isolates the corporation from the members or
stockholders who compose it will be lifted to allow for its consideration merely
as an aggregation of individuals.
Upon the foregoing considerations, We are of the opinion, and so hold, that the
preponderance of evidence have shown that the Villa Rey Transit, Inc. is an alter
ego of Jose M. Villarama, and that the restrictive clause in the contract entered
into by the latter and Pantranco is also enforceable and binding against the said
Corporation. For the rule is that a seller or promisor may not make use of a
corporate entity as a means of evading the obligation of his covenant.31 Where
the Corporation is substantially the alter ego of the covenantor to the
restrictive agreement, it can be enjoined from competing with the covenantee.32
The Corporation contends that even on the supposition that Villa Rey Transit,
Inc. and Villarama are one and the same, the restrictive clause in the contract
between Villarama and Pantranco does not include the purchase of existing lines
but it only applies to application for the new lines. The clause in dispute reads
thus:
(4) The SELLER shall not, for a period of ten (10) years from the date
of this sale apply for any TPU service identical or competing with the
BUYER. (Emphasis supplied)
As We read the disputed clause, it is evident from the context thereof that the
intention of the parties was to eliminate the seller as a competitor of the buyer
for ten years along the lines of operation covered by the certificates of public
convenience subject of their transaction. The word "apply" as broadly used has
for frame of reference, a service by the seller on lines or routes that would
compete with the buyer along the routes acquired by the latter. In this
jurisdiction, prior authorization is needed before anyone can operate a TPU
124
service,33whether the service consists in a new line or an old one acquired from a
previous operator. The clear intention of the parties was to prevent the seller
from conducting any competitive line for 10 years since, anyway, he has bound
himself not to apply for authorization to operate along such lines for the
duration of such period.34
If the prohibition is to be applied only to the acquisition of new certificates of
public convenience thru an application with the Public Service Commission, this
would, in effect, allow the seller just the same to compete with the buyer as long
as his authority to operate is only acquired thru transfer or sale from a previous
operator, thus defeating the intention of the parties. For what would prevent
the seller, under the circumstances, from having a representative or dummy
apply in the latter's name and then later on transferring the same by sale to the
seller? Since stipulations in a contract is the law between the contracting
parties,
Every person must, in the exercise of his rights and in the performance
of his duties, act with justice, give everyone his due, and observe
honesty and good faith. (Art. 19, New Civil Code.)
We are not impressed of Villarama's contention that the re-wording of the two
previous drafts of the contract of sale between Villarama and Pantranco is
significant in that as it now appears, the parties intended to effect the least
restriction. We are persuaded, after an examination of the supposed drafts,
that the scope of the final stipulation, while not as long and prolix as those in the
drafts, is just as broad and comprehensive. At most, it can be said that the re-
wording was done merely for brevity and simplicity.
The evident intention behind the restriction was to eliminate the sellers as a
competitor, and this must be, considering such factors as the good will35 that the
seller had already gained from the riding public and his adeptness and
proficiency in the trade. On this matter, Corbin, an authority on Contracts has
this to say.36
When one buys the business of another as a going concern, he usually
wishes to keep it going; he wishes to get the location, the building, the
stock in trade, and the customers. He wishes to step into the seller's
shoes and to enjoy the same business relations with other men. He is
willing to pay much more if he can get the "good will" of the business,
meaning by this the good will of the customers, that they may continue
to tread the old footpath to his door and maintain with him the business
relations enjoyed by the seller.
... In order to be well assured of this, he obtains and pays for the
seller's promise not to reopen business in competition with the business
sold.
As to whether or not such a stipulation in restraint of trade is valid, our
jurisprudence on the matter37says:
The law concerning contracts which tend to restrain business or trade
has gone through a long series of changes from time to time with the
changing condition of trade and commerce. With trifling exceptions, said
changes have been a continuous development of a general rule. The early
cases show plainly a disposition to avoid and annul all contract which
prohibited or restrained any one from using a lawful trade "at any time
or at any place," as being against the benefit of the state. Later,
however, the rule became well established that if the restraint was
limited to "a certain time" and within "a certain place," such contracts
were valid and not "against the benefit of the state." Later cases, and
we think the rule is now well established, have held that a contract in
restraint of trade is valid providing there is a limitation upon either time
or place. A contract, however, which restrains a man from entering into
business or trade without either a limitation as to time or place, will be
held invalid.
The public welfare of course must always be considered and if it be not
involved and the restraint upon one party is not greater than protection
to the other requires, contracts like the one we are discussing will be
sustained. The general tendency, we believe, of modern authority, is to
make the test whether the restraint is reasonably necessary for the
protection of the contracting parties. If the contract is reasonably
necessary to protect the interest of the parties, it will be upheld.
(Emphasis supplied.)
Analyzing the characteristics of the questioned stipulation, We find that
although it is in the nature of an agreement suppressing competition, it is,
however, merely ancillary or incidental to the main agreement which is that of
sale. The suppression or restraint is only partial or limited: first, in scope, it
refers only to application for TPU by the seller in competition with the lines sold
to the buyer; second, in duration, it is only for ten (10) years; and third, with
respect to situs or territory, the restraint is only along the lines covered by the
certificates sold. In view of these limitations, coupled with the consideration of
P350,000.00 for just two certificates of public convenience, and considering,
furthermore, that the disputed stipulation is only incidental to a main agreement,
125
the same is reasonable and it is not harmful nor obnoxious to public service.38 It
does not appear that the ultimate result of the clause or stipulation would be to
leave solely to Pantranco the right to operate along the lines in question, thereby
establishing monopoly or predominance approximating thereto. We believe the
main purpose of the restraint was to protect for a limited time the business of
the buyer.
Indeed, the evils of monopoly are farfetched here. There can be no danger of
price controls or deterioration of the service because of the close supervision of
the Public Service Commission.39 This Court had stated long ago,40that "when one
devotes his property to a use in which the public has an interest, he virtually
grants to the public an interest in that use and submits it to such public use
under reasonable rules and regulations to be fixed by the Public Utility
Commission."
Regarding that aspect of the clause that it is merely ancillary or incidental to a
lawful agreement, the underlying reason sustaining its validity is well explained in
36 Am. Jur. 537-539, to wit:
... Numerous authorities hold that a covenant which is incidental to the
sale and transfer of a trade or business, and which purports to bind the
seller not to engage in the same business in competition with the
purchaser, is lawful and enforceable. While such covenants are designed
to prevent competition on the part of the seller, it is ordinarily neither
their purpose nor effect to stifle competition generally in the locality,
nor to prevent it at all in a way or to an extent injurious to the public.
The business in the hands of the purchaser is carried on just as it was in
the hands of the seller; the former merely takes the place of the latter;
the commodities of the trade are as open to the public as they were
before; the same competition exists as existed before; there is the
same employment furnished to others after as before; the profits of
the business go as they did before to swell the sum of public wealth; the
public has the same opportunities of purchasing, if it is a mercantile
business; and production is not lessened if it is a manufacturing plant.
The reliance by the lower court on tile case of Red Line Transportation Co. v.
Bachrach41 and finding that the stipulation is illegal and void seems misplaced. In
the said Red Line case, the agreement therein sought to be enforced was
virtually a division of territory between two operators, each company imposing
upon itself an obligation not to operate in any territory covered by the routes of
the other. Restraints of this type, among common carriers have always been
covered by the general rule invalidating agreements in restraint of trade. 42
Neither are the other cases relied upon by the plaintiff-appellee applicable to
the instant case. In Pampanga Bus Co., Inc. v. Enriquez,43the undertaking of the
applicant therein not to apply for the lifting of restrictions imposed on his
certificates of public convenience was not an ancillary or incidental agreement.
The restraint was the principal objective. On the other hand, in Red Line
Transportation Co., Inc. v. Gonzaga,44 the restraint there in question not to ask
for extension of the line, or trips, or increase of equipment — was not an
agreement between the parties but a condition imposed in the certificate of
public convenience itself.
Upon the foregoing considerations, Our conclusion is that the stipulation
prohibiting Villarama for a period of 10 years to "apply" for TPU service along
the lines covered by the certificates of public convenience sold by him to
Pantranco is valid and reasonable. Having arrived at this conclusion, and
considering that the preponderance of the evidence have shown that Villa Rey
Transit, Inc. is itself the alter ego of Villarama, We hold, as prayed for in
Pantranco's third party complaint, that the said Corporation should, until the
expiration of the 1-year period abovementioned, be enjoined from operating the
line subject of the prohibition.
To avoid any misunderstanding, it is here to be emphasized that the 10-year
prohibition upon Villarama is not against his application for, or purchase of,
certificates of public convenience, but merely the operation of TPU along the
lines covered by the certificates sold by him to Pantranco. Consequently, the sale
between Fernando and the Corporation is valid, such that the rightful ownership
of the disputed certificates still belongs to the plaintiff being the prior
purchaser in good faith and for value thereof. In view of the ancient rule
of caveat emptor prevailing in this jurisdiction, what was acquired by Ferrer in
the sheriff's sale was only the right which Fernando, judgment debtor, had in
the certificates of public convenience on the day of the sale.45
Accordingly, by the "Notice of Levy Upon Personalty" the Commissioner of Public
Service was notified that "by virtue of an Order of Execution issued by the
Court of First Instance of Pangasinan, the rights, interests, or participation
which the defendant, VALENTIN A. FERNANDO — in the above entitled case
may have in the following realty/personalty is attached or levied upon, to wit:
The rights, interests and participation on the Certificates of Public Convenience
issued to Valentin A. Fernando, in Cases Nos. 59494, etc. ... Lines — Manila to
Lingayen, Dagupan, etc. vice versa." Such notice of levy only shows that Ferrer,
the vendee at auction of said certificates, merely stepped into the shoes of the
judgment debtor. Of the same principle is the provision of Article 1544 of the
Civil Code, that "If the same thing should have been sold to different vendees,
126
the ownership shall be transferred to the person who may have first taken
possession thereof in good faith, if it should be movable property."
There is no merit in Pantranco and Ferrer's theory that the sale of the
certificates of public convenience in question, between the Corporation and
Fernando, was not consummated, it being only a conditional sale subject to the
suspensive condition of its approval by the Public Service Commission. While
section 20(g) of the Public Service Act provides that "subject to established
limitation and exceptions and saving provisions to the contrary, it shall be
unlawful for any public service or for the owner, lessee or operator thereof,
without the approval and authorization of the Commission previously had ... to
sell, alienate, mortgage, encumber or lease its property, franchise, certificates,
privileges, or rights or any part thereof, ...," the same section also provides:
... Provided, however, That nothing herein contained shall be construed
to prevent the transaction from being negotiated or completed before
its approval or to prevent the sale, alienation, or lease by any public
service of any of its property in the ordinary course of its business.
It is clear, therefore, that the requisite approval of the PSC is not a condition
precedent for the validity and consummation of the sale.
Anent the question of damages allegedly suffered by the parties, each of the
appellants has its or his own version to allege.
Villa Rey Transit, Inc. claims that by virtue of the "tortious acts" of defendants
(Pantranco and Ferrer) in acquiring the certificates of public convenience in
question, despite constructive and actual knowledge on their part of a prior sale
executed by Fernando in favor of the said corporation, which necessitated the
latter to file the action to annul the sheriff's sale to Ferrer and the subsequent
transfer to Pantranco, it is entitled to collect actual and compensatory damages,
and attorney's fees in the amount of P25,000.00. The evidence on record,
however, does not clearly show that said defendants acted in bad faith in their
acquisition of the certificates in question. They believed that because the bill of
sale has yet to be approved by the Public Service Commission, the transaction
was not a consummated sale, and, therefore, the title to or ownership of the
certificates was still with the seller. The award by the lower court of attorney's
fees of P5,000.00 in favor of Villa Rey Transit, Inc. is, therefore, without basis
and should be set aside.
Eusebio Ferrer's charge that by reason of the filing of the action to annul the
sheriff's sale, he had suffered and should be awarded moral, exemplary damages
and attorney's fees, cannot be entertained, in view of the conclusion herein
reached that the sale by Fernando to the Corporation was valid.
Pantranco, on the other hand, justifies its claim for damages with the allegation
that when it purchased ViIlarama's business for P350,000.00, it intended to
build up the traffic along the lines covered by the certificates but it was rot
afforded an opportunity to do so since barely three months had elapsed when
the contract was violated by Villarama operating along the same lines in the name
of Villa Rey Transit, Inc. It is further claimed by Pantranco that the
underhanded manner in which Villarama violated the contract is pertinent in
establishing punitive or moral damages. Its contention as to the proper measure
of damages is that it should be the purchase price of P350,000.00 that it paid to
Villarama. While We are fully in accord with Pantranco's claim of entitlement to
damages it suffered as a result of Villarama's breach of his contract with it, the
record does not sufficiently supply the necessary evidentiary materials upon
which to base the award and there is need for further proceedings in the lower
court to ascertain the proper amount.
PREMISES CONSIDERED, the judgment appealed from is hereby modified as
follows:
1. The sale of the two certificates of public convenience in question by Valentin
Fernando to Villa Rey Transit, Inc. is declared preferred over that made by the
Sheriff at public auction of the aforesaid certificate of public convenience in
favor of Eusebio Ferrer;
2. Reversed, insofar as it dismisses the third-party complaint filed by Pangasinan
Transportation Co. against Jose M. Villarama, holding that Villa Rey Transit, Inc.
is an entity distinct and separate from the personality of Jose M. Villarama, and
insofar as it awards the sum of P5,000.00 as attorney's fees in favor of Villa Rey
Transit, Inc.;
3. The case is remanded to the trial court for the reception of evidence in
consonance with the above findings as regards the amount of damages suffered
by Pantranco; and
4. On equitable considerations, without costs. So ordered.
THIRD DIVISION
127

ALLIED BANKING G.R. No. 151040 ALLIED BANKING

CORPORATION, CORPORATION

Petitioner, and EX-OFFICIO SHERIFF OF

Present:
MALABON, METRO MANILA,

Respondents.
PANGANIBAN, J., Chairman
- versus -
SANDOVAL-GUTIERREZ,

CORONA, x---------------------------------------------------------------------------------x

CARPIO-MORALES, and

GARCIA, JJ. D E C I S I O N
CHENG YONG and LILIA GAW,

Respondents.

Promulgated: GARCIA, J.:

October 6, 2005

x------------------------------------
--------x
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
CHENG YONG and LILIA GAW, G.R. No. 154109 Court of Appeals (CA) in CA-G.R. CV 41280, to wit:

Petitioners, 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

- versus - 2. Resolution dated 01 July 2002,[2] denying Cheng Yong and

Lilia Gaws motion for reconsideration.

The material facts:

128
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
129
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
130
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
131

ASIDE THE DECISION OF THE REGIONAL TRIAL COURT OF 1. the subject Promissory Note is not valid and

MAKATI CITY, BRANCH 145 IN ITS ENTIRETY. enforceable for non-fulfillment of a suspensive condition and

consequently, the Deed of Chattel Mortgage, being a mere

In Particular, THE HONORABLE COURT OF APPEALS accessory agreement, is likewise not valid and enforceable in the

PATENTLY ERRED WHEN IT UPHELD RESPONDENTS absence of a valid principal contract; and

ASSERTION THAT THE REAL ESTATE MORTGAGE DATED

MAY 31, 1983 CANNOT BE FORECLOSED WITH RESPECT TO 2. the Loss of the mortgaged Fishing Vessel Jean III

THE OBLIGATION OF PHILIPPINE PACIFIC TO PETITIONER. must be borne by the respondent bank considering that the

vessel was in its possession and control at the time of the loss.

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 Per this Courts Resolution dated 20 November 2002,[8] the two (2)
borne by them. In its resolution of 1 July 2002, the appellate court denied the separate petitions were ordered consolidated, involving, as they do, the same
motion. decision of the appellate court.

As we see it, the common issues to be resolved are:

Hence, the spouses Chengs own petition for review on certiorari in G.R.
I. Whether or not the promissory note dated 12
No. 154109, seeking the reversal and setting aside of both the appellate courts
August 1981 is valid;
decision of 11 December 2001 and resolution of 01 July 2002, it being their
II. Whether or not the chattel mortgage over the
submission that said court committed a grave and serious reversible error in not fishing vessel Jean III can be foreclosed for Philippine
Pacifics failure to comply with its obligation under the
holding that:
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
132

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
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).

effectivity of the promissory note dated 12 August 1981 were conditioned upon

the ratification thereof by the SEC-created management committee in SEC Case We agree.

No. 2042, the appellate court explained that the terms of the subject promissory
The appellate court is correct in declaring that under the parole evidence
note are clear and leave no doubt upon the intention of the parties. On this score,
rule, when the parties have reduced their agreement into writing, they are deemed
it ruled that the parole evidence introduced by the Cheng spouses to the effect
to have intended such written agreement to be the sole repository and memorial
that the validity and enforceability of the note are conditioned upon its approval
of everything that they have agreed upon. All their prior and contemporaneous
and ratification by the management committee should have been discarded by the
agreements are deemed to be merged in the written document so that, as between
trial court, consistent with the parole evidence rule embodied in Rule 130, Section
them and their successors-in-interest, such writing becomes exclusive evidence of
9 of the Rules of Court.[9] Says the appellate court in its challenged decision:
the terms thereof and any verbal agreement which tends to vary, alter or modify
Instead, We agree with [Allied Bank] that there is no the same is not admissible.[11]
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 Here, the terms of the subject promissory note and the deed of chattel
SEC in SEC Case No. 2042.
mortgage are clear and explicit and devoid of any conditionality upon which its
To begin with, there is nothing on the face of the validity depends. To be sure, Allied Bank was not a party to SEC Case No. 2042
promissory note requiring said prior ratification for it to become
valid. Basic is the rule that if the terms of the contract are clear where the management committee was ordered created; hence, it would not be
and leave no doubt upon the intention of the parties, the literal
meaning of its stipulations shall control (Article 1370, Civil Code; correct to presume that it had notice of the existence of the management
Honrado, Jr. vs. CA, 198 SCRA 326).
committee which, incidentally, was still to be created when the subject promissory
This basic rule notwithstanding, the court a
quo admitted in evidence the alleged verbal stipulation made by note was executed on 12 August 1981. Notably, while the parties in SEC Case No.
[the spouses Cheng] to the effect that the validity of the
promissory note was dependent upon its ratification by the 2042 agreed to form the management committee on 27 July 1981, it was only on
management committee. Such parole evidence should not have
14 August 1981 when the committee was actually created and its members
been allowed as it had the effect of altering the provisions of
the promissory note which are in clear and unequivocal terms. appointed. Clearly then, the subject promissory note was outside the realm of
133

authority of the management committee. Corollarily, the chattel mortgage loan to be secured and nothing else. To be sure, the obligation of GCPI was already

accessory to it is likewise valid. paid in full. Hence the real estate mortgage accessory to it was inevitably

extinguished.
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 All told, we find no reversible error committed by the appellate court in

also rule that the loss of the mortgaged chattel brought about by its sinking must rendering the assailed 11 December 2001 Decision and subsequent 01 July

be borne not by Allied Bank but by the spouses Cheng. As owners of the fishing 2002 Resolution in CA-G.R. CV 41280.

vessel, it was incumbent upon the spouses to insure it against loss. Thus, when the
WHEREFORE, the consolidated petitions are DENIED and the
vessel sank before the chattel mortgage could be foreclosed, uninsured as it is,
challenged decision and resolution of the Court of Appeals AFFIRMED in toto.
its loss must be borne by the spouses Cheng.

We proceed to the third issue. Both the trial court and the appellate SO ORDERED.
court are unanimous in finding that the real estate mortgage executed by the Republic of the Philippines
Supreme Court
spouses Cheng over their San Juan property to secure the loan of GCPI cannot be Manila

held to secure the spouses obligation as co-makers of the promissory note dated FIRST DIVISION
12 August 1981. We see no reason to depart from the findings of the two courts
SALUN-AT MARQUEZ and NESTOR G.R. No. 168387
below. DELA CRUZ,
Petitioners,
Present:
Article 2126 of the Civil Code is explicit:
- versus -
ART. 2126. The mortgage directly and immediately CORONA, C. J., Chairperson,
subjects the property upon which it is imposed, whoever the
ELOISA ESPEJO, ELENITA ESPEJO, VELASCO, JR.,
possessor may be, to the fulfillment of the obligation for whose
EMERITA ESPEJO, OPHIRRO LEONARDO-DE CASTRO,
security it was constituted.
ESPEJO, OTHNIEL ESPEJO, DEL CASTILLO, and
ORLANDO ESPEJO, OSMUNDO PEREZ, J.
ESPEJO, ODELEJO ESPEJO and NEMI
The agreement between the Cheng spouses and Allied Bank as evidenced FERNANDEZ, Promulgated:
Respondents. August 25, 2010
by the receipt signed by Allied Banks representative is that the San Juan x--------------------------------------------------------x
property shall collateralize the approved loan of GCPI, thus indicating the specific
134
DECISION
DEL CASTILLO, J.
When the parties admit the contents of written documents but put in issue whether these
documents adequately and correctly express the true intention of the parties, the deciding
body is authorized to look beyond these instruments and into the contemporaneous and
subsequent actions of the parties in order to determine such intent.
Well-settled is the rule that in case of doubt, it is the intention of the contracting parties
that prevails, for the intention is the soul of a contract, not its wording which is prone to
mistakes, inadequacies, or ambiguities. To hold otherwise would give life, validity, and
precedence to mere typographical errors and defeat the very purpose of agreements.
This Petition for Review on Certiorari[1] assails the October 7, 2003 Decision,[2] as well as
the May 11, 2005 Resolution[3] of the Court of Appeals (CA) in CA G.R. SP No. 69981. The
dispositive portion of the appellate courts Decision reads:
WHEREFORE, finding reversible error committed by the Department
of Agrarian Reform Adjudication Board, the instant petition for review
is GRANTED. The assailed Decision, dated 17 January 2001, rendered
by the Department of Agrarian Reform Adjudication Board is hereby
ANNULLED and SET ASIDE. The Decision of the Department of
Agrarian Reform Adjudication Board of Bayombong[,] Nueva Vizcaya,
dated 17 March 1998, is REINSTATED. Costs against respondents.
SO ORDERED.[4]
The reinstated Decision of the Department of Agrarian Reform Adjudication Board
(DARAB) of Bayombong, Nueva Vizcaya, in turn, contained the following dispositive portion:
Accordingly, judgment is rendered:
1. Finding [respondents] to be the owner by re-purchase from
RBBI [of] the Murong property covered by TCT No. [T-]62096
(formerly TCT No. 43258);
2. Ordering the cancellation of TCT with CLOA Nos. 395 and
396 in the name[s] of Salun-at Marquez and Nestor de la Cruz
respectively, as they are disqualified to become tenants of the
Lantap property;
3. Directing RBBI to sell through VOS the Lantap property
to its rightful beneficiary, herein tenant-farmer Nemi Fernandez
under reasonable terms and conditions;
4. Ordering RBBI to return the amount paid to it by Nestor
and Salun-at; and ordering the latter to pay 20 cavans of palay per
hectare at 46 kilos per cavan unto [respondents] plus such accrued
and unpaid rentals for the past years as may be duly accounted
for with the assistance of the Municipal Agrarian Reform Officer
of Bagabag, Nueva Vizcaya who is also hereby instructed to assist
the parties execute their leasehold contracts and;
5. The order to supervise harvest dated March 11, 1998 shall
be observed until otherwise modified or dissolved by the appellate
body.
SO ORDERED.[5]
Factual Antecedents
Respondents Espejos were the original registered owners of two parcels of agricultural
land, with an area of two hectares each. One is located at Barangay Lantap, Bagabag, Nueva
Vizcaya (the Lantap property) while the other is located in Barangay Murong, Bagabag,
Nueva Vizcaya (the Murong property). There is no dispute among the parties that the
Lantap property is tenanted by respondent Nemi Fernandez (Nemi)[6] (who is the
husband[7] of respondent Elenita Espejo (Elenita), while the Murong property is tenanted
by petitioners Salun-at Marquez (Marquez) and Nestor Dela Cruz (Dela Cruz).[8]
135
The respondents mortgaged both parcels of land to Rural Bank of Bayombong, Inc. (RBBI)
to secure certain loans. Upon their failure to pay the loans, the mortgaged properties were
foreclosed and sold to RBBI. RBBI eventually consolidated title to the properties and
transfer certificates of title (TCTs) were issued in the name of RBBI. TCT No. T-
62096 dated January 14, 1985 was issued for the Murong property. It contained the
following description:
Beginning at a point marked I on plan H-176292, S. 44034 W. 1656.31
m. more or less from B.L.L.M. No 1, Bagabag Townsite, K-27,
thence N. 28 deg. 20 E., 200.00 m. to point 2;
thence S. 61 deg. 40 E., 100.00 m. to point 3;
thence S. 28 deg. 20 W., 200.00 m. to point 4;
thence N. 61 deg. 40 W., 100.00 m. to point 1; point of beginning;
Containing an area of 2.000 hectares. Bounded on the northeast, by
Road; on the southeast, and southwest by public land; and on the
northwest by Public Land, properties claimed by Hilario Gaudia and
Santos Navarrete. Bearings true. Declination 0131 E. Points referred to
are marked on plan H-176292. Surveyed under authority of sections 12-
22 Act No. 2874 and in accordance with existing regulations of the
Bureau of Lands by H.O. Bauman Public Land Surveyor, [in] December
1912-March 1913. Note: All corners are Conc. Mons. 15x15x60 cm. This
is Lot No. 79-A=Lot No. 159 of Bagabag Townsite, K-27.[9]
Subsequently, TCT No. T-62836 dated June 4, 1985 was issued for the Lantap property
and contained the following description:
Beginning at a point marked 1 on plan H-105520, N. 80 deg. 32 W.,
1150.21 m. from BLLM No. 122, Irrigation project,
thence N. 61 deg. 40E., 200.00 m. to point 2;
thence N. 28 deg. 20E, 100.00 m. to point 3;
thence S. 61 deg. 40E, 200.00 m. to point 4;
thence S. 28 deg. 20W, 100.00 m. to point 1; point of beginning;
containing an area of 2.0000 hectares. Bounded on the northeast,
southeast, and southwest by Public land; and on the northwest by Road
and public land. Bearings true. Declination 0 deg. 31E., points referred
to are marked on plan H-105520. Surveyed under authority of Section
12-22, Act No. 2874 and in accordance with existing regulations of the
Bureau of Lands, by H.O. Bauman Public Land Surveyor, [in] Dec. 1912-
Mar. 1913 and approved on January 6, 1932. Note: This is Lot No. 119-
A Lot No. 225 of Bagabag Townsite K-27. All corners are B.I. Conc.
Mons. 15x60 cm.[10]
Both TCTs describe their respective subjects as located in Bagabag Townsite, K-27,
without any reference to either Barangay Lantap or Barangay Murong.
On February 26, 1985, respondents Espejos bought back one of their lots from RBBI. The
Deed of Sale[11] described the property sold as follows:
x x x do hereby SELL, TRANSFER, and CONVEY, absolutely and
unconditionally x x x that certain parcel of land, situated in the
Municipality of Bagabag, Province of Nueva Vizcaya, and more
particularly bounded and described as follows, to wit:
Beginning at a point marked 1 on plan x x x x
Containing an area of 2.000 hectares. Bounded on
the NE., by Road; on the SE., and SW by Public Land;
and on the NW., by Public Land, properties claimed
by Hilario Gaudia and Santos Navarrete. Bearing
true. Declination 013 B. Points referred to are
marked on plan H-176292.
of which the Rural Bank of Bayombong (NV) Inc., is the registered
owner in fee simple in accordance with the Land Registration Act, its
title thereto being evidenced by Transfer Certificate of Title No. T-
62096 issued by the Registry of Deeds of Nueva Vizcaya.
As may be seen from the foregoing, the Deed of Sale did not mention the barangay where
the property was located but mentioned the title of the property (TCT No. T-62096),
which title corresponds to the Murong property. There is no evidence, however, that
respondents took possession of the Murong property, or demanded lease rentals from the
petitioners (who continued to be the tenants of the Murong property), or otherwise
136

exercised acts of ownership over the Murong property. On the other hand, respondent Petitioners filed their Answer[21] and insisted that they bought the Murong property as

Nemi (husband of respondent Elenita and brother-in-law of the other respondents), farmer-beneficiaries thereof. They maintained that they have always displayed good faith,

continued working on the other property -- the Lantap property -- without any evidence paid lease rentals to RBBI when it became the owner of the Murong property, bought the

that he ever paid rentals to RBBI or to any landowner. The Deed of Sale was annotated on same from RBBI upon the honest belief that they were buying the Murong property, and
[12]
TCT No. T-62096 almost a decade later, on July 1, 1994. occupied and exercised acts of ownership over the Murong property. Petitioners also

argued that what respondents Espejos repurchased from RBBI in 1985 was actually the
[13] [14]
Meanwhile, on June 20, 1990, RBBI, pursuant to Sections 20 and 21 of Republic Act Lantap property, as evidenced by their continued occupation and possession of the Lantap
(RA) No. 6657,[15] executed separate Deeds of Voluntary Land Transfer (VLTs) in favor of property through respondent Nemi.

petitioners Marquez and Dela Cruz, the tenants of the Murong property. Both VLTs

described the subject thereof as an agricultural land located RBBI answered[22] that it was the Lantap property which was the subject of the buy-back
in Barangay Murong and covered by TCT No. T-62836 (which, however, is the title transaction with respondents Espejos. It denied committing a grave mistake in the

corresponding to the Lantap property).[16] transaction and maintained its good faith in the disposition of its acquired assets in

conformity with the rural banking rules and regulations.

After the petitioners completed the payment of the purchase price of P90,000.00 to

RBBI, the DAR issued the corresponding Certificates of Land Ownership Award (CLOAs) OIC-RARAD Decision[23]

to petitioners Marquez[17] and Dela Cruz[18] on September 5, 1991. Both CLOAs stated that
their subjects were parcels of agricultural land situated in Barangay Murong.[19] The The OIC-RARAD gave precedence to the TCT numbers appearing on the Deed of Sale and

CLOAs were registered in the Registry of Deeds of Nueva Vizcaya on September 5, 1991. the VLTs. Since TCT No. T-62096 appeared on respondents Deed of Sale and the said title

refers to the Murong property, the OIC-RARAD concluded that the subject of sale was

On February 10, 1997 (more than 10 years after the Deed of Sale in favor of the indeed the Murong property. On the other hand, since the petitioners VLTs referred to

respondents and almost seven years after the execution of VLTs in favor of the TCT No. T-62836, which corresponds to the Lantap property, the OIC-RARAD ruled that

petitioners), respondents filed a Complaint[20] before the Regional Agrarian Reform petitioners CLOAs necessarily refer to the Lantap property. As for the particular

Adjudicator (RARAD) of Bayombong, Nueva Vizcaya for the cancellation of petitioners description contained in the VLTs that the subject thereof is the Murong property, the

CLOAs, the deposit of leasehold rentals by petitioners in favor of respondents, and the OIC-RARAD ruled that it was a mere typographical error.

execution of a deed of voluntary land transfer by RBBI in favor of respondent Nemi. The Further, since the VLTs covered the Lantap property and petitioners are not the actual
complaint was based on respondents theory that the Murong property, occupied by the tillers thereof, the OIC-RARAD declared that they were disqualified to become tenants
petitioners, was owned by the respondents by virtue of the 1985 buy-back, as documented of the Lantap property and ordered the cancellation of their CLOAs. It then ordered RBBI

in the Deed of Sale. They based their claim on the fact that their Deed of Sale refers to to execute a leasehold contract with the real tenant of the Lantap property, Nemi.

TCT No. 62096, which pertains to the Murong property.

137
The OIC-RARAD recognized that petitioners only right as the actual tillers of the Murong
property is to remain as the tenants thereof after the execution of leasehold contracts
with and payment of rentals in arrears to respondents.
DARAB Decision[24]
Upon appeal filed by petitioners, the DARAB reversed the OIC-RARAD Decision. It ruled
that in assailing the validity of the CLOAs issued to petitioners as bona fide tenant-
farmers, the burden of proof rests on the respondents. There being no evidence that the
DAR field personnel were remiss in the performance of their official duties when they
issued the corresponding CLOAs in favor of petitioners, the presumption of regular
performance of duty prevails. This conclusion is made more imperative by the respondents
admission that petitioners are the actual tillers of the Murong property, hence qualified
beneficiaries thereof.
As for respondents allegation that they bought back the Murong property from RBBI, the
DARAB ruled that they failed to support their allegation with substantial evidence. It gave
more credence to RBBIs claim that respondents repurchased the Lantap property, not the
Murong property. Respondents, as owners of the Lantap property, were ordered to enter
into an agricultural leasehold contract with their brother-in-law Nemi, who is the actual
tenant of the Lantap property.
The DARAB ended its January 17, 2001 Decision in this wise:
We find no basis or justification to question the authenticity and
validity of the CLOAs issued to appellants as they are by operation of
law qualified beneficiaries over the landholdings; there is nothing to
quiet as these titles were awarded in conformity with the CARP
program implementation; and finally, the Board declares that all
controverted claims to or against the subject landholding must be
completely and finally laid to rest.
WHEREFORE, premises considered and finding reversible errors[,] the
assailed decision is ANNULLED and a new judgment is hereby rendered,
declaring:
1. Appellants Salun-at Marquez and Nestor Dela Cruz
as the bona fide tenant-tillers over the Murong property and therefore
they are the qualified beneficiaries thereof;
2. Declaring Transfer Certificate of Title (TCT) Nos.
395 and 396 issued in the name of [farmer-beneficiaries] Salun-at
Marquez and Nestor Dela Cruz respectively, covered formerly by TCT
No. 62096 (TCT No. 43258) of the Murong property as valid and legal;
3. Ordering the co-[respondents] to firm-up an
agricultural leasehold contract with bona fide tenant-tiller Nemi
Fernandez over the Lantap property, [the latter] being the subject
matter of the buy back arrangement entered into between
[respondents] and Rural Bank of Bayombong, Incorporated, and other
incidental matters are deemed resolved.
SO ORDERED.[25]
Ruling of the Court of Appeals
In appealing to the CA, the respondents insisted that the DARAB erred in ruling that they
repurchased the Lantap property, while the petitioners were awarded the Murong
property. They were adamant that the title numbers indicated in their respective deeds
of conveyance should control in determining the subjects thereof. Since respondents Deed
of Sale expressed that its subject is the property with TCT No. T-62096, then what was
sold to them was the Murong property. On the other hand, petitioners VLTs and CLOAs
say that they cover the property with TCT No. T-62836; thus it should be understood that
they were awarded the Lantap property. Respondents added that since petitioners are not
the actual tillers of the Lantap property, their CLOAs should be cancelled due to their lack
of qualification.
138

The CA agreed with the respondents. Using the Best Evidence Rule embodied in Rule 130, Their Motion for Reconsideration was likewise denied with finality.[31] Entry of judgment

Section 3, the CA held that the Deed of Sale is the best evidence as to its contents, was made in that case on December 15, 2004.[32]

particularly the description of the land which was the object of the sale. Since the Deed

of Sale expressed that its subject is the land covered by TCT No. T-62096 the Murong On July 27, 2005,[33] petitioners filed the instant petition.

property then that is the property that the respondents repurchased.

The CA further ruled that as for petitioners VLTs, the same refer to the property with Issues

TCT No. T-62836; thus, the subject of their CLOAs is the Lantap property. The additional
description in the VLTs that the subject thereof is located in Barangay Murong was Rephrased and consolidated, the parties present the following issues for the Courts

considered to be a mere typographical error. The CA ruled that the technical description determination:

contained in the TCT is more accurate in identifying the subject property since the same
I
particularly describes the properties metes and bounds.
What is the effect of the final judgment dismissing RBBIs Petition for Review
on Certiorari, which assailed the same CA Decision
Both the RBBI[26] and petitioners[27] filed their respective motions for reconsideration,
II
which were separately denied.[28] Whether the CA erred in utilizing the Best Evidence Rule to determine the subject of
the contracts

On June 22, 2004, RBBI filed a separate Petition for Review on Certiorari, docketed as
III
G.R. No. 163320, with this Court.[29] RBBI raised the issue that the CA failed to appreciate What are the subject properties of the parties respective contracts with RBBI

that respondents did not come to court with clean hands because they misled RBBI to

believe at the time of the sale that the two lots were not tenanted. RBBI also asked that Our Ruling
they be declared free from any liability to the parties as it did not enrich itself at anyones

expense. RBBIs petition was dismissed on July 26, 2004 for lack of merit. The said Propriety of the Petition
Resolution reads: Respondents maintain that the instant petition for review raises factual issues which are

beyond the province of Rule 45.[34]

Considering the allegations, issues[,] and arguments adduced in the
petition for review on certiorari, the Court Resolves to DENY the
petition for lack of sufficient showing that the Court of Appeals had The issues involved herein are not entirely factual. Petitioners assail the appellate courts
committed any reversible error in the questioned judgment to warrant
rejection of their evidence (as to the contractual intent) as inadmissible under the Best
the exercise by this Court of its discretionary appellate jurisdiction in
this case.[30] Evidence Rule. The question involving the admissibility of evidence is a legal question that

is within the Courts authority to review.[35]

139
Besides, even if it were a factual question, the Court is not precluded to review the
same. The rule that a petition for review should raise only questions of law admits of
exceptions, among which are (1) when the findings are grounded entirely on speculations,
surmises, or conjectures; (2) when the inference made is manifestly mistaken, absurd or
impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on
a misappreciation of facts; (5) when the findings of fact are conflicting; (6) when, in making
its findings, the same are contrary to the admissions of both appellant and appellee; (7)
when the findings are contrary to those of the trial court; (8) when the findings are
conclusions without citation of specific evidence on which they are based; (9) when the
facts set forth in the petition as well as in the petitioner's main and reply briefs are not
disputed by the respondent; and (10) when the findings of fact are premised on the
supposed absence of evidence and contradicted by the evidence on record.[36]
In the instant case, we find sufficient basis to apply the exceptions to the general rule
because the appellate court misappreciated the facts of the case through its erroneous
application of the Best Evidence Rule, as will be discussed below. Moreover, the disparate
rulings of the three reviewing bodies below are sufficient for the Court to exercise its
jurisdiction under Rule 45.
First Issue
Dismissal of RBBIs appeal
Respondents maintain that the Courts earlier dismissal of RBBIs petition
for review of the same CA Decision is eloquent proof that there is no reversible error in
the appellate courts decision in favor of the respondents.[37]
We are not persuaded. This Court dismissed RBBIs earlier petition in G.R. No. 163320
because it failed to convincingly demonstrate the alleged errors in the CA Decision. The
bank did not point out the inadequacies and errors in the appellate courts decision but
simply placed the responsibility for the confusion on the respondents for allegedly
misleading the bank as to the identity of the properties and for misrepresenting that the
two lots were not tenanted. Thus, RBBI argued that respondents did not come to court
with clean hands.
These arguments were ineffectual in convincing the Court to review the appellate courts
Decision. It is the appellants responsibility to point out the perceived errors in the
appealed decision. When a party merely raises equitable considerations such as the clean
hands doctrine without a clear-cut legal basis and cogent arguments to support his claim,
there should be no surprise if the Court is not swayed to exercise its appellate jurisdiction
and the appeal is dismissed outright. The dismissal of an appeal does not always and
necessarily mean that the appealed decision is correct, for it could simply be the result of
the appellants inadequate discussion, ineffectual arguments, or even procedural lapses.
RBBIs failure to convince the Court of the merits of its appeal should not prejudice
petitioners who were not parties to RBBIs appeal, especially because petitioners duly filed
a separate appeal and were able to articulately and effectively present their arguments. A
party cannot be deprived of his right to appeal an adverse decision just because another
party had already appealed ahead of him,[38] or just because the other partys separate
appeal had already been dismissed.[39]
There is another reason not to bind the petitioners to the final judgment against
RBBI. RBBI executed the transfer (VLTs) in favor of petitioners prior to the
commencement of the action. Thus, when the action for cancellation of CLOA was filed,
RBBI had already divested itself of its title to the two properties involved. Under the rule
on res judicata, a judgment (in personam) is conclusive only between the parties and their
successors-in-interest by title subsequent to the commencement of the action.[40] Thus,
when the vendor (in this case RBBI) has already transferred his title to third persons
(petitioners), the said transferees are not bound by any judgment which may be rendered
against the vendor.[41]
140
Second Issue
Is it correct to apply the Best Evidence Rule?
Citing the Best Evidence Rule in Rule 130, Section 3, the CA held that the Deed of Sale
between respondents and RBBI is the best evidence as to the property that was sold by
RBBI to the respondents. Since the Deed of Sale stated that its subject is the land
covered by TCT No. T-62096 the title for the Murong property then the property
repurchased by the respondents was the Murong property. Likewise, the CA held that
since the VLTs between petitioners and RBBI refer to TCT No. T-62836 the title for the
Lantap property then the property transferred to petitioners was the Lantap property.
Petitioners argue that the appellate court erred in using the best evidence rule to
determine the subject of the Deed of Sale and the Deeds of Voluntary Land
Transfer. They maintain that the issue in the case is not the contents of the contracts but
the intention of the parties that was not adequately expressed in their
contracts. Petitioners then argue that it is the Parol Evidence Rule that should be applied
in order to adequately resolve the dispute.
Indeed, the appellate court erred in its application of the Best Evidence Rule. The Best
Evidence Rule states that when the subject of inquiry is the contents of a document, the
best evidence is the original document itself and no other evidence (such as a reproduction,
photocopy or oral evidence) is admissible as a general rule. The original is preferred
because it reduces the chance of undetected tampering with the document.[42]
In the instant case, there is no room for the application of the Best Evidence Rule because
there is no dispute regarding the contents of the documents. It is admitted by the parties
that the respondents Deed of Sale referred to TCT No. T-62096 as its subject; while the
petitioners Deeds of Voluntary Land Transfer referred to TCT No. T-62836 as its
subject, which is further described as located in Barangay Murong.
The real issue is whether the admitted contents of these documents adequately and
correctly express the true intention of the parties. As to the Deed of Sale, petitioners
(and RBBI) maintain that while it refers to TCT No. T-62096, the parties actually intended
the sale of the Lantap property (covered by TCT No. T-62836).
As to the VLTs, respondents contend that the reference to TCT No. T-62836
(corresponding to the Lantap property) reflects the true intention of RBBI and the
petitioners, and the reference to Barangay Murong was a typographical error. On the
other hand, petitioners claim that the reference to Barangay Murong reflects their true
intention, while the reference to TCT No. T-62836 was a mere error. This dispute reflects
an intrinsic ambiguity in the contracts, arising from an apparent failure of the instruments
to adequately express the true intention of the parties. To resolve the ambiguity, resort
must be had to evidence outside of the instruments.
The CA, however, refused to look beyond the literal wording of the documents and
rejected any other evidence that could shed light on the actual intention of the contracting
parties. Though the CA cited the Best Evidence Rule, it appears that what it actually
applied was the Parol Evidence Rule instead, which provides:
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.[43]
The Parol Evidence Rule excludes parol or extrinsic evidence by which a party seeks to
contradict, vary, add to or subtract from the terms of a valid agreement or
instrument. Thus, it appears that what the CA actually applied in its assailed Decision when
it refused to look beyond the words of the contracts was the Parol Evidence Rule, not the
Best Evidence Rule. The appellate court gave primacy to the literal terms of the two
contracts and refused to admit any other evidence that would contradict such terms.
141
However, even the application of the Parol Evidence Rule is improper in the case at bar. In
the first place, respondents are not parties to the VLTs executed between RBBI and
petitioners; they are strangers to the written contracts. Rule 130, Section 9 specifically
provides that parol evidence rule is exclusive only as between the parties and their
successors-in-interest. The parol evidence rule may not be invoked where at least one of
the parties to the suit is not a party or a privy of a party to the written document in
question, and does not base his claim on the instrument or assert a right originating in the
instrument.[44]
Moreover, the instant case falls under the exceptions to the Parol Evidence Rule, as
provided in the second paragraph of Rule 130, Section 9:
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:
(1) An intrinsic ambiguity, mistake or
imperfection in the written agreement;
(2) The failure of the written agreement to
express the true intent and agreement of the parties
thereto;
x x x x (Emphasis supplied)
Here, the petitioners VLTs suffer from intrinsic ambiguity. The VLTs described the
subject property as covered by TCT No. T-62836 (Lantap property), but they also
describe the subject property as being located in Barangay Murong. Even the respondents
Deed of Sale falls under the exception to the Parol Evidence Rule. It refers to TCT No. T-
62096 (Murong property), but RBBI contended that the true intent was to sell the Lantap
property. In short, it was squarely put in issue that the written agreement failed to
express the true intent of the parties.
Based on the foregoing, the resolution of the instant case necessitates an examination of
the parties respective parol evidence, in order to determine the true intent of the
parties. Well-settled is the rule that in case of doubt, it is the intention of the contracting
parties that prevails, for the intention is the soul of a contract,[45] not its wording which is
prone to mistakes, inadequacies, or ambiguities. To hold otherwise would give life, validity,
and precedence to mere typographical errors and defeat the very purpose of agreements.
In this regard, guidance is provided by the following articles of the Civil Code involving the
interpretation of contracts:
Article 1370. If 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.
If the words appear to be contrary to the evident intention of the
parties, the latter shall prevail over the former.
Article 1371. In order to judge the intention of the contracting parties,
their contemporaneous and subsequent acts shall be principally
considered.
Rule 130, Section 13 which provides for the rules on the interpretation of documents is
likewise enlightening:
Section 13. Interpretation according to circumstances. For the proper
construction of an instrument, the circumstances under which it was
made, including the situation of the subject thereof and of the parties
to it, may be shown, so that the judge may be placed in the position of
those whose language he is to interpret.
Applying the foregoing guiding rules, it is clear that the Deed of Sale was intended to
transfer the Lantap property to the respondents, while the VLTs were intended to convey
142

the Murong property to the petitioners. This may be seen from the contemporaneous and therefore natural that the Murong property and no other was the one that they had
subsequent acts of the parties. intended to acquire from RBBI with the execution of the VLTs. Moreover, after the

execution of the VLTs, petitioners remained in possession of the Murong property,

Third issue
enjoying and tilling it without any opposition from anybody. Subsequently, after the
Determining the intention of the parties
regarding the subjects of their contracts petitioners completed their payment of the total purchase price of P90,000.00 to RBBI,

the Department of Agrarian Reform (DAR) officials conducted their investigation of the

Murong property which, with the presumption of regularity in the performance of official
We are convinced that the subject of the Deed of Sale between RBBI and the respondents
duty, did not reveal any anomaly. Petitioners were found to be in actual possession of the
was the Lantap property, and not the Murong property. After the execution in 1985 of the
Murong property and were the qualified beneficiaries thereof. Thus, the DAR officials
Deed of Sale, the respondents did not exercise acts of ownership that could show that
issued CLOAs in petitioners favor; and these CLOAs explicitly refer to the land
they indeed knew and believed that they repurchased the Murong property. They did not
in Barangay Murong. All this time, petitioners were in possession of the Murong property,
take possession of the Murong property. As admitted by the parties, the Murong property
undisturbed by anyone for several long years, until respondents started the controversy in
was in the possession of the petitioners, who occupied and tilled the same without any
1997.
objection from the respondents. Moreover, petitioners paid leasehold rentals for using the

Murong property to RBBI, not to the respondents.

All of these contemporaneous and subsequent actions of RBBI and petitioners support

their position that the subject of their contract (VLTs) is the Murong property, not the
Aside from respondents neglect of their alleged ownership rights over the Murong
Lantap property. Conversely, there has been no contrary evidence of the parties actuations
property, there is one other circumstance that convinces us that what respondents really
to indicate that they intended the sale of the Lantap property. Thus, it appears that the
repurchased was the Lantap property. Respondent Nemi (husband of respondent Elenita)
reference in their VLT to TCT No. T-62836 (Lantap property) was due to their honest but
is the farmer actually tilling the Lantap property, without turning over the supposed
mistaken belief that the said title covers the Murong property. Such a mistake is not
landowners share to RBBI. This strongly indicates that the respondents considered
farfetched considering that TCT No. T-62836 only refers to the Municipality of
themselves (and not RBBI) as the owners of the Lantap property. For if respondents
Bayombong, Nueva Vizcaya, and does not indicate the particular barangay where the
(particularly spouses Elenita and Nemi) truly believed that RBBI retained ownership of the
property is located. Moreover, both properties are bounded by a road and public
Lantap property, how come they never complied with their obligations as supposed tenants
land. Hence, were it not for the detailed technical description, the titles for the two
of RBBIs land? The factual circumstances of the case simply do not support the theory
properties are very similar.
propounded by the respondents.
The respondents attempt to discredit petitioners argument that their VLTs were
We are likewise convinced that the subject of the Deeds of Voluntary Land Transfer
intrinsically ambiguous and failed to express their true intention by asking why petitioners
(VLTs) in favor of petitioners was the Murong property, and not the Lantap
never filed an action for the reformation of their contract.[46] A cause of action for the
property. When the VLTs were executed in 1990, petitioners were already the tenant-
reformation of a contract only arises when one of the contracting parties manifests an
farmers of the Murong property, and had been paying rentals to RBBI accordingly. It is
intention, by overt acts, not to abide by the true agreement of the parties.[47] It seems
143
fairly obvious that petitioners had no cause to reform their VLTs because the parties
thereto (RBBI and petitioners) never had any dispute as to the interpretation and
application thereof. They both understood the VLTs to cover the Murong property (and
not the Lantap property). It was only much later, when strangers to the contracts argued
for a different interpretation, that the issue became relevant for the first time.
All told, we rule that the Deed of Sale dated February 26, 1985 between respondents and
RBBI covers the Lantap property under TCT No. T-62836, while the Deeds of Voluntary
Land Transfer and TCT Nos. CLOA-395 and CLOA-396 of the petitioners cover
the Murong property under TCT No. T-62096. In consequence, the CAs ruling against
RBBI should not be executed as such execution would be inconsistent with our ruling
herein. Although the CAs decision had already become final and executory as against
RBBI with the dismissal of RBBIs petition in G.R. No. 163320, our ruling herein in favor of
petitioners is a supervening cause which renders the execution of the CA decision against
RBBI unjust and inequitable.
WHEREFORE, the Petition for Review on Certiorari is GRANTED. The assailed October
7, 2003 Decision, as well as the May 11, 2005 Resolution of the Court of Appeals in CA-G.R.
SP No. 69981 are REVERSED and SET ASIDE. The January 17, 2001 Decision of the
DARAB Central Office is REINSTATED. The Deed of Sale dated February 26, 1985
between respondents and Rural Bank of Bayombong, Inc. covers the Lantap property under
TCT No. T-62836, while the Deeds of Voluntary Land Transfer and TCT Nos. CLOA-395
and CLOA-396 of the petitioners cover the Murong property under TCT No. T-62096. The
Register of Deeds of Nueva Vizcaya is directed to make the necessary corrections to the
titles of the said properties in accordance with this Decision. Costs against respondents.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 111426 July 11, 1994
NORMA DIZON-PAMINTUAN, petitioner,
vs.
PEOPLE OF THE PHILIPPINES, respondent.
Puno and Puno for petitioner.
The Solicitor General for respondent.
DAVIDE, JR., J.:
The chief issue presented for our determination in this petition for review under
Rule 45 of the Rules of Court is the correctness of the decision of 29 March
1993 of the Court of Appeals in CA-G.R. CR No. 110241 which affirmed the
decision of Branch 20 of the Regional Trial Court of Manila in Criminal Case No.
88-649542 finding the petitioner guilty of the violation of the Anti-Fencing Law
(P.D. No. 1612) but set aside the penalty imposed and ordered the trial court to
receive additional evidence on the "correct valuation" of the pieces of jewelry
involved for the sole purpose of determining the penalty to be imposed.
The information in Criminal Case No. 88-64954 charged the petitioner with the
violation of the Anti-Fencing Law in that
on or about and during the period from February 12, to
February 24, 1988, inclusive, in the City of Manila, Philippines,
the said accused, with intent of gain for herself or for another,
did then and there wilfully, unlawfully and knowingly buy and
keep in her possession and/or sell or dispose of the following
jewelries, to wit: one (1) set of earrings, a ring studded with
diamonds in a triangular style, one (1) set of earrings (diamond
studded) and one (1) diamond-studded crucifix, or all valued at
P105,000.00, which she knew or should have known to have been
derived from the proceeds of the crime of robbery committed
144
by Joselito Sacdalan Salinas against the owner Teodoro and
Luzviminda Encarnacion.3
On the basis of the testimonies of prosecution witnesses Teodoro Encarnacion
(one of the offended parties), Cpl. Ignacio Jao, Jr., and Pfc. Emmanuel Sanchez,
both of the Western Police District, the trial court promulgated on 16 November
1990 its decision, the dispositive portion of which reads:
WHEREFORE, the prosecution having proved the guilty of the
accused for violation of Presidential Decree No. 1612 beyond
reasonable doubt, the accused Norma Dizon-Pamintuan is
hereby sentenced to suffer an indeterminate penalty of
imprisonment from FOURTEEN (14) YEARS of prision mayor to
NINETEEN (19) YEARS of reclusion temporal.
No civil liability in view of the recovery of the items, subject-
matter of this case.
With costs.4
The evidence of the prosecution is summarized by the trial court as follows:
Teodoro Encarnacion, Undersecretary, Department of Public
Works and Highways testified that he has just arrived at his
residence located at Better Living Subdivision, Parañaque at
around 9:45 p.m. of February 12, 1988 coming from the Airport
and immediately proceeded inside the house, leaving behind his
driver and two housemaids outside to pick-up his personal
belongings from his case. It was at this point that five
unidentified masked armed persons appeared from the grassy
portion of the lot beside the house and poked their guns to his
driver and two helpers and dragged them inside his house. That
the men pointed a gun at him and was made to lie face down on
the floor. The other occupants, namely his wife, the maids and
his driver were likewise made to lie on the floor. Thereafter,
the robbers ransacked the house and took away jewelries and
other personal properties including cash. After the intruders
left the house he reported the matter immediately to the
police. He was then interviewed by the Parañaque police and was
informed that an operation group would be assigned to the case.
He likewise reported the matter to the Western Police District
on February 15, 1988. Two days later, a group of WPD
operatives came over to his house and he was asked to prepare
a list of items of jewelry and other valuables that were lost
including a sketch of distinctive items. He was later told that
some of the lost items were in Chinatown area as tipped by the
informer the police had dispatched. That an entrapment would
be made with their participation, on February 14, 1988. As such,
they went to Camp Crame at around 9:00 a.m. and arrived at the
vicinity of 733 Florentino Torres Street, Sta. Cruz, Manila at
about 10:00 a.m.; that he is with his wife posed as a buyer and
were able to recognize items of the jewelry stolen displayed at
the stall being tended by Norma Dizon Pamintuan; the pieces
were: 1 earring and ring studded with diamonds worth P75,000
bought from estimator Nancy Bacud (Exh. "C-2"), 1 set of
earring diamond worth P15,000 (Exh. "C-3") and 1 gold chain
with crucifix worth P3,000 (Exh. "C-4").
Corporal Ignacio Jao, Jr. of the WPD testified that he was with
the spouses Teodoro Encarnacion, Jr. in the morning of
February 24, 1988 and they proceeded to Florentino Torres
Street, Sta. Cruz, Manila at the stall of Norma Dizon-Pamintuan
together with Sgt. Perez. After the spouses Encarnacion
recognized the items subject matter of the robbery at the
display window of the stall being tended by the herein accused,
they invited the latter to the precinct and investigated the
same. They likewise brought the said showcase to the WPD
station. He further testified that he has no prior knowledge of
the stolen jewelries of the private complainant from one store
to another.
Pfc. Emmanuel Sanchez of the WPD testified that he reported
for duty on February 24, 1988; that he was with the group who
accompanied the spouses Encarnacion in Sta. Cruz, Manila and
was around when the couple saw some of the lost jewelries in
the display stall of the accused. He was likewise present during
the early part of the investigation of the WPD station.5
The recovery of the pieces of jewelry, on the basis of which the trial court ruled
that no civil liability should be adjudged against the petitioner, took place when,
as testified to by Teodoro Encarnacion, the petitioner "admitted that she got
145
the items but she did not know they were stolen [and that] she surrendered the
items and gave them to [his] wife."6
On the other hand, the version of the defense, as testified to by Rosito Dizon-
Pamintuan, is summarized by the trial court thus:
The defense presented only the testimony of Rosito Dizon-
Pamintuan who testified that he is the brother of Norma Dizon-
Pamintuan and that sometime around 11:00 a.m. of February 24,
1985, he, together with the accused went infront of the
Carinderia along Florentino Torres Street, Sta. Cruz, Manila
waiting for a vacancy therein to eat lunch. Suddenly, three
persons arrived and he overheard that Cpl. Jao told her sister
to get the jewelry from inside the display window but her sister
requested to wait for Fredo, the owner of the stall. But ten
minutes later when said Fredo did not show up, the police
officer opened the display window and got the contents of the
same. The display stall was hauled to a passenger jeepney and
the same, together with the accused were taken to the police
headquarters. He likewise testified that he accompanied his
sister to the station and after investigation was sent home.7
In convicting the petitioner, the trial court made the following findings:
The prosecution was able to prove by evidence
that the recovered items were part of the loot
and such recovered items belong to the
spouses Encarnacion, the herein private
complainants. That such items were recovered
by the Police Officers from the stall being
tended by the accused at that time. Of
importance, is that the law provides a
disputable presumption of fencing under
Section 5 thereof, to wit:
Mere possession of any goods, article, item
object, or anything of value which has been
the subject of robbery or thievery shall
be prima facie evidence of fencing.
There is no doubt that the recovered items were found in the
possession of the accused and she was not able to rebut the
presumption though the evidence for the defense alleged that
the stall is owned by one Fredo. A distinction should likewise be
made between ownership and possession in relation to the act
of fencing. Moreover, as to the value of the jewelries
recovered, the prosecution was able to show that the same is
Ninety Three Thousand Pesos (P93,000.00).8
The petitioner then appealed her conviction to the Court of Appeals (CA-G.R. CR
No. 11024) where she raised two issues: (1) that the judgment was based on a
mere presumption, and (2) that the prosecution failed to show that the value of
the jewelry recovered is P93,000.00.
In its challenged decision of 29 March 1993, the Court of Appeals disposed of
the first issue in this wise:
The guilt of accused-appellant was established beyond
reasonable doubt. All the elements of the crime of fencing in
violation of the Anti-Fencing Law of 1979 (P.D. No. 1612), to wit:
1. A crime of robbery or theft has been committed;
2. A person, not a participant in said crime, buys, receives,
possesses, keeps, acquires, conceals, sells or disposes, or buys
and sells; or in any manner deals in any article or item, object or
anything of value;
3. With personal knowledge, or should be known to said person
that said item, object or anything of value has been derived
from the proceeds of the crime of robbery or theft;
4. With intent to gain for himself or for another;
have been established by positive and convincing evidence of
the prosecution . . .
...
The fact that a crime of robbery has been committed on
February 12, 1988 is established by the testimony of private
complainant Teodoro T. Encarnacion who immediately reported
the same to Parañaque Police Station of the Southern Police
146
District (TSN, Hearings of October 3, 1988, November 9, 1988
and January 11, 1989; Exh. A) and submitted a list and sketches
of the jewelries robbed, among other things, from their
residence located at Better Living Subdivision, Parañaque,
Metro Manila (Exh. C,
C-1 to C-4 and D).
The second element is likewise established by convincing
evidence. On February 24, 1988, accused-appellant was found
selling the jewelries (Exhs. C-2, C-3 and C-4) which was
displayed in a showcase in a stall located at Florentino Street,
Sta. Cruz, Manila. [Testimonies of Teodoro Encarnacion (id.
supra); Cpl. Ignacio Jao (TSN, Hearing of February 13, 1989)
and Pfc. Emmanuel Sanchez (TSN, Hearing of June 4, 1989)].
On the element of knowledge that the items are derived from
the proceeds of the crime of robbery and of intent to gain for
herself or for another, the Anti-Fencing Law provides:
Sec. 5. Presumption of Fencing. — Mere
possession of any good, article, item, object,
or anything of value which has been the
subject of robbery or thievery shall be prima
facie evidence of fencing.
Knowledge and intent to gain are proven by the fact that these
jewelries were found in possession of appellant and they were
displayed for sale in a showcase being tended by her in a stall
along Florentino Street, Sta. Cruz, Manila.9
Nevertheless, the Court of Appeals was of the opinion that there was not enough
evidence to prove the value of the pieces of jewelry recovered, which is essential
to the imposition of the proper penalty under Section 3 of P.D.
No. 1612. It opined that the trial court erred in concluding that "the value of the
recovered jewelries is P93,000.00 based on the bare testimony of the private
complainant and the self-serving list he submitted (Exhs. C, C-2 and C-4, TSN,
Hearing of October 3, 1993)."10
The dispositive portion of the Court of Appeals' decision reads:
WHEREFORE, finding that the trial court did not commit any
reversible error, its decision dated October 26, 1990
convincing accused appellant is hereby AFFIRMED with the
modification that the penalty imposed is SET ASIDE and the
Regional Trial Court (Branch 20) of Manila is ordered
to receive evidence with respect to the correct valuation of the
properties involved in this case, marked as Exhibits "C", "C-2"
and "C-4" for the sole purpose of determining the proper
penalty to be meted out against accused under Section 3, P.D.
No. 1612. Let the original records be remanded immediately.11
Hence, this petition wherein the petitioner contends that:
I
PUBLIC RESPONDENT COURT OF APPEALS MANIFESTLY
ERRED IN AFFIRMING THE DECISION OF PUBLIC
RESPONDENT JUDGE CAÑEBA, IN BLATANT DISREGARD
OF APPLICABLE LAW AND WELL-ESTABLISHED
JURISPRUDENCE.
II
PUBLIC RESPONDENT COURT OF APPEALS MANIFESTLY
ERRED IN REMANDING THE CASE TO THE COURT A QUO
FOR RECEPTION OF EVIDENCE FOR THE PURPOSE OF
DETERMINING THE CORRECT PENALTY TO BE IMPOSED.12
On 23 February 1994, after the public respondents had filed their Comment and
the petitioner her Reply to the Comment, this Court gave due course to the
petition and required the parties to submit their respective memoranda, which
they subsequently complied with.
The first assigned error is without merit.
Fencing, as defined in Section 2 of P.D. No. 1612 (Anti-Fencing Law), is "the act
of any person who, with intent to gain for himself or for another, shall buy,
receive, possess, keep, acquire, conceal, sell or dispose of, or shall buy and sell,
or in any manner deal in any article, item, object or anything of value which he
knows, or should be known to him, to have been derived from the proceeds of the
crime of robbery or theft."
Before P.D. No. 1612, a fence could only be prosecuted for and held liable as
an accessory, as the term is defined in Article 19 of the Revised Penal Code. The
147
penalty applicable to an accessory is obviously light under the rules prescribed in
Articles 53, 55, and 57 of the Revised Penal Code, subject to the qualification
set forth in Article 60 thereof. Nothing, however, the reports from law
enforcement agencies that "there is rampant robbery and thievery of
government and private properties" and that "such robbery and thievery have
become profitable on the part of the lawless elements because of the existence
of ready buyers, commonly known as fence, of stolen properties," P.D.
No. 1612 was enacted to "impose heavy penalties on persons who profit by the
effects of the crimes of robbery and theft." Evidently, the accessory in the
crimes of robbery and theft could be prosecuted as such under the Revised
Penal Code or under P.D. No. 1612. However, in the latter case, he ceases to be a
mere accessory but becomes aprincipal in the crime of fencing. Elsewise stated,
the crimes of robbery and theft, on the one hand, and fencing, on the other, are
separate and distinct offenses.13 The state may thus choose to prosecute him
either under the Revised Penal Code or P.D. No. 1612, although the preference
for the latter would seem inevitable considering that fencing is
a malum prohibitum, and P.D. No. 1612 creates a presumption of fencing14 and
prescribes a higher penalty based on the value of the property.15
The elements of the crime of fencing are:
1. A crime of robbery or theft has been committed;
2. The accused, who is not a principal or accomplice in
the commission of the crime of robbery or theft, buys,
receives, possesses, keeps, acquires, conceals, sells or
disposes, or buys and sells, or in any manner deals in
any article, item, object or anything of value, which has
been derived from the proceeds of the said crime;
3. The accused knows or should have known that the
said article, item, object or anything of value has been
derived from the proceeds of the crime of robbery or
theft; and
4. There is, on the part of the accused, intent to gain
for himself or for another.
In the instant case, there is no doubt that the first, second, and fourth
elements were duly established. A robbery was committed on 12 February 1988
in the house of the private complainants who afterwards reported the incident
to the Parañaque Police, the Western Police District, the NBI, and the CIS, and
submitted a list of the lost items and sketches of the jewelry taken from them
(Exhibits "C" and "D"). Three of these items stolen, viz., (a) a pair of earrings
and ring studded with diamonds worth P75,000.00 (Exhibit "C-2"); (b) one set of
earrings worth P15,000.00 (Exhibit "C-3"); and (c) a chain with crucifix worth
P3,000.00 (Exhibit "C-4"), were displayed for sale at a stall tended to by the
petitioner in Florentino Torres Street, Sta. Cruz, Manila. The public display of
the articles for sale clearly manifested an intent to gain on the part of the
petitioner.
The more crucial issue to be resolved is whether the prosecution proved the
existence of the third element: that the accused knew or should have known that
the items recovered from her were the proceeds of the crime of robbery or
theft.
One is deemed to know a particular fact if he has the cognizance, consciousness
or awareness thereof, or is aware of the existence of something, or has the
acquaintance with facts, or if he has something within the mind's grasp with
certitude and clarity.16 When knowledge of the existence of a particular fact is
an element of an offense, such knowledge is established if a person is aware of a
high probability of its existence unless he actually believes that it does not
exist.17 On the other hand, the words "should know" denote the fact that a
person of reasonable prudence and intelligence would ascertain the fact in
performance of his duty to another or would govern his conduct upon assumption
that such fact exists.18 Knowledge refers to a mental state of awareness about a
fact. Since the court cannot penetrate the mind of an accused and state with
certainty what is contained therein, it must determine such knowledge with care
from the overt acts of that person. And given two equally plausible states of
cognition or mental awareness, the court should choose the one which sustains
the constitutional presumption of innocence.19
Since Section 5 of P.D. No. 1612 expressly provides that "[m]ere possession of
any good, article, item, object, or anything of value which has been the subject
of robbery or thievery shall be prima facie evidence of fencing," it follows that
the petitioner is presumed to have knowledge of the fact that the items found in
her possession were the proceeds of robbery or theft. The presumption is
reasonable for no other natural or logical inference can arise from the
established fact of her possession of the proceeds of the crime of robbery or
theft. This presumption does not offend the presumption of innocence enshrined
in the fundamental law.20 In the early case of United States vs.
Luling, 21 this Court held:
148
It has been frequently decided, in case of statutory crimes,
that no constitutional provision is violated by a statute
providing that proof by the state of some material fact or
facts shall constitute prima facieevidence of guilt, and that
then the burden is shifted to the defendant for the purpose of
showing that such act or acts are innocent and are committed
without unlawful intention. (Commonwealth vs. Minor, 88 Ky.,
422.)
In some of the States, as well as in England, there exist what
are known as common law offenses. In the Philippine Islands no
act is a crime unless it is made so by statute. The state having
the right to declare what acts are criminal, within certain well
defined limitations, has a right to specify what act or acts shall
constitute a crime, as well as what proof shall constitute prima
facie evidence of guilt, and then to put upon the defendant the
burden of showing that such act or acts are innocent and are
not committed with any criminal intent or intention.
In his book on constitutional law,22 Mr. Justice Isagani A. Cruz said:
Nevertheless, the constitutional presumption of innocence may
be overcome by contrary presumptions based on the experience
of human conduct [People vs. Labara, April 20, 1954].
Unexplained flight, for example, may lead to an inference of
guilt, as 'the wicked flee when no man pursueth, but the
righteous is as bold as a lion. Failure on the part of the accused
to explain his possession of stolen property may give rise to the
reasonable presumption that it was he himself who had stolen it
[U.S. vs. Espia, 16 Phil. 506]. Under our Revised Penal Code, the
inability of an accountable officer to produce funds or property
entrusted to him will be considered prima facie evidence that
he has appropriated them to his personal use [Art. 217].
According to Cooley, the constitutional presumption will not
apply as long as there is "some rational connection between the
fact proved and the ultimate fact presumed, and the inference
of one fact from proof of another shall not be so unreasonable
as to be purely arbitrary mandate" [1 Cooley, 639].
The petitioner was unable to rebut the presumption under P.D. No. 1612. She
relied solely on the testimony of her brother which was insufficient to overcome
the presumption, and, on the contrary, even disclosed that the petitioner was
engaged in the purchase and sale of jewelry and that she used to buy from a
certain Fredo.23
Fredo was not presented as a witness and it was not established that he was a
licensed dealer or supplier of jewelry. Section 6 of P.D. No. 1612 provides that
"all stores, establishments or entitles dealing in the buy and sell of any good,
article, item, object or anything of value obtained from an unlicensed dealer or
supplier thereof, shall before offering the same for sale to the public, secure
the necessary clearance or permit from the station commander of the
Integrated National Police in the town or city where such store, establishment
or entity is located." Under the Rules and Regulations24 promulgated to carry out
the provisions of Section 6, an unlicensed dealer/supplier refers to any person,
partnership, firm, corporation, association or any other entity or establishment
not licensed by the government to engage in the business of dealing in or
supplying "used secondhand articles," which refers to any good, article, item,
object or anything of value obtained from an unlicensed dealer or supplier,
regardless of whether the same has actually or in fact been used.
We do not, however, agree with the Court of Appeals that there is insufficient
evidence to prove the actual value of the recovered articles.
As found by the trial court, the recovered articles had a total value of
P93,000.00, broken down as follows:
a) one earring and ring studded with diamonds (Exh. "C-2") —
P75,000.00
b) one set of earring (Exh. "C-3") — P15,000.00
c) one gold chain with crucifix (Exh. "C-4") — P3,000.00
These findings are based on the testimony of Mr. Encarnacion 25 and on
Exhibit "C,"26 a list of the items which were taken by the robbers on 12
February 1988, together with the corresponding valuation thereof. On
cross-examination, Mr. Encarnacion re-affirmed his testimony on direct
examination that the value of the pieces of jewelry described in Exhibit
"C-2" is P75,000.0027 and that the value of the items described in
Exhibit "C-3" is P15,000.00, although he admitted that only one earring
— and not the pair — was recovered. 28 The cross-examination withheld
any question on the gold chain with crucifix described in Exhibit "C-4."
In view, however, of the admission that only one earring was recovered
of the jewelry described in Exhibit "C-3," it would be reasonable to
149

reduce the value from P15,000.00 to P7,500.00. Accordingly, the total Manila in Criminal Case No. 88-64954 and orders the remand of the case for the
value of the pieces of jewelry displayed for sale by the petitioner and trial court to receive evidence with respect to the correct value of the
established to be part of the proceeds of the robbery on 12 February properties involved. The decision of the Regional Trial Court is AFFIRMED
1988 would be P87,000.00. subject to the modification of the penalty which is hereby reduced to an
indeterminate penalty ranging from Ten (10) years and One (1) day of Prision
Section 3(a) of P.D. No. 1612 provides that the penalty of prision mayor shall be Mayor maximum as minimum to Eighteen (18) years and Five (5) months
imposed upon the accused if the value of the property involved is more than of Reclusion Temporal maximum as maximum, with the accessory penalties of the
P12,000.00 but does not exceed P22,000.00, and if the value of such property latter.
exceeds the latter sum, the penalty of prision mayor should be imposed in its
maximum period, adding one year for each additional P10,000.00; the total SO ORDERED.
penalty which may be imposed, however, shall not exceed twenty years. In such
cases, the penalty shall be termed reclusion temporal and the accessory penalty Republic of the Philippines
pertaining thereto provided in the Revised Penal Code shall also be imposed. The SUPREME COURT
maximum penalty that can be imposed in this case would then be eighteen (18) Manila
years and five (5) months, which is within the range of reclusion
temporal maximum. Applying the Indeterminate Sentence law which allows the EN BANC
imposition of an indeterminate penalty which, with respect to offenses penalized
by a special law, shall range from a minimum which shall not be lower than the G.R. No. L-11310 January 31, 1918
minimum prescribed by the special law to a maximum which should not exceed the
maximum provided therein, the petitioner can thus be sentenced to an
CARLOS PALANCA, plaintiff-appellant,
indeterminate penalty ranging from ten (10) years and one (1) day of prision
vs.
mayor maximum, as minimum to eighteen (18) years and five (5) months
FRED WILSON & CO., defendant-appellee.
of reclusion temporal maximum as maximum, with the accessory penalties
corresponding to the latter.
Alfredo Chicote and Jose Arnaiz for appellant.
Gilbert, Cohn and Fisher for appellee.
In the light of the foregoing, the Court of Appeals erred in setting aside the
penalty imposed by the trial court and in remanding the case to the trial court
MALCOLM, J.:
for further reception of evidence to determine the actual value of the pieces of
jewelry recovered from the petitioner and for the imposition of the appropriate
penalty. As the culmination of negotiations, on June 11, 1913, Song Fo and Co., of Manila,
through its manager Carlos Palanca, entered into a contract with Fred Wilson and
Co. for the purchase of a distilling apparatus for P10,000. Wilson and Co. ordered
We do not agree with the petitioner's contention, though, that a remand for
the apparatus of Turner, Schon and Co., London, installing it in January, 1914. On
further reception of evidence would place her in double jeopardy. There is
May 18, 1914, or about five months after the machine was installed, Palanca
double jeopardy when the following requisites concur: (1) the first jeopardy must
wrote Wilson and Co. that the rectifying machine had been examined by a
have attached prior to the second, (2) the first jeopardy must have validly been
number of competent persons who stated that the machine was not capable of
terminated, and (3) the second jeopardy must be for the same offense as that in
producing the amount of alcohol stipulated in the contract. Getting no
the first.29 Such a concurrence would not occur assuming that the case was
satisfaction from the reply of Wilson and Co., action for damages for breach of
remanded to the trial court.
contract was begun in the Court of First Instance of the city of Manila, praying
first that the defendant be ordered to comply strictly with the terms of the
WHEREFORE, the instant petition is partly GRANTED by setting aside the
contract and second that the defendant be ordered to pay as damages the
challenged decision of the Court of Appeals in CA-G.R. CR No. 11024 insofar as it
amount of P16,713.80.
sets aside the penalty imposed by Branch 20 of the Regional Trial Court of
150
Defendant answered with a general denial and a cross-complaint asking judgment
against the plaintiff in the sum of P5,000, the final installment claimed to be due
as the purchase price of the machine. By the judgment handed down by the
Honorable James A. Ostrand, judge of first instance, it was ordered that the
plaintiff take nothing by his action, and that the defendant have and recovered
judgment against the plaintiff for the sum of P5,000, with interest thereon at
the rate of 12 per cent per annum from the first day of September, 1914,
without special findings as to costs.
It is around the first clause of the contract (Exhibit D) that all the argument
centers. This clause reads: "Un aparato; 'Guillaume' para la destilacion-
rectificacion directa y continua; tipo 'C,' Agricola, de una capacidad de 6,000
litros cada 24 horas de trabajo, de un grado de 96-97 Gay Lussac, todo segun el
grabado de la pagina 30 del catalogo Egrot, edicion de 1907." We believe in the
first place, that it is undeniable from the evidence, that the apparatus in
question, while it could treat 6,000 liters of raw material a day, did not produce
6,000 liters a day, but on the contrary only something over 480 liters a day of
rectified alcohol of the required grade. This being true, appellant vigorously
asserts that there has been a breach of the contract in that instead of the
machine having a capacity of 6,000 liters for every 24 hours of work, it only had
(a producing) capacity of 480 liters for this period of time. Appellant would
require that all the terms of the contract be given effect with special emphasis
upon the phrase "de un grado de 96-97 Gay Lussac." This last phrase in
connection with the previous one "de una capacidad de 6,000 litros cada 24 horas
de trabajo" according to appellant could not possibly mean that the machine was
only to take in 6,000 liters for this would be improbable in view of the express
mention of the grade of the product. Appellee on the other hand relies on the
ordinary meaning of the word "capacity" as indicating receptivity and on the
preliminary negotiations as explaining the intention of the parties. The evidence
is of little assistance in resolving the question. Thus, Carlos Palanca, the manager
of Song Fo and Co., and now the successor of the company, testified that he told
the agents of Wilson and Co. that he need a machine that would produce at least
6,000 liters of alcohol a day. The agent of Wilson and Co., James F. Loader,
squarely contradicted this on the stand and said that Palanca asked him to get on
an apparatus to treat 6,000 liters.
Beginning anew, in order to reach a proper conclusion as to the meaning of clause
one of the contract, we approach the subject from two directions. Under the
first view, we take up the meaning of the words themselves. Under the second,
believing that it is necessary to explain intrinsic ambiguity in the contract, we
can go, as we are permitted to do under chapter IV title II, book IV of the Civil
Code, and chapter X of the Code of Civil Procedure, especially section 285, to
evidence of the circumstances under which the agreement was made.
The terms of the contract disclose the following essential constituents: (1) A
machine Guillaume, type "C" (Agricola) as described on page 30 of the Catalogue
Egrot, edition of 1907; (2) a machine of a capacity of 6,000 liters for every 24
hours of work, and (3) a machine producing alcohol of a grade 96-97 Gay Lussac.
Type C (Agricola) as described on pages 30 and 31 of the catalogue mentions the
grade of alcohol guaranteed of 96-97 Gay Lussac, but contains no mention of a
capacity of 6,000 liters a day. Passing the second element for the moment, there
is no dispute in the record, or more properly speaking the plaintiff did not prove,
that the machine did not turn out alcohol of the grade 96-97 Gay Lussac.
Predicated therefore on the description to be found in the catalogue, it is plain
that the defendant sold to the plaintiff the machine there mentioned. This
leaves for interpretation the one word "capacity."
That in connection with the distilling of liquor, the word "capacity" may have
different meanings unless restricted in terminology, is disclosed by the decision
of the United States Supreme Court in Chicago Distilling Co. vs. Stone ([1891]
140 U. S., 647), where the qualifying phrases "working capacity" and "producing
capacity" are specifically" mentioned. The ordinary meaning of the word is
defined in the English Dictionaries as "ability to receive or contain; cubic extent;
carrying power or space; said of that within which any solid or fluid may be
placed, and also used figuratively; as the keg has a capacity of 10 gallons; the
ship's capacity is 1,000 tons." The ordinary meaning of the Spanish equivalent
"capacidad" as disclosed by the Spanish Dictionaries is "ambito que tiene alguna
cosa y es suficiente para contener en si otra; como el de una vasijia, arca, etc. En
el vaso se debe atender la disposicion y capacidad." Both definitions denote that
which anything can receive or contain.
We think, however, that it can be laid down as a premise for further discussion
that there is intrinsic ambiguity in the contract which needs explanation. Section
285 of the Code of Civil Procedure providing that a written agreement shall be
presumed to contain all the terms, nevertheless "does not exclude other
evidence of the circumstances under which the agreement was made, or to which
it relates, or to explain an intrinsic ambiguity." Turning, therefore, to the
surrounding circumstances, we find the following: Wilson and Co. in their offer to
Song Fo and Co. on June 9, 1913, while mentioning capacity, only did so in express
connection with the name and description of the machine as illustrated in the
catalogue. They furnished Song Fo and Co. with plans and specifications of the
distilling apparatus; and these describe a capacity of 6,000 liters of jus
(ferment). Wilson and Co.'s order to manufacturer, while mentioning a capacity
151
of 6,000 liters per day, does so again in connection with the description in the
maker's catalogue. And, finally, it was stated during the trial, and it has not been
denied, that a machine capable of producing 6,000 liters of rectified alcohol
every 24 hours from nipa ferment would cost between P35,000 and P40,000.
We are accordingly constrained to hold that the proper construction of clause 1
of the contract, in question in connection with the conduct of the parties and
surrounding circumstances, is that Wilson and Co. were to furnish Song Fo and
CO. a distilling apparatus, type C (Agricola), as described on page 30 of the
maker's catalogue, capable of receiving or treating 6,000 liters every 24 hours
of work and of producing alcohol of a grade 96-97 Gay Lussac.
We conclude that the judgment of the trial court should be affirmed without
special finding as to costs. So ordered.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-39972 & L-40300 August 6, 1986
VICTORIA LECHUGAS, petitioner,
vs.
HON. COURT OF APPEALS, MARINA LOZA, SALVADOR LOZA, ISIDRO
LOZA, CARMELITA LOZA, DAVID LOZA, AMPARO LOZA, ERLINDA LOZA
and ALEJANDRA LOZA, respondents.
A.R. Montemayor for petitioner.
Arturo L. Limoso for private respondents.
GUTIERREZ, JR., J:
This petition for review invokes the parol evidence rule as it imputes grave abuse
of discretion on the part of the appellate court for admitting and giving
credence to the testimony of the vendor regarding the sale of the disputed lot.
The testimony is contrary to the contents of the deed of sale executed by the
vendor in favor of the petitioner.
The petitioner filed a complaint for forcible entry with damages against the
private respondents, alleging that the latter by means of force, intimidation,
strategy and stealth, unlawfully entered lots A and B, corresponding to the
middle and northern portion of the property owned by the petitioner known as
Lot No. 5456. She alleged that they appropriated the produce thereof for
themselves, and refused to surrender the possession of the same despite
demands made by the petitioner. The complaint was dismissed. Petitioner
appealed to the then Court of First Instance (CFI) of Iloilo where the case was
docketed as Civil Case No. 5055.
While the above appeal was pending, the petitioner instituted another action
before the CFI of Iloilo for recovery and possession of the same property
against the private respondents.
This case was docketed as Civil Case No. 5303. The two cases were tried jointly.
After trial, the court rendered judgment. The dispositive portion of the decision
states:
Wherefore, premises considered, judgment is rendered, to wit:
a. dismissing the complaints in two cases;
b. declaring defendants except Salvador Anona and Jose Lozada
as owners and lawful possessors of the land in question
together with all the improvements thereon;
c. dismissing the claim for damages of all defendants except
that of Jose Lozada;
d. ordering plaintiff to pay defendant Jose Lozada the sum of
P500.00 as attorney's fees and the amount of P300.00 as
litigation expenses; and
e. ordering plaintiff to pay the costs of both proceedings.
The petitioner appealed to the Court of Appeals but the latter sustained the
dismissal of the cases. Hence, this petition with the petitioner making the
following assignments of errors:
152
I portion of 12 hectares owned by Leoncia Lasangue by
THAT THE RESPONDENT COURT ERRED IN CONSIDERING
PAROL EVIDENCE OVER THE OBJECTION OF THE
PETITIONER IN ORDER TO VARY THE SUBJECT MATTER
OF THE DEED OF DEFINITE SALE (EXHIBIT A) ALTHOUGH
THE LAND THEREIN IS DESCRIBED AND DELIMITED BY
METES AND BOUNDS AND IdENTIFIED AS LOT NO. 5456
OF LAMBUNAO CADASTRE.
II
THAT THE RESPONDENT COURT ERRED IN CONSIDERING
THE THEORY OF THE DEFENDANTS-APPELLEES FOR THE
FIRST TIME ON APPEAL THAT THE LAND DESCRIBED IN
THE DEED OF SALE (EXHIBIT A) IS LOT NO. 5522
INSTEAD OF LOT NO. 5456 OF THE LAMBUNAO CADASTRE,
THEIR ORIGINAL THEORY BEING THAT THE DEED OF SALE
(EXHIBIT A) IS NULL AND VOID AB INITIO BECAUSE
LEONCIA LASANGUE CAN NOT SELL THE LAND IN
QUESTION IN 1950 SINCE IT WAS ALLEGEDLY SOLD IN
1941 BY HER FATHER EMETERIO LASANGUE.
III
THAT THE RESPONDENT COURT CANNOT REFORM THE
DEED OF DEFINITE SALE BY CHANGING ITS SUBJECT
MATTER IN THE ABSENCE OF STRONG, CLEAR AND
CONVINCING EVIDENCE AND ON THE STRENGTH OF LONG
TESTIMONY OF THE VENDOR AND ALTHOUGH NO DIRECT
ACTION FOR REFORMATION WAS FILED IN THE COURT
OF ORIGIN.
A summary of the facts which brought about the controversy is contained in the
findings of the appellate court:
Plaintiff (petitioner) Victoria Lechugas testified that she
bought the land now subject of this litigation from Leoncia
Lasangue as evidenced by a public "Deed of Absolute Sale"
which plaintiff had caused to be registered in the Office of the
Register of Deeds; preparatory to the execution of the deed
Exhibit "A", plaintiff had the land segregated from the bigger
contracting a private land surveyor, the Sirilan Surveying
Office, to survey the land on December 3, 1950 and establish
its boundaries, shape, form and area in accordance with the said
plan which was attached to exhibit A as Annex A thereof. She
also states that she caused the declaration of the said portion
of six hectares subject of Exhibit A in her name beginning the
year 1951 under tax declaration No. 7912, paid taxes on the
same land, and has taken possession of the land through her
tenants Jesus Leoncio, Roberta Losarita and Simeon Guinta, who
shared one-half of the produce of the riceland with her, while
she shouldered some of the expenses in cultivation and seeds,
and one-third share in other crops, like coffee beans, bamboos,
coconuts, corn and the like.
xxx xxx xxx
Plaintiff's declaration is corroborated by her tenant Simeon
Guinta who testifies that the land subject of the complaint was
worked on by him 1954 when its former tenant, Roberto
Lazarita, now deceased, left the land. As tenant thereof, he
planted rice, corn peanuts, coffee, and other minor products,
sharing the same with the owner, plaintiff Victoria Lechugas;
that on June 14, 1958, while witness was plowing Lot A
preparatory to rice planting, defendants entered the land and
forced him to stop his work. Salvador Anona and Carmelita Losa,
particularly, told witness that if he (witness) would sign an
affidavit recognizing them as his landlords, they would allow him
to continue plowing the land. On that occasion, Salvador Anona,
David Loza and Jose Loza were carrying unsheathed bolos,
which made this witness very afraid, so much so that he left
the land and reported the matter to Victoria Lechugas who
reportedly went to the Chief of Police of Lambunao to ask the
latter to intervene. The advise however of the chief of police,
who responded to the call of plaintiff, was not heeded by the
defendants who stayed adamantly on Lot A and refused to
surrender the possession thereof to plaintiff appropriating the
harvest to themselves. This witness further declares that on
June 24, 1958, defendants entered Lot B of the land in
question, situated on the northern portion, and cut the bamboo
poles growing thereof counted by plaintiff's brother and
overseer in the land, Bienvenido Laranja, to be 620 bamboo
153
poles all in all. Despite the warning of the overseer Laranja,
defendants did not stop cutting the bamboos, and they
remained on the land, refusing to leave the same. To top it all,
in June of 1959, defendants, not contended with just occupying
the middle and northern portions of the land (Lots A and B),
grabbed the whole parcel containing six hectares to the damage
and prejudice of herein plaintiff, so that plaintiff was left with
no other recourse but to file Civil Case No. 5303 for ownership,
recovery of possession and damages.
Defendants, on the other hand, maintain that the land which
plaintiff bought from Leoncia Lasangue in 1950 as evidenced by
the deed exhibit A, is different from the land now subject of
this action, and described in paragraph 2 of plaintiff's
complaint. To prove this point, defendants called as their first
witness plaintiff herself (pp. 6167, t.s.n., Tuble), to elicit from
her the reason why it was that although her vendor Leoncia
Lasangue was also residing at the municipality of Lambunao,
Iloilo, plaintiff did not care to call her to the witness stand to
testify regarding the Identity of the land which she (plaintiff)
bought from said vendor Leoncia Lasangue; to which query
witness Lechugas countered that she had tried to call her
vendor, but the latter refused, saying that she (Lasangue) had
already testified in plaintiff's favor in the forcible entry case
in the Justice of the Peace Court. In connection with her
testimony regarding the true Identity of the land plaintiff, as
witness of defendants, stated that before the execution of
Exhibit "A" on December 8, 1950 the lot in question was
surveyed (on December 3, 1950) by the Sirilan Surveyor
Company after due notice to the boundary owners including
Leoncia Lasangue.
Defendant's evidence in chief, as testified to by Carmelita
Lozada (pp. 100-130, t.s.n., Trespeces; pp. 131-192, t.s.n., Tuble)
shows that on April 6, 1931 Hugo Loza father of Carmelita Loza
and predecessor-in-interest of the rest of the heirs of herein
defendants, (with the exception of Jose Loza and Salvador
Anona) purchased a parcel of land from one Victorina Limor as
evidenced by the deed "Venta Definitiva" (exhibit 3, pp. 49-50,
folder of exhibits). This land, containing 53,327 square meters
is bounded on the north by Ramon Lasangue, on the south by
Emeterio Lasangue and covered by tax declaration No. 7346
(exhibit 3-9, p. 67, Id.) in vendor's name; that immediately
after the sale, Hugo Loza took possession of the said parcel of
land and declared the same in his name (exhibit 3-10, p. 67,
folder of exhibits) starting the year 1935. On March 17, 1941,
Hugo Loza bought from Emeterio Lasangue a parcel of land with
an area of four hectares more or less, adjoining the land he
(Loza) had earlier bought from Victoria Limor, and which sale
was duly evidenced by a public instrument (exhibit 2, pp. 35-36,
folder of exhibits). This property had the following boundaries,
to wit: on the north by Eladio Luno, on the south, by Simeon
Lasangue, on the west, by Gregorio Militar and Emeterio
Lasangue and on the east, by Maximo Lasangue and Hipolito
Lastica (exhibit 2, exhibit 2-B, p. 37, Id). After the execution
of the deed of sale, Exhibit 2, Hugo Loza cause the transfer of
the declaration in his own name (tax declaration No. 8832, exh.
2-C, p. 38, Id.) beginning 1945, and started paying the taxes on
the land (exhibits 2-d to 2-i, pp. 39-44, Id.). These two parcels
of land (that purchased by Hugo Loza in 1941 from Emeterio
Lasangue, and a portion of that bought by him from Victoria
Limor sometime in 1931) were consolidated and designated,
during the cadastral survey of Lambunao, Iloilo in 1959 as Lot
No. 5456; while the remaining portion of the lot bought from
Victorina Limor, adjoining Lot 5456 on the east, was designated
as Lot No. 5515 in the name of the Heirs of Hugo Loza.
Defendants claim that the lot bought by plaintiff from Leoncia
Lasangue as evidenced by exhibit A, is situated south of the
land now subject of this action and designated during cadastral
survey of Lambunao as Lot No. 5522, in the name of Victoria
Lechugas.
xxx xxx xxx
Leoncia Lasangue, plaintiff's vendor in exhibit A, testifying for
defendants (pp. 182-115, t.s.n., Tambagan; pp. 69-88, t.s.n.,
Tuble) declared that during his lifetime her father, Emeterio
Lasangue, owned a parcel of land in Lambunao, Iloilo, containing
an area of 36 hectares; that said Emeterio Lasangue sold a slice
of 4 hectares of this property to Hugo Loza evidenced by a
deed of sale (Exh. 2) dated March 17, 1941; that other sales
were made to other persons, leaving only some twelve hectares
out of the original 36; that these 12 hectares were transferred
by her parents in her (witness) name, being the only child and
154

heir; that on December 8, 1950, she (Leoncia Lasangue) sold six Q. What portion of these thirty-six (36)
hectares of her inherited property to Victoria Lechugas under a hectares of land did you sell actually,
public instrument (exhibit A) which was prepared at the according to your agreement with Victoria
instance of Victoria Lechugas and thumbmarked by herself (the Lechugas, and was it inside the thirty-six (36)
vendor). hectares of land or a portion on one of the
sides of thirty-six (36) hectares?
Refuting plaintiff's contention that the land sold to her is the
very land under question, vendor Leoncia Lasangue testifies A. It is on the edge of the whole land.
that:
Q. Where is that edge? on the north, east,
Q. But Victoria Lechugas declared here that, west or south?
by means of this document, exhibit 'A', you
sold to her this very land in litigation; while A . This edge. (witness indicating the lower
you declared here now that this land in edge of the piece of paper shown into her)
litigation was not included in the sale you made
of another parcel of land in her favor. What Q. Do you know what is east, that is, the
do you say about that? direction where the sun rises?

A. I only sold six (6) hectares to her. A. I know what is east.

Q. And that was included in this land in Q. Do you know where the sun sets ?
litigation?
A. The sun sets on the west.
A. No.
Q. If you are standing in the middle of your
xxx xxx xxx land containing thirty-six (36) hectares and
facing the east, that is, the direction where
Q. Did you tell her where that land you were the sun rises, where is that portion of land
selling to her was situated? sold to Victoria Lechugas, on your left, on your
right, front of you or behind you?
xxx xxx xxx
A. On my right side. (Witness indicating
A. On the South. south). (Testimony of Leoncia Lasangue, pp.
209-211, rollo) (emphasis supplied).
Q. South side of what land, of the land in
litigation? On the basis of the above findings and the testimony of vendor Leoncia Lasangue
herself, who although illiterate was able to specifically point out the land which
A. The land I sold to her is south of the land in she sold to the petitioner, the appellate court upheld the trial court's decision
litigation. except that the deed of sale (Exhibit A) was declared as not null and void ab
initio insofar as Leoncia Lasangue was concerned because it could pass ownership
xxx xxx xxx of the lot in the south known as Lot No. 5522 of the Lambunao Cadastre which
155
Leoncia Lasangue intended to sell and actually sold to her vendee, petitioner
Victoria Lechugas.
In her first assignment of error, the petitioner contends that the respondent
Court had no legal justification when it subjected the true intent and agreement
to parol evidence over the objection of petitioner and that to impugn a written
agreement, the evidence must be conclusive. Petitioner maintains, moreover, that
the respondent Court relied so much on the testimony of the vendor who did not
even file a case for the reformation of Exhibit A.
The contentions are without merit.
The appellate court acted correctly in upholding the trial court's action in
admitting the testimony of Leoncia Lasangue. The petitioner claims that Leoncia
Lasangue was the vendor of the disputed land. The petitioner denies that Leoncia
Lasangue sold Lot No. 5522 to her. She alleges that this lot was sold to her by
one Leonora Lasangue, who, however, was never presented as witness in any of
the proceedings below by herein petitioner.
As explained by a leading commentator on our Rules of Court, the parol evidence
rule does not apply, and may not properly be invoked by either party to the
litigation against the other, where at least one of the parties to the suit is not
party or a privy of a party to the written instrument in question and does not
base a claim on the instrument or assert a right originating in the instrument or
the relation established thereby. (Francisco on Evidence, Vol. VII, part I of the
Rules of Court, p. 155 citing 32 C.J.S. 79.)
In Horn v. Hansen (57 N.W. 315), the court ruled:
...and the rule therefore applies, that as between parties to a
written agreement, or their privies, parol evidence cannot be
received to contradict or vary its terms. Strangers to a
contract are, of course, not bound by it, and the rule excluding
extrinsic evidence in the construction of writings is inapplicable
in such cases; and it is relaxed where either one of the parties
between whom the question arises is a stranger to the written
agreement, and does not claim under or through one who is
party to it. In such case the rule is binding upon neither. ...
In the case of Camacho v. Municipality of Baliuag, 28 Phil. 466, this Court held
that parol evidence which was introduced by the municipality was competent to
defeat the terms of the plaintiff's deed which the latter executed with the
Insular Government. In his concurring opinion, Justice Moreland stated:
It should be noted in the first place, that there is no written
instrument between the plaintiff and the municipality, that is,
between the parties to the action; and there is, therefore, no
possibility of the question arising as to the admissibility of
parol evidence to vary or contradict the terms of an instrument.
The written instrument that is, the conveyance on which
plaintiff bases his action was between the Insular Government
and the plaintiff, and not between the municipality and the
plaintiff; and therefore, there can arise, as between the
plaintiff and defendant no question relative to the varying or
contradicting the terms of a written instrument between them
...
The petitioner's reliance on the parol evidence rule is misplaced. The rule is not
applicable where the controversy is between one of the parties to the document
and third persons. The deed of sale was executed by Leoncia Lasangue in favor
of Victoria Lechugas. The dispute over what was actually sold is between
petitioner and the private respondents. In the case at bar, through the
testimony of Leoncia Lasangue, it was shown that what she really intended to sell
and to be the subject of Exhibit A was Lot No. 5522 but not being able to read
and write and fully relying on the good faith of her first cousin, the petitioner,
she just placed her thumbmark on a piece of paper which petitioner told her was
the document evidencing the sale of land. The deed of sale described the
disputed lot instead.
This fact was clearly shown in Lasangue's testimony:
Q. And how did you know that that was the
description of the land that you wanted to sell
to Victoria Lechugas?
R. I know that because that land came from
me.
S. But how were you able to read the
description or do you know the description?
A. Because, since I do not know how to read
and write and after the document was
156
prepared, she made me sign it. So I just signed
because I do not know how to read.
xxx xxx xxx
Q. What explanation did she make to you?
A. She said to me, 'Manang, let us have a
document prepared for you to sign on the land
you sold to me.' So, after the document was
prepared, I signed.
Q. Did you tell her where that land you were
selling to her was situated?
xxx xxx xxx
A. On the South.
Q. South side of what land, of the land in
litigation?
A. The land I sold to her is south of the land in
litigation.
Q. Did you tell her that before preparing the
document you signed?
A. Yes, I told her so because I had confidence
in her because she is my first cousin. (pp. 198-
207, rollo)
From the foregoing, there can be no other conclusion but that Lasangue did not
intend to sell as she could not have sold, a piece of land already sold by her
father to the predecessor-in-interest of the respondents.
The fact that vendor Lasangue did not bring an action for the reformation of
Exhibit "A" is of no moment. The undisputed fact is that the respondents have
timely questioned the validity of the instrument and have proven that, indeed
Exhibit "A" does not reflect the true intention of the vendor.
There is likewise no merit in the contention of the petitioner that the
respondents changed their theory on appeal.
Respondents, from the very start, had questioned and denied Leoncia Lasangue's
capacity to sell the disputed lot to petitioner. It was their contention that the
lot was sold by Leoncia's father Emeterio Lasangue to their father, Hugo Loza
wayback in 1941 while the alleged sale by Leoncia to the petitioner took place
only in 1950. In essence, therefore, the respondents were already attacking the
validity of Exhibit "A". Moreover, although the prior sale of the lot to their
father may have been emphasized in their defenses in the civil cases filed
against them by the petitioner in the lower court, nevertheless in their
affirmative defense, the respondents already raised doubt on the true intention
of Leoncia Lasangue in signing Exhibit "A" when they alleged that..." Leoncia
Lasangue, publicly, and in writing repudiated said allegation and pretension of the
plaintiff, to the effect that the parcel of land now in litigation in the present
case "WAS NOT INCLUDED in the sale she executed in favor of the plaintiff ...
.
Consequently, petitioner cannot impute grave abuse on the part of the appellate
court and state that it allowed a change of theory by the respondents for the
first time on appeal for in reality, there was no such change.
The third issue raised by the petitioner has no merit. There is strong, clear, and
convincing evidence as to which lot was actually sold to her. We see no reason to
reverse the factual findings of both the Court of First Instance and the Court
of Appeals on this point. The "reformation" which the petitioner questions was, in
fact, intended to favor her. Instead of declaring the deed of sale null and void
for all purposes, the Court upheld its having passed ownership of Lot No. 5522 to
the petitioner.
WHEREFORE, IN VIEW OF THE FOREGOING, the petition is hereby
DISMISSED for lack of merit with costs against the petitioner.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 170491 April 4, 2007
157
NATIONAL POWER CORPORATION, Petitioner,
vs.
HON. RAMON G. CODILLA, JR., Presiding Judge, RTC of Cebu, Br. 19,
BANGPAI SHIPPING COMPANY, and WALLEM SHIPPING,
INCORPORATED, Respondents.
DECISION
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of
Civil Procedure, assailing the Decision1 of the Court of Appeals in CA-G.R. CEB-SP
No. 00848, dated 9 November 2005, which dismissed the Petition for Certiorari
filed by the National Power Corporation seeking to set aside the Order2 issued
by the Regional Trial Court (RTC) of Cebu, Branch 19 dated 16 November 2004,
denying admission and excluding from the records plaintiff’s (herein petitioner)
Exhibits "A", "C", "D", "E", "H" and its sub-markings, "I", "J", and its sub-
markings, "K", "L", "M" and its sub-markings, "N" and its sub-markings, "O", "P"
and its sub-markings, "Q" and its sub-markings, "R" and "S" and its sub-markings.
On 20 April 1996, M/V Dibena Win, a vessel of foreign registry owned and
operated by private respondent Bangpai Shipping, Co., allegedly bumped and
damaged petitioner’s Power Barge 209 which was then moored at the Cebu
International Port. Thus, on 26 April 1996, petitioner filed before the Cebu RTC
a complaint for damages against private respondent Bangpai Shipping Co., for the
alleged damages caused on petitioner’s power barges.
Thereafter, petitioner filed an Amended Complaint dated 8 July 1996 impleading
herein private respondent Wallem Shipping, Inc., as additional defendant,
contending that the latter is a ship agent of Bangpai Shipping Co. On 18
September 1996, Wallem Shipping, Inc. filed a Motion to Dismiss which was
subsequently denied by public respondent Judge in an Order dated 20 October
1998. Bangpai Shipping Co. likewise filed a Motion to Dismiss which was also
denied by public respondent Judge in an Order issued on 24 January 2003.
Petitioner, after adducing evidence during the trial of the case, filed a formal
offer of evidence before the lower court on 2 February 2004 consisting of
Exhibits "A" to "V" together with the sub-marked portions thereof.
Consequently, private respondents Bangpai Shipping Co. and Wallem Shipping,
Inc. filed their respective objections to petitioner’s formal offer of evidence.
On 16 November 2004, public respondent judge issued the assailed order
denying the admission and excluding from the records petitioner’s Exhibits "A",
"C", "D", "E", "H" and its sub-markings, "I", "J" and its sub-markings, "K", "L",
"M" and its sub-markings, "N" and its sub-markings, "O", "P" and its sub-
markings, "Q" and its sub-markings, "R" and "S" and its sub-markings. According
to the court a quo:
The Court finds merit in the objections raised and the motion to strike out filed
respectively by the defendants. The record shows that the plaintiff has been
given every opportunity to present the originals of the Xerox or photocopies of
the documents it offered. It never produced the originals. The plaintiff
attempted to justify the admission of the photocopies by contending that "the
photocopies offered are equivalent to the original of the document" on the basis
of the Electronic Evidence (Comment to Defendant Wallem Philippines’
Objections and Motion to Strike). But as rightly pointed out in defendant
Wallem’s Reply to the Comment of Plaintiff, the Xerox copies do not constitute
the electronic evidence defined in Section 1 of Rule 2 of the Rules on Electronic
Evidence as follows:
"(h) "Electronic document" refers to information or the representation of
information, data, figures, symbols or other models of written expression,
described or however represented, by which a right is established or an
obligation extinguished, or by which a fact may be proved and affirmed, which is
received, recorded, transmitted, stored, processed, retrieved or produced
electronically. It includes digitally signed documents and any printout, readable
by sight or other means which accurately reflects the electronic data message
or electronic document. For the purpose of these Rules, the term "electronic
document" may be used interchangeably with "electronic data message".
The information in those Xerox or photocopies was not received, recorded,
retrieved or produced electronically. Moreover, such electronic evidence must be
authenticated (Sections 1 and 2, Rule 5, Rules on Electronic Evidence), which the
plaintiff failed to do. Finally, the required Affidavit to prove the admissibility
and evidentiary weight of the alleged electronic evidence (Sec. 1, Rule 9, Ibid)
was not executed, much less presented in evidence.
The Xerox or photocopies offered should, therefore, be stricken off the record.
Aside from their being not properly identified by any competent witness, the
loss of the principals thereof was not established by any competent proof.
xxxx
158
WHEREFORE, plaintiff’s Exhibits "A", "C", "D", "E", "H" and its sub-markings,
"I", "J", and its sub-markings, "K", "L", "M" and its sub-markings, "N" and its sub-
markings, "O", "P" and its sub-markings, "Q" and its sub-markings, and "R" are
hereby DENIED admission and excluded from the records. However, these
excluded evidence should be attached to the records of this case to enable the
appellate court to pass upon them should an appeal be taken from the decision on
the merits to be rendered upon the termination of the trial of this case.
Exhibits "S" and its sub-markings are also DENIED admission for lack of proper
identification since the witness who brought these pictures expressly admitted
that he was not present when the photos were taken and had not knowledge when
the same where taken.3
Upon denial of petitioner’s Motion for Reconsideration in an Order dated 20
April 2005, petitioner filed a Petition for Certiorari under Rule 65 of the Rules
of Civil Procedure before the Court of Appeals maintaining that public
respondent Judge acted with grave abuse of discretion amounting to lack or
excess of jurisdiction in denying the admission of its Exhibits "A", "C", "D", "E",
"H" and its sub-markings, "I", "J" and its sub-markings, "K", "L", "M" and its sub-
markings, "N" and its sub-markings, "O", "P" and its sub-markings, "Q" and its
sub-markings, "R", and "S" and its sub-markings.
On 9 November 2005, the appellate court issued a Decision dismissing
petitioner’s petition for certiorari, the pertinent portions of which elucidate:
After a judicious scrutiny of the record of the case on hand, together with the
rules and jurisprudence which are applicable in the premises, we have come up
with a finding that the petition for certiorari filed in this case is not
meritorious.
It appears that there is no sufficient showing by the petitioner that the
respondent judge acted with grave abuse of discretion in issuing the assailed
orders in Civil Case No. CEB-18662. As what our jurisprudence tells us, grave
abuse of discretion is meant such capricious and whimsical exercise of judgment
as would be equivalent to lack of jurisdiction x x x.
In the case at bench, what has been shown to the contrary by the totality of the
record on hand is that the respondent judge acted correctly and within the pale
of his sound discretion in issuing the assailed order, dated November 16, 2004,
in Civil Case No. CEB-18662.
Indeed, it appears that the pieces of petitioner’s documentary evidence which
were denied admission by the respondent judge were not properly identified by
any competent witness. As pointed out by the respondent Bangpai Shipping
Company in its comment on the petition filed in this case which reproduces some
excerpts of the testimonies in the court a quo of Atty. Marianito De Los Santos,
Engr. Nestor Enriquez, Jr. and Mr. Rodulfo I. Pagaling, the said witnesses did not
have personal knowledge of and participation in the preparation and making of
the pieces of documentary evidence denied admission by respondent judge x x x.
In other words, there was lack of proper identification of said pieces of
documentary evidence. x x x.
Then another ground for denying admission of petitioner’s Exhibits A, C, D, E, H,
I, J, K, L, M, N, O, P, Q, R, and S by the respondent judge is that said pieces of
documentary evidence were merely photocopies of purported documents or
papers. There is no gainsaying the fact that the respondent judge acted within
the pale of his discretion when he denied admission of said documentary
evidence. Section 3 of Rule 130 of the Rules of Court of the Philippines is very
explicit in providing that, when the subject of inquiry are the contents of
documents, no evidence shall be admissible other than the original documents
themselves, except in certain cases specifically so enumerated therein, and the
petitioner has not shown that the non-presentation or non-production of its
original documentary pieces of evidence falls under such exceptions. As aptly
pointed out by the respondent judge in the order issued by him on November 16,
2004:
"x x x The record shows that the plaintiff (petitioner herein) has been given
every opportunity to present the originals of the Xerox or photocopies of the
documents it offered. It never produced said originals."
So, the petitioner has only itself to blame for the respondent judge’s denial of
admission of its aforementioned documentary evidence.
Of course, the petitioner tries to contend that the photocopies of documents
offered by it are equivalent to the original documents that it sought to offer in
evidence, based on the Rules on Electronic Evidence which were in force and
effect since August 1, 2001. However, such a contention is devoid of merit. The
pieces of documentary evidence offered by the petitioner in Civil Case CEB-
18662 which were denied admission by the respondent judge do not actually
constitute as electronic evidence as defined in the Rules on Electronic Evidence.
The informations therein were not received, retrieved or produced
electronically. The petitioner has not adequately established that its
documentary evidence were electronic evidence. it has not properly
159
authenticated such evidence as electronic documents, assuming arguendo that
they are. Lastly, the petitioner has not properly established by affidavit
pursuant to Rule 9 of the Rules on Electronic Evidence the admissibility and
evidentiary weight of said documentary evidence.
Thus, by any legal yardstick, it is manifest that the respondent judge did not
commit grave abuse of discretion in denying admission of the aforementioned
documentary evidence of petitioner.
But even if it be granted just for the sake of argument that the respondent
judge committed an error in denying the aforementioned documentary evidence
of the petitioner, still the petition for certiorari filed in this case must fail.
Such error would at most be only an error of law and not an error of jurisdiction.
In Lee vs. People, 393 SCRA 397, the Supreme Court of the Philippines said that
certiorari will not lie in case of an error of law. x x x.
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered
by us DISMISSING the petition filed in this case and AFFIRMING the assailed
orders issued by respondent judge in Civil Case No. CEB-18662.4
Aggrieved by the aforequoted decision, petitioner filed the instant petition.
The focal point of this entire controversy is petitioner’s obstinate contention
that the photocopies it offered as formal evidence before the trial court are
the functional equivalent of their original based on its inimitable interpretation
of the Rules on Electronic Evidence.
Petitioner insists that, contrary to the rulings of both the trial court and the
appellate court, the photocopies it presented as documentary evidence actually
constitute electronic evidence based on its own premise that an "electronic
document" as defined under Section 1(h), Rule 2 of the Rules on Electronic
Evidence is not limited to information that is received, recorded, retrieved or
produced electronically. Rather, petitioner maintains that an "electronic
document" can also refer to other modes of written expression that is produced
electronically, such as photocopies, as included in the section’s catch-all proviso:
"any print-out or output, readable by sight or other means".
We do not agree.
In order to shed light to the issue of whether or not the photocopies are indeed
electronic documents as contemplated in Republic Act No. 8792 or the
Implementing Rules and Regulations of the Electronic Commerce Act, as well as
the Rules on Electronic Evidence, we shall enumerate the following documents
offered as evidence by the petitioner, to wit:
1. Exhibit "A" is a photocopy of a letter manually signed by a certain
Jose C. Troyo, with "RECEIVED" stamped thereon, together with a
handwritten date;
2. Exhibit "C" is a photocopy of a list of estimated cost of damages of
petitioner’s power barges 207 and 209 prepared by Hopewell Mobile
Power Systems Corporation and manually signed by Messrs. Rex Malaluan
and Virgilio Asprer;
3. Exhibit "D" is a photocopy of a letter manually signed by a certain
Nestor G. Enriquez, Jr., with "RECEIVED" stamped thereon, together
with a handwritten notation of the date it was received;
4. Exhibit "E" is a photocopy of a Standard Marine Protest Form which
was filled up and accomplished by Rex Joel C. Malaluan in his own
handwriting and signed by him. Portions of the Jurat were handwritten,
and manually signed by the Notary Public;
5. Exhibit "H" is a photocopy of a letter manually signed by Mr. Nestor
G. Enriquez, Jr. with "RECEIVED" stamped thereon, together with a
handwritten notation of the date it was received;
6. Exhibit "I" is a photocopy of a computation of the estimated energy
loss allegedly suffered by petitioner which was manually signed by Mr.
Nestor G. Enriquez, Jr.;
7. Exhibit "J" is a photocopy of a letter containing the breakdown of the
cost estimate, manually signed by Mr. Nestor G. Enriquez, Jr., with
"RECEIVED" stamped thereon, together with a handwritten notation of
the date it was received, and other handwritten notations;
8. Exhibit "K" is a photocopy of the Subpoena Duces Tecum Ad
Testificandum written using a manual typewriter, signed manually by
Atty. Ofelia Polo-De Los Reyes, with a handwritten notation when it was
received by the party;
9. Exhibit "L" is a photocopy of a portion of the electricity supply and
operation and maintenance agreement between petitioner and Hopewell,
160
containing handwritten notations and every page containing three
unidentified manually placed signatures;
10. Exhibit "M" is a photocopy of the Notice of Termination with
attachments addressed to Rex Joel C. Malaluan, manually signed by
Jaime S. Patinio, with a handwritten notation of the date it was
received. The sub-markings also contain manual signatures and/or
handwritten notations;
11. Exhibit "N" is a photocopy of a letter of termination with
attachments addressed to VIrgilio Asprer and manually signed by Jaime
S. Patino. The sub-markings contain manual signatures and/or
handwritten notations;
12. Exhibit "O" is the same photocopied document marked as Annex C;
13. Exhibit "P" is a photocopy of an incident report manually signed by
Messrs. Malaluan and Bautista and by the Notary Public, with other
handwritten notations;
14. Exhibit "Q" is a photocopy of a letter manually signed by Virgilio
Asprer and by a Notary Public, together with other handwritten
notations.
On the other hand, an "electronic document" refers to information or the
representation of information, data, figures, symbols or other models of written
expression, described or however represented, by which a right is established or
an obligation extinguished, or by which a fact may be proved and affirmed, which
is received, recorded, transmitted, stored, processed, retrieved or produced
electronically.5 It includes digitally signed documents and any printout, readable
by sight or other means which accurately reflects the electronic data message
or electronic document.6
The rules use the word "information" to define an electronic document received,
recorded, transmitted, stored, processed, retrieved or produced electronically.
This would suggest that an electronic document is relevant only in terms of the
information contained therein, similar to any other document which is presented
in evidence as proof of its contents.7 However, what differentiates an electronic
document from a paper-based document is the manner by which the information
is processed; clearly, the information contained in an electronic document is
received, recorded, transmitted, stored, processed, retrieved or produced
electronically.
A perusal of the information contained in the photocopies submitted by
petitioner will reveal that not all of the contents therein, such as the signatures
of the persons who purportedly signed the documents, may be recorded or
produced electronically. By no stretch of the imagination can a person’s signature
affixed manually be considered as information electronically received, recorded,
transmitted, stored, processed, retrieved or produced. Hence, the argument of
petitioner that since these paper printouts were produced through an electronic
process, then these photocopies are electronic documents as defined in the
Rules on Electronic Evidence is obviously an erroneous, if not preposterous,
interpretation of the law. Having thus declared that the offered photocopies are
not tantamount to electronic documents, it is consequential that the same may
not be considered as the functional equivalent of their original as decreed in the
law.
Furthermore, no error can be ascribed to the court a quo in denying admission
and excluding from the records petitioner’s Exhibits "A", "C", "D", "E", "H" and
its sub-markings, "I", "J" and its sub-markings, "K", "L", "M" and its sub-
markings, "N" and its sub-markings, "O", "P" and its sub-markings, "Q" and its
sub-markings, and "R". The trial court was correct in rejecting these photocopies
as they violate the best evidence rule and are therefore of no probative value
being incompetent pieces of evidence. 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.8 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.9The 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.10
Moreover, as mandated under Section 2, Rule 130 of the Rules of Court:
"SECTION 2. Original writing must be produced; exceptions. — There can be no
evidence of a writing the contents of which is the subject of inquiry, other than
the original writing itself, except in the following cases:
(a) When the original has been lost, destroyed, or cannot be produced in
court;
161
(b) When the original is in the possession of the party against whom the
evidence is offered, and the latter fails to produce it after reasonable
notice;
(c) When the original is a record or other document in the custody of a
public officer;
(d) When the original has been recorded in an existing record a
certified copy of which is made evidence by law;
(e) 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."
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.11 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;12 (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.13 However, in the case at
bar, though petitioner insisted in offering the photocopies as documentary
evidence, it failed to establish that such offer was made in accordance with the
exceptions as enumerated under the abovequoted rule. Accordingly, we find no
error in the Order of the court a quo denying admissibility of the photocopies
offered by petitioner as documentary evidence.
Finally, it perplexes this Court why petitioner continued to obdurately disregard
the opportunities given by the trial court for it to present the originals of the
photocopies it presented yet comes before us now praying that it be allowed to
present the originals of the exhibits that were denied admission or in case the
same are lost, to lay the predicate for the admission of secondary evidence. Had
petitioner presented the originals of the documents to the court instead of the
photocopies it obstinately offered as evidence, or at the very least laid the
predicate for the admission of said photocopies, this controversy would not have
unnecessarily been brought before the appellate court and finally to this Court
for adjudication. Had it not been for petitioner’s intransigence, the merits of
petitioner’s complaint for damages would have been decided upon by the trial
court long ago. As aptly articulated by the Court of Appeals, petitioner has only
itself to blame for the respondent judge’s denial of admission of its
aforementioned documentary evidence and consequently, the denial of its prayer
to be given another opportunity to present the originals of the documents that
were denied admission nor to lay the predicate for the admission of secondary
evidence in case the same has been lost.
WHEREFORE, premises considered, the instant petition is hereby DENIED. The
Decision of the Court of Appeals in CA-G.R. CEB-SP No. 00848, dated 9
November 2005 is hereby AFFIRMED. Costs against petitioner.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 170633 October 17, 2007
MCC INDUSTRIAL SALES CORPORATION, petitioner,
vs.
SSANGYONG CORPORATION, respondents.
D E C I S I O N
NACHURA, J.:
Before the Court is a petition for review on certiorari of the Decision1 of the
Court of Appeals in CA-G.R. CV No. 82983 and its Resolution2 denying the motion
for reconsideration thereof.
Petitioner MCC Industrial Sales (MCC), a domestic corporation with office at
Binondo, Manila, is engaged in the business of importing and wholesaling stainless
steel products.3 One of its suppliers is the Ssangyong Corporation
(Ssangyong),4 an international trading company5 with head office in Seoul, South
Korea and regional headquarters in Makati City, Philippines.6 The two
corporations conducted business through telephone calls and facsimile or
162
telecopy transmissions.7 Ssangyong would send the pro forma invoices containing
the details of the steel product order to MCC; if the latter conforms thereto,
its representative affixes his signature on the faxed copy and sends it back to
Ssangyong, again by fax.8
On April 13, 2000, Ssangyong Manila Office sent, by fax, a letter9 addressed to
Gregory Chan, MCC Manager [also the President10 of Sanyo Seiki Stainless Steel
Corporation], to confirm MCC's and Sanyo Seiki's order of 220 metric
tons (MT) of hot rolled stainless steel under a preferential rate
of US$1,860.00 per MT. Chan, on behalf of the corporations, assented and
affixed his signature on the conforme portion of the letter.11
On April 17, 2000, Ssangyong forwarded to MCC Pro Forma Invoice No. ST2-
POSTSO40112 containing the terms and conditions of the transaction. MCC sent
back by fax to Ssangyong the invoice bearing the conformity signature13 of Chan.
As stated in the pro forma invoice, payment for the ordered steel products
would be made through an irrevocable letter of credit (L/C) at sight in favor of
Ssangyong.14 Following their usual practice, delivery of the goods was to be made
after the L/C had been opened.
In the meantime, because of its confirmed transaction with MCC, Ssangyong
placed the order with its steel manufacturer, Pohang Iron and Steel Corporation
(POSCO), in South Korea15 and paid the same in full.
Because MCC could open only a partial letter of credit, the order for 220MT of
steel was split into two,16 one for 110MT covered by Pro Forma Invoice
No. ST2-POSTS0401-117 and another for 110MT covered by ST2-
POSTS0401-2,18 both dated April 17, 2000.
On June 20, 2000, Ssangyong, through its Manila Office, informed Sanyo Seiki
and Chan, by way of a fax transmittal, that it was ready to ship 193.597MT of
stainless steel from Korea to the Philippines. It requested that the opening of
the L/C be facilitated.19 Chan affixed his signature on the fax transmittal and
returned the same, by fax, to Ssangyong.20
Two days later, on June 22, 2000, Ssangyong Manila Office informed Sanyo
Seiki, thru Chan, that it was able to secure a US$30/MT price adjustment on
the contracted price of US$1,860.00/MT for the 200MT stainless steel, and
that the goods were to be shipped in two tranches, the first 100MT on that day
and the second 100MT not later than June 27, 2000. Ssangyong reiterated its
request for the facilitation of the L/C's opening.21
Ssangyong later, through its Manila Office, sent a letter, on June 26, 2000, to
the Treasury Group of Sanyo Seiki that it was looking forward to receiving the
L/C details and a cable copy thereof that day.22 Ssangyong sent a separate
letter of the same date to Sanyo Seiki requesting for the opening of the L/C
covering payment of the first 100MT not later than June 28, 2000.23 Similar
letters were transmitted by Ssangyong Manila Office on June 27, 2000.24 On
June 28, 2000, Ssangyong sent another facsimile letter to MCC stating that its
principal in Korea was already in a difficult situation25 because of the failure of
Sanyo Seiki and MCC to open the L/C's.
The following day, June 29, 2000, Ssangyong received, by fax, a letter signed by
Chan, requesting an extension of time to open the L/C because MCC's credit line
with the bank had been fully availed of in connection with another transaction,
and MCC was waiting for an additional credit line.26 On the same date, Ssangyong
replied, requesting that it be informed of the date when the L/C would be
opened, preferably at the earliest possible time, since its Steel Team 2 in Korea
was having problems and Ssangyong was incurring warehousing costs.27 To
maintain their good business relationship and to support MCC in its financial
predicament, Ssangyong offered to negotiate with its steel manufacturer,
POSCO, another US$20/MT discount on the price of the stainless steel ordered.
This was intimated in Ssangyong's June 30, 2000 letter to MCC.28 On July 6,
2000, another follow-up letter29 for the opening of the L/C was sent by
Ssangyong to MCC.
However, despite Ssangyong's letters, MCC failed to open a letter of
credit.30 Consequently, on August 15, 2000, Ssangyong, through counsel, wrote
Sanyo Seiki that if the L/C's were not opened, Ssangyong would be compelled to
cancel the contract and hold MCC liable for damages for breach thereof
amounting to US$96,132.18, inclusive of warehouse expenses, related interests
and charges.31
Later, Pro Forma Invoice Nos. ST2-POSTS080-132 and ST2-POSTS080-
233 dated August 16, 2000 were issued by Ssangyong and sent via fax to MCC.
The invoices slightly varied the terms of the earlier pro forma invoices (ST2-
POSTSO401, ST2-POSTS0401-1 and ST2-POSTS0401-2), in that the
quantity was now officially 100MT per invoice and the price was reduced
to US$1,700.00 per MT. As can be gleaned from the photocopies of the said
August 16, 2000 invoices submitted to the court, they both bear the conformity
signature of MCC Manager Chan.
On August 17, 2000, MCC finally opened an L/C with PCIBank for US$170,000.00
covering payment for 100MT of stainless steel coil under Pro Forma Invoice
163
No. ST2-POSTS080-2.34 The goods covered by the said invoice were then
shipped to and received by MCC.35
MCC then faxed to Ssangyong a letter dated August 22, 2000 signed by Chan,
requesting for a price adjustment of the order stated in Pro Forma Invoice No.
ST2-POSTS080-1, considering that the prevailing price of steel at that time was
US$1,500.00/MT, and that MCC lost a lot of money due to a recent strike.36
Ssangyong rejected the request, and, on August 23, 2000, sent a demand
letter37 to Chan for the opening of the second and last L/C of US$170,000.00
with a warning that, if the said L/C was not opened by MCC on August 26, 2000,
Ssangyong would be constrained to cancel the contract and hold MCC liable for
US$64,066.99 (representing cost difference, warehousing expenses, interests
and charges as of August 15, 2000) and other damages for breach. Chan failed to
reply.
Exasperated, Ssangyong through counsel wrote a letter to MCC, on September
11, 2000, canceling the sales contract under ST2-POSTS0401-1 /ST2-
POSTS0401-2, and demanding payment of US$97,317.37 representing losses,
warehousing expenses, interests and charges.38
Ssangyong then filed, on November 16, 2001, a civil action for damages due to
breach of contract against defendants MCC, Sanyo Seiki and Gregory Chan
before the Regional Trial Court of Makati City. In its complaint,39Ssangyong
alleged that defendants breached their contract when they refused to open the
L/C in the amount of US$170,000.00 for the remaining 100MT of steel
under Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2.
After Ssangyong rested its case, defendants filed a Demurrer to
Evidence40 alleging that Ssangyong failed to present the original copies of
the pro forma invoices on which the civil action was based. In an Order dated
April 24, 2003, the court denied the demurrer, ruling that the documentary
evidence presented had already been admitted in the December 16, 2002
Order41 and their admissibility finds support in Republic Act (R.A.) No. 8792,
otherwise known as the Electronic Commerce Act of 2000. Considering that both
testimonial and documentary evidence tended to substantiate the material
allegations in the complaint, Ssangyong's evidence sufficed for purposes of a
prima facie case.42
After trial on the merits, the RTC rendered its Decision43 on March 24, 2004, in
favor of Ssangyong. The trial court ruled that when plaintiff agreed to sell and
defendants agreed to buy the 220MT of steel products for the price of
US$1,860 per MT, the contract was perfected. The subject transaction was
evidenced by Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2-
POSTS0401-2, which were later amended only in terms of reduction of volume
as well as the price per MT, following Pro Forma Invoice Nos. ST2-POSTS080-
1 and ST2-POSTS080-2. The RTC, however, excluded Sanyo Seiki from liability
for lack of competent evidence. The fallo of the decision reads:
WHEREFORE, premises considered, Judgment is hereby rendered
ordering defendants MCC Industrial Sales Corporation and Gregory
Chan, to pay plaintiff, jointly and severally the following:
1) Actual damages of US$93,493.87 representing the outstanding
principal claim plus interest at the rate of 6% per annum from March
30, 2001.
2) Attorney's fees in the sum of P50,000.00 plus P2,000.00 per
counsel's appearance in court, the same being deemed just and equitable
considering that by reason of defendants' breach of their obligation
under the subject contract, plaintiff was constrained to litigate to
enforce its rights and recover for the damages it sustained, and
therefore had to engage the services of a lawyer.
3) Costs of suit.
No award of exemplary damages for lack of sufficient basis.
SO ORDERED.44
On April 22, 2004, MCC and Chan, through their counsel of record, Atty. Eladio
B. Samson, filed their Notice of Appeal.45 On June 8, 2004, the law office of
Castillo Zamora & Poblador entered its appearance as their collaborating counsel.
In their Appeal Brief filed on March 9, 2005,46 MCC and Chan raised before the
CA the following errors of the RTC:
I. THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING
THAT APPELLANTS VIOLATED THEIR CONTRACT WITH APPELLEE
A. THE HONORABLE COURT A QUO PLAINLY ERRED IN
FINDING THAT APPELLANTS AGREED TO PURCHASE 200
164
METRIC TONS OF STEEL PRODUCTS FROM APPELLEE,
INSTEAD OF ONLY 100 METRIC TONS.
1. THE HONORABLE COURT A QUO PLAINLY ERRED
IN ADMITTING IN EVIDENCE THE PRO
FORMA INVOICES WITH REFERENCE NOS. ST2-
POSTS0401-1 AND ST2-POSTS0401-2.
II. THE HONORABLE COURT A QUO PLAINLY ERRED IN AWARDING
ACTUAL DAMAGES TO APPELLEE.
III. THE HONORABLE COURT A QUO PLAINLY ERRED IN
AWARDING ATTORNEY'S FEES TO APPELLEE.
IV. THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING
APPELLANT GREGORY CHAN JOINTLY AND SEVERALLY LIABLE
WITH APPELLANT MCC.47
On August 31, 2005, the CA rendered its Decision48 affirming the ruling of the
trial court, but absolving Chan of any liability. The appellate court ruled, among
others, that Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2-
POSTS0401-2 (Exhibits "E", "E-1" and "F") were admissible in evidence,
although they were mere facsimile printouts of MCC's steel orders.49 The
dispositive portion of the appellate court's decision reads:
WHEREFORE, premises considered, the Court holds:
(1) The award of actual damages, with interest, attorney's fees and
costs ordered by the lower court is hereby AFFIRMED.
(2) Appellant Gregory Chan is hereby ABSOLVED from any liability.
SO ORDERED.50
A copy of the said Decision was received by MCC's and Chan's principal counsel,
Atty. Eladio B. Samson, on September 14, 2005.51 Their collaborating counsel,
Castillo Zamora & Poblador,52 likewise, received a copy of the CA decision on
September 19, 2005.53
On October 4, 2005, Castillo Zamora & Poblador, on behalf of MCC, filed a
motion for reconsideration of the said decision.54 Ssangyong opposed the motion
contending that the decision of the CA had become final and executory on
account of the failure of MCC to file the said motion within the reglementary
period. The appellate court resolved, on November 22, 2005, to deny the motion
on its merits,55 without, however, ruling on the procedural issue raised.
Aggrieved, MCC filed a petition for review on certiorari56 before this Court,
imputing the following errors to the Court of Appeals:
THE COURT OF APPEALS DECIDED A LEGAL QUESTION NOT IN
ACCORDANCE WITH JURISPRUDENCE AND SANCTIONED A
DEPARTURE FROM THE USUAL AND ACCEPTED COURSE OF
JUDICIAL PROCEEDINGS BY REVERSING THE COURT A
QUO'S DISMISSAL OF THE COMPLAINT IN CIVIL CASE NO. 02-124
CONSIDERING THAT:
I. THE COURT OF APPEALS ERRED IN SUSTAINING THE
ADMISSIBILITY IN EVIDENCE OF THE PRO-FORMA
INVOICES WITH REFERENCE NOS. ST2-POSTSO401-1 AND
ST2-POSTSO401-2, DESPITE THE FACT THAT THE SAME
WERE MERE PHOTOCOPIES OF FACSIMILE PRINTOUTS.
II. THE COURT OF APPEALS FAILED TO APPRECIATE THE
OBVIOUS FACT THAT, EVEN ASSUMING PETITIONER
BREACHED THE SUPPOSED CONTRACT, THE FACT IS THAT
PETITIONER FAILED TO PROVE THAT IT SUFFERED ANY
DAMAGES AND THE AMOUNT THEREOF.
III. THE AWARD OF ACTUAL DAMAGES IN THE AMOUNT
OF US$93,493.87 IS SIMPLY UNCONSCIONABLE AND
SHOULD HAVE BEEN AT LEAST REDUCED, IF NOT DELETED
BY THE COURT OF APPEALS.57
In its Comment, Ssangyong sought the dismissal of the petition, raising the
following arguments: that the CA decision dated 15 August 2005 is already final
and executory, because MCC's motion for reconsideration was filed beyond the
reglementary period of 15 days from receipt of a copy thereof, and that, in any
case, it was a pro formamotion; that MCC breached the contract for the
purchase of the steel products when it failed to open the required letter of
credit; that the printout copies and/or photocopies of facsimile or telecopy
transmissions were properly admitted by the trial court because they are
considered original documents under R.A. No. 8792; and that MCC is liable for
165
actual damages and attorney's fees because of its breach, thus, compelling
Ssangyong to litigate.
The principal issues that this Court is called upon to resolve are the following:
I – Whether the CA decision dated 15 August 2005 is already final and
executory;
II – Whether the print-out and/or photocopies of facsimile transmissions are
electronic evidence and admissible as such;
III – Whether there was a perfected contract of sale between MCC and
Ssangyong, and, if in the affirmative, whether MCC breached the said contract;
and
IV – Whether the award of actual damages and attorney's fees in favor of
Ssangyong is proper and justified.
-I-
It cannot be gainsaid that in Albano v. Court of Appeals,58 we held that receipt
of a copy of the decision by one of several counsels on record is notice to all, and
the period to appeal commences on such date even if the other counsel has not
yet received a copy of the decision. In this case, when Atty. Samson received a
copy of the CA decision on September 14, 2005, MCC had only fifteen (15) days
within which to file a motion for reconsideration conformably with Section 1,
Rule 52 of the Rules of Court, or to file a petition for review on certiorari in
accordance with Section 2, Rule 45. The period should not be reckoned from
September 29, 2005 (when Castillo Zamora & Poblador received their copy of
the decision) because notice to Atty. Samson is deemed notice to collaborating
counsel.
We note, however, from the records of the CA, that it was Castillo Zamora &
Poblador, not Atty. Samson, which filed both MCC's and Chan's Brief and Reply
Brief. Apparently, the arrangement between the two counsels was for the
collaborating, not the principal, counsel to file the appeal brief and subsequent
pleadings in the CA. This explains why it was Castillo Zamora & Poblador which
filed the motion for the reconsideration of the CA decision, and they did so on
October 5, 2005, well within the 15-day period from September 29, 2005, when
they received their copy of the CA decision. This could also be the reason why
the CA did not find it necessary to resolve the question of the timeliness of
petitioner's motion for reconsideration, even as the CA denied the same.
Independent of this consideration though, this Court assiduously reviewed the
records and found that strong concerns of substantial justice warrant the
relaxation of this rule.
In Philippine Ports Authority v. Sargasso Construction and Development
Corporation,59 we ruled that:
In Orata v. Intermediate Appellate Court, we held that where strong
considerations of substantive justice are manifest in the petition, this
Court may relax the strict application of the rules of procedure in the
exercise of its legal jurisdiction. In addition to the basic merits of the
main case, such a petition usually embodies justifying circumstance
which warrants our heeding to the petitioner's cry for justice in spite
of the earlier negligence of counsel. As we held in Obut v. Court of
Appeals:
[W]e cannot look with favor on a course of action which would
place the administration of justice in a straight jacket for then
the result would be a poor kind of justice if there would be
justice at all. Verily, judicial orders, such as the one subject of
this petition, are issued to be obeyed, nonetheless a non-
compliance is to be dealt with as the circumstances attending
the case may warrant. What should guide judicial action is the
principle that a party-litigant is to be given the fullest
opportunity to establish the merits of his complaint or defense
rather than for him to lose life, liberty, honor or property on
technicalities.
The rules of procedure are used only to secure and not override or
frustrate justice. A six-day delay in the perfection of the appeal, as in
this case, does not warrant the outright dismissal of the appeal.
In Development Bank of the Philippines vs. Court of Appeals, we gave
due course to the petitioner's appeal despite the late filing of its brief
in the appellate court because such appeal involved public interest. We
stated in the said case that the Court may exempt a particular case
from a strict application of the rules of procedure where the appellant
failed to perfect its appeal within the reglementary period, resulting in
the appellate court's failure to obtain jurisdiction over the case.
In Republic vs. Imperial, Jr., we also held that there is more leeway to
exempt a case from the strictness of procedural rules when the
appellate court has already obtained jurisdiction over the appealed case.
We emphasize that:
166
[T]he rules of procedure are mere tools intended to facilitate
the attainment of justice, rather than frustrate it. A strict and
rigid application of the rules must always be eschewed when it
would subvert the rule's primary objective of enhancing fair
trials and expediting justice. Technicalities should never be
used to defeat the substantive rights of the other party. Every
party-litigant must be afforded the amplest opportunity for
the proper and just determination of his cause, free from the
constraints of technicalities.60
Moreover, it should be remembered that the Rules were promulgated to set
guidelines in the orderly administration of justice, not to shackle the hand that
dispenses it. Otherwise, the courts would be consigned to being mere slaves to
technical rules, deprived of their judicial discretion. Technicalities must take a
backseat to substantive rights. After all, it is circumspect leniency in this
respect that will give the parties the fullest opportunity to ventilate the merits
of their respective causes, rather than have them lose life, liberty, honor or
property on sheer technicalities.61
The other technical issue posed by respondent is the alleged pro forma nature of
MCC's motion for reconsideration, ostensibly because it merely restated the
arguments previously raised and passed upon by the CA.
In this connection, suffice it to say that the mere restatement of arguments in a
motion for reconsideration does not per se result in a pro forma motion.
In Security Bank and Trust Company, Inc. v. Cuenca,62 we held that a motion for
reconsideration may not be necessarily pro forma even if it reiterates the
arguments earlier passed upon and rejected by the appellate court. A movant
may raise the same arguments precisely to convince the court that its ruling was
erroneous. Furthermore, the pro forma rule will not apply if the arguments were
not sufficiently passed upon and answered in the decision sought to be
reconsidered.
- II -
The second issue poses a novel question that the Court welcomes. It provides the
occasion for this Court to pronounce a definitive interpretation of the equally
innovative provisions of the Electronic Commerce Act of 2000 (R.A. No.
8792) vis-à-vis the Rules on Electronic Evidence.
Although the parties did not raise the question whether the original facsimile
transmissions are "electronic data messages" or "electronic documents" within
the context of the Electronic Commerce Act (the petitioner merely assails as
inadmissible evidence the photocopies of the said facsimile transmissions), we
deem it appropriate to determine first whether the said fax transmissions are
indeed within the coverage of R.A. No. 8792 before ruling on whether the
photocopies thereof are covered by the law. In any case, this Court has ample
authority to go beyond the pleadings when, in the interest of justice or for the
promotion of public policy, there is a need to make its own findings in order to
support its conclusions.63
Petitioner contends that the photocopies of the pro forma invoices presented by
respondent Ssangyong to prove the perfection of their supposed contract of sale
are inadmissible in evidence and do not fall within the ambit of R.A. No. 8792,
because the law merely admits as the best evidence the original fax transmittal.
On the other hand, respondent posits that, from a reading of the law and the
Rules on Electronic Evidence, the original facsimile transmittal of the pro
forma invoice is admissible in evidence since it is an electronic document and,
therefore, the best evidence under the law and the Rules. Respondent further
claims that the photocopies of these fax transmittals (specifically ST2-
POSTS0401-1 and ST2-POSTS0401-2) are admissible under the Rules on
Evidence because the respondent sufficiently explained the non-production of
the original fax transmittals.
In resolving this issue, the appellate court ruled as follows:
Admissibility of Pro Forma
Invoices; Breach of Contract
by Appellants
Turning first to the appellants' argument against the admissibility of
the Pro Forma Invoices with Reference Nos. ST2-POSTS0401-1 and
ST2-POSTS0401-2 (Exhibits "E", "E-1" and "F", pp. 215-218, Records),
appellants argue that the said documents are inadmissible (sic) being
violative of the best evidence rule.
The argument is untenable.
The copies of the said pro-forma invoices submitted by the appellee are
admissible in evidence, although they are mere electronic facsimile
printouts of appellant's orders. Such facsimile printouts are considered
Electronic Documents under the New Rules on Electronic Evidence,
which came into effect on August 1, 2001. (Rule 2, Section 1 [h], A.M.
No. 01-7-01-SC).
167
"(h) 'Electronic document' refers to information or the
representation of information, data, figures, symbols or other
modes of written expression, described or however
represented, by which a right is established or an obligation
extinguished, or by which a fact may be proved and affirmed,
which is received, recorded, transmitted, stored, processed,
retrieved or produced electronically. It includes digitally signed
documents and any printout or output, readable by sight or
other means, which accurately reflects the electronic data
message or electronic document. For purposes of these Rules,
the term 'electronic document' may be used interchangeably
with 'electronic data message'.
An electronic document shall be regarded as the equivalent of an original
document under the Best Evidence Rule, as long as it is a printout or
output readable by sight or other means, showing to reflect the data
accurately. (Rule 4, Section 1, A.M. No. 01-7-01-SC)
The ruling of the Appellate Court is incorrect. R.A. No. 8792,64 otherwise known
as the Electronic Commerce Act of 2000, considers an electronic data message
or an electronic document as the functional equivalent of a written document for
evidentiary purposes.65 The Rules on Electronic Evidence66 regards an electronic
document as admissible in evidence if it complies with the rules on admissibility
prescribed by the Rules of Court and related laws, and is authenticated in the
manner prescribed by the said Rules.67 An electronic document is also the
equivalent of an original document under the Best Evidence Rule, if it is a
printout or output readable by sight or other means, shown to reflect the data
accurately.68
Thus, to be admissible in evidence as an electronic data message or to be
considered as the functional equivalent of an original document under the Best
Evidence Rule, the writing must foremost be an "electronic data message" or an
"electronic document."
The Electronic Commerce Act of 2000 defines electronic data message and
electronic document as follows:
Sec. 5. Definition of Terms. For the purposes of this Act, the following
terms are defined, as follows:
xxx
c. "Electronic Data Message" refers to information generated, sent,
received or stored by electronic, optical or similar means.
xxx
f. "Electronic Document" refers to information or the representation of
information, data, figures, symbols or other modes of written
expression, described or however represented, by which a right is
established or an obligation extinguished, or by which a fact may be
proved and affirmed, which is received, recorded, transmitted, stored,
processed, retrieved or produced electronically.
The Implementing Rules and Regulations (IRR) of R.A. No. 8792,69 which was
signed on July 13, 2000 by the then Secretaries of the Department of Trade
and Industry, the Department of Budget and Management, and then Governor of
the Bangko Sentral ng Pilipinas, defines the terms as:
Sec. 6. Definition of Terms. For the purposes of this Act and these
Rules, the following terms are defined, as follows:
xxx
(e) "Electronic Data Message" refers to information generated, sent,
received or stored by electronic, optical or similar means, but not
limited to, electronic data interchange (EDI), electronic mail, telegram,
telex or telecopy. Throughout these Rules, the term "electronic data
message" shall be equivalent to and be used interchangeably with
"electronic document."
xxxx
(h) "Electronic Document" refers to information or the representation
of information, data, figures, symbols or other modes of written
expression, described or however represented, by which a right is
established or an obligation extinguished, or by which a fact may be
proved and affirmed, which is received, recorded, transmitted, stored,
processed, retrieved or produced electronically. Throughout these
Rules, the term "electronic document" shall be equivalent to and be used
interchangeably with "electronic data message."
The phrase "but not limited to, electronic data interchange (EDI), electronic
mail, telegram, telex or telecopy" in the IRR's definition of "electronic data
168
message" is copied from the Model Law on Electronic Commerce adopted by the
United Nations Commission on International Trade Law (UNCITRAL),70 from
which majority of the provisions of R.A. No. 8792 were taken.71 While Congress
deleted this phrase in the Electronic Commerce Act of 2000, the drafters of
the IRR reinstated it. The deletion by Congress of the said phrase is significant
and pivotal, as discussed hereunder.
The clause on the interchangeability of the terms "electronic data message" and
"electronic document" was the result of the Senate of the Philippines' adoption,
in Senate Bill 1902, of the phrase "electronic data message" and the House of
Representative's employment, in House Bill 9971, of the term "electronic
document."72 In order to expedite the reconciliation of the two versions, the
technical working group of the Bicameral Conference Committee adopted both
terms and intended them to be the equivalent of each one.73 Be that as it may,
there is a slight difference between the two terms. While "data message" has
reference to information electronically sent, stored or transmitted, it does not
necessarily mean that it will give rise to a right or extinguish an
obligation,74 unlike an electronic document. Evident from the law, however, is the
legislative intent to give the two terms the same construction.
The Rules on Electronic Evidence promulgated by this Court defines the said
terms in the following manner:
SECTION 1. Definition of Terms. – For purposes of these Rules, the
following terms are defined, as follows:
xxxx
(g) "Electronic data message" refers to information generated, sent,
received or stored by electronic, optical or similar means.
(h) "Electronic document" refers to information or the representation
of information, data, figures, symbols or other modes of written
expression, described or however represented, by which a right is
established or an obligation extinguished, or by which a fact may be
proved and affirmed, which is received, recorded, transmitted, stored,
processed, retrieved or produced electronically. It includes digitally
signed documents and print-out or output, readable by sight or other
means, which accurately reflects the electronic data message or
electronic document. For purposes of these Rules, the term "electronic
document" may be used interchangeably with "electronic data message."
Given these definitions, we go back to the original question: Is an original
printout of a facsimile transmission an electronic data message or electronic
document?
The definitions under the Electronic Commerce Act of 2000, its IRR and the
Rules on Electronic Evidence, at first glance, convey the impression
that facsimile transmissions are electronic data messages or electronic
documents because they are sent by electronic means. The expanded definition
of an "electronic data message" under the IRR, consistent with the UNCITRAL
Model Law, further supports this theory considering that the enumeration "xxx
[is] not limited to, electronic data interchange (EDI), electronic mail, telegram,
telex or telecopy." And to telecopy is to send a document from one place to
another via a fax machine.75
As further guide for the Court in its task of statutory construction, Section 37
of the Electronic Commerce Act of 2000 provides that
Unless otherwise expressly provided for, the interpretation of this
Act shall give due regard to its international origin and the need to
promote uniformity in its application and the observance of good faith in
international trade relations. The generally accepted principles of
international law and convention on electronic commerce shall likewise be
considered.
Obviously, the "international origin" mentioned in this section can only refer to
the UNCITRAL Model Law, and the UNCITRAL's definition of "data message":
"Data message" means information generated, sent, received or stored
by electronic, optical or similar means including, but not limited to,
electronic data interchange (EDI), electronic mail, telegram, telex or
telecopy.76
is substantially the same as the IRR's characterization of an "electronic data
message."
However, Congress deleted the phrase, "but not limited to, electronic data
interchange (EDI), electronic mail, telegram, telex or telecopy," and replaced the
term "data message" (as found in the UNCITRAL Model Law ) with "electronic
data message." This legislative divergence from what is assumed as the term's
"international origin" has bred uncertainty and now impels the Court to make an
inquiry into the true intent of the framers of the law. Indeed, in the
construction or interpretation of a legislative measure, the primary rule is to
169
search for and determine the intent and spirit of the law.77 A construction
should be rejected that gives to the language used in a statute a meaning that
does not accomplish the purpose for which the statute was enacted, and that
tends to defeat the ends which are sought to be attained by the enactment.78
Interestingly, when Senator Ramon B. Magsaysay, Jr., the principal author of
Senate Bill 1902 (the predecessor of R.A. No. 8792), sponsored the bill on
second reading, he proposed to adopt the term "data message" as formulated
and defined in the UNCITRAL Model Law.79 During the period of amendments,
however, the term evolved into "electronic data message," and the phrase "but
not limited to, electronic data interchange (EDI), electronic mail, telegram, telex
or telecopy" in the UNCITRAL Model Law was deleted. Furthermore, the term
"electronic data message," though maintaining its description under the
UNCITRAL Model Law, except for the aforesaid deleted phrase, conveyed a
different meaning, as revealed in the following proceedings:
xxxx
Senator Santiago. Yes, Mr. President. I will furnish a copy together with
the explanation of this proposed amendment.
And then finally, before I leave the Floor, may I please be allowed to go
back to Section 5; the Definition of Terms. In light of the acceptance
by the good Senator of my proposed amendments, it will then become
necessary to add certain terms in our list of terms to be defined. I
would like to add a definition on what is "data," what is "electronic
record" and what is an "electronic record system."
If the gentleman will give me permission, I will proceed with the
proposed amendment on Definition of Terms, Section 5.
Senator Magsaysay. Please go ahead, Senator Santiago.
Senator Santiago. We are in Part 1, short title on the Declaration of
Policy, Section 5, Definition of Terms.
At the appropriate places in the listing of these terms that have to be
defined since these are arranged alphabetically, Mr. President, I would
like to insert the term DATA and its definition. So, the amendment will
read: "DATA" MEANS REPRESENTATION, IN ANY FORM, OF
INFORMATION OR CONCEPTS.
The explanation is this: This definition of "data" or "data" as it is now
fashionably pronounced in America - - the definition of "data" ensures
that our bill applies to any form of information in an electronic record,
whether these are figures, facts or ideas.
So again, the proposed amendment is this: "DATA" MEANS
REPRESENTATIONS, IN ANY FORM, OF INFORMATION OR
CONCEPTS.
Senator Magsaysay. May I know how will this affect the definition of
"Data Message" which encompasses electronic records, electronic
writings and electronic documents?
Senator Santiago. These are completely congruent with each other.
These are compatible. When we define "data," we are simply reinforcing
the definition of what is a data message.
Senator Magsaysay. It is accepted, Mr. President.
Senator Santiago. Thank you. The next term is "ELECTRONIC RECORD."
The proposed amendment is as follows:
"ELECTRONIC RECORD" MEANS DATA THAT IS RECORDED OR
STORED ON ANY MEDIUM IN OR BY A COMPUTER SYSTEM OR
OTHER SIMILAR DEVICE, THAT CAN BE READ OR PERCEIVED BY A
PERSON OR A COMPUTER SYSTEM OR OTHER SIMILAR DEVICE. IT
INCLUDES A DISPLAY, PRINTOUT OR OTHER OUTPUT OF THAT
DATA.
The explanation for this term and its definition is as follows: The term
"ELECTRONIC RECORD" fixes the scope of our bill. The record is the
data. The record may be on any medium. It is electronic because it is
recorded or stored in or by a computer system or a similar device.
The amendment is intended to apply, for example, to data on magnetic
strips on cards or in Smart cards. As drafted, it would not apply to
telexes or faxes, except computer-generated faxes, unlike the
United Nations model law on electronic commerce. It would also not
apply to regular digital telephone conversations since the information is
not recorded. It would apply to voice mail since the information has been
recorded in or by a device similar to a computer. Likewise, video records
are not covered. Though when the video is transferred to a website, it
170
would be covered because of the involvement of the computer. Music
recorded by a computer system on a compact disc would be covered.
In short, not all data recorded or stored in digital form is covered. A
computer or a similar device has to be involved in its creation or storage.
The term "similar device" does not extend to all devices that create or
store data in digital form. Although things that are not recorded or
preserved by or in a computer system are omitted from this bill, these
may well be admissible under other rules of law. This provision focuses
on replacing the search for originality proving the reliability of systems
instead of that of individual records and using standards to show
systems reliability.
Paper records that are produced directly by a computer system such as
printouts are themselves electronic records being just the means of
intelligible display of the contents of the record. Photocopies of the
printout would be paper record subject to the usual rules about copies,
but the original printout would be subject to the rules of admissibility
of this bill.
However, printouts that are used only as paper records and whose
computer origin is never again called on are treated as paper records. In
that case, the reliability of the computer system that produces the
record is irrelevant to its reliability.
Senator Magsaysay. Mr. President, if my memory does not fail me,
earlier, the lady Senator accepted that we use the term "Data Message"
rather than "ELECTRONIC RECORD" in being consistent with the
UNCITRAL term of "Data Message." So with the new amendment of
defining "ELECTRONIC RECORD," will this affect her accepting of the
use of "Data Message" instead of "ELECTRONIC RECORD"?
Senator Santiago. No, it will not. Thank you for reminding me. The term
I would like to insert is ELECTRONIC DATA MESSAGE in lieu of
"ELECTRONIC RECORD."
Senator Magsaysay. Then we are, in effect, amending the term of the
definition of "Data Message" on page 2A, line 31, to which we have
no objection.
Senator Santiago. Thank you, Mr. President.
xxxx
Senator Santiago. Mr. President, I have proposed all the amendments
that I desire to, including the amendment on the effect of error or
change. I will provide the language of the amendment together with the
explanation supporting that amendment to the distinguished sponsor and
then he can feel free to take it up in any session without any further
intervention.
Senator Magsaysay. Before we end, Mr. President, I understand from
the proponent of these amendments that these are based on
the Canadian E-commerce Law of 1998. Is that not right?
Senator Santiago. That is correct.80
Thus, when the Senate consequently voted to adopt the term "electronic data
message," it was consonant with the explanation of Senator Miriam Defensor-
Santiago that it would not apply "to telexes or faxes, except computer-
generated faxes, unlike the United Nations model law on electronic commerce."
In explaining the term "electronic record" patterned after the E-Commerce Law
of Canada, Senator Defensor-Santiago had in mind the term "electronic data
message." This term then, while maintaining part of the UNCITRAL Model Law's
terminology of "data message," has assumed a different context, this time,
consonant with the term "electronic record" in the law of Canada. It accounts
for the addition of the word "electronic" and the deletion of the phrase "but not
limited to, electronic data interchange (EDI), electronic mail, telegram, telex or
telecopy." Noteworthy is that the Uniform Law Conference of Canada, explains
the term "electronic record," as drafted in the Uniform Electronic Evidence Act,
in a manner strikingly similar to Sen. Santiago's explanation during the Senate
deliberations:
"Electronic record" fixes the scope of the Act. The record is the data.
The record may be any medium. It is "electronic" because it is recorded
or stored in or by a computer system or similar device. The Act is
intended to apply, for example, to data on magnetic strips on cards, or in
smart cards. As drafted, it would not apply to telexes or faxes (except
computer-generated faxes), unlike the United Nations Model Law on
Electronic Commerce. It would also not apply to regular digital telephone
conversations, since the information is not recorded. It would apply to
voice mail, since the information has been recorded in or by a device
similar to a computer. Likewise video records are not covered, though
when the video is transferred to a Web site it would be, because of the
171
involvement of the computer. Music recorded by a computer system on a
compact disk would be covered.
In short, not all data recorded or stored in "digital" form is covered. A
computer or similar device has to be involved in its creation or storage.
The term "similar device" does not extend to all devices that create or
store data in digital form. Although things that are not recorded or
preserved by or in a computer system are omitted from this Act, they
may well be admissible under other rules of law. This Act focuses on
replacing the search for originality, proving the reliability of systems
instead of that of individual records, and using standards to show
systems reliability.
Paper records that are produced directly by a computer system, such as
printouts, are themselves electronic records, being just the means of
intelligible display of the contents of the record. Photocopies of the
printout would be paper records subject to the usual rules about copies,
but the "original" printout would be subject to the rules of admissibility
of this Act.
However, printouts that are used only as paper records, and whose
computer origin is never again called on, are treated as paper records.
See subsection 4(2). In this case the reliability of the computer system
that produced the record is relevant to its reliability.81
There is no question then that when Congress formulated the term "electronic
data message," it intended the same meaning as the term "electronic record" in
the Canada law. This construction of the term "electronic data message,"
which excludes telexes or faxes, except computer-generated faxes, is in
harmony with the Electronic Commerce Law's focus on "paperless"
communications and the "functional equivalent approach"82 that it espouses. In
fact, the deliberations of the Legislature are replete with discussions on
paperless and digital transactions.
Facsimile transmissions are not, in this sense, "paperless," but verily are paper-
based.
A facsimile machine, which was first patented in 1843 by Alexander Bain,83 is a
device that can send or receive pictures and text over a telephone line. It works
by digitizing an image—dividing it into a grid of dots. Each dot is either on or off,
depending on whether it is black or white. Electronically, each dot is represented
by a bit that has a value of either 0 (off) or 1 (on). In this way, the fax machine
translates a picture into a series of zeros and ones (called a bit map) that can be
transmitted like normal computer data. On the receiving side, a fax machine
reads the incoming data, translates the zeros and ones back into dots, and
reprints the picture.84 A fax machine is essentially an image scanner, a modem
and a computer printer combined into a highly specialized package. The scanner
converts the content of a physical document into a digital image, the modem
sends the image data over a phone line, and the printer at the other end makes a
duplicate of the original document.85 Thus, in Garvida v. Sales, Jr.,86where we
explained the unacceptability of filing pleadings through fax machines, we ruled
that:
A facsimile or fax transmission is a process involving the transmission
and reproduction of printed and graphic matter by scanning an original
copy, one elemental area at a time, and representing the shade or tone
of each area by a specified amount of electric current. The current is
transmitted as a signal over regular telephone lines or via microwave
relay and is used by the receiver to reproduce an image of the elemental
area in the proper position and the correct shade. The receiver is
equipped with a stylus or other device that produces a printed record on
paper referred to as a facsimile.
x x x A facsimile is not a genuine and authentic pleading. It is, at best,
an exact copy preserving all the marks of an original. Without the
original, there is no way of determining on its face whether the
facsimile pleading is genuine and authentic and was originally signed by
the party and his counsel. It may, in fact, be a sham pleading.87
Accordingly, in an ordinary facsimile transmission, there exists an original paper-
based information or data that is scanned, sent through a phone line, and re-
printed at the receiving end. Be it noted that in enacting the Electronic
Commerce Act of 2000, Congress intended virtual or paperless writings to be
the functional equivalent and to have the same legal function as paper-based
documents.88 Further, in a virtual or paperless environment, technically, there is
no original copy to speak of, as all direct printouts of the virtual reality are the
same, in all respects, and are considered as originals.89 Ineluctably, the law's
definition of "electronic data message," which, as aforesaid, is interchangeable
with "electronic document," could not have included facsimile transmissions,
which have an original paper-based copy as sent and a paper-based
facsimile copy as received. These two copies are distinct from each other, and
have different legal effects. While Congress anticipated future developments in
communications and computer technology90 when it drafted the law, it excluded
the early forms of technology, like telegraph, telex and telecopy (except
172
computer-generated faxes, which is a newer development as compared to the
ordinary fax machine to fax machine transmission), when it defined the term
"electronic data message."
Clearly then, the IRR went beyond the parameters of the law when it adopted
verbatim the UNCITRAL Model Law's definition of "data message," without
considering the intention of Congress when the latter deleted the phrase "but
not limited to, electronic data interchange (EDI), electronic mail, telegram, telex
or telecopy." The inclusion of this phrase in the IRR offends a basic tenet in the
exercise of the rule-making power of administrative agencies. After all, the
power of administrative officials to promulgate rules in the implementation of a
statute is necessarily limited to what is found in the legislative enactment itself.
The implementing rules and regulations of a law cannot extend the law or expand
its coverage, as the power to amend or repeal a statute is vested in the
Legislature.91 Thus, if a discrepancy occurs between the basic law and an
implementing rule or regulation, it is the former that prevails, because the law
cannot be broadened by a mere administrative issuance—an administrative
agency certainly cannot amend an act of Congress.92 Had the Legislature really
wanted ordinary fax transmissions to be covered by the mantle of the Electronic
Commerce Act of 2000, it could have easily lifted without a bit of tatter the
entire wordings of the UNCITRAL Model Law.
Incidentally, the National Statistical Coordination Board Task Force on the
Measurement of E-Commerce,93 on November 22, 2006, recommended a working
definition of "electronic commerce," as "[a]ny commercial transaction conducted
through electronic, optical and similar medium, mode, instrumentality and
technology. The transaction includes the sale or purchase of goods and services,
between individuals, households, businesses and governments conducted over
computer-mediated networks through the Internet, mobile phones, electronic
data interchange (EDI) and other channels through open and closed networks."
The Task Force's proposed definition is similar to the Organization of Economic
Cooperation and Development's (OECD's) broad definition as it covers
transactions made over any network, and, in addition, it adopted the following
provisions of the OECD definition: (1) for transactions, it covers sale or purchase
of goods and services; (2) for channel/network, it considers any computer-
mediated network and NOT limited to Internet alone; (3) it excludes
transactions received/placed using fax, telephone or non-interactive mail; (4) it
considers payments done online or offline; and (5) it considers delivery made
online (like downloading of purchased books, music or software programs) or
offline (deliveries of goods).94
We, therefore, conclude that the terms "electronic data message" and
"electronic document," as defined under the Electronic Commerce Act of 2000,
do not include a facsimile transmission. Accordingly, a facsimile
transmissioncannot be considered as electronic evidence. It is not the functional
equivalent of an original under the Best Evidence Rule and is not admissible
as electronic evidence.
Since a facsimile transmission is not an "electronic data message" or an
"electronic document," and cannot be considered as electronic evidence by the
Court, with greater reason is a photocopy of such a fax transmission not
electronic evidence. In the present case, therefore, Pro Forma Invoice
Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2 (Exhibits "E" and "F"), which
are mere photocopies of the original fax transmittals, are not electronic
evidence, contrary to the position of both the trial and the appellate courts.
- III -
Nevertheless, despite the pro forma invoices not being electronic evidence, this
Court finds that respondent has proven by preponderance of evidence the
existence of a perfected contract of sale.
In an action for damages due to a breach of a contract, it is essential that the
claimant proves (1) the existence of a perfected contract, (2) the breach
thereof by the other contracting party and (3) the damages which he/she
sustained due to such breach. Actori incumbit onus probandi. The burden of
proof rests on the party who advances a proposition affirmatively.95 In other
words, a plaintiff in a civil action must establish his case by a preponderance of
evidence, that is, evidence that has greater weight, or is more convincing than
that which is offered in opposition to it.96
In general, contracts are perfected by mere consent,97 which is manifested by
the meeting of the offer and the acceptance upon the thing and the cause which
are to constitute the contract. The offer must be certain and the acceptance
absolute.98 They are, moreover, obligatory in whatever form they may have been
entered into, provided all the essential requisites for their validity are
present.99 Sale, being a consensual contract, follows the general rule that it is
perfected at the moment there is a meeting of the 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.100
173

The essential elements of a contract of sale are (1) consent or meeting of the G-1 Signature of defendant Gregory
minds, that is, to transfer ownership in exchange for the price, (2) object Chan, contained in
certain which is the subject matter of the contract, and (3) cause of the facsimile/thermal paper.
obligation which is established.101 H Letter to defendants dated 22 To prove that defendants
June 2000, original the successful price adjus
In this case, to establish the existence of a perfected contract of sale between plaintiff in favor of forme
the parties, respondent Ssangyong formally offered in evidence the testimonies advised of the schedules
of its witnesses and the following exhibits:
I Letter to defendants dated 26 To prove that plaintiff re
June 2000, original requested defendants for
Exhibit Description Purpose opening of the Letters of
J Letter to defendants dated 26
E Pro forma Invoice dated 17 April To show that defendants contracted with June 2000, original defendants' failure and re
2000 with Contract No. ST2- plaintiff for the delivery of 110 MT of with their obligations and
K Letter to defendants dated 27
POSTS0401-1, photocopy stainless steel from Korea payable by way of plaintiff is incurring by re
June 2000, original
an irrevocable letter of credit in favor of defendants' failure and re
plaintiff, among other conditions. L Facsimile message to defendants L/Cs.
dated 28 June 2000, photocopy
E-1 Pro forma Invoice dated 17 April To show that defendants sent their
2000 with Contract No. ST2- confirmation of the (i) delivery to M
it of the Letter from defendants dated 29 To prove that defendants
POSTS0401, contained in specified stainless steel products, (ii) June 2000, contained in liabilities to plaintiff, tha
facsimile/thermal paper faxed by defendants' payment thereof by way of an facsimile/thermal paper faxed by for "more extension" of t
defendants to plaintiff showing the irrevocable letter of credit in favor of defendants to plaintiff showing the opening of the Letter of C
printed transmission details on the plaintiff, among other conditions. printed transmission details on the for favorable understandi
upper portion of said paper as upper portion of said paper as consideration.
coming from defendant MCC on 26 coming from defendant MCC on 29
Apr 00 08:41AM June 00 11:12 AM

E-2 Conforme signature of Mr. Gregory
Chan, contained in
facsimile/thermal paper faxed by
defendants to plaintiff showing the
printed transmission details on the
upper portion of said paper as
coming from defendant MCC on 26
Apr 00 08:41AM
To show that defendants sent their M-1
confirmation of the (i) delivery to it of the
total of 220MT specified stainless steel
products, (ii) defendants' payment thereof
by way of an irrevocable letter of credit in
favor of plaintiff, among other conditions.
Signature of defendant Gregory
Chan, contained in
facsimile/thermal paper faxed by
defendants to plaintiff showing the
printed transmission details on the
upper portion of said paper as
coming from defendant MCC on
June 00 11:12 AM

F Pro forma Invoice dated 17 April
2000 with Contract No. ST2-
POSTSO401-2, photocopy
G Letter to defendant SANYO
SEIKE dated 20 June
2000, contained in
facsimile/thermal paper
To show that defendants contracted N with
plaintiff for delivery of another 110 MT of
stainless steel from Korea payableOby way of
an irrevocable letter of credit in favor of
plaintiff, among other conditions.
To prove that defendants were informed of
the date of L/C opening and
defendant's conforme/approval thereof.
Letter to defendants dated 29
June 2000, original
Letter to defendants dated 30
June 2000, photocopy
To prove that plaintiff re
request for defendants to
the latter's request for e
was granted, defendants'
to comply therewith exten
notwithstanding.
174

P Letter to defendants dated 06 X-3 Conforme signature of defendant To prove that defendant M
July 2000, original Gregory Chan, photocopy through Gregory Chan, ag
Q Demand letter to defendants dated To prove that plaintiff was constrained to and purchase of the balan
15 Aug 2000, original engaged services of a lawyer for collection tons at the discounted pri
efforts. US$1,700/ton, apart from
and shipment of 100 metr
R Demand letter to defendants dated To prove that defendants opened the first
delivered by plaintiff SSA
23 Aug 2000, original L/C in favor of plaintiff, requested for
for by defendant MCC.
further postponement of the final L/C and
for minimal amounts, were urged toDD open the Letter from defendant MCC to To prove that there was a
final L/C on time, and were informed that plaintiff SSANGYONG dated 22 and purchase agreement b
failure to comply will cancel the contract. August 2000, contained in SSANGYONG and defend
facsimile/thermal paper with back- balance of 100 metric ton
S Demand letter to defendants dated To show defendants' refusal and failure to
up photocopy other order and shipment
11 Sept 2000, original open the final L/C on time, the cancellation
which was delivered by pla
of the contract as a consequence thereof,
SSANGYONG and paid fo
and final demand upon defendants to remit
MCC.
its obligations.
DD-1 Ref. No. ST2-POSTS080- To prove that there was a
W Letter from plaintiff SSANGYONG To prove that there was a perfected sale
1, contained in facsimile/thermal and purchase agreement b
to defendant SANYO SEIKI dated and purchase agreement between the
paper with back-up photocopy SSANGYONG and defend
13 April 2000, with fax back from parties for 220 metric tons of steel
balance of 100 metric ton
defendants SANYO SEIKI/MCC to products at the price of US$1,860/ton.
other order and shipment
plaintiff SSANGYONG, contained
which was delivered by pla
in facsimile/thermal paper with
SSANGYONG and paid fo
back-up photocopy
MCC.
W-1 Conforme signature of defendant To prove that defendants, acting through
DD-2 Signature of defendant Gregory To prove that defendant M
Gregory Chan, contained in Gregory Chan, agreed to the sale and
Chan, contained in through Gregory Chan, ag
facsimile/thermal paper with back- purchase of 220 metric tons of steel
facsimile/thermal paper with back- and purchase of the balan
up photocopy products at the price of US$1,860/ton.
up photocopy tons, apart from the othe
W-2 Name of sender MCC Industrial To prove that defendants sent their shipment of 100 metric to
Sales Corporation conformity to the sale and purchase delivered by plaintiff Ssa
agreement by facsimile transmission. for by defendant MCC.102
X Pro forma Invoice dated 16 August To prove that defendant MCC agreed to
2000, photocopy adjust and split the confirmed purchaseamong these documentary evidence presented by respondent, MCC,
Significantly,
order into 2 shipments atin100 metric tons
its petition before this Court, assails the admissibility only of Pro
each at the discounted price of
Forma Invoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2 (Exhibits "E"
US$1,700/ton. and "F"). After sifting through the records, the Court found that these invoices
X-1 Notation "1/2", photocopy To prove that the presentare
Promere
forma Invoice of their original fax transmittals. Ssangyong avers that
photocopies
was the first of 2 pro forma invoices.
these documents were prepared after MCC asked for the splitting of the original
X-2 Ref. No. ST2-POSTS080- To prove that the presentorder into two, so that the latter can apply for an L/C with greater facility. It,
Pro formaInvoice
1, photocopy however, failed to explain why the originals of these documents were not
was the first of 2 pro formainvoices.
presented.
175
To determine whether these documents are admissible in evidence, we apply the
ordinary Rules on Evidence, for as discussed above we cannot apply the
Electronic Commerce Act of 2000 and the Rules on Electronic Evidence.
Because these documents are mere photocopies, they are simply secondary
evidence, admissible only upon compliance with Rule 130, Section 5, which states,
"[w]hen 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." Furthermore, the offeror of secondary
evidence must prove the predicates thereof, namely: (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; (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. 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.103
Given these norms, we find that respondent failed to prove the existence of the
original fax transmissions of Exhibits E and F, and likewise did not sufficiently
prove the loss or destruction of the originals. Thus, Exhibits E and F cannot be
admitted in evidence and accorded probative weight.
It is observed, however, that respondent Ssangyong did not rely merely on
Exhibits E and F to prove the perfected contract. It also introduced in evidence
a variety of other documents, as enumerated above, together with the
testimonies of its witnesses. Notable among them are Pro Forma Invoice
Nos. ST2-POSTS080-1 and ST2-POSTS080-2 which were issued by Ssangyong
and sent via fax to MCC. As already mentioned, these invoices slightly varied the
terms of the earlier invoices such that the quantity was now
officially 100MT per invoice and the price reduced to US$1,700.00 per MT.
The copies of the said August 16, 2000 invoices submitted to the court bear the
conformity signature of MCC Manager Chan.
Pro Forma Invoice No. ST2-POSTS080-1 (Exhibit "X"), however, is a mere
photocopy of its original. But then again, petitioner MCC does not assail the
admissibility of this document in the instant petition. Verily, evidence not
objected to is deemed admitted and may be validly considered by the court in
arriving at its judgment.104 Issues not raised on appeal are deemed abandoned.
As to Pro Forma Invoice No. ST2-POSTS080-2 (Exhibits "1-A" and "2-C"),
which was certified by PCIBank as a true copy of its original,105 it was, in fact,
petitioner MCC which introduced this document in evidence. Petitioner MCC paid
for the order stated in this invoice. Its admissibility, therefore, is not open to
question.
These invoices (ST2-POSTS0401, ST2-POSTS080-1 and ST2-POSTS080-
2), along with the other unchallenged documentary evidence of respondent
Ssangyong, preponderate in favor of the claim that a contract of sale was
perfected by the parties.
This Court also finds merit in the following observations of the trial court:
Defendants presented Letter of Credit (Exhibits "1", "1-A" to "1-R")
referring to Pro Forma Invoice for Contract No. ST2POSTS080-2, in
the amount of US$170,000.00, and which bears the signature of
Gregory Chan, General Manager of MCC. Plaintiff, on the other hand,
presented Pro Forma Invoice referring to Contract No. ST2-
POSTS080-1, in the amount of US$170,000.00, which likewise bears the
signature of Gregory Chan, MCC. Plaintiff accounted for the notation
"1/2" on the right upper portion of the Invoice, that is, that it was the
first of two (2) pro forma invoices covering the subject contract
between plaintiff and the defendants. Defendants, on the other hand,
failed to account for the notation "2/2" in its Pro Forma Invoice
(Exhibit "1-A"). Observably further, both Pro Forma Invoices bear the
same date and details, which logically mean that they both apply to one
and the same transaction.106
Indeed, why would petitioner open an L/C for the second half of the transaction
if there was no first half to speak of?
The logical chain of events, as gleaned from the evidence of both parties,
started with the petitioner and the respondent agreeing on the sale and
purchase of 220MT of stainless steel at US$1,860.00 per MT. This initial
contract was perfected. Later, as petitioner asked for several extensions to pay,
adjustments in the delivery dates, and discounts in the price as originally agreed,
the parties slightly varied the terms of their contract, without necessarily
novating it, to the effect that the original order was reduced to 200MT, split
into two deliveries, and the price discounted to US$1,700 per MT. Petitioner,
176
however, paid only half of its obligation and failed to open an L/C for the other
100MT. Notably, the conduct of both parties sufficiently established the
existence of a contract of sale, even if the writings of the parties, because of
their contested admissibility, were not as explicit in establishing a
contract.107 Appropriate conduct by the parties may be sufficient to establish an
agreement, and while there may be instances where the exchange of
correspondence does not disclose the exact point at which the deal was closed,
the actions of the parties may indicate that a binding obligation has been
undertaken.108
With our finding that there is a valid contract, it is crystal-clear that when
petitioner did not open the L/C for the first half of the transaction (100MT),
despite numerous demands from respondent Ssangyong, petitioner breached its
contractual obligation. It is a well-entrenched rule that the failure of a buyer to
furnish an agreed letter of credit is a breach of the contract between buyer and
seller. Indeed, where the buyer fails to open a letter of credit as stipulated, the
seller or exporter is entitled to claim damages for such breach. Damages for
failure to open a commercial credit may, in appropriate cases, include the loss of
profit which the seller would reasonably have made had the transaction been
carried out.109
- IV -
This Court, however, finds that the award of actual damages is not in accord
with the evidence on record. It is axiomatic that actual or compensatory
damages cannot be presumed, but must be proven with a reasonable degree of
certainty.110 In Villafuerte v. Court of Appeals,111 we explained that:
Actual or compensatory damages are those awarded in order to
compensate a party for an injury or loss he suffered. They arise out of a
sense of natural justice and are aimed at repairing the wrong done.
Except as provided by law or by stipulation, a party is entitled to an
adequate compensation only for such pecuniary loss as he has duly
proven. It is hornbook doctrine that to be able to recover actual
damages, the claimant bears the onus of presenting before the court
actual proof of the damages alleged to have been suffered, thus:
A party is entitled to an adequate compensation for such
pecuniary loss actually suffered by him as he has duly proved.
Such damages, to be recoverable, must not only be capable of
proof, but must actually be proved with a reasonable degree of
certainty. We have emphasized that these damages cannot be
presumed and courts, in making an award must point out specific
facts which could afford a basis for measuring whatever
compensatory or actual damages are borne.112
In the instant case, the trial court awarded to respondent Ssangyong
US$93,493.87 as actual damages. On appeal, the same was affirmed by the
appellate court. Noticeably, however, the trial and the appellate courts, in making
the said award, relied on the following documents submitted in evidence by the
respondent: (1) Exhibit "U," the Statement of Account dated March 30, 2001;
(2) Exhibit "U-1," the details of the said Statement of Account); (3) Exhibit "V,"
the contract of the alleged resale of the goods to a Korean corporation; and (4)
Exhibit "V-1," the authentication of the resale contract from the Korean
Embassy and certification from the Philippine Consular Office.
The statement of account and the details of the losses sustained by respondent
due to the said breach are, at best, self-serving. It was respondent Ssangyong
itself which prepared the said documents. The items therein are not even
substantiated by official receipts. In the absence of corroborative evidence, the
said statement of account is not sufficient basis to award actual damages. The
court cannot simply rely on speculation, conjecture or guesswork as to the fact
and amount of damages, but must depend on competent proof that the claimant
had suffered, and on evidence of, the actual amount thereof.113
Furthermore, the sales contract and its authentication certificates, Exhibits "V"
and "V-1," allegedly evidencing the resale at a loss of the stainless steel subject
of the parties' breached contract, fail to convince this Court of the veracity of
its contents. The steel items indicated in the sales contract114 with a Korean
corporation are different in all respects from the items ordered by petitioner
MCC, even in size and quantity. We observed the following discrepancies:
List of commodities as stated in Exhibit "V":
COMMODITY: Stainless Steel HR Sheet in Coil, Slit Edge
SPEC: SUS304 NO. 1
SIZE/Q'TY:
2.8MM X 1,219MM X C 8.193MT
3.0MM X 1,219MM X C 7.736MT
3.0MM X 1,219MM X C 7.885MT
3.0MM X 1,219MM X C 8.629MT
4.0MM X 1,219MM X C 7.307MT
177

4.0MM X 1,219MM X C
4.5MM X 1,219MM X C
4.5MM X 1,219MM X C
5.0MM X 1,219MM X C
6.0MM X 1,219MM X C
6.0MM X 1,219MM X C
7.247MT As to the award of attorney's fees, it is well settled that no premium should be
8.450MT placed on the right to litigate and not every winning party is entitled to an
automatic grant of attorney's fees. The party must show that he falls under one
8.870MT
of the instances enumerated in Article 2208 of the Civil Code.118 In the instant
8.391MT case, however, the Court finds the award of attorney's fees proper, considering
6.589MT that petitioner MCC's unjustified refusal to pay has compelled respondent
7.878MT Ssangyong to litigate and to incur expenses to protect its rights.

6.0MM X 1,219MM X C 8.397MT

WHEREFORE, PREMISES CONSIDERED, the appeal is PARTIALLY GRANTED.
TOTAL: 95.562MT115 The Decision of the Court of Appeals in CA-G.R. CV No. 82983 is MODIFIED in
that the award of actual damages is DELETED. However, petitioner
List of commodities as stated in Exhibit "X" (the invoice that was not is ORDERED to pay respondent NOMINAL DAMAGES in the amount
paid): of P200,000.00, and the ATTORNEY'S FEES as awarded by the trial court.

DESCRIPTION: Hot Rolled Stainless Steel Coil SUS 304 SO ORDERED.

SIZE AND QUANTITY:
EN BANC
2.6 MM X 4' X C 10.0MT
3.0 MM X 4' X C 25.0MT
4.0 MM X 4' X C 15.0MT ASSOCIATE JUSTICE DELILAH A.M. No. CA-05-20-P
4.5 MM X 4' X C 15.0MT VIDALLON-MAGTOLIS, COURT (Formerly OCA IPI No. 05-
5.0 MM X 4' X C 10.0MT OF APPEALS, 81-CA-P)
Complainant,
6.0 MM X 4' X C 25.0MT
Present:
TOTAL: 100MT116
DAVIDE, JR., C.J.,*
From the foregoing, we find merit in the contention of MCC that Ssangyong did PUNO,*
not adequately prove that the items resold at a loss were the same items PANGANIBAN,**
ordered by the petitioner. Therefore, as the claim for actual damages was not QUISUMBING,*
proven, the Court cannot sanction the award. YNARES-SANTIAGO,*
SANDOVAL-GUTIERREZ,
Nonetheless, the Court finds that petitioner knowingly breached its contractual - versus - CARPIO,
obligation and obstinately refused to pay despite repeated demands from AUSTRIA-
respondent. Petitioner even asked for several extensions of time for it to make MARTINEZ,
good its obligation. But in spite of respondent's continuous accommodation, CORONA,
petitioner completely reneged on its contractual duty. For such inattention and CARPIO MORALES,*
insensitivity, MCC must be held liable for nominal damages. "Nominal damages are CALLEJO, SR.,
'recoverable where a legal right is technically violated and must be vindicated AZCUNA,*
against an invasion that has produced no actual present loss of any kind or where TINGA,
there has been a breach of contract and no substantial injury or actual damages CHICO-NAZARIO, and
whatsoever have been or can be shown.'"117 Accordingly, the Court awards GARCIA, JJ.
nominal damages of P200,000.00 to respondent Ssangyong. CIELITO M. SALUD,
178

CLERK IV, COURT OF APPEALS, Promulgated:

Respondent. appeal, the case was assigned to the Sixth Division of the Court of Appeals,
September
9, 2005 docketed as CA-G.R. CR No. 27423. Lagua, who was then detained at the Bureau
x--------------------------------------------------x
D E C I S I O N of Prisons National Penitentiary in Muntinlupa City, filed a Very Urgent Petition

for Bail. Finding the petition well-taken, the appellate court issued a Resolution on
CALLEJO, SR., J.:
October 9, 2003, directing him to post a P200,000.00 bond.

Laguas bond was approved in a Resolution[3] dated November 6, 2003,

Cielito Salud, Clerk IV, Mailing Section of the Judicial Records Division,
where the appellate court also directed the issuance of an order of release in
Court of Appeals (CA) stands charged with the following offenses:
favor of Lagua. The resolution was then brought to the Office of the Division Clerk

1. Inefficiency and incompetence in the performance of of Court, Atty. Maria Isabel M. Pattugalan-Madarang, for promulgation.
official duties;

2. Conduct grossly prejudicial to the best interest of the

service; and Irma Del Rosario, Utility Worker, noticed the respondents unusual
3. Directly or indirectly having financial and material
interest in the Lagua case. The respondent had apparently been making inquiries
interest in an official transaction, under Section 22,
paragraphs (p), (t) and (u), Rule XIV of the Omnibus whether the appellate court had already directed the issuance of an order of
Rules Implementing the Civil Service Law.[1]
release in the said case and was initially told there was none yet. Due to his

persistence, the records of the case were eventually found.[4] Atty. Madarang

The Facts then directed the typing of the Order of Release Upon Bond,[5] and to notify the

mailing section that there were orders requiring personal service.[6] At around

4:00 p.m., the respondent then went to Atty. Madarangs office and assisted in

arranging and stapling the papers for release. He brought the said resolutions and
Melchor Lagua was found guilty of homicide in Criminal Case Nos. 118032-
other papers himself to the Mailing Section.[7]
H and 118033-H before the Regional Trial Court of Pasig City, Branch 163.[2] On
179

(who) answered my call. She added that Rhodora Valdez has

On November 7, 2003, the respondent went to the National Penitentiary
to serve the resolution and order of release in the Lagua case. The respondent
left the prison compound at around 2:30 p.m.[8]
been waiting for us (Laguas relatives) to call. Her exact
words were these: Wala si Rhodora. Meron lang siyang
nilakad. Pero kahapon pa nya hinihintay ang tawag nyo. May
kulang pa kayo eh. Kailangan kasing i-en banc sa Court of
Appeals ang kaso ni Lagua.

In the meantime, Atty. Madarang received a telephone call from a certain
Melissa Melchor, who introduced herself as Laguas relative. It was about 2:00 p.m.
The caller asked her how much more they had to give to facilitate Laguas
provisional liberty. The caller also told Atty. Madarang that they had sought the
help of a certain Rhodora Valdez of the Regional Trial Court (RTC) of Pasig, where
5. That I coordinated with Ms. Cecil Secarro, the Acting
Chief of the Mailing Section, to inquire if it was usual/normal
for her to text her process servers on the field for an
update of their deliveries, to which she answered in the
affirmative. While she was in the office, she texted Salud
for his whereabouts and he replied, that he was on his way
back to Quezon City. That was before 4 p.m., adding that his
deliveries were ok.

the criminal case originated, but were told that they still had a balance to be given
6.
to Justice Magtolis and Atty. Madarang through the respondent. Atty. Madarang
then called the said court and asked to speak to Ms. Valdez, pretending to be
Laguas relative.
What transpired thereafter is contained in Atty. Madarangs Affidavit
That I got Saluds mobile phone number from Ms. Secarro
and started texting him at about the same time Ms. Secarro
did. I represented myself as Arlyn, Laguas relative. Most of
his text messages are still stored in my mobile phone. In
fact, I received one text message from him while I was at
the office of Justice Magtolis, (the Chairman of the
6th Division and the ponente of C.R. No. 27423) in the late
afternoon of November 7, 2003 while reporting to her this
incident. Those stored in my phone are the following:

dated December 8, 2003, as follows:

1. bkit, C rhodora to. 639204439082. Nov.
2003, 15:36:15
4. That upon telephone queries made with the office of the
Clerk of Court of RTC Pasig, I learned that Rhodora Valdez
is the incumbent Process Server of RTC, [Branch] 163, Pasig
2. CNO KAMAGANAK AT ANONG PANGALAN
City, from which the original case against accused-appellant
MO 639204439082, 7 Nov 2003 16:14:47
Lagua originated. Disguising myself as accused-appellant
Laguas relative, I dialed [Branch] 163, RTC, Pasig (6314273)
but Rhodora Valdez did not report for work that day,
3. SINO K KC NAGHIWALAY N KAMI
according to Baby (also known as Ester), her officemate
639204439082, 7 Nov 2003 16:40:21
180

12. D ba pwede bukas tyo kita. May gusto lang

ako malaman 639184470111 7 Nov 2003
4. TAWAG K S AKIN 639204439082 7 Nov
21:02:41
2003 17:18:47

13. D 2ngkol kay rhodora duon sa kasama ko

5. NARELEASE N C MR. LAGUA. NAGKITA N B
kaninang lalakeng pinsan 639184470111 7 Nov
KAYO 639204439082-7 Nov 2003 19:44:52
2003, 21:04:28

6. Magkano b and binigay nyo sa middle nyo.

14. Ala po ako sa Lunes sa opis. Sa hapon po
Puede bang malaman 639184470111-7 Nov 2003
puede kyo 639184470111, 7 Nov 2003 21:07:23
20:32:05

15. Kay Melchor Lagua 639184470111 7 Nov

7. Gud evening. May gusto lng akong malaman.
2003 21:08:19
Sana alang makaalam kahit cino. Lito
6391844701117 Nov. 2003 19:54:20

16. Kasama ko cya kanina nang lumabas

639184470111 7 Nov. 2003 21:13:05
8. Cno ang kausap n Rhodora. Pwede bang
malaman 639184470111-7 Nov 2003 20:37:57

17. Ano m ba Melchor Lagua 639184470111 7

Nov 2003 21:15:52
9. May landline ka. Tawagan kta bukas nang
umaga 639184470111-7 Nov 2003 20:56:31

18. Between 5 and 5:30 ng hapon. Bkit.

639184470111 7 Nov. 2003 21:54:24
10. Wag s Court of Appeal. Txt na lang kta kung
saan. 639184470111-7 Nov 2003 20:52:58

19. 3 PM PUWEDE KB 639004039082 10 Nov

2003 12:09:32
11. Gusto mo bukas nang umaga magkita tyo.
639184470111 7 Nov 2003 20:57:10

20. Kilala mo b c rhodora. Nagkita na b kayo. Ala

naman problema sa kanya. Ok naman
639184470111 7 Nov 2003, 21:57:13
181

10. That on Tuesday, November 11, 2003, I brought Salud,

accompanied by Ms. Secarro to Justice Magtolis. Out of the
21. MAGKITA N LANG TAYO 639204439082
confrontation, we discovered that Salud did not properly
10 Nov. 2003, 12:20:16
serve the copies of the Resolution and Order of Release upon
the accused-appellant and his counsel, Atty. Salvador C.
Quimpo of the Quimpo Dingayan-Quimpo and Associates. He
22. A, OK, NAGKITA N B KAYO NG gave them to a certain Art, allegedly Laguas relative who he
KAMAGANAK MO 639204439082 10 Nov 2003 claimed approached him at the Bureau of Prisons in the
15:12:14 morning of November 7, 2003. He told Justice Magtolis that
he gave these documents to Art, who promised to take care
of them, even before he could deliver the copy addressed to
23. D TALAGA AKO DARATING DAHIL WALA the Director of Prisons. He never mentioned that this Art
AKONG KAILANGAN S IYO. 639204439082 was connected with the office of accused-appellants counsel.
10 Nov 2003 18:36:03 Because of this information from Salud himself, I did not
sign the Certificate of Service, Annex C.

7. That Salud called me up in the morning of November 8,

2003 at around 7:33 but I purposely did not answer him. Why 11. That several days later, Salud accompanied by Ms. Secarro,
did he need to call me up? came to my office to apologize. But before he could even say
a word, he broke down in [wails]. In between his loud cries,
he uttered, Boss, patawad po, alang-alang sa aking mga
8. That I personally called up the Bureau of Prisons for the anak.[9]
exact time the Order of Release was delivered and when
accused appellant Lagua was released. I learned that the
Order of Release was received at 9:15 A.M. and that Lagua
was released between 5-5:30 P.M. of November 7, 2003.

On November 11, 2003, Justice Magtolis called the respondent to her

9. That I was able to talk to Rhodora Valdez the following office. When confronted, the respondent denied extorting or receiving money for
Monday, November 10, 2003. Again, I introduced myself as
Laguas relative, Arlyn and told her I only wanted to know how Laguas release, or in any other case. He, however, admitted serving the copies of
much more we had to pay for Laguas release. She refused to
resolution and order of release intended for Lagua and his counsel to Art
entertain me because according to her, Hindi ikaw ang kausap
ko. Duda ako sa yo. Kung gusto mo, puntahan mo ako dito
Baluran.[10] Justice Magtolis then called the respondent to a meeting with Clerk of
bukas, para magkita tayo. Pero lumabas na si Lagua. Itinawag
sa akin ni Lito Salud. Then, she [hung] up. Court Atty. Tessie L. Gatmaitan, who stated that she would transfer the

respondent to another office which has nothing to do with cases.

182
Justice Magtolis lodged the complaint against the respondent in a Letter
dated November 14, 2003, containing, among others, the following allegations:
The delivery of resolutions/orders to unauthorized
persons and complete strangers who promised to take care
thereof (siya na raw ang bahala) constitutes not only neglect of
duty but also conduct prejudicial to the best interest of the
service. Staying for the whole day within the vicinity of the
National Bilibid Prisons to the point of failing to fulfill his other
duties for the day constitutes inefficiency and incompetence in
the performance of official duties. On the other hand, the use
of my name and that of our Division Clerk of Court to illegally
solicit financial or material benefit from parties with pending
cases before this Court is illegal per se.
In view of the foregoing, it is respectfully requested
that Cielito Salud be subjected to an administrative investigation
and disciplinary action.[11]
Attached to the complaint were the following documents to support the charges:
ANNEX A - Record of the cases received by Salud on November
6, 2003 for delivery/service the following day, November 7,
2003. Please note that in each of the 3 cases assigned to him,
there are several parties/counsels to be served.
ANNEX B - Certificate of Service signed by Salud, attested by
the Acting Chief of the Mailing Section and Division Clerk of
Court Ma. Ramona L. Ledesma, showing that the parties/counsel
in SP-67586 were served only on November 10, 2003 (not on
November 7, 2003).
ANNEX C - Certificate of Service for CR-27423, and
corresponding Delivery Receipts.
C-1 - Delivery Receipts for Defense Counsel Salvador Quimpo
signed by someone whose signature was identified by Salud [as]
Art a cousin of appellant Melchor Lagua.
C-2 - Delivery Receipt for the accused-appellant, received by the
same Art and not served thru the Director of Prisons.
C-3 - Delivery Receipt for the OSG, showing that it was
delivered/received by the said office on November 10, 2003, not
on November 7, 2003.
C-4 - Delivery Receipt for the Director of Prisons showing
receipt on November 7, 2003.
ANNEX D - Record of Resolutions in 3 other cases (SP-80241,
SP-65404 and SP-77957) received for service by Salud on
November 10, 2003. The resolutions/processes in these 3 cases
were delivered/served to the parties/counsel on November 10,
2003 together with undelivered resolutions left
unserved/undelivered on November 7, 2003.
ANNEX E - Certification signed by Salud showing service to
parties/counsel in SP-65404 (received by Salud on November 10,
2003) on November 10, 2003 (same date)
ANNEX F, F-1 & F-2 - Delivery Receipts for parties/counsel in
SP-65404, showing service/delivery on November 10, 2003 in
183

contrast to his minimal delivery/services on November 7, 2003

only in Muntinlupa.
4.3 That while I was at the NBI, I received a text
message from my boss, requesting me to return to the
office immediately because there is another notice of
ANNEX G - Copy of the resolution dated November 6, 2003 of
resolution coming from Atty. Ledesma which I have to
the 6th Division approving the appellants bond and directing the
serve to Quezon City and Las Pias;
issuance of an order of release.

4.4 In compliance with the request, I returned to the

ANNEX H - Copy of the Order of Release upon Bond, which Salud
Office and arrived at around 3:15 p.m.;
was supposed to deliver, among others on November 7, 2003 to
the defense counsel, the appellant and the OSG.[12]

4.5 That when I received the resolution, I read the same

and found out that the hearing is still scheduled on
December 10, 2003 at 10:30 a.m.;

In his counter-affidavit,[13] the respondent vehemently denied the

4.6
charges. He never demanded money from Laguas relative; his name had been used
by someone and was, thus, a mere victim of the circumstances. Moreover, the fact
that he immediately released the CA order in question was clear proof that he had
no financial interest in the transaction. His version of the events that occurred
That when I was about to leave to deliver the Writ
of Habeas Corpus and the Notice of Hearing to the PAO,
Quezon City, my officemate Jun Vicencio told me to wait
because Irma, the staff of Atty. Madarang requested
me to standby because I need to deliver the Order of
Release to the New Bilibid Prison, Muntinlupa;

that day is as follows:

4.7 That because of the request I waited until 4:00 p.m.;

4.1 That on November 6, 2003 at around 1:38 p.m. the

4.8 That because its already late, I decided to go to
Acting Chief of the Mailing Section gave me an
Atty. Madarangs office to inquire about the Order of
assignment to deliver the Writ of Habeas Corpus
Release which I need to deliver to the New Bilibid
(hearing on November 26, 2003 at RTC, Zamboanga) for
Prison, Muntinlupa;
CA-G.R. SP No. 80238 for delivery to NBI, PAO, Quezon
City, Muntinlupa;

4.9 That Atty. Madarang told me to wait a little while

because the order is about to be finished. So I waited.
4.2 That I delivered a copy of the Writ of Habeas
Corpus to [the National] Bureau of Investigation (NBI);
184

4.10 That Atty. Madarang gave to me the Order of Release

at 4:15 p.m.
4.16 That at around 9:30 [a.m.] I was able to enter the
administrative offices but because there was no staff
inside I went to the documentation office. The staff in
4.11 That because I am aware that I may not reach [the]
the documentation office told me to submit the Order
New Bilibid Prison on time, I told Atty. Madarang that I
of Release to the administrative office. He said that
can deliver it on November 7, 2003, early in the morning.
they will prepare the documents of MELCHOR LAGUA
She agreed and told me THANK YOU Ikaw na ang bahala;
(prisoner) but also told me that the prisoner might be
released on Monday yet because the signatories are
busy attending the ongoing 98 anniversary celebration;
4.12 That I informed my boss about the Order of Release
that was assigned to me and she had it listed in our
logbook. I asked my boss [Cecil Secarro] if I can deliver
4.17 That I returned to the administrative office and was
the Notice of Hearing for SP 67586 and the others on
able to find Mr. JUANITO TORRES, Administrative
Monday if I cannot finish delivering them on November
Officer III, who received the copy for the Director but
7, 2003. She agreed but told me to be sure that the
refused to receive the copy of Mr. LAGUA. He told me
Order of Release will be served first and the others be
to wait for his staff to receive the copy of Mr. LAGUA;
served not later than Monday, November 10, 2003.
Thereafter, I went home.

4.18 That because the staff were not around, I went to the
canteen to buy softdrinks to quench my thirst;
4.13 That on November 7, 2003, I went straight to [the]
New Bilibid Prison and arrived there before 8:00 [a.m.]
Unfortunately, all the staff wearing white uniforms and
4.19 That Mr. ART followed me in the canteen and told me
the security guards were falling in line in front of the
to assist in the release of Mr. LAGUA because there
building of the New Bilibid Prison. So I could not enter
were no personnel attending to the Order of Release;
the administration office.

4.20 That since my boss told me to insure the release of

4.14 That while I was standing in front of the building
the prisoner, I waited for my staff to arrive who will
where the administrative office is located, a certain
attend to the matter;
ART approached me and asked me if I am the personnel
of the Court of Appeals who will deliver the Order of
Release.
4.21 That I delivered the copy of Mr. LAGUA to the staff.
But ART told them he can receive the copy of Mr.
LAGUA because he is his relative so, the staff told me
4.15 That I said yes, and he told me his name and said that
to give the copy to ART.
he is a relative of MELCHOR LAGUA (prisoner) and is
connected with the office of Atty. [Quimpo].
185

4.22 That I gave the copy of the Order of Release for the
accused to ART. ART also told me that he is authorized Considering the gravity of the charges, then Acting Presiding Justice
to receive the copy for Atty. Quimpo because he is also
Cancio C. Garcia[15] referred the matter to Atty. Elisa B. Pilar-Longalong, Assistant
the representative of the law office. Hence, I also gave
the copy for Atty. Quimpo to ART;
Clerk of Court, for investigation, report, and recommendation.

4.23 That I was able to finish my duty at the New Bilibid

Prison at around 2:30 [p.m.] and I proceeded to Purok I,
6A Bayanan, Muntinlupa to serve the Writ of Habeas
Corpus in CA-G.R. SP No. 80238; The Investigation

4.24 That because of [sic] the address of the addressee

was incomplete, I found a hard time locating the address
The requisite hearings were held from December 12, 2003 to August 4,
of the addressee and when I found Purok I, 6A, the
persons thereat do not know JOEL DE LA PAZ. I asked 2004.
for their help but nobody in the place knew JOEL DE LA
PAZ;

Atty. Madarang affirmed the contents of her Affidavit[16] dated December 8,

4.25 That I left Muntinlupa late in the afternoon and due
to the lack of time I decided to deliver the other 2003. She testified that the respondent later came to her office along with Ms.
documents on the next working day which is Monday,
Secarro. Amidst his cries, he pleaded, Boss, patawad po, alang-alang sa aking mga
November 10, 2003;

anak. She replied, Wait, wala ka namang kasalanan sa akin. Ikaw ang nagpasimuno

4.26 That I delivered the other documents on Monday, ng lahat ng ito. The respondent repeated, Boss, patawad po alang alang sa aking
November 10, 2003, without any problem;
mga anak, and Atty. Madarang answered, Okey lang, pinatawad na kita. Hindi naman

ako galit sa iyo.[17]

4.27 That I was surprised when Atty. Madarang later on
accused me that I used her name and the name of
Justice Magtolis to demand money from Mr. LAGUAS
relative.[14] Justice Magtolis testified that Atty. Madarang reported having received

a telephone call from the alleged relative of Lagua. She narrated that she gave
186

the name Arlyn to the caller, and, thereafter, exchanged text messages with the her appeal bond. During the visit, the respondent took the pertinent documents

respondent. Justice Magtolis instructed Atty. Madarang to continue from her.[24] The witness also stated that she gave the respondent a partial

communicating with the respondent and, if possible, to see it through a possible payment of P7,000.00[25] on May 16, 1999 and he issued a receipt.[26] They then

pay-off where a National Bureau of Investigation (NBI) agent would be asked to proceeded to the Documents Section where they secured copies of the court

assist them. However, the entrapment did not materialize. The respondent decision, certificate of manifestation and her picture. She made the last payment

thereafter came to her office, where he was asked why he was unable to serve all of P13,000.00 in June 13, 1999, and also issued a receipt. The respondent was also

the other papers and documents that day.[18] He also admitted that he served a asking for an additional payment of P15,000.00, which she was unable to give.

copy of the resolution to the wrong person (Baluran). Justice Magtolis also stated
Flores narrated that she introduced another detainee to the respondent,
that she threatened to transfer the respondent, and that the latter vehemently
Dalawangbayan, whom the latter was also able to help. She stated that according
objected, pleaded, and cried saying, Huwag naman pong pa-transfer. When asked
to Dalawangbayan, the respondent asked for P200,000.00. She further testified
why, the respondent said that he has children in school and something like, Dyan
that she knew the respondent as Joselito M. Salud, and not Cielito Salud.[27] After
po ako kumikita.[19]
the incident, she wrote a letter to Associate Justice Conrado Vasquez, Jr. to ask

for assistance regarding her appeal bond.

Another witness was Cristy Flores, convicted of three counts of estafa

who served time at the Correctional Institute for Women in Batangas City. She
Atty. Salvador Quimpo, Laguas counsel, testified that it was Engineer Art
testified that the respondent was introduced to her in December 1998 by a
Baluran who hired him as counsel of the said accused. He stated that he gave an
[20]
certain Crisanta Gamil. Gamil was also detained at the correctional facility; the
oral authorization to Baluran to get the CA resolutions or orders; Baluran was the
respondent had worked on her appeal bond papers and asked for P20,000.00 to
one who furnished him a copy of the resolution.[28] He called Mr. Baluran to say
facilitate the issuance of the appeal bond.[21] The payment was made right in front
that an order for Laguas release had already been issued by the appellate court.
[22]
of her, and the respondent issued a receipt. The witness also testified that
The witness stated, however, that he had never seen the respondent before.[29]
Gamil told her, O, at least dyan mo ipalakad ang papel mo. Okay ′yan,

sigurado.[23] The respondent visited her in May 1999, as she had asked him to fix
187
The respondent testified that he has been a CA employee since 1991. He
admitted that he knew Flores, and met her in January 1999 when he brought
Gamils order of release in the Batangas City Jail. He claimed that he was waiting
for the relatives of Gamil as they were the ones who would pay for his fare home,
and while waiting, he talked to the jailguard/warden. Flores then approached him
and asked him if he was from the CA. When the respondent answered in the
affirmative, Flores replied that Justice Vasquez was her neighbor in Bian, Laguna.
The respondent admitted that he was in the Correctional Institute for
Women in Mandaluyong City on May 16, 1999, as he was then visiting Vilma
Dalawangbayan. He also saw Flores.[30] When asked why he visited Dalawangbayan,
the respondent replied that Flores had written a letter to him (which he dubbed
as maintrigang sulat)[31] addressed Lito Salud, Mailing Section, Court of Appeals.
In the said letter, Flores asked him to help Dalawangbayan, just like he had helped
Gamil. The respondent then showed the letter to then Chief of Office Prudencio
B. Aguilar, who told him, Puntahan mo yan, Lito at maintriga ′yang sulat na yan, baka
tayo mapahamak dyan.[32] Thus, he went to the Correctional Institute in
Mandaluyong City to sort things out with Dalawangbayan and Gamil. The
respondent, however, stated that he could not find the letter anywhere and had
already been lost.[33]
During his May 16, 1999 visit to the correctional facility, Flores
approached him in the visiting hall, and said suddenly, Sandali lang, Kuya, then left.
He then talked to Dalawangbayan about the controversial letter, explaining that
his job in the Court of Appeals was only to remand the records and deliver the
Orders for release, just like what he did in Gamils case. [34] He again visited
Dalawangbayan on June 13, 1999[35] as evidenced by the entries in the visitors
logbook. He was no longer able to speak to Flores, but made five other such visits
to Dalawangbayan in the correctional facility.
The Findings of the Investigating Officer
In her Report dated January 21, 2005, Atty. Longalong found that the
respondent was guilty as charged, and made the following recommendation:
In view of all the foregoing, there is substantial
evidence to hold respondent liable for the offenses charged. He
is liable for inefficiency and incompetence in the performance of
his official duties and for conduct prejudicial to the best
interest of the service when he admittedly served the copies of
the resolution and order of release in the Lagua case intended
for detained appellant and his counsel on Mr. Baluran whom he
admitted to have met only on that day, against the rules and
normal office procedure on personal service. His long stay in the
Bureau of Prisons also caused the delay in the service of other
court processes assigned to him for service on that day. He is
also liable for having financial or material interest in an official
188

transaction considering his undue interest in the service of the

order of release and actual release of Lagua to the point of
staying almost the whole day in the Bureau of Prisons and the
aborted deal as can be concluded from the phone call of Melissa
Melchor to Atty. Madarang and subsequent exchange of text The Ruling of the Court
messages with Atty. Madarang disguising as Laguas relative.

RECOMMENDATION: On the charge of inefficiency, the respondent is clearly administratively

liable. After serving Laguas copy of the resolution and order of release to the

1. Rule IV, Section 52 of Civil Service Commission

prison Director, he should have immediately returned to his station or served the
Memorandum Circular No. 19, S. 1999, issued pursuant to Book V
of the Administrative Code of 1987, provides that the penalty other resolutions and documents for personal service. As an officer of the court,
for the first offense of inefficiency and incompetence in the
performance of official duties, for conduct prejudicial to the the respondent plays an essential part in the administration of justice. He is
best interest of the service and for directly or indirectly having
financial and material interest in any official transaction is required to live up to the stringent standards of his office, and his conduct must,
suspension for a period of 6 months, 1 day to 1 year. Pursuant to
at all times, be above reproach and suspicion. He must steer clear of any act which
Section 55 of the same Memorandum Circular, if the respondent
is found guilty of 2 or more charges, the penalty to be imposed would tend to undermine his integrity, or erode somehow the peoples faith and
should be that corresponding to the most serious charge and the
rest shall be considered as aggravating circumstances. Section trust in the courts.[37] As the respondent himself admitted, he stayed on until 2:30
54-c of the same Memorandum Circular provides that the
maximum of the penalty shall be imposed where only aggravating p.m. without any valid reason, despite the fact that he knew he still had to serve
and no mitigating circumstances are present. Since in this case,
several orders and resolutions. As pointed out by the Investigating Officer,
the penalty is the same for all 3 offenses, the maximum of the
penalty for the first offense which is suspension for 1 year [may
inefficiency and incompetence in the performance of official duties is classified
be] imposed on the respondent.
as a grave offense, and is punishable by suspension for six months and one day to

2. Considering that the prescribed penalty for the one year.[38]

offense exceeds one month suspension, the case may now be
referred to the Supreme Court for appropriate action, pursuant
to Circular No. 30-91 of the Office of the Court Indeed, the complainant in administrative proceedings has the burden of
Administrator.[36]
proving the allegations in the complaint by substantial evidence. If a court

employee is to be disciplined for a grave offense, the evidence against him must
189

be competent and derived from direct knowledge; as such, charges based on mere to; CNO KAMAGANAK AT ANONG PANGALAN MO; and SINO K KC

suspicion and speculation cannot be given credence. Thus, if the complainant fails NAGHIWALAY N KAMI. The respondents testimony on the matter is as follows:

to substantiate a claim of corruption and bribery, relying on mere conjectures and

Q: In the hearing of December 2, 2003, in the TSN on page 32

suppositions, the administrative complaint must be dismissed for lack of
onwards
[39]
merit. However, in administrative proceedings, the quantum of proof required

to establish malfeasance is not proof beyond reasonable doubt but substantial ATTY. ROSERO:

evidence, i.e., that amount of relevant evidence that a reasonable mind might

accept as adequate to support a conclusion, is required.[40] The findings of Is that the testimony of Atty. Madarang, Justice?

investigating magistrates on the credibility of witnesses are given great weight by

JUSTICE MAGTOLIS:
reason of their unmatched opportunity to see the deportment of the witnesses as

they testified.[41]
Oo. I will just refer to your admission through your
counsel that Cellphone No. 6392044390[8]2 is yours.
You admitted that?
To determine the credibility and probative weight of the testimony of a

witness, such testimony must be considered in its entirety and not in truncated
ATTY. ROSERO:
parts. To determine which contradicting statements of a witness is to prevail as

to the truth, the other evidence received must be considered.[42] Thus, while it is
I think we made an admission as to that matter, Justice.
true that there is no direct evidence that the respondent received any money to Well just check the affidavit of Atty. Madarang.

facilitate the release of detained Lagua, the following circumstances must be

JUSTICE MAGTOLIS:
taken as contrary to the respondents plea of innocence:
Here, admitted. Basahin mo.

First. The respondent admitted that he was the sender of the first three
ATTY. ROSERO:
text messages in Atty. Madarangs cellphone: bkit, C rhodora
190

Yes, Justice, admitted but not the cellphone number A: Nauna po siyang magtext sa akin, Justice, hindi po ako nagtext
sa kanya. Nagtext po siya sa akin sumagot po ako sa
kanya.
JUSTICE MAGTOLIS:

Q: There was an exchange several times?

Sige, ulitin natin, 6392044390[9]2.
A: Nuong pong text niya sa akin hindi po several times dahil kung
makita ′nyo po dyan.

ATTY. ROSERO:

Yes, admitted. That is his cellphone.

JUSTICE MAGTOLIS:
JUSTICE MAGTOLIS:

Let me see the affidavit of Atty. Madarang. After this question,

This cellphone is yours. may I ask for a continuance?

Q: Do you also admit that you called Atty. Madarang several ATTY. ROSERO:
times on November 7, 2003?

No objection, Your Honor.

ATTY. ROSERO:

JUSTICE MAGTOLIS:
November 7 is a Friday. Tumawag ka daw several times
kay Atty. Madarang, November 7?

All these text messages were checked by us with your

counsel in the cellphone of Atty. Madarang which were
JUSTICE MAGTOLIS: preserved until we allowed her to erase these. There are
exchanges here: 6392044390[8]2, November 7. When
she texted she answered, Bkit c Rhodora 2 and then
Texted, Im sorry I will correct that, texted. second was, Cnong kamaganak anong pangalan mo? This is
addressed to you, this is your telephone?

A: Opo.
191

A: Sa text niya nakalagay dun na Si Rhodora ba kasama kaya po

ako nakipaglokohan dun.[43]
Q: But the one who answered is Rhodora?

A: Ako po ′yun.

As pointed out by the Investigating Officer, the respondents claim of

Q: Ikaw ang sumasagot. Why did you say that you are Rhodora?
joking around (nakipaglokohan) with an unknown sender of a text message by
A: Justice, nung ma-receive ko po ′yong text niya apat na beses
ko pong na-receive ang text ni Arlene.
replying thereto is contrary to a normal persons reaction. This is made even more

apparent by the fact that the respondent even admitted that he called Atty.
INVESTIGATOR:
Madarang twice, and when asked why, gave a vague answer, and, when further

questioned, even broke down in tears.[44]

Who is Arlene?

A: Atty. Madarang. Arlene, sa text po niya sa akin, Sir Lito, The respondents claim that the admission of the text messages as
kamaganak po ito ni Mr. Lagua. Magkano pa po ba ang
kakulangang pera para ibigay ko sa inyo. Si Rhodora ba evidence against him constitutes a violation of his right to privacy is unavailing.
kasama? Hindi ko po sinagot yon. Pangalawa, ′yun din po
ang message nya. Ano ito? Sa akin pong kuan, sa pag-iisip Text messages have been classified as ephemeral electronic communication under
ko lang po, bakit dahil si Mr. Art Baluran kamag-anak na,
Section 1(k), Rule 2 of the Rules on Electronic Evidence,[45] and shall be proven by
ano ito? Text pa ulit pa sya ng pangatlo. Nang-iintriga na
′to. Pang-apat, intriga ′to. Text ko nga rin ′to, lokohan lang the testimony of a person who was a party to the same or has personal knowledge
tayo. Bkit si Rhodora ′to yun po ang sagot ko sa kanya.
thereof. Any question as to the admissibility of such messages is now moot and

academic, as the respondent himself, as well as his counsel, already admitted that
Q: So at that time you already knew about Rhodora?

A: Hindi po, dun, duon po sa text niya nakalagay po dun eh, Si he was the sender of the first three messages on Atty. Madarangs cell phone.
Rhodora kasama ba? So ikinuan ko po na si Rhodora ′to,
dun po sa text nya.

This was also the ruling of the Court in the recent case of Zaldy Nuez v.

Q: Nakipaglokohan ka? Elvira Cruz-Apao.[46] In that case, the Court, in finding the respondent therein

guilty of dishonesty and grave misconduct, considered text messages addressed

192

to the complainant asking for a million pesos in exchange for a favorable decision Second. The respondents testimony during the hearings held before

in a case pending before the CA. The Court had the occasion to state: Investigating Officer Atty. Longalong is replete with inconsistencies and

loopholes. He claimed that he made inquiries from other CA staff and learned that

The text messages were properly admitted by the

there was indeed a deal between someone in the criminal section and a certain
Committee since the same are now covered by Section 1(k), Rule
2 of the Rules on Electronic Evidence, which provides: Rhodora of the RTC, Pasig. He further claimed that the said parties wanted to get

back at him for immediately serving the release order which prevented them from
Ephemeral electronic communication refers to
demanding the balance of the deal from Laguas relative. However, this bare claim
telephone conversations, text messages and other
electronic forms of communication the evidence of
was not corroborated by any witness. Moreover, the respondent alleged that two
which is not recorded or retained.
anonymous callers claimed to know something about the case against him; when

Under Section 2, Rule 11 of the [said rules], Ephemeral asked about it, he stated that he no longer exerted efforts to find out who they
electronic communications shall be proven by the testimony of a
were as they did not give out their names:
person who was a party to the same or who has personal
knowledge thereof . In this case, complainant who was the JUSTICE MAGTOLIS:
recipient of the said messages and therefore had personal
knowledge thereof testified on their contents and import.
Respondent herself admitted that the cellphone number Q: On page 5 of your affidavit, you said in paragraph 8 That I
reflected in complainants cellphone from which the messages made some inquiry and some personnel of the Court of
originated was hers. Moreover, any doubt respondent may have Appeals told me that there is indeed a deal between a
had as to the admissibility of the text messages had been laid to staff in the Criminal Section and Rhodora of RTC, Pasig.
rest when she and her counsel signed and attested to the Can you tell us who is this staff?
veracity of the text messages between her and complainant. It
is also well to remember that in administrative cases, technical A: Ah dito po Justice, hindi po siya nagpakilala, sa telephono po.
rules of procedure and evidence are not strictly applied. We have
no doubt as to the probative value of the text messages as
evidence in determining the guilt or lack thereof of respondent
in this case.

INVESTIGATOR:

Sino siya?
193

A: Hinahanap po nila ako.

A: Hindi po siya ′yong tawag po niya sa akin sa telepono nang

malaman po dito sa CA na ako ay kinasuhan ninyo tumawag
JUSTICE MAGTOLIS:
po siya sa Personnel.

Q: What did he tell you? He, lalaki, ano?

JUSTICE MAGTOLIS:
A: Sa babae muna po?

Q: Who is siya?
Q: Oo, babaet lalake ba?
A: Ay hindi po siya nagpakilala.
A: Opo.

INVESTIGATOR:
Q: Who was the first caller, the lady or the gentleman?

A: Babae po.
Lalaki o babae?

Q: Were you the one who answered the phone?

A: Una po babae tapos ′yong pangalawa po lalaki.
A: Hindi po.

INVESTIGATOR:
INVESTIGATOR:

Sinong kinakausap?
Hinahanap daw siya.

A: Ako po.
JUSTICE MAGTOLIS:

INVESTIGATOR:
Q: Hinahanap ka, okay, when you answered the phone, what did
you say?
Hinahanap ka?
194

A: Ang sabi ko po sa kanya, pupuwede mo ba akong matulungan sa You are very fond of answering calls. You dont even know the
paggawa ng affidavit dahil kinasuhan nga ako ni Justice name.
Magtolis.

Q: That anonymous caller told you that there must be some deals
between Rhodora and someone from the Criminal
Section?

Q: But you do not know who you were talking to? A: ′Yun din daw po ang naririnig niyang tsismis dyan sa labas.

A: Tinanong ko nga po kung sino siya eh tumutulong lang daw siya

sa akin dahil ang naririnig niyang tsismis din dyan eh baka
Q: Tsismis, that was that the caller told you?
po si Rhodora ang may ka-kuan sa Criminal.
A: Opo.

Q: Saan ′yong ka-kuan?

Q: And she wanted to help you?
A: Ang may kausap sa Criminal.
A: Kaya po sinabi din sa akin na tsismis eh hindi pa po pwedeng

Q: Who said na baka si Rhodora ang may kausap sa Criminal?

Q: What did you answer her?
A: ′Yon pong kausap ko sa kabilang linya.

INVESTIGATOR:
Q: The name you do not know?

A: Eh tinanong ko naman po kung sino siya ayaw naman po niyang

magpakilala. Matutulungan mo ba ako, ibinaba na po ang Anong sagot mo raw?
telepono.

JUSTICE MAGTOLIS:
INVESTIGATOR:

Q: Anong sagot niya sa tulungan kasi nakakarinig siyang tsismis?

Anonymous caller.

INVESTIGATOR:
JUSTICE MAGTOLIS:
195

Q Ano ang sagot mo? A: Same kuento rin po, sinabi niya na ganuon din po na narinig din
po niya sa labas.
A: Eh iyon nga ang gusto kong malaman, ang katotohanan. Baka
naman pupuwede mo akong matulungan. Sino ba ′to?

JUSTICE MAGTOLIS:

JUSTICE MAGTOLIS:

Q: Alright, you were not the one who answered the call?

Q: Di ba she was the one who offered to help? A: Hindi po.

A: Ay ayaw daw po naman niyang masabit po ang pangalan niya.

Q: Somebody called you that theres a phone call?

Q: But she was the one who called you? A: Opo.

A: Opo.

Q: Okay. How did your talk end with this girl or lady? Q: When you answered, what was your first word?

A: Nung pagsalita ko nga pong baka pupuwede akong tulungan, wala A: Hello!
na.

Q: What was the answer at the other end of the line?

Q: How about the man, the gentleman or the boy who called?
A: Hello rin po.
A: Same kuan din po ang kanilang kuan e.

Q: What next?
JUSTICE MAGTOLIS:
A: Alam mo, ang sabi po niya sa akin ganito po

Dont use kuan.

Q: Who was the first one who said something other than hello?

A: Siya po ang nauna.

ATTY. ROSERO:

Q: What did she say, the exact words?

Sige, Lito, ipaliwanag mo.
A: Exact words, sa naalala kong sinabi niya Alam mo, Mr. Salud,
Salud po ang kuan niya sa akin, narinig ko sa labas,
196

istoryahan dyan sa labas na baka si Rhodora ang may ka- A: Eh hindi na nga po sila nagbanggit po ng pangalan dahil po sabi
kuan dito sa Criminal. Ang sabi ko po sa kanya Iyan din ng unang babae ayaw nga rin po niyang sumabit sa kaso.[47]
ang itinawag sa akin kahapon. Eh dalawa na kayo eh baka
naman pupuwede nyo akong matulungan. Puede ko bang
malaman ang pangalan mo? Ganun din po, ayaw na pong
magsalita ibinaba na [ang] telepono.

This respondents actuation on this matter, if at all true, is again contrary

Q: Do you know Rhodora? to the normal reaction of one who has been administratively charged, and wants to

A: Hindi po.
clear his name of any wrongdoing.

Q: You never met her?

The respondent also admitted visiting an inmate (Vilma Dalawangbayan) at
A: Hindi po.

the correctional facility eight times for no apparent reason. This admission lends

Q: You never talked to her? some credence to the testimony of Flores, that she was the one who introduced

A: Nung pong ipinakiusap nyo sa akin sa telepono po nung tayo him to Dalawangbayan, the person he was visiting. When asked why he frequently
poy
visited, he stated that he found her beautiful (Maganda po siya, Justice), and was

on the verge of courting her (Para na nga po akong nanliligaw). The Court believes
Q: After the conversation with the lady and that gentleman who
called you to offer some help and afterwards did not that this allegation was concocted by the respondent as a mere afterthought, to
help at all, what happened?
cover up for his misdeeds.
A: Wala na po.

Q: Did you not check with Rhodora, What is this they are talking The Investigating Officer also found that the respondent was high-
about that it might be between you and someone in the
Criminal Section? You never asked her that? strung during his testimony, and this finding must be accorded respect. Indeed,

A: Hindi ko na rin po when the issue is the credibility of witnesses, the function of evaluating it is

primarily lodged in the investigating judge. The rule which concedes due respect,
Q: You did not. But I thought you wanted help from those people
and even finality, to the assessment of the credibility of witnesses by trial judges
who can help you?
197

whatsoever to testify falsely against him. Respondents defense

in civil and criminal cases where preponderance of evidence and proof beyond
reasonable doubt, respectively, are required, applies a fortiori in administrative
cases where the quantum of proof required is only substantial evidence. The
investigating judge is in a better position to pass judgment on the credibility of
witnesses, having personally heard them when they testified, and observed their
of denial is inherently a weak defense. It is well settled that
denial, to be believed, must be buttressed by strong evidence of
non-culpability, otherwise the denial is purely self-serving and
with nil evidentiary value (People of the Philippines v. Arlee, 323
SCRA 201). Like the defense of alibi, denial crumbles in the light
of positive declarations (People of the Philippines vs. Ricafranca,
323 SCRA 652).

deportment and manner of testifying.[48] Thus, the following findings of Atty. Indeed, the Court is looked upon by people with high respect, a sacred place where

Longalong are well taken: litigants are heard, rights and conflicts settled and justice solemnly dispensed

However, respondent denied receiving P20,000 from with. Misbehavior within or around the vicinity diminishes its sanctity and dignity.
Gamil and P15,000 from Flores and signing LM Salud on Flores
notebooks (Exhibits E-1 and F-1) but admitted visiting Vilma at The conduct and behavior required of every court personnel, from the presiding
the Correctional Institute for Women 8 times from May to
judge to the lowliest clerk, must always be beyond reproach and circumscribed
August 1999. Respondents denial here appears self-serving and
incredible considering his admission of going to the Correctional with the heavy burden of responsibility. Their conduct must, at all times, be
Institute for Women several times for no valid official reason.
Moreover, although Flores is a convict for estafa, her characterized by, among other things, propriety and decorum so as to earn and
testimony on the matter was more consistent and credible.
Likewise, respondent admitted seeing Flores at the Correctional keep the publics respect and confidence in the judicial service.[49] Public service
Institute for Women and that Flores mailed her letter to him on
requires the utmost integrity and strictest discipline. Thus, a public servant must
May 16, 1999 which he called maintriga. He also admitted that he
told Flores to seek the help of Justice Vasquez on her case. The
exhibit at all times the highest sense of honesty and integrity not only in the
foregoing, plus the fact that Flores eventually wrote Justice
Vasquez, confirms the truth of Flores testimony on the matter. performance of his official duties but in his personal and private dealings with

other people.[50]
With the aforecited admissions by respondent, the
substantial evidence presented by the complainant and her While there is no direct evidence to suggest that he actually extorted
witnesses with their positive and forthright testimonies deserve
more credence than respondents self-serving denial and money to facilitate the issuance of the appeal bond and release order which he
inconsistent and vague testimony. Even the demeanor of
complainant and her witnesses give credence to their testimonies himself served, the surrounding circumstances, as well as the inconsistencies in
than the nervous and [high-strung] demeanor of respondent
his testimony, point towards administrative culpability. The respondents
during his testimony. Moreover, complainant and her witnesses,
including the superiors of respondent, have no reason or motive actuations fall short of the standard required of a public servant. He is guilty of
198

gross or grave misconduct. Misconduct is a transgression of some established and further DIRECTED to inform the Court as to the date of his receipt of this

definite rule of action, a forbidden act, a dereliction from duty, unlawful behavior, Decision to determine when his suspension shall have taken effect.

willful in character, improper or wrong behavior,[51] while gross, has been defined
The Office of the Court Administrator is also DIRECTED to conduct a
as out of all measure; beyond allowance; flagrant; shameful; such conduct as is not
discreet investigation on the possible involvement of Rhodora Valdez (Utility
to be excused.[52] Under the Omnibus Civil Service Rules and Regulations, grave
Worker), and other personnel of the Regional Trial Court of Pasig City, Branch 163.
misconduct is punishable by dismissal from the service even for the first offense,

as it is classified as a grave offense. However, considering that the respondent SO ORDERED.

FIRST DIVISION
has not been previously charged nor administratively sanctioned, the Court finds

that a penalty of suspension for one year and six months will serve the purpose of
[G.R. No. 148220. June 15, 2005]
disciplining the respondent.

Court personnel, from the lowliest employee to the clerk of court or any ROSENDO HERRERA, petitioner, vs. ROSENDO ALBA, minor, represented by
his mother ARMI A. ALBA, and HON. NIMFA CUESTA-VILCHES,
position lower than that of a judge or justice, are involved in the dispensation of
Presiding Judge, Branch 48, Regional Trial Court,
Manila, respondents.
justice, and parties seeking redress from the courts for grievances look upon them

as part of the Judiciary. They serve as sentinels of justice, and any act of D E C I S I O N

CARPIO, J.:
impropriety on their part immeasurably affect the honor and dignity of the

Judiciary and the peoples confidence in it.[53] Thus, any conduct which tends to
The Case
diminish the image of the Judiciary cannot be countenanced.

IN LIGHT OF ALL THE FOREGOING, respondent Cielito M. Salud is
found GUILTY of inefficiency and gross misconduct. He is SUSPENDED for a
period of One (1) Year and Six (6) Months, effective immediately. He is
This is a petition for review[1] to set aside the Decision[2] dated 29 November
2000 of the Court of Appeals (appellate court) in CA-G.R. SP No. 59766. The
appellate court affirmed two Orders[3] issued by Branch 48 of the Regional Trial
Court of Manila (trial court) in SP No. 98-88759. The Order dated 3 February
2000 directed Rosendo Herrera (petitioner) to submit to deoxyribonucleic acid
(DNA) paternity testing, while the Order dated 8 June 2000 denied petitioners
motion for reconsideration.
199
The Facts
On 14 May 1998, then thirteen-year-old Rosendo Alba (respondent),
represented by his mother Armi Alba, filed before the trial court a petition for
compulsory recognition, support and damages against petitioner. On 7 August 1998,
petitioner filed his answer with counterclaim where he denied that he is the
biological father of respondent. Petitioner also denied physical contact with
respondents mother.
Respondent filed a motion to direct the taking of DNA paternity testing to
abbreviate the proceedings. To support the motion, respondent presented the
testimony of Saturnina C. Halos, Ph.D. When she testified, Dr. Halos was an
Associate Professor at De La Salle University where she taught Cell Biology. She
was also head of the University of the Philippines Natural Sciences Research
Institute (UP-NSRI), a DNA analysis laboratory. She was a former professor at
the University of the Philippines in Diliman, Quezon City, where she developed the
Molecular Biology Program and taught Molecular Biology. In her testimony, Dr.
Halos described the process for DNA paternity testing and asserted that the test
had an accuracy rate of 99.9999% in establishing paternity.[4]
Petitioner opposed DNA paternity testing and contended that it has not
gained acceptability. Petitioner further argued that DNA paternity testing
violates his right against self-incrimination.
The Ruling of the Trial Court
In an Order dated 3 February 2000, the trial court granted respondents
motion to conduct DNA paternity testing on petitioner, respondent and Armi Alba.
Thus:
In view of the foregoing, the motion of the petitioner is GRANTED and the
relevant individuals, namely: the petitioner, the minor child, and respondent
are directed to undergo DNA paternity testing in a laboratory of their
common choice within a period of thirty (30) days from receipt of the
Order, and to submit the results thereof within a period of ninety (90) days
from completion. The parties are further reminded of the hearing set on 24
February 2000 for the reception of other evidence in support of the
petition.
IT IS SO ORDERED.[5] (Emphasis in the original)
Petitioner filed a motion for reconsideration of the 3 February 2000 Order.
He asserted that under the present circumstances, the DNA test [he] is compelled
to take would be inconclusive, irrelevant and the coercive process to obtain the
requisite specimen, unconstitutional.
In an Order dated 8 June 2000, the trial court denied petitioners motion for
reconsideration.[6]
On 18 July 2000, petitioner filed before the appellate court a petition
for certiorari under Rule 65 of the 1997 Rules of Civil Procedure. He asserted
that the trial court rendered the Orders dated 3 February 2000 and 8 June 2000
in excess of, or without jurisdiction and/or with grave abuse of discretion
amounting to lack or excess of jurisdiction. Petitioner further contended that
there is no appeal nor any [other] plain, adequate and speedy remedy in the
ordinary course of law. Petitioner maintained his previous objections to the taking
of DNA paternity testing. He submitted the following grounds to support his
objection:
1. Public respondent misread and misapplied the ruling in Lim vs. Court
of Appeals (270 SCRA 2).
2. Public respondent ruled to accept DNA test without considering the
limitations on, and conditions precedent for the admissibility of
DNA testing and ignoring the serious constraints affecting the
reliability of the test as admitted by private respondents expert
witness.
3. Subject Orders lack legal and factual support, with public
respondent relying on scientific findings and conclusions unfit for
judicial notice and unsupported by experts in the field and
scientific treatises.
4. Under the present circumstances the DNA testing petitioner [is]
compelled to take will be inconclusive, irrelevant and the coercive
process to obtain the requisite specimen from the petitioner,
unconstitutional.[7]
The Ruling of the Court of Appeals
On 29 November 2000, the appellate court issued a decision denying the
petition and affirming the questioned Orders of the trial court. The appellate
court stated that petitioner merely desires to correct the trial courts evaluation
of evidence. Thus, appeal is an available remedy for an error of judgment that the
court may commit in the exercise of its jurisdiction. The appellate court also
200
stated that the proposed DNA paternity testing does not violate his right against
self-incrimination because the right applies only to testimonial compulsion. Finally,
the appellate court pointed out that petitioner can still refute a possible adverse
result of the DNA paternity testing. The dispositive portion of the appellate
courts decision reads:
WHEREFORE, foregoing premises considered, the Petition is
hereby DENIED DUE COURSE, and ordered dismissed, and the challenged
orders of the Trial Court AFFIRMED, with costs to Petitioner.
SO ORDERED.[8]
Petitioner moved for reconsideration, which the appellate court denied in its
Resolution dated 23 May 2001.[9]
Issues
Petitioner raises the issue of whether a DNA test is a valid probative tool in
this jurisdiction to determine filiation. Petitioner asks for the conditions under
which DNA technology may be integrated into our judicial system and the
prerequisites for the admissibility of DNA test results in a paternity suit.[10]
Petitioner further submits that the appellate court gravely abused its
discretion when it authorized the trial court to embark in [sic] a new procedure
xxx to determine filiation despite the absence of legislation to ensure its
reliability and integrity, want of official recognition as made clear in Lim vs. Court
of Appeals and the presence of technical and legal constraints in respect of [sic]
its implementation.[11] Petitioner maintains that the proposed DNA paternity
testing violates his right against self-incrimination.[12]
The Ruling of the Court
The petition has no merit.
Before discussing the issues on DNA paternity testing, we deem it
appropriate to give an overview of a paternity suit and apply it to the facts of this
case. We shall consider the requirements of the Family Code and of the Rules of
Evidence to establish paternity and filiation.
An Overview of the Paternity and Filiation Suit
Filiation proceedings are usually filed not just to adjudicate paternity but
also to secure a legal right associated with paternity, such as
citizenship,[13] support (as in the present case), or inheritance. The burden of
proving paternity is on the person who alleges that the putative father is the
biological father of the child. There are four significant procedural aspects of a
traditional paternity action which parties have to face: a prima facie case,
affirmative defenses, presumption of legitimacy, and physical resemblance
between the putative father and child.[14]
A prima facie case exists if a woman declares that she had sexual relations
with the putative father. In our jurisdiction, corroborative proof is required to
carry the burden forward and shift it to the putative father.[15]
There are two affirmative defenses available to the putative father. The
putative father may show incapability of sexual relations with the mother, because
of either physical absence or impotency.[16] The putative father may also show that
the mother had sexual relations with other men at the time of conception.
A child born to a husband and wife during a valid marriage is presumed
legitimate.[17] The childs legitimacy may be impugned only under the strict
standards provided by law.[18]
Finally, physical resemblance between the putative father and child may be
offered as part of evidence of paternity. Resemblance is a trial technique unique
to a paternity proceeding. However, although likeness is a function of heredity,
there is no mathematical formula that could quantify how much a child must or
must not look like his biological father.[19] This kind of evidence appeals to the
emotions of the trier of fact.
In the present case, the trial court encountered three of the four aspects.
Armi Alba, respondents mother, put forward a prima facie case when she asserted
that petitioner is respondents biological father. Aware that her assertion is not
enough to convince the trial court, she offered corroborative proof in the form of
letters and pictures. Petitioner, on the other hand, denied Armi Albas assertion.
He denied ever having sexual relations with Armi Alba and stated that respondent
is Armi Albas child with another man. Armi Alba countered petitioners denial by
submitting pictures of respondent and petitioner side by side, to show how much
they resemble each other.
Paternity and filiation disputes can easily become credibility contests. We
now look to the law, rules, and governing jurisprudence to help us determine what
evidence of incriminating acts on paternity and filiation are allowed in this
jurisdiction.
201
Laws, Rules, and Jurisprudence
Establishing Filiation
The relevant provisions of the Family Code provide as follows:
ART. 175. Illegitimate children may establish their illegitimate filiation in
the same way and on the same evidence as legitimate children.
xxx
ART. 172. The filiation of legitimate children is established by any of the
following:
(1) The record of birth appearing in the civil register or a final
judgment; or
(2) An admission of legitimate filiation in a public document or a
private handwritten instrument and signed by the parent
concerned.
In the absence of the foregoing evidence, the legitimate filiation shall be
proved by:
(1) The open and continuous possession of the status of a
legitimate child; or
(2) Any other means allowed by the Rules of Court and special
laws.
The Rules on Evidence include provisions on pedigree. The relevant sections
of Rule 130 provide:
SEC. 39. Act or declaration about pedigree.The act or declaration of a
person deceased, or unable to testify, in respect to the pedigree of another
person related to him by birth or marriage, may be received in evidence
where it occurred before the controversy, and the relationship between the
two persons is shown by evidence other than such act or declaration. The
word pedigree includes relationship, family genealogy, birth, marriage,
death, the dates when and the places where these facts occurred, and the
names of the relatives. It embraces also facts of family history intimately
connected with pedigree.
SEC. 40. Family reputation or tradition regarding pedigree.The reputation or
tradition existing in a family previous to the controversy, in respect to the
pedigree of any one of its members, may be received in evidence if the
witness testifying thereon be also a member of the family, either by
consanguinity or affinity. Entries in family bibles or other family books or
charts, engraving on rings, family portraits and the like, may be received as
evidence of pedigree.
This Courts rulings further specify what incriminating acts are acceptable as
evidence to establish filiation. In Pe Lim v. CA,[20] a case petitioner often cites,
we stated that the issue of paternity still has to be resolved by such conventional
evidence as the relevant incriminating verbal and written acts by the putative
father. Under Article 278 of the New Civil Code, voluntary recognition by a parent
shall be made in the record of birth, a will, a statement before a court of record,
or in any authentic writing. To be effective, the claim of filiation must be made by
the putative father himself and the writing must be the writing of the putative
father.[21] A notarial agreement to support a child whose filiation is admitted by
the putative father was considered acceptable evidence.[22] Letters to the mother
vowing to be a good father to the child and pictures of the putative father cuddling
the child on various occasions, together with the certificate of live birth, proved
filiation.[23] However, a student permanent record, a written consent to a fathers
operation, or a marriage contract where the putative father gave consent, cannot
be taken as authentic writing.[24] Standing alone, neither a certificate of
baptism[25] nor family pictures[26] are sufficient to establish filiation.
So far, the laws, rules, and jurisprudence seemingly limit evidence of
paternity and filiation to incriminating acts alone. However, advances in science
show that sources of evidence of paternity and filiation need not be limited to
incriminating acts. There is now almost universal scientific agreement that blood
grouping tests are conclusive on non-paternity, although inconclusive on
paternity.[27]
In Co Tao v. Court of Appeals,[28] the result of the blood grouping test
showed that the putative father was a possible father of the child. Paternity was
imputed to the putative father after the possibility of paternity was proven on
presentation during trial of facts and circumstances other than the results of the
blood grouping test.
In Jao v. Court of Appeals,[29] the child, the mother, and the putative
father agreed to submit themselves to a blood grouping test. The National Bureau
of Investigation (NBI) conducted the test, which indicated that the child could
not have been the possible offspring of the mother and the putative father. We
held that the result of the blood grouping test was conclusive on the non-paternity
of the putative father.
The present case asks us to go one step further. We are now asked whether
DNA analysis may be admitted as evidence to prove paternity.
202
DNA Analysis as Evidence
DNA is the fundamental building block of a persons entire genetic make-up.
DNA is found in all human cells and is the same in every cell of the same person.
Genetic identity is unique. Hence, a persons DNA profile can determine his
identity.[30]
DNA analysis is a procedure in which DNA extracted from a biological sample
obtained from an individual is examined. The DNA is processed to generate a
pattern, or a DNA profile, for the individual from whom the sample is taken. This
DNA profile is unique for each person, except for identical twins.[31] We quote
relevant portions of the trial courts 3 February 2000 Order with approval:
Everyone is born with a distinct genetic blueprint
called DNA (deoxyribonucleic acid). It is exclusive to an individual (except in
the rare occurrence of identical twins that share a single, fertilized egg),
and DNA is unchanging throughout life. Being a component of every cell in
the human body, the DNA of an individuals blood is the very DNA in his or
her skin cells, hair follicles, muscles, semen, samples from buccal swabs,
saliva, or other body parts.
The chemical structure of DNA has four bases. They are known
as A (adenine), G (guanine), C (cystosine) and T (thymine). The order in
which the four bases appear in an individuals DNA determines his or her
physical makeup. And since DNA is a double-stranded molecule, it is
composed of two specific paired bases, A-T or T-A and G-C or C-G. These
are called genes.
Every gene has a certain number of the above base pairs distributed in a
particular sequence. This gives a person his or her genetic code. Somewhere
in the DNA framework, nonetheless, are sections that differ. They are
known as polymorphic loci, which are the areas analyzed in DNA typing
(profiling, tests, fingerprinting, or analysis/DNA fingerprinting/genetic tests
or fingerprinting). In other words, DNA typing simply means determining
the polymorphic loci.
How is DNA typing performed? From a DNA sample obtained or extracted, a
molecular biologist may proceed to analyze it in several ways. There are five
(5) techniques to conduct DNA typing. They are: the RFLP (restriction
fragment length polymorphism); reverse dot blot or HLA DQ a/Pm loci which
was used in 287 cases that were admitted as evidence by 37 courts in the
U.S. as of November 1994; mtDNA process; VNTR (variable number tandem
repeats); and the most recent which is known as the PCR-([polymerase] chain
reaction) based STR (short tandem repeats) method which, as of 1996, was
availed of by most forensic laboratories in the world. PCR is the process of
replicating or copying DNA in an evidence sample a million times through
repeated cycling of a reaction involving the so-called DNA polymerize
enzyme. STR, on the other hand, takes measurements in 13 separate places
and can match two (2) samples with a reported theoretical error rate of less
than one (1) in a trillion.
Just like in fingerprint analysis, in DNA typing, matches are determined. To
illustrate, when DNA or fingerprint tests are done to identify a suspect in a
criminal case, the evidence collected from the crime scene is compared with
the known print. If a substantial amount of the identifying features are the
same, the DNA or fingerprint is deemed to be a match. But then, even if
only one feature of the DNA or fingerprint is different, it is deemed not to
have come from the suspect.
As earlier stated, certain regions of human DNA show variations between
people. In each of these regions, a person possesses two genetic types
called allele, one inherited from each parent. In [a] paternity test, the
forensic scientist looks at a number of these variable regions in an individual
to produce a DNA profile. Comparing next the DNA profiles of the mother
and child, it is possible to determine which half of the childs DNA was
inherited from the mother. The other half must have been inherited from
the biological father. The alleged fathers profile is then examined to
ascertain whether he has the DNA types in his profile, which match the
paternal types in the child. If the mans DNA types do not match that of
the child, the man is excluded as the father. If the DNA types match, then
he is not excluded as the father.[32] (Emphasis in the original)
Although the term DNA testing was mentioned in the 1995 case of People v.
Teehankee, Jr.,[33] it was only in the 2001 case of Tijing v. Court of
Appeals[34] that more than a passing mention was given to DNA analysis.
In Tijing, we issued a writ of habeas corpus against respondent who abducted
petitioners youngest son. Testimonial and documentary evidence and physical
resemblance were used to establish parentage. However, we observed that:
Parentage will still be resolved using conventional methods unless we adopt
the modern and scientific ways available. Fortunately, we have now the
facility and expertise in using DNA test for identification and parentage
testing. The University of the Philippines Natural Science Research Institute
(UP-NSRI) DNA Analysis Laboratory has now the capability to conduct DNA
typing using short tandem repeat (STR) analysis. xxx For it was said, that
courts should apply the results of science when completely obtained in aid of
situations presented, since to reject said result is to deny progress. Though
it is not necessary in this case to resort to DNA testing, in [the] future it
203
would be useful to all concerned in the prompt resolution of parentage and
identity issues.
Admissibility of
DNA Analysis as Evidence
The 2002 case of People v. Vallejo[35] discussed DNA analysis as evidence.
This may be considered a 180 degree turn from the Courts wary attitude towards
DNA testing in the 1997 Pe Lim case,[36] where we stated that DNA, being a
relatively new science, xxx has not yet been accorded official recognition by our
courts. In Vallejo, the DNA profile from the vaginal swabs taken from the rape
victim matched the accuseds DNA profile. We affirmed the accuseds conviction
of rape with homicide and sentenced him to death. We declared:
In assessing the probative value of DNA evidence, therefore, courts should
consider, among other things, the following data: how the samples were
collected, how they were handled, the possibility of contamination of the
samples, the procedure followed in analyzing the samples, whether the
proper standards and procedures were followed in conducting the tests, and
the qualification of the analyst who conducted the tests.[37]
Vallejo discussed the probative value, not admissibility, of DNA evidence. By
2002, there was no longer any question on the validity of the use of DNA analysis
as evidence. The Court moved from the issue of according official recognition to
DNA analysis as evidence to the issue of observance of procedures in conducting
DNA analysis.
In 2004, there were two other cases that had a significant impact on
jurisprudence on DNA testing: People v. Yatar[38] and In re: The Writ of Habeas
Corpus for Reynaldo de Villa.[39] In Yatar, a match existed between the DNA
profile of the semen found in the victim and the DNA profile of the blood sample
given by appellant in open court. The Court, following Vallejos footsteps, affirmed
the conviction of appellant because the physical evidence, corroborated by
circumstantial evidence, showed appellant guilty of rape with homicide. In De Villa,
the convict-petitioner presented DNA test results to prove that he is not the
father of the child conceived at the time of commission of the rape. The Court
ruled that a difference between the DNA profile of the convict-petitioner and
the DNA profile of the victims child does not preclude the convict-petitioners
commission of rape.
In the present case, the various pleadings filed by petitioner and respondent
refer to two United States cases to support their respective positions on the
admissibility of DNA analysis as evidence: Frye v. U.S.[40] and Daubert v. Merrell
Dow Pharmaceuticals.[41]In Frye v. U.S., the trial court convicted Frye of
murder. Frye appealed his conviction to the Supreme Court of the District of
Columbia. During trial, Fryes counsel offered an expert witness to testify on the
result of a systolic blood pressure deception test[42] made on defendant. The state
Supreme Court affirmed Fryes conviction and ruled that the systolic blood
pressure deception test has not yet gained such standing and scientific recognition
among physiological and psychological authorities as would justify the courts in
admitting expert testimony deduced from the discovery, development, and
experiments thus far made. The Frye standard of general acceptance states as
follows:
Just when a scientific principle or discovery crosses the line between the
experimental and demonstrable stages is difficult to define. Somewhere in
this twilight zone the evidential force of the principle must be recognized,
and while courts will go a long way in admitting expert testimony deduced
from a well recognized scientific principle or discovery, the thing from which
the deduction is made must be sufficiently established to have gained
general acceptance in the particular field in which it belongs.
In 1989, State v. Schwartz[43] modified the Frye standard. Schwartz was
charged with stabbing and murder. Bloodstained articles and blood samples of the
accused and the victim were submitted for DNA testing to a government facility
and a private facility. The prosecution introduced the private testing facilitys
results over Schwartzs objection. One of the issues brought before the state
Supreme Court included the admissibility of DNA test results in a criminal
proceeding. The state Supreme Court concluded that:
While we agree with the trial court that forensic DNA typing has gained
general acceptance in the scientific community, we hold that admissibility of
specific test results in a particular case hinges on the laboratorys
compliance with appropriate standards and controls, and the availability of
their testing data and results.[44]
In 1993, Daubert v. Merrell Dow Pharmaceuticals, Inc.[45] further modified
the Frye-Schwartz standard. Daubert was a product liability case where both the
trial and appellate courts denied the admissibility of an experts testimony because
it failed to meet the Frye standard of general acceptance. The United States
Supreme Court ruled that in federal trials, the Federal Rules of Evidence have
superseded the Frye standard. Rule 401 defines relevant evidence, while Rule 402
provides the foundation for admissibility of evidence. Thus:
Rule 401. Relevant evidence is defined as that which has any tendency to
make the existence of any fact that is of consequence to the determination
204

of the action more probable or less probable than it would be without the
evidence.
Rule 402. All relevant evidence is admissible, except as otherwise provided
by the Constitution of the United States, by Act of Congress, by these
rules, or by other rules prescribed by the Supreme Court pursuant to
statutory authority. Evidence which is not relevant is not admissible.
Rule 702 of the Federal Rules of Evidence governing expert testimony
provides:
If scientific, technical, or other specialized knowledge will assist the trier
of fact to understand the evidence or to determine a fact in issue, a
witness qualified as an expert by knowledge, skill, experience, training, or
education, may testify thereto in the form of an opinion or otherwise.
Daubert cautions that departure from the Frye standard of general
acceptance does not mean that the Federal Rules do not place limits on the
admissibility of scientific evidence. Rather, the judge must ensure that the
testimonys reasoning or method is scientifically valid and is relevant to the issue.
Admissibility would depend on factors such as (1) whether the theory or technique
can be or has been tested; (2) whether the theory or technique has been subjected
to peer review and publication; (3) the known or potential rate of error; (4) the
existence and maintenance of standards controlling the techniques operation; and
(5) whether the theory or technique is generally accepted in the scientific
community.
Another product liability case, Kumho Tires Co. v. Carmichael,[46] further
modified the Daubert standard. This led to the amendment of Rule 702 in 2000
and which now reads as follows:
If scientific, technical or other specialized knowledge will assist the trier of
fact to understand the evidence or to determine a fact in issue, a witness
qualified as an expert by knowledge, skill, experience, training, or
education, may testify thereto in the form of an opinion or otherwise, if (1)
the testimony is based upon sufficient facts or data, (2) the testimony is
the product of reliable principles and methods, and (3) the witness has
applied the principles and methods reliably to the facts of the case.
We now determine the applicability in this jurisdiction of these American
cases. Obviously, neither the Frye-Schwartz standard nor the Daubert-
Kumho standard is controlling in the Philippines.[47] At best, American
jurisprudence merely has a persuasive effect on our decisions. Here, evidence is
admissible when it is relevant to the fact in issue and is not otherwise excluded
by statute or the Rules of Court.[48] Evidence is relevant when it has such a relation
to the fact in issue as to induce belief in its existence or non-existence.[49] Section
49 of Rule 130, which governs the admissibility of expert testimony, provides as
follows:
The opinion of a witness on a matter requiring special knowledge, skill,
experience or training which he is shown to possess may be received in
evidence.
This Rule does not pose any legal obstacle to the admissibility of DNA analysis as
evidence. Indeed, even evidence on collateral matters is allowed when it tends in
any reasonable degree to establish the probability or improbability of the fact in
issue.[50]
Indeed, it would have been convenient to merely refer petitioner to our
decisions in Tijing, Vallejo and Yatar to illustrate that DNA analysis is admissible
as evidence. In our jurisdiction, the restrictive tests for admissibility established
by Frye-Schwartz and Daubert-Kumho go into the weight of the evidence.
Probative Value of
DNA Analysis as Evidence
Despite our relatively liberal rules on admissibility, trial courts should be
cautious in giving credence to DNA analysis as evidence. We reiterate our
statement in Vallejo:
In assessing the probative value of DNA evidence, therefore, courts should
consider, among other things, the following data: how the samples were
collected, how they were handled, the possibility of contamination of the
samples, the procedure followed in analyzing the samples, whether the
proper standards and procedures were followed in conducting the tests, and
the qualification of the analyst who conducted the tests.[51]
We also repeat the trial courts explanation of DNA analysis used in paternity
cases:
In [a] paternity test, the forensic scientist looks at a number of these
variable regions in an individual to produce a DNA profile. Comparing next
the DNA profiles of the mother and child, it is possible to determine which
half of the childs DNA was inherited from the mother. The other half must
have been inherited from the biological father. The alleged fathers profile
is then examined to ascertain whether he has the DNA types in his profile,
which match the paternal types in the child. If the mans DNA types do not
match that of the child, the man is excluded as the father. If the DNA
types match, then he is not excluded as the father.[52]
205

It is not enough to state that the childs DNA profile matches that of the putative
father. A complete match between the DNA profile of the child and the DNA
profile of the putative father does not necessarily establish paternity. For this
reason, following the highest standard adopted in an American jurisdiction,[53] trial
courts should require at least 99.9% as a minimum value of the Probability of
Paternity (W) prior to a paternity inclusion. W is a numerical estimate for the
likelihood of paternity of a putative father compared to the probability of a
random match of two unrelated individuals. An appropriate reference population
database, such as the Philippine population database, is required to compute for
W. Due to the probabilistic nature of paternity inclusions, W will never equal to
100%. However, the accuracy of W estimates is higher when the putative father,
mother and child are subjected to DNA analysis compared to those conducted
between the putative father and child alone.[54]
DNA analysis that excludes the putative father from paternity should be
conclusive proof of non-paternity. If the value of W is less than 99.9%, the results
of the DNA analysis should be considered as corroborative evidence. If the value
of W is 99.9% or higher, then there is refutable presumption of paternity.[55] This
refutable presumption of paternity should be subjected to the Vallejo standards.
for acts of lasciviousness (US vs. Tan Teng, 23 Phil. 145); morphine forced
out of the mouth was received as proof (US vs. Ong Siu Hong, 36 Phil.
735); an order by the judge for the witness to put on pair of pants for size
was allowed (People vs. Otadora, 86 Phil. 244); and the court can compel a
woman accused of adultery to submit for pregnancy test (Villaflor vs.
Summers, 41 Phil. 62), since the gist of the privilege is the restriction
on testimonial compulsion.[56]
The policy of the Family Code to liberalize the rule on the investigation of
the paternity and filiation of children, especially of illegitimate children, is without
prejudice to the right of the putative parent to claim his or her own
defenses.[57] Where the evidence to aid this investigation is obtainable through
the facilities of modern science and technology, such evidence should be
considered subject to the limits established by the law, rules, and jurisprudence.
WHEREFORE, we DISMISS the petition. We AFFIRM the Decision of the
Court of Appeals dated 29 November 2000 in CA-G.R. SP No. 59766. We also
AFFIRM the Orders dated 3 February 2000 and 8 June 2000 issued by Branch
48 of the Regional Trial Court of Manila in Civil Case No. SP-98-88759.
SO ORDERED.

Right Against
Self-Incrimination

Section 17, Article 3 of the 1987 Constitution provides that no person shall
be compelled to be a witness against himself. Petitioner asserts that obtaining
samples from him for DNA testing violates his right against self-incrimination.
Petitioner ignores our earlier pronouncements that the privilege is applicable only
to testimonial evidence. Again, we quote relevant portions of the trial courts 3
February 2000 Order with approval:

Obtaining DNA samples from an accused in a criminal case or from the

respondent in a paternity case, contrary to the belief of respondent in this
action, will not violate the right against self-incrimination. This privilege
applies only to evidence that is communicative in essence taken under duress
(People vs. Olvis, 154 SCRA 513, 1987). The Supreme Court has ruled that
the right against self-incrimination is just a prohibition on the use of
physical or moral compulsion to extort communication (testimonial evidence)
from a defendant, not an exclusion of evidence taken from his body when it
may be material. As such, a defendant can be required to submit to a test
to extract virus from his body (as cited in People vs. Olvis, Supra); the
substance emitting from the body of the accused was received as evidence