EN BANC

G.R. No. 221862, January 23, 2018

GEN. EMMANUEL BAUTISTA, IN HIS CAPACITY AS THE CHIEF OF STAFF OF THE

ARMED FORCES OF THE PHILIPPINES (AFP), GEN. EDUARDO AÑO, IN HIS
CAPACITY AS COMMANDING OFFICER OF THE INTELLIGENCE SERVICE OF THE
ARMED FORCES OF THE PHILIPPINES (ISAFP), GEN. HERNANDO IRIBERRI, IN
HIS CAPACITY AS COMMANDING GENERAL OF THE PHILIPPINE ARMY, GEN.
BENITO ANTONIO T. DE LEON, IN HIS CAPACITY AS COMMANDING GENERAL
OF THE 5TH INFANTRY DIVISION, AND PC/SUPT. MIGUEL DE MAYO LAUREL,
IN HIS CAPACITY AS CHIEF OF THE ISABELA PROVINCIAL POLICE OFFICE,
Petitioners, v. ATTY. MARIA CATHERINE DANNUG-SALUCON, Respondent.

DECISION

BERSAMIN, J.:

The privilege of the writ of amparo may be granted on the basis of the application of
the totality of evidence standard. Such application may extend to the use of relevant
circumstantial evidence. Hearsay testimony that is consistent with the admissible
evidence adduced may also be admitted and appreciated. The flexibility in the
admission of evidence derives from the recognition of the State's often virtual,
monopoly of access to pertinent evidence, as well as from the recognition of the
deliberate use of the State's power to destroy pertinent evidence being inherent in the
practice of enforced disappearances.

The Case

By petition for review on certiorari,1 the petitioners, namely: Gen. Emmanuel Bautista,
Gen. Eduardo Año, Gen. Hernando Iriberri, Gen. Benito Antonio T. De Leon, and Chief
Supt. Miguel De Mayo Laurel, hereby assail the decision promulgated on March 12,
2015 in CA-G.R. SP No. 00053-W/A,2 whereby the Court of Appeals (CA) granted the
privilege of the writs of amparo and habeas data in favor of respondent Atty. Maria
Catherine Dannug-Salucon (Atty. Salucon), the petitioner thereat, as well as the
resolution promulgated on December 2, 2015, 3 whereby the CA denied their motion for
reconsideration.

Antecedents

After her admission to the Philippine Bar, Atty. Salucon initially worked for the Public
Attorney's Office (PAO) before resigning to be become a human rights advocate. She
co-founded the National Union of People's Lawyers (NUPL), a national association of
human rights advocates, law students and paralegals principally engaged in public
interest cases and human rights advocacy. She also established her own law firm, and
undertook the defense of several political detainees, most of whom were leaders or
members of peasant and other sectoral organizations and people's organizations,
including human rights defenders labeled or suspected to be members of the
Communist Party of the Philippines (CPP) or the New People's Army (NPA) who had
been harassed with allegedly trumped-up charges by the agents of the Government.

For purposes of this adjudication, we adopt the CA's summary of the factual
antecedents derived from Atty. Salucon's petition for the issuance of the writs of
amparo and habeas data, to wit:

On March 24, 2014, [respondent] was at a lunch meeting with the relatives of a
detained political prisoner client who was allegedly among several leaders of people's
organizations/sectoral organizations who were falsely charged in a murder and
frustrated murder case pending before the Regional Trial Court (RTC) of Lagawe,
Ifugao. As they were discussing the security risks involved in the handling of the case,
William Bugatti, her paralegal who was working with her on said case and who was also
an activist and human rights defender, informed her that he had personally observed
that surveillance was being conducted on them, including the respondent, especially
during hearings for the above case. Thus, he suggested certain security measures for
her own protection. [Respondent] realized the significance of Bugatti's advice when he
was fatally gunned down later that evening. Parenthetically, [respondent] had asked
him (sic) early that very day to identify the names, ranks and addresses of the
handler/s of the prosecution witness in the Lagawe case, whom [respondent] suspected
of lying on the witness stand.

That same evening, [respondent] was informed by a client x x x working as a civilian

asset for the PNP Intelligence Section that the Regional Intelligence of the PNP, through
the PNP Isabela Provincial Police Office, had issued a directive to PNP Burgos, Isabela,
[respondent's] hometown, to conduct a background investigation on her and to confirm
whether she was a "Red Lawyer". She also learned that she was being secretly followed
by agents of the Intelligence Service of the Armed Forces of the Philippines (ISAFP) and
that person looking like military/policemen had been asking people around her office
about her whereabouts and routine. Further, respondent's name was reportedly
included in the military's Watch List of so-called communist terrorist supporters
rendering legal services.

On March 31, 2014, [respondent] again received a call from her confidential informant,
confirming that she was indeed the subject of surveillance and that, in fact, he was
tailed by ISAFP operatives when he came to [respondent's] office a few nights earlier.
The day before, the confidential informant was allegedly cornered by three ISAFP
operatives who interrogated him on the purpose of his visit to respondent's office. They
also asked him why respondent was acquainted with known NPA members such as
Randy Malayao and Grace Bautista, and why she was always the lawyer of several
suspected communist terrorists.

Upon further investigation, respondent discovered the following things:

1) On or about March 12, 19 and 21, 2014, when

[respondent] had out-of-town hearings, different
individuals riding on motorcycles and appearing
to be soldiers approached one of the buko and
tupig vendors in front of [respondent's] office.
 Each of them similarly questioned the vendors as
to where [respondent] went, with whom, what
time she usually returned to the office and who
stayed behind in the office whenever she left. The
vendor was surprised because the questions of
the individuals were uniform on all occasions and
they did not go into [respondent's] office despite
the vendor's advice for them to talk to
[respondent's] secretary. The above incidents
were narrated to [respondent] by her driver,
Regie Lutao Gamongan, who had gotten the
information from the vendor.

2) On March 31, 2014, a member of the Criminal

Investigation Service (CIS) of the Criminal
Investigation Detection Group (CIDG) came to the
law office, asking for the [respondent], but
without telling her secretary why he was looking
for her. Upon learning that she was not there, he
left, then returned again in the afternoon.
However, he left again upon finding out that
[respondent] had decided to stay at the Hall of
Justice longer than expected.

3) On the same day, [respondent] received a text

message from the Chief Investigator of the CIDG,
asking for a copy of the records of a human rights
case involving three Bayan Muna members who
were allegedly arbitrarily arrested on the basis of
trumped up charges for two counts of frustrated
murder and tortured in the hands of the 86th
Infantry Battalion intelligence operatives. Said
case was dismissed by the Office of the Provincial
Prosecutor during preliminary investigation.
[Respondent] was surprised at the request
because it was the third time that the
investigator was requesting for a copy of the
records and he could have easily secured the
same from the Provincial Prosecutor's Office.
Thus, [respondent] ignored the text message.

4) On or about 7:30 AM on April 3, 2014, while

[respondent's] driver, Gamongan, was waiting for
her in front of her residence at Poblacion, Burgos,
Isabela, a red "Wave" motorcycle with its plate
number cased inside a tinted plastic cover,
making it impossible to read the same, passed by
 their house. The motorcycle driver, who was of
medium height, with dark complexion, a haircut
and demeanor of a military/policeman, with a
tattoo on his left, wearing a white sando shirt and
with a pistol bag slung around his shoulder,
looked intently at Gamongan as he passed by, "as
if he wanted to do something wrong". After
passing by the [respondent's] compound, the
motorcycle rider suddenly made a u-turn and
stared intently at Gamongan as he passed by. As
he headed towards the highway, Gamongan
noticed that the man was continually observing
him through the side mirror. In relation to this
incident, witness Gamongan executed a Judicial
Affidavit and testified during the trial
proceedings.

5) On or about April 7 and 10, 2013, soldiers came

to [respondent's] office in the guise of asking her
to notarize documents. Since [respondent] was
on out-of-town hearings, her secretary suggested
names of other available notaries public.
However, instead of leaving right away, the
military men asked where [respondent] went and
with whom, and insisted on leaving the
document and picking it up later on when
[respondent] arrived.

6) On April 10, 2014, a known civilian asset of the

Military Intelligence Group (MIG) in Isabela, who
also happened to be the "close-in" secretary and
part-time driver of an uncle who was a municipal
circuit judge, came to [respondent's] office, trying
to convince her to meet with the head of the MIG
Isabela so that the latter could explain why
[respondent] was being watched. However,
[respondent] declined. The following day, the
civilian asset returned and told her that she was
being watched by the MIG because of a land
dispute which she was handling at a court in
Roxas, Isabela. [Respondent] did not believe him
because, just a couple of days prior to that date,
the MIG operatives had talked to the
client/confidential informant who had first
informed [respondent] of the purported
surveillance operations on her, asking for
[respondent's] phone number and inviting him to
 join them as civilian asset in their anti-insurgency
operations.4
In her petition, thus, [respondent] posited that the above-described acts, taking into
consideration previous incidents where human rights lawyers, human rights defenders,
political activists and defenders, were killed or abducted after being labeled as
"communists" and being subjected to military surveillance, may be interpreted as
preliminary acts leading to the abduction and/or killing of [respondent]. Moreover,
while [respondent] admitted that the purported military and police operatives who
conducted, and were still conducting, surveillance and harassments on [respondent]
were still unidentified, she maintained that the same were identified as members of the
ISAFP, the Philippine Army and the police, and that there was no doubt that they all
acted upon orders of their superiors within the chain of command. [Respondent]
reported the incidents to the NUPL and the human rights group KARAPATAN (Alliance
for the Advancement of People's Rights), who agreed to help her in filing the instant
petition. She also tried reporting the incidents to the National Bureau of Investigation
(NBI) in Isabela, but, as of present, no positive report had been made identifying the
individuals who conducted the alleged surveillance, although available information
specifically pointed to the military and police units as the ones doing the surveillance. 5

We also adopt the CA's summary of the petitioners' averments, as follows:

[Petitioners] categorically denied [respondent's] allegations that she was ever under
surveillance by the military and/or police under the command of [petitioners'] officials.
xxx

xxx [Petitioners] also objected to the impleading of other [petitioners] in their official
capacities, allegedly under the doctrine of command responsibility. [Petitioners]
maintained that the doctrine of command responsibility is a substantive rule that
establishes criminal or administrative liability that is different from the purpose and
approach under the Rule on the Writ of Amparo. Thus, it can only be invoked in a full-
blown criminal or administrative case and not in a summary amparo proceeding.

xxxx

[Petitioners] [also] alleged that upon receipt of the CA Resolution promulgated on April
22, 2014 x x x, they immediately exerted efforts to conduct an inquiry and to gather
information about the purported threats on the life, liberty and security of the
[respondent], to wit:

1. [Respondent] Secretary Gazmin maintained that, aside from sweeping

allegations of surveillance and gathering of information made by alleged
unidentified operatives from the military and the police on [respondent], the
latter failed to particularize the instances of [petitioner] Sec. Gazmin's
involvement in said surveillance and information gathering that would warrant
his inclusion as party [respondent] in the case;

2. Upon receipt of the CA's April 22, 2014 Resolution, [petitioner] Gen. Emmanuel
T. Bautista issued a directive to the ISAFP Chief and Commander of the 5 th
 Infantry Division to verify the alleged surveillance operations conducted on
[respondent]. In addition, he enjoined the concerned unit/s to immediately
investigate and/or submit to the Higher Headquarters pertinent investigation
results already conducted, if any, relative to the complained acts. Finally,
[petitioner] Gen. Bautista affirmed the continuation of efforts to establish the
surrounding circumstances of [respondent's] allegations and to bring those
responsible, including any military personnel, if shown to have participated or to
have had complicity in the commission of the alleged acts, to the court of justice.

3. [Petitioner] Major Gen. Eduardo M. Año denied the ISAFP's involvement in the
alleged surveillance operations on and harassment of [respondent], and the
inclusion of [petitioner's] name in an alleged watchlist. In fact, petitioner Major
Gen. Ano claimed that he only came to know of [respondent's] name upon
receipt of the Petition, which he described as a mere product of a fabricated
story intended to discredit him, in particular, and the ISAFP as a whole.
Nonetheless, upon obtaining a copy of the Petition from the Judge Advocate
General and the AFP Radio Message directing his unit to submit results of the
verification and inquiry on the Petition, [petitioner] Major Gen. Ano immediately
instructed the Group Commanders of the MIG 1 and 2 to coordinate closely with
the military and the PNP in the area to ensure that no harassment or surveillance
will be conducted on [respondent].

4. Upon receipt of [the CA Resolution], [petitioner] Lt. Gen. Hernando DCA Iriberri
immediately informed the Army Judge Advocate, the legal arm of the Philippine
Army, of the same. Having no information on the nature and circumstances
surrounding the case, he coordinated with his staff to look into the matter. Even
prior to the radio message from the Chief of Staff dated April 25, 2014, directing
him to conduct verification on the alleged surveillance on [respondent],
[petitioner] Lt. Gen. Iriberri had already taken the initiative to issue a directive
to the Commanding General of the 5 th Infantry Division in Gamu, lsabela, to
verify and inquire into the allegations in the Petitioner pertaining to any
operation which may have been conducted or which was in anyway (sic) related
to the transgression of human rights of [respondent]. Finally, he undertook that,
should there be any finding that any army personnel was involved or had
committed any of the allegations in the Petition, such personnel shall be dealt
with accordingly pursuant to existing laws and AFP regulations.

5. [Petitioner] Major Gen. Benito Antonio T. De Leon pointed out that he assumed
command of the 5th Infantry (STAR) Division only on April 4, 2014, thus, the
alleged surveillance operations would have been conducted prior to his
assumption of said office. Since he assumed command of said unit, he had not
given any orders to his men to conduct surveillance or "casing" operations
against any persons within the unit's area of operation, nor did he receive any
 similar orders from his superiors. Nonetheless, even prior to the receipt of the
directive from the higher headquarters and a copy of the Petition, [petitioner]
Major Gen. De Leon, on his own volition and upon gaining information through
print media of the filing of the petition, exerted efforts to verify with the
intelligence unit commanders under his command whether there was any
standing instruction or order for them to conduct "casing" or surveillance
operations against [respondent], to which the commanders responded in the
negative. In addition, he averred that he immediately sent out radio messages to
his subordinates to be law-abiding and that human rights violations have no
place in the military.

6. [Petitioner] PCSupt. Miguel de Mayo Laurel clarified that he was currently the
Acting Regional Director of the Police Regional Office 2, and not the Chief of the
Isabela Provincial Police Office, as indicated in the Petition. Said Petition was only
emailed by the Legal Service of Camp Crame to the Office of the Regional Legal
Service, which provided [petitioner] PCSupt. Laurel a copy of the same.
[Petitioner] PCSupt. Laurel maintained that their Office had no memorandum
order relating to [respondent's] allegations, nor are there any documents in their
possession concerning [respondent]. Thus, PCSupt. Laurel immediately sent a
Memorandum directing the Provincial Director of the Isabela Police Provincial
Office and the Chief of the Regional Intelligence Division of Police Regional Office
2, two of the units mentioned in the Petition which were under his operational
control, to submit their comments and all relevant information and pertinent
documents relative to the allegations made by [respondent] and to identify the
persons who are responsible for the alleged harassment and threats on
[respondent's] life, liberty and security. In response thereto, PSSupt. Ramos, Jr.,
the Provincial Director of the Isabela Provincial Police Office, reported that no
directive was ever issued to PNP Burgos, Isabela, to conduct a background
investigation and to confirm [respondent's] alleged status as a "Red Lawyer", or
to threaten, intimidate or harass, and conduct continuous surveillance on her. He
likewise denied that his office was in possession of any data or information which
may or would likely violate [respondent's] right to privacy or be used as a
justification to harass or intimidate her. Meanwhile, the Chief of the Regional
Intelligence Division likewise denied the existence of any order or directive to
conduct a background investigation and to confirm [respondent] as a "Red
Lawyer", or that their office was in possession of any data or information on
[respondent]. Finally, [petitioner] PCSupt. Laurel ordered the Isabela Provincial
Police Office and the PSSupt. Ramos, Jr. to investigate the alleged threats on the
life, liberty and security of [respondent], and to identify the persons, if any, who
are responsible for the same.

[Petitioners] also noted that [respondent's] testimony consisted of mere unverified

accounts from an unknown person whose identity [respondent] did not want to reveal.
Moreover, [respondent's] allegations against [petitioners] and their respective offices
were, at best, mere conclusions on her part, a mere impression that [respondent] had
based on the physical appearance of the men looking for her, as described by her staff
and according to her own personal assessment of the circumstances. However,
[respondent] could not categorically identify and link any of the said individuals to
[petitioners], claiming only that they were military-looking men. 6

In substantiation of her petition, Atty. Salucon and her driver, Reggie Lutao Gamongan,
testified. She also submitted documentary evidence consisting of the several criminal
informations filed in various courts against her clients who were either political
detainees, leaders or members of peasant and other sectoral and people's
organizations, human rights defenders or suspected NPA members, and the
complainants were either military or police officers and personnel.

On the part of the petitioners, Maj. Gen. De Leon and Sr. Supt. Ramos, Jr. testified.
Submitted as additional evidence by the petitioners were relevant memoranda, letters,
and radio messages.

On March 12, 2015, the CA rendered the assailed decision granting the privilege of the
writs of amparo and habeas data,7 disposing thusly:

Considering the foregoing, we find that petitioner has substantially proven by

substantial evidence her entitlement to the writs of amparo and habeas data. Moreover,
she was able to substantially establish that respondents PCSupt. Laurel, Lt. Gen.
Irriberi, Major Gen. Ano and Gen. Bautista are responsible and accountable for the
violation of respondent's rights to life, liberty and security on the basis of the unjustified
surveillance operations and acts of harassment and intimidation committed against
petitioner and/or lack of any fair and effective official investigation as to her allegations.
On the other hand, while it is true that respondent Major Gen. De Leon assumed his
office only after the occurrence of the subject incidents, he is still currently in the best
position to conduct the necessary investigation and perform all other responsibilities or
obligations required, if any, by the writ of amparo and habeas data. However, the
instant petition should be dismissed as against respondent President Aquino on the
ground of immunity from suit, against respondent Secretary Gazmin for lack of merit
and against former PNP Dir. Gen. Purisima for being moot and academic.

WHEREFORE, the instant Petition for the Issuance of the Writs of Amparo and Habeas
Data is GRANTED.

Accordingly, respondents PCSupt. Miguel De Mayo Laurel, in his capacity as Acting

Regional Director of the Police Regional Office 2; Gen. Hernando Irriberi, in his capacity
as the Commanding General of the Philippine Army; Gen. Eduardo Año, in his capacity
as the Commanding Officer of the ISAFP; and Gen. Emmanuel Bautista, in his capacity
as the Chief of Staff of the AFP, are hereby DIRECTED to exert extraordinary diligence
and efforts, not only to protect the life, liberty and security of petitioner Atty. Maria
Catherine Dannug-Salucon and the immediate members of her family, but also to
conduct further investigation to determine the veracity of the alleged surveillance
operation and acts of harassment and intimidation committed against petitioner, as well
as to identify and find the person/s responsible for said violations and bring them to
competent court. The foregoing respondents are likewise DIRECTED to SUBMIT a
quarterly report of their actions to this Court, as a way of PERIODIC REVIEW to enable
this Court to monitor the action of respondents.
The above-named respondents are likewise DIRECTED to produce and disclose to this
Court any and all facts, information, statements, records, photographs, dossiers, and all
other evidence, documentary or otherwise, pertaining to petitioner Atty. Maria
Catherine Dannug-Salucon, for possible destruction upon order of this Court.

In the event that herein respondents no longer occupy their respective posts, the
directives mandated in this Decision are enforceable against the incumbent officials
holding the relevant positions. Failure to comply with the foregoing shall constitute
contempt of court.

Finally, the instant petition is hereby DISMISSED with respect to the following
respondents: President Benigno Simeon C. Aquino III, on the ground of immunity from
suits; Secretary of National Defense Voltaire Gazmin, for lack of merit; and PNP Gen.
Alan Purisima, for being moot and academic.

SO ORDERED.8

On December 2, 2015, the CA denied the petitioners' motion for reconsideration filed by
the Office of the Solicitor General,9 ruling:

WHEREFORE, the instant Motion for Reconsideration is DENIED.

The undated Manifestation of the Solicitor General is NOTED. Accordingly, let the
pleadings, orders and notices be sent to the incumbent officials holding the relevant
positions in this case.

SO ORDERED.10

Hence, this appeal.

Issues

The petitioners submit in support of their appeal that the issues to be considered and
resolved by the Court are the following:

a. Whether or not the CA erred in admitting and considering Atty. Salucon's

evidence despite being largely based on hearsay information;

b. Whether or not the CA erred in finding Atty. Salucon's evidence sufficient to

justify the granting of the privilege of the writs of amparo and habeas data;

c. Whether or not the CA erred in ruling that the hearsay evidence of Atty. Salucon,
assuming its admissibility for the sake of argument, satisfied the requirement of
substantial evidence;

d. Whether or not the CA erred in granting the privilege of the writ of habeas data
despite the failure of Atty. Salucon to produce evidence showing that the
petitioners were in possession of facts, information, statements, photographs or
 documents pertaining to her; and

e. Whether or not the CA erred in directing the petitioners to exert extraordinary

diligence and efforts to conduct further investigation in order to determine the
veracity of Atty. Salucon's alleged harassment and surveillance. 11

Ruling of the Court

The appeal lacks merit.

I.
The CA properly admitted Atty. Salucon's
proof even if it supposedly consisted
of circumstantial evidence and hearsay testimonies

In Razon, Jr. v. Tagitis,12 the Court adopted the standard of totality of evidence for
granting the privilege of the writ of amparo, explaining:

Not to be forgotten in considering the evidentiary aspects of Amparo petitions are the
unique difficulties presented by the nature of enforced disappearances, heretofore
discussed, which difficulties this Court must frontally meet if the Amparo Rule is to be
given a chance to achieve its objectives. These evidentiary difficulties compel the Court
to adopt standards appropriate and responsive to the circumstances, without
transgressing the due process requirements that underlie every proceeding.

xxxx

The fair and proper rule, to our mind, is to consider all the pieces of evidence adduced
in their totality, and to consider any evidence otherwise inadmissible under our usual
rules to be admissible if it is consistent with the admissible evidence adduced. In other
words, we reduce our rules to the most basic test of reason — i.e., to the
relevance of the evidence to the issue at hand and its consistency with all
other pieces of adduced evidence. Thus, even hearsay evidence can be
admitted if it satisfies this basic minimum test.

We note in this regard that the use of flexibility in the consideration of evidence is not
at all novel in the Philippine legal system. In child abuse cases, Section 28 of the Rule
on Examination of a Child Witness is expressly recognized as an exception to the
hearsay rule. This Rule allows the admission of the hearsay testimony of a child
describing any act or attempted act of sexual abuse in any criminal or non-criminal
proceeding, subject to certain prerequisites and the right of cross-examination by the
adverse party. The admission of the statement is determined by the court in light of
specified subjective and objective considerations that provide sufficient indicia of
reliability of the child witness. These requisites for admission find their counterpart in
the present case under the above-described conditions for the exercise of flexibility in
the consideration of evidence, including hearsay evidence, in extrajudicial killings and
enforced disappearance cases.13
Razon, Jr. v. Tagitis cited the ruling in Velasquez Rodriguez,14 wherein the Inter-
American Court of Human Rights (IACHR) took note that enforced disappearances could
generally be proved only through circumstantial or indirect evidence or by logical
inference; and that it would be impossible otherwise to prove that an individual had
been made to disappear because of the State's virtual monopoly of access to pertinent
evidence, or because the deliberate use of the State's power to destroy pertinent
evidence was inherent in the practice of enforced disappearances. Hence, the reliance
on circumstantial evidence and hearsay testimony of witnesses is permissible. In this
respect, Razon, Jr. v. Tagitis observed that Velasquez Rodriguez rendered an
informative discussion on the appreciation of evidence to establish enforced
disappearances, to wit:

Velasquez stresses the lesson that flexibility is necessary under the unique
circumstances that enforced disappearance cases pose to the courts; to have an
effective remedy, the standard of evidence must be responsive to the evidentiary
difficulties faced. On the one hand, we cannot be arbitrary in the admission and
appreciation of evidence, as arbitrariness entails violation of rights and cannot be used
as an effective counter-measure; we only compound the problem if a wrong is
addressed by the commission of another wrong. On the other hand, we cannot be very
strict in our evidentiary rules and cannot consider evidence the way we do in the usual
criminal and civil cases; precisely, the proceedings before us are administrative in
nature where, as a rule, technical rules of evidence are not strictly observed. Thus,
while we must follow the substantial evidence rule, we must observe flexibility in
considering the evidence we shall take into account. 15

Under the totality of evidence standard, hearsay testimony may be admitted and
appreciated depending on the facts and circumstances unique to each petition for the
issuance of the writ of amparo provided such hearsay testimony is consistent with the
admissible evidence adduced. Yet, such use of the standard does not unquestioningly
authorize the automatic admissibility of hearsay evidence in all amparo proceedings.
The matter of the admissibility of evidence should still depend on the facts and
circumstances peculiar to each case. Clearly, the flexibility in the admissibility of
evidence adopted and advocated in Razon, Jr. v. Tagitis is determined on a case-to-
case basis.

II.
The respondent presented substantial
evidence sufficient to justify
the issuance of the writ of amparo

The petition for the writ of amparo partakes of a summary proceeding that requires
only substantial evidence to make the appropriate interim and permanent reliefs
available to the petitioner. The Rules of Court and jurisprudence have long defined
substantial evidence as such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.16 It is to be always borne in mind that such
proceeding is not an action to determine criminal guilt requiring proof beyond
reasonable doubt, or to allocate liability for damages based on preponderance of
evidence, or to adjudge administrative responsibility requiring substantial evidence. 17
The facts and circumstances enumerated by the respondent's petition consisted of the
following:

a) She was a human rights lawyer who had taken

criminal cases in which the accused were political
detainees, including human rights defenders or
suspected members of the CPP-NPA, and the
complainants were military or police officials or
personnel;

b) Her paralegal William Bugatti informed her that

he had personally observed various individuals
conducting surveillance operations of their
movements (i.e., the respondent and Bugatti)
specially during the trial of a case in Ifugao
involving a political detainee who was a leader of
a people's or sectoral organization;

c) On the day Bugatti informed her about his

observation, and she instructed him to discover
the names, ranks, and addresses of the handlers
of the Prosecution witness in the Ifugao case, he
was fatally gunned down;

d) On the same day Bugatti was gunned down, a

client of hers who was working as a civilian asset
for the PNP Intelligence Section reported to her
that the Regional Intelligence Unit of the PNP,
through the PNP Isabela Provincial Office, issued
a directive to conduct a background investigation
to confirm if she was a "Red Lawyer;"

e) Said civilian asset also informed her that she was

being secretly followed by ISAFP agents, and that
individuals who appeared to be military or police
personnel had been asking people around her
office regarding her routine and whereabouts;

f) Her secretary informed her that a member of the

CIS-CIDG and some purported military personnel
had gone to her law office on several occasions
inquiring on her whereabouts;

g) On the same day said CIS-CIDG member went to

her law office, she received a text message from
the Chief Investigator of the CIDG requesting, for
the third time, a copy of the records of a case she
was handling;
 h) Gamongan, her driver who testified in support of
the petition, notified her that a vendor outside
her law office had told him that several
motorcycle-riding personnel of the military had
approached said vendor on separate instances
asking about her whereabouts and the persons
she was with, her routine and schedule, as well as
the persons who were left at the law office
whenever she went out;

i) Gamongan also testified about an incident that

occurred while he was waiting outside her house
in which a motorcycle-riding man, who looked
like he was military or police based on his haircut
and demeanor, had driven by her house twice
intently observing him and the house "as if he
wanted to do something bad;"

j) A known civilian asset of the Military Intelligence

Group (MIG) tried to convince her to have a
meeting with MIG Isabela so that he could
explain why she was being watched; and

k) Upon her refusal of the invitation to meet, the

civilian asset returned the next day telling her
that she was being watched by the MIG because
of a land dispute case she was then handling for a
client.18
Upon due consideration of the foregoing, the CA opined that it would be all the more
difficult to obtain direct evidence to prove the respondent's entitlement to the privilege
of the writ of amparo because no extrajudicial killing or enforced disappearance had yet
occurred. Indeed, her petition referred to acts that merely threatened to violate her
rights to life, liberty and security, or that could be appreciated only as preliminary steps
to her probable extrajudicial killing or enforced disappearance. Even so, it would be
uncharacteristic for the courts, especially this Court, to simply fold their arms and
ignore the palpable threats to her life, liberty and security and just wait for the
irreversible to happen to her. The direct evidence might not come at all, given the
abuse of the State's power to destroy evidence being inherent in enforced
disappearances or extrajudicial killings.

There was no question about the relevance of the hearsay testimony with which the
respondent sought to establish some of the facts and circumstances she alleged.
Flexibility needed to be adopted in the appreciation and consideration of such facts and
circumstances despite hearsay being inadmissible under other judicial situations. Such
flexibility accorded with the following instruction in Razon, Jr. v. Tagitis,19 to wit:
x x x In an Amparo petition, however, this requirement must be read in light of the
nature and purpose of the proceeding, which addresses a situation of uncertainty; the
petitioner may not be able to describe with certainty how the victim exactly
disappeared, or who actually acted to kidnap, abduct or arrest him or her, or where the
victim is detained, because these information may purposely be hidden or covered up
by those who caused the disappearance. In this type of situation, to require the level of
specificity, detail and precision that the petitioners apparently want to read into the
Amparo Rule is to make this Rule a token gesture of judicial concern for violations of
the constitutional rights to life, liberty and security.

To read the Rules of Court requirement on pleadings while addressing the unique
Amparo situation, the test in reading the petition should be to determine whether it
contains the details available to the petitioner under the circumstances, while
presenting a cause of action showing a violation of the victim's rights to life, liberty and
security through State or private party action. The petition should likewise be read in its
totality, rather than in terms of its isolated component parts, to determine if the
required elements — namely, of the disappearance, the State or private action, and the
actual or threatened violations of the rights to life, liberty or security — are present. 20

Verily, proceedings related to the petition for the issuance of the writ of amparo should
allow not only direct evidence, but also circumstantial evidence. The Rules of Court has
made no distinction between direct evidence of a fact and evidence of circumstances
from which the existence of a fact may be inferred. 21 One kind of evidence is not
superior to the other, for the trier of facts must weigh the evidence upon admission.
Only in the event of a conviction in a criminal case does the Rules of Court require that
the circumstantial evidence should consist of a combination of several circumstances
that "produce a conviction beyond reasonable doubt." 22 Yet, under Razon, Jr. v. Tagitis,
even hearsay testimony may be considered by the amparo court provided such
testimony can lead to conclusions consistent with the admissible evidence adduced.23
What the respondent obviously established is that the threats to her right to life, liberty
and security were neither imaginary nor contrived, but real and probable. The gunning
down of her paralegal Bugatti after he had relayed to her his observation that they had
been under surveillance was the immediate proof of the threat. The purpose and noble
objectives of the special rules on the writ of amparo may be rendered inutile if the rigid
standards of evidence applicable in ordinary judicial proceedings were not tempered
with such flexibility.

III.
The CA had sufficient basis to issue the writ
of habeas data at the respondent's behest

The writ of habeas data is a remedy available to any person whose right to privacy in
life, liberty or security is violated or threatened by an unlawful act or omission of a
public official or employee, or of a private individual or entity engaged in the gathering,
collecting or storing of data or information regarding the person, family, home and
correspondence of the aggrieved party.24 It is an independent and summary remedy
designed to protect the image, privacy, honor, information, and freedom of information
of an individual, and to provide a forum to enforce one's right to the truth and to
informational privacy.25 It seeks to protect a person's right to control information
regarding oneself, particularly in instances in which such information is being collected
through unlawful means in order to achieve unlawful ends.26

In its decision, the CA, issuing the privilege of the writ of habeas data, directed the
petitioners "to produce and disclose to this Court any and all facts, information,
statements, records, photographs, dossiers, and all other evidence, documentary or
otherwise, pertaining to petitioner Atty. Maria Catherine Dannug-Salucon, for possible
destruction upon order of this Court.''

The directive was factually and procedurally warranted. There was no question that the
civilian asset of the PNP Intelligence Section relayed to the respondent that there was a
standing order issued by the PNP Isabela Provincial Police Office to the PNP office in
Burgos, Isabela to conduct a background investigation in order to confirm if she was a
"Red Lawyer." She was also under actual surveillance by different individuals who
looked like they were members of the military or police establishments. The objective of
these moves taken against her was unquestionably to establish a pattern of her
movements and activities, as well as to obtain the records of the cases she was
handling for her various clients. These and other established circumstances fully
warranted within the context of the Rule on the Writ of Habeas Data the directive of the
CA for the handing over and destruction of all information and data on her in order to
protect her privacy and security.

IV.
The directive of the CA for the petitioners
to exert extraordinary diligence in conducting
further investigations was valid and proper

Section 9 of the Rule on the Writ of Amparo requires the amparo respondent to state in
the return the actions that have been or will still be taken: (a) to verify the identity of
the aggrieved party; (b) to recover and preserve evidence related to the death or
disappearance of the person identified in the petition which may aid in the prosecution
of the person or persons responsible; (c) to identify witnesses and obtain statements
from them concerning the death or disappearance; (d) to determine the cause, manner,
location and time of death or disappearance as well as any pattern or practice that may
have brought about the death or disappearance; (e) to identify and apprehend the
person or persons involved in the death or disappearance; and (f) to bring the
suspected offenders before a competent court.

Section 17 of the Rule on the Writ of Amparo ordains the diligence required of a public
official or employee who is named as a respondent in the petition for the writ of
amparo, to wit:

Section 17. Burden of Proof and Standard of Diligence Required. -The parties shall
establish their claims by substantial evidence.

The respondent who is a private individual or entity must prove that ordinary diligence
as required by applicable laws, rules and regulations was observed in the performance
of duty.
The respondent who is a public official or employee must prove that
extraordinary diligence as required by applicable laws, rules and regulations
was observed in the performance of duty.

The respondent public official or employee cannot invoke the presumption that
official duty has been regularly performed to evade the responsibility or
liability.

In Razon, Jr. v. Tagitis,27 the Court spelled out the two-fold burden that the public
authorities had to discharge in situations of extrajudicial killings and enforced
disappearances, viz.:

Our intervention is in determining whether an enforced disappearance has taken place

and who is responsible or accountable for this disappearance, and to define and impose
the appropriate remedies to address it. The burden for the public authorities to
discharge in these situations, under the Rule on the Writ of Amparo, is twofold. The
first is to ensure that all efforts at disclosure and investigation are undertaken under
pain of indirect contempt from this Court when governmental efforts are less than what
the individual situations require. The second is to address the disappearance, so that
the life of the victim is preserved and his or her liberty and security restored. In these
senses, our orders and directives relative to the writ are continuing efforts that are not
truly terminated until the extrajudicial killing or enforced disappearance is fully
addressed by the complete determination of the fate and the whereabouts of the victim,
by the production of the disappeared person and the restoration of his or her liberty
and security, and, in the proper case, by the commencement of criminal action against
the guilty parties.28

In Ladaga v. Mapagu,29 the Court precisely indicated that the failure of an amparo
petitioner to establish by substantial evidence the involvement of military or police
forces was not a hindrance to the Court ordering the conduct of further investigations,
to wit:

Emphasizing the extraordinary character of the amparo remedy, the Court ruled in the
cases of Roxas and Razon, Jr. that an amparo petitioner's failure to establish by
substantial evidence the involvement of government forces in the alleged violation of
rights is never a hindrance for the Court to order the conduct of further investigation
where it appears that the government did not observe extraordinary diligence in the
performance of its duty to investigate the complained abduction and torture or enforced
disappearance. The Court directed further investigation in the case of Roxas because
the modest efforts of police investigators were effectively putting petitioner's right to
security in danger with the delay in identifying and apprehending her abductors. In
Razon, Jr., the Court found it necessary to explicitly order the military and police
officials to pursue with extraordinary diligence the investigation into the abduction and
disappearance of a known activist because not only did the police investigators conduct
an incomplete and one-sided investigation but they blamed their ineffectiveness to the
reluctance and unwillingness of the relatives to cooperate with the authorities. 30

It should not be a surprise at all, therefore, that the CA commanded the petitioners as
the amparo respondents “to exert extraordinary diligence and efforts, not only to
protect the life, liberty and security of petitioner Atty. Maria Catherine Dannug-Salucon
and the immediate members of her family, but also to conduct further investigation to
determine the veracity of the alleged surveillance operation and acts of harassment and
intimidation committed against petitioner, as well as to identify and find the person/s
responsible for said violations and bring them to competent court." Needless to stress,
the directive was unassailable.

The petitioners (and their successors in office), by merely issuing orders to their
subordinates under their respective commands and relying on the latter's reports
without conducting independent investigations on their own to determine the veracity of
the respondent's allegations, did not discharge the two-fold burden. Thereby, they did
not exercise extraordinary diligence. They are reminded of the following dictum
regarding the conduct of investigations that the Court pronounced in In the Matter of
the Petition for the Writ of Amparo and Habeas Data in favor of Noriel Rodriguez: 31

More importantly, respondents also neglect to address our ruling that the failure to
conduct a fair and effective investigation similarly amounted to a violation of or threat
to Rodriguez's rights to life, liberty, and security. The writ's curative role is an
acknowledgment that the violation of the right to life, liberty, and security may be
caused not only by a public official's act, but also by his omission. Accountability may
attach to respondents who are imputed with knowledge relating to the enforced
disappearance and who carry the burden of disclosure; or those who carry, but have
failed to discharge, the burden of extraordinary diligence in the investigation of the
enforced disappearance. The duty to investigate must be undertaken in a serious
manner and not as a mere formality preordained to be ineffective. 32

The petitioners' recommendation for the creation of an independent body to investigate

both the harassments suffered by the respondent and the surveillance conducted
against her is rejected as an act of evasion. The military and police establishments
certainly had the competence and resources to conduct such investigation. Although
they have predicated the recommendation on what transpired in Roxas v. Arroyo,33 the
awkward situation sought to be avoided under Roxas v. Arroyo -"wherein the very
persons alleged to be involved in an enforced disappearance or extrajudicial killing are,
at the same time, the very ones tasked by law to investigate the matter" 34 - did not
obtain herein. For one, there was no conclusive proof of the actual authorship of the
unauthorized surveillance conducted against the respondent. Thus, it was speculative
on the part of the petitioners and their successors in office to simply say that the
investigation, if conducted by them, would be biased or one-sided. They could not
escape the responsibility of conducting the investigation with extraordinary diligence by
deflecting the responsibility to other investigatory agencies of the Government. The
duty of extraordinary diligence pertains to them, and to no other. Moreover, their
higher ranks or positions in the AFP and PNP hierarchies put them in the best position
to obtain or acquire information and to ensure that the investigation to be conducted
would quickly yield results in view of the investigation going to focus on their
subordinate personnel.

It would be within the context of Section 9 of the Rule on the Writ of Amparo if the
petitioners and their successors in office should instead exhibit a readiness and
willingness to undertake the investigations if only to shed light soon enough on whether
or not their subordinates and personnel over whom they exercised authority and control
had been involved at all in the surveillance of the respondent and the making of threats
against her personal security.

WHEREFORE, the Court DENIES the petition for review on certiorari for its lack of
merit; AFFIRMS the decision and resolution promulgated by the Court of Appeals on
March 12, 2015 and December 2, 2015, respectively, in CA-G.R. SP No. 00053-W/A;
and REMANDS this case to the Court of Appeals for the monitoring of the investigation
to be hereafter undertaken in accordance with the decision promulgated by the Court of
Appeals on March 12, 2015, and for the validation of the results of the investigation.

SO ORDERED.

Sereno, C.J., Carpio, Velasco, Jr., Leonardo-De Castro, Peralta, Del Castillo, Perlas-
Bernabe, Leonen, Tijam, Reyes, Jr., and Gesmundo, JJ., concur.
Jardeleza, J., no part.
Caguioa and Martires, JJ., on leave.

G.R. No. 182230 September 19, 2012

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

vs.
EDGARDO LUPAC y FLORES, Accused-Appellant.

DECISION

BERSAMIN, J.:

Under appeal is the decision promulgated on November 23, 2007, whereby the Court of Appeals
1

(CA) affirmed the rape conviction of Edgardo Lupac y Flores but modified the trial court's
characterization of the offense as statutory rape because of the failure of the People to properly
establish the victim's minority under 12 years at the time of the commission of the rape.

The information filed on August 16, 1999 under which Lupac was arraigned and tried for statutory
rape alleged as follows:

That on or about the 21st day of May, 1999 in the Municipality of Taytay, Province of Rizal,
Philippines and within the jurisdiction of this

Honorable Court, the above-named accused with lewd designs and by means of force and
intimidation, did then and there willfully, unlawfully and feloniously have sexual intercourse with one,
AAA, his niece, 10 years old against her will and consent.
2

CONTRARY TO LAW. 3

The version of the Prosecution follows.

AAA, her mother (BBB), and Lupac (allegedly BBB’s brother) had originally been living together in
the same house, but he eventually transferred to another place in the neighborhood. His transfer
notwithstanding, he continued going to BBB’s house, where he occasionally took afternoon naps in
the bedroom of the house. On May 21, 1999, BBB left AAA in the house alone with Lupac to sell
peanuts in Mandaluyong City. At around 1:30 p.m., AAA told him that she was going to take a nap in
the bedroom. She did not lock the bedroom door as was her usual practice.

Waking up around 2:30 p.m., AAA was aghast to find herself naked from the waist down. She felt
soreness in her body and pain in her genitalia. Momentarily, she noticed Lupac standing inside the
bedroom near her, clad only in his underwear. He was apologetic towards her, saying that "he really
did not intend to do ‘that’ to her." He quietly handed her a towel. As soon as she absorbed what had
4

happened, she started to cry. He opened the windows and unlocked the door of the house. Seeing 5

the chance, she rushed out of the house, and ran to the place of Tita Terry, a neighbor, who was a
friend of her mother’s. AAA revealed to Tita Terry what he had done to her, saying: Inano ako ni
Kuya Ega. She uttered the word hindot – vernacular for sexual intercourse. She and Tita Terry left
6 7

together to find BBB and inform her about what had happened to AAA. 8

The three of them reported the rape to the barangay. A barangay kagawad accompanied them to the
Taytay Police Station to lodge a complaint for rape against Lupac. AAA submitted to a medico-legal
examination, which found her to have suffered injuries inflicted deep inside her genitalia (described
as congested vestibule within the labia minora, deep fresh bleeding laceration at 9 o’clock position of
the hymen, and abraded and u-shape posterior fourchette).

During the trial, Dr. Emmanuel N. Reyes, the medico-legal officer who had examined AAA, attested
that he had found AAA at the time of the examination to have recently lost her virginity based on her
hymen revealing "a deep fresh bleeding at 9:00 o’clock position." 9

Lupac’s defense consisted of denial and alibi.

Lupac denied being related to AAA, either by consanguinity or otherwise, but admitted being her
neighbor for a long time. He also denied the accusation, insisting that he had been asleep in his own
house during the time of the rape. Nonetheless, he conceded not being aware of any motive for AAA
to falsely charge him with rape.

After trial, on August 11, 2006, the Regional Trial Court, Branch 73, in Antipolo City (RTC) convicted
Lupac of statutory rape, disposing:
10

WHEREFORE, PREMISES CONSIDERED, Edgardo Lupac is hereby found guilty of the crime of
statutory rape and is sentenced to suffer the penalty of RECLUSION PERPETUA. He is also
ordered to pay private complainant ₱ 50,000.00 as civil indemnity and ₱ 50,000.00 in moral
damages plus the cost of the suit.

SO ORDERED.

In convicting Lupac of statutory rape as defined and penalized under paragraph 1(d), Article 266-A
of the Revised Penal Code, as amended by Republic Act No. 8353, the RTC concluded that
although the qualifying circumstance of relationship had not been proven, AAA’s testimony showing
her age of only 11 years at the time of the rape, being born on December 23, 1988, sufficed to prove
her age as an essential element in statutory rape.

On intermediate appeal, Lupac assailed the credibility of AAA and argued that the RTC erred in
accepting AAA’s testimony as proof of her date of birth and her minority under 12 years.

On November 23, 2007, the CA affirmed the conviction, but modified it by holding that Lupac was
11

guilty of simple rape under Article 266-A, paragraph 1(b) of the Revised Penal Code. It noted that
the Prosecution was not able to effectively establish the victim’s minority under 12 years because of
the non-submission of AAA’s birth certificate, such fact being essential in qualifying the offense to
statutory rape. It observed, however, that the lack of consent as an element of rape was properly
alleged in the information and duly established by the evidence showing that AAA had been asleep
and unconscious at the time of the commission of the rape. It held that the variance in the mode of
the commission of the rape was really a non-issue because he did not challenge the information at
the arraignment, during the trial and even on appeal. It disposed:

IN VIEW THEREOF, the assailed Decision convicting the accused is hereby AFFIRMED. The
penalty and the damages are likewise AFFIRMED.

SO ORDERED.

In his appeal, Lupac insists on his innocence, still impugning the credibility of AAA.

We affirm the CA.

Firstly, both the RTC and the CA considered AAA as a credible witness. We accord great weight to
their assessment of the credibility of AAA as a witness as well as of her version. Verily, the personal
observation of AAA’s conduct and demeanor enabled the trial judge to discern if she was telling the
truth or inventing it. The trial judge’s evaluation, which the CA affirmed, now binds the Court, leaving
12

to the accused the burden to bring to our attention facts or circumstances of weight that were
overlooked, misapprehended, or misinterpreted but would materially affect the disposition of the
case differently if duly considered. Alas, the accused made no showing that the RTC, in the first
13

instance, and the CA, on review, had ignored, misapprehended, or misinterpreted facts or
circumstances supportive of or crucial to his defense. 14

Secondly, the CA rectified the mistaken characterization by the RTC of the crime as statutory rape.
We concur with the CA. Although the information alleged that AAA had been only 10 years of age at
the time of the commission of the rape, the State did not reliably establish such age of the victim in
accordance with the guidelines for competently proving such age laid down by the Court in People v.
Pruna, to wit:
15

In order to remove any confusion that may be engendered by the foregoing cases, we hereby set the
following guidelines in appreciating age, either as an element of the crime or as a qualifying
circumstance.

1. The best evidence to prove the age of the offended party is an original or certified true copy of the
certificate of live birth of such party.
2. In the absence of a certificate of live birth, similar authentic documents such as baptismal
certificate and school records which show the date of birth of the victim would suffice to prove age.

3. If the certificate of live birth or authentic document is shown to have been lost or destroyed or
otherwise unavailable, the testimony, if clear and credible, of the victim’s mother or a member of the
family either by affinity or consanguinity who is qualified to testify on matters respecting pedigree
such as the exact age or date of birth of the offended party pursuant to Section 40, Rule 130 of the
Rules on Evidence shall be sufficient under the following circumstances

a. If the victim is alleged to be below 3 years of age and what is sought to be proved is that
she is less than 7 years old;

b. If the victim is alleged to be below 7 years of age and what is sought to be proved is that she is
less than 12 years old;
c. If the victim is alleged to be below 12 years of age and what is sought to be proved is that she is
less than 18 years old.

4. In the absence of a certificate of live birth, authentic document, or the testimony of the victim’s
mother or relatives concerning the victim’s age, the complainant’s testimony will suffice provided that
it is expressly and clearly admitted by the accused.

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. 16

The foregoing guidelines (Pruna guidelines, for short) apply herein despite their being promulgated
subsequent to the filing of the information, for they were only an amalgamation of the norms on
proving the age of the victim in rape variously defined in jurisprudence. With the minority under 12
years of AAA being an element in statutory rape, the proof of such minority age should conform to
the Pruna guidelines in order that such essential element would be established beyond reasonable
doubt. That was not done because the evidence adduced by the Prosecution did not satisfy Pruna
guidelines 4 and 5, supra, to wit:

4. In the absence of a certificate of live birth, authentic document, or the testimony of the victim’s
mother or relatives concerning the victim’s age, the complainant’s testimony will suffice provided that
it is expressly and clearly admitted by the accused.

5. It is the prosecution that has the burden of proving the age of the offended party. The failure of the
accused to object to the testimonial evidence regarding age shall not be taken against him.

As such, the RTC erred in giving credence to AAA’s declaration about her being under 12 years at
the time of the rape.

Thirdly, the conviction of Lupac for rape is upheld despite AAA’s minority under 12 years not being
competently proved. This is because the information also properly charged him with raping AAA by
its express averment that the carnal knowledge of her by him had been "against her will and
consent." The essence of rape is carnal knowledge of a female either against her will (through force
or intimidation) or without her consent (where the female is deprived of reason or otherwise
unconscious, or is under 12 years of age, or is demented). The Prosecution showed during the trial
17

that AAA had been asleep when he forced himself on her. Such showing competently established
the rape thus charged, as defined by paragraph 1 of Article 266-A, Revised Penal Code, for AAA, 18

being unconscious in her sleep, was incapable of consenting to his carnal knowledge of her. Indeed,
the Court has uniformly held in several rulings that carnal knowledge of a female while she was
asleep constituted rape. 19

Lastly, Lupac assails the absence of credible direct evidence about his having carnal knowledge of
AAA because she herself, being then asleep and unconscious, could not reliably attest to his
supposed deed. Consequently, he argues that the evidence against him did not amount to proof
beyond reasonable doubt.

Lupac’s argument hews closely to what the Court has stated in People v. Campuhan to the effect 20

that there must be proof beyond reasonable doubt of at least the introduction of the male organ into
the labia of the pudendum of the female genital organ, which required some degree of penetration
beyond the vulva in order to touch the labia majora or the labia minora.
The position of Lupac is bereft of merit, however, because his conviction should still stand even if
direct evidence to prove penile penetration of AAA was not adduced. Direct evidence was not the
only means of proving rape beyond reasonable doubt. Circumstantial evidence would also be the
reliable means to do so, provided that (a) there was more than one circumstance; (b) the facts from
which the inferences were derived were proved; and (c) the combination of all the circumstances
was such as to produce a conviction beyond reasonable doubt. What was essential was that the
21

unbroken chain of the established circumstances led to no other logical conclusion except the
appellant’s guilt.
22

The following circumstances combined to establish that Lupac consummated the rape of AAA,
namely: (a) when AAA went to take her afternoon nap, the only person inside the house with her
was Lupac; (b) about an hour into her sleep, she woke up to find herself already stripped naked as
to expose her private parts; (c) she immediately felt her body aching and her vaginal region hurting
upon her regaining consciousness; (d) all doors and windows were locked from within the house,
with only her and the brief-clad Lupac inside the house; (e) he exhibited a remorseful demeanor in
unilaterally seeking her forgiveness (Pasensiya ka na AAA), even spontaneously explaining that he
did not really intend to do "that" to her, showing his realization of the gravity of the crime he had just
committed against her; (f) her spontaneous, unhesitating and immediate denunciation of the rape to
Tita Terry and her mother (hindot being the term she used); and (g) the medico-legal findings about
her congested vestibule within the labia minora, deep fresh bleeding laceration at 9 o’clock position
in the hymen, and abraded and U-shaped posterior fourchette proved the recency of infliction of her
vaginal injuries.

The fact that all her injuries – congested vestibule within the labia minora, deep fresh bleeding
laceration at 9 o’clock position of the hymen and abraded and U-shaped posterior fourchette – were
confined to the posterior region area of her genitals signified the forceful penetration of her with a
blunt instrument, like an erect penis.

The Court holds that AAA’s denunciation of Lupac as her rapist to Tita Terry and her own mother
with the use of the words hindot and inano ako ni Kuya Ega without any appreciable length of time
having intervened following her discovery of the rape was part of the res gestae (that is, rape).
Section 42, Rule 130 of the Rules of Court states:

Section 42. Part of the res gestae. – Statements made by a person while a startling occurrence is
taking place or immediately prior or subsequent thereto with respect to the circumstances thereof,
may be given in evidence as part of the res gestae. So, also, statements accompanying an
equivocal act material to the issue, and giving it a legal significance, may be received as part of the
res gestae.

For the application of this rule, three requisites must be shown to concur, namely: ( a) that the
principal act, the res gestae, must be a startling occurrence; (b) the statements were made before
the declarant had the time to contrive or devise a falsehood; and (c) the statements must concern
the occurrence in question and its immediate attending circumstances. The requisites were met
herein. AAA went to Tita Terry’s house immediately after fleeing from Lupac and spontaneously,
unhesitatingly and immediately declared to Tita Terry that Lupac had sexually abused her. Such 23

manner of denunciation of him as her rapist was confirmed by Tita Terry’s testimony about AAA’s
panic-stricken demeanor that rendered it difficult to quickly comprehend what the victim was then
saying. Of course, AAA’s use of the words hindot and inano ako ni Kuya Ega said enough about her
24

being raped.

The nature of res gestae has been fittingly explained by the Court in People v. Salafranca, viz:
25
The term res gestae has been defined as "those circumstances which are the undesigned incidents
of a particular litigated act and which are admissible when illustrative of such act." In a general way,
res gestae refers to the circumstances, facts, and declarations that grow out of the main fact and
serve to illustrate its character and are so spontaneous and contemporaneous with the main fact as
to exclude the idea of deliberation and fabrication. The rule on res gestae encompasses the
exclamations and statements made by either the participants, victims, or spectators to a crime
immediately before, during, or immediately after the commission of the crime when the
circumstances are such that the statements were made as a spontaneous reaction or utterance
inspired by the excitement of the occasion and there was no opportunity for the declarant to
deliberate and to fabricate a false statement. The test of admissibility of evidence as a part of the res
gestae is, therefore, whether the act, declaration, or exclamation is so intimately interwoven or
connected with the principal fact or event that it characterizes as to be regarded as a part of the
transaction itself, and also whether it clearly negatives any premeditation or purpose to manufacture
testimony.

Lastly, the Court needs to add exemplary damages to the civil damages awarded to AAA. 1âwphi1
Under the Civil Code, exemplary damages are imposed in a criminal case as part of the civil liability
"when the crime was committed with one or more aggravating circumstances." Such damages are
26

awarded "by way of example or correction for the public good, in addition to the moral, temperate,
liquidated or compensatory damages." 27

Conformably with the Civil Code, the CA and the RTC should have recognized the entitlement of
AAA to exemplary damages on account of the attendance of the aggravating circumstance of her
minority under 12 years. It should not matter that the CA disregarded her testimony on her age due
to such testimony not measuring up to the Pruna guidelines. At least, the RTC found her testimony
on her minority under 12 years at the time of the rape credible enough to convict the accused of
statutory rape. Nor was it of any consequence that such minority would have defined the rape as
statutory had it been sufficiently established. What mattered was to consider the attendance of an
aggravating circumstance of any kind to warrant the award of exemplary damages to the victim. This
was the point stressed in People v. Catubig, to wit:
28

The term "aggravating circumstances" used by the Civil Code, the law not having specified
otherwise, is to be understood in its broad or generic sense. The commission of an offense has a
two-pronged effect, one on the public as it breaches the social order and the other upon the private
victim as it causes personal sufferings, each of which is addressed by, respectively, the prescription
of heavier punishment for the accused and by an award of additional damages to the victim. The
increase of the penalty or a shift to a graver felony underscores the exacerbation of the offense by
the attendance of aggravating circumstances, whether ordinary or qualifying, in its commission.
Unlike the criminal liability which is basically a State concern, the award of damages,
however, is likewise, if not primarily, intended for the offended party who suffers thereby. It
would make little sense for an award of exemplary damages to be due the private offended
party when the aggravating circumstance is ordinary but to be withheld when it is qualifying.
Withal, the ordinary or qualifying nature of an aggravating circumstance is a distinction that
should only be of consequence to the criminal, rather than to the civil, liability of the
offender. In fine, relative to the civil aspect of the case, an aggravating circumstance, whether
ordinary or qualifying, should entitle the offended party to an award of exemplary damages
within the unbridled meaning of Article 2230 of the Civil Code.

For exemplary damages, therefore, the Court holds that the sum of ₱ 30,000.00 is reasonable and
proper.
The Court declares Lupac to be further liable to pay interest of 6% per annum on all the items of civil
damages, to be reckoned from the finality of this decision until full payment.

WHEREFORE, we AFFIRM the decision promulgated on November 23, 2007 in all respects, subject
to the modification that EDGARDO LUPAC y FLORES shall pay the further amount of ₱ 30,000.00
as exemplary damages, plus interest of 6% per annum on the civil indemnity, moral damages, and
exemplary damages, reckoned from the finality of this decision until full payment.

Costs of suit to be paid by the accused.

SO ORDERED.

SECOND DIVISION

[G.R. NO. 155034 : May 22, 2008]

PEOPLE OF THE PHILIPPINES, Appellee, v. FRANCISCO BLANCAFLOR,

Appellant.

DECISION

TINGA, J.:

Assailed in this Petition for Review1 is the Decision2 of the Court of Appeals 3 in CA-
G.R. SP No. 66449 deleting the award of salary differential and attorney's fees to
petitioner Virgilio Sapio, as well as the Resolution 4 denying his motion for
reconsideration.

The controversy started with a complaint filed by petitioner against Undaloc

Construction and/or Engineer Cirilo Undaloc for illegal dismissal, underpayment of
wages and nonpayment of statutory benefits. Respondent Undaloc Construction, a
single proprietorship owned by Cirilo Undaloc, is engaged in road construction
business in Cebu City.

Petitioner had been employed as watchman from 1 May 1995 to 30 May 1998 when
he was terminated on the ground that the project he was assigned to was already
finished, he being allegedly a project employee. Petitioner asserted he was a
regular employee having been engaged to perform works which are "usually
necessary or desirable" in respondents' business. He claimed that from 1 May to 31
August 1995 and from 1 September to 31 December 1995, his daily wage rate was
only P80.00 and P90.00, respectively, instead of P121.87 as mandated by Wage
Order No. ROVII-03. From 1 March 1996 to 30 May 1998, his daily rate was
P105.00. He further alleged that he was made to sign two payroll sheets, the first
bearing the actual amount he received wherein his signature was affixed to the last
column opposite his name, and the second containing only his name and signature.
To buttress this allegation, petitioner presented the payroll sheet covering the
period from 4 to 10 December 1995 in which the entries were written in pencil. He
also averred that his salary from 18 to 30 May 1998 was withheld by respondents. 5

For its part, respondent Cirilo Undaloc maintained that petitioner was hired as a
project employee on 1 May 1995 and was assigned as watchman from one project
to another until the termination of the project on 30 May 1998. 6 Refuting the claim
of underpayment, respondent presented the payroll sheets from 2 September to 8
December 1996, 26 May to 15 June 1997, and 12 January to 31 May 1998. 7

On 12 July 1999, the Labor Arbiter8 rendered a decision the dispositive portion of
which reads:

WHEREFORE, in the [sic] light of the foregoing, judgment is rendered finding

complainant to be a project employee and his termination was for an authorized
cause. However, respondent is found liable to pay complainant's salary of
P2,648.45 and 13th month pay of P2,489.00. Respondent is also found liable to pay
complainant's salary differential in the amount of P24,902.88. Attorney's fee of
P3,000.00 is also awarded.

All other claims are dismissed for lack of merit. 9

Respondents appealed the award of salary differential to the National Labor

Relations Commission (NLRC). In a Decision 10 dated 28 August 2000, the NLRC
sustained the findings of the Labor Arbiter.

Respondents elevated the case to the Court of Appeals which deleted the award of
salary differential and attorney's fees.

Thus, this Petition for Review .

Petitioner raises two grounds, one procedural and the other substantive. On the
procedural aspect, petitioner contends that the appellate court erred in failing to
dismiss respondent's petition for certiorari brought before it on the ground that
respondents failed to attach certified true copies of the NLRC's decision and
resolution denying the motion for reconsideration.11

In his Comment on the Petition for Certiorari with Prayer for Temporary Restraining
and/or Preliminary Injunction 12 filed with the Court of Appeals on 22 November
2001, petitioner did not raise this procedural issue. Neither did he do so when he
moved for reconsideration of the 8 May 2002 Decision of the Court of Appeals. It is
only now before this Court that petitioner proffered the same. This belated
submission spells doom for petitioner. More fundamentally, an examination of the
Court of Appeals rollo belies petitioner as it confirms that the alleged missing
documents were in fact attached to the petition.13

That petitioner was a project employee became a non-issue beginning with the
decision of the Labor Arbiter. Contested still is his entitlement to salary differential,
apart from attorney's fees.
Petitioner avers that he was paid a daily salary way below the minimum wage
provided for by law.14 His claim of salary differential represents the difference
between the daily wage he actually received and the statutory minimum wage,
which he presented as follows:

Actual Daily Wage Minimum Daily Wage

Received (for 8 hours Provided by Law (for 8
worked) hours worked)
5-1-95 to 8-31-95 P80.00 plus 3 hrs. OT P121.87
Place of Assignment: M.J. Cuenco-Imus Road
Link
9-1-95 to 12-31-95 P90.00 plus 3 hrs. OT P121.87
Place of Assignment:
1-1-96 to 2-28-96 P90.00 plus 3 hrs. OT P131.00
Place of Assignment:
3-1-96 to 6-30-96 P105.00 plus 3 hrs. OT P131.00
Place of Assignment:
7-1-96 to 9-30-96 P105.00 plus 3 hrs. OT P136.00
Place of Assignment:
10-1-96 to 3-14-97 P105.00 plus 3 hrs. OT P141.00
Place of Assignment:
3-15-97 to 6-30-97 P105.00 plus 3 hrs. OT P141.00
Place of Assignment:
7-1-97 to 9-30-97 P105.00 plus 3 hrs. OT P150.00
Place of Assignment:
10-1-97 to 3-31-98 P105.00 plus 3 hrs. OT P150.00
Place of Assignment:
4-1-98 to 5-17-98 P105.00 plus 3 hrs. OT P155.00
Place of Assignment:
5-18-98 to 5-30-98 P105.00 plus 3 hrs. OT P160.00
Place of Assignment:
To counter petitioner's assertions, respondents submitted typewritten and signed
payroll sheets from 2 September to 8 December 1996, from 26 May to 15 June
1997, and from 12 January to 31 May 1998. 15 These payroll sheets clearly indicate
that petitioner did receive a daily salary of P141.00.

In turn, petitioner presented the December 1995 payroll sheet written in pencil 16 in
tandem with the assertion that he, together with his co-employees, was required to
sign two sets of payroll sheets in different colors: white, which bears the actual
amount he received with his signature affixed in the last column opposite his name,
and yellow, where only his name appears thereon with his signature also affixed in
the last column opposite his name.17 In the December 1995 payroll sheet, petitioner
appears to have received P90.00 only as his daily salary but he did not sign the
same.

Banking on the fact that the December 1995 payroll sheet was written in pencil, the
Labor Arbiter concluded that the entries were susceptible to change or erasure and
that that susceptibility in turn rendered the other payroll sheets though typewritten
less credible. Thus:

x x x Complainant's allegation that he was made to sign two (2) payrolls, the first
page bears the actual amount he received when he affixed his signature in the last
column and the original with entries written in pencil is admitted by the respondent
that it did so. When respondent had his payrolls prepared in pencil, the tendency is
that the entries therein will be erased and changed them so that it would appear
that the salaries of the workers are in conformity with the law.

The explanation given by the respondent through the affidavit of Jessica Labang
that the payrolls were first written in pencil because of the numerous employees to
be paid each Saturday, is not acceptable. The efforts done in preparing the payroll
in pencil is practically the same if it was done in ballpen or through typewriters.
Obviously, the purpose is to circumvent the law. When payrolls are prepared in
pencil, it is so easy for the employer to alter the amounts actually paid to the
workers and make it appear that the amounts paid to the workers are in accord
with law. The probative value of the payrolls submitted by the respondent becomes
questionable, thus, cannot be given weight. It is most likely that the entries in the
payrolls are no longer the same entries when complainant signed them.
Complainant is therefore entitled to salary differential as complainant's salary was
only P105.00. x x x18

Thereupon, the Labor Arbiter proceeded to grant petitioner's salary differential to

the tune of P24,902.88.

The Court of Appeals did not subscribe to the common findings of the Labor Arbiter
and the NLRC. The appellate court pointed out that allegations of fraud in the
preparation of payroll sheets must be substantiated by evidence and not by mere
suspicions or conjectures, viz:

As a general rule, factual findings and conclusions drawn by the National Labor
Relations Commission are accorded great weight and respect upon appeal, even
finality, as long as they are supported by substantial evidence. Substantial evidence
is more than a mere scintilla. It means such relevant evidence that a reasonable
mind would accept as sufficient to support a conclusion. A suspicion or belief no
matter how sincerely felt cannot be a substitute for factual findings carefully
established through an orderly procedure.

The Labor Arbiter merely surmised and presumed that petitioners had the tendency
to alter the entries in the payroll. Albeit the petitioner admitted that the payrolls
were initially made in pencil, the same does not, and must not be presumed as
groundwork for alteration. We find nothing in the proceedings, as well as in the
pleadings submitted, to sustain the Labor Arbiter's findings of the alleged
"tendency" to alter the entries.

It is elementary in this jurisdiction that whoever alleges fraud or mistake affecting a

transaction must substantiate his allegation, since it is presumed that a person
takes ordinary care of his concerns and private transactions have been fair and
regular. Persons are presumed to have taken care of their business.

Absent any indication sufficient enough to support a conclusion, we cannot uphold

the findings of the Labor Arbiter and the NLRC. 19

The conclusion of the Labor Arbiter that entries in the December 1995 payroll sheet
could have been altered is utterly baseless. The claim that the December 1995
payroll sheet was written in pencil and was thus rendered it prone to alterations or
erasures is clearly non sequitur. The same is true with respect to the typewritten
payroll sheets. In fact, neither the Labor Arbiter nor the NLRC found any alteration
or erasure or traces thereat, whether on the pencil-written or typewritten payroll
sheets. Indeed, the most minute examination will not reveal any tampering.
Furthermore, if there is any adverse conclusion as regards the December 1995
payroll sheet, it must be confined only to it and cannot be applied to the
typewritten payroll sheets.

Moreover, absent any evidence to the contrary, good faith must be presumed in
this case. Entries in the payroll, being entries in the course of business, enjoy the
presumption of regularity under Rule 130, Section 43 of the Rules of Court. Hence,
while as a general rule, the burden of proving payment of monetary claims rests on
the employer,20 when fraud is alleged in the preparation of the payroll, the burden
of evidence shifts to the employee and it is incumbent upon him to adduce clear
and convincing evidence in support of his claim. 21 Unfortunately, petitioner's bare
assertions of fraud do not suffice to overcome the disputable presumption of
regularity.

While we adhere to the position of the appellate court that the "tendency" to alter
the entries in the payrolls was not substantiated, we cannot however subscribe to
the total deletion of the award of salary differential and attorney's fees, as it so
ruled.

The Labor Arbiter granted a salary differential of P24,902.88.22

The Labor Arbiter erred in his computation. He fixed the daily wage rate actually
received by petitioner at P105.0023 without taking into consideration the P141.00
rate indicated in the typewritten payroll sheets submitted by respondents.
Moreover, the Labor Arbiter misapplied the wage orders 24 when he wrongly
categorized respondent as falling within the first category. Based on the stipulated
number of employees and audited financial statements, 25 respondents should have
been covered by the second category.

To avoid further delay in the disposition of this case which is not in consonance with
the objective of speedy justice, we have to adjudge the rightful computation of the
salary differential based on the applicable wage orders. After all, the supporting
records are complete.
This Court finds that from 1 January to 30 August 1996 and 1 July 1997 to 31 May
1998, petitioner had received a wage less than the minimum mandated by law.
Therefore, he is entitled to a salary differential. For the periods from 30 May to 31
December 1995 and 2 September 1996 to 30 June 1997, petitioner had received
the correct wages. To illustrate:

Wage actually Statutory Differential

received Minimum wage
30 May - 31 P105.00 P99.0026 0
December. 1995
1 January - 30 P105.00 P125.0027 P20.00/day or
June 1996 (156 P3120.00
days)
1 July - 30 August P105.00 P130.0028 P25.00/day or
1996 (52 days) P1300.00
2 - 30 September P141.0029 P130.0030 0
1996
1 October 1996 - P141.00 P135.0031 0
15 March 1997
16 March - 30 P141.00 P139.0032 0
June 1997
1 July - 30 P141.00 P144.0033 P3.00/day or
September 1997 P234.00
(78 days)
1 October 1997 - P141.00 P149.0034 P8.00/day or
31 March 1998 P1248.00
(156 days)
1 April - 31 May P141.00 P154.0035 P13.00/day or
1998 (52 days) P676.00
The total salary differential that petitioner is lawfully entitled to amounts to
P6,578.00 However, pursuant to Section 12 of Republic Act (R.A.) No. 6727, as
amended by R.A. No. 8188. Respondents are required to pay double the amount
owed to petitioner, bringing their total liability to P13,156.00.

Section 12. Any person, corporation, trust, firm, partnership, association or entity
which refuses or fails to pay any of the prescribed increases or adjustments in the
wage rates made in accordance with this Act shall be punished by a fine not less
than Twenty-five thousand pesos (P25,000.00) nor more than One hundred
thousand pesos (P100,000.00) or imprisonment of not less than two (2) years nor
more than four (4) years, or both such fine and imprisonment at the discretion of
the court: Provided, That any person convicted under this Act shall not be entitled
to the benefits provided for under the Probation Law.

The employer concerned shall be ordered to pay an amount equivalent to

double the unpaid benefits owing to the employees: Provided, That
payment of indemnity shall not absolve the employer from the criminal
liability imposable under this Act.
If the violation is committed by a corporation, trust or firm, partnership, association
or any other entity, the penalty of imprisonment shall be imposed upon the entity's
responsible officers, including, but not limited to, the president, vice president,
chief executive officer, general manager, managing director or partner. (Emphasis
supplied)cralawlibrary

The award of attorney's fees is warranted under the circumstances of this case.
Under Article 2208 of the New Civil Code, attorney's fees can be recovered in
actions for the recovery of wages of laborers and actions for indemnity under
employer's liability laws 36 but shall not exceed 10% of the amount awarded. 37 The
fees may be deducted from the total amount due the winning party.

WHEREFORE, the petition is PARTIALLY GRANTED. Petitioner is awarded the

salary differential in the reduced amount of P13,156.00 and respondents are
directed to pay the same, as well as ten percent (10%) of the award as attorney's
fees.

SO ORDERED.

Quisumbing, J., Chairperson, Velasco, Jr., Leonardo - de Casto, Brion, JJ.,

concur.

G.R. No. 214406

BP OIL AND CHEMICALS INTERNATIONAL PHILIPPINES, INC., Petitioner

vs.
TOTAL DISTRIBUTION & LOGISTIC SYSTEMS, INC., Respondents

DECISION

PERALTA, J.:

Before this Court is the Petition for Review on Certiorari under Rule 45, dated November 10, 2014 of
petitioner BP Oil and Chemicals International Philippines, Inc. (BP Oil) that seeks to reverse and set
aside the Decision dated April 30, 2014 of the Court of Appeals (CA) which, in turn, reversed and
1

set aside the Decision dated January 21, 2011 of the Regional Trial Court (RTC), Branch 148,
2

Makati City, in a case for a collection of sum of money.

The antecedent facts follow.

A Complaint for Sum of Money was filed by petitioner BP Oil against respondent Total Distribution &
Logistic Systems, Inc. (TDLSI) on April 15, 2002, seeking to recover the sum of ₱36,440,351.79
representing the total value of the moneys, stock and accounts receivables that TDLSI has allegedly
refused to return to BP Oil.

The allegations of the parties, as summarized by the RTC, are as follows:

According to the allegations in the complaint, the defendant entered into an Agency Agreement (the
Agreement) with BP Singapore on September 30, 1997, whereby it was given the right to act as the
exclusive agent of the latter for the sales and distribution of its industrial lubricants in the Philippines.
The agency was for a period of five years from 1997 to 2002. In return, the defendant was supposed
to meet the target sales volume set by BP Singapore for each year of the Agreement. As agreed in
the Supplemental Agreement they executed on January 6, 1998, the defendant was supposed to
deposit the proceeds of the sales it made to a depositary account that the defendant will open for the
purpose. On April 27, 1998, BP Singapore assigned its rights under the Agreement to the plaintiff
effective March 1, 1998.

When the defendant did not meet its target sales volume for the first year of the Agreement, the
plaintiff informed the defendant that it was going to appoint other distributors to sell the BP's
industrial lubricant products in the Philippines. The defendant did not object to the plan of the plaintiff
but asked for ₱10,000,000.00 as compensation for the expenses. The plaintiff did not agree to the
demand made by the defendant.

On August 19, 1999, the defendant through its lawyer, wrote the plaintiff a letter where it demanded
that it be paid damages in the amount of ₱40,000,000.00 and announced that it was withholding
remittance of the sales until it was paid by the plaintiff. On September 1, 1999, the plaintiff wrote the
defendant back to give notice that it was terminating the Agreement unless the defendant rectified
the breaches it committed within a period of 30 days. The plaintiff also demanded that the defendant
pay the plaintiff its outstanding obligations and return the unsold stock in its possession.

On October 11, 1999, the plaintiff gave the defendant formal notice of [sic] that it was terminating the
Agreement after it did not hear from the defendant. The plaintiff would find out that the defendant
had filed a request for arbitration with the Philippine Dispute Resolution Center, Inc. (PDRCI).

On October 9, 2000, the plaintiff, through Mr. Lau Hock Lee, sent the defendant another letter to
reiterate its demand for the defendant to return the unremitted collections and stocks in its
possession.

On April 30, 2001, the defendant, through Mr. Miguel G. de Asis, its Chief Finance Officer, wrote the
plaintiff a letter admitting that as of the said date, it had in its possession collections against sales in
the amount of ₱27,261,305.75, receivables in the amount of ₱8,767,656.26 and stocks valued at
₱1,155,000.00.

On July 9, 2001, the law firm of Siguion Reyna Montecillo & Ongsiako sent the defendant a formal
demand letter for the payment of the total amount of ₱36,440,351.79 representing the total amount
of the collections, receivables and stocks that defendant should have returned to the plaintiff as of
May 31, 2001. The amount was based on a summary of account prepared by Ms. Aurora B.
Osanna, plaintiffs Business Development Supervisor.

On April 15, 2002, the plaintiff filed the instant complaint for collection against the defendant. The
defendant initially filed a Motion to Dismiss the complaint on the ground for [sic] lack of cause of
action because of the existence of an arbitration agreement, as well as a previously filed arbitration
proceeding between the parties. This Court denied the defendant's Motion to Dismiss for lack of
merit in its Order dated February 21, 2003. The Motion for Reconsideration filed by the defendant
was likewise denied by this Court on April 30, 2003. The Defendant went up to the Court of Appeals
to question the denial of its Motion to Dismiss via a Petition for Certiorari and Prohibition.

On June 9, 2003, the Defendant filed its Answer Ad Cautelam with Compulsory Counterclaim Ad
Cautelam.

In its answer, the defendant alleged that it was appointed as the exclusive agent of the plaintiff to sell
BP brand industrial lubricants in the Philippines. The agency was to last for five years from signing of
the Agreement, or until September 29, 2001. As the exclusive agent of BP products, the defendant
was tasked to promote, market, distribute and sell the BP products supplied the plaintiff.

The defendant further alleged that it did not fail to meet the sales target for Year I. Delays on the part
of the plaintiff in shipping the products moved the commencement of the Agreement from January
1997 to August 1997, making the stipulated sales target no longer applicable.

On June 8, 1999, the plaintiff unexpectedly informed the defendant of its intention to assume more
control of Philippine operations, including the appointment of a full-time representative in the
Philippines and new distributors. No reason was given for this policy change.

Although the defendant pointed out to the plaintiff that the appointment of a new distributor would
violate the Agency Agreement, the plaintiff ignored the defendant's protests and affirmed that it
would proceed with taking over control of the distribution in the Philippines of BP products and with
appointing additional distributors.

While business proceeded, the defendant's counsel, Atty. Eugeniano E. Perez III, sent the plaintiff a
letter dated August 19, 1999 pointing out, among others, that: a) The plaintiffs plan to take over the
lubricant business and appoint other distributors was in breach of the Agency Agreement; b) the
defendant incurred losses because of the plaintiffs non-compliance with the Agreement and lack of
support; and c) the defendant would be carrying on the business would be withholding any funds to
be collected pending compliance with the demand.

Instead of heeding the consequences of its proposed illegal acts, the plaintiffs took steps to take
over the distribution of BP Products in the Philippines and to appoint new agents for this purpose.
Even before the termination of the Agreement, the plaintiff cut off the supply of BP products to the
defendant, and even tried to sell directly to the defendant's customers, without the defendant's
knowledge. To protect its rights, and pursuant to the arbitration clause under the Agreement, the
defendant filed a Request for Arbitration before the Philippine Dispute Resolution Center, Inc.
(PDRCI) on 5 October 1999.

By way of affirmative defenses, the defendant argued that: 1.) it has the right to retain in pledge
objects subject of the agency until it is indemnified by the plaintiff for the damages it suffered under
Article 1914 in relation to Articles 1912 and 1913 of the Civil Code; 2.) the complaint is dismissible
on the ground of lack of cause of action for being prematurely filed and/or litis pendencia because
the issue in the case is already a sub-issue in the arbitration proceedings; and 3.) the action should
be stayed in accordance with Republic Act No. 876.

On March 21, 2004, the Court of Appeals came out with its Decision affirming this Court's denial of
the defendant's Motion to Dismiss after the defendant filed it Answer Ad Cautelam. The Court of
Appeals also denied the defendant's Motion for Reconsideration on August 16, 2004. The Decision
of the Court of Appeals sustaining this Court attained finality with the denial by the Supreme Court
on November 10, 2004 of the Petition for Review on Certiorari filed by the defendant as well as its
Motion for Reconsideration from the said denial.

In light of the finality of the decision of the Court of Appeals, the defendant lost its right to invoke the
pendency of the arbitration proceedings as part of its affirmative defenses. The defendant is
therefore left with only one affirmative defense to the complaint of the plaintiff, and this is the right of
retention given to an agent under Article 1912, 1913 and 1914 of the Civil Code.

This makes the issue to be resolved by this Court uncomplicated: 1) whether the plaintiff has the
right to collect the amount of ₱36,440,35 l. 79 from the defendant together with legal interest
computed from September 1, 1999, attorney's fees and costs of suit; and 2) whether the defendant
is justified in retaining the amounts and stocks in its possession by virtue of the aforementioned
provisions of the Civil Code on agency.3

In its Decision dated January 21, 2011, the RTC ruled in favor of the petitioner, the dispositive
portion of which reads as follows:

WHEREFORE, premises considered, judgment is hereby rendered, granting the claim of the plaintiff
and directing the defendant to pay the plaintiff the sum of:

(1) Thirty-Six Million Nine Hundred Forty-Three Thousand Eight Hundred Twenty-Nine Pesos and
Thirteen Centavos (₱36,943,829.13) for the value of the stocks and the moneys received and
retained by the defendant in its possession pursuant to the Agreement with legal interest computed
at 6% per annum from July 19, 2001 up to the finality of this decision and at 12% per annum from
finality of this decision up to the date of payment.

(2) Attorney's fees in the amount of One Million Five Hundred Thousand Pesos (₱1,500,000.00) and
costs of suit amounting to Four Hundred Thirty-Nine Thousand Eight Hundred Forty Pesos
(₱439,840.00).

SO ORDERED. 4

After the respondent elevated the case to the CA, the latter court reversed and set aside the
decision of the RTC and found in favor of the respondent in its Decision dated April 30, 2014, thus:

WHEREFORE, the instant appeal is GRANTED. The assailed Decision dated January 21, 2011 of
the Regional Trial Court of Makati City, Branch 148 is REVERSED and SET ASIDE. The instant
complaint is DISMISSED.

SO ORDERED. 5

The CA ruled, among others, that the admission made by respondent in Exhibit "J ," that it was
withholding moneys, receivables and stocks respectively valued at ₱27,261,305.75, ₱8,767,656.26
and ₱1,155,000.00 from petitioner, has no evidentiary weight, thus, petitioner was not able to
preponderantly establish its claim.

Hence, the present petition where petitioner states the following grounds:

THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN RENDERING ITS

DECISION AS WELL AS IN DENYING BP OIL'S MOTION FOR
RECONSIDERATION.SPECIFICALLY:

THE COURT OF APPEALS ERRED IN NOT RULING THAT TDLSI HAS MADE A JUDICIAL
ADMISSION THAT IT HAS POSSESSION OF THE STOCKS, MONEYS AND RECEIVABLES THAT
BP OIL SEEKS TO RECOVER IN THE COMPLAINT BELOW, CONSIDERING THAT:

a. EXHIBIT "J' QUALIFIES AS AN ACTIONABLE DOCUMENT WHOSE AUTHENTICITY AND DUE

EXECUTION WERE DEEMED ADMITTED BY TDLSI FOLLOWING ITS FAIL URE TO
SPECIFICALLY DENY THE SAME UNDER OATH IN ITS ANSWER.

b. REGARDLESS OF WHETHER EXHIBIT "J" MAY BE CONSIDERED AS AN ACTIONABLE

DOCUMENT, THE FACT REMAINS THAT TD LSI HAD ACTUALLY ADMITTED PREPARING AND
SENDING THE SAME TO BP OIL IN ITS ANSWER.
i. NO RESERVATION WAS EVER MADE BY TD LSI REGARDING THE AUTHENTICITY OF ITS
CONTENTS AND NO WITNESS WAS EVER PRESENTED BY TDLSI TO DISOWN ITS DUE
EXECUTION.

ii. ASIDE FROM BEING SELF-SERVING, THE ANSWER TO WRITTEN INTERROGATORIES

GIVEN BY TDLSI'S MR. MIGUEL DE ASIS AND CITED IN THE DECISION AS A BASIS TO
NEGATE TDLSI'S ADMISSION OF EXHIBIT "J" WAS NEVER OFFERED IN EVIDENCE. THE
COURT OF APPEALS SHOULD NOT HAVE EVEN CONSIDERED THE SAME IN RENDERING
ITS DECISION.

c. THE RIGHT OF RETENTION INVOKED BY TDLSI IN ITS ANSWER CARRIES WITH IT THE
ADMISSION: (i) THAT BP OIL IS ENTITLED TO THE STOCKS, MONEYS AND RECEIVABLES
SUBJECT OF THE COMPLAINT BELOW, AND (ii) THAT TDLSI IS WITHHOLDING THE SAME
FROM BP OIL.

II

THE COURT OF APPEALS SERIOUSLY ERRED IN NOT RULING THAT WITH OR WITHOUT
EXHIBIT "J," BP OIL HAS MET THE QUANTUM OF PROOF REQUIRED BY LAW TO PROVE ITS
CLAIM.

a. CIVIL CASES ONLY REQUIRE A PREPONDERANCE OF EVIDENCE AND BP OIL HAS

DISCHARGED ITS BURDEN OF MEETING THIS STANDARD OF PROOF.

b. THE REFUSAL OF THE COURT TO GIVE WEIGHT TO SOME OF THE PIECES OF EVIDENCE
PRESENTED BY BP OIL HAS NO LEGAL BASIS.

c. THE DENIAL OF TDLSI'S DEMURRER TO EVIDENCE SHOWS THAT BP OIL HAS MADE OUT
A PRIMA F ACIE CASE IN SUPPORT OF ITS CLAIMS AGAINST TDLSI AND TDLSI'S FAILURE
TO CONTROVERT THIS PRIMA F ACIE CASE JUSTIFIES A RULING IN FAVOR OF BP OIL.

According to petitioner, Exhibit "J" qualifies as an actionable document whose authenticity and due
execution were deemed admitted by respondent or TDLSI following its failure to specifically deny the
same under oath. Petitioner insists that it has met the quantum of proof required by law.

In its Comment dated March 24, 2015, respondent reiterates the ruling of the CA that Exhibit "J" is
not an actionable document and cannot be considered a judicial admission on its part.

The petition is devoid of any merit.

The Rules of Court require that only questions of law should be raised in petitions filed under Rule
45. This court is not a trier of facts. It will not entertain questions of fact as the factual findings of the
6

appellate courts are "final, binding[,] or conclusive on the parties and upon this [c]ourt" when 7

supported by substantial evidence. Factual findings of the appellate courts will not be reviewed nor
8

disturbed on appeal to this court. 9

This Court's Decision in Cheesman v. Intermediate Appellate Court distinguished questions of law
10

from questions of fact:

As distinguished from a question of law - which exists "when the doubt or difference arises as to
what the law is on a certain state of facts" - "there is a question of fact when the doubt or difference
arises as to the truth or the falsehood of alleged facts;" or when the "query necessarily invites
calibration of the whole evidence considering mainly the credibility of witnesses, existence and
relevancy of specific surrounding circumstances, their relation to each other and to the whole and
the probabilities of the situation."
11

Seeking recourse from this court through a petition for review on certiorari under Rule 45 bears
significantly on the manner by which this court shall treat findings of fact and evidentiary matters. As
a general rule, it becomes improper for this court to consider factual issues: the findings of fact of the
trial court, as affirmed on appeal by the Court of Appeals, are conclusive on this court. "The reason
behind the rule is that [this] Court is not a trier of facts and it is not its duty to review, evaluate, and
weigh the probative value of the evidence adduced before the lower courts." 12

However, these rules do admit exceptions. Over time, the exceptions to these rules have expanded.
13

At present, there are 10 recognized exceptions that were first listed in Medina v. Mayor Asistio, Jr.: 14

(1) When the conclusion is a finding grounded entirely on speculation, surmises or conjectures; (2)
When the inference made is manifestly mistaken, absurd or impossible; (3) Where there is a grave
abuse of discretion; (4) When the judgment is based on a misapprehension of facts; (5) When the
findings of fact are conflicting; (6) When the Court of Appeals, in making its findings, went beyond
the issues of the case and the same is contrary to the admissions of both appellant and appellee; (7)
The findings of the Court of Appeals are contrary to those of the trial court; (8) When the findings of
fact 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 respondents; and (10) The finding of fact of the Court of Appeals is premised on the supposed
absence of evidence and is contradicted by the evidence on record. 15

A close reading of the present petition shows that what this Court is being asked to resolve is, what
should prevail - the findings of facts of the RTC or the findings of facts of the CA on the alleged
misapprehension of facts of the RTC. The findings of facts of both Courts are obviously conflicting,
hence, the need for this Court to rule on the present petition.

On the issue of whether Exhibit "J" is an actionable document, the CA ruled:

Here, plaintiff-appellee relies heavily on its Exhibit "J", defendant-appellant's purported letter dated
April 30, 2001, which it alleged to be an "actionable document" which defendant-appellant failed to
deny under oath. It does amounts to a judicial admission on the part of defendant-appellant that it
has possession of its stocks, moneys and receivables belonging to plaintiff-appellee.
x x xx

Here, the purported April 30, 2001 letter is not an actionable document per se. The present
complaint is an action for collection of sum of money arising from the termination of the Agency
Agreement between the parties. Plaintiff-appellee's cause of action is primarily based on the alleged
non-payment of outstanding debts of defendant-appellant as well as the unremitted
collections/payments and unsold stocks, despite demand. In other words, plaintiff-appellee's cause
of action is not based solely on the April 30, 2001 letter allegedly stating the "present value of stocks,
collections and accounts receivables" of defendant-appellant. Clearly, said document is not an
actionable document contemplated in Section 7, Rule 8 of the 1997 Rules of Court but is merely
evidentiary in nature. As such, there was no need for defendant-appellant to deny its genuineness
and due execution under oath. We thus cannot sustain plaintiff-appellee' s contention that the
aforesaid Exhibit "J" amounted to a judicial admission because it's due execution and authenticity
was never denied under oath by defendant appellant.

Verily, an admission is any statement of fact made by a party against its interest or unfavorable to
the conclusion for which he contends or is inconsistent with the facts alleged by him. To be
admissible, an admission must (a) involve matters of fact, and not of law; (b) be categorical and
definite; (c) be knowingly and voluntarily made; and (d) be adverse to the admitter' s interests,
otherwise it would be self-serving and inadmissible.

In this case, the alluded Exhibit "J" was introduced in evidence by plaintiff-appellee alleging in its
Complaint that:

"18. Under date of 30 April 2001, TDLSI wrote BP Oil a letter admitting that the following stocks,
collections and accounts receivable were still in their possession as of even date:

Amount collected against sales ₱27,261,305.75

Accounts Receivable 8,767,656.26
Estimated Value of Stocks 1,155,000.00
A copy of the 30 April 2001 letter of TDLSI is hereto attached as Annex "J" and made an integral
part hereof."

In its Answer Ad Cautelam with Compulsory Counterclaim Ad Cautelam, defendant-appellant TDLSI

averred, viz.:

"17. Paragraph 18 is admitted, with qualification [that] TDLSI's letter dated 30 April 2001 was
prepared and sent to BP Oil solely on the latter's representations that the figures were being sought
only to negotiate a settlement of the parties' dispute and end the pending arbitration. Instead, in
shocking bad faith, BP Oil refused to settle and made TDLSI's letter the basis of the instant
Complaint."

Hence, while defendant-appellant admitted said Exhibit "J'', it nevertheless qualified and limited said
admission to, merely, the existence thereof. In fact, in its Comment to Plaintiff's Exhibits, defendant
clearly stated:

"(9) EXH. "J" - only the existence of the letter sent by Defendant to Plaintiff dated April 30, 2001,
signed by Miguel de Asis and addressed to Hok Lee Hau, is admitted. The contents as well as the
factual basis thereof, are not admitted. Besides, the circumstances leading to the sending of this
letter were thoroughly explained by Miguel de Asis in his answer to Plaintiffs written interrogatories."

x x xx

Evidently, the afore-quoted letter does not, in any way, categorically declare that the figures stated
therein are "still in [the] possession of' or, in the hands of, defendant-appellant TDLSI. The "present
value" of the accounts receivables, collections and stocks is one thing, the "value in possession or
on hand" of said accounts is another.

Sans the above-discussed Exhibit "J", therefore, this Court is not convinced that plaintiff-appellee BP
Oil was able to preponderantly establish its claim against defendant-appellant TDLSI in the amount
of ₱36,440,351.79 for the value of the moneys, stock and accounts receivables which the latter
allegedly refused to deliver to the former. As aptly argued by defendant-appellant TDLSI, the
purported Acknowledgment Receipts and Delivery Receipts presented by plaintiffappellee BP Oil the
purpose of which is "to prove that TD LSI, through its General manager, Mr. Ivor Williams,
acknowledged receipt and delivery of the stocks" are totally baseless since the same were never
signed as having been "received by" said Mr. Ivor Williams. Hence, without the latter's signature, the
purpose for which said documents were offered becomes nil.

The above findings of the CA are partially correct.

Exhibit "J" reads as follows:

Mr. Lau,

Some considerable time has passed since either party had the opportunity to review their respective
position (sic) on the disagreement between us. It was pleasing to note that a discussion has now
started between us again and you give the impression that a settlement is a better solution for both
parties than to continue through the legal route.

The present value of stocks, collections and accounts receivable was requested. As of today, we
can state the following:

Amount Collected against Sales ₱27,261,305.75

Accounts receivables ₱8,767,656.26
Estimated Value of Stocks ₱1,155,000.00
Please note that the stock value is estimated because the drums are no longer sealable due to their
condition. However, this is not significant in number.

To the mind of the Court, Exh. "J" is not an actionable document but is an evidence that may be
admissible and; hence, need not be denied under oath. Sections 7 and 8 of the 1997 Rules of Court
provide:

Section 7. Action or defense based on document. - Whenever an action or defense is based upon a
written instrument or document, the substance of such instrument or document shall be set forth in
the pleading, and the original or a copy thereof shall be attached to the pleading as an exhibit, which
shall be deemed to be a part of the pleading, or said copy may with like effect be set forth in the
pleading.

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

A document, therefore, is actionable when an action or defense is grounded upon such written
instrument or document. The complaint filed by petitioner is an action for collection of sum of money
arising from the termination of the Agency Agreement with TDLSI. The CA, therefore, was correct
when it stated that petitioner's cause of action is primarily based on the alleged non-payment of
outstanding debts of respondent as well as the unremitted collections/payments and unsold stocks,
despite demand. Thus, petitioner's cause of action is not based solely on the April 30, 2001 letter
allegedly stating the "present value of stocks, collections and accounts receivables" of TDLSI.
Noteworthy is the denial of respondent TDLSI' s Demurrer to Evidence by the RTC because it clearly
discussed petitioner's cause of action and the sufficiency of the evidence it presented, thus:

Upon consideration of the pleadings and arguments filed by the parties, the Court is convinced to
DENY the demurrer.

The record shows that the plaintiff presented sufficient evidence that will preponderantly establish its
claim against the defendant. Among the evidence presented which might prove the claim or right to
relief of the plaintiff against the defendant include (I) the purchase orders of TDLSI's third party
customers; (2) original approved copies of the requests for approval sent by TDLSI to BP Oil from
May 21, 1998 to August 14, 1999; (3)TDLSI invoices covering the products subject of the purchase
orders and requests for approval; and (4) The sales invoices issued by BP Oil to TDLSI to its
customers.

The aforesaid evidence presented was to the mind of the Court contain pertinent facts and
such evidence will prove that the plaintiff has a cause of action against the defendant. As
correctly pointed out by the plaintiff, TDLSI cannot premise its demurrer on any supposed lack of
proof of delivery by BP Oil of certain moneys and receivables. The allegations in the complaint, as
well as the evidence presented by BP Oil, establish that generated as they were by the sales made
by TDLSI, the moneys and receivables have always been in TDLSI's possession and it is the
obligation of the latter to deliver them to BP Oil.

The Court is of the view that the better way to weigh and decide this case based on merits is for the
defendant to present its own evidence to refute the plaintiff's allegations. It is better that the
defendant be given a day in court to prove its defenses in a full-blown trial.

The Court cannot just dismiss the case on the ground that upon the facts and law presented
by the plaintiff it was not able to show a right to relief when in fact the evidence presented,
testimonial and documentary, show otherwise and its claim appears to be meritorious. To
ensure that justice would be served and that the case be decided on its real merits upon a careful
review and appreciation of facts and evidence presented it would be best that defendant should
instead present its own defenses in a formal trial and not just to dismiss the case allegedly in the
absence of clear proof that plaintiff has no right to the reliefs prayed for.

Moreover, the Court noted that this case has been prolonged for so long and this Court can no
longer allow any more delay to this case.1âwphi1

WHEREFORE, premises considered, the Demurrer to Evidence is hereby DENIED for lack of merit. 16

It is basic that whoever alleges a fact has the burden of proving it because a mere allegation is not
evidence. In civil cases, the burden of proof is on the party who would be defeated if no evidence is
17

given on either side. The RTC's denial of TDLSI's Demurrer to Evidence shows and proves that
18

petitioner had indeed laid a prima facie case in support of its claim. Having been ruled that
petitioner's claim is meritorious, the burden of proof, therefore, was shifted to TDLSI to controvert
petitioner's prima facie case.

The CA, however, ruled that while TDLSI admitted Exhibit "J", it nevertheless qualified and limited
said admission to, merely, the existence thereof, thus, without Exhibit "J" the same court was not
convinced that petitioner was able to preponderantly establish its claim against TDLSI in the amount
of ₱36,440,351.79 for the value of the moneys, stock and accounts receivables which TDLSI
allegedly refused to deliver to petitioner. This is erroneous. The fact is, TDLSI indeed admitted the
existence of Exhibit "J." Thus, Exhibit "J" can be considered as an admission against interest.
Admissions against interest are those made by a party to a litigation or by one in privity with or
identified in legal interest with such party, and are admissible whether or not the declarant is
available as a witness. An admission against interest is the best evidence that affords the greatest
19

certainty of the facts in dispute, based on the presumption that no man would declare anything
against himself unless such declaration is true. It is fair to presume that the declaration corresponds
20

with the truth, and it is his fault if it does not. No doubt, admissions against interest may be refuted
21

by the declarant. In this case, however, respondent failed to refute the contents of Exhibit "J."
22

Be that as it may, the qualification made by respondent in the admission of Exhibit "J" is immaterial
as the contents thereof were merely corroborative of the other pieces of evidence presented by
petitioner and that respondent failed in its defense, to present evidence to defeat the claim of
petitioner. As aptly ruled by the RTC:

After going over the allegations and the evidence presented by the parties, the Court finds as it did in
its Order denying the Demurrer to Evidence of the defendant that the plaintiff presented sufficient
evidence that will preponderantly establish its claim against the defendant. The Court notes that
apart from not presenting any evidence in support of its defense, the defendant did not really
put up any serious defense to defeat the claim of the plaintiff, and its only remaining defense
consisting of the right of retention given to agents under Articles 1912, 1913 and 1914 of the
Civil Code, even if proven to exist, will not negate the finding that the plaintiff is entitled to
the value of the moneys and stocks in the defendant's possession.

To the mind of the court, the evidence presented by the plaintiff, unrebutted by any evidence
on the part of the defendant and even aided by the admissions made by the defendant in its
letter dated April 30, 2001 to the plaintiff (Exhibit "J"), proves that the plaintiff has a cause of
action for the payment of the amount of Thirty-Six Million Nine Hundred Forty-Three
Thousand Eight Hundred Twenty-Nine Pesos and Thirteen Centavos (₱36,943,829.13) for the
value of the stocks and the moneys received and retained by the defendant in its possession
pursuant to the Agreement with legal interest computed at 6% per annum from July 19, 2001,
when formal demand (Exhibit "L") was made by the plaintiff for the liquidatedamount of
₱36,943,829.13, up to the finality of this decision up to the date of payment thereof.

Considering that the plaintiff was compelled to engage in litigation for almost 10 years, it must also
be indemnified for the costs of suit corresponding to filing fees in the amount of ₱429,840.00 and
attorney's fees equivalent to ₱1,500,000.00. 23

Section 1, Rule 133 of the Rules of Court mandates that in civil cases, the party having the burden
24

of proof must establish his case by a preponderance of evidence. By preponderance of evidence,

according to Raymundo v. Lunaria, [means] that the evidence as a whole adduced by one side is
25

superior to that of the other. It refers to the weight, credit and value of the aggregate evidence on
either side and is usually considered to be synonymous with the term "greater weight of evidence" or
"greater weight of the credible evidence." It is evidence which is more convincing to the court as
worthy of belief than that which is offered in opposition thereto.

Upon close analysis, therefore, this Court is inclined to believe the findings of the RTC that petitioner
was able to prove its case by a preponderance of evidence and that respondent failed to disprove
petitioner's claim. As such, the CA gravely erred in reversing the decision of the RTC.

A modification, however, must be made as to the rate of interest applied by the RTC. The RTC
ordered the respondent to pay the amount adjudged "with legal interest computed at 6% per annum
from July 19, 2001 up to the finality of the decision and at 12% per annum from finality of the
decision up to the date of payment." Now, the interest imposed should be 12% per annum from July
19, 2001 until June 30, 2013 and 6% per annum from July 1, 2013 until full satisfaction per decision
of this Court in Secretary of the Department of Public Works and Highways, et al. v. Spouses
Heracleo and Ramona Tecson which set forth the following guidelines:
26

In summary, the interest rates applicable to loans and forbearance of money, in the absence of an
express contract as to such rate of interest, for the period of 1940 to present are as follows:

Law, Rule and Regulations, Date of Effectivity Interest Rate

BSP Issuances
Act No. 2655 May 1, 1916 6%
 CB Circular No. 416 July 29, 1974 12%
CB Circular No. 905 December 22, 1982 12%
CB Circular No. 799 July 1, 2013 6%
It is important to note, however, that interest shall be compounded at the time judicial demand is
made pursuant to Article 2212 of the Civil Code of the Philippines, and sustained in Eastern
27

Shipping Lines v. Court of Appeals, then later on in Nacar v. Gallery Frames, save for the
28 29

reduction of interest rate to 6% for loans or forbearance of money, thus:

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or
forbearance of money, the interest due should be that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In
the absence of stipulation, the rate of interest shall be 6% per annum to be computed from default,
i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the
Civil Code.30

WHEREFORE, the Petition for Review on Certiorari under Rule 45 of the Rules of Court dated
November 10, 2014 of BP Oil and Chemicals International Philippines, Inc. is GRANTED.
Consequently, the Decision dated April 30, 2014 of the Court of Appeals is REVERSED and SET
ASIDE and the Decision dated January 21, 2011 of the Regional Trial Court, Branch 148, Makati
City is AFFIRMED and REINSTATED, with the MODIFICATION that the interest imposed should be
12% per annum from July 19, 2001 until June 30, 2013 and 6% per annum from July 1, 2013 until
fully paid.

SO ORDERED.

G.R. No. 195244 June 22, 2015

THE PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

vs.
ALVIN ESUGON y AVILA, Accused-Appellant.

DECISION
BERSAMIN, J.:

Every child is presumed qualified to be a witness. The party challenging the child's competency as a
witness has the burden of substantiating his challenge.

Under review is the decision promulgated on July 23, 2010, whereby the Court of Appeals (CA)
1

affirmed with modification the conviction of the appellant for the composite crime of robbery with
homicide handed down by the Regional Trial Court (RTC), Branch 211, in Mandaluyong City through
its judgment rendered on January 27, 2006. 2

Antecedents

The information charged the appellant with robbery with homicide, alleging as follows:

That on or about the 22nd day of October 2003, in the City of Mandaluyong, Philippines, a place
within the jurisdiction of this Honorable Court, the above-named accused, with intent to gain, with the
use of a bladed weapon, by means of force and violence, did, then and there, willfully, unlawfully and
feloniously take, steal and carry away cash money amounting to ₱13,000.00 belonging to
JOSEPHINE CASTRO y BARRERA, to the damage and prejudice of the latter; that by reason or on
occasion of said robbery, accused did, then and there willfully, unlawfully and feloniously attack,
assault and stab with the said bladed weapon said JOSEPHINE CASTRO y BARRERA, thereby
inflicting upon her physical injuries which directly caused her death.

CONTRARY TO LAW. 3

The CA adopted the RTC’s summation of the evidence of the Prosecution, to wit:

Carl or Muymoy, 5-year old son of the victim, testified that on the night of the incident, he, his
younger sister Cheche, and his mother and father, were sleeping on the ground floor of their house.
He saw appellant, whom he calls "Nonoy," enter their house and stab her mother with a knife, while
he (Carl) peeped through a chair. Although there was no light at the ground floor, there was light
upstairs. After his mother got stabbed, his father chased the appellant. Carl saw blood come out of
his mother’s lower chest. His father then brought her to the hospital. Carl positively identified the
appellant, a neighbor who often goes to their house, as the one who stabbed his mother. On cross-
examination, he related that the assailant took money from his father’s pocket. He likewise admitted
that he did not see very well the perpetra tor because there was no light (TSN, February 24, 2004,
pp. 3, 11-23, 28, 30-32).

Upon being asked by the trial court, Carl stated that although there was no light when his mother
was stabbed, he was sure of what he saw since there was light at their second floor, which illumined
the ground floor through the stairway (TSN, February 24, 2004, pp. 33-34).

Insp. Marquez, who autopsied the body, related that the cause of the victim’s death was
hemorrhagic shock due to stab wound. The wound was located at the epigastric region, measuring
2.8 x 0.5 cm, 4 cm from left of the anterior midline, 13 cm deep, directed posterior and upward,
piercing the right ventricle of the hear t, thoracic aorta and lower lobe of the left lung (TSN, April 21,
2004, pp. 1, 6; Exh. "I," Records, p. 103).

Next to testify was Dennis, husband of the victim. He narrated that he and the victim were married
for nine years before the incident and that they have four children: Monica, 11 years old; Mary Joy, 9
years old; Carl, 5 years old; and Cherry Ann, 7 months old. At about 9 p.m. on October 21, 2003, he
and his wife were sleeping downstairs in their sala, with their baby, while their other children slept
upstairs. Their sala measures 3 by 3 meters. At around 2 a.m., his son Carl woke up crying and went
downstairs to sleep with them. Fifteen to thirty minutes later, he heard someone shout
"magnanakaw!" [H]e turned on the light and saw that their door was open. He got their bolo and ran
outside. When he did not see anybody, he returned and heard his wife moaning. He embraced and
carried her and saw blood on her back. He shouted for help and his brother-in law helped him bring
the victim to the hospital where she eventually died. He spent ₱23,000.00 for the funeral and
₱44,500.00 for the wake and burial. On cross-examination, he admitted that he has no personal
knowledge as to who stabbed his wife since he did not actually see the perpetrator and that it was
his son who saw the appellant (TSN, August 25, 2004, pp. 3 12; October 6, 2004, pp. 5-6; November
17, 2004, pp. 3-4).

Sharon, sister-in-law of the victim, testified that she and her husband were sleeping upstairs when
they were roused from their sleep at around 2 a.m. of October 22, 2003 by Dennis’ cry for help. She
saw that there was blood on the victim’s chest. After the victim was brought to the hospital, she
noticed that the victim’s children were trembling in fear and were crying. They got outside and went
to the billiard hall in front of their house. She took Carl and had him sit on her lap. Then Carl said,
"Tita, sya pasok bahay namin" pointing to someone but she did not see who it was since there were
many people passing by. Later, the police asked Carl whether he saw somebody enter their house
and he answered yes and demonstrated how his mother was stabbed. Carl also said that the person
who stabbed his mother was present in the vicinity. He then pointed to appellant and said " siya po
yung pumaso k sa bahay namin." As a resident there, appellant often goes to the billiard hall and
sometimes watches the television at the house of the victim (TSN, February 9, 2005, pp. 3-14).

PO1 Fabela also testified that after it was reported to him that there was a stabbing incident, he went
to the hospital then to the crime scene and interviewed the persons thereat. Later, Carl pinpointed
and positively identified the appellant as the one who stabbed his mother and robbed them of their
money. Appellant was arrested and brought to the police station (TSN, March 16, 2005, pp. 2, 5-6).

PO2 Sazon meanwhile testified that while he was questioning people in the area, Carl pointed to
them the suspect who was one of the bystanders. They were asking Carl questions when he
suddenly blurted out that it was appellant who entered their house and stabbed his mother. They
invited the appellant to the police station but the latter denied having committed the crime. On cross-
examination, the witness admitted that their basis in arresting appellant was the information relayed
by Carl (TSN, April 27, 2005, pp. 2, 12-17; June 15, 2005, p. 5). 4

In turn, the appellant denied the accusation. According to him, he had frequented the victim’s billiard
hall, which was situated only four houses away from where he lived, and, on the evening in question,
he had been the last to leave the billiard hall at 11 o’ clock p.m. and had then gone home. He
recalled that he had been roused from slumber by screams for help around two o’clock a.m.,
prompting him to ask his mother for the key to the door; that he had then gone outside where he
learned of the killing of the victim; that police officers had later on approached him to inquire what he
knew about the killing because they told him that Carl, the young son of the victim, had pointed to
him as the perpetrator, making him the primary suspect; that he had replied that he had had nothing
to do with the crime; and that he had assured the police officers that he had never been involved in
any wrongdoing in his years of living in the neighborhood.

The appellant’s mother corroborated his version. 5

Judgment of the RTC

As mentioned, the RTC pronounced the appellant guilty of the crime charged under its judgment
rendered on January 27, 2006, disposing:
6

WHEREFORE, premises considered, finding the accused ALVIN ESUGON y AVILA @ "NONOY"
GUILTY beyond reasonable doubt of the crime of ROBBERY WITH HOMICIDE under Article 293
and punished under Article 294 (1) of the Revised Penal Code, the court hereby sentences him to
Reclusion Perpetua and to indemnify the heirs of JOSEPHINE CASTRO y BARRERA as follows:

1) ₱50,000.00 civil indemnity;

2) ₱57,500.00 as actual damages;

3) ₱50,000.00 as moral damages.

SO ORDERED. 7

Decision of the CA

On appeal, the appellant argued that the RTC erred in finding him guilty beyond reasonable doubt of
the composite crime of robbery with homicide based solely on the testimony of Carl, a 5-year old
witness whose recollections could only be the product of his imagination. 8
On July 23, 2010, however, the CA, giving credence to the child witness, and opining that his
inconsistencies did not discredit his testimony, affirmed the conviction of the appellant, ruling thusly:
9

WHEREFORE, the appeal is DENIED for lack of merit. The Decision dated January 27, 2006 of the
Regional Trial Court, Branch 211 of Mandaluyong City in Crim. Case No. MC03-7597, is hereby
AFFIRMED with the MODIFICATION in that the award of ₱57,500.00 as actual damages should be
DELETED and in lieu thereof, temperate damages in the amount of ₱25,000.00 should be
AWARDED the heirs of Josephine Castro y Barrera.

SO ORDERED. 10

Issues

In this appeal, the appellant posits that the adverse testimony of the 5-year old Carl, being filled with
inconsistencies, was not credible, but doubtful; that unlike him, his sisters, who were then at the
second floor of the house, were not roused from sleep; that contrary to Carl’s recollection, the place
was not even dark when the stabbing attack on the victim occurred because his father said that he
had turned the light on upon hearing somebody shouting " Magnanakaw!;" and that his father had
then gotten his bolo, and gone outside the house. 11

Moreover, the appellant maintains that the Prosecution did not prove that violence or intimidation
was employed in the course of the robbery. He argues that he could not be held liable for robbery by
using force upon things considering that the culprit had neither broken any wall, roof, floor, door or
window to gain entry in the house nor entered the house through an opening not intended for
entrance. If at all, he could be liable only for the separate crimes of theft and homicide, not of the
composite crime of robbery with homicide. 12

The Office of the Solicitor General (OSG) counters that the evidence showed that the appellant’s
principal intent had been to rob the victim’s house, with the homicide being perpetrated as a mere
incident of the robbery; and that Carl positively identified the appellant as the person who had
stabbed the victim, his identification bearing "all the earmarks of credibility especially when he has
no motive for lying about the identity of the accused." 13

Ruling of the Court

The appeal is bereft of merit.

The most important task of the St ate in the successful prosecution of the accused is his credible
and competent identification as the perpetrator of the crime. Hence, this appeal turns on whether or
not the identification of the appellant as the perpetrator of the robbery with homicide was credible
and competent considering that the identifying witness was Carl, a 5-year old lad, whose sole
testimony positively pointed to and incriminated the appellant as the person who had entered their
home, robbed the family, and killed his mother.

The qualification of a person to testify rests on the ability to relate to others the acts and events
witnessed. Towards that end, Rule 130 of the Rules of Court makes clear who may and may not be
witnesses in judicial proceedings, to wit:

Section 20. Witnesses; their qualifications. - Except as provided in the next succeeding section, all
persons who can perceive, and perceiving, can make known their perception to others, may be
witnesses.

Religious or political belief, interest in the outcome of the case, or conviction of a crime unless
otherwis e provided by law, shall not be a ground for disqualification. (l8 a)
Section 21. Disqualification by reason of mental incapacity or immaturity. - The following persons
cannot be witnesses:

(a) Those whose mental condition, at the time of their production for examination, is such that they
are incapable of intelligently making known their perception to others;

(b) Children whose mental maturity is such as to render them incapable of perceiving the facts
respecting which they are examined and of relating them truthfully. (19a)

As the rules show, anyone who is sensible and aware of a relevant event or incident, and can
communicate such awareness, experience, or observation to others can be a witness. Age, religion,
ethnicity, gender, educational attainment, or social stat us are not necessary to qualify a person to
be a witness, so long as he does not possess any of the disqualifications as listed the rules. The
generosity with which the Rules of Court allows people to testify is apparent, for religious beliefs,
interest in the outcome of a case, and conviction of a crime unless otherwise provided by law are not
grounds for disqualification.
14

That the witness is a child cannot be the sole reason for disqualification. The dismissiveness with
which the testimonies of child witnesses were treated in the past has long been erased. Under the
Rule on Examination of a Child Witness (A.M. No. 004-07-SC 15 December 2000), every child is
now presumed qualified to be a witness. To rebut this presumption, the burden of proof lies on the
party challenging the child’s competency. Only when substantial doubt exists regarding the ability of
the child to perceive ,remember, communicate, distinguish truth from falsehood, or appreciate the
duty to tell the truth in court will the court, motu proprio or on motion of a party, conduct a
competency examination of a child. 15

The assessment of the credibility of witnesses is within the province of the trial court. All questions
16

bearing on the credibility of witnesses are best addressed by the trial court by virtue of its unique
position to observe the crucial and often incommunicable evidence of the witnesses’ deportment
while testifying, something which is denied to the appellate court because of the nature and function
of its office. The trial judge has the unique advantage of actually examining the real and testimonial
evidence, particularly the demeanor of the witnesses. Hence, the trial judge’s assessment of the
witnesses’ testimonies and findings of fact are accorded great respect on appeal. In the absence of
any substantial reason to justify the reversal of the trial court’s assessment and conclusion, like
when no significant facts and circumstances are shown to have been overlooked or disregarded, the
reviewing court is generally bound by the former’s findings. The rule is even more stringently applied
if the appellate court has concurred with the trial court.
17

The appellant did not object to Carl’s competency as a witness. He did not attempt to adduce
evidence to challenge such competency by showing that the child was incapable of perceiving
events and of communicating his perceptions, or that he did not possess the basic qualifications of a
competent witness. After the Prosecution terminated its direct examination of Carl, the appellant
extensively tested his direct testimony on cross-examination. All that the Defense did was to attempt
to discredit the testimony of Carl, but not for once did the Defense challenge his capacity to
distinguish right from wrong, or to perceive, or to communicate his perception to the trial court.
Consequently, the trial judge favorably determined the competency of Carl to testify against the
appellant.

The appellant points to inconsistencies supposedly incurred by Carl. That is apparently not disputed.
However, it seems clear that whatever inconsistencies the child incurred in his testimony did not
concern the principal occurrence or the elements of the composite crime charged but related only to
minor and peripheral matters. As such, their effect on his testimony was negligible, if not nil, because
the inconsistencies did not negate the positive identification of the appellant as the perpetrator. Also,
that Carl did not shout to seek help upon witnessing how the appellant had stabbed his mother to
death did not destroy his credibility. For sure, he could not be expected to act and to react to what
happened like an adult. Although children have different levels of intelligence and different degrees
of perception, the determination of their capacity to perceive and of their ability to communicate their
perception to the courts still pertained to the trial court, because it concerned a factual issue and
should not be disturbed on appeal in the absence of a strong showing of mistake or misappreciation
on the part of the trial court.
18

It is true that an appeal in a criminal case like this one opens the record of the trial bare and open.
Even so, the finding of facts by the trial court are still entitled to great respect especially when
affirmed on appeal by the CA. This great respect for such findings rests mainly on the trial court’s
19

direct and personal access to the witnesses while they testify in its presence, giving them the unique
opportunity to observe their manner and decorum during intensive grilling by the counsel for the
accused, and to see if the witnesses were fidgeting and prevaricating, or sincere and trustworthy.
With both the RTC and the CA sharing the conviction on Carl’s credibility, his capacity to perceive
and his ability to communicate his perception, we cannot depart from their common conclusion.
Moreover, according credence to Carl’s testimony despite his tender age would not be
unprecedented. In People v. Mendiola, the Court considered a 6-y ear-old victim competent, and
20

regarded her testimony against the accused credible. In Dulla v. Court of Appeals, the testimony of
21

the three-year-old victim was deemed acceptable. As such, Carl’s testimony was entitled to full
probative weight.

Carl positively identified the appellant as the culprit during the investigation and during the trial.
Worthy to note is that the child could not have been mistaken about his identification of him in view
of his obvious familiarity with the appellant as a daily presence in the billiard room maintained by the
child’s family. Verily, the evidence on record overwhelmingly showed that the appellant, and no
other, had robbed and stabbed the victim.

The appellant contends that robbery was not proved beyond reasonable doubt; that to sustain a
conviction for robbery with homicide, the robbery itself must be proven as conclusively as the other
essential element of the crime; and that it was not established that the taking of personal property
was achieved by means of violence against or intimidation of any person or by using force upon
things.

The contention lacks persuasion.

To sustain a conviction for robbery with homicide, the Prosecution must prove the concurrence of
the following elements, namely: (1) the taking of personal property belonging to another; (2) with
intent to gain; (3) with the use of violence or intimidation against a person; and (4) the crime of
homicide, as used in the generic sense, was committed on the occasion or by reason of the
robbery. A conviction requires certitude that the robbery is the main objective of the malefactor, and
22

the killing is merely incidental to the robbery.

23

The CA has indicated that the appellant carried a long-bladed weapon. The fact that the appellant
was armed with the long-bladed weapon, which was undoubtedly a deadly weapon, competently
proved the presence of violence or intimidation against persons that qualified the offense as robbery
instead of theft. For sure, too, the patent intent of the appellant was originally to commit robbery, with
the homicide being committed only in the course or on the occasion of the perpetration of the
robbery. As the records show, Dennis was awakened by someone shouting " Magnanakaw!" The
shout was most probably made by the victim, whom the appellant then stabbed in order to facilitate
his escape. Considering that the original criminal design to rob had been consummated with the
taking of the money amounting to ₱13,000.00, the killing of the victim under the circumstances
rendered the appellant guilty beyond reasonable doubt of robbery with homicide.

Robbery with homicide is a composite crime, also known as a special complex crime. It is composed
of two or more crimes but is treated by law as a single indivisible and unique offense for being the
product of one criminal impulse. It is a specific crime with a specific penalty provided by law, and is
to be distinguished from a compound or complex crime under Article 48 of the Revised Penal Code. 24

A composite crime is truly distinct and different from a complex or compound crime. In a composite
crime, the composition of the offenses is fixed by law, but in a complex or compound crime, the
combination of the offenses is not specified but generalized, that is, grave and/or less grave, or one
offense being the necessary means to commit the other. In a composite crime, the penalty for the
specified combination of crimes is specific, but in a complex or compound crime the penalty is that
corresponding to the most serious offense, to be imposed in the maximum period. A light felony that
accompanies the commission of a complex or compound crime may be made the subject of a
separate information, but a light felony that accompanies a composite crime is absorbed.

The aggravating circumstances of dwelling and nighttime are not appreciated to raise the penalty to
be imposed because the information did not specifically allege them. But they should be appreciated
in order to justify the grant of exemplary damages to the heirs of the victim in the amount of
₱30,000.00 in accordance with relevant jurisprudence. Under Article 2230 of the Civil Code,
25

exemplary damages may be granted if at least one aggravating circumstance attended the
commission of the crime. The aggravating circumstance for this purpose need not be specifically
alleged in the information, and can be either a qualifying or attendant circumstance. As expounded
in People v. Catubig: 26

The term "aggravating circumstances" used by the Civil Code, the law not having specified
otherwise, is to be understood in its broad or generic sense. 1âwphi1 The commission of an offense has
a two-pronged effect, one on the public as it breaches the social order and the other upon the private
victim as it causes personal sufferings, each of which is addressed by, respectively, the prescription
of heavier punishment for the accused and by an award of additional damages to the victim. The
increase of the penalty or a shift to a graver felony underscores the exacerbation of the offense by
the attendance of aggravating circumstances, whether ordinary or qualifying, in its commission.
Unlike the criminal liability which is basically a State concern, the award of damages, however, is
likewise, if not primarily, intended for the offended party who suffers thereby. It would make little
sense for an award of exemplary damages to be due the private offended party when the
aggravating circumstance is ordinary but to be withheld when it is qualifying. Withal, the ordinary or
qualifying nature of an aggravating circumstance is a distinction that should only be of consequence
to the criminal, rather than to the civil, liability of the offender. In fine, relative to the civil aspect of the
case, an aggravating circumstance, whether ordinary or qualifying, should entitle the offended party
to an award of exemplary damages within the unbridled meaning of Article 2230 of the Civil Code. 27

In line with current jurisprudence, we increase the civil indemnity to

28

₱75,000.00, and the moral damages to ₱75,000.00.

In addition to the damages awarded by the CA, the appellant should be liable to pay the heirs of the
victim interest at the legal rate of 6% per annum on all the monetary awards for damages from the
date of the finality of this decision until the awards are fully paid.

WHEREFORE, the Court AFFIRMS the decision promulgated on July 23, 2010 subject to the
MODIFICATIONS that then accused-appellant ALVIN ESUGON y AVILA shall pay to the heirs of the
late Josephine Castro y Barrera civil indemnity of ₱75,000.00; moral damages of ₱75,000.00;
exemplary damages of ₱30,000.00; temperate damages of ₱25,000.00; and interest at the legal rate
of 6% per annum on all monetary awards for damages reckoned from the date of the finality of this
decision until the awards are fully paid, plus the costs of suit.

The accused-appellant is ORDERED to pay the costs of suit.

SO ORDERED.

G.R. No. 230429

LARA'S GIFT AND DECORS, INC., Petitioner

vs.
PNB GENERAL INSURERS CO., INC. and UCPB GENERAL INSURANCE CO., INC., Respondents

DECISION

VELASCO,JR., J.:

Nature of the Case

Before this Court is a petition for review under Rule 45 of the Rules of Court, seeking to reverse and
set aside the March 6, 2017 Amended Decision of the Court of Appeals (CA), Special Former Fifth
1

Division, in CA-G.R. SP Nos. 138321 and 138774. The Amended Decision granted respondents'
motions for the reconsideration of the December 21, 2015 Decision of the CA's Former Fifth Division
2

annulling and setting aside the Omnibus Orders dated October 1, 2014 and November 26, 2014 of
the Regional Trial Court (RTC) of Makati City, Branch 14 7, in Civil Case No. 11-238.

Factual Antecedents

Petitioner Lara's Gifts and Decors, Inc. (LGDI) is engaged in the business of manufacturing, selling,
and exporting various handicraft items and decorative products. It leased buildings/warehouses,
particularly Buildings RI, R2, R3, R4, Y2, Y3, Y4, and Y4 Annex, from J.Y. & Sons Realty Co., Inc.,
located at JY & Sons Compound, Philippine Veterans Center, Taguig City, for its business
operations. The warehouses leased also served as production and storage areas of its goods and
stocks.

The handicraft products, raw materials, and machineries and equipment of petitioner were insured
against fire and other allied risks with respondent PNB General Insurers Co., Inc. (PNB Gen) in the
total amount of ₱582,000,000 covering the period of February 19, 2007 (4:00 p.m.) to February 18,
2008 (4:00 p.m.). The insurance policy, which is in the nature of an "open policy," was covered by
Fire Insurance Policy No. FI-NIL-H0- 0018666, wherein PNB Gen assumed 55% of the total amount
insured. Meanwhile, respondent UCPB General Insurance Co., Inc. (UCPB), as coinsurer, assumed
the remaining 45% through Fire Insurance Policy No. HOF07D-FLS072788. The policy was
subsequently increased to ₱717,000,000, pursuant to Policy Endorsement No. FI-NIL-
H020070005944A.

On February 19, 2008, approximately four hours before the policy was about to expire, a fire broke
out and razed Buildings Y2, Y3, and Y4 of the JY & Sons Compound. Petitioner immediately claimed
from the respondents for the loss and damage of its insured properties.
To evaluate and ascertain the amount of loss, respondents engaged the services of Cunningham
Lindsey Philippines, Inc. (CLPI), an independent adjuster. CLPJ required petitioner to submit
supporting documents material for the proper determination of the actual amount of loss; the latter,
however, failed to comply with the request. Thereafter, respondents appointed a new adjuster,
Esteban Adjusters and Valuer's Inc. (ESTEBAN) to undertake the valuation of the loss. ESTEBAN
similarly found petitioner's documents insufficient to properly evaluate and assess the amount of the
loss claimed.

Taking into consideration the findings of the independent adjusters and the report of its forensic
specialists, respondents denied petitioner's claim for coverage of liability under the insurance policy
due, inter alia, to the following reasons: 1) violation of Policy Conditions Nos. 13 and 19; 2)
misdeclaration/subsequent exclusion of laser machines from claim for machineries and equipment;
and 3) absence of independent and competent evidence to substantiate loss (additional alternative
ground for claim on stocks and machineries/equipment). 3

Resultantly, petitioner filed a Complaint for Specific Performance and Damages against respondents
before the Makati City R TC, docketed as Civil Case No. 11-238. The case was raffled to Branch 62
of the trial court.

In its Notice of Pre-Trial Conference, the RTC directed the parties to submit their respective pre-trial
4

briefs, accompanied by the documents or exhibits intended to be presented, at least three days
before the scheduled Pre-Trial Conference. It also contained a stem warning that "no evidence shall
be allowed to be presented and offered during the trial in support of a party's evidence-in-chief other
than those that had been earlier identified and pre-marked during the pre-trial, except if allowed by
the Court for good cause shown."

During the Pre-Trial Conference, both parties made admissions and proposed stipulations of facts
and issues to simplify the course of the trial. On account of the voluminous documentary exhibits to
be presented, identified, and marked, the parties allotted six meetings/conferences just for the pre-
marking of exhibits.

After the termination of the Pre-Trial Conference, the RTC issued a Pre-Trial Order dated September
12, 2013, in which the parties were given the opportunity to amend or correct any errors found
therein within five days from receipt thereof. In the same Order, all the parties made a reservation for
the presentation of additional documentary exhibits in the course of the trial.

The parties filed their respective Motions to Amend/Correct Pre-Trial Order. None of the parties,
5

however, sought to amend the Pre-Trial Order for the purpose of submitting additional judicial
affidavits of witnesses or the admission of additional documentary exhibits not presented and
premarked during the Pre-Trial Conference.

Trial on the merits ensued on November 7, 2013. Among the witnesses presented by petitioner are
Gina Servita (Servita) and Luis Raymond Villafuerte (Mr. Villafuerte). Servita testified on cross-
examination that she was able to reconstitute, collect, and/or collate and keep in her possession
copies of several commercial documents consisting of purported Purchase Orders (POs), Sales
Invoices (Sis), and Delivery Receipts (DRs) (collectively, the Questioned Documents), months after
the fire broke out. Mr. Villafuerte, meanwhile, testified on his involvement and participation in the
6

management and operations of petitioner corporation. He further admitted, however, that he had
divested his full interest in the management and operations of the company to devote his time as
Governor of Camarines Sur from 2004 to 2013. As such, his participation in the business was
reduced to a mere advisor of his wife, Mrs. Lara Maria Villafuerte (Mrs. Villafuerte), petitioner
corporation's president, who is likewise slated to testify.
7
During the continuation of Mr. Villafuerte's cross-examination on July 10, 2014, petitioner furnished
respondents with a copy of the 2nd Supplemental Judicial Affidavit of Mrs. Villafuerte dated July 9,
8

2014 (the 1st Supplemental Judicial Affidavit of Mrs. Villafuerte was filed during the Pre-Trial for the
re-marking of exhibits). PNB Gen, through a Motion to Expunge, sought to strike from the records
9

the said 2nd Supplemental Judicial Affidavit of Mrs. Villauferte and all documents attached thereto
for alleged violation of Administrative Matter No. 12-8-8-SC, otherwise known as the "Judicial
Affidavit Rule" (JA Rule) and A.M. No. 03-1-09-SC, or the Guidelines to be Observed by Trial Court
10

Judges and Clerks of Court in the Conduct of Pre-Trial and Use of Deposition-Discovery Measures
(Guidelines on Pre-Trial). UCPB filed its Manifestation and Motion, adopting in toto PNB Gen's
11

Motion. The twin Motions were set to be heard on September 19, 2014.

On September 18, 2014, or a day prior to the hearing of the Motion to Expunge, the re-direct
examination of Mr. Villafuerte continued. During the trial, petitioner's counsel produced the
Questioned Documents in open court and asked Mr. Villafuerte to identify those documents, seeking
to introduce and mark them as exhibits. Respondents immediately objected in open court to the
introduction and presentation of the Questioned Documents on the grounds that they were neither
touched upon nor covered by the witness' cross-examination, and that the same were being
introduced for the first time at this late stage of proceeding, without giving the parties opportunity to
verify their relevance and authenticity. They argued that since these documents were not presented,
identified, marked, and even compared with the originals during the Pre-Trial Conference, they
should be excluded pursuant to the Guidelines on Pre-Trial and JA Rule. The documents are further
alleged to be the same documents subject of the respondents' twin Motions to Expunge, i.e., the
same Questioned Documents which were never presented, marked, or compared during the various
Pre-Trial Conferences of the case, or were never presented to the insurers and adjusters early on.

Ruling of the RTC

On September 18, 2014, the RTC issued an Order overruling the objections of respondents and
12

allowing petitioner to propound questions relating to the Questioned Documents, without prejudice to
the hearing on the motions to expunge the 2nd Supplemental Judicial Affidavit of Mrs. Villafuerte, to
wit:

ACCORDINGLY, the objection interposed by the defendants is overruled, the court allows the
plaintiff to ask questions on the documentary evidence being shown to the witness and the witness
is allowed to answer questions related or in connection with the said documents. This is without
prejudice to the hearing that will be conducted on the manifestation and motion set for tomorrow with
respect to the Supplemental Judicial Affidavit of another witness in the person of Lara Villafuerte.

SO ORDERED.

Aggrieved, respondents moved for the reconsideration of the abovementioned Order in open court.

On October 1, 2014, the RTC issued an Omnibus Order resolving respondents' motions in this
13

wise:

WHEREFORE, premises considered, the motion for reconsideration of the Order dated September
18, 2014, Motion to Expunge filed on September 11, 2014 and the Manifestation and Motion filed on
September 15, 2014 by the defendants are hereby denied for lack of merit.

SO ORDERED.

The R TC allowed Mr. Villafuerte to testify on the contested documentary exhibits, on the ground that
both the trial court and the parties are bound by the reservations made for the presentation of
additional evidence, and in keeping with the interest of justice that evidence should be liberally
allowed to be heard than to be suppressed, subject to the final appreciation of its weight and
credence. The Omnibus Order likewise denied UCPB's Motion seeking to expunge from the records
the 2nd Supplemental Judicial Affidavit of Mrs. Villafuerte and its accompanying exhibits.

Respondents separately moved for the reconsideration of the denial of their motions to expunge, but
the trial court denied the same in an Omnibus Order dated November 26, 2014.
14

Aggrieved, respondents filed a petition for certiorari under Rule 65 of the Rules of Court before the
15

CA, imputing grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the
trial court in issuing the foregoing October 1, 2014 and November 26, 2014 Omnibus Orders.

Ruling of the Court of Appeals

On December 21, 2015, the CA, through its Former Fifth Division, rendered a Decision, the
dispositive portion of which states:

WHEREFORE, both Petitions are DISMISSED. Public Respondent Judge Ronald B. Moreno's (a)
September 18, 2014 Order; (b) October 1, 2014 Omnibus Order; and (c) November 26, 2014
Omnibus Order; issued in Civil Case No. 11-238, are hereby AFFIRMED in toto.

SO ORDERED.

In dismissing the petitions, the CA held that the RTC has the discretion, ptrrsuant to Section 7, Rule
16

132 of the Rules of Court, to allow the Questioned Documents to be presented and admitted in
support of Mr. Villafuerte's answers during his cross-examination. Anent the admission of the 2nd
Supplemental Judicial Affidavit of Mrs. Villafuerte, the CA noted that the records show that "all the
parties made reservations" to present "additional documentary exhibits" in the course of the trial, as
embodied in the Pre-Trial Order.

Dissatisfied, respondents moved for reconsideration of the CA Decision.

On March 6, 2017, the CA Special Former Fifth Division issued an Amended Decision reversing its
initial pronouncement, thus:

WHEREFORE, the motions for reconsideration are granted and the petitions in these cases are
granted. The Omnibus Orders of the Regional Trial Court of Makati City, Branch 147 dated October
1, 2014 and November 26, 2014 are Annulled and Set Aside.

SO ORDERED.

Finding merit in the respondents' contentions, the CA ruled that the RTC erred in allowing the
introduction of the 2nd Supplemental Judicial Affidavit in evidence, including the attached
Questioned Documents, since petitioner failed to comply with Sections 2 and 10 of the JA Rule
which prohibit the presentation, marking and identification of additional exhibits during trial that were
not promptly submitted during pre-trial. In addition, the CA declared Mr. Villafuerte as incompetent to
testify on the Questioned Documents since he was neither involved in the preparation nor execution
thereof; thus, his testimony respecting the documents is hearsay. Accordingly, the CA annulled and
set aside the October 1, 2014 and November 26, 2014 RTC Orders.

Hence, the instant petition.

Petitioner, in the main, argues that the introduction of additional documentary evidence during re-
direct examination of a witness is not absolutely proscribed by A.M. No. 03-1-09-SC, or the 17

Guidelines to be Observed by Trial Court Judges and Clerks of Court in the Conduct of Pre-Trial and
Use of Deposition-Discovery Measures (Guidelines in the Conduct of Pre-Trial), and the JA Rule.
Petitioner likewise contends that the trial court was well within its discretion to allow the introduction
of additional evidence during re-direct examination to explain or supplement the answers of a
witness during his or her cross-examination. Anent the submission of the 2nd Supplemental Judicial
Affidavit of Mrs. Villafuerte, petitioner asserts that the JA Rule allows for the belated submission of
judicial affidavits, subject only to applicable penalties.

Respondents, for their part, insist that the allowance of the 2nd Supplemental Judicial Affidavit and
its attachments to be introduced into evidence violates the express provisions of the JA Rule, Rule
10, Section 6 of the Rules of Court and other procedural rules. They further maintain that the
provisions of the Guidelines on Pre-Trial and JA Rule-prohibiting the submission, presentation, and
identification of evidence which were not identified, compared, and marked during pre-trial-are
mandatory, and thus, should not have been disregarded by the trial court. They further contend that
Mr. Villafuerte should not have been allowed to testify on the Questioned Documents since he does
not have personal knowledge of the matters contained therein.

Issue

The sole issue for the resolution of the Court is whether or not the CA erred in disallowing the
introduction of additional documentary exhibits during trial and the filing of the 2nd Supplemental
Judicial Affidavit of Mrs. Villafuerte.

Our Ruling

We find merit in the petition.

In an action for certiorari, the primordial task of the court is to ascertain whether the court a quo
acted with grave abuse of discretion amounting to excess or lack of jurisdiction in the exercise of its
judgment, such that the act was done in a capricious, whimsical, arbitrary or despotic manner. Grave
abuse of discretion means such capricious and whimsical exercise of judgment as is equivalent to
lack of jurisdiction. The abuse of discretion must be patent and gross as to amount to an evasion of
18

a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation
of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion
and hostility. 19

The jurisdiction of the court in such cases is narrow in scope since it is limited to resolving only
errors of jurisdiction, or one where the acts complained of were issued without or in excess of
jurisdiction. There is excess of jurisdiction where the court or quasi-judicial body, being clothed with
20

the power to determine the case, oversteps its authority as declared by law. Hence, as long as the
court acts within its jurisdiction, any alleged errors committed in the exercise of its discretion will
amount to nothing more than mere errors of judgment, correctible by an appeal or a petition for
review under Rule 45 of the Rules of Court.

This was the issue the CA was confronted with. Specifically, the CA was called to determine whether
the trial court correctly allowed the petitioner to submit the 2nd Supplemental Judicial Affidavit,
together with the documentary evidence attached thereto, even though trial had already commenced
when it submitted the same, and hence, had not been submitted and pre-marked during the pre-trial.

We agree with the CA Former Fifth Division's December 21, 2015 Decision that the trial court did not
gravely abuse its discretion in issuing the assailed Omnibus Orders.

The JA Rule, which took effect on January 1, 2013, was promulgated to address congestion and
delays in courts. Designed to expedite court proceedings, it primarily affects the manner by which
evidence is presented in court, particularly with regard to the taking of the witnesses' testimonies.
21

Consequently, in lieu of direct testimony in court, the parties are required to submit the judicial
affidavits of their witnesses within a given period. Nevertheless, the JA Rule was not devised to
supplant or amend existing procedural rules; rather, it is designed to supplement and augment them.
In this regard, reference must be made to the Guidelines on Pre-Trial in relation to the Rules on Pre-
Trial, which, interestingly, both parties invoke in support of their respective arguments.

Invoking the avowed objectives of the Guidelines on Pre-Trial and the JA Rule to abbreviate court
proceedings, ensure prompt disposition of cases, and decongest court dockets, respondents 22

contend that the submission of the 2nd Supplemental Judicial Affidavit of Mrs. Villafuerte and the
corresponding documentary evidence will unduly prolong the case and defeat the purposes of these
rules.

We are not persuaded.

The JA Rule and the Guidelines on Pre-Trial do not totally proscribe the submission of
additional evidence even after trial had already commenced

Certainly, the parties are mandated under Sec. 2 of the JA Rule to file and serve the judicial
affidavits of their witnesses, together with their documentary or object evidence, not later than five
days before pre-trial or preliminary conference, to wit:

Section 2. Submission of Judicial Affidavits and Exhibits in lieu of direct testimonies. - (a) The parties
shall file with the court and serve on the adverse party, personally or by licensed courier service, not
later than five days before pre-trial or preliminary conference or the scheduled hearing with respect
to motions and incidents, the following:

(1) The judicial affidavits of their witnesses, which shall take the place of such witnesses' direct
testimonies; and

(2) The parties' documentary or object evidence, if any, which shall be attached to the judicial
affidavits and marked as Exhibits A, B, C, and so on in the case of the complainant or the plaintiff,
and as Exhibits 1, 2, 3, and so on in the case of the respondent or the defendant. x x x

The documentary and testimonial evidence submitted will then be specified by the trial judge in the
Pre-Trial Order. Concomitant thereto, Sec. 10 of the same Rule contains a caveat that the failure to
timely submit the affidavits and documentary evidence shall be deemed to be a waiver of their
submission, thus:

Section 10. Effect of non-compliance with the Judicial Affidavit Rule. - (a) A party who fails to submit
the required judicial affidavits and exhibits on time shall be deemed to have waived their submission.
The court may, however, allow only once the late submission of the same provided, the delay is for a
valid reason, would not unduly prejudice the opposing party, and the defaulting party pays a fine of
not less than ₱1,000.00 nor more than ₱5,000.00 at the discretion of the court. (Emphasis supplied)

It bears to note that Sec. 10 does not contain a blanket prohibition on the submission of additional
evidence. However, the submission of evidence beyond the mandated period in the JA Rule is
strictly subject to the conditions that: a) the court may allow the late submission of evidence only
once; b) the party presenting the evidence proffers a valid reason for the delay; and c) the opposing
party will not be prejudiced thereby.
Corollary thereto, the Guidelines on Pre-Trial instructs the parties to submit their respective pre-trial
briefs at least three (3) days before the pretrial, containing, inter alia, the documents or exhibits to be
presented and to state the purposes thereof, viz:

I. Pre-Trial

A Civil Cases

2. The parties shall submit, at least three (3) days before the pretrial, pre-trial briefs containing the
following:

xxxx

d. The documents or exhibits to be presented, stating the purpose thereof (No evidence shall be
allowed to be presented and offered during the trial in support of a party's evidence-in-chief other
than those that had been earlier identified and pre-marked during the pre-trial, except if allowed by
the court for good cause shown) x x x. (Emphasis supplied)

Notwithstanding the foregoing procedural prescription, the same n1le confers upon the trial court the
discretion to allow the introduction of additional evidence during trial other than those that had been
previously marked and identified during the pre-trial, provided there are valid grounds.

The tria1 court precisely exercised this discretion. It allowed the introduction of the Questioned
Documents during the re-direct examination of Mr. Villafuerte upon petitioner's manifestation that the
same are being presented in response to the questions propounded by PNB Gen's counsel, Atty.
Mejia, during the cross-examination: 23

Atty. Mejia: Did you for instance submit proofs of purchases of raw materials for the production of the
goods worth ₱330 Million?

Witness: We have delivery receipts from subcontractors to prove the validity and existence of these
because we feel ...

Atty. Mejia: Do these delivery receipts amount to ₱330 Million?

Witness: I do not know the total but as I mentioned earlier, sir, we have already proven proof of loss.

Atty. Mejia: Did you for instance submit job orders issued by LGD to its subcontractors for the
production of the goods worth ₱330 Million?

Witness: We have purchase orders that we issued to our subcontractors.

Atty. Mejia: Did you issue purchase orders to your subcontractors?

Witness: Yes, sir.

Atty. Mejia: Did you submit copies of these purchase orders to your subcontractors?

Witness: I think so. (Emphasis supplied)

24

To echo the CA's observation, Atty. Mejia first raised the matter of petitioner's issuance and
submission of purchase orders to its subcontractors during Mr. Villafuerte's cross-examination. 25

Granting that the line of questioning refers to the fact of petitioner's submission of proofs of purchase
of raw materials used for the production of its goods, the existence of such proofs of purchase was
injected into the testimony due to Mr. Villafuerte's answers. The Court wishes to point out that Atty.
Mejia failed to have Mr. Villafuerte's answers stricken out the records although the same were
unresponsive to the questions propounded. Pursuant, therefore, to Sec. 7, Rule 132 of the Rules of
Court, Mr. Villafuerte may be examined again by petitioner's counsel to supplement and expound on
his answers during the cross-examination:

SEC. 7. Re-direct examination; its purpose and extent. - After the cross-examination of the witness
has been concluded, he may be reexamined by the party calling him, to explain or supplement his
answer given during the cross-examination. On re-direct examination, questions on matters not dealt
with during the cross-examination, may be allowed by the court in its discretion.

Respondents understandably take issue on Mr. Villafuerte's competence to testify on the Questioned
Documents given his admission that he no longer has any direct participation in the operations and
management of petitioner corporation upon divesting his interests thereat in 2004, and that his
current participation in the company is only limited to an advisory capacity. Nevertheless, the issues
26

of Mr. Villafuerte's incompetence as a witness to testify on the object and documentary evidence
presented and the propriety of presentation of the Questioned Documents, while intimately related,
are separate and distinct from each other.

Moreover, to disallow the presentation of the Questioned Documents on the ground of Mr.
Villafuerte's incompetence to identify and authenticate the same for lack of personal knowledge is
premature at this juncture. Sec. 34, Rule 132 of the Revised Rules on Evidence clearly instructs that:

Section 34. Offer of evidence. -The court shall consider no evidence which has not been formally
offered. The purpose for which the evidence is offered must be specified. (Emphasis supplied)

Sec. 20 of the same Rule, in turn, provides that before any private document is received in
27

evidence, its due execution and authenticity must be proved either by anyone who saw the
document executed or written, or by evidence of the genuineness of the signature or handwriting of
the maker. Following Sec. 19 of Rule 132, the documents sought to be presented undoubtedly are
28

private in character, and hence, must be identified and authenticated in the manner provided in the
Rules. The failure to properly authenticate the documents would result in their inadmissibility. The
29

court, however, can only rule on such issue upon the proponent's formal offer of evidence, which,
pursuant to Sec. 35, Rule 132, is made after the presentation of the party's testimonial evidence.
30

The present case clearly has not reached that stage yet when the documents were introduced in
court.

The 2nd Supplemental Judicial Affidavit of Mrs. Villafuerte was properly admitted by the trial
court

With regard to the admission of the 2nd Supplemental Judicial Affidavit, We reiterate the
requirements laid down in Sec. 2 of the JA Rule that the parties must file with the court and serve on
the adverse party the Judicial Affidavits of their witnesses not later than five days before pre-trial or
preliminary conference. While the belated submission of evidence is not totally disallowed, it is still,
to reiterate, subject to several conditions, which petitioner failed to comply with. Specifically, the
records are bereft of any justification, or "good cause," for the filing of the 2nd Supplemental Judicial
Affidavit during trial instead of during the pre-trial. Petitioner merely filed and served the affidavit
during the hearing on July 10, 2014, without any accompanying motion setting forth any explanation
and valid reason for the delay. Further, whether denominated as merely "supplemental," the fact that
the affidavit introduces evidence not previously marked and identified during pre-trial qualifies it as
new evidence.
Nevertheless, the Court is constrained to rule that the 2nd Supplemental Judicial Affidavit was
properly admitted in evidence by the trial court. As can be gleaned from Page 64 of the Pre-Trial
Order, both parties reserved the right to present additional evidence, thus:

All the parties made a reservation for the presentation of additional documentary exhibits in the
course of the trial.
31

Clearly, the foregoing reservation is tantamount to a waiver of the application of Secs. 2 and 10 of
the JA Rule. That respondents waived their right to object to petitioner's introduction of additional
evidence is further reinforced by their counsel's manifestation during the hearing on November 21,
2013:

Atty. Zarate: May I ask her your honor. Who else is knowledgeable about the documents, Madam
Witness?

Witness: The DRs and the Purchase Orders, your honor, were prepared by Lara's Gifts and
Decors.1âwphi1 They were sent to the subcontractors, your Honor. And then, however, their copies
were burned so we now asked the subcontractors to give us copies of the purchase orders that we
sent to them so these are the purchase orders, your honor.

xxxx

Atty. Zarate: These are the copies of the DRs of the subcontractors, your honor, because our copies
were burned by the fire.

Atty. Mejia: Your honor Please, we will not be objecting to the introduction in evidence of boxes of
documents which were prepared by persons who are not before the court who apparently will not be
brought to court for cross-examination by us, provided that there [is] a showing today that these
alleged products or supplies delivered have something to do with specific purchase orders that
established the contractual obligation to manufacture the 1,081,000 pieces of candle holders.

xxxx

Atty. Mejia: x x x Now, if they say, later on, they will be able connect the relevance or materiality, it
will be after the presentation of Mrs. Lara Villafuerte whom the witness claims is knowledgeable
about these documents, your honor .

Court: . . . that is why, he is saying, that it will be the President who can testify.

Atty. Mejia: We would rather wait for the President to identify these documents, your Honor.

Court: ... that is I believe the manifestation of the counsel.

Atty. Zarate: Yes, I am agreeable to that, your Honor. (Emphasis supplied)

32

Notably, respondents argued that the parties' respective reservations to allow them to introduce
additional evidence do not constitute a waiver of the parties' rights and obligations under the Pre-
Trial Order and the Rules. They further maintained that the introduction of additional evidence must
be predicated on necessity, and within the bounds of the issues that have been defined, limited, and
identified in the Pre-Trial Order. This argument deserves scant consideration.
33

For one, following the Guidelines on Pre-Trial, the parties are bound by the contents of the Pre-Trial
34

Order. Records do not disclose that the respondents endeavored to amend the Pre-Trial Order to
withdraw their assent to their reservation. Consequently, they cannot now dispute the contents of the
Pre-Trial Order. The evidence sought to be presented are likewise undeniably relevant to the issues
raised during the pre-trial, which mainly question petitioner's entitlement to claim the amount of its
insurance policy from the respondents and if it has proved the amount of its loss by substantial
evidence.

Finally, no less than UCPB, in its Motion to Correct/Amend Pre-Trial Order, moved that the Pre-Trial
Order be amended to explicitly include the trial court's ruling that it will allow additional direct
testimony of the parties' witnesses to be given in open court so long as they have already submitted
their Judicial Affidavits within the reglementary period required by the JA Rule. It appears that the
motion was made in connection with UCPB's motion to allow its own witness to give additional direct
testimony in open court. Herein, respondents do not dispute that petitioner was able to submit the
Judicial Affidavit and 1st Supplemental Judicial Affidavit of Mrs. Villafuerte within the period
prescribed by the JA Rule. Respondents, therefore, cannot be made to selectively apply the
provisions of the rules to the petitioner and then request to be exempted therefrom.

In view of the peculiar factual milieu surrounding the instant case, We rule, pro hac vice, that the trial
court did not gravely abuse its discretion in allowing the Questioned Documents to be presented in
court and in admitting the 2nd Supplemental Judicial Affidavit of petitioner's witness. This
notwithstanding, litigants are strictly enjoined to adhere to the provisions of the JA Rule, and to be
circumspect in the contents of court documents and pleadings.

WHEREFORE, the petition is GRANTED. The assailed Amended Decision of the Court of Appeals
in CA-G.R. SP Nos. 138321 and 138774 is hereby REVERSED and SET ASIDE. The Court of
Appeals' December 21, 2015 Decision is REINSTATED.

SO ORDERED.

G.R. No. 214054, August 05, 2015

NG MENG TAM, Petitioner, v. CHINA BANKING CORPORATION, Respondent.

DECISION

VILLARAMA, JR., J.:

Before this Court is a direct recourse from the Regional Trial Court (RTC) via petition 1
for review on the question of whether Section 5 2 of the Judicial Affidavit Rule (JAR)
applies to hostile or adverse witnesses. The petition seeks to annul and set aside the
May 28, 20143 and August 27, 20144 Orders of the RTC, Branch 139, Makati City in Civil
Case No. 08-1028.

This case stemmed from a collection suit filed by China Banking Corporation (China
Bank) against Ever Electrical Manufacturing Company Inc. (Ever), the heirs of Go Tong,
Vicente Go, George Go and petitioner Ng Meng Tam sometime in December 2008.
China Bank alleged that it granted Ever a loan amounting to P5,532,331.63. The loan
was allegedly backed by two surety agreements executed by Vicente, George and
petitioner in its favor, each for P5,000,000.00, and dated December 9, 1993 and May 3,
1995, respectively. When Ever defaulted in its payment, China Bank sent demand
letters collectively addressed to George, Vicente and petitioner. The demands were
unanswered. China Bank filed the complaint for collection docketed as Civil Case No.
08-1028, which was raffled off to RTC Branch 62, Makati City.

In his Answer, petitioner alleged that the surety agreements were null and void since
these were executed before the loan was granted in 2004. Petitioner posited that the
surety agreements were contracts of adhesion to be construed against the entity which
drafted the same. Petitioner also alleged that he did not receive any demand letter.

In the course of the proceedings, petitioner moved that his affirmative defenses be
heard by the RTC on the ground that the suit is barred by the statute of limitations and
laches.5 The motion was denied by the court. 6 On appeal, the Court of Appeals (CA) in
its December 22, 2010 Decision 7 ruled that a preliminary hearing was proper pursuant
to Section 6,8 Rule 16 of the Rules of Court due to the grounds cited by petitioner.
There being no appeal, the decision became final and executory on August 28,
2011.9redarclaw

10
pursuant to Sections 111 and 6,12 Rule 25 of the
On March 15, 2011, petitioner served interrogatories to parties

Rules of Court to China Bank and required Mr. George C. Yap, Account Officer of the
Account Management Group, to answer.

On June 22, 2011, George Yap executed his answers to interrogatories to

parties.13redarclaw

In the meantime, having failed mediation and judicial dispute resolution, Civil Case No. 08-1028 was re-raffled off to RTC Branch 139, Makati City.

Petitioner again moved for the hearing of his affirmative defenses. Because he found Yap’s answers to the interrogatories to parties evasive and not

responsive, petitioner applied for the issuance of a subpoena duces tecum and ad testificandum against George
Yap pursuant to Section 6,14 Rule 25 of the Revised Rules of Court.

On April 29, 2014, when the case was called for the presentation of George Yap as a
witness, China Bank objected citing Section 5 of the JAR. China Bank said that Yap
cannot be compelled to testify in court because petitioner did not obtain and present
George Yap’s judicial affidavit. The RTC required the parties to submit their motions on
the issue of whether the preparation of a judicial affidavit by George Yap as an adverse
or hostile witness is an exception to the judicial affidavit rule. 15redarclaw

Petitioner contended that Section 5 does not apply to Yap because it specifically excludes adverse party witnesses and hostile witnesses from its
application. Petitioner insists that Yap needed to be called to the stand so that he may be qualified as a hostile witness pursuant to the Rules of Court.

China Bank, on the other hand, stated that petitioner’s characterization of Yap’s answers to the interrogatories to parties as ambiguous and evasive is a
declaration of what type of witness Yap is. It theorizes that the interrogatories to parties answered by Yap serve as the judicial affidavit and there is no
need for Yap to be qualified as a hostile witness.

In its May 28, 2014 Order, the RTC denied for lack of merit petitioner’s motion to examine Yap without executing a judicial affidavit. The RTC in
interpreting Section 5 of the JAR stated:LawlibraryofCRAlaw
x x x The aforementioned provision, which allows the requesting party to avail himself
of the provisions of Rule 21 of the Rules of Court finds applicability to: (a) a
government employee or official, or the requested witness, who is neither the witness
of the adverse party nor a hostile witness and (b) who unjustifiably declines to execute
a judicial affidavit or refuses without just cause to make the relevant books,
documents, or other things under his control available for copying, authentication, and
eventual production in court.

In the case at bar, witness George Yap is being utilized as an adverse witness for the
[petitioner]. Moreover, there was no showing that he unjustifiably declines to execute
a judicial affidavit. In fact, it was [China Bank]’s counsel who insisted that said witness’
judicial affidavit be taken. Thus, Section 5 of the [JAR] which [petitioner] invoked to
exempt him from the Rule finds no application. Unless there is contrary ruling on the
matter by the Supreme Court, this court has no choice but to implement the rule as
written.

On this note, this Court also finds no merit on the contention of [China Bank] that the
answer to the written interrogatories by witness George Yap already constitutes his
judicial affidavit. Inasmuch as the Court strictly implemented the [JAR] on the part of
[petitioner], so shall it rule in the same manner on the part of [China Bank]. As
correctly pointed out by [petitioner], the said answer to interrogatories does not comply
with Section 3 of the [JAR] which provides for the contents of the judicial affidavit. 16

In essence, the RTC ruled that Section 5 did not apply to Yap since he was an adverse
witness and he did not unjustifiably decline to execute a judicial affidavit. It
stated:LawlibraryofCRAlaw

In view of the foregoing, the motion of the [petitioner] that witness George Yap be
examined without executing a Judicial Affidavit is hereby DENIED FOR LACK OF
MERIT.17

Petitioner moved for reconsideration but it was denied by the RTC in its August 27,
2014 Order.18 The RTC reiterated its position and stated: LawlibraryofCRAlaw

It must be pointed out that the [petitioner] [was] the [one] who invoked the provisions
of Section 5 of the [JAR] to compel the attendance of witness George Yap and as such,
it is their duty to show the applicability of the said provisions to the case at bar. As
stated in the challenged Order, Section 5 of the [JAR] finds applicability to: (a) a
government employee or official, or the requested witness, who is neither the witness
of the adverse party nor a hostile witness and (b) who unjustifiably declines to execute
a judicial affidavit or refuses without just cause to make the relevant books,
documents, or other things under his control available for copying, authentication, and
eventual production in court. In the case at bar, [petitioner] [does] not deny that
witness George Yap is to be utilized as [his] adverse witness. On this score alone, it is
clear that the provisions invoked do not apply. 19

The RTC stressed that Section 5 of the JAR required the requested witness’ refusal to
be unjustifiable. It stated:LawlibraryofCRAlaw

x x x the [JAR] requires that the refusal must be unjustifiable and without just cause.
It must be pointed out that [China Bank]’s previous motions to quash the subpoena
was grounded on the claim that having already submitted to this court his sworn
written interrogatories, his being compelled to testify would be unreasonable,
oppressive and pure harassment. Thus, witness’ refusal to testify cannot be considered
unjustifiable since he raised valid grounds. 20

Hence, this petition.

Petitioner contends that the RTC committed a grave error when it interpreted Section 5
to include adverse party and hostile witnesses. Based on the wording of Section 5,
adverse party and hostile witnesses are clearly excluded.

China Bank asserts that Yap neither refused unjustifiably nor without just cause refused
to a judicial affidavit. It cited the RTC’s August 27, 2014 Order where the court said
that Yap had answered the interrogatories and to compel him to testify in open court
would be “unreasonable, oppressive and pure harassment.” Moreover, it stated that
based on the language used by Section 2 of the JAR the filing of judicial affidavits is
mandatory.

The petition is anchored on the following arguments: LawlibraryofCRAlaw

RTC BR. 139-MAKATI COMMITTED AN ERROR OF LAW WHEN IT INTERPRETED SEC. 5

OF THE [JAR] CONTRARY TO ITS WORDINGS.

II
RTC BR. 139-MAKATI COMMITTED AN ERROR OF LAW WHEN IT INTERPRETED SEC. 5
[OF THE JAR] CONTRARY TO ITS PRACTICAL INTENTION AND COMMON SENSE.

III

RTC BR. 139-MAKATI COMMITTED AN ERROR OF LAW WHEN IT EFFECTIVELY

DISREGARDED THE RELEVANT RULES ON MODE OF DISCOVERY WHICH GOVERN THE
PRESENTATION OF ADVERSE WITNESSES.

IV

ON A POLICY LEVEL AND IN THE EVENT RTC BR. 139-MAKATI’S INTERPRETATION AND
APPLICATION OF SEC. 5 OF THE [JAR] IS CORRECT (I.E., THAT OPPOSING PARTY WHO
INTENDS TO PRESENT ADVERSE OR HOSTILE WITNESS MUST GET AND SUBMIT THAT
WITNESS’ JUDICIAL AFFIDAVIT NO MATTER WHAT) IT IS HUMBLY SUBMITTED, WITH
THE UTMOST INDULGENCE OF THE HONORABLE SUPREME COURT, THAT THE SAME
RULE BE IMPROVED OR AMENDED BY PROVIDING SANCTIONS IN THE EVENT THE
ADVERSE OR HOSTILE WITNESS REFUSES TO ANSWER OR EXECUTE JUDICIAL
AFFIDAVIT AS REQUIRED BY THE OPPOSING PARTY. 21

We grant the petition.

THE JUDICIAL AFFIDAVIT RULE

APPLIES TO PENDING CASES

On September 4, 2012, the JAR was promulgated to address case congestion and
delays in courts. To this end, it seeks to reduce the time needed to take witnesses’
testimonies.22 The JAR took effect on January 1, 2013 and would also apply to pending
cases pursuant to Section 12 to wit: LawlibraryofCRAlaw

Sec. 12. Effectivity. – This rule shall take effect on January 1, 2013 following its
publication in two newspapers of general circulation not later than September 15, 2012.
It shall also apply to existing cases. (Emphasis supplied)

The Court En Banc gave public prosecutors in first and second level courts one year of
modified compliance.23 The JAR thus took full effect on January 1, 2014.
Here, parties were presenting their evidence for the RTC’s consideration when the JAR
took effect. Therefore, pursuant to Section 12 the JAR applies to the present collection
suit.

SECTION 5 OF THE JAR DOES NOT

APPLY TO ADVERSE PARTY WITNESSES

The JAR primarily affects the manner by which evidence is presented in court. Section
2(a) of the JAR provides that judicial affidavits are mandatorily filed by parties to a case
except in small claims cases. These judicial affidavits take the place of direct testimony
in court. It provides:LawlibraryofCRAlaw

Sec. 2. Submission of Judicial Affidavits and Exhibits in lieu of direct testimonies. – (a)
The parties shall file with the court and serve on the adverse party, personally or by
licensed courier service, not later than five days before pre-trial or preliminary
conference or the scheduled hearing with respect to motions and incidents, the
following:LawlibraryofCRAlaw

(1) The judicial affidavits of their witnesses, which shall take the place of such witnesses’ direct testimonies; and

(2) The parties’ documentary or object evidence, if any, which shall be attached to the judicial affidavits and marked as Exhibits A, B, C, and so on in the
case of the complainant or the plaintiff, and as Exhibits 1, 2, 3, and so on in the case of the respondent or the defendant.

xxxx

Section 324 of the JAR enumerates the content of a judicial affidavit.

Under Section 10,25 parties are to be penalized if they do not conform to the provisions
of the JAR. Parties are however allowed to resort to the application of a subpoena
pursuant to Rule 21 of the Rules of Court in Section 5 of the JAR in certain situations.
Section 5 provides:LawlibraryofCRAlaw

Sec. 5. Subpoena. – If the government employee or official, or the requested witness,

who is neither the witness of the adverse party nor a hostile witness, unjustifiably
declines to execute a judicial affidavit or refuses without just cause to make the
relevant books, documents, or other things under his control available for copying,
authentication, and eventual production in court, the requesting party may avail himself
of the issuance of a subpoena ad testificandum or duces tecum under Rule 21 of the
Rules of Court. The rules governing the issuance of a subpoena to the witness in this
case shall be the same as when taking his deposition except that the taking of a judicial
affidavit shal1 be understood to be ex parte.
While we agree with the RTC that Section 5 has no application to Yap as he was
presented as a hostile witness we cannot agree that there is need for a finding that
witness unjustifiably refused to execute a judicial affidavit.

Section 5 of the JAR contemplates a situation where there is a (a) government

employee or official or (b) requested witness who is not the (1) adverse party’s witness
nor (2) a hostile witness. If this person either (a) unjustifiably declines to execute a
judicial affidavit or (b) refuses without just cause to make the relevant documents
available to the other party and its presentation to court, Section 5 allows the
requesting party to avail of issuance of subpoena ad testificandum or duces tecum
under Rule 21 of the Rules of Court. Thus, adverse party witnesses and hostile
witnesses being excluded they are not covered by Section 5. Expressio unius est
exclusion alterius: the express mention of one person, thing, or consequence implies
the exclusion of all others.26redarclaw

Here, Yap is a requested witness who is the adverse party’s witness. Regardless of whether he unjustifiably declines to execute a judicial affidavit or
refuses without just cause to present the documents, Section 5 cannot be made to apply to him for the reason that he is included in a group of individuals
expressly exempt from the provision’s application.

The situation created before us begs the question: if the requested witness is the adverse party’s witness or a hostile witness, what procedure should be
followed?

The JAR being silent on this point, we turn to the provisions governing the rules on evidence covering hostile witnesses specially Section 12, Rule 132 of
the Rules of Court which provides:LawlibraryofCRAlaw

SEC. 12. Party may not impeach his own witness. – Except with respect to witnesses
referred to in paragraphs (d) and (e) of Section 10, the party producing a witness is not
allowed to impeach his credibility.

A witness may be considered as unwilling or hostile only if so declared by the court

upon adequate showing of his adverse interest, unjustified reluctance to testify, or his
having misled the party into calling him to the witness stand.

The unwilling or hostile witness so declared, or the witness who is an adverse party,
may be impeached by the party presenting him in all respects as if he had been called
by the adverse party, except by evidence of his bad character. He may also be
impeached and cross-examined by the adverse party, but such cross-examination must
only be on the subject matter of his examination-in-chief.

Before a party may be qualified under Section 12, Rule 132 of the Rules of Court, the
party presenting the adverse party witness must comply with Section 6, Rule 25 of the
Rules of Court which provides:LawlibraryofCRAlaw
SEC. 6. Effect of failure to serve written interrogatories. – Unless thereafter allowed by
the court for good cause shown and to prevent a failure of justice, a party not served
with written interrogatories may not be compelled by the adverse party to give
testimony in open court, or to give a deposition pending appeal.

In Afulugencia v. Metropolitan Bank & Trust Co.,27 this Court stated that “in civil cases,
the procedure of calling the adverse party to the witness stand is not allowed, unless
written interrogatories are first served upon the latter.” 28 There petitioners Spouses
Afulugencia sought the issuance of a subpoena duces tecum and ad testificandum to
compel the officers of the bank to testify and bring documents pertaining to the
extrajudicial foreclosure and sale of a certain parcel of land. Metrobank moved to
quash the issuance of the subpoenas on the ground of non-compliance with Section 6,
Rule 25 of the Rules of Court. In quashing the issuance of the subpoena, the Court
reminded litigants that the depositions are a mechanism by which fishing expeditions
and delays may be avoided. Further written interrogatories aid the court in limiting
harassment and to focus on what is essential to a case. The Court stated: LawlibraryofCRAlaw

One of the purposes of the above rule is to prevent fishing expeditions and needless
delays; it is there to maintain order and facilitate the conduct of trial. It will be
presumed that a party who does not serve written interrogatories on the adverse party
beforehand will most likely be unable to elicit facts useful to its case if it later opts to
call the adverse party to the witness stand as its witness. Instead, the process could be
treated as a fishing expedition or an attempt at delaying the proceedings; it produces
no significant result that a prior written interrogatories might bring.

Besides, since the calling party is deemed bound by the adverse party’s testimony,
compelling the adverse party to take the witness stand may result in the calling party
damaging its own case. Otherwise stated, if a party cannot elicit facts or information
useful to its case through the facility of written interrogatories or other mode of
discovery, then the calling of the adverse party to the witness stand could only serve to
weaken its own case as a result of the calling party’s being bound by the adverse
party’s testimony, which may only be worthless and instead detrimental to the calling
party’s cause.

Another reason for the rule is that by requiring prior written interrogatories, the court
may limit the inquiry to what is relevant, and thus prevent the calling party from
straying or harassing the adverse party when it takes the latter to the stand.

Thus, the rule not only protects the adverse party from unwarranted surprises or
harassment; it likewise prevents the calling party from conducting a fishing expedition
or bungling its own case. Using its own judgment and discretion, the court can hold its
own in resolving a dispute, and need not bear witness to the parties perpetrating unfair
court practices such as fishing for evidence, badgering, or altogether ruining their own
cases. Ultimately, such unnecessary processes can only constitute a waste of the
court’s precious time, if not pointless entertainment. 29 (Citation omitted)

In this case, parties, with the approval of the Court, furnished and answered
interrogatories to parties pursuant to Rule 25 of the Rules of Court. They therefore
complied with Section 6 of Rule 25 of the Rules of Court. Before the present
controversy arose, the RTC had already issued subpoenas for Yap to testify and produce
documents. He was called to the witness stand when China Bank interposed its
objection for non-compliance with Section 5 of the JAR. Having established that Yap, as
an adverse party witness, is not within Section 5 of the JAR’s scope, the rules in
presentation of adverse party witnesses as provided for under the Rules of Court shall
apply. In keeping with this Court’s decision in Afulugencia, there is no reason for the
RTC not to proceed with the presentation of Yap as a witness.

In sum, Section 5 of the JAR expressly excludes from its application adverse party and
hostile witnesses. For the presentation of these types of witnesses, the provisions on
the Rules of Court under the Revised Rules of Evidence and all other correlative rules
including the modes of deposition and discovery rules shall apply.

WHEREFORE, the petition is GRANTED. The May 28, 2014 and August 27, 2014
Orders of the Regional Trial Court, Branch 139, Makati City are hereby ANNULLED and
SET ASIDE.

No pronouncement as to costs.

SO ORDERED.cralawlawlibrary

G.R. No. 208424, February 14, 2018

ARMANDO LAGON, Petitioner, v. HON. DENNIS A. VELASCO, IN HIS CAPACITY

AS PRESIDING JUDGE OF MUNICIPAL TRIAL COURT IN CITIES OF
KORONADAL, SOUTH COTABATO, AND GABRIEL DIZON, Respondents.

DECISION

REYES, JR., J.:

This treats of the Petition for Certiorari1 under Rule 65 of the Revised Rules of Court
seeking the annulment of the Order 2 dated June 6, 2013, issued by public respondent
Hon. Dennis A. Velasco (Judge Velasco), directing petitioner Armando Lagon (Lagon) to
file the judicial affidavits of his witnesses within five (5) days prior to the
commencement of the trial dates.

The Antecedent Facts

Sometime in December 2000, Lagon obtained a cash loan from private respondent
Gabriel Dizon (Dizon), in the amount of Three Hundred Thousand Pesos (Php
300,000.00). In payment thereof, Lagon issued PCIBank Check No. 0064914, postdated
January 12, 2001, in an equal amount. However, when Dizon presented the check for
payment, it was dishonored for being Drawn Against Insufficient Funds. 3

Consequently, Dizon sent a Letter dated May 6, 2011 to Lagon, demanding the
payment Php 300,000.00. However, Lagon refused to pay. 4

On June 6, 2011, Dizon field a Complaint for Sum of Money, Damages and Attorney's
Fees against Lagon.5

On October 8, 2011, Lagon filed a Motion to Dismiss on the ground of prescription.

In response, Dizon filed an Opposition with Motion to Amend Complaint. 6 In his

Amended Complaint, Dizon averred that he sent two demand letters, one dated March
23, 2010 and another dated May 6, 2011. Both letters were sent through JRS Express. 7

On February 29, 2012, Lagon filed his Answer asserting that he has paid the loan. 8

Meanwhile, during the preliminary conference, the parties were directed to file their
respective pre-trial briefs within five (5) days from receipt of the trial court's order.

Thereafter, on August 9, 2012, Judge Velasco issued a Pre-Trial Conference Order. 9

At the initial trial on June 6, 2013, neither of the parties submitted their judicial
affidavits or those of their witnesses. Hence, Judge Velasco issued the assailed Order 10
requiring the parties to submit their respective judicial affidavits five (5) days before
the trial.11 The essential portion of the Order dated June 6, 2013, reads:

In the interest of justice and equity, the plaintiff is hereby allowed to submit his Judicial
Affidavits. But for failure of the plaintiff to submit Judicial Affidavits in due time, the
Court imposed a fine of Three Thousand pesos (Php 3,000.00) and to be reimbursed an
amount of Five Thousand pesos (Php 5,000.00) to the defendant's expenses in coming
to Court within five (5) days from today.

The parties are hereby directed to submit Judicial Affidavits of their witnesses within
five (5) days prior to the trial dates. Otherwise, the Court will no longer admit the
same.12

Lagon received a copy of the same Order on June 26, 2013. 13

On June 27, 2013, Lagon filed a Motion for Partial Reconsideration. 14 In his Motion,
Lagon requested that he be allowed to submit the judicial affidavit of his witnesses after
the plaintiff shall have adduced his evidence. Lagon claimed that Section 2 of the
Judicial Affidavit Rule, which mandates the submission by both parties of their judicial
affidavits before the pre-trial conference is violative of his right to due process, hence
unconstitutional.15

On July 10, 2013, Judge Velasco issued the assailed Order 16 denying Lagon's Motion for
Partial Reconsideration.17 Judge Velasco opined that "the requirement of the submission
of judicial affidavits of witnesses, not later than 5 days before the pre-trial or
preliminary conference or the scheduled hearing, under Section 2 of the Judicial
Affidavit Rule is not violative of Lagon's right to due process. 18

Dissatisfied with the ruling, Lagon sought direct recourse to this Court by filing the
instant Petition for Certiorari19 under Rule 65 of the Revised Rules of Court.

The Issue

The lone issue for this Court's resolution is whether or not Section 2 of the Judicial
Affidavit Rule, which requires a defendant to adduce his testimony and that of his
witnesses by judicial affidavits, and submit his documentary evidence before the pre-
trial or preliminary conference, offends his right to due process of law.

In this regard, Lagon asserts that Judge Velasco committed grave abuse of discretion,
amounting to lack or excess of jurisdiction, by compelling him (Lagon) to submit his
evidence by judicial affidavits, even before the plaintiff could have adduced his own
evidence and rested his case. According to Lagon, under the Judicial Affidavit Rule, the
defendant is forced to adduce evidence simultaneously with the plaintiff. This conflicts
with the rule on Demurrer to Evidence, which grants a defendant the right to opt out of
presenting evidence, and instead move for the dismissal of the complaint upon the
failure of the plaintiff to show a right to relief. The defendant is thus stripped of his "due
process right not to be compelled to adduce evidence." 20 Moreover, Lagon contends that
the Judicial Affidavit Rule violates the order of trial provided under the Rules of Civil
Procedure.21 Additionally, it denies litigants of their right to present adverse, hostile or
unwilling witnesses, or to secure the testimonies of witnesses by deposition upon oral
examination or written interrogatories, because the party cannot secure their judicial
affidavits.22

On the other hand, Dizon counters that no grave abuse of discretion may be ascribed
against Judge Velasco for merely enforcing the rules promulgated by this Court. Dizon
maintains that the Judicial Affidavit Rule was promoted precisely to address the
problem of case congestion and delays created by the voluminous cases filed every
year and the slow and cumbersome court proceedings. Likewise, Dizon avers that
contrary to Lagon's claim, the Judicial Affidavit Rule actually preserves and respects
litigants' procedural rights. Due process of law contemplates notice to the party, and an
opportunity to be heard before judgment is rendered. 23 Lagon was accorded notice and
an opportunity to be heard when Judge Velasco ordered the submission of judicial
affidavits prior to the pre-trial conference. It was Lagon, who blatantly refused to
comply with the order.24 Dizon points out that the Judicial Affidavit Rule does not in any
way prevent Lagon from filing a demurrer to evidence if he feels that the same is truly
warranted.25

Ruling of the Court

The instant petition is bereft of merit.

It must be noted at the outset that a petition for certiorari under Rule 65 of the Revised
Rules of Court is a pleading limited to the correction of errors of jurisdiction or grave
abuse of discretion amounting to lack or excess of jurisdiction. 26 "Its principal office is
to keep the inferior court within the parameters of its jurisdiction or to prevent it from
committing such a grave abuse of discretion amounting to lack or excess of
jurisdiction."27

It is well-settled that a petition for certiorari against a court which has jurisdiction over
a case will prosper only if grave abuse of discretion is manifested. The burden is on the
part of the petitioner to prove not merely reversible error, but grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of the public respondent issuing
the impugned order. Mere abuse of discretion is not enough; it must be grave. The
term grave abuse of discretion pertains to a capricious and whimsical exercise of
judgment so patent and gross as to amount to an evasion of a positive duty or a virtual
refusal to perform a duty enjoined by law, as where the power is exercised in an
arbitrary and despotic manner because of passion or hostility. 28

In the case at bar, Lagon accuses Judge Velasco of having committed grave abuse of
discretion amounting to lack or excess of jurisdiction in issuing the assailed order, 29
requiring him (Lagon) to submit his Judicial Affidavits before the commencement of the
trial of the case.

The Court is not convinced.

In issuing the assailed order, Judge Velasco was actually enforcing the Judicial Affidavit
Rule, promulgated by the Court. Therefore, by no stretch of the imagination may Judge
Velasco's faithful observance of the rules of procedure, be regarded as a capricious,
whimsical or arbitrary act.

Essentially, Article VIII, Section 5(5) of the 1987 Constitution bestows upon the Court
the power to "promulgate rules concerning the protection and enforcement of
constitutional rights, pleading, practice, and procedure in all courts x x x."

Seeking to eradicate the scourge of long-drawn protracted litigations, and address case
congestion and delays in court, 30 on September 4, 2012, the Court en banc
promulgated A.M. No. 12-8-8-SC, or the Judicial Affidavit Rule.

The Judicial Affidavit Rule was particularly created to solve the following ills brought
about by protracted litigations, such as, the dismissal of criminal cases due to the
frustration of complainants in shuttling back and forth to court after repeated
postponements; and the dearth of foreign businessmen making long-term investments
in the Philippines because the courts are unable to provide ample and speedy protection
to their investments, thereby keeping the people poor. 31 At first, the Court approved
the piloting by trial courts in Quezon City of the compulsory use of judicial affidavits in
place of the direct testimonies of witnesses. 32 Eventually, the success of the judicial
affidavit rule was unprecedented, and its implementation led to a reduction of about
two-thirds of the time used for presenting the testimonies of witnesses. Indeed, the use
of judicial affidavits greatly hastened the hearing and adjudication of cases. 33

Accordingly, the Court en banc directed the application of the Judicial Affidavit Rule to
all actions, proceedings, and incidents requiring the reception of evidence 34 before the
following tribunals, such as,
(i) the Metropolitan Trial Courts, the Municipal Trial Courts in Cities, the Municipal Trial
Courts, the Municipal Circuit Trial Courts, and the Shari'a Circuit Courts but shall not
apply to small claims cases under A.M. 08-8-7-SC; (ii) The Regional Trial Courts and
the Shari'a District Courts; (iii) The Sandiganbayan, the Court of Tax Appeals, the Court
of Appeals, and the Shari'a Appellate Courts; (iv) The investigating officers and bodies
authorized by the Supreme Court to receive evidence, including the Integrated Bar of
the Philippine (IBP); and (v) The special courts and quasi-judicial bodies, whose rules of
procedure are subject to disapproval of the Supreme Court, insofar as their existing
rules of procedure contravene the provisions of this Rule. 35

Thus, in all proceedings before the aforementioned tribunals, the parties are required to
file the Judicial Affidavits of their witnesses, in lieu of their direct testimonies.
Specifically, Section 2 of the Judicial Affidavit Rule ordains that:

Section 2. Submission of Judicial Affidavits and Exhibits in lieu of direct testimonies. -

(a) The parties shall file with the court and serve on the adverse party, personally or by
licensed courier service, not later than five days before pre-trial or preliminary
conference or the scheduled hearing with respect to motions and incidents, the
following:

The judicial affidavits of their witnesses, which shall take the place of such witnesses'
direct testimonies; and

The parties' documentary or object evidence, if any, which shall be attached to the
judicial affidavits and marked as Exhibits A, B, C, and so on in the case of the
complainant or the plaintiff, and as Exhibits 1, 2, 3, and so on in the case of the
respondent or the defendant.

(b) Should a party or a witness desire to keep the original document or object evidence
in his possession, he may, after the same has been identified, marked as exhibit, and
authenticated, warrant in his judicial affidavit that the copy or reproduction attached to
such affidavit is a faithful copy or reproduction of that original. In addition, the party or
witness shall bring the original document or object evidence for comparison during the
preliminary conference with the attached copy, reproduction, or pictures, failing which
the latter shall not be admitted.

This is without prejudice to the introduction of secondary evidence in place of the

original when allowed by existing rules.

Incidentally, the failure to comply with Section 2 of the Judicial Affidavit Rule shall
result to a waiver of the submission of the required judicial affidavits and exhibits.
However, the court may, upon valid cause shown, allow the late submission of the
judicial affidavit, subject to specific penalties, constituting a fine of not less than One
Thousand Pesos (Php 1,000.00), nor more than Five Thousand Pesos (Php 5,000.00), at
the discretion of the court.36

Despite the noble purpose of the Judicial Affidavit Rule, Lagon comes to this Court
bewailing the same procedural regulation as violative of his right to due process of law,
in that it "forces" him to present evidence even before the plaintiff has rested his case,
apparently in violation of the rule on demurrer to evidence.
Juxtaposing the Judicial Affidavit Rule with that of the rule on demurrer to evidence, it
becomes all too apparent that there exists no conflict between them. Similar to the
judicial affidavit, a demurrer to evidence likewise abbreviates judicial proceedings, and
serves as an instrument for the expeditious termination of an action. 37 It is as "an
objection or exception by one of the parties in an action at law, to the effect that the
evidence which his adversary produced is insufficient in point of law (whether true or
not) to make out his case or sustain the issue." 38 All that it grants is an option to a
defendant, to seek the dismissal of the case, should he believe that the plaintiff failed
to establish his right to relief. The demurrer challenges the sufficiency of the plaintiffs
evidence to sustain a verdict.39 Thus, in passing upon the sufficiency of the evidence
raised in a demurrer, the court is merely required to ascertain whether there is
competent or sufficient proof to sustain the plaintiff's complaint.

Clearly, both the Judicial Affidavit Rule and Demurrer to Evidence can co-exist
harmoniously as tools for a more efficient and speedy administration of trial
procedures. On the one hand, the Judicial Affidavit Rule simply dispenses with the
direct testimony, thereby reducing the time at which a case stands for trial, in the same
way that the Demurrer to Evidence abbreviates proceedings by allowing the defendant
to seek for an early resolution of the case should the plaintiff be unable to sufficiently
prove his complaint. These rules do not conflict, and when used hand in hand will lead
to an efficient administration of the trial.

Moreover, by no stretch of the imagination may it be concluded that Lagon was

deprived of due process of law. There is nothing in the provisions of the Judicial
Affidavit Rule, which prohibits a defendant from filing a demurrer to evidence, if he
truly believes that the evidence adduced by the plaintiff is insufficient. Besides, in the
resolution of the demurrer to evidence, only the evidence presented by the plaintiff
shall be considered and weighed by the Court.

Furthermore, the fact that the defendant is mandated to submit his judicial affidavit
prior to the trial and before the plaintiff has rested his case is not a cumbersome
requirement or a circumvention of due process. On the contrary, this Is necessary for
the orderly administration of the proceeding before the courts. It must be remembered
that in as early as the pre-trial conference, the defendant is already required to submit
a pre-trial brief, where he is then tasked to state the number and names of his
witnesses, as well as the substance of their testimonies; the issues to be tried and
resolved; and the documents or exhibits to be presented and the purpose thereof. 40
Thus, the defendant is already required in this early stage of the proceedings to
formulate his defense and plan his strategy to counter the plaintiffs complaint. There is
nothing too tedious or burdensome in requiring the submission of the judicial affidavit.
In fact, this would even help the defendant in preparing his opposing arguments against
the plaintiff.

All told, the Court has always emphasized that "procedural rules should be treated with
utmost respect and due regard, since they are designed to facilitate the adjudication of
cases to remedy the worsening problem of delay in the resolution of rival claims and in
the administration of justice." 41 It cannot be overemphasized that when the rules are
clear, magistrates are mandated to apply them. Judge Velasco honored this principle by
issuing the assailed order requiring the submission of judicial affidavits before the
commencement of the trial of the case. Accordingly, he cannot be deemed to have
acted with grave abuse of discretion amounting to lack or excess of jurisdiction by
strictly enforcing the Court's rules. Perforce, the Petition for Certiorari must be
dismissed.

WHEREFORE, premises considered, the instant Petition for Certiorari is DENIED for
lack of merit. The Order dated June 6, 2013 in Civil Case No. 2293, issued by Hon.
Dennis A. Velasco, Presiding Judge, Municipal Trial Court in Cities, Koronadal City, is
AFFIRMED.

SO ORDERED.

G.R. No. 187448

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
ALFREDO R. DE BORJA, Respondent.

DECISION

CAGUIOA, J.:

Before this Court is an Appeal by Certiorari filed under Rule 45 of the Rules of Court (Petition),
1

seeking review of the Resolutions dated July 31, 2008 and March 25, 2009 issued by the
2 3

Sandiganbayan (SB) – First Division in Civil Case No. 0003. The Resolution dated July 31, 2008
4

granted respondent Alfredo De Borja's (De Borja) Demurrer to Evidence dated April 15, 2005 5

(Demurrer to Evidence), while the Resolution dated March 25, 2009 denied petitioner Republic of the
Philippines' (Republic) Motion for Reconsideration dated August 15, 2008 of the Resolution dated
6

July 31, 2008.

The Factual Antecedents

The case stems from a Complaint filed by petitioner Republic, represented by the Presidential
7

Commission on Good Government, for "Accounting, Reconveyance, Forfeiture, Restitution, and

Damages" (Complaint) before the SB (Civil Case No. 0003) for the recovery of ill-gotten assets
allegedly amassed by the individual respondents therein, singly or collectively, during the
administration of the late President Ferdinand E. Marcos. Geronimo Z. Velasco (Velasco), one of
8

the defendants in Civil Case No. 0003, was the President and Chairman of the Board of Directors of
the Philippine National Oil Company (PNOC). Herein respondent De Borja is Velasco' s nephew.
9 10

It appears from the records that PNOC, in the exercise of its functions, would regularly enter into
charter agreements with vessels and, pursuant to industry practice, vessel owners would pay
"address commissions" to PNOC as charterer, amounting to five percent (5%) of the total freight. 11

Allegedly, during the tenure of Velasco, no address commissions were remitted to PNOC. 12

Instead, starting 1979, the percentage of the address commission no longer appeared in the charter
contracts and the words "as agreed upon" were substituted therefor, per instructions of Velasco. As
13

a result, the supposed address commissions were remitted to the account of Decision Research
Management Company (DRMC), one of the defendant corporations in Civil Case No. 0003 and the
alleged conduit for address commissions. 14
Velasco was likewise alleged to have diverted
government funds by entering into several transactions involving the purchase of crude oil tankers
and by reason of which he received bribes, kickbacks, or commissions in exchange for the granting
of permits, licenses, and/or charters to oil tankers to service PNOC.
15

Given the foregoing, petitioner Republic claimed that it was De Borja who collected these address
commissions in behalf of Velasco, basing its allegation on the testimony of Epifanio F. Verano 16

(Verano), a witness for petitioner Republic. De Borja was further alleged to have acted as Velasco's
dummy, nominee, and/or agent for corporations he owned and/or controlled, such as DRMC. 17

After the filing of the parties' responsive pleadings, trial on the merits ensued. Subsequently, upon
the conclusion of its presentation of evidence, petitioner Republic submitted its Formal Offer of
Evidence dated March 6, 1995. 18

On April 15, 2005, respondent De Borja filed his Demurrer to Evidence of even date, stating therein,
among others: (i) that Verano, on two (2) occasions, testified that he delivered an envelope to
Velasco who, in turn, instructed him to deliver the same to De Borja; (ii) that Verano admitted that
the envelope was sealed; (iii) that Verano did not open the envelope and therefore had no
knowledge of the contents thereof; (iv) that Verano did not deliver the envelope personally to De
Borja; and (v) that Verano did not confirm whether De Borja in fact received the said envelope. 19

In turn, petitioner Republic filed a Comment/Opposition dated May 9, 2005, to which respondent De
20

Borja filed a Reply dated June 2, 2005.21

Ruling of the SB

In its Resolution dated July 31, 2008, the SB found that the evidence presented was insufficient to
support a claim for damages against De Borja, thereby granting respondent De Borja's Demurrer to
Evidence. In the said Resolution, the SB ratiocinated:

After an assessment of the arguments raised by defendant De Borja and the comments thereto of
plaintiff, this Court finds that the plaintiff has failed to present sufficient evidence to prove that
defendant De Borja is liable for damages as averred in the complaint.

Among the witnesses presented by plaintiff, the Court focused on the testimony of the witness for
plaintiff Epifanio F. Verano, who was presented to prove that on two occasions, defendant Velasco
instructed Verano to deliver to defendant De Borja envelopes containing money which constituted
commissions given by ship brokers.

Upon cross-examination, however, witness Verano admitted that although he was instructed to
deliver two envelopes to the office of De Borja, he did not know for a fact that De Borja
actually received them. Moreover, witness Verano testified that after he delivered the
envelopes, he did not receive any word that they did reach De Borja, nor did Verano confirm
De Borja's receipt of them.

xxxx

Plaintiff also sought to prove defendant De Borja's participation in the alleged utilization of public
funds by the affidavit executed by Jose M. Reyes. However, the affiant Jose M. Reyes never
testified in open court, as he had a heart attack two days before he was scheduled to take the
witness stand. x x x
x x x In this case, where the plaintiff's evidence against defendant De Borja consists only of
Verano's testimony and Reyes' affidavit, no preponderance of evidence has been
satisfactorily established. (Emphasis supplied)
22

Petitioner Republic then filed its Motion for Reconsideration dated August 15, 2008, which was
23

denied by the SB in the Resolution March 25, 2009.

Hence, petitioner Republic filed the instant Petition solely with respect to the liability of respondent
De Borja, claiming that the SB erred in granting the Demurrer to Evidence and in denying its Motion
for Reconsideration dated August 15, 2008.

In a Resolution dated July 15, 2009, the Court required respondent De Borja to file a Comment. In
24

compliance with the Court's directive, respondent De Borja filed his Comment dated September 11,
2009, reiterating the insufficiency of the evidence adduced before the SB (e.g., testimony of
25

Verano, affidavit of deceased Jose M. Reyes).

Petitioner Republic then filed its Reply dated June 10, 2010 in due course. A Motion for Early
26

Resolution dated June 7, 2011 was thereafter filed by respondent De Borja, which was noted by the
27

Court in its Resolution dated August 10, 2011. 28

Parenthetically, on June 16, 2011, the SB rendered a Decision dismissing Civil Case No. 0003 with
respect to the remaining respondents therein. 1avvphi1 This, in turn, was subject of an appeal before this
Court and
29

docketed as G.R. No. 199323, entitled "Republic of the Philippines vs. Geronimo Z. Velasco, et al".
On July 28, 2014, the Court rendered a Resolution, denying the appeal. Thereafter, an Entry of
Judgment was made with respect to G.R. No. 199323. Subsequently, on December 6, 2016,
respondent De Borja filed a Motion to Dismiss dated December 2, 2016, on the ground that the
30

Petition had been rendered moot and academic by reason of the said Entry of Judgment, which
affirmed the June 16, 2011 Decision and November 15, 2011 Resolution of the SB that dismissed
Civil Case No. 0003.

Issue

The issue presented for the Court's resolution is whether or not the SB committed reversible error in
granting respondent De Borja's Demurrer to Evidence.

The Court's Ruling

Before proceeding to the substantive issue in this case, and for the guidance of the bench and bar,
the Court finds it proper to first discuss procedural matters.

A demurrer to evidence is a motion to dismiss on the ground of insufficiency of evidence. It is a

remedy available to the defendant, to the effect that the evidence produced by the plaintiff is
insufficient in point of law, whether true or not, to make out a case or sustain an issue. The 31

question in a demurrer to evidence is whether the plaintiff, by his evidence in chief, had been able to
establish a prima facie case. 32

In Felipe v. MGM Motor Trading Corp., wherein the propriety of the trial court's granting of a
33

demurrer to evidence was the crux of the controversy, we held that a review of the dismissal of the
complaint naturally entailed a calibration of the evidence on record to properly determine whether
the material allegations of the complaint were amply supported by evidence. This being so, where
the resolution of a question requires an examination of the evidence, the credibility of the witnesses,
the existence and the relevance of surrounding circumstances, and the probability of specific
situations, the same involves a question of fact. 34

In this regard, the Court emphasizes that factual questions are not the proper subject of a petition for
review under Rule 45, the same being limited only to questions of law. Not being a trier of facts, the
35

Court is not duty-bound to analyze and weigh again the evidence already considered in the
proceedings below. For such reasons, the Court has consistently deferred to the factual findings of
36

the trial court, in light of the unique opportunity afforded them to observe the demeanor and
spontaneity of the witness in assessing the credibility of their testimony. 37

Further, in his Comment dated September 11, 2009, respondent De Borja points out the
inadvertence of petitioner Republic, through the Office of the Solicitor General, to submit proof of
service on the Sandiganbayan of a copy of the instant Petition and the preceding Motion for
Extension of Time to File Petition for Review dated April 29, 2009. In this regard, the failure of
38

petitioner Republic to strictly comply with Section 5(d), Rule 56 of the Rules of Court already renders
its Petition dismissible.39

Nevertheless, considering that rules of procedure are subservient to substantive rights, and in order
to finally write finis to this prolonged litigation, the Court hereby dispenses with the foregoing lapses
in the broader interest of justice. The Court has repeatedly favored the resolution of disputes on the
merits, rather than on procedural defects.

Further, anent the claim of respondent De Borja that the Petition had already been rendered moot
and academic due to the dismissal of Civil Case No. 0003 by the SB, the Court finds the same
lacking in merit. It is axiomatic that a dismissal on the basis of a demurrer to evidence is similar to a
judgment; it is a final order ruling on the merits of a case. Hence, when petitioner Republic brought
40

the instant appeal before this Court, the same was limited to respondent De Borja's liability alone. In
this regard, the propriety of the SB's granting of respondent De Borja's Demurrer to Evidence, which
is the subject matter of this case, is separate and distinct from the subject matter of the appeal in
G.R. No. 199323, i.e., liability of Velasco, et al.

Thus, respondent De Borja's claim in his Motion to Dismiss that "the complaint against [him] was
dismissed not only once - but twice" is inaccurate and legally flawed. Perforce, it is of no moment
that the SB dismissed Civil Case No. 0003 as the same was merely with respect to the respondents
other than respondent De Borja who, by then, was already confronted with the instant appeal
brought by petitioner Republic.

The singular question for the Court now is this: whether petitioner Republic was able to adduce
sufficient evidence to prove the alleged complicity of respondent De Borja with the required quantum
of evidence. After a judicious review of the records and the submissions of the parties, the Court
rules in the negative.

Case law has defined "burden of proof' as the duty to establish the truth of a given proposition or
issue by such quantum of evidence as the law demands in the case at which the issue arises. In 41

civil cases, the burden of proof is on the plaintiff to establish his case by preponderance of evidence,
i.e., superior weight of evidence on the issues involved. "Preponderance of evidence" means
42

evidence which is of greater weight, or more convincing than that which is offered in opposition to it. 43

In a demurrer to evidence, however, it is premature to speak of "preponderance of evidence"

because it is filed prior to the defendant's presentation of evidence; it is precisely the office of a
demurrer to evidence to expeditiously terminate the case without the need of the defendant's
evidence. Hence, what is crucial is the determination as to whether the plaintiffs evidence entitles it
44

to the relief sought.

Specifically, the inquiry in this case is confined to resolving whether petitioner Republic is entitled to
"Accounting, Reconveyance, Forfeiture, Restitution, and Damages" based on the evidence it has
presented.

As repeatedly stressed by respondent De Borja, the only evidence presented with respect to his
liability is the testimony of Verano and the affidavit of one Jose M. Reyes, as summarized below:

(i) Affidavit of Jose M. Reyes

With respect to the affidavit of Jose M. Reyes, his non-appearance before the SB due to his untimely
demise rendered the same inadmissible in evidence for being hearsay, as correctly observed by the
SB.45

(ii) Testimony of Verano

Verano was presented to prove that on two (2) occasions, Velasco had instructed him to deliver to
De Borja envelopes allegedly containing the "address commissions". 46

SOL URETA

Q: Could you tell us about, if you know, any particular instance any payment by address commission
to PNOC?

A: I begly (sic) recall. A broker coming to the house handing me a brown envelope for delivery to the
Minister.

Q: Who is the Minister?

A: Minister Velasco.

xxxx

Q: Do you know the contents of that envelope, Mr. witness?

A: It was sealed. Since it is for somebody else I did not open it.

Q: What did he say at that time he handed to you that envelope?

A: He said that is from "X-C".

xxxx

Q: Would you tell us what was your understanding as to the contents of that particular envelope?

ATTY. MENDOZA

Objection, your Honor please, it calls for an opinion.

PJ GA[R]CHITORENA

Lay the basis...

SOL URETA

Q: Mr. witness, according to you the envelope was given to you and for what purpose again?
ATTY. MENDOZA

Already answered. He said it was to be delivered.

PJ GA[R]CHITORENA

Q: And he did not know the contents because it was a sealed envelope.

SOL URETA

Q: Were there any indication from Mr. Heger at that time as to what that particular envelope
contained?

A: No, he did not say so.

Q: But then could you tell us what was your impression...

PJ GA[R]CHITORENA

Impression as to what?

SOL URETA

As to the nature of delivery.

ATTY. MENDOZA

Objection, that calls for an opinion.

xxxx

PJ GA[R]CHITORENA

It could contain shirt, it could contain pieces of paper, it could contain clippings. You must
show that you have basis for that question. But in fact he said, he do (sic) not know. He did
(sic) know what contents was (sic). Any question along that line will be a guess. He is not
expert at feelings (sic) things in coming out with a result... We know which was you want (sic) to go
and for that very reason Mr. Mendoza is objecting because you give us the false.

Q: What did you do with that envelope for heaven's sake?

A: I brought it to him. What will I do with it it's not mine. I was told to give it to the Minister.

SOL URETA

Q: What happened when you weren't (sic) to the Minister?

A: To bring it to the office of Mr. de Borja.

xxxx

Q: What did Mr. Velasco say with respect to that envelope.

A: He told me to bring it to Mr. de Borja.

Q: Who is Mr. de Borja?

A: At that time he was connected with Gerver.

Q: What happened when you brought it to the office of Mr. de Borja?

A: I brought it to the office of Mr. de Borja and he wasn't there, so I just left it.

xxxx

SOL URETA

Q: Were there other occasions when envelope (sic) was given to you by a broker?

A: I recall once in early 80's.

Q: Who was the particular broker that brought to you the envelope?

A: Mr. David Reynolds.

Q: Will you tell us the circumstance of that delivery?

A: Well, he just came to the office I thought he was going there for a cup of coffee and then he said
give this to Mr. Velasco, that's it.

Q: Did you know where that envelope that (sic) particular time?

A: I brought it over to Makati because I was holding office along Roxas Blvd.

Q: To whom did you bring that envelope?

A: To the office of Mr. Velasco.

Q: What happened afterwards when you brought the envelope to Mr. Velasco?

A: Again he told me to bring it over to Gerver.

Q: Did you bring it to Gerver?

A: I left it there.

PJ GA[R]CHITORENA

Q: To whom did you left (sic) it?

A: Supposed to be for Mr. de Borja, but Mr. de Borja was not around.

xxxx

Q: The first one, when was it more or less, when somebody called, Mr. Heger?

A: Late '70's, your Honor. [t.s.n. pp. 114-123, March 1995-Verano on Direct.] (Additional emphasis
47

supplied)

Moreover, during Verano' s cross-examination, it was revealed that he was not knowledgeable of the
contents of the envelopes and that he also never confirmed whether respondent De Borja had
actually received them:

Q: Referring to this envelope which you mentioned in your direct testimony, both the envelopes
delivered by Mr. Hagar to you and Mr. Reynolds. They were sealed?

A: Right.

Q: You did not open them?

A: No, sir.
Q: When you brought to the Office of Mr. Velasco they remained sealed?

A: They remained sealed.

Q: And when you brought them to the Office of Mr. De Borja...

A: They remained sealed [t.s.n., p. 162 March 1995-Verano on Cross].

PJ GA[R]CHITORENA

Q: Regarding these two envelopes, you said that you delivered these envelopes in the Office of Mr.
de Borja?

A: Yes, your Honor.

Q: But de Borja was not around at that time?

A: That is right.

PJ GA[R]CHITORENA

Q: After delivery did you receive any word that the envelopes did not reach Mr. de Borja?

WITNESS

A: I did not receive any report.

Q: From anybody?

A: From anybody.

Q: Did you meet Mr. de Borja anytime before the delivery?

A: No, sir.

Q: Subsequently did you meet Mr. de Borja?

A: Yes.

Q: Did you bring the matter of the envelope?

A: No, sir.

Q: Did he bring the matter with you?

A: No, sir. [t.s.n., pp. 21-22, 2 March 1995 - Verano, Questions from the Court]. 48

In the face of the foregoing testimony, the insinuations of petitioner Republic in the instant Petition
can best be described as speculative, conjectural, and inconclusive at best. Nothing in the testimony
of Verano reasonably points, or even alludes, to the conclusion that De Borja acted as a dummy or
conduit of Velasco in receiving address commissions from vessel owners.

The Court joins and concurs in the SB's observations pertaining to Verano's want of knowledge with
respect to the contents of the envelopes allegedly delivered to respondent De Borja's office, which
remained sealed the entire time it was in Verano' s possession. As admitted by Verano himself, he
did not and could not have known what was inside the envelopes when they were purportedly
entrusted to him for delivery. In the same vein, Verano did not even confirm respondent De Borja's
receipt of the envelopes, despite numerous opportunities to do so. Relatedly, it was further revealed
during the cross-examination of Verano that in the first place, Velasco did not even deal directly with
brokers.49

All told, the Court finds that the evidence adduced is wholly insufficient to support the allegations of
the Complaint before the SB. Thus, for failure of petitioner Republic to show any right to the relief
sought, the Court affirms the SB in granting the Demurrer to Evidence.

WHEREFORE, premises considered, the Petition is DENIED and the Resolutions dated July 31,
2008 and March 25, 2009 of the Sandiganbayan - First Division in Civil Case No. 0003 are hereby
AFFIRMED.

SO ORDERED.

G.R. No. 161151

BJDC CONSTRUCTION, REPRESENTED BY ITS MANAGER/PROPRIETOR JANET S. DELA

CRUZ, Petitioner,
vs.
NENA E. LANUZO, CLAUDETTE E. LANUZO, JANET E. LANUZO, JOAN BERNABE E. LANUZO,
and RYAN JOSEE. LANUZO, Respondent.

DECISION

BERSAMIN, J.:

The party alleging the negligence of the other as the cause of injury has the burden to establish the
allegation with competent evidence. If the action based on negligence is civil in nature, the proof
required is preponderance of evidence.

This case involves a claim for damages arising from the death of a motorcycle rider in a nighttime
accident due to the supposed negligence of a construction company then undertaking re-blocking
work on a national highway. The plaintiffs insisted that the accident happened because the
construction company did not provide adequate lighting on the site, but the latter countered that the
fatal accident was caused by the negligence of the motorcycle rider himself. The trial court decided
in favor of the construction company, but the Court of Appeals (CA) reversed the decision and ruled
for the plaintiffs.

Hence, this appeal.

Antecedents

On January 5, 1998, Nena E. Lanuzo (Nena) filed a complaint for damages against BJDC 1

Construction (company), a single proprietorship engaged in the construction business under its
Manager/Proprietor Janet S. de la Cruz. The company was the contractor of the re-blocking project
to repair the damaged portion of one lane of the national highway at San Agustin, Pili, Camarines
Sur from September 1997to November 1997.

Nena alleged that she was the surviving spouse of the late Balbino Los Baños Lanuzo (Balbino) who
figured in the accident that transpired at the site of the re-blocking work at about 6:30 p.m. on
October 30, 1997; that Balbino’s Honda motorcycle sideswiped the road barricade placed by the
company in the right lane portion of the road, causing him to lose control of his motorcycle and to
crash on the newly cemented road, resulting in his instant death; and that the company’s failure to
place illuminated warning signs on the site of the project, especially during night time, was the
proximate cause of the death of Balbino. She prayed that the company be held liable for damages,
to wit: (a) P5,000.00 as the actual damage to Balbino’s motorcycle; (b) P100,000.00 as funeral and
burial expenses; (c) P559,786.00 representing the "unearned income in expectancy" of Balbino; (d)
P100,000.00 as moral damages; (e) P75,000.00 as attorney’s fees, plus P1,500.00 per court
appearance; and (f) P20,000.00 as litigation costs and other incidental expenses.

In its answer, the company denied Nena’s allegations of negligence, insisting that it had installed
2

warning signs and lights along the highway and on the barricades of the project; that at the time of
the incident, the lights were working and switched on; that its project was duly inspected by the
Department of Public Works and Highways (DPWH), the Office of the Mayor of Pili, and the Pili
Municipal Police Station; and that it was found to have satisfactorily taken measures to ensure the
safety of motorists.

The company further alleged that since the start of the project in September 1997, it installed several
warning signs, namely: (a) big overhead streamers containing the words SLOW DOWN ROAD
UNDER REPAIR AHEAD hung approximately 100 meters before the re-blocking site, one facing the
Pili-bound motorists and another facing the Naga-bound motorists; (b) road signs containing the
words SLOW DOWN ROAD UNDER REPAIR 100 METERS AHEAD placed on the road shoulders
below the streamers; (c) road signs with the words SLOW DOWN ROAD UNDER REPAIR 50
METERS AHEAD placed 50 meters before the project site; (d) barricades surrounded the affected
portion of the highway, and a series of 50-watt light bulbs were installed and switched on daily from
6:00 p.m. until the following morning; (e) big warning signs containing the words SLOW DOWN
ROAD UNDER REPAIR and SLOW DOWN MEN WORKING were displayed at both ends of the
affected portion of the highway with illumination from two 50-watt bulbs from 6:00 p.m. until the
following morning; and (f) the unaffected portion of the highway was temporarily widened in the
adjacent road shoulder to allow two-way vehicular traffic.

The company insisted that the death of Balbino was an accident brought about by his own
negligence, as confirmed by the police investigation report that stated, among others, that Balbino
was not wearing any helmet at that time, and the accident occurred while Balbino was overtaking
another motorcycle; and that the police report also stated that the road sign/barricade installed on
the road had a light. Thus, it sought the dismissal of the complaint and prayed, by way of
counterclaim, that the Nena be ordered to pay P100,000.00 as attorney’s fees, as well as moral
damages to be proven in the course of trial.

The RTC subsequently directed the amendment of the complaint to include the children of Nena and
Balbino as co-plaintiffs, namely: Janet, Claudette, Joan Bernabe and Ryan Jose, all surnamed
Lanuzo. Hence, the plaintiffs are hereinafter be referred to as the Lanuzo heirs.

Decision of the RTC

On October 8, 2001, the RTC rendered judgment in favor of the company, as follows:

Plaintiffs are the survivors of Balbino Los Baños Lanuzo who met a traumatic death on 30 October,
1997 at about 6:30 p.m., when he bumped his motorcycle on a barricade that was lighted with an
electric bulb, protecting from traffic the newly-reblocked cement road between San Agustin and San
Jose, Pili, Camarines Sur; they claim defendant’s OMISSION in lighting up the barricaded portion of
the reblocking project being undertaken by defendant was the proximate cause of the accident,
leaving them bereaved and causing them actual and moral damages.
Defendant DENIED the claim of plaintiffs; both parties offered testimonial and documentary
evidence, from which this Court,

FINDS

that: plaintiff DID NOT present an eyewitness account of the death of their decedent; on the
contrary, the flagman of defendant was present when the accident occurred, which was caused by
the decedent having overtaken a motorcycle ahead of [him] and on swerving, to avoid the barricade,
hit it, instead, breaking the lighted electric bulb on top of the barricade, resulting in the fall of the
decedent about 18 paces from where his motorcycle fell on the reblocked pavement; the police
investigator, policeman Corporal, by Exh. 1, confirmed the tale of the flagman, aside from confirming
the presence of the warning devices placed not only on the premises but at places calculated to
warn motorists of the ongoing reblocking project.

OPINION

From the foregoing findings, it is the opinion of this Court that the plaintiffs were unable to make out
a case for damages, with a preponderance of evidence.

WHEREFORE, Judgment is hereby rendered, DISMISSING the complaint. 3

Decision of the CA

The Lanuzo heirs appealed to the CA.

On August 11, 2003, the CA promulgated its decision declaring that the issue was whether the
company had installed adequate lighting in the project so that motorists could clearly see the
barricade placed on the newly cemented lane that was then still closed to vehicular traffic, thereby
4

reversing the judgment of the RTC, and holding thusly:

WHEREFORE, premises considered, the present appeal is hereby GRANTED and the decision
appealed from in Civil Case No. P-2117 is hereby REVERSED and SET ASIDE. A new judgment is
hereby entered ordering the defendant-appellee to pay the plaintiff-appellants, heirs of the victim
Balbino L. B. Lanuzo, the sums of P50,000.00 as death indemnity, P20,000.00 by way of temperate
damages and P939,736.50 as loss of earning capacity of the deceased Balbino L. B. Lanuzo.

SO ORDERED. 5

The CA ruled that the following elements for the application of the doctrine of res ipsa loquitur were
present, namely: (1) the accident was of such character as to warrant an inference that it would not
have happened except for the defendant’s negligence; (2) the accident must have been caused by
an agency or instrumentality within the exclusive management or control of the person charged with
the negligence complained of; and (3) the accident must not have been due to any voluntary action
or contribution on the part of the person injured.

The CA regarded as self-serving the testimony of Eduardo Zamora, an employee of the company
who testified that there was an electric bulb placed on top of the barricade on the area of the
accident. It held that Zamora’s statement was negated by the statements of Ernesto Alto and
Asuncion Sandia to the effect that they had passed by the area immediately before the accident and
had seen the road to be dark and lit only by a gas lamp. It noted that SPO1 Corporal, the police
investigator, had noticed the presence of lighted electric bulbs in the area, but the same had been
installed on the other side of the street opposite the barricade.
The CA ruled that the placing of road signs and streamers alone did not prove that the electric bulbs
were in fact switched on at the time of the accident as to sufficiently light up the newly re-blocked
portion of the highway. It opined that "[t]he trial court gave undue weight to the self- serving
statement of appellee’s employee, Eduardo Zamora, which was supposedly corroborated by SPO1
Pedro Corporal. SPO1 Corporal arrived at the scene only after the accident occurred, and thus the
electric bulbs could have already been switched on by Zamora who was at the area of the project." It
concluded that the negligence of the company was the proximate cause of Balbino’s death; hence,
the company was liable for damages.

The company filed a motion for reconsideration, but the CA denied the motion in the resolution
6

promulgated on November 13, 2003.

Issues

In this appeal, the company submits the following issues, namely:

I. The application by the Honorable Court of Appeals of the doctrine of res ipsa loquitur to the case
at bar, despite and contrary to the finding, among others, by the trial court that the proximate cause
of the accident is the victim’s own negligence, is "not in accord with the law or with the applicable
decisions of the Supreme Court" [Sec. 6 (a), Rule 45, Rules of Court].

II. The Honorable Court of Appeals, by substituting its own findings of fact and conclusion with those
of the trial court despite the lack of "strong or cogent reasons" therefor, "has so far departed from the
accepted and usual course of judicial proceedings ... as to call for an exercise of the power of
supervision" by this Honorable Supreme Court [Sec. 6 (b), Ibid.].

III. The findings by the Honorable Court of Appeals that respondents (appellants therein) "had
satisfactorily presented a prima facie case of negligence which the appellee (petitioner herein) had
not overcome with an adequate explanation" and which alleged negligence is "the proximate cause
of death of Lanuzo" are manifestations of grave abuse of discretion in the appreciation of facts, and
constitute a judgment based on a misinterpretation of facts, which justify a review by this Honorable
Supreme Court. 7

The company reiterates the categorical finding of the RTC that the proximate cause of the accident
was Balbino’s own negligence, and that such finding was based on the conclusion stated by SPO1
Corporal in his investigation report to the effect that the incident was "purely self accident," and on
the unrebutted testimony of Zamora to the effect that Balbino was driving his motorcycle at a fast
speed trying to overtake another motorcycle rider before hitting the barricade. On the other hand, it
insists that its documentary and testimonial evidence proved its exercise of due care and
observance of the legally prescribed safety requirements for contractors.

The company maintains that Balbino was familiar with the re- blocking project that had been going
on for months because he had been passing the area at least four times a day during weekdays in
going to and from his place of work in the morning and in the afternoon; and that he could have
avoided the accident had he exercised reasonable care and prudence.

The company assails the application of the doctrine of res ipsa loquitur, positing that the Lanuzo
heirs did not establish all the requisites for the doctrine to apply.

Anent the first requisite, the company states that the Lanuzo heirs did not successfully counter its
documentary and testimonial evidence showing that Balbino’s own negligence had caused the
accident. It cites the fact that Balbino was familiar with the road conditions and the re-blocking
project because he had been passing there daily; and that Balbino had been driving too fast and not
wearing the required helmet for motorcycle drivers, which were immediately evident because he had
been thrown from his motorcycle and had landed "18 paces away" from the barricade that he had
hit.

On the second requisite, the company argues that Balbino’s driving and operation of his motorcycle
on the day of the accident indicated that the accident was not within its exclusive management and
control; and that as to the matters that were within its control, it sufficiently showed its observance of
due and reasonable care and its compliance with the legally prescribed safety requirements.

Regarding the third requisite, the company reminds that Zamora and SPO1 Corporal revealed that
Balbino was overtaking another motorcycle rider before hitting the barricade. The credibility of said
witnesses was not challenged, and their testimonies not rebutted; hence, the CA erred in relying on
the recollections of Asuncion Sandia and Ernesto Alto who were not present when the incident took
place. Sandia and Alto’s testimonies could not be accorded more weight than Zamora’s eyewitness
account, considering that the latter was believed by the trial judge who had the first-hand opportunity
to observe the demeanor of the witnesses.

Whose negligence was the proximate cause of the death of Balbino?

Ruling of the Court

Inasmuch as the RTC and the CA arrived at conflicting findings of fact on who was the negligent
party, the Court holds that an examination of the evidence of the parties needs to be undertaken to
properly determine the issue. The Court must ascertain whose evidence was preponderant, for
8

Section 1, Rule 133 of the Rules of Court mandates that in civil cases, like this one, the party having
the burden of proof must establish his case by a preponderance of evidence. 9

Burden of proof is the duty of a party to present evidence on the facts in issue necessary to establish
his claim or defense by the amount of evidence required by law. It is basic that whoever alleges a
10

fact has the burden of proving it because a mere allegation is not evidence. Generally, the party
11

who denies has no burden to prove. In civil cases, the burden of proof is on the party who would be
12

defeated if no evidence is given on either side. The burden of proof is on the plaintiff if the
13

defendant denies the factual allegations of the complaint in the manner required by the Rules of
Court, but it may rest on the defendant if he admits expressly or impliedly the essential allegations
but raises affirmative defense or defenses, which if proved, will exculpate him from liability. 14

By preponderance of evidence, according to Raymundo v. Lunaria: 15

x x x is meant that the evidence as a whole adduced by one side is superior to that of the other. It
refers to the weight, credit and value of the aggregate evidence on either side and is usually
considered to be synonymous with the term "greater weight of evidence" or "greater weight of the
credible evidence." It is evidence which is more convincing to the court as worthy of belief than that
which is offered in opposition thereto.

In addition, according to United Airlines, Inc. v. Court of Appeals, the plaintiff must rely on the
16

strength of his own evidence and not upon the weakness of the defendant’s.

Upon a review of the records, the Court affirms the findings of the RTC, and rules that the Lanuzo
heirs, the parties carrying the burden of proof, did not establish by preponderance of evidence that
the negligence on the part of the company was the proximate cause of the fatal accident of Balbino.

Negligence, the Court said in Layugan v. Intermediate Appellate Court, is "the omission to do
17

something which a reasonable man, guided by those considerations which ordinarily regulate the
conduct of human affairs, would do, or the doing of something which a prudent and reasonable man
would not do, or as Judge Cooley defines it, ‘(t)he failure to observe for the protection of the
18

interests of another person, that degree of care, precaution, and vigilance which the circumstances
justly demand, whereby such other person suffers injury.’" In order that a party may be held liable
19

for damages for any injury brought about by the negligence of another, the claimant must prove that
the negligence was the immediate and proximate cause of the injury. Proximate cause is defined as
"that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause,
produces the injury and without which the result would not have occurred." 20

The test by which the existence of negligence in a particular case is determined is aptly stated in the
leading case of Picart v. Smith, as follows:
21

The test by which to determine the existence of negligence in a particular case may be stated as
follows: Did the defendant in doing the alleged negligent act use that reasonable care and caution
which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of
negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary
conduct of the discreet paterfamilias of the Roman law. The existence of negligence in a given case
is not determined by reference to the personal judgment of the actor in the situation before him. The
law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence
and prudence and determines liability by that.

The question as to what would constitute the conduct of a prudent man in a given situation must of
course be always determined in the light of human experience and in view of the facts involved in
the particular case. Abstract speculation cannot here be of much value but this much can be
profitably said: Reasonable men govern their conduct by the circumstances which are before them
or known to them. They are not, and are not supposed to be, omniscient of the future. Hence they
can be expected to take care only when there is something before them to suggest or warn of
danger. Could a prudent man, in the case under consideration, foresee harm as a result of the
course actually pursued? If so, it was the duty of the actor to take precautions to guard against that
harm. Reasonable foresight of harm, followed by the ignoring of the suggestion born of this
prevision, is always necessary before negligence can be held to exist. Stated in these terms, the
proper criterion for determining the existence of negligence in a given case is this: Conduct is said to
be negligent when a prudent man in the position of the tortfeasor would have foreseen that an effect
harmful to another was sufficiently probable to warrant his foregoing the conduct or guarding against
its consequences.

First of all, we note that the Lanuzo heirs argued in the trial and appellate courts that there was a
total omission on the part of the company to place illuminated warning signs on the site of the
project, especially during night time, in order to warn motorists of the project. They claim that the
omission was the proximate cause of the death of Balbino. In this appeal, however, they contend
22

that the negligence of the company consisted in its omission to put up adequate lighting and the
required signs to warn motorists of the project, abandoning their previous argument of a total
omission to illuminate the project site.

During the trial, the Lanuzo heirs attempted to prove inadequacy of illumination instead of the total
omission of illumination. Their first witness was Cesar Palmero, who recalled that lights had been
actually installed in the site of the project. The next witness was Ernesto Alto, who stated that he had
seen three light bulbs installed in the site, placed at intervals along the stretch of the road covered by
the project. Alto further stated that he had passed the site on board his tricycle on October 30, 1997
prior to the accident, and had seen only a gas lamp, not light bulbs, on his approach. Another
witness of the plaintiffs, Asuncion Sandia, claimed that she had also passed the site on board a bus
on the night just prior to the accident, and had seen the site to be dark, with only one lane open to
traffic, with no light at all. Obviously, the witnesses of the plaintiffs were not consistent on their
recollections of the significant detail of the illumination of the site.

In contrast, the company credibly refuted the allegation of inadequate illumination. Zamora, its
flagman in the project, rendered an eyewitness account of the accident by stating that the site had
been illuminated by light bulbs and gas lamps, and that Balbino had been in the process of
overtaking another motorcycle rider at a fast speed when he hit the barricade placed on the newly
cemented road. On his part, SPO1 Corporal, the police investigator who arrived at the scene of the
accident on October 30, 1997, recalled that there were light bulbs on the other side of the barricade
on the lane coming from Naga City; and that the light bulb on the lane where the accident had
occurred was broken because it had been hit by the victim’s motorcycle. Witnesses Gerry Alejo and
Engr. Victorino del Socorro remembered that light bulbs and gas lamps had been installed in the
area of the project.

Secondly, the company presented as its documentary evidence the investigation report dated
December 3, 1997 of SPO1 Corporal (Annex 1), the relevant portions of which indicated the finding
of the police investigator on the presence of illumination at the project site, viz:

SUBJECT: Investigation Report Re: Homicide Thru Reckless Imprudence

(Self Accident)

xxxx

II.MATTERS INVESTIGATED:

1.To determine how the incident happened.

2.To determine the vehicle involved.

III. FACTS OF THE CASE:

3.At 6:45 P.M. October 30, 1997, Elements of Pili Municipal Police Station led by SPO2 Melchor
Estallo, SPO2 Cesar Pillarda, both members of the patrol section and SPO1 Pedro D. Corporal,
investigator reported having conducted an on the spot investigation re: vehicular incident (Self
Accident) that happened on or about 6:30 o’clock in the evening of October 30, 1997 along national
highway, San Agustin, Pili, Camarines Sur, wherein one Balbino Lanuzo y Doe, of legal age,
married, a public school teacher, a resident of San Jose, Pili, Camarines Sur while driving his Honda
motorcycle 110 CC enroute to San Jose, Pili, Camarines Sur from Poblacion, this municipality and
upon reaching at road re: blocking portion of the national highway at barangay San Agustin, Pili,
Camarines Sur and while overtaking another motorcycle ahead incidentally side-swiped a road
sign/barricade installed at the lane road re: blocking of the national highway, causing said
motorcycle rider to swerved his ridden motorcycle to the right and stumble down and fell to the
concrete cemented road. Victim was rushed to Bicol Medical Center, Naga City for treatment but
was pronounced dead on arrival.

4.That upon arrival at the scene of the incident it was noted that road sign/barricade installed on the
road has a light.

5.That said road was under repair for almost a month which one lane portion of the national highway
is possible of all passing vehicles from south and north bound.
6.That said motorcycle stumble down on the newly repair portion of the national highway and the
driver lying down beside the motorcycle.

xxxx

8.That one of the passerby revealed that the victim possibly be miscalculated the road block that
made him to tumble down when he applied sudden brake.

IV. FINDINGS/DISCUSSION:

9.The time of the incident was at about 6:30 o’clock in the evening a time wherein dark of the night is
approaching the vision of the driver is affected with the changing condition and it is all the time when
driver should lights his driven vehicle, as to this case, the driver Balbino Lanuzo y Doe (victim has
exercise all precautionary measures to avoid accident but due to self accident he incidentally
sideswiped the road sign/barricade of the re: Blocking portion of the national highway resulting him
to stumble down his motorcycle and fell down to the concrete cement road.

10.The driver/victim met unexpectedly (sic) along that one lane potion of the re: blocking and
considering it was night time, confusion overthrew him and because of sudden impulse, he lost
control on the motorcycle he was driving.

11.That the driver/victim has no crush (sic) helmet at the time of the incident considering that it
should be a basic requirement as to prevent from any accident.

V. RECOMMENDATION:

12.Basing on the above discussion and facts surroundings the case was purely self accident
resulting to Homicide Thru Reckless Imprudence and the case must be closed. (Emphasis ours.) 23

Additionally, the company submitted the application for lighting permit covering the project site
(Annex 7) to prove the fact of installation of the electric light bulbs in the project site.

In our view, the RTC properly gave more weight to the testimonies of Zamora and SPO1 Corporal
than to those of the witnesses for the Lanuzo heirs.1âwphi1 There was justification for doing so,
because the greater probability pertained to the former. Moreover, the trial court’s assessment of the
credibility of the witnesses and of their testimonies is preferred to that of the appellate court’s
because of the trial court’s unique first-hand opportunity to observe the witnesses and their
demeanor as such. The Court said in Cang v. Cullen: 24

The findings of the trial court on the credibility of witnesses are accorded great weight and respect -
even considered as conclusive and binding on this Court - since the trial judge had the unique
opportunity to observe the witness firsthand and note his demeanor, conduct and attitude under
grueling examination. Only the trial judge can observe the furtive glance, blush of conscious shame,
hesitation, flippant or sneering tone, calmness, sigh of a witness, or his scant or full realization of an
oath - all of which are useful aids for an accurate determination of a witness' honesty and sincerity.
He can thus be expected to determine with reasonable discretion which testimony is acceptable and
which witness is worthy of belief.

Absent any showing that the trial court's calibration of the credibility of the witnesses was flawed, we
are bound by its assessment. This Court will sustain such findings unless it can be shown that the
trial court ignored, overlooked, misunderstood, misappreciated, or misapplied substantial facts and
circumstances, which, if considered, would materially affect the result of the case. 25
The Court observes, too, that SPO1 Corporal, a veteran police officer detailed for more than 17
years at the Pili Police Station, enjoyed the presumption of regularity in the performance of his
official duties. The presumption, although rebuttable, stands because the Lanuzo heirs did not
26

adduce evidence to show any deficiency or irregularity in the performance of his official duty as the
police investigator of the accident. They also did not show that he was impelled by any ill motive or
bias to testify falsely.

Thirdly, the CA unreasonably branded the testimonies of Zamora and SPO1 Corporal as "self-
serving." They were not. Self-serving evidence refers to out-of-court statements that favor the
declarant’s interest; it is disfavored mainly because the adverse party is given no opportunity to
27

dispute the statement and their admission would encourage fabrication of testimony. But court 28

declarations are not self-serving considering that the adverse party is accorded the opportunity to
test the veracity of the declarations by cross-examination and other methods.

There is no question that Zamora and SPO1 Corporal were thoroughly cross-examined by the
counsel for the Lanuzo heirs. Their recollections remained unchallenged by superior contrary
evidence from the Lanuzo heirs.

Fourthly, the doctrine of res ipsa loquitur had no application here. In Tan v. JAM Transit, Inc., the 29

Court has discussed the doctrine thusly:

Res ipsa loquitur is a Latin phrase that literally means "the thing or the transaction speaks for itself."
It is a maxim for the rule that the fact of the occurrence of an injury, taken with the surrounding
circumstances, may permit an inference or raise a presumption of negligence, or make out a
plaintiff's prima facie case, and present a question of fact for defendant to meet with an explanation.
Where the thing that caused the injury complained of is shown to be under the management of the
defendant or his servants; and the accident, in the ordinary course of things, would not happen if
those who had management or control used proper care, it affords reasonable evidence — in the
absence of a sufficient, reasonable and logical explanation by defendant — that the accident arose
from or was caused by the defendant's want of care. This rule is grounded on the superior logic of
ordinary human experience, and it is on the basis of such experience or common knowledge that
negligence may be deduced from the mere occurrence of the accident itself. Hence, the rule is
applied in conjunction with the doctrine of common knowledge.

For the doctrine to apply, the following requirements must be shown to exist, namely: (a) the
accident is of a kind that ordinarily does not occur in the absence of someone’s negligence; (b) it is
caused by an instrumentality within the exclusive control of the defendant or defendants; and (c) the
possibility of contributing conduct that would make the plaintiff responsible is eliminated.30

The Court has warned in Reyes v. Sisters of Mercy Hospital, however, that "res ipsa loquitur is not
31

a rigid or ordinary doctrine to be perfunctorily used but a rule to be cautiously applied, depending
upon the circumstances of each case."

Based on the evidence adduced by the Lanuzo heirs, negligence cannot be fairly ascribed to the
company considering that it has shown its installation of the necessary warning signs and lights in
the project site. In that context, the fatal accident was not caused by any instrumentality within the
exclusive control of the company. In contrast, Balbino had the exclusive control of how he operated
and managed his motorcycle. The records disclose that he himself did not take the necessary
precautions. As Zamora declared, Balbino overtook another motorcycle rider at a fast speed, and in
the process could not avoid hitting a barricade at the site, causing him to be thrown off his
motorcycle onto the newly cemented road. SPO1 Corporal’s investigation report corroborated
Zamora’s declaration. This causation of the fatal injury went uncontroverted by the Lanuzo heirs.
Moreover, by the time of the accident, the project, which had commenced in September 1997, had
been going on for more than a month and was already in the completion stage. Balbino, who had
passed there on a daily basis in going to and from his residence and the school where he then
worked as the principal, was thus very familiar with the risks at the project site. Nor could the Lanuzo
heirs justly posit that the illumination was not adequate, for it cannot be denied that Balbino’s
motorcycle was equipped with headlights that would have enabled him at dusk or night time to see
the condition of the road ahead. That the accident still occurred surely indicated that he himself did
not exercise the degree of care expected of him as a prudent motorist.

According to Dr. Abilay, the cause of death of Balbino was the fatal depressed fracture at the back of
his head, an injury that Dr. Abilay opined to be attributable to his head landing on the cemented road
after being thrown off his motorcycle. Considering that it was shown that Balbino was not wearing
any protective head gear or helmet at the time of the accident, he was guilty of negligence in that
respect. Had he worn the protective head gear or helmet, his untimely death would not have
occurred.

The RTC was correct on its conclusions and findings that the company was not negligent in ensuring
safety at the project site. All the established circumstances showed that the proximate and
immediate cause of the death of Balbino was his own negligence. Hence, the Lanuzo heirs could not
recover damages. 32

WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and SETS
ASIDE the decision promulgated on August 11, 2003 by the Court of Appeals; REINSTATES the
decision rendered on October 8, 2001 by the Regional Trial Court, Branch 32, in Pili, Camarines Sur
dismissing the complaint; and MAKES no pronouncements on costs of suit.

SO ORDERED.

G.R. No. 178169 January 12, 2015

NFF INDUSTRIAL CORPORATION, Petitioner,

vs.
G & L ASSOCIATED BROKERAGE and/or GERARDO TRINIDAD, Respondents.

DECISION

PERALTA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and
set aside the Decision dated November 22, 2006 and the Order dated May 22, 2007, respectively,
1 2

of the Court of Appeals (CA), in the civil case entitled NFF Industrial Corporation v. G & L Associated
Brokerage, Inc. and/or Gerardo Trinidad, docketed as CA-G.R. CV No. 85060.

The facts follow.

Petitioner NFF Industrial Corporation is engaged in the business of manufacturing bulk bags, while
respondent G & L Associated Brokerage, Inc. (respondent company) is among its customers. 3

Respondent Gerardo Trinidad is the general manager of respondent company. 4

According to petitioner, on July 20, 1999, respondent company ordered one thousand (1,000) pieces
ofbulk bags from petitioner, at Three Hundred Eighty Pesos (₱380.00) per piece, or a total purchase
price of Three Hundred Eighty Thousand Pesos (₱380,000.00), payable within thirty (30) days from
delivery, covered by Purchase Order No. 97-002 dated July 29, 1999. In the said Purchase Order,
5

an instruction was made that the bulk bags were for immediate delivery to "G & L Associated
Brokerage, Inc., c/o Hi-Cement Corporation, Norzagaray, Bulacan." Shortly thereafter, respondent
6

company ordered an additional one thousand (1,000) pieces of bulk bags, thus for a total of two
thousand (2,000) pieces, at the same price per bag and with the same terms of payment as well as
the same instructions for delivery. Accordingly, petitioner made deliveries of the bulk bags to Hi-
7

Cement on the following dates and evidencedby the following documents, to wit:

Units Date of Amount Delivery Sales Invoices

Delivered Delivery Receipts
400 July 30, 1999 ₱152,000.00 No. 0226 dated No. 4113 dated
July 30, 1999 July 30, 1999
1,000 August 4, 1999 ₱380,000.00 No. 0229 dated No. 4120 dated
August 4, 1999 August 4, 1999
600 August 6, 1999 ₱228,000.00 No. 0231 dated No. 4122 dated
August 6, 1999 August 6, 1999 8

2,000 ₱760,000.00
Petitioner alleged that the aforementioned deliveries were duly acknowledged by representatives of
respondent company. Petitioner also averred that all the delivery receipts were rubber
9

stamped,dated and signed by the security guard-on-duty, as well asother representatives of

respondent company. All deliveries made were likewise covered by sales invoices.
10 11

Based on the said invoices, the total sales price is Seven Hundred Sixty Thousand Pesos
(₱760,000.00). All the sales invoices were duly served upon, and received by respondent
12

company’s representative, one Marian Gabay. 13

On the other hand, respondents alleged that on July 20, 1999, it ordered from petitioner,by way of
Purchase Order No. 97-002, one thousand (1,000) pieces of bulk bags from petitioner at a unit price
of (₱380.00) per piece for a total purchase price of Three Hundred Eighty Thousand Pesos
(₱380,000.00). The said bulk bags were to be used by respondent company for the purpose of
14

hauling cement from Hi-Cement Corporation at Norzagaray, Bulacan, toa dam project in Casecnan,
Nueva Ecija, the respondent company having been designated as one of the many haulers at the Hi-
Cement Corporation. On July 26, 1999, respondent company formalized its offer through a letter
15

containing the same terms as the Purchase Order and providing for other details regarding the
purchase.16

According to respondents, the Purchase Order specifically provides that the bulk bags were to be
delivered at Hi-Cement Corporation to Mr. Raul Ambrosio, respondent company’s checker and
authorized representative assigned thereat. Subsequently, however, the ordered bulk bags were
17

not delivered to respondent company, the same not having been received by the authorized
representative in conformity with the terms of the Purchase Order.18

Meanwhile, thirty (30) days elapsed from the time the last alleged delivery was made but no
payment was effected by respondent company. This prompted petitioner to send a demand letter
19

dated October 27, 1999 to respondent company. As respondent company failed to respond to the
20

demand letter, petitioner followed up itsclaim from the former through a series of telephone calls. 21

Again, since no concrete answer was provided by respondent company, petitioner sent another
demand letter dated November 23, 1999; and finally, a third demand letter dated October 2, 2001. 22
As the demands remained unheeded, petitioner filed a complaint for sum of money against
respondents on December 19, 2001. 23

As no settlement was reached during the pre-trial stage, trial proceeded. On January 25, 2005, the
Regional Trial Court (RTC) rendered its decision in favor of petitioner. The fallo of the Decision
provides:

PRESCINDING FROM THE FOREGOING CONSIDERATIONS, judgment is hereby rendered in

favor of the plaintiff NFF INDUSTRIAL CORPORATION and against the defendant Corporation G &
L Associated Brokerage, Inc., and the latter is hereby ordered to pay the plaintiff the following:

1. The sum of Php760,000.00 – representing overdue accounts plus interest from the first demand
on October 27, 1999 until fully paid.

2. The sum of Php152,000.00 as attorney’s fees.

3. Cost of suit.

SO ORDERED. 24

Aggrieved, respondents appealed before the CA. As a result, the decision of the RTC was reversed
in the CA’s Decision dated November 22, 2006, in the following wise: WHEREFORE, the appealed
25

decision is, hereby, REVERSED AND SET ASIDE. The Complaint against the appellant is perforce
DISMISSED.

SO ORDERED. 26

Undaunted, petitioner filed a Motion for Reconsideration. The same was, however, denied in the
assailed Order dated May 22, 2007.

Hence, this petition stating the following grounds:

PREPONDERANCE OF EVIDENCE SHOWS THAT THE RESPONDENT COMPANY

ACCEPTEDDELIVERY OF THE BULK BAGS.

II

RESPONDENTS’ CONDUCT PREPONDERANTLY SHOWS THAT DELIVERY OF THE BULK

BAGS HAS BEEN ACCEPTED.

III

FINDINGS OF FACT OF THE TRIAL COURT ARE ENTITLED TO GREAT WEIGHT.

IV.

TO SUSTAIN THE DECISION OF THE COURT OF APPEALS WILL CAUSE UNJUST

ENRICHMENT ON THE PART OF RESPONDENTS AT THE EXPENSE OF THE PETITIONER. 27

Simply, the issue before us is whether or not there was valid delivery on the part of petitioner in
accordance with law, which would give rise to an obligation to pay on the part of respondent for the
value of the bulk bags.
The question is basically factual since it involves an evaluation of the conflicting evidence presented
by the opposing parties, including the existence and relevance of specific surrounding
circumstances, to determine the truth or falsity of alleged facts. 28

While it is well settled that factual issues are not within the province of this Court, as it is not a trier of
facts and is not required to examine or contrast the oral and documentary evidence de novo,
nevertheless, the Court has the authority to review and, in proper cases, reverse the factual findings
of lower courts in these instances: (a) when the findings of fact of the trial court are in conflict with
those of the appellate court; (b) when the judgment of the appellate court is based on
misapprehension of facts; and (c) when the appellate court manifestly overlooked certain relevant
facts which, if properly considered, would justify a different conclusion. Considering that in the
29

instant case, the findings of the CAare contrary to those of the RTC, a minute scrutiny by this Court
is in order,and resort to duly proven evidence becomes necessary. 30

Petitioner avers that it has delivered the bulk bags to respondent company, which effectively placed
the latter in control and possession thereof, as in fact, respondent company had made use of the
said bulk bags in the ordinary course of its business activities. Conversely, respondents contend
31

that the evidence on record miserably failed to establish that the alleged deliveries were received by
the authorized representative of the respondents. Thus, there was no delivery at all in contemplation
of law. 32

We find respondents' contention devoid of persuasive force.

The resolution of the issue at bar necessitates a scrutiny of the concept of "delivery" in the context of
the Law on Sales. Under the Civil Code, the vendor is bound to transfer the ownership of and
33

deliver, as well as warrant the thing which is the object of the sale. The ownership of thing sold is
34

considered acquired by the vendee once it is delivered to him in the following wise:

Art. 1496. The ownership of the thing sold is acquired by the vendee from the moment it is delivered
to him in any of the ways specified in Articles 1497 to 1501, or in any other manner signifying an
agreement that the possession is transferred from the vendor to the vendee.

Art. 1497. The thing sold shall be understood as delivered, when it is placed in the control and
possession of the vendee.

Thus, ownership does not pass by mere stipulation but only by delivery. Manresa explains, "the
35

delivery of the thing x x x signifies that title has passed from the seller to the buyer." Moreover,
36

according to Tolentino, the purpose of delivery is not only for the enjoyment of the thing but also a
mode of acquiring dominion and determines the transmission of ownership, the birth of the real
right. The delivery under any of the forms provided by Articles 1497 to 1505 of the Civil Code
37

signifies that the transmission of ownership from vendor to vendee has taken place. Here, 38

emphasis is placed on Article 1497 of the Civil Code, which contemplates what is known as real or
actual delivery,when the thing sold is placed in the control and possession of the vendee. 39

In Equatorial Realty Development, Inc. v. Mayfair Theater, Inc., the concept of "delivery" was
40

elucidated, to wit:

Delivery has been described as a composite act, a thing in which both parties must join and the
minds of both parties concur. It is an act by which one party parts with the title toand the possession
of the property, and the other acquires the right to and the possession of the same. In its natural
sense, delivery means something in addition to the delivery of property or title; it means transfer of
possession. In the Law on Sales, delivery may be either actual or constructive, but both forms of
delivery contemplate "the absolute giving up of the control and custody of the property on the part of
the vendor, and the assumption of the same by the vendee." 41

Applying the foregoing criteria to the case at bar, We find that there were various occasions of
delivery by petitioner to respondents, and the same was duly acknowledged by respondent Trinidad.
This is supported by the testimony of petitioner’s Sales Manager, Richard Agustin Vergamos, an
excerpt thereof states:

DIRECT EXAMINATION

ATTY. CORALDE

Q: So, after getting the order of two thousand pieces (2,000 pcs.) and after following the delivery
instructions of Mr. Trinidad, after you agreed to the price of three hundred eighty pesos per piece
(₱380.00/pc) what happened next, if any, Mr. Witness?

A: WE processed the order and as committed to him, we delivered the items few days after the
order.

COURT

Q: How many days?

A: Let me refer, your honor, to the document of the D.R.

xxxx

A: On July 30, 1999, we delivered four hundred pieces (400 pcs.) to Union Cement Manufacturing
Plant under the company name G & L Associated Brokerage, your honor.

ATTY. CORALDE:

Q: So after your company delivered on July 30, 1999, what did you do next, if any, Mr. Witness? A:
After I was advised by our deliveryman, I immediately called Mr. Trinidad that we were able todeliver
only four hundred pieces (400 pcs.) of bulk bags.

Q: And what was his reaction to your report, Mr. Witness?

A: At first, I apologized because I was not able to make the five hundred pieces required. So, in
reply…

xxxx

ATTY. CORALDE

Q: So what was his reaction to your report that you delivered only four hundred pieces (400 pcs) of
bulk bags instead of five hundred pieces (500 pcs), Mr. Witness?

A: He acknowledged our delivery and thanked me for delivering the item.

xxxx

Q: So, after the conversation with Mr. Trinidad, what happened next, in so far as the second
delivery, Mr. Witness?

A: And in that call, he followed-up to me the balance of delivery.

Q: So what did you tell him?

A: I told him that the two thousand pieces (2,000 pcs.) we agreed was already in process in our
production and the one thousand pieces (1,000 pcs.) is scheduled to deliver a few days later.

xxxx

Q: No, my question is, who advised you that there was already delivery made on August 4, 1999?

A: Our deliveryman advised me that they have already delivered the one thousand pieces (1,000
pcs.) bulk bags to the Cement Manufacturing Plant.

Q: What did you do after receiving that information from your deliveryman?

A: After that advise[d], I called again Mr. Trinidad to inform him that we already delivered one
thousand pieces (1,000 pcs.) of bulk bags and he acknowledged our delivery and thank me that I
was able to deliver one thousand pieces (1,000 pcs.), sir.

xxxx

Q: Now, who advised you that there was a delivery of six hundred pieces (600 pcs.)?

A: Our deliveryman, sir.

Q: So, having been informed that, what did you do next, if any, Mr.

Witness?

A: And after advised I called again MR. Gerry Trinidad to inform of the delivered six hundred pieces
(600 pcs.) bags.

Q: And then what was his reaction, Mr. Witness?

A: He confirmed our delivery, sir.

Q: So after that, did you have any occasion to talk again personally to

Mr. Gerry Trinidad, Mr. Witness?

A: Yes, sir.

Q: When was this?

A: It was when the time I haveto submit the invoices, sir.

Q: What for these invoices are (sic), Mr. Witness?

A: These invoices have to be submitted to the customer for recognizing the delivery, as wellas for
collection purposes and payment of the orders, sir. 42

Based on the foregoing, it is clear that petitioner has actually delivered the bulk bags to respondent
company, albeit the same was not delivered to the person named in the Purchase Order. In addition,
by allowing petitioner’s employee to pass through the guard-on-duty, who allowed the entry of
delivery into the premises ofHi-Cement, which is the designated delivery site, respondents had
effectively abandoned whatever infirmities may have attended the delivery of the bulk bags. As a
matter of fact, if respondents were wary about the manner of delivery, such issue should have been
brought up immediately after the first delivery was made. Instead, Mr. Trinidad acknowledged receipt
of the first batch of the bulk bags and even followed up the remaining balance of the orders for
delivery.
Thus, the RTC correctly held that:

The evidence adduced by the parties clearly proved that Gerardo Trinidad himself, initially ordered
1,000 pieces of NFF bulk bags at Php380.00 per piece from the plaintiff on or about July 29, 1999.
After testing and checking sample bags, Mr. Trinidad had approved it and even instructed the Sales
Manager of NFF in the person of Richard Bergamo to place and print the bags with G & L logo as
well as control number on all our sides of bags and thereafter agreed to the quantity of Two
Thousand [2,000] pieces as what had been agreed upon during the meeting with the Union Cement
Marketing personnel atthe Cement manufacturing [TSN March 10, 2003, pp. 25]. Initial delivery of
400 pieces of bulk bags were made on July 31, 1999 and then followed by another delivery of
additional bulk bags on August 5, 1999 while the remaining 600 pieces of bags were delivered on
August6, 1999 to complete the 2,000 pieces ordered by the defendant. All these deliveries were
made to defendant’s designated address at "G & L Associated Brokerage, Inc., C/O HI CEMENT
CORPORATION, NORZAGARAY BULACAN." These deliveries were made in compliance with Hi-
Cement’s standard/regular operating procedure. It passed thru guard on duty, who allowed the entry
of delivery into the premises of Hi-Cement, which is the designated delivery site and then a
representative of the defendant thereat received the delivered items in behalf of the defendant.
43

Respondents’ mere allegations ofnon-delivery and misdelivery deserve scant consideration. On the
matter of non-delivery, We find it bizarre that respondents failed in demanding the delivery of the
bulk bags despite its urgent need to procure the same, as admitted by respondents’ witnesses.
Customarily, failure to deliver the goods could have prompted respondents to follow up on the orders
and ensure that the same is delivered at the earliest opportunity. In fact, if they had not actually
received any quantity of bulk bags, despite their alleged repeated demands, they could have
demanded in writing or resorted to legal action for the enforcement thereof. But there was dearth of
evidence showing the same. On the matter of misdelivery, when the instruction todeliver the partial
five hundred (500) pieces of bulk bags was made by Mr. Trinidad, the latter did not even mention the
name Ramil Ambrosio. The significance of such condition, therefore, falls flat to the actual delivery
made by petitioner at the agreed delivery site. As testified by Mr. Vergamos, to wit:

DIRECT TESTIMONY

ATTY. CORALDE

Q: Now, Mr. Witness, where was the delivery of the bulk bags required for you by Mr. Trinidad? A: I
was instructed by Mr. Gerry Trinidad to deliver the partial five hundred pieces (500 pcs.) bags
toUnion Cement Manufacturing Plant in Norzagaray, Bulacan, under the name G & L Associated
Brokerage, sir.

Q: Did he advise you of specific person to whom this delivery should be made, Mr. Witness?

A: He did not advise me of any person, sir. 44

Interestingly, respondents presented the payroll of its employees wherein the name Ramil Ambrosio
appeared only in the payroll for the periods of July 16 to 31, 1999, August 16 to 31, 1999 and
September 16 to 30, 1999. However, for the period from July 30 to August 6, 1999, during which the
deliveries were made, the name Ramil Ambrosio does not appear in the payroll of respondent
company. Thus, it is clear that during the time the deliveries were made on the agreed dates and for
45

which petitioner in fact delivered the bags to respondent company, there was no Ramil Ambrosio to
actually receive the same as he obviously did not report for work.
46

More importantly, in his testimony, respondent Trinidad categorically admitted receiving the delivery
receipts,which evince the actual delivery of the bulk bags, to wit:
 DIRECT EXAMINATION

ATTY. RODRIGUEZ

Q: The plaintiff also presented other Delivery Receipts, Mr. Witness, one (1) dated on August 4,
1999, No. 0229, previously marked as Exhibit "C" for the plaintiff and another Receipt No. 0231
dated August 6, 1999, kindly go over these Delivery Receipts, Mr. Witness, and inform us if you
have seen this Delivery Receipts before?

COURT

Q: The one with No. 0229 dated August 4, 1999, you saw it?

A: Yes, your honor, I have seen this.

Q: Where did you see it?

A: I have seen this before. This was attached to the billing they have sent us, your honor.

Q: How about the other receipt, Mr. Witness, No. 0231?

INTERPRETER

Witness perusing over the document hand by the counsel.

A: Yes sir, I have already seen this sir.

Q: And on what occasion did you see this Delivery Receipt, Mr. Witness?

A: Thru the billing that they have sent to us, sir.

Q: In other words, you have copies of these delivery receipts?

xxxx

ATTY. RODRIGUEZ

xxxx

Q: Mr. Witness, you mentioned that you have seen these Delivery Receipts before thru the invoices
or billings sent to you by the plaintiff in this case, if these receipts are shown to you, will you be able
to identify them?

A: Yes, sir. 47

Similarly, the corresponding sales invoices were duly served upon, and received by respondent
company’s representatives, as shown by the signatures of one Marian Gabay, respondent Trinidad’s
helper at his residence, who received the sales invoices in behalf of respondent company. It is 48

worthy to stress that from the time the copies of the sales invoices were served on respondents and
thereafter, respondents were never heard to complain relative thereto. 49

On this score, We agree with petitioner that it is rather confounding that respondents, despite
receipt,on various occasions, of the billing statements and delivery receipts, failed to even call the
attention of petitioner regarding the matter. In the same vein, despite the subsequent receipt of
50

demand letters, receipt of which wereduly acknowledged and admitted by respondents, the latter
opted not to question or contest the same, which is quite unusual and extremely inconsistent with its
claim of non-delivery of the bulk bags in question. 51
At any rate, We find merit in petitioner’s argument that despite its failure to strictly comply with the
instruction to deliver the bulk bags to the specified person, acceptance of delivery may be inferred
from the conduct of the respondents. Accordingly, respondents may be held liable to pay for the
52

price of the bulk bags pursuant to Article 1585 of the Civil Code, which provides that:

ARTICLE 1585. The buyer is deemedto have accepted the goods when he intimates to the seller
that he has accepted them, or when the goods have been delivered to him, and he does any act in
relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a
reasonable time, he retains the goods without intimating to the seller that he has rejected them.

As early as Sy v. Mina, it has been pronounced that the vendee’s acceptance of the equipment and
53

supplies and accessories, and the use it made of them is an implied conformity to the terms of the
invoices and he is bound thereby. The Court in that case also held that the buyer’s failure to
54

interpose any objection to the invoices issued to it, to evidence delivery of the materials ordered as
per their agreement, should be deemed as an implied acceptance by the buyer of the said
conditions.55

Indeed, the use by respondent of the bulk bags is an act of dominion, which is inconsistent with the
ownership of petitioner. As correctly observed by the RTC, the use of the bulk bags by respondents
can be readily verified from the records of the case, to wit:

The plaintiff’s witness affirmatively testified that the personnel of G & L Associated Brokerage used
the bulk bags by loading cement inside the bulk bags and it was lifted by a forklift and lifted the same
towards the truck belonging to G & L Associated Brokerage [TSN May 12, 2003 pp. 13]. Case
records even disclosed that the Exhibits L and its submarkings which was identified by the plaintiff’s
witness Richard Agustin Bergamo who took the pictures himself evidentlyshowing that the defendant
being the haulers of the Union Cement, withdrew tonner bags from Union Cement Bulacan Plan and
used these tonner bags supplied by the plaintiff in hauling Union Cement intended for CP Casecnan.
The self-serving claim of Gerardo Trinidad that he was constrained to make an order to some other
suppliers due to alleged non-delivery of the tonner bags likewise, deserved scant consideration.
Defendant Gerardo Trinidad admitted having used more than four thousand bags for the Casecnan
Project but when asked to produce copies of sales invoices and proof of purchase with respect to
these alleged suppliers in connection with Casecnan Project, said defendant miserably failed to
produce even a single proof and instead identified some delivery receipts covering the period year
2000 contrary to his very claim that the bulk bags were urgently needed sometime in July 1999 for
the Casecnan Project. 56

Also, the fact that respondent company was the sole user of the tonner bags at the Bulacan Plant of
Union Cement during the period pertinent to this case was duly proven by the Certification issued by
Union Cement Corporation, dated July 26,2002, that respondent was the only sole user of tonner
bags at Union Cement Bulacan Plant intended for the CP Casecnan Project(Project) from August
1999 to June 2001. To bolster this, the pictures taken at the premises of respondent company
situated near the Project clearly depict respondent company’s act of using tonner bags supplied by
petitioner, in hauling Union Cement intended for the Project.57

At this juncture, the overriding consideration is the evidence adduced that the bulk bags delivered by
petitioner at the Union Cement Plant were actually used by respondents, and this Court cannot allow
respondents to enrich themselves at the expense of another.

Having received the aforesaid billings, the corresponding delivery receipts and demand letters
rendered by petitioner, respondents should have forthwith called the attention of petitioner, if indeed,
its insinuation that the bulk bags themselves have not been delivered or misdelivered were true. In 58
the ordinary course of business, in case of unwarranted claims of payment of a sum of money, one
would immediately protest the same. But no such action was taken by respondents despite notice
59

thereof. Only when respondents were required by the RTC to submit an answer to the complaint
60

were they constrained to contest the claims of petitioner. If respondent were to be defeated only by
its failure toeffect delivery to the designated representative of respondent, the latter would inevitably
be unjustly enriched at the expense of the former. 61

If at all, respondents’ failure to pay the purchase price may have been due to lack of funds rather
than non-delivery or misdelivery of the bulk bags. On cross-examination, Aurelio L. Gomez,
petitioner’s general manager, testified that respondents admitted after the third delivery that they
were postponing the payment because theyhave no money to pay. Thus:

CROSS-EXAMINATION

ATTY. RODRIGUEZ:

Q: How about the other officers of the corporation, did you inquire from them?

A: Not me personally sir, but my credit collector.

Q: Did you inquire from them whatwas the result of the inquiry?

A: This was after the third delivery was made when they said that they have no money to pay that is
why they were postponing the payment sir. 62

Sifting through the testimony of the witnesses and the evidence submitted, the evidence of petitioner
preponderantly established that there was valid delivery of bulk bags, which gives rise to respondent
company’s corresponding obligation to pay therefor. By preponderance of evidence is meant that the
evidence adduced by one sideis, as a whole, superior to that of the other side. Essentially,
63

preponderance of evidence refers to the comparative weight of the evidence presented by the
opposing parties. As such, it has been defined as "the weight, credit, and value of the aggregate
64

evidence on either side," and is usually considered to be synonymous with the term greater weight of
the evidence or greater weight of the credible evidence. It is proof that is more convincing to the
65

court as worthy of belief than that which is offered in opposition thereto. Contrary to respondents’
66

view, We find that petitioner has successfully established its case. Accordingly, We give greater
weight, credit and value to its evidence.

Finally, with regard to the liabilityof respondent Trinidad, we adopt with approval the findings of the
RTC that he was merely being sued in his capacity as General Manager of respondent company. 67

Since there was no showing of any of circumstances warranting the piercing the veil of corporate
fiction, he cannot be held jointly and severally liable for the outstanding obligation of respondent
company. As held in Kukan International Corporation v. Reyes, citing an earlier case, those who
68 69

seek to pierce the veil must clearly establish that the separate and distinct personalities of the
corporations are set up to justify a wrong, protect fraud, or perpetrate a deception, to wit:

The same principle was the subject and discussed in Rivera v. United Laboratories, Inc.:

While a corporation may exist for any lawful purpose, the law will regard it as an association of
persons or, in case of two corporations, merge them into one, when its corporate legal entity is used
as a cloak for fraud or illegality. This is the doctrine of piercing the veil of corporate fiction. The
doctrine applies only when such corporate fiction is used to defeat public convenience, justify wrong,
protect fraud, or defend crime, or when it is made as a shield to confuse the legitimate issues, or
where a corporation is the mere alter ego or business conduit of a person, or where the corporation
is so organized and controlled and its affairs are so conducted as to make it merely an
instrumentality, agency, conduit or adjunct of another corporation.

To disregard the separate juridical personality of a corporation, the wrongdoing must be established
clearly and convincingly. It cannot be presumed. (Emphasis supplied.) 70

All told, We find reason to overturn the findings of the CA and affirm the decision of the trial
court.1âwphi1 Accordingly, respondent is hereby ordered to pay petitioner the sum of Seven Hundred
Sixty Thousand Pesos (₱760,000.00), representing overdue accounts plus interest from the first
demand on October 27, 1999 until fully paid in accordance with the doctrine laid down in Eastern
Shipping Lines v. Court of Appeals, then later on in Nacar v. Gallery Frames, as well as attorney’s
71 72

fees.73

At this juncture, it is well to note that under Nacar, in the absence of stipulation by the parties, the
judgment obligor shall be liable to pay six percent (6%) interest per annum to be computed from
default, i.e.,judicial or extrajudicial demand pursuant to the provisions of Article 1169 of the Civil
Code. Furthermore, when the judgment of the court awarding the sum of money becomes final and
74

executory, the rate of legal interest shall be six percent (6%) per annum from such finality until its
satisfaction, taking the form of a judicial debt.
75

WHEREFORE, the petition is GRANTED. The Decision dated November 22, 2006 and the Order
dated May 22, 2007, respectively, of the Court of Appeals are hereby REVERSED and SET ASIDE.
The Decision of the Regional Trial Court, dated January 25, 2005, is hereby AFFIRMED with
MODIFICATION to the effect that legal interest shall be awarded to petitioner at the following rates:

a) For the period of October 27, 1999 to June 30, 2013, the interest rate of twelve percent (12%)
76 77

per annum shall be imposed, compounded annually;

b) For the period of July 1, 2013 up to the day prior to the date of promulgation of this Decision, the
78

interest rate of six percent (6%) per annum shall be imposed, compounded annually; and

c) From the date of promulgation of this Decision up to full payment, a straight six percent (6%)
interest per annum shall be imposed on the sum of money plus the interest computed under
paragraph (a) and (b) above. 79

SO ORDERED.

G.R. No. 180144 September 24, 2014

LEONARDO BOGNOT, Petitioner,

vs.
RRI LENDING CORPORATION, represented by its General Manager, DARIO J. BERNARDEZ,
Respondent.

DECISION

BRION, J.:

Before the Court is the petition for review on certiorari filed by Leonardo Bognot (petitioner) assailing
1

the March 28, 2007 decision and the October 15, 2007 resolution of the Court of Appeals (CA) in
2 3

CA-G.R. CV No. 66915.

Background Facts

RRI Lending Corporation (respondent) is an entity engaged in the business of lending money to its
borrowers within Metro Manila. It is duly represented by its General Manager, Mr. Dario J. Bernardez
(Bernardez).

Sometime in September 1996, the petitioner and his younger brother, Rolando A. Bognot
(collectively referred to as the "Bognot siblings"), applied for and obtained a loan of Five Hundred
Thousand Pesos (₱500,000.00) from the respondent, payable on November 30, 1996. The loan 4

was evidenced by a promissory note and was secured by a post dated check dated November 30,
5

1996.

Evidence on record shows that the petitioner renewed the loan several times on a monthly basis. He
paid a renewal fee of ₱54,600.00 for each renewal, issued a new post-dated checkas security, and
executed and/or renewed the promissory note previouslyissued. The respondent on the other hand,
cancelled and returned to the petitioner the post-dated checks issued prior to their renewal.

Sometime in March 1997, the petitioner applied for another loan renewal. He again executed as
principal and signed Promissory Note No. 97-035 payable on April 1, 1997; his co-maker was again
6

Rolando. As security for the loan, the petitioner also issued BPI Check No. 0595236, post dated to
7

April 1, 1997.
8

Subsequently, the loan was again renewed on a monthly basis (until June 30, 1997), as shown by
the Official Receipt No. 797 dated May 5, 1997, and the Disclosure Statement dated May 30, 1997
9

duly signed by Bernardez. The petitioner purportedly paid the renewal fees and issued a post-dated
check dated June 30, 1997 as security. As had been done in the past, the respondent superimposed
the date "June 30, 1997" on the upper right portion of Promissory Note No. 97-035 to make it appear
that it would mature on the said date.

Several days before the loan’s maturity, Rolando’s wife, Julieta Bognot (Mrs. Bognot), went to the
respondent’s office and applied for another renewal of the loan. She issued in favor of the
respondent Promissory Note No. 97-051, and International Bank Exchange (IBE) Check No.
00012522, dated July 30, 1997, in the amount of ₱54,600.00 as renewal fee.

On the excuse that she needs to bring home the loan documents for the Bognot siblings’ signatures
and replacement, Mrs. Bognot asked the respondent’s clerk to release to her the promissory note,
the disclosure statement, and the check dated July 30, 1997. Mrs. Bognot, however, never returned
these documents nor issued a new post-dated check. Consequently, the respondent sent the
petitioner follow-up letters demanding payment of the loan, plus interest and penalty charges. These
demands went unheeded.

On November 27, 1997, the respondent, through Bernardez, filed a complaint for sum of money
before the Regional Trial Court (RTC) against the Bognot siblings. The respondent mainly alleged
that the loan renewal payable on June 30, 1997 which the Bognot siblings applied for remained
unpaid; that before June30, 1997, Mrs. Bognot applied for another loan extension and issued IBE
Check No. 00012522 as payment for the renewal fee; that Mrs. Bognot convinced the respondent’s
clerk to release to her the promissory note and the other loan documents; that since Mrs. Bognot
never issued any replacement check, no loanextension took place and the loan, originally payable
on June 30, 1997, became due on this date; and despite repeated demands, the Bognot siblings
failed to pay their joint and solidary obligation.

Summons were served on the Bognotsiblings. However, only the petitioner filed his answer.
In his Answer, the petitioner claimed that the complaint states no cause of action because the
10

respondent’s claim had been paid, waived, abandoned or otherwise extinguished. He denied being a
party to any loan application and/or renewal in May 1997. He also denied having issued the BPI
check post-dated to June 30, 1997, as well as the promissory note dated June 30, 1997, claiming
that this note had been tampered. He claimed that the one (1) month loan contracted by Rolando
and his wife in November 1996 which was lastly renewed in March 1997 had already been fully paid
and extinguished in April 1997.11

Trial on the merits thereafter ensued.

The Regional Trial Court Ruling

In a decision dated January 17, 2000,the RTC ruled in the respondent’s favor and ordered the
12

Bognot siblings to pay the amount of the loan, plus interest and penalty charges. It considered the
wordings of the promissory note and found that the loan they contracted was joint and solidary. It
also noted that the petitioner signed the promissory note as a principal (and not merely as a
guarantor), while Rolando was the co-maker. It brushed the petitioner’s defense of full payment
aside, ruling that the respondent had successfully proven, by preponderance of evidence, the
nonpayment of the loan. The trial court said:

Records likewise reveal that while he claims that the obligation had been fully paid in his Answer, he
did not, in order to protect his right filed (sic) a cross-claim against his co-defendant Rolando Bognot
despite the fact that the latter did not file any responsive pleading.

In fine, defendants are liable solidarily to plaintiff and must pay the loan of ₱500,000.00 plus 5%
interest monthly as well as 10% monthly penalty charges from the filing of the complaint on
December 3, 1997 until fully paid. As plaintiff was constrained to engage the services of counsel in
order to protect his right,defendants are directed to pay the former jointly and severally the amount
of ₱50,000.00 as and by way of attorney’s fee.

The petitioner appealed the decision to the Court of Appeals.

The Court of Appeals Ruling

In its decision dated March 28, 2007, the CA affirmed the RTC’s findings. It found the petitioner’s
defense of payment untenable and unsupported by clear and convincing evidence. It observed that
the petitioner did not present any evidence showing that the check dated June 30, 1997 had, in fact,
been encashed by the respondent and the proceeds applied to the loan, or any official receipt
evidencing the payment of the loan. It further stated that the only document relied uponby the
petitioner to substantiate his defense was the April 1, 1997 checkhe issued which was cancelled and
returned to him by the respondent.

The CA, however, noted the respondent’s established policy of cancelling and returning the post-
dated checks previously issued, as well as the subsequent loan renewals applied for by the
petitioner, as manifested by the official receipts under his name. The CA thus ruled that the
petitioner failed to discharge the burden of proving payment.

The petitioner moved for the reconsideration of the decision, but the CA denied his motion in its
resolution of October 15, 2007, hence, the present recourse to us pursuant toRule 45 of the Rules of
Court.

The Petition
The petitioner submits that the CA erred in holding him solidarily liable with Rolando and his wife.
Heclaimed that based on the legal presumption provided by Article 1271 of the Civil Code, his 13

obligation had been discharged by virtue of his possession of the post-dated check (stamped
"CANCELLED") that evidenced his indebtedness. He argued that it was Mrs. Bognot who
subsequently assumed the obligation by renewing the loan, paying the fees and charges, and
issuing a check. Thus, there is an entirely new obligation whose payment is her sole responsibility.

The petitioner also argued that as a result of the alteration of the promissory note without his
consent (e.g., the superimposition of the date "June 30, 1997" on the upper right portion of
Promissory Note No. 97-035 to make it appear that it would mature on this date), the respondent can
no longer collect on the tampered note, let alone, hold him solidarily liable with Rolando for the
payment of the loan. He maintained that even without the proof of payment, the material alteration of
the promissory note is sufficient to extinguish his liability.

Lastly, he claimed that he had been released from his indebtedness by novation when Mrs. Bognot
renewed the loan and assumed the indebtedness.

The Case for the Respondents

The respondent submits that the issues the petitioner raised hinge on the appreciation of the
adduced evidence and of the factual lower courts’ findings that, as a rule, are notreviewable by this
Court.

The Issues

The case presents to us the following issues:

1. Whether the CA committed a reversible error in holding the petitioner solidarily liable with
Rolando;

2. Whether the petitioner is relieved from liability by reason of the material alteration in the
promissory note; and

3. Whether the parties’ obligation was extinguished by: (i) payment; and (ii) novation by substitution
of debtors.

Our Ruling

We find the petition partly meritorious.

As a rule, the Court’s jurisdiction in a Rule 45 petition is limited to the review of pure questions of
law. Appreciation of evidence and inquiry on the correctness of the appellate court's factual findings
14

are not the functions of this Court; we are not a trier of facts.
15

A question of law exists when the doubt or dispute relates to the application of the law on given
facts. On the other hand, a question of fact exists when the doubt or dispute relates to the truth or
falsity of the parties’ factual allegations.
16

As the respondent correctly pointedout, the petitioner’s allegations are factual issuesthat are not
proper for the petition he filed. In the absence of compelling reasons, the Court cannot re-examine,
review or re-evaluate the evidence and the lower courts’ factual conclusions. This is especially true
when the CA affirmed the lower court’s findings, as in this case. Since the CA’s findings of facts
affirmed those of the trial court, they are binding on this Court, rendering any further factual review
unnecessary.
If only to lay the issues raised - both factual and legal – to rest, we shall proceed to discuss their
merits and demerits.

No Evidence Was Presented to Establish the Fact of Payment

Jurisprudence tells us that one who pleads payment has the burden of proving it; the burden rests
17

on the defendant to prove payment, rather than on the plaintiff to prove non-payment. Indeed, once
18

the existence of an indebtedness is duly established by evidence, the burden of showing with legal
certainty that the obligation has been discharged by payment rests on the debtor. 19

In the present case, the petitioner failed to satisfactorily prove that his obligation had already been
extinguished by payment. As the CA correctly noted, the petitioner failed to present any evidence
that the respondent had in fact encashed his check and applied the proceeds to the payment of the
loan. Neither did he present official receipts evidencing payment, nor any proof that the check had
been dishonored.

We note that the petitioner merely relied on the respondent’s cancellation and return to him of the
check dated April 1, 1997. The evidence shows that this check was issued to secure the
indebtedness. The acts imputed on the respondent, standing alone, do not constitute sufficient
evidence of payment.

Article 1249, paragraph 2 of the Civil Code provides:

xxxx

The delivery of promissory notes payable to order, or bills of exchange or other mercantile
documents shall produce the effect of payment only when they have been cashed, or when through
the fault of the creditor they have been impaired. (Emphasis supplied)

Also, we held in Bank of the Philippine Islands v. Spouses Royeca: 20

Settled is the rule that payment must be made in legal tender. A check is not legal tender and,
therefore, cannot constitute a valid tender of payment. Since a negotiable instrument is only a
substitute for money and not money, the delivery of such an instrument does not, by itself, operate
as payment. Mere delivery of checks does not discharge the obligation under a judgment. The
obligation is not extinguished and remains suspended until the payment by commercial document is
actually realized.(Emphasis supplied)

Although Article 1271 of the Civil Code provides for a legal presumption of renunciation of action (in
cases where a private document evidencing a credit was voluntarily returned by the creditor to the
debtor), this presumption is merely prima facieand is not conclusive; the presumption loses efficacy
when faced with evidence to the contrary.

Moreover, the cited provision merely raises a presumption, not of payment, but of the renunciation of
the credit where more convincing evidence would be required than what normally would be called for
to prove payment. Thus, reliance by the petitioner on the legal presumption to prove payment is
21

misplaced.

To reiterate, no cash payment was proven by the petitioner. The cancellation and return of the check
dated April 1, 1997, simply established his renewal of the loan – not the fact of payment.
Furthermore, it has been established during trial, through repeated acts, that the respondent
cancelled and surrendered the post-dated check previously issued whenever the loan is renewed.
We trace whatwould amount to a practice under the facts of this case, to the following testimonial
exchanges:
Civil Case No. 97-0572

TSN December 14, 1998, Page 13.

Atty. Almeda:

Q: In the case of the renewal of the loan you admitted that a renewal fee is charged to the debtor
which he or she must pay before a renewal is allowed. I show you Exhibit "3" official receipt of
plaintiff dated July 3, 1997, would this be your official receipt which you issued to your client which
they make renewal of the loan?

A: Yes, sir.

xxx xxx xxx

Q: And naturally when a loan has been renewed, the old one which is replaced by the renewal has
already been cancelled, is that correct?

A: Yes, sir.

Q: It is also true to say that all promissory notes and all postdated checks covered by the old loan
which have been the subject of the renewal are deemed cancelled and replaced is that correct?

A: Yes, sir. xxx 22

Civil Case No. 97-0572

TSN November 27, 1998, Page 27.

Q: What happened to the check that Mr. Bognot issued?

Court: There are two Bognots. Who in particular?

Q: Leonardo Bognot, Your Honor.

A: Every month, they were renewed, he issued a new check, sir.

Q: Do you have a copy of the checks?

A: We returned the check upon renewing the loan. 23

In light of these exchanges, wefind that the petitioner failed to discharge his burden ofproving
payment.

The Alteration of the Promissory Note

Did Not Relieve the Petitioner From Liability

We now come to the issue of material alteration. The petitioner raised as defense the alleged
material alteration of Promissory Note No. 97-035 as basis to claim release from his loan. He alleged
that the respondent’s superimposition of the due date "June 30, 1997" on the promissory note
without his consent effectively relieved him of liability.

We find this defense untenable.

Although the respondent did not dispute the fact of alteration, he nevertheless denied that the
alteration was done without the petitioner’s consent. The parties’ Pre-Trial Order dated November 3,
1998 states that:
24
xxx There being no possibility of a possible compromise agreement, stipulations, admissions, and
denials were made, to wit:

FOR DEFENDANT LEONARDO BOGNOT

13. That the promissory note subject of this case marked as Annex "A" of the complaint was
originally dated April 1, 1997 with a superimposed rubber stamp mark "June 30, 1997" to which the
plaintiff admitted the superimposition.

14. The superimposition was done without the knowledge, consent or prior consultation with
Leonardo Bognot which was denied by plaintiff." (Emphasis supplied)
25

Significantly, the respondent also admitted in the Pre-Trial Order that part of its company practice is
to rubber stamp, or make a superimposition through a rubber stamp, the old promissory note which
has been renewed to make it appear that there is a new loan obligation. The petitioner did not rebut
this statement. To our mind, the failure to rebut is tantamount to an admission of the respondent’s
allegations:

"22. That it is the practice of plaintiff to just rubber stamp or make superimposition through a rubber
stamp on old promissory note which has been renewed to make it appear that there is a new loan
obligation to which the plaintiff admitted." (Emphasis Supplied).26

Even assuming that the note had indeed been tampered without the petitioner’s consent, the latter
cannot totally avoid payment of his obligation to the respondent based on the contract of loan.

Based on the records, the Bognot Siblings had applied for and were granted a loan of ₱500,000.00
by the respondent. The loan was evidenced by a promissory note and secured by a post-dated
check dated November 30, 1996. In fact, the petitioner himself admitted his loan application was
27

evidenced by the Promissory Note dated April 1, 1997. This loan was renewed several times by the
28

petitioner, after paying the renewal fees, as shown by the Official Receipt Nos. 797 and 587 dated
29 30

May 5 and July 3, 1997, respectively. These official receipts were issued in the name of the
petitioner. Although the petitioner had insisted that the loan had been extinguished, no other
evidence was presented to prove payment other than the cancelled and returnedpost-dated check.

Under this evidentiary situation, the petitioner cannot validly deny his obligation and liability to the
respondent solely on the ground that the Promissory Note in question was tampered. Notably, the
existence of the obligation, as well as its subsequent renewals, have been duly established by: first,
the petitioner’s application for the loan; second, his admission that the loan had been obtained from
the respondent; third, the post-dated checks issued by the petitioner to secure the loan; fourth, the
testimony of Mr. Bernardez on the grant, renewal and non-payment of the loan; fifth, proof of non-
payment of the loan; sixth, the loan renewals; and seventh, the approval and receipt of the loan
renewals.

In Guinsatao v. Court of Appeals, this Court pointed out that while a promissory note is evidence of
31

an indebtedness, it is not the only evidence, for the existence of the obligation can be proven by
other documentary evidence such as a written memorandum signed by the parties. In Pacheco v.
Court of Appeals, this Court likewise expressly recognized that a check constitutes anevidence of
32

indebtedness and is a veritable proof of an obligation. It canbe used in lieu of and for the same
purpose as a promissory note and can therefore be presented to establish the existence of
indebtedness. 33
In the present petition, we find that the totality of the evidence on record sufficiently established the
existence of the petitioner’s indebtedness (and liability) based on the contract ofloan. Even with the
tampered promissory note, we hold that the petitioner can still be held liable for the unpaid loan.

The Petitioner’s BelatedClaim of Novation by Substitution May no Longer be Entertained

It has not escaped the Court’s attention that the petitioner raised the argument that the obligation
had been extinguished by novation. The petitioner never raised this issue before the lower courts.

It is a settled principle of law thatno issue may be raised on appeal unless it has been brought before
the lower tribunal for its consideration. Matters neither alleged in the pleadingsnor raised during the
34

proceedings below cannot be ventilated for the first time on appeal before the Supreme Court. 35

In any event, we find no merit in the defense of novation as we discuss at length below. Novation
cannot be presumed and must be clearly and unequivocably proven.

Novation is a mode of extinguishing an obligation by changing its objects or principal obligations, by

substituting a new debtor in place of the old one, or by subrogating a third person to the rights of the
creditor.
36

Article 1293 of the Civil Code defines novation as follows:

"Art. 1293. Novation which consists insubstituting a new debtor in the place of the originalone, may
be made even without the knowledge or against the will of the latter, but not without the consent of
the creditor. Payment by the new debtor gives him rights mentioned in Articles 1236 and 1237."

To give novation legal effect, the original debtor must be expressly released from the obligation, and
the new debtor must assume the original debtor’s place in the contractual relationship. Depending
on who took the initiative, novation by substitution of debtor has two forms – substitution by
expromision and substitution by delegacion. The difference between these two was explained in
Garcia v. Llamas: 37

"In expromision, the initiative for the change does not come from -- and may even be made without
the knowledge of -- the debtor, since it consists of a third person’s assumption of the obligation. As
such, it logically requires the consent of the third person and the creditor. In delegacion, the debtor
offers, and the creditor accepts, a third person who consents to the substitution and assumes the
obligation; thus, the consent of these three persons are necessary."

In both cases, the original debtor must be released from the obligation; otherwise, there can be no
valid novation. Furthermore, novation by substitution of debtor must alwaysbe made with the
38

consent of the creditor. 39

The petitioner contends thatnovation took place through a substitution of debtors when Mrs. Bognot
renewed the loan and assumed the debt. He alleged that Mrs. Bognot assumed the obligation by
paying the renewal fees and charges, and by executing a new promissory note. He further claimed
that she issued her own check to cover the renewal fees, which fact, according to the petitioner,
40

was done with the respondent’s consent.

Contrary to the petitioner’s contention, Mrs. Bognot did not substitute the petitioner as debtor. She
merely attempted to renew the original loan by executing a new promissory note and check. The
41

purported one month renewal of the loan, however, did not push through, as Mrs. Bognot did not
return the documents or issue a new post dated check. Since the loan was not renewed for another
month, the originaldue date, June 30,1997, continued to stand.
More importantly, the respondent never agreed to release the petitioner from his obligation. That the
respondent initially allowed Mrs. Bognot to bring home the promissory note, disclosure statement
and the petitioner’s previous check dated June 30, 1997, does not ipso factoresult in novation.
Neither will this acquiescence constitute an implied acceptance of the substitution of the debtor.

In order to give novation legal effect, the creditor should consent to the substitution of a new debtor.
Novation must be clearly and unequivocally shown, and cannot be presumed.

Since the petitioner failed to show thatthe respondent assented to the substitution, no valid novation
took place with the effect of releasing the petitioner from his obligation to the respondent.

Moreover, in the absence of showing that Mrs. Bognot and the respondent had agreed to release the
petitioner, the respondent can still enforce the payment of the obligation against the original debtor.
Mere acquiescence to the renewal of the loan, when there is clearly no agreement to release the
petitioner from his responsibility, does not constitute novation.

The Nature of the Petitioner’s Liability

On the nature of the petitioner’s liability, we rule however, that the CA erred in holding the petitioner
solidarily liable with Rolando.

A solidary obligation is one in which each of the debtors is liable for the entire obligation, and each of
the creditors is entitled to demand the satisfaction of the whole obligation from any or all of the
debtors. There is solidary liability when the obligation expressly so states, when the law so
42

provides, or when the nature of the obligation so requires. Thus, when the obligor undertakes to be
43

"jointly and severally" liable, the obligation is solidary,

In this case, both the RTC and the CA found the petitioner solidarily liable with Rolando based on
Promissory Note No. 97-035 dated June 30, 1997. Under the promissory note, the Bognot Siblings
defined the parameters of their obligation as follows:

"FOR VALUE RECEIVED, I/WE, jointly and severally, promise to pay to READY RESOURCES
INVESTORS RRI LENDING CORPO. or Order, its office at Paranaque, M.M. the principal sum of
Five Hundred Thousand PESOS (₱500,000.00), PhilippineCurrency, with interest thereon at the rate
of Five percent (5%) per month/annum, payable in One Installment (01) equal daily/weekly/semi-
monthly/monthly of PESOS Five Hundred Thousand Pesos (₱500,000.00), first installment to
become due on June 30, 1997. xxx" (Emphasis Ours).
44

Although the phrase "jointly and severally" in the promissory note clearly and unmistakably provided
for the solidary liability of the parties, we note and stress that the promissory note is merely a
photocopyof the original, which was never produced.

Under the best evidence rule, whenthe subject of inquiry is the contents of a document, no evidence
isadmissible other than the original document itself except in the instances mentioned in Section 3,
Rule 130 of the Revised Rules of Court. 45

The records show that the respondenthad the custody of the original promissory note dated April 1,
1997, with a superimposed rubber stamp mark "June 30, 1997", and that it had been given every
opportunity to present it. The respondent even admitted during pre-trial that it could not present the
original promissory note because it is in the custody of its cashier who is stranded in Bicol. Since
46

the respondent never produced the original of the promissory note, much less offered to produce it,
the photocopy of the promissory note cannot be admitted as evidence. Other than the promissory
note in question, the respondent has not presented any other evidence to support a finding of
solidary liability. As we earlier noted, both lower courts completely relied on the note when they
found the Bognot siblingssolidarily liable.

The well-entrenched rule is that solidary obligation cannot be inferred lightly. It must be positively
and clearly expressed and cannot be presumed. 47

In view of the inadmissibility of the promissory note, and in the absence of evidence showing that the
petitioner had bound himself solidarily with Rolando for the payment of the loan, we cannot but
conclude that the obligation to pay is only joint. 48

The 5% Monthly Interest Stipulated in the Promissory Note is Unconscionable and Should be
Equitably Reduced

Finally, on the issue of interest, while we agree with the CA that the petitioner is liable to the
respondentfor the unpaid loan, we find the imposition of the 5% monthly interest to be excessive,
iniquitous, unconscionable and exorbitant, and hence, contrary to morals and jurisprudence.
Although parties to a loan agreement have wide latitude to stipulate on the applicable interest rate
under Central Bank Circular No. 905 s. 1982 (which suspended the Usury Law ceiling on interest
effective January 1, 1983), we stress that unconscionable interest rates may still be declared illegal. 49

In several cases, we haveruled that stipulations authorizing iniquitous or unconscionable interests

are contrary to morals and are illegal. In Medel v. Court of Appeals, we annulled a stipulated 5.5%
50

per month or 66% per annum interest on a ₱500,000.00 loan, and a 6% per month or 72% per
annum interest on a ₱60,000.00 loan, respectively, for being excessive, iniquitous,
unconscionableand exorbitant.1âwphi1

We reiterated this ruling in Chua v. Timan, where we held that the stipulated interest rates of 3%
51

per month and higher are excessive, iniquitous, unconscionable and exorbitant, and must therefore
be reduced to 12% per annum.

Applying these cited rulings, we now accordingly hold that the stipulated interest rate of 5% per
month, (or 60% per annum) in the promissory note is excessive, unconscionable, contrary to morals
and is thus illegal. It is void ab initiofor violating Article 1306 of the Civil Code.1âwphi1 We accordingly
52

find it equitable to reduce the interest rate from 5% per month to 1% per month or 12% per annum in
line with the prevailing jurisprudence.

WHEREFORE, premises considered, the Decision dated March 28, 2007 of the Court of Appeals in
CA-G.R. CV No. 66915 is hereby AFFIRMED with MODIFICATION, as follows:

1. The petitioner Leonardo A. Bognotand his brother, Rolando A. Bognot are JOINTLY LIABLE to
pay the sum of ₱500,000.00 plus 12% interest per annum from December 3, 1997 until fully paid.

2. The rest of the Court of Appeals' dispositions are hereby AFFIRMED.

Costs against petitioner Leonardo A. Bognot.

SO ORDERED.

G.R. No. 204594, November 07, 2018

 SINDOPHIL, INC., Petitioner, v. REPUBLIC OF THE PHILIPPINES, Respondent.

DECISION

LEONEN, J.:

The presumption that a holder of a Torrens title is an innocent purchaser for value is
disputable and may be overcome by contrary evidence. Once a prima facie case
disputing this presumption is established, the adverse party cannot simply rely on the
presumption of good faith and must put forward evidence that the property was
acquired without notice of any defect in its title.

This resolves Sindophil, Inc.'s (Sindophil) Petition for Review on Certiorari 1 assailing the
June 19, 2012 Resolution2 and November 23, 2012 Resolution 3 of the Court of Appeals
in CA-G.R. CV No. 96660. The Court of Appeals deemed as abandoned and,
consequently, dismissed Sindophil's joint appeal with a certain Marcelo R. Teodoro
(Teodoro) for their failure to file their Appellants' Brief within the required period. 4

This case involves a 2,791-square-meter parcel of land (Tramo property) located on Aurora Boulevard (Tramo), Pasay City, currently in Sindophil's

possession. Sindophil anchors its right to the Tramo property on Transfer Certificate of Title (TCT) No. 132440, which was purportedly issued by the

Register of Deeds of Pasay City.5

On July 27, 1993, the Republic of the Philippines filed a Complaint6

for revocation, annulment, and cancellation of
certificates of title before the Pasay City Regional Trial Court, and impleaded Sindophil
as one of the defendants.

In its Complaint, the Republic alleged that per TCT No. 10354, 7 issued by the Register
of Deeds of Pasay City, the Tramo property was initially registered under the name of
Teodoro on November 12, 1964. Teodoro then sold it to a certain Reynaldo Puma
(Puma), causing the cancellation of TCT No. 10354 and the issuance of TCT No.
128358.8 Subsequently, Puma sold it to a certain Lourdes Ty (Ty). Puma's TCT No.
128358 was cancelled and TCT No. 129957 was issued to Ty. 9 Finally, on May 3, 1991,10
Ty sold the property to Sindophil, causing the cancellation of TCT No. 129957 and the
issuance of TCT No. 132440 to Sindophil on March 24, 1993. 11

Despite the issuance of certificates of title over the Tramo property, the Republic claimed that TCT No. 10354 in the name of Teodoro was "spurious or

of do4btful authenticity."12
For one, the registry records of the Register of Deeds of Pasay City
showed that it was issued for a parcel of land in the name of a certain Maximo Escobar,
not Teodoro.13 Another instance was that Teodoro's TCT No. 10354 provided that it
emanated from TCT No. 3632; but the memorandum of cancellation annotated on TCT
No. 3632 provided that it was cancelled by TCT No. 8081 issued to a certain Efigenia A.
Vda. de Inocencio, not by TCT No. 10354 supposedly issued to Teodoro. 14 Furthermore,
TCT No. 10354 provided that it covered Lot 3270-B of the subdivision plan Psd-18572,
allegedly a portion of Lot 3270 registered in the name of the Republic of the Philippines
under TCT No. 6735. An examination of TCT No. 6735, however, revealed that it was
never subdivided and that it remained under the name of the Republic. Neither was
there a record of subdivision plan Psd-18572 recorded with the Department of
Environment and Natural Resources.15 For these reasons, the Republic argued that TCT
No. 10354 and all certificates of title that emanated from it, including Sindophil's TCT
No. 132440, were null and void and should accordingly be cancelled. 16

In their Answer,17
Teodoro, Puma, Ty, and Sindophil countered that the Republic was estopped
from questioning the transfers considering that it had allowed the series of transfers
and even accepted the "tremendous amount[s] paid" 18 as capital gains tax. They added
that the Complaint was filed because of the Register of Deeds' "personal grudge" 19
against them because they had questioned a consulta issued by the Register of Deeds
before the Administrator of the Land Registration Authority. 20 Finally, they contended
that they were innocent purchasers for value and, in the absence of evidence to the
contrary, reconveyance should not lie. 21 Arguing that the Republic had no cause of
action against them, they prayed for the dismissal of the Complaint. 22

During trial, only the Republic was able to present its evidence. Defendants Teodoro, Puma, Ty, and Sindophil were all deemed to have waived their

right to present evidence when they failed to present any evidence or witness despite several settings. The parties were then ordered to file their

respective memoranda; but instead of filing a memorandum, Sindophil filed a Motion to Re-Open Case,23
praying that it be allowed
to present evidence that it was a buyer in good faith. As to why it failed to present
evidence during trial, Sindophil explained that its witness, Sindophil President Victoria
Y. Chalid (Chalid), suffered a stroke which prevented her from testifying during trial. 24
Lastly, it pointed out that the Regional Trial Court granted the Republic a total of 110
days to file a formal offer of evidence. Thus, Sindophil prayed that it be "given equal
opportunity to present [its] defense since the [Regional Trial Court] had been very
lenient to [the Republic's counsel,] the Office of the Solicitor General[.]" 25

The Regional Trial Court, however, went on to decide the case without acting on Sindophil's Motion to Re-Open Case. In its November 13, 2009

Decision,26
it ruled in favor of the Republic and voided the certificates of title issued to
defendants Teodoro, Puma, Ty, and Sindophil. It found that the Tramo property claimed
by Teodoro under TCT No. 10354 was derived from TCT No. 6735 registered in the
name of the Republic.27 However, no annotation of the supposed transfer to Teodoro
was annotated on TCT No. 6735.28

On the claim of defendants that they were innocent purchasers for value, the Regional Trial Court said that this defense was "just a mere [assertion] and

was never supported by any documents."29

It stated that defendants failed to discharge the burden of
proving that they were purchasers in good faith and for value, thus, rejecting their
argument.30

The dispositive portion of the Regional Trial Court November 13, 2009 Decision read:

WHEREFORE, in view of the foregoing, TCT No. 10354 in the name of Marcelo R.
Teodoro and all subsequent titles derived therein, TCT Nos. 128358, 129957 and
132440, in the names of Reynaldo Puma, Lourdes Ty and Sindophil, Inc., respectively,
are hereby declared Null and Void. The Re[gi]ster of Deeds is hereby ordered to effect
the cancellation of the same. Likewise, defendants are hereby directed to refrain from
exercising or representing acts of ownership and/or possession over the land covered
by the titles declared Null and Void.
SO ORDERED.31 (Emphasis in the original)

Sindophil, together with Teodoro, appealed before the Court of Appeals. 32 However, for
failure to file their appellants' brief within the required period, the Court of Appeals
deemed the appeal abandoned and consequently dismissed it. The Court of Appeals
June 19, 2012 Resolution33 stated:

In view of the failure of the defendants-appellants to file their Appellants' Brief within
the period allowed to them, we hereby consider their appeal as ABANDONED and,
consequently, DISMISSED pursuant to Section 1(e) of Rule SO of the 1997 Rules of
Civil Procedure.

IT IS SO ORDERED.34 (Emphasis in the original)

Sindophil filed a Motion for Reconsideration 35 with its appellant's brief36 annexed to it. It
explained that it failed to file its appeal brief on time because its counsel, Atty. Rovenel
O. Obligar (Atty. Obligar), transferred his law office from Pasig City to Las Piñas City
and, in the process, his house helpers probably lost or inadvertently disposed of the
Resolution directing the filing of appeal brief. 37

In its November 23, 2012 Resolution,38

the Court of Appeals denied Sindophil's Motion for
Reconsideration, thus:

This has reference to the motion filed by the defendant-appellant Sindophil, Inc.,
through its counsel, for reconsideration of the resolution promulgated in this case on
June 19, 2012.

We find no cogent reason to warrant a reconsideration of the aforementioned

resolution. The petitioner, through its counsel, admitted in its motion that it committed
lapses. It has to suffer the consequence of such lapses.

Procedural rules have their own wholesome rationale in the orderly administration of
justice. Justice is to be administered according to the rules in order to obviate
arbitrariness, caprice or whimsicality (Vasco vs. Court of Appeals, G.R. No. L-46763,
February 28, 1978, 81 SCRA 763, 766).

Thus, procedural rules are not to be belittled or dismissed simply because their non-
observance may have resulted in prejudice to a party's substantive rights. Like all rules,
they are required to be followed except only when, for the most persuasive of reasons,
they may be relaxed to relieve a litigant of an injustice not commensurate with the
degree of his thoughtlessness in not complying with the procedure prescribed. While it
is true that litigation is not a game of technicalities, this does not mean that the Rules
of Court may be ignored at will and at random to the prejudice of the orderly
presentation and assessment of the issues and their just resolution. As held by the
Supreme Court in Garbo vs. Court of Appeals, G.R. No. 107698, July 5, 1996, 258
SCRA 159:

"Procedural rules are tools designed to facilitate the adjudication of cases. Courts and
litigants alike are thus enjoined to abide strictly by the rules. And while the Court, in
some instances, allows a relaxation in the application of the rules, this, we stress, was
never intended to forge a bastion of erring litigants to violate the rules with impunity.
The liberality in the interpretation and application of the rules applies only in proper
cases and under justifiable causes and circumstances. While it is true that litigation is
not a game of technicalities, it is equally true that every case must be prosecuted in
accordance with the prescribed procedure to insure an orderly and speedy
administration of justice."

Procedural rules, therefore, are not to be disdained as mere technicalities that may be
ignored at will to suit the convenience of a party (Santos vs. Court of Appeals, G.R. No.
92862, July 4, 1991, 198 SCRA 806). We find the instant case to be not an exception to
the aforementioned rule.

WHEREFORE, in view of the foregoing premises, we hereby DENY the motion for
reconsideration filed in this case by the defendant-appellant Sindophil, Inc.

SO ORDERED.39

On January 18, 2013, Sindophil filed its Petition for Review on Certiorari 40 before this
Court. After four (4) Motions 41 for Extension, the Republic filed its Comment 42 on July
15, 2013. In its July 31, 2013 Resolution, 43 this Court noted the Comment and directed
Sindophil to file its Reply within 10 days from notice.

Sindophil was served a copy of the Comment on September 18, 2013 and had until
September 28, 2013 to file its Reply.44 However, Sindophil failed to file its Reply within
the required period and its counsel was required to show cause 45 why he should not be
disciplinarily dealt with and was again required to file a Reply. On May 15, 2014,
Sindophil filed its Reply46 with its counsel apologizing for failing to file it within the
required period "because he honestly believed that the filing of one is optional and not
mandatory."47 This Court noted the Reply in its July 7, 2014 Resolution. 48

The parties raise both procedural and substantive issues for resolution of this Court. The procedural issues in this case are:

First, whether or not the Court of Appeals erred in dismissing Sindophil's appeal for failure to file an appeal brief within the required period; and

Second, whether or not the Regional Trial Court erred in deciding the case despite Sindophil's filing of a Motion to Re-Open Case.

The substantive issues are:

First, whether or not the certificates of title emanating from TCT No. 10354 are null and void; and

Second, whether or not the Regional Trial Court erred in not awarding Sindophil, compensation from the Assurance Fund.

On the procedural issues, Sindophil mainly argues that it was deprived of the right to "genuine" due process both by the Regional Trial Court and the

Court of Appeals. According to Sindophil, its failure to present evidence during trial and its failure to file the appeal brief within the required period are

"technical grounds"49
that the Regional Trial Court and the Court of Appeals could have excused
in the interest of substantial justice.

On the merits, Sindophil maintains that when it bought the Tramo property from Ty, it
was a buyer in good faith and had no notice of any infirmities in his title. 50 Considering
that under the Torrens System, "[a] purchaser is not bound by the original certificate of
title but only by the certificate of title of the person from whom he purchased the
property[,]"51 the Regional Trial Court erred in voiding its title to the Tramo property
because of the supposed anomalies surrounding the issuance of TCT No. 10354 to
Teodoro. Assuming that its title is indeed void, Sindophil nevertheless argues that it
should have been awarded compensation from the Assurance Fund per Section 95 52 of
the Property Registration Decree, as amended. 53

As for respondent, it argues that there was no deprivation of due process because Sindophil was given more than enough opportunity to present its case

but repeatedly and unjustifiably failed to do so. Its reasons for failing to file the appeal brief-the Resolution directing the filing of the brief was lost either

because of its counsel's transfer of office from Pasig City to Las Piñas City or because it might have been disposed by the counsel's house helpers-are

inexcusable and are all due to the negligence of its counsel. With appeal being a mere statutory privilege, respondent argues that the Court of Appeals

did not err in dismissing Sindophil's appeal for failure to comply with the Rules ofCourt.54

Furthermore, respondent maintains that the issue of whether a buyer is in good faith is a question of fact. The issue of whether Sindophil is entitled to

compensation from the Assurance Fund is likewise a question of fact as entitlement to compensation presupposes that the claimant is a buyer in good

faith. These issues being questions of fact, respondent argues that this Court may not resolve them because only questions of law may be brought

before this Court on a petition for review on certiorari under Rule 45 of the Rules of Court.55
In any case, even if the case is
resolved on the merits, respondent avers that Sindophil still had the burden of proving
that it was a buyer in good faith, an assertion that Sindophil miserably failed to
establish. According to respondent, it was error for Sindophil to rely solely on the
presumption of good faith without proving its case. 56

This Petition must be denied.

Rule 50, Section 1(e) of the Rules of Court is the basis for dismissing an appeal for
failure to file the appellant's brief within the required period:
 RULE 50
Dismissal of Appeal

Section 1. Grounds for Dismissal of Appeal. - An appeal may be dismissed by the Court
of Appeals, on its own motion or on that of the appellee, on the following grounds:

. . . .

(e) Failure of the appellant to serve and file the

required number of copies of his brief or
memorandum within the time provided by these
Rules[.]

With the use of the permissive "may," it has been held that the dismissal is directory,
not mandatory, with the discretion to be exercised soundly and "in accordance with the
tenets of justice and fair play"57 and "having in mind the circumstances obtaining in
each case."58 In Bigornia v. Court of Appeals:59

Technically, the Court of Appeals may dismiss an appeal for failure of the appellant to
file the appellants' brief on time. But, the dismissal is directory, not mandatory. Hence,
the court has discretion to dismiss or not to dismiss the appeal. It is a power conferred
on the court, not a duty. The discretion, however, must be a sound one, to be exercised
in accordance with the tenets of justice and fair play, having in mind the circumstances
obtaining in each case.60 (Emphasis in the original, citation omitted)

In Bigornia, this Court ordered the reinstatement of the appeal despite the late filing of
the appellant's brief. The petitioners in Bigornia were police officers who, this Court
said, "receive meager salaries for risking life and limb." 61 With the police officers having
been adjudged liable for substantial amounts in damages, this Court said that "[i]t is
but fair that [petitioners] be heard on the merits of their case before being made to pay
damages, for what could be, a faithful performance of duty." 62

The appeal was likewise reinstated in

Aguam v. Court of Appeals,63 where a motion for extension of
time to file appellant's brief was denied by the Court of Appeals for having been filed
nine (9) days64 beyond the period for filing the appellant's brief. The motion for
reconsideration with attached appellant's brief was likewise denied. 65 However, it was
established that the notice to file appellant's brief was received by an employee of the
realty firm with whom the appellant's lawyer was sharing office, not by the appellant's
lawyer who was a solo practitioner. 66 Thus, this Court ordered the Court of Appeals to
admit the appellant's brief in the higher interest of justice. 67

The same extraordinary circumstances similar to

Bigornia and Aguam are not present here. In Sindophil's
Motion for Reconsideration68 before the Court of Appeals, Sindophil's counsel, Atty.
Obligar, explained that his law office used to be located in Pasig City. However, when
two (2) of his staff left due to "family reasons," 69 he had to transfer his office to Las
Piñas City, which was near Parañaque City where he resided. He then speculated that in
the course of the transfer, the Court of Appeals' resolution directing Sindophil to file its
appeal brief might have been one of the files lost or inadvertently disposed of by his
house helpers.70

Atty. Obligar's excuse is unacceptable. While he is not prohibited from hiring clerks and other staff to help him in his law practice, it is still, first and

foremost, his duty to monitor the receipt of notices such as the Court of Appeals' resolution directing the filing of the appellant's brief. He cannot blame

his staff or house helpers as it is already settled that the negligence of the clerks and employees of a lawyer binds the latter.71
That he is not
even sure what happened to the Resolution shows his carelessness, and this negligence
is one that ordinary diligence could have guarded against. He should have devised a
system in his law office whereby his clerks are to immediately route the notices they
receive to the handling lawyer because the reglementary period for filing an appeal
brief runs from their receipt.72 Under the circumstances, the Court of Appeals exercised
its discretion soundly by deeming Sindophil's appeal as abandoned and, consequently,
dismissing the appeal.

II

Neither did the Regional Trial Comi err in deciding the case despite Sindophil's filing of a
Motion to Re-Open Case.

The order of trial is governed by Rule 30, Section 5 of the Rules of Court, with item (f)
specifically governing the reopening of a case to introduce new evidence, thus:

Section 5. Order of trial. - Subject to the provisions of Section 2 of Rule 31, and unless
the court for special reasons otherwise directs, the trial shall be limited to the issues
stated in the pre-trial order and shall proceed as follows:

(a) The plaintiff shall adduce evidence in support of

his complaint;

(b) The defendant shall then adduce evidence in

support of his defense, counterclaim, cross-claim
and third-party complaint;

(c) The third-party defendant, if any, shall adduce

evidence of his defense, counterclaim, cross-
claim and fourthparty complaint;
 (d) The fourth-party, and so forth, if any, shall
adduce evidence of the material facts pleaded by
them;

(e) The parties against whom any counterclaim or

crossclaim has been pleaded, shall adduce
evidence in support of their defense, in the order
to be prescribed by the court;

(f) The parties may then respectively adduce

rebutting evidence only, unless the court, for
good reasons and in the furtherance of justice,
permits them to adduce evidence upon their
original case; and

(g) Upon admission of the evidence, the case shall be

deemed submitted for decision, unless the court
directs the parties to argue or to submit their
respective memoranda or any further pleadings.

If several defendants or third-party defendants, and so forth, having separate defenses

appear by different counsel, the court shall determine the relative order of presentation
of their evidence. (Underscoring provided)

Republic v. Sandiganbayan73 explained Rule 30, Section 5 in this wise:

Under this rule, a party who has the burden of proof must introduce, at the first
instance, all the evidence he relies upon and such evidence cannot be given piecemeal.
The obvious rationale of the requirement is to avoid injurious surprises to the other
party and the consequent delay in the administration of justice.

A party's declaration of the completion of the presentation of his evidence prevents him
from introducing further evidence; but where the evidence is rebuttal in character,
whose necessity, for instance, arose from the shifting of the burden of evidence from
one party to the other; or where the evidence sought to be presented is in the nature of
newly discovered evidence, the party's right to introduce further evidence must be
recognized. Otherwise, the aggrieved party may avail of the remedy of certiorari.

Largely, the exercise of the court's discretion under the exception of Section 5 (f), Rule
30 of the Ru1es of Court depends on the attendant facts i.e., on whether the evidence
would qualify as a "good reason" and be in furtherance of "the interest of justice." For a
reviewing court to properly interfere with the lower court's exercise of discretion, the
petitioner must show that the lower court's action was attended by grave abuse of
discretion. Settled jurisprudence has defined this term as the capricious and whimsical
exercise of judgment, equivalent to lack of jurisdiction; or, the exercise of power in an
arbitrary manner by reason of passion, prejudice, or personal hostility, so patent or so
gross as to amount to an evasion of a positive duty, to a virtual refusal to perform the
mandated duty, or to act at all in contemplation of the law. Grave abuse of discretion
goes beyond the bare and unsupported imputation of caprice, whimsicality or
arbitrariness, and beyond allegations that merely constitute errors of judgment or mere
abuse of discretion.

In Lopez v. Liboro, we had occasion to make the following pronouncement:

After the parties have produced their respective direct proofs, they are allowed to offer
rebutting evidence only, but, it has been held, the court, for good reasons, in the
furtherance of justice, may permit them to offer evidence upon their original case, and
its ruling will not be disturbed in the appellate court where no abuse of discretion
appears. So, generally, additional evidence is allowed when it is newly discovered, or
where it has been omitted through inadvertence or mistake, or where the purpose of
the evidence is to correct evidence previously offered. The omission to present evidence
on the testator's knowledge of Spanish had not been deliberate. It was due to a
misapprehension or oversight.

Likewise, in Director of Lands v. Roman Archbishop of Manila, we ruled:

The strict rule is that the plaintiff must try his case out when he commences.
Nevertheless, a relaxation of the rule is permitted in the sound discretion of the court.
"The proper rule for the exercise of this discretion," it has been said by an eminent
author, "is, that material testimony should not be excluded because offered by the
plaintiff after the defendant has rested, although not in rebuttal, unless it has been kept
back by a trick, and for the purpose of deceiving the defendant and affecting his case
injuriously."

These principles find their echo in Philippine remedial law. While the general rule is
rightly recognized, the Code of Civil Procedure authorizes the judge "for special
reasons," to change the order of the trial, and "for good reason, in the furtherance of
justice," to permit the parties "to offer evidence upon their original case." . . .

In his commentaries, Chief Justice Moran had this to say:

However, the court for good reasons, may, in the furtherance of justice, permit the
parties to offer evidence upon their original case, and its ruling will not be disturbed
where no abuse of discretion appears, Generally, additional evidence is allowed when . .
.; but it may be properly disallowed where it was withheld deliberately and without
justification.74 (Emphasis in the original, citations omitted)
The introduction of new evidence even after a party has rested its case may, therefore,
be done but only if the court finds that it is for good reasons and in the furtherance of
justice. The admission is discretionary on the part of the court and, as explained in
Republic, may only be set aside if the admission was done with grave abuse of
discretion or:

[T]he capricious and whimsical exercise of judgment, equivalent to lack of jurisdiction;

or, the exercise of power in an arbitrary manner by reason of passion, prejudice, or
personal hostility, so patent or so gross as to amount to an evasion of a positive duty,
to a virtual refusal to perform the mandated duty, or to act at all in contemplation of
the law.75 (citation omitted)

To recall, Sindophil filed an Urgent Motion to Reset Hearing with Notice of Change of
Address one (1) day before its scheduled initial presentation of evidence. On motion by
the Solicitor General, representing the Republic, the Regional Trial Court denied the
Motion to Reset Hearing for having been filed on short notice and deemed as waived
Sindophil's right to present evidence. The parties were then ordered to file their
respective memoranda thirty (30) days from notice, after which the case would be
deemed submitted for decision.76

Thereafter, Sindophil filed a motion for extension, praying for an additional fifteen (15) days or until February 26, 2009, to file its memorandum.77

The Regional Trial Court granted the motion in its February 24, 2009 Order. 78 However,
despite the grant of extension, Sindophil did not file the required memorandum.
Instead, it filed the Motion to Re-Open Case 79 more than a month later or on March 31,
2009. In its Motion to Re-Open Case, Sindophil alleged that its witness, Sindophil
President Chalid, had previously suffered a stroke that rendered her indisposed to take
the stand.80

The stroke suffered by Sindophil's President was not a good reason to reopen the case. In its Pre-Trial Brief, Sindophil indicated the Register of Deeds of

Pasay City as its other witness.81

It could have very well presented the Register of Deeds first while
Chalid recovered from her stroke. Why it did not do so is only known to Sindophil.

Furthermore, while illness is a valid ground for postponing a hearing, 82 it does not
appear that Sindophil raised Chalid's stroke as a ground to postpone its initial
presentation of defense evidence. The illness was only alleged in the Motion to Re-Open
Case filed on March 31, 2009, more than three (3) months after the scheduled
presentation of evidence on December 10, 2008. The excuse, therefore, appears to be
an afterthought.

Neither can Sindophil claim that it was not given equal opportunity to present its case.
Atty. Obligar, counsel for Sindophil, admitted that he never objected to the motions for
extension to file formal offer of evidence filed by the Republic. 83 Even if this Court
believes that he did not object to the extensions "as a gesture of consideration bearing
in mind the work load and bulk of cases being attended to by the [Office of the Solicitor
General],"84 he was still not entitled to expect that the Office of the Solicitor General
would grant him the same leniency by not objecting to the Motion to Reset the initial
presentation of defense evidence. Litigation is primarily an adversarial proceeding.
Counsels are to take every opportunity, so long as it is within the bounds of the law, to
advocate their clients' causes.

Furthermore, contrary to Sindophil's claim, the Regional Trial Court entertained the
Motion to Re-Open Case that it even set the Motion for clarificatory hearing and oral
argument.85 However, Atty. Obligar again absented himself during the scheduled
hearing.

Given the foregoing, the Regional Trial Court did not gravely abuse its discretion in
deciding the case despite the filing of the Motion to ReOpen Case.

III

Sindophil insists that it bought the Tramo property from Ty in good faith and that it was
an innocent purchaser for value. However, the presumption of good faith and that a
holder of a title is an innocent purchaser for value may be overcome by contrary
evidence.

Here, the Republic presented evidence that TCT No. 10354, from which Sindophil's TCT
No. 132440 was derived, was void. As found by the Regional Trial Court:

Record shows that Certificate of Title No. 6735, wherein the lot claimed by defendant,
Marcelo R. Teodoro, lot 3270-B, is derived therefrom, is under the name of the Republic
of the Philippines, dated October 17, 1913. Nothing in the subsequent annotations was
under the name of any of the defendants and neither the subject TCT No. 10354. 86

With the Republic having put forward evidence that the Tramo property claimed by
Sindophil belongs to the Republic, the burden of evidence shifted to Sindophil to prove
that its title to it was valid. Concomitantly, it had the burden of proving that it was
indeed a buyer in good faith and for value. As this Court said in Baltazar v. Court of
Appeals,87 "the burden of proving the status of a purchaser in good faith and for value
lies upon him who asserts that status"88 and "[i]n discharging that burden, it is not
enough to invoke the ordinary presumption of good faith, i.e., that everyone is
presumed to act in good faith. The good faith that is [essential here] is integral with the
very status which must be proved."89

Unfortunately for Sindophil, it utterly failed to discharge the burden of evidence because its counsel failed to attend the scheduled initial presentation of

evidence.

Further, looking at the records, the defects in Sindophil's title could be inferred from the annotations in TCT No. 129957, the certificate of title held by
Sindophil's immediate predecessor, Ty. A certain Antonio C. Mercado had filed an adverse claim against Ty because the Tramo property had been

previously sold to him by Puma, Ty's predecessor.90

The alleged double sale should have prompted Sindophil
to look into Puma's title, TCT No. 128358, where it can be gleaned that Teodoro
likewise filed an adverse claim. 91 These annotations show that the Tramo property is
controversial and has been the subject of several adverse claims, belying Sindophil's
contention that it acquired the property in good faith.

With Sindophil failing to prove that it was a buyer in good faith, it cannot recover
damages to be paid out of the Assurance Fund under Section 95 92 of the Property
Registration Decree. In La Urbana v. Bernardo,93 this Court held that "it is a condition
sine qua non that the person who brings an action for damages against the assurance
fund be the registered owner, and, as to holders of transfer certificates of title, that
they be innocent purchasers in good faith and for value." 94

WHEREFORE
, the Petition for Review on Certiorari is DENIED. The June 19, 2012 Resolution
and November 23, 2012 Resolution of the Court of Appeals in CA-G.R. CV No. 96660
are AFFIRMED.

SO ORDERED.

G.R. No. 205097, June 08, 2016

CORAZON D. ISON, Petitioner, v. PEOPLE OF THE PHILIPPINES, Respondent.

DECISION

REYES, J.:

The instant petition for review on certiorari1 assails the Decision2 and Amended
Decision3 of the Court of Appeals (CA), dated January 30, 2012 and October 30, 2012,
respectively, in CA-G.R. CR No. 33471, which affirmed with modification the Decision 4
rendered on April 30, 2010 by the Regional Trial Court (RTC) of Binangonan, Rizal,
Branch 67, convicting Corazon D. Ison (Ison), now 76 years old, of Estafa under Article
315(2)(a)5 of the Revised Penal Code (RPC).

Antecedent Facts

As summed up by the Office of the Solicitor General (OSG), the prosecution's version of
the facts is as follows:
chanRoblesvirtualLawlibrary
Sometime in September 2004, [Ison] offered to sell two (2) parcels of fishpond 6
[located in Barangay Pilapila, Binangonan, Rizal] with areas of two thousand seventeen
(2,017) square meters and forty-six (46) square meters to Atty. Hermenegildo Ramos,
Jr. (Ramos) and Edgar Barroga (Barroga). The contract price for said fishponds was
Eight Hundred Thousand Pesos (Php800,000.00) which included all improvements,
fishes, fmgerlings, privileges, plants, trees, and two motorized bancas.

[Ison] persuaded Ramos and Barroga to buy the fishponds after showing them Laguna
Lake Development Authority (LLDA) permits and receipts either in
her name or in the name of her husband.

Ramos and Barroga were convinced of [Ison's] ownership of the fishponds and agreed
to buy the same. After executing the Contract to Sell 7 dated September 15, 2004,
Ramos and Barroga paid [Ison] One Hundred Thousand Pesos (Php100,000.00) in cash
as partial payment. Thereafter, Ramos and Barroga took possession of the fishponds.
Ramos and Barroga visited the fishponds often, bought feeds and operated the same.
Ramos and Barroga also made [Ison's] caretaker, Ariel Genodipa, as their caretaker.

On November 4, 2004, Ramos and Barroga paid [Ison] an additional Fifty Thousand
Pesos (Php50,000.00) representing two equal installments of Twenty- Five Thousand
Pesos (Php25,000.00).

Thereafter, Ramos and Barroga received a call from a certain Ligaya Tupaz who told
them that Colonel Pedro Vergara (Vergara) was the real owner of the fishponds.

On December 27, 2004, a meeting was set for Ramos, Barroga, [Ison] and Vergara.
Vergara, however, left before the meeting started. During the meeting, [Ison] admitted
that she first sold the fishponds to Vergara before she sold the same to Ramos and
Barroga. Ramos and Barroga then asked [Ison] to return their money plus interest and
damages. [Ison] promised to return the money but reneged on her promise.

Meanwhile, on January 2, 2005, Vergara and eight mamumukot entered the fishponds,
harvested the fish and took possession of the same.

Ramos and Barroga then sent demand letters dated January 3, 2005 and January 10,
2005 to [Ison].

When [Ison] failed to comply, Ramos and Barroga filed a complaint for Estafa against
her.

During her arraignment, [Ison] pleaded "not guilty" to the crime charged. 8 (Citations
omitted)

Ison, on the other hand, claims that she remains to be the registered owner of the
fishponds. In November of 2003, she sold the same to Colonel Pedro Vergara (Col.
Vergara), who designated her as caretaker thereof. Within a year from the purchase,
Col. Vergara did not earn from the fishponds' operation. Thereafter, he authorized Ison
to sell the property for P850,000.00, out of which P150,000.00 shall be paid to the
agents. Since the permits and other documents relative to the ownership and operation
of the fishponds are still in Ison's name, Col. Vergara authorized her to sign the deed
evidencing the sale for the sake of expediency in the transactions. 9

Ison alleges that she was introduced to Atty. Hermenegildo Ramos, Jr. (Atty. Ramos) and Edgar Barroga (Edgar) (collectively, the private complainants)

by three agents, to wit, Rommel Estacio, Jude Paralejas and Jess Barroga (Jess).10
Jess is the father of Edgar. When Ison
met with the private complainants in the fishponds, the latter already brought a ready
made Contract to Sell. Initially, Ison wanted for cash to be outrightly paid. Hence, she
refused to sign the contract, which stipulated that the purchase would be in an
installment basis. Jess then assured Ison that Atty. Ramos can easily make the
payments and that the Contract to Sell would be a mere formality. Ison thus received
P50,000.00 in cash and P50,000.00 in check and the private complainants promised
that the balance would be paid in December 2004. Ison informed Col. Vergara of the
agreement.11

In November of 2004, Ison reminded Atty. Ramos about the balance due. Atty. Ramos paid Ison P50,000.00. Later, in December, Atty. Ramos told Ison

that the payments would be made in an installment basis as stipulated in the Contract to Sell. Ison informed Edgar and Jess of Atty. Ramos' stance.12

On December 8, 2004, Ison, Col. Vergara, and the private complainants met in Tropical Hut in Sta. Lucia. As Col. Vergara had to fetch somebody from

the airport, he left even before the discussions started. The private complainants then demanded for Ison to reimburse the P150,000.00, which they had

previously paid.13

Since either the payment of the balance by the private complainants or the reimbursement by Ison had not been made, Col. Vergara harvested the

fishes in the ponds. Subsequently, the private complainants met Ison in SM Megamall for the latter to return the P150,000.00, which she had previously

received. However, Atty. Ramos refused to accept the money and instead offered the said amount to Ison in exchange for the latter's testimony in the

suit intended to be filed against Col. Vergara for harvesting the fishes. Even after conferring with her lawyer, Ison was still undecided whether or not to

testify against Col. Vergara. Eventually, Atty. Ramos filed cases against Ison and Col. Vergara.14

Col. Vergara admitted that he authorized Ison to sell the fishponds. However, he claimed that he was unaware of the execution of the Contract to Sell

between Ison and the private complainants. Ison now alleges that Col. Vergara's denial was made for him to evade criminal liability relative to the

harvest of the fishes in the ponds.15

On September 15, 2005, an Information16

was filed against Ison charging her with estafa under Article
315(2)(a) of the RPC.

Rulings of the RTC and CA

On April 30, 2010, the RTC convicted Ison as charged in the Information in Criminal
Case No. 05-362. The dispositive portion of the decision reads:
chanRoblesvirtualLawlibrary
Based on the foregoing, we find accused [Ison] GUILTY beyond reasonable doubt of
committing Estafa under Article 315(2[a]) of the [RPC] and sentence her to suffer an
indeterminate penalty of 2 years, 11 months and 10 days of Prision Correccional in its
Minimum and Medium periods as minimum to 20 years of Reclusion Temporal as
Maximum[.] We also ORDER her to pay [the private complainants] the amount of
P150,000.00 which she defrauded from them and costs. All other claims for damages
are DISMISSED for lack of basis.

SO ORDERED.17ChanRoblesVirtualawlibrary

The conviction was based on the following grounds:

chanRoblesvirtualLawlibrary

To convict Ison of Estafa under Article 315(2[a]) of the [RPC], the prosecution must
prove beyond a reasonable doubt that she defrauded [the private complainants] of
P150,000.00 as payment for fishponds fees by falsely pretending to possess power,
influence, qualifications as the owner x x x when [they actually] belonged to someone
else. The prosecution was able to show a document where Ison represented herself as
the owner of the fishponds and the testimony from [Atty.] Ramos that she was not.
This is further buttressed by Ison's admission that she was not the owner but Col.
Vergara and her defense is that [the private complainants] knew this fact and still
induced her to sign the Contract to Sell as a formality and that it was they who reneged
on their "real agreement" of a down payment plus the full balance by December 2004.
Further[,J she tried to return the money in exchange for settling the cases. The trouble
with this story is that it is so incredible that only a fool can swallow it. If such a story
were true, then she could simply refuse to accept the payment or deal with [the private
complainants] in the first place to protect the interests of [Col. Vergara], her supposed
principal. Further[,] there is no proof on record that [Col. Vergara] authorized [Ison] to
sell the fishponds to [the private complainants] under the terms she describes. Records
will show that she was even supposed to present him presumably to prove this but he
did not testify. Further, we doubt that if she actually disclosed that [Col. Vergara] was
the true owner that they would continue to deal with her and not with him considering
that [Atty.] Ramos is a lawyer with [sic] a stickler for legalities. The indisputable fact is
that she represented herself in a public document as the owner of these properties as
she [offered to sell them] to [the private complainants] when she was not[,] to their
damage in the amount of P150,000.00 and the lost fishponds. Further, she candidly
admitted that she was trying to settle this case and an offer of compromise by an
accused in a criminal case may be received as an implied admission of guilt (Section
27, Rule 130). x x x Ison can only offer her uncorroborated self-serving denial, an
inherently weak and incredible defense which will not help her beat the rap. 18 (Citations
omitted)

On January 30, 2012, the CA denied Ison's appeal, but modified the penalty imposed by
the RTC pursuant to the provisions of the Indeterminate Sentence Law. The decretal
portion of the assailed decision 19 is quoted below:
chanRoblesvirtualLawlibrary
WHEREFORE, the appeal is DENIED. The assailed Decision dated April 30, 2010 of the
RTC, Branch 67, Binangonan[,] Rizal, in Criminal Case No. 05-362, is AFFIRMED with
MODIFICATION, sentencing [Ison] to the indeterminate penalty of imprisonment of
four (4) years and two (2) months of prision correccional, as minimum, to eighteen
(18) years and one (1) day of reclusion temporal, as maximum.

SO ORDERED.20ChanRoblesVirtualawlibrary

The CA explained that:

chanRoblesvirtualLawlibrary

The elements of estafa under [Article 315(2[a]) of the RPC] are: (1) there must be a
false pretense, fraudulent act or fraudulent means; (2) such false pretense, fraudulent
act or fraudulent means must be made or executed prior to or simultaneously with the
commission of the fraud; (3) the offended party must have relied on the false pretense,
fraudulent act, or fraudulent means, that is, he was induced to part with his money or
property because of the false pretense, fraudulent act, or fraudulent means; and (4) as
a result thereof, the offended party suffered damage.

x x x x

Indeed, the totality of the evidence extant in the records points to two relevant facts
determinative of [Ison's] culpability: (1) adverse to Col. Vergara's ownership of the
subject properties and without disclosing such fact to [the private complainants] when
she made her offer to sell or even at the time of the execution of the Contract to Sell,
[Ison], through fraudulent and deceitful pretense of ownership, misrepresented herself
as the true and lawful owner of the subject properties, making [the private
complainants] believe she had full power to dispose thereof; and (2) with complete
reliance on such misrepresentation, [the private complainants] entered into the
Contract and paid [Ison] the partial consideration of P150,000.00 in the hope of
acquiring ownership of the subject properties, but which resulted in their defraudation.
Contrary to [Ison's] claim of [the private complainants'] knowledge of Col. Vergara's
ownership of the subject properties prior to the execution of the Contract, the evidence
reveals that [the private complainants] were notified of an adverse claim only in
November 2004 when Mrs. Vergara informed them that she and [her husband] are the
owners thereof. [The private complainants] confirmed such ownership only during their
meeting with Col. Vergara and [Ison] on December 27, 200[4] when the latter admitted
having earlier sold the subject properties to Col. Vergara. In fact, her own testimony
during the trial on January 7, 2009 proves that [the private complainants] learned of
Col. Vergara's ownership only after the execution of the Contract. x x x:

x x x x

Where a party recognizes and admits that the ownership of a property belongs to
another, the party's untruthful assertion of ownership over said property by a false
claim of true and lawful ownership thereof and by the performance of acts consistent
with such purported ownership is a clear case of deceit and misrepresentation.
Furthermore, by recognizing that ownership belongs to another, the party admits that
he is not in a position to transfer ownership of the property. Hence, one who, by
invoking his false claim of ownership, transfers ownership to another despite his lack of
authority to do so, is guilty of fraud and deceit.

x x x x

Indubitably, the parody between [Ison's] recognition of Col. Vergara's ownership of the
subject properties and her false pretense of true and lawful ownership thereof clearly
evinces fraud and deception. The strength of this false pretense facilitated the
execution of the Contract to Sell on the basis of which, [the private complainants] were
compelled to part with P150,000.00, enabling [Ison] to unjustifiably and fraudulently
profit.21 (Citations omitted)

On October 30, 2012, the CA rendered the herein assailed Amended Decision 22
reiterating the conviction but lowering the minimum period of the indeterminate penalty
imposed to six (6) months and one (1) day of prision correccional in view of Ison's
advanced age.

Issues

Aggrieved, Ison presents before the Court the issues of whether or not (1) deceit, as an
essential element of estafa, has been proven, and (2) the RTC and CA had ignored,
misconstrued or misunderstood material facts and circumstances, which if considered,
would result to her acquittal. 23

In support of the issues raised, Ison insists that when the Contract to Sell was executed, she was still the registered owner of the fishponds despite the

prior sale to Col. Vergara. The private complainants cannot feign ignorance of the foregoing circumstances considering that Jess, who was among the

three agents, is the father of Edgar. It is illogical to believe that Jess did not relay the information to his son. Further, Ison, as the registered owner of

the fishponds, signed the Contract to Sell not to deceive any party, but only for ease and convenience in facilitating the transactions.24

Ison postulates that a simple breach of contract was committed. If only Atty. Ramos paid the balance of P700,000.00 in December of 2004 pursuant to

their verbal agreement, Col. Vergara would not have harvested the fishes in January of 2005, and ownership over the ponds would have been

transferred to the private complainants.25

cralawred

Further, Col. Vergara never denied that he authorized Ison to sell the fishponds. Col. Vergara merely stated that he was unaware of the execution of the
Contract to Sell so as to evade liability for harvesting the fishes in the ponds. Besides, Col. Vergara's attendance in the meeting between Ison and the
private complainants held in Tropical Hut sometime in December of 2004 negates the claim that Col. Vergara was unaware of the contract's execution. He
was there to exact full payment from the private complainants. However, Col. Vergara set aside the agreement in January of 2005 when he proceeded to
26
harvest the fishes in the ponds despite Ison's protestations to wait for the private complainants to pay the full price or consideration.

Moreover, Col. Vergara, as the party to be primarily prejudiced if the Contract to Sell is to be enforced, did not file any complaints against Ison. It is

thus argued that Col. Vergara's inaction was attributable to the fact that he actually authorized Ison to sell the fishponds. Noteworthy are the
stipulations contained in the RTC's Order dated January 7, 2009, to wit: (a) Jess was among the agents, who looked for prospective buyers of the

fishponds; (b) Ison was authorized by Col. Vergara to sell the fishponds on a cash basis albeit there was no documentary evidence to that effect; and (c)

the private complainants promised to pay the balance in December of 2004. Having been unrefuted, the prosecution is bound by the foregoing

stipulations.27
cralawred

Ison also laments that the Contract to Sell is inadmissible in evidence for being irrelevant and incompetent. The said contract did not reflect the real
28
intent of the parties and was also not properly notarized.

Ison likewise denies that she proposed a compromise to the private complainants. It was the latter's counsel who asked her to pay P220,000.00 in

exchange for the withdrawal of the complaint.29

The OSG, in its Comment,30

contends that the conviction should be affirmed. Ison's fraudulent
acts, to wit: (a) presentation of the Laguna Lake Development Authority permits in her
and her husband's names; (b) operation of an ice plant in the fishponds' vicinity; and
(c) her misrepresentation of Ariel Genodipa (Genodipa) as her caretaker for the
fishponds had induced the private complainants to enter into a Contract to Sell and part
with their money. Further, Ison's admission that she was no longer the owner of the
fishponds when she sold the same to the private complainants runs counter to her plea
of innocence.

Anent the relevance and admissibility of the Contract to Sell, the OSG argues that it
was entered into voluntarily and is reflective of the true intent of the parties.

Ruling of the Court

The Court grants the instant petition.

The elements of the crime are lacking.

The elements of estafa by means of deceit as defined under Article 315(2)(a) of the
RPC are as follows: (1) that there must be a false pretense, fraudulent act or fraudulent
means; (2) that such false pretense, fraudulent act or fraudulent means must be made
or executed prior to or simultaneously with the commission of the fraud; (3) that the
offended party must have relied on the false pretense, fraudulent act or fraudulent
means, that is, he was induced to part with his money or property because of the false
pretense, fraudulent act or fraudulent means; and (4) that as a result thereof, the
offended party suffered damage.31

"The false pretense or fraudulent act must be committed prior to or simultaneously with the commission of the fraud, it being essential that such false

statement or representation constitutes the very cause or the only motive which induces the offended party to part with his money. In the absence of

such requisite, any subsequent act of the accused, however fraudulent and suspicious it might appear, cannot serve as basis for prosecution for estafa

under the said provision."32

In the case at bar, Tson was charged for allegedly causing damage to the private complainants when she misrepresented herself as the owner of the

fishponds and entering into a Contract to Sell relative thereto when she had no authority to do so. It is hence indispensable to resolve the following

questions: (a) Did Ison misrepresent herself to the private complainants as the owner of the fishponds?; and (b) Were the private complainants induced

to part with the amount of P150,000.00 by reason of Ison's alleged misrepresentations?

After an examination of the records and the parties' arguments, the Court departs from the conclusions drawn by the RTC and the CA for reasons

discussed hereunder.

Col. Vergara's Affidavit,33

which is part of the evidence submitted by the prosecution, states that
he "requested [Ison] to look for a buyer of [the fishponds] in CASH in the amount of
EIGHT HUNDRED FIFTY THOUSAND PESOS (P850,000.00)."34 According to Col. Vergara,
the Contract to Sell was executed without his knowledge and consent. Later, Col.
Vergara discovered that his designated fishponds caretaker, Genodipa, was already
receiving salaries from the private complainants. When Col. Vergara inquired from Ison,
the latter admitted having sold the fishponds to the private complainants in an
installment and not cash basis. However, the private complainants reneged on their
commitment to fully pay the balance of P700,000.00 by December of 2004. Despite
such non-payment, the private complainants started exercising ownership rights over
the fishponds. On December 27, 2004, Col. Vergara, who wished to be paid for the
value of the fishponds, attended the meeting in Tropical Hut between Ison and the
private complainants. Sensing that no payment was forthcoming, Col. Vergara left
early. He told those present that he was "not a privy to their transaction," and "advised
them to settle the matter among themselves."35 In January of 2005, he caused the
harvesting of the fishes in the ponds.

A perusal of Col. Vergara's Affidavit yields the following observations. First, he, in fact,
asked Ison to look for a buyer of the fishponds, albeit no written document was issued
and the extent of the given authority was not discussed. Second, Col. Vergara did not
explicitly deny that he granted Ison the authority to sign any contract considering that
the latter still remains to be the registered owner of the fishponds. Third, in the
December of 2004 meeting held in Tropical Hut, Col. Vergara exhibited little interest as
shown by his early departure and his utterance to the effect that Ison and the private
complainants should settle the matter among themselves. Fourth, Col. Vergara, being
the owner of the fishponds and the one who would sustain the most damage as a result
of any unauthorized sale, never filed any complaint, criminal or otherwise, against Ison.
Col. Vergara's disinterest in filing a complaint or testifying against Ison militates against
the private complainants' claim that Ison had no authority to enter into the transaction.

In rendering a conviction, the RTC and CA cited that while the Contract to Sell indicated
that Ison is the true and lawful owner of the fishponds, she herself admitted the
mistruth in the representation. Hence, the court a quos concluded that Ison clearly
employed deceit.

The Court now inquires whether or not Ison indeed employed false pretenses or
fraudulent acts, relied upon by the private complainants, who in turn were induced to
part with the amount of P150,000.00. To this, the Court answers in the negative.
As discussed above, Col. Vergara had asked Ison to look for a buyer. Although there is
no conclusive proof as to the exact extent or limit of the authority granted to Ison, the
fact remains that she acted upon a color thereof. Col. Vergara's disinterest in
prosecuting Ison for any unlawful acts lends credence to the foregoing circumstance.

Other pieces of circumstantial evidence further cast a cloud of doubt upon the private
complainants' allegation of misrepresentation by Ison. As pointed out by the defense,
Jess was among the three agents, who introduced Ison to the private complainants.
Jess is the father of private complainant Edgar. It is thus more logical to infer that Jess
informed his son about matters pertinent to the status and ownership of the fishponds.
Besides, the private complainants visited the fishponds and talked to Genodipa, the
caretaker. It can be presumed that Atty. Ramos knows the intricacies of the law, had
made the necessary inquiries as to the fishponds' ownership, and had observed due
diligence and precaution before agreeing to part with the amount of P150,000.00 given
to Ison.

Considering the above, the Court is thus unpersuaded by the claim that Ison's
representation or misrepresentation constituted the very cause or the only motive
which induced the private complainants to part with their money.

"Where the inculpatory facts and circumstances are susceptible of two or more
interpretations, one of which is consistent with the innocence of the accused while the
other may be compatible with the finding of guilt, the Court must acquit the accused
because the evidence does not fulfill the test of moral certainty required for
conviction."36

In the case at bar, the prosecution failed to prove beyond reasonable doubt that Ison misrepresented herself as the owner of the fishponds and entered

into the Contract to Sell without authority from Col. Vergara. It was likewise not amply established that the private complainants were completely

unaware of the pertinent facts concerning the fishponds' ownership. Hence, the essential element of reliance upon the misrepresentation, which should

have induced the private complainants to part with their money, is wanting. Inevitably, the Court is constrained to uphold the presumption of innocence

in Ison's favor and acquit her.

Reimbursement of the amount paid plus interests are due from Ison.

While Ison cannot be made criminally liable, it is undisputed that she received the amount of P150,000.00 from the private complainants as down

payment for the fishponds. Lest unjust enrichment results, reimbursement of the amount is in order.

Further, pursuant to the doctrine in

Nacar v. Gallery Frames,37 Ison shall be liable for the payment of
interests. Thus, the amount of P150,000.00, which she had received, shall be subject to
an annual interest of twelve percent (12%) computed from the filing of the complaint
on September 15, 2005 until June 30, 2013. Thereafter, from July 1, 2013 onwards
until full satisfaction of the amount due, the applicable annual interest shall be six
percent (6%).

ALL THE FOREGOING CONSIDERED, the petition is GRANTED. The Decision and
Amended Decision of the Court of Appeals dated January 30, 2012 and October 30,
2012, respectively, in CA-G.R. CR No. 33471 convicting Corazon D. Ison of Estafa are
REVERSED and SET ASIDE. Corazon D. Ison is ACQUITTED on the basis of
reasonable doubt, but is hereby DIRECTED to REIMBURSE the private complainants,
Atty. Hermenegildo Ramos, Jr. and Edgar Barroga, of the amount of ONE HUNDRED
FIFTY THOUSAND PESOS (P150,000.00). The said amount shall be subject to the
payment of an annual interest of twelve percent (12%) to be computed from
September 15, 2005 to June 30, 2013, and thereafter, six percent (6%) from July 1,
2013 until full satisfaction thereof.

SO ORDERED.cralawlawlibrary