EVID Full

G.R. No. 156132. October 16, 2006.
CITIBANK, N.A. (Formerly First National City Bank) and

INVESTORS FINANCE CORPORATION, doing business
under the name and style of FNCB Finance,
petitioners, vs.MODESTA R. SABENIANO, respondent.
*
Actions; Pleadings and Practice; Forum Shopping; Motions for

Extension of Time; The Petition for Review would constitute the
initiatory pleading before the Supreme Court, upon the timely filing
of which, the case before the Court commences, much in the same
way a case is initiated by the filing of a Complaint before the trial
courtand, without such a Petition, there is technically no case
before the Court; A Motion for Extension of Time within which to
file a Petition for Review does not serve the same purpose as the
Petition for Review itself.Although it may seem at first glance
that respondent was simultaneously seeking recourse from the
Court of Appeals and this Court, a careful and closer scrutiny of
the details of the case at bar would reveal otherwise. It should be
recalled that respondent did nothing more in G.R. No. 152985 than
to file with this Court a Motion for Extension of Time within which
to file her Petition for Review. For unexplained reasons,
respondent failed to submit to this Court her intended Petition
within the reglementary period. Consequently, this Court was
prompted to issue a Resolution, dated 13 November 2002,
declaring G.R. No. 152985 terminated, and the therein assailed
Court of Appeals Decision final and executory. G.R. No. 152985,
therefore, did not progress and respondents appeal was
unperfected. The Petition for Review would constitute the
initiatory pleading before this Court, upon the timely filing of
which, the case before this Court commences; much in the same
way a case is initiated by the filing of a Complaint before the trial
court. The Petition for Review establishes the identity of parties,
rights or causes of action, and relief sought from this Court, and
without such a Petition, there is technically no case before this
Court. The Motion filed by respondent seeking extension of time
within which to file her Petition for Review does not serve the
same purpose as the Petition for Review itself. Such a Motion
merely presents the important dates and the justification for the
additional time requested for, but it does
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*
FIRST DIVISION.
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Citibank, N.A. (Formerly First National City Bank) vs.

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not go into the details of the appealed case. Without any
particular idea as to the assignments of error or the relief
respondent intended to seek from this Court, in light of her failure
to file her Petition for Review, there is actually no second case
involving the same parties, rights or causes of action, and relief
sought, as that in CA-G.R. CV No. 51930.
Same; Same; Same; Certification
Against
Forum
Shopping;Contents; The Certification against Forum Shopping is
required to be attached to the initiatory pleading.It should also
be noted that the Certification against Forum Shopping is required
to be attached to the initiatory pleading, which, in G.R. No.
152985, should have been respondents Petition for Review. It is in
that Certification wherein respondent certifies, under oath, that:
(a) she has not commenced any action or filed any claim involving
the same issues in any court, tribunal or quasi-judicial agency and,
to the best of her knowledge, no such other action or claim is
pending therein; (b) if there is such other pending action or claim,
that she is presenting a complete statement of the present status
thereof; and (c) if she should thereafter learn that the same or
similar action or claim has been filed or is pending, she shall
report that fact within five days therefrom to this Court. Without
1
her Petition for Review, respondent had no obligation to execute

and submit the foregoing Certification against Forum Shopping.
Thus, respondent did not violate Rule 7, Section 5 of the Revised
Rules of Court; neither did she mislead this Court as to the
pendency of another similar case.
Appeals; Findings of fact of the Court of Appeals are conclusive
upon the Supreme Court; Exceptions.It is already a well-settled
rule that the jurisdiction of this Court in cases brought before it
from the Court of Appeals by virtue of Rule 45 of the Revised Rules
of Court is limited to reviewing errors of law. Findings of fact of
the Court of Appeals are conclusive upon this Court. There are,
however, recognized exceptions to the foregoing rule, namely: (1)
when the findings are grounded entirely on speculation, surmises,
or conjectures; (2) when the interference made is manifestly
mistaken, absurd, or impossible; (3) when there is 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 in
making its findings, the Court of Appeals went beyond the issues
of the case, or its findings are contrary to the admissions of both
the appellant and the
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SUPREME COURT REPORTS ANNOTATED
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appellee; (7) when the findings are contrary to those of the
trial court; (8) when the findings are conclusions without citation
of specific evidence on which they are based; (9) when the facts set
forth in the petition as well as in the petitioners main and reply
briefs are not disputed by the respondent; and (10) when the
findings of fact are premised on the supposed absence of evidence
and contradicted by the evidence on record.
Judges; That the trial court judge who decided a case is not
the same judge who heard the case and received the evidence is of
little consequence when the records and transcripts of stenographic
notes (TSNs) are complete and available for consideration by the
former.What deserves stressing is that, in this jurisdiction, there
exists a disputable presumption that the RTC Decision was
rendered by the judge in the regular performance of his official
duties. While the said presumption is only disputable, it is
satisfactory unless contradicted or overcame by other evidence.
Encompassed in this presumption of regularity is the presumption
that the RTC judge, in resolving the case and drafting his
Decision, reviewed, evaluated, and weighed all the evidence on
record. That the said RTC judge is not the same judge who heard
the case and received the evidence is of little consequence when
the records and transcripts of stenographic notes (TSNs) are
complete and available for consideration by the former.
Evidence; Admissions; Documentary
Evidence; Promissory
Notes; By the admission of the genuineness and due execution of an
instrument is meant that the party whose signature it bears admits
that he signed it or that it was signed by another for him with his
authority, that at the time it was signed it was in words and figures
exactly as set out in the pleading of the party relying on it, that the
document was delivered, and that any formal requisites required by
law, are waived by him; The effect of an admission is such that in
the case of a promissory note a prima facie case is made for the
plaintiff which dispenses with the necessity of evidence on his part
and entitles him to a judgment on the pleadings unless a special
defense of new matter, such as payment, is interposed by the
defendant.Petitioner Citibank did not deny the existence nor
questioned the authenticity of PNs No. 23356 and 23357 it issued
in favor of respondent for her money market placements. In fact, it
admitted the genuineness and due execution of the said PNs, but
qualified that they were no longer outstanding. In Hibberd v.
Rohde and McMillian, 32 Phil. 476, this
2
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Court delineated the consequences of such an admissionBy
the admission of the genuineness and due execution of an
instrument, as provided in this section, is meant that the party
whose signature it bears admits that he signed it or that it was
signed by another for him with his authority; that at the time it
was signed it was in words and figures exactly as set out in the
pleading of the party relying upon it; that the document was
delivered; and that any formal requisites required by law, such as
a seal, an acknowledgment, or revenue stamp, which it lacks, are
waived by him. Hence, such defenses as that the signature is a
forgery (Puritan Mfg. Co. vs. Toti & Gradi, 14 N. M., 425; Cox vs.
Northwestern Stage Co., 1 Idaho, 376; Woollen vs. Whitacre, 73
Ind., 198; Smith vs. Ehnert, 47 Wis., 479; Faelnar vs. Escao, 11
Phil. Rep., 92); or that it was unauthorized, as in the case of an
agent signing for his principal, or one signing in behalf of a
partnership (Country Bank vs. Greenberg, 127 Cal., 26; Henshaw
vs. Root, 60 Inc., 220; Naftzker vs. Lantz, 137 Mich., 441) or of a
corporation (Merchant vs. International Banking Corporation, 6
Phil Rep., 314; Wanita vs. Rollins, 75 Miss., 253; Barnes vs.
Spencer & Barnes Co., 162 Mich., 509); or that, in the case of the
latter, that the corporation was authorized under its charter to
sign the instrument (Merchant vs. International Banking
Corporation, supra); or that the party charged signed the
instrument in some other capacity than that alleged in the
pleading setting it out (Payne vs. National Bank, 16 Kan., 147); or
that it was never delivered (Hunt vs. Weir, 29 Ill., 83; Elbring vs.
Mullen, 4 Idaho, 199; Thorp vs. Keokuk Coal Co., 48 N.Y., 253;Fire
Association of Philadelphia vs. Ruby, 60 Neb., 216) are cut off by
the admission of its genuineness and due execution. The effect of
the admission is such that in the case of a promissory note aprima

facie case is made for the plaintiff which dispenses with the
necessity of evidence on his part and entitles him to a judgment on
the pleadings unless a special defense of new matter, such as
payment, is interposed by the defendant (Papa vs. Martinez, 12
Phil. Rep., 613; Chinese Chamber of Commerce vs. Pua To Ching,
14 Phil. Rep., 222; Banco Espaol-Filipino vs. McKay & Zoeller, 27
Phil. Rep., 183). x x x
Same; Obligations and Contracts; Payments; As a general
rule, one who pleads payment has the burden of proving iteven
where the plaintiff must allege non-payment, the general rule is
that the burden rests on the defendant to prove payment, rather
than on the plaintiff to prove non-payment.Since the genuineness
and due execution of
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PNs No. 23356 and 23357 are uncontested, respondent was
able to establish prima facie that petitioner Citibank is liable to
her for the amounts stated therein. The assertion of petitioner
Citibank of payment of the said PNs is an affirmative allegation of
a new matter, the burden of proof as to such resting on petitioner
Citibank. Respondent having proved the existence of the
obligation, the burden of proof was upon petitioner Citibank to
show that it had been discharged. It has already been established
by this Court thatAs a general rule, one who pleads payment has
the burden of proving it. Even where the plaintiff must allege nonpayment, the general rule is that the burden rests on the
defendant to prove payment, rather than on the plaintiff to prove
non-payment. The debtor has the burden of showing with legal
certainty that the obligation has been discharged by payment.
3
When the existence of a debt is fully established by the evidence

contained in the record, the burden of proving that it has been
extinguished by payment devolves upon the debtor who offers such
defense to the claim of the creditor. Where the debtor introduces
some evidence of payment, the burden of going forward with the
evidenceas distinct from the general burden of proofshifts to
the creditor, who is then under the duty of producing some
evidence of non-payment.
Same; Witnesses; Taking into consideration the substantial
length of time between the transactions and the witnesses
testimonies, as well as the undeniable fact that bank officers deal
with multiple clients and process numerous transactions during
their tenure, the Court is reluctant to give much weight to such
bank officials testimonies regarding the payment of promissory
notes and the use of the proceeds thereof for opening time deposit
accountsthe Court finds it implausible that they should
remember, after all these years, the particular transaction with
respondent involving her promissory notes and her time deposit
accounts.Before anything else, it should be noted that when Mr.
Pujedas testimony before the RTC was made on 12 March 1990
and Mr. Tans deposition in Hong Kong was conducted on 3
September 1990, more than a decade had passed from the time the
transactions they were testifying on took place. This Court had
previously recognized the frailty and unreliability of human
memory with regards to figures after the lapse of five years.
Taking into consideration the substantial length of time between
the transactions and the witnesses testimonies, as well as the
undeniable fact that bank officers deal with multiple clients and
process
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numerous transactions during their tenure, this Court is
reluctant to give much weight to the testimonies of Mr. Pujeda and
Mr. Tan regarding the payment of PNs No. 23356 and 23357 and
the use by respondent of the proceeds thereof for opening TD
accounts. This Court finds it implausible that they should
remember, after all these years, this particular transaction with
respondent involving her PNs No. 23356 and 23357 and TD
accounts. Both witnesses did not give any reason as to why, from
among all the clients they had dealt with and all the transactions
they had processed as officers of petitioner Citibank, they specially
remembered respondent and her PNs No. 23356 and 23357. Their
testimonies likewise lacked details on the circumstances
surrounding the payment of the two PNs and the opening of the
time deposit accounts by respondent, such as the date of payment
of the two PNs, mode of payment, and the manner and context by
which respondent relayed her instructions to the officers of
petitioner Citibank to use the proceeds of her two PNs in opening
the TD accounts.
Same; Preponderance of Evidence; Words and Phrases;
Preponderant evidence means that, as a whole, the evidence
adduced by one side outweighs that of the adverse party.After
going through the testimonial and documentary evidence
presented by both sides to this case, it is this Courts assessment
that respondent did indeed have outstanding loans with petitioner
Citibank at the time it effected the off-set or compensation on 25
July 1979 (using respondents savings deposit with petitioner
Citibank), 5 September 1979 (using the proceeds of respondents
money market placements with petitioner FNCB Finance) and 26
October 1979 (using respondents dollar accounts remitted from
Citibank-Geneva). The totality of petitioners evidence as to the
existence of the said loans preponderates over respondents.
Preponderant evidence means that, as a whole, the evidence
adduced by one side outweighs that of the adverse party.
4
Banks and Banking; Checks; Managers Checks (MCs) are

drawn by the banks manager upon the bank itself and regarded to
be as good as the money it represents.It bears to emphasize that
the proceeds of the loans were paid to respondent in MCs, with the
respondent specifically named as payee. MCs checks are drawn by
the banks manager upon the bank itself and regarded to be as
good
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as the money it represents. Moreover, the MCs were crossed
checks, with the words Payees Account Only.
Same; Same; Crossed Checks; A crossed check cannot be
presented to the drawee bank for payment in cashthe check can
only be deposited with the payees bank which, in turn, must
present it for payment against the drawee bank in the course of
normal banking hours; The crossed check can only be deposited and
the drawee bank may only pay to another bank in the payees or
indorsers account.In general, a crossed check cannot be
presented to the drawee bank for payment in cash. Instead, the
check can only be deposited with the payees bank which, in turn,
must present it for payment against the drawee bank in the course
of normal banking hours. The crossed check cannot be presented
for payment, but it can only be deposited and the drawee bank
may only pay to another bank in the payees or indorsers account.
The effect of crossing a check was described by this Court
in Philippine Commercial International Bank v. Court of Appeals,
350 SCRA 446 (2001)[T]he crossing of a check with the phrase
Payees Account Only is a warning that the check should be
deposited in the account of the payee. Thus, it is the duty of the
collecting bank PCI Bank to ascertain that the check be deposited
in payees account only. It is bound to scrutinize the check and to

know its depositors before it can make the clearing indorsement
all prior indorsements and/or lack of indorsement guaranteed.
Same; Same; Same; Presumptions; Given that a check is more
than just an instrument of credit used in commercial transactions
for it also serves as a receipt or evidence for the drawee bank of the
cancellation of the said check due to payment, then, the possession
by the drawee bank of the said Managers Checks (MCs), duly
stamped Paid gives rise to the presumption that the said
Managers Checks (MCs) were already paid out to the intended
payee.The crossed MCs presented by petitioner Bank were
indeed deposited in several different bank accounts and cleared by
the Clearing Office of the Central Bank of the Philippines, as
evidenced by the stamp marks and notations on the said checks.
The crossed MCs are already in the possession of petitioner
Citibank, the drawee bank, which was ultimately responsible for
the payment of the amount stated in the checks. Given that a
check is more than just an instrument of credit used in commercial
transactions for it also serves as a receipt or evidence for the
drawee bank of the cancellation of the said check
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due to payment, then, the possession by petitioner Citibank of
the said MCs, duly stamped Paid gives rise to the presumption
that the said MCs were already paid out to the intended payee,
who was in this case, the respondent.
Same; Same; Same; Same; It is presumed that private
transactions have been fair and regular, and that the ordinary
course of business has been followed.This Court finds applicable
herein the presumptions that private transactions have been fair
5
and regular, and that the ordinary course of business has been
followed. There is no question that the loan transaction between
petitioner Citibank and the respondent is a private transaction.
The transactions revolving around the crossed MCsfrom their
issuance by petitioner Citibank to respondent as payment of the
proceeds of her loans; to its deposit in respondents accounts with
several different banks; to the clearing of the MCs by an
independent clearing house; and finally, to the payment of the
MCs by petitioner Citibank as the drawee bank of the said
checksare all private transactions which shall be presumed to
have been fair and regular to all the parties concerned. In addition,
the banks involved in the foregoing transactions are also presumed
to have followed the ordinary course of business in the acceptance
of the crossed MCs for deposit in respondents accounts, submitting
them for clearing, and their eventual payment and cancellation.
Same; Same; Same; Same; Where checks crossed for payees
account only were actually deposited, cleared, and paid, then the
presumption would be that the said checks were properly deposited
to the account of the payee, who was clearly named as such in the
checks; The mere fact that the Managers Checks (MCs) do not bear
the payees signature at the back does not negate deposit thereof in
her account.Respondent denied ever receiving MCs No. 220701
and 226467. However, considering that the said checks were
crossed for payees account only, and that they were actually
deposited, cleared, and paid, then the presumption would be that
the said checks were properly deposited to the account of
respondent, who was clearly named the payee in the checks.
Respondents bare allegations that she did not receive the two
checks fail to convince this Court, for to sustain her, would be for
this Court to conclude that an irregularity had occurred
somewhere from the time of the issuance of the said checks, to
their deposit, clearance, and payment, and which would
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have involved not only petitioner Citibank, but also BPI,
which accepted the checks for deposit, and the Central Bank of the
Philippines, which cleared the checks. It falls upon the respondent
to overcome or dispute the presumption that the crossed checks
were issued, accepted for deposit, cleared, and paid for by the
banks involved following the ordinary course of their business. The
mere fact that MCs No. 220701 and 226467 do not bear
respondents signature at the back does not negate deposit thereof
in her account. The liability for the lack of indorsement on the
MCs no longer fall on petitioner Citibank, but on the bank who
received the same for deposit, in this case, BPI Cubao Branch.
Once again, it must be noted that the MCs were crossed, for
payees account only, and the payee named in both checks was
none other than respondent. The crossing of the MCs was already
a warning to BPI to receive said checks for deposit only in
respondents account. It was up to BPI to verify whether it was
receiving the crossed MCs in accordance with the instructions on
the face thereof. If, indeed, the MCs were deposited in accounts
other than respondents, then the respondent would have a cause
of action against BPI.
Same; Same; Same; A check, whether a managers check or
ordinary check, is not legal tender, and an offer of a check in
payment of a debt is not a valid tender of payment and may be
refused receipt by the obligee or creditor.Mr. Tan, in his
deposition, further explained that provisional receipts were issued
when payment to the bank was made using checks, since the
checks would still be subject to clearing. The purpose for the
provisional receipts was merely to acknowledge the delivery of the
checks to the possession of the bank, but not yet of payment. This
bank practice finds legitimacy in the pronouncement of this Court
6
that a check, whether an MC or an ordinary check, is not legal

tender and, therefore, cannot constitute valid tender of payment.
In Philippine Airlines, Inc. v. Court of Appeals, 181 SCRA 557
(1990), this Court elucidated that: Since a negotiable instrument is
only a substitute for money and not money, the delivery of such an
instrument does not, by itself, operate as payment (Sec. 189, Act
2031 on Negs. Insts.; Art. 1249, Civil Code; Bryan Landon Co. v.
American Bank, 7 Phil. 255; Tan Sunco, v. Santos, 9 Phil. 44; 21
R.C.L. 60, 61). A check, whether a managers check or ordinary
check, is not legal tender, and an offer of a check in payment of a
debt is not a valid tender of payment and may be refused receipt
by the obligee or creditor. Mere delivery of checks
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does not discharge the obligation under a judgment. The
obligation is not extinguished and remains suspended until the
payment by commercial document is actually realized (Art. 1249,
Civil Code, par. 3).
Same; Loans; Words and Phrases; Booking the loan means
recording it in the General Ledger.Ms. Cristina Dondoyano, who
worked at petitioner Citibank as a loan processor, was responsible
for booking respondents loans. Booking the loans means recording
it in the General Ledger. She explained the procedure for booking
loans, as follows: The account officer, in the Marketing
Department, deals directly with the clients who wish to borrow
money from petitioner Citibank. The Marketing Department will
forward a loan booking checklist, together with the borrowing
clients PNs and other supporting documents, to the loan preprocessor, who will check whether the details in the loan booking
checklist are the same as those in the PNs. The documents are
then sent to Signature Control for verification of the clients

signature in the PNs, after which, they are returned to the loan
pre-processor, to be forwarded finally to the loan processor. The
loan processor shall book the loan in the General Ledger,
indicating therein the client name, loan amount, interest rate,
maturity date, and the corresponding PN number. Since she
booked respondents loans personally, Ms. Dondoyano testified
that she saw the original PNs. In 1986, Atty. Fernandez of
petitioner Citibank requested her to prepare an accounting of
respondents loans, which she did, and which was presented as
Exhibit 120 for the petitioners. The figures from the said exhibit
were culled from the bookings in the General Ledger, a fact which
respondents counsel was even willing to stipulate.
Evidence; Preponderance of Evidence; Words and Phrases;
While it is well-settled that the term preponderance of evidence
should not be wholly dependent on the number of witnesses, there
are certain instances when the number of witnesses becomes the
determining factor.This Court finds that the preponderance of
evidence supports the existence of the respondents loans, in the
principal sum of P1,920,000.00, as of 5 September 1979. While it is
well-settled that the term preponderance of evidence should not
be wholly dependent on the number of witnesses, there are certain
instances when the number of witnesses become the determining
factorThe preponderance of evidence may be determined, under
certain conditions, by the number of witnesses testifying to a
particular fact or
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state of facts. For instance, one or two witnesses may testify
to a given state of facts, and six or seven witnesses of equal candor,
7
fairness, intelligence, and truthfulness, and equally well

corroborated by all the remaining evidence, who have no greater
interest in the result of the suit, testify against such state of facts.
Then the preponderance of evidence is determined by the number
of witnesses. (Wilcox vs. Hines, 100 Tenn. 524, 66 Am. St. Rep.,
761.)
Same; Best Evidence Rule; Words and Phrases; In general, the
best evidence rule requires that the highest available degree of proof
must be produced, and, for documentary evidence, the contents of a
document are best proved by the production of the document itself,
to the exclusion of any secondary or substitutionary evidence.The
best evidence rule requires that the highest available degree of
proof must be produced. Accordingly, for documentary evidence,
the contents of a document are best proved by the production of the
document itself, to the exclusion of any secondary or
substitutionary evidence. The best evidence rule has been made
part of the revised Rules of Court, Rule 130, Section 3, which
readsSEC. 3.Original document must be produced; exceptions.
When the subject of inquiry is the contents of a document, no
evidence shall be admissible other than the original document
itself, except in the following cases: (a) When the original has been
lost or destroyed, or cannot be produced in court, without bad faith
on the part of the offeror; (b) When the original is in the custody or
under the control of the party against whom the evidence is
offered, and the latter fails to produce it after reasonable notice; (c)
When the original consists of numerous accounts or other
documents which cannot be examined in court without great loss of
time and the fact sought to be established from them is only the
general result of the whole; and (d) When the original is a public
record in the custody of a public officer or is recorded in a public
office.
Same; Same; Even with respect to documentary evidence, the
best evidence rule applies only when the content of such document
is the subject of the inquiry.As the afore-quoted provision states,

the best evidence rule applies only when the subject of the inquiry
is the contents of the document. The scope of the rule is more
extensively explained thusBut even with respect to documentary
evidence, the best evidence rule applies only when the content of
such document is the subject of the inquiry. Where the issue is
only as to whether such
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document was actually executed, or exists, or on the
circumstances relevant to or surrounding its execution, the best
evidence rule does not apply and testimonial evidence is
admissible (5 Moran, op. cit., pp. 76-66; 4 Martin, op. cit., p. 78).
Any other substitutionary evidence is likewise admissible without
need for accounting for the original. Thus, when a document is
presented to prove its existence or condition it is offered not as
documentary, but as real, evidence. Parol evidence of the fact of
execution of the documents is allowed (Hernaez, et al. vs. McGrath,
etc., et al., 91 Phil 565). x x x
Same; A basic rule of evidence states that evidence that one
did or did not do a certain thing at one time is not admissible to
prove that he did or did not do the same or similar thing at another
time, but it may be received to prove a specific intent or knowledge,
identity, plan, system, scheme, habit, custom or usage, and the
like.While the Court of Appeals can take judicial notice of the
Decision of its Third Division in the Dy case, it should not have
given the said case much weight when it rendered the assailed
Decision, since the former does not constitute a precedent. The
Court of Appeals, in the challenged Decision, did not apply any
legal argument or principle established in the Dy case but, rather,
8
adopted the findings therein of wrongdoing or misconduct on the

part of herein petitioner Citibank and Mr. Tan. Any finding of
wrongdoing or misconduct as against herein petitioners should be
made based on the factual background and pieces of evidence
submitted in this case, not those in another case. It is apparent
that the Court of Appeals took judicial notice of the Dy case not as
a legal precedent for the present case, but rather as evidence of
similar acts committed by petitioner Citibank and Mr. Tan. A basic
rule of evidence, however, states that, Evidence that one did or
did not do a certain thing at one time is not admissible to prove
that he did or did not do the same or similar thing at another time;
but it may be received to prove a specific intent or knowledge,
identity, plan, system, scheme, habit, custom or usage, and the
like. The rationale for the rule is explained thusThe rule is
founded upon reason, public policy, justice and judicial
convenience. The fact that a person has committed the same or
similar acts at some prior time affords, as a general rule, no logical
guaranty that he committed the act in question. This is so because,
subjectively, a mans mind and even his modes of life may change;
and, objectively, the conditions under which he may find himself at
a given time may likewise change and thus induce him to act in a
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different way. Besides, if evidence of similar acts are to be
invariably admitted, they will give rise to a multiplicity of
collateral issues and will subject the defendant to surprise as well
as confuse the court and prolong the trial.
Banks and Banking; Compensation; Compensation takes place
by operation of law.There is little controversy when it comes to
the right of petitioner Citibank to compensate respondents
outstanding loans with her deposit account. As already found by

this Court, petitioner Citibank was the creditor of respondent for
her outstanding loans. At the same time, respondent was the
creditor of petitioner Citibank, as far as her deposit account was
concerned, since bank deposits, whether fixed, savings, or current,
should be considered as simple loan ormutuum by the depositor to
the banking institution. Both debts consist in sums of money. By
June 1979, all of respondents PNs in the second set had matured
and became demandable, while respondents savings account was
demandable anytime. Neither was there any retention or
controversy over the PNs and the deposit account commenced by a
third person and communicated in due time to the debtor
concerned. Compensation takes place by operation of law,
therefore, even in the absence of an expressed authority from
respondent, petitioner Citibank had the right to effect, on 25 June
1979, the partial compensation or off-set of respondents
outstanding loans with her deposit account, amounting to
P31,079.14.
Evidence; Notarial Law; On the evidentiary value of notarized
documents, it should be recalled that the notarization of a private
document converts it into a public one and renders it admissible in
court without further proof of its authenticity.The Deeds of
Assignment of the money market placements with petitioner
FNCB Finance were notarized documents, thus, admissible in
evidence. Rule 132, Section 30 of the Rules of Court provides
thatSEC. 30. Proof of notarial documents.Every instrument
duly acknowledged or proved and certified as provided by law, may
be presented in evidence without further proof, the certificate of
acknowledgement being prima facie evidence of the execution of
the instrument or document involved. Significant herein is this
Courts elucidation in De Jesus v. Court of Appeals, 217 SCRA 307
(1993), which readsOn the evidentiary value of these documents,
it should be recalled that the notarization of a private document
converts it into a public
9
391
VOL. 504, OCTOBER 16, 2006
39
1

Sabeniano
one and renders it admissible in court without further proof of
its authenticity (Joson vs. Baltazar, 194 SCRA 114 [1991]). This is
so because a public document duly executed and entered in the
proper registry is presumed to be valid and genuine until the
contrary is shown by clear and convincing proof (Asido vs.
Guzman, 57 Phil. 652 [1918]; U.S. vs. Enriquez, 1 Phil. 241
[1902]; Favor vs. Court of Appeals, 194 SCRA 308 [1991]). As such,
the party challenging the recital of the document must prove his
claim with clear and convincing evidence (Diaz vs. Court of
Appeals, 145 SCRA 346 [1986]).
Same; Same; The certificate of acknowledgment in notarized
Deeds of Assignment constitutes prima facie evidence of the
execution thereof.The rule on the evidentiary weight that must
be accorded a notarized document is clear and unambiguous. The
certificate of acknowledgement in the notarized Deeds of
Assignment constituted prima facie evidence of the execution
thereof. Thus, the burden of refuting this presumption fell on
respondent. She could have presented evidence of any defect or
irregularity in the execution of the said documents or raised
questions as to the verity of the notary publics acknowledgment
and certificate in the Deeds. But again, respondent admitted
executing the Deeds of Assignment, dated 2 March 1978 and 9
March 1978, although claiming that the loans for which they were
executed as security were already paid. And, she assailed the
Deeds of Assignment, dated 25 August 1978, with nothing more
than her bare denial of execution thereof, hardly the clear and
convincing evidence required to trounce the presumption of due
execution of a notarized document.
Same; Pledge; Although the pertinent documents were entitled

Deeds of Assignment, they were, in reality, more of a pledge.
Petitioner Citibank was only acting upon the authority granted to
it under the foregoing Deeds when it finally used the proceeds of
PNs No. 20138 and 20139, paid by petitioner FNCB Finance, to
partly pay for respondents outstanding loans. Strictly speaking, it
did not effect a legal compensation or off-set under Article 1278 of
the Civil Code, but rather, it partly extinguished respondents
obligations through the application of the security given by the
respondent for her loans. Although the pertinent documents were
entitled Deeds of Assignment, they were, in reality, more of a
pledge by respondent to petitioner Citibank of her credit due from
petitioner FNCB Finance by virtue of her money market
placements with the latter. According
392
92
Sabeniano
to Article 2118 of the Civil CodeART. 2118. If a credit has
been pledged becomes due before it is redeemed, the pledgee may
collect and receive the amount due. He shall apply the same to the
payment of his claim, and deliver the surplus, should there be any,
to the pledgor.
Same; Same; Conflict
of
Laws; Processual
Presumptions;Words and Phrases; In the absence of any allegation
and evidence presented of the specific rules and laws governing the
constitution of a pledge in Geneva, Switzerland, they will be
presumed to be the same as Philippine local or domestic lawsthis
is known as processual presumption.Certain principles of private
international law should be considered herein because the
property pledged was in the possession of an entity in a foreign
country, namely, Citibank-Geneva. In the absence of any
10
allegation and evidence presented by petitioners of the specific

rules and laws governing the constitution of a pledge in Geneva,
Switzerland, they will be presumed to be the same as Philippine
local or domestic laws; this is known as processual presumption.
containing the alleged forged signature, one cannot make a

definitive comparison which would establish forgery. A comparison
based on a mere xerox copy or reproduction of the document under
controversy cannot produce reliable results.
Same; Best Evidence Rule; Forgery; When a document is

assailed on the basis of forgery, the best evidence rule
applies;Without the original document containing the alleged
forged signature, one cannot make a definitive comparison which
would establish forgerya comparison based on a mere xerox copy
or reproduction of the document under controversy cannot produce
reliable results.Respondent denied that it was her signature on
the Declaration of Pledge. She claimed that the signature was a
forgery. When a document is assailed on the basis of forgery, the
best evidence rule appliesBasic is the rule of evidence that when
the subject of inquiry is the contents of a document, no evidence is
admissible other than the original document itself except in the
instances mentioned in Section 3, Rule 130 of the Revised Rules of
Court. Mere photocopies of documents are inadmissible pursuant
to the best evidence rule. This is especially true when the issue
is that of forgery. As a rule, forgery cannot be presumed and
must be proved by clear, positive and convincing evidence and the
burden of proof lies on the party alleging forgery. The best
evidence of a forged signature in an instrument is the instrument
itself reflecting the alleged forged signature. The fact of forgery
can only be established by a comparison between the alleged
forged signature and the authentic and
Same; Presumptions; It is presumed that evidence willfully

suppressed by a party would be adverse to said party if the evidence
is produced.Respondent made several attempts to have the
original copy of the pledge produced before the RTC so as to have it
examined by experts. Yet, despite several Orders by the RTC,
petitioner Citibank failed to comply with the production of the
original Declaration of Pledge. It is admitted that Citibank-Geneva
had possession of the original copy of the pledge. While petitioner
Citibank in Manila and its branch in Geneva may be separate and
distinct entities, they are still incontestably related, and between
petitioner Citibank and respondent, the former had more influence
and resources to convince Citibank-Geneva to return, albeit
temporarily, the original Declaration of Pledge. Petitioner Citibank
did not present any evidence to convince this Court that it had
exerted diligent efforts to secure the original copy of the pledge,
nor did it proffer the reason why Citibank-Geneva obstinately
refused to give it back, when such document would have been very
vital to the case of petitioner Citibank. There is thus no
justification to allow the presentation of a mere photocopy of the
Declaration of Pledge in lieu of the original, and the photocopy of
the pledge presented by petitioner Citibank has nil probative
value. In addition, even if this Court cannot make a categorical
finding that respondents signature on the original copy of the
pledge was forged, it is persuaded that petitioner Citibank
willfully suppressed the presentation of the original document, and
takes into consideration the presumption that the evidence
willfully suppressed would be adverse to petitioner Citibank if
produced.
393
VOL. 504, OCTOBER 16, 2006
39
3

Sabeniano
genuine signature of the person whose signature is theorized
upon to have been forged. Without the original document
11
Appeals; Review of matters, even those not assigned as errors

in the appeal, may be authorized if the consideration thereof is
necessary in arriving at a just decision of the case, and there is a
close interrelation between the omitted assignment of error and
those actually assigned and discussed by the appellant.While it is
true that the general rule is that only errors which have been
stated in the assignment of errors and properly argued in the brief
shall be consid394
94
Sabeniano
ered, this Court has also recognized exceptions to the general
rule, wherein it authorized the review of matters, even those not
assigned as errors in the appeal, if the consideration thereof is
necessary in arriving at a just decision of the case, and there is a
close interrelation between the omitted assignment of error and
those actually assigned and discussed by the appellant. Thus, the
Court of Appeals did not err in awarding the damages when it
already made findings that would justify and support the said
award.
Banks and Banking; Banking is impressed with public interest
and its fiduciary character requires high standards of integrity and
performancea bank is under the obligation to treat the accounts
of its depositors with meticulous care whether such accounts consist
only of a few hundred pesos or of millions of pesos.Although this
Court appreciates the right of petitioner Citibank to effect legal
compensation of respondents local deposits, as well as its right to
the proceeds of PNs No. 20138 and 20139 by virtue of the
notarized Deeds of Assignment, to partly extinguish respondents
outstanding loans, it finds that petitioner Citibank did commit
wrong when it failed to pay and properly account for the proceeds
of respondents money market placements, evidenced by PNs No.

23356 and 23357, and when it sought the remittance of
respondents dollar accounts from Citibank-Geneva by virtue of a
highly-suspect Declaration of Pledge to be applied to the remaining
balance of respondents outstanding loans. It bears to emphasize
that banking is impressed with public interest and its fiduciary
character requires high standards of integrity and performance. A
bank is under the obligation to treat the accounts of its depositors
with meticulous care whether such accounts consist only of a few
hundred pesos or of millions of pesos. The bank must record every
single transaction accurately, down to the last centavo, and as
promptly as possible. Petitioner Citibank evidently failed to
exercise the required degree of care and transparency in its
transactions with respondent, thus, resulting in the wrongful
deprivation of her property.
Damages; The award of moral damages is meant to
compensate for the actual injury suffered by a party, not to enrich
her.For the mental anguish, serious anxiety, besmirched
reputation, moral shock and social humiliation suffered by the
respondent, the award of moral damages is but proper. However,
this Court reduces the amount thereof to P300,000.00, for the
award of moral damages is
395
VOL. 504, OCTOBER 16, 2006
39
5

Sabeniano
meant to compensate for the actual injury suffered by the
respondent, not to enrich her.
PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Agcaoili & Associates for petitioners.
12
Angara, Abello, Concepcion, Regala & Cruz co-counsel

for petitioners.
Moises R. Tolentino, Jr. for respondent.
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari, under
Rule 45 of the Revised Rules of Court, of the Decision of the
Court of Appeals in CA-G.R. CV No. 51930, dated 26 March
2002, and the Resolution, dated 20 November 2002, of the
same court which, although modifying its earlier Decision,
still denied for the most part the Motion for Reconsideration
of herein petitioners.
Petitioner Citibank, N.A. (formerly known as the First
National City Bank) is a banking corporation duly authorized
and existing under the laws of the United States of America
and licensed to do commercial banking activities and perform
trust functions in the Philippines.
Petitioner Investors Finance Corporation, which did
business under the name and style of FNCB Finance, was an
affiliate company of petitioner Citibank, specifically handling
money market placements for its clients. It is now, by virtue
1
_______________
1
Rollo, pp. 165-325.
Penned by Associate Justice Andres B. Reyes, Jr. with Associate Justices
Conrado M. Vasquez, Jr. and Amelita G. Tolentino, concurring;Id., at pp. 327366.

3
Id., at pp. 368-374.
396
396

Sabeniano
of a merger, doing business as part of its successor-ininterest, BPI Card Finance Corporation. However, so as to
consistently establish its identity in the Petition at bar, the

said petitioner shall still be referred to herein as FNCB
Finance.
Respondent Modesta R. Sabeniano was a client of both
petitioners Citibank and FNCB Finance. Regrettably, the
business relations among the parties subsequently went
awry.
On 8 August 1985, respondent filed a Complaint against
petitioners, docketed as Civil Case No. 11336, before the
Regional Trial Court (RTC) of Makati City. Respondent
claimed to have substantial deposits and money market
placements with the petitioners, as well as money market
placements with the Ayala Investment and Development
Corporation (AIDC), the proceeds of which were supposedly
deposited automatically and directly to respondents accounts
with petitioner Citibank. Respondent alleged that petitioners
refused to return her deposits and the proceeds of her money
market placements despite her repeated demands, thus,
compelling respondent to file Civil Case No. 11336 against
petitioners for Accounting, Sum of Money and Damages.
Respondent eventually filed an Amended Complaint on 9
October 1985 to include additional claims to deposits and
money market placements inadvertently left out from her
original Complaint.
In their joint Answer and Answer to Amended
Complaint, filed on 12 September 1985 and 6 November
1985, respectively, petitioners admitted that respondent had
deposits and money market placements with them, including
dollar accounts in the Citibank branch in Geneva,
Switzerland (Citibank-Geneva). Petitioners further alleged
that the respondent
4
_______________
4
TSN, Deposition of Mr. Francisco Tan, 3 September 1990, pp. 9-10.
Records, Vol. I, pp. 1-8.
13
Id., at pp. 148-157.
Id., at pp. 40-51.
24 August 1995 by the fourth Judge who handled the said

case,
Id., at pp. 208-227.
_______________
11
397
VOL. 504, OCTOBER 16, 2006

397
Sabeniano
later obtained several loans from petitioner Citibank, for
which she executed Promissory Notes (PNs), and secured by
(a) a Declaration of Pledge of her dollar accounts in CitibankGeneva, and (b) Deeds of Assignment of her money market
placements with petitioner FNCB Finance. When respondent
failed to pay her loans despite repeated demands by
petitioner Citibank, the latter exercised its right to off-set or
compensate respondents outstanding loans with her deposits
and money market placements, pursuant to the Declaration
of Pledge and the Deeds of Assignment executed by
respondent in its favor. Petitioner Citibank supposedly
informed
respondent
Sabeniano
of
the
foregoing
compensation through letters, dated 28 September 1979 and
31 October 1979. Petitioners were therefore surprised when
six years later, in 1985, respondent and her counsel made
repeated requests for the withdrawal of respondents deposits
and money market placements with petitioner Citibank,
including her dollar accounts with Citibank-Geneva and her
money market placements with petitioner FNCB Finance.
Thus, petitioners prayed for the dismissal of the Complaint
and for the award of actual, moral, and exemplary damages,
and attorneys fees.
When the parties failed to reach a compromise during the
pre-trial hearing, trial proper ensued and the parties
proceeded with the presentation of their respective evidence.
Ten years after the filing of the Complaint on 8 August 1985,
a Decision was finally rendered in Civil Case No. 11336 on
9
10
Order, dated 11 December 1985, penned by Judge Ansberto P. Paredes,
Records, Vol. I, p. 346.

10
Penned by Judge Manuel D. Victorio, Records, Vol. III, pp. 1607-1621.
11
Civil Case No. 11336 was raffled and re-reffled to four different Judges
of the Makati RTC before it was finally resolved. It was originally raffled to
Makati RTC, Branch 140, presided by Judge Ansberto P. Paredes. On 4
February 1987, before the termination of the re-direct examination of herein
respondent (plaintiff before the
398
398

Sabeniano
Judge Manuel D. Victorio, the dispositive portion of which

reads
WHEREFORE, in view of all the foregoing, decision is hereby
rendered as follows:
(1) Declaring as illegal, null and void the set-off effected by the
defendant Bank [petitioner Citibank] of plaintiffs [respondent
Sabeniano] dollar deposit with Citibank, Switzerland, in the
amount of US$149,632.99, and ordering the said defendant
[petitioner Citibank] to refund the said amount to the plaintiff
with legal interest at the rate of twelve percent (12%) per annum,
compounded yearly, from 31 October 1979 until fully paid, or its
peso equivalent at the time of payment;
(2) Declaring the plaintiff [respondent Sabeniano] indebted to
the defendant Bank [petitioner Citibank] in the amount of
P1,069,847.40 as of 5 September 1979 and ordering the plaintiff
[respondent Sabeniano] to pay said amount, however, there shall
be no interest and penalty charges from the time the illegal set-off
was effected on 31 October 1979;
14
(3) Dismissing all other claims and counterclaims interposed by

the parties against each other.
Costs against the defendant Bank.
_______________
RTC), the case was transferred to Makati RTC, Branch 57, presided by
Judge Francisco X. Velez, for reasons not disclosed in the Records. Judge
Velez was able to try and hear the case until the presentation of the evidence
by herein petitioners (defendants before the RTC). Respondent again took the
stand to present rebuttal evidence, but even before she could finish her
testimony, Judge Velez inhibited himself upon petitioners motion (Order,
dated 10 April 1992, penned by Judge Francisco X. Velez, Records, Vol. 11, p.
1085). The case was transferred to Makati RTC, Branch 141, presided by
Judge Marcelino F. Bautista, Jr. For reasons not disclosed in the Records,
Judge Manuel D. Victorio took over Makati RTC, Branch 141. After the
parties submitted their respective Memoranda, Judge Victorio declared the
case submitted for decision (Order, dated 9 December 1994, penned by Judge
Manuel D. Victorio, Records, Vol. III, p. 1602). Judge Victorio rendered his
Decision in Civil Case No. 11336 on 24 August 1995 (Records, Vol. III, pp.
1607-1621).
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VOL. 504, OCTOBER 16, 2006

399
Sabeniano
All the parties appealed the foregoing Decision of the RTC to
the Court of Appeals, docketed as CA-G.R. CV No. 51930.
Respondent questioned the findings of the RTC that she was
still indebted to petitioner Citibank, as well as the failure of
the RTC to order petitioners to render an accounting of
respondents deposits and money market placements with
them. On the other hand, petitioners argued that petitioner
Citibank validly compensated respondents outstanding loans
with her dollar accounts with Citibank-Geneva, in
accordance with the Declaration of Pledge she executed in its

favor. Petitioners also alleged that the RTC erred in not
declaring respondent liable for damages and interest.
On 26 March 2002, the Court of Appeals rendered its
Decision affirming with modification the RTC Decision in
Civil Case No. 11336, dated 24 August 1995, and ruling
entirely in favor of respondent in this wise
12
Wherefore, premises considered, the assailed 24 August

1995Decision of the court a quo is hereby AFFIRMED with
MODIFICATION, as follows:
1. Declaring as illegal, null and void the set-off effected by the
defendant-appellant Bank of the plaintiff-appellants dollar deposit
with Citibank, Switzerland, in the amount of US$149,632.99, and
ordering defendant-appellant Citibank to refund the said amount
to the plaintiff-appellant with legal interest at the rate of twelve
percent (12%) per annum, compounded yearly, from 31 October
1979 until fully paid, or its peso equivalent at the time of payment;
2. As defendant-appellant Citibank failed to establish by
competent evidence the alleged indebtedness of plaintiff-appellant,
the set-off of P1,069,847.40 in the account of Ms. Sabeniano is
hereby declared as without legal and factual basis;
3. As defendants-appellants failed to account the following
plaintiff-appellants money market placements, savings account
and current accounts, the former is hereby ordered to return the
same, in accordance with the terms and conditions agreed upon by
the con_______________
12
Rollo, pp. 365-366.
400
400

Sabeniano
15
tending parties as evidenced by the certificates of investments, to

wit:
1. (i)Citibank NNPN Serial No. 023356 (Cancels and
Supersedes NNPN No. 22526) issued on 17 March 1977,
P318,897.34 with 14.50% interest p.a.;
2. (ii)Citibank NNPN Serial No. 23357 (Cancels and
Supersedes NNPN No. 22528) issued on 17 March 1977,
P203,150.00 with 14.50 interest p.a.;
3. (iii)FNCB NNPN Serial No. 05757 (Cancels and Supersedes
NNPN No. 04952), issued on 02 June 1977, P500,000.00
with 17% interest p.a.;
4. (iv)FNCB NNPN Serial No. 05758 (Cancels and Supersedes
NNPN No. 04962), issued on 02 June 1977, P500,000.00
with 17% interest per annum;
5. (v)The Two Million (P2,000,000.00) money market
placements of Ms. Sabeniano with the Ayala Investment &
Development Corporation (AIDC) with legal interest at the
rate of twelve percent (12%) per annum compounded
yearly, from 30 September 1976 until fully paid;
4. Ordering defendants-appellants to jointly and severally pay
the plaintiff-appellant the sum of FIVE HUNDRED THOUSAND
PESOS (P500,000.00) by way of moral damages, FIVE HUNDRED
THOUSAND PESOS (P500,000.00) as exemplary damages, and
ONE HUNDRED THOUSAND PESOS (P100,000.00) as attorneys
fees.
Apparently, the parties to the case, namely, the respondent,

on one hand, and the petitioners, on the other, made separate
attempts to bring the aforementioned Decision of the Court of
Appeals, dated 26 March 2002, before this Court for review.
G.R. No. 152985
Respondent no longer sought a reconsideration of the

Decision of the Court of Appeals in CA-G.R. CV No. 51930,
dated 26 March 2002, and instead, filed immediately with
this Court on 3 May 2002 a Motion for Extension of Time to
File a
401
VOL. 504, OCTOBER 16, 2006

401
Sabeniano
Petition for Review, which, after payment of the docket and
other lawful fees, was assigned the docket numberG.R. No.
152985. In the said Motion, respondent alleged that she
received a copy of the assailed Court of Appeals Decision on
18 April 2002 and, thus, had 15 days therefrom or until 3
May 2002 within which to file her Petition for Review. Since
she informed her counsel of her desire to pursue an appeal of
the Court of Appeals Decision only on 29 April 2002, her
counsel neither had enough time to file a motion for
reconsideration of the said Decision with the Court of
Appeals, nor a Petition for Certiorari with this Court. Yet,
the Motion failed to state the exact extension period
respondent was requesting for.
Since this Court did not act upon respondents Motion for
Extension of Time to file her Petition for Review, then the
period for appeal continued to run and still expired on 3 May
2002. Respondent failed to file any Petition for Review
within the prescribed period for appeal and, hence, this Court
issued a Resolution, dated 13 November 2002, in which it
pronounced that
13
14
15
G.R. No. 152985 (Modesta R. Sabeniano vs. Court of Appeals,

et al.).It appearing that petitioner failed to file the intended
petition for review on certiorari within the period which expired on
May 3, 2002, the Court Resolves to DECLARE THISCASE
TERMINATED and DIRECT the Division Clerk of Court
16
to INFORM the parties that the judgment sought to be reviewed

has become final and executory.
_______________
17
13
Rollo of G.R. No. 152985, pp. 3-4.
14
The filing of a motion for extension does not automatically suspend the
running of the period for appeal, since the purpose of such motion is to
merely ask the court to grant an enlargement of the time fixed by law. The
movant, therefore, has no right to assume that his motion would be granted,
and should check with the court as to the outcome of his motion, so that if the
same is denied, he can still perfect his appeal. (Hon. Bello and Ferrer v.
Fernando, 114 Phil. 101, 104; 4 SCRA 135, 138 [1962]).
15
Rollo of G.R. No. 156132, p. 1227.
18
_______________
402
402
Assailing the Decision and Resolution of the Court of Appeals

in CA-G.R. CV No. 51930, dated 26 March 2002 and 20
November 2002, respectively, petitioners filed the present
Petition, docketed as G.R. No. 156132. The Petition was
initially denied by this Court for failure of the petitioners to
attach thereto a Certification against Forum Shopping.
However, upon petitioners Motion and compliance with the
requirements, this Court resolved to reinstate the Petition.
The Petition presented fourteen (14) assignments of errors
allegedly committed by the Court of Appeals in its Decision,
dated 26 March 2002, involving both questions of fact and
questions of law which this Court, for the sake of expediency,
discusses jointly, whenever possible, in the succeeding
paragraphs.

Sabeniano
The said Resolution was duly recorded in the Book of

Entriesof Judgments on 3 January 2003.
G.R. No. 156132
Meanwhile, petitioners filed with the Court of Appeals a
Motion for Reconsideration of its Decision in CA-G.R. CV No.
51930, dated 26 March 2002. Acting upon the said Motion,
the Court of Appeals issued the Resolution, dated 20
November 2002, modifying its Decision of 26 March 2002, as
follows
16
WHEREFORE, premises considered, the instant Motion for

Reconsideration is PARTIALLY GRANTED as Sub-paragraph
(V) paragraph 3 of the assailed Decisions dispositive portion is
hereby ordered DELETED.
The challenged 26 March 2002 Decision of the Court
isAFFIRMED with MODIFICATION.
16
Rollo, p. 374.
17
Resolution, dated 29 January 2003; Rollo, pp. 980-A-B.
18
Resolution, dated 23 June 2003; Id., at pp. 1311-1312.
403
VOL. 504, OCTOBER 16, 2006

403
Sabeniano
I
The Resolution of this Court, dated 13 November 2002, in
G.R. No. 152985, declaring the Decision of the Court of
Appeals, dated 26 March 2002, final and executory, pertains
to respondent Sabeniano alone.
Before proceeding to a discussion of the merits of the instant
Petition, this Court wishes to address first the argument,
persistently advanced by respondent in her pleadings on
record, as well as her numerous personal and unofficial
letters to this Court which were no longer made part of the
record, that the Decision of the Court of Appeals in CA-G.R.
17
CV No. 51930, dated 26 March 2002, had already become

final and executory by virtue of the Resolution of this Court
in G.R. No. 152985, dated 13 November 2002.
G.R. No. 152985 was the docket number assigned by this
Court to respondents Motion for Extension of Time to File a
Petition for Review. Respondent, though, did not file her
supposed Petition. Thus, after the lapse of the prescribed
period for the filing of the Petition, this Court issued the
Resolution, dated 13 November 2002, declaring the Decision
of the Court of Appeals, dated 26 March 2002, final and
executory. It should be pointed out, however, that the
Resolution, dated 13 November 2002, referred only toG.R.
No. 152985, respon-dents appeal, which she failed to perfect
through the filing of a Petition for Review within the
prescribed period. The declaration of this Court in the same
Resolution would bind respondent solely, and not petitioners
which filed their own separate appeal before this Court,
docketed as G.R. No. 156132, the Petition at bar. This would
mean that respondent, on her part, should be bound by the
findings of fact and law of the Court of Appeals, including the
monetary amounts consequently awarded to her by the
appellate court in its
404
404

Sabeniano
Decision, dated 26 March 2002; and she can no longer refute

or assail any part thereof.
This Court already explained the matter to respondent
when it issued a Resolution in G.R. No. 156132, dated 2
February 2004, which addressed her Urgent Motion for the
Release of the Decision with the Implementation of the Entry
of Judgment in the following manner
19
20
[A]cting on Citibanks and FNCB Finances Motion for

Reconsideration, we resolved to grant the motion, reinstate the
petition and require Sabeniano to file a comment thereto in

ourResolution of June 23, 2003. Sabeniano filed a Comment dated
July 17, 2003 to which Citibank and FNCB Finance filed
a Replydated August 20, 2003.
From the foregoing, it is clear that Sabeniano had knowledge of,
and in fact participated in, the proceedings in G.R. No. 156132.
She cannot feign ignorance of the proceedings therein and claim
that the Decision of the Court of Appeals has become final and
executory. More precisely, the Decision became final and
executory only with regard to Sabeniano in view of her failure
to file a petition for review within the extended period granted by
the Court, and not to Citibank and FNCB Finance whose Petition
for Review was duly reinstated and is now submitted for decision.
Accordingly, the instant Urgent Motion is hereby DENIED.
(Emphasis supplied.)
To sustain the argument of respondent would result in an

unjust and incongruous situation wherein one party may
frustrate the efforts of the opposing party to appeal the case
by merely filing with this Court a Motion for Extension of
Time to File a Petition for Review, ahead of the opposing
_______________
19
Firestone
Tire
and
Rubber
Company
of
the
Philippines
v.
Tempongko,137 Phil. 239, 244; 27 SCRA 418, 422 (1969); Singh v. Liberty
Insurance Corp., 118 Phil. 532, 535; 8 SCRA 517, 519-520 (1963).
20
Rollo, pp. 1443-1445.
405
VOL. 504, OCTOBER 16, 2006

405
Sabeniano
party, then not actually filing the intended Petition. The
party who fails to file its intended Petition within the
21
18
reglementary or extended period should solely bear the

consequences of such failure.
Respondent Sabeniano did not commit forum shopping.
Another issue that does not directly involve the merits of the
present Petition, but raised by petitioners, is whether
respondent should be held liable for forum shopping.
Petitioners contend that respondent committed forum
shopping on the basis of the following facts:
While petitioners Motion for Reconsideration of the
Decision in CA-G.R. CV No. 51930, dated 26 March 2002,
was still pending before the Court of Appeals, respondent
already filed with this Court on 3 May 2002 her Motion for
Extension of Time to File a Petition for Review of the same
Court of Appeals Decision, docketed as G.R. No. 152985.
Thereafter, respondent continued to participate in the
proceedings before the Court of Appeals in CA-G.R. CV No.
51930 by filing her Comment, dated 17 July 2002, to
petitioners Motion for Reconsideration; and a Rejoinder,
dated 23 September 2002, to petitioners Reply. Thus,
petitioners argue that by seeking relief concurrently from
this Court and the Court of Appeals,
_______________
21
See the case of Borromeo v. Court of Appeals (162 Phil. 430, 438; 70
SCRA 329 [1976]) wherein this Court pronounced that a partys right to
appeal shall not be affected by the perfection of another appeal from the same
decision; otherwise, it would lead to the absurd proposition that one party
may be deprived of the right to appeal from the portion of a decision against
him just because the other party who had been notified of the decision ahead
had already perfected his appeal in so far as the said decision adversely
affects him. If the perfection of an appeal by one party would not bar the
right of the other party to appeal from the same decision, then an unperfected
appeal, as in the case at bar, would have far less effect.
406
406

Sabeniano
respondent is undeniably guilty of forum shopping, if not

indirect contempt.
This Court, however, finds no sufficient basis to hold
respondent liable for forum shopping.
Forum shopping has been defined as the filing of two or
more suits involving the same parties for the same cause of
action, either simultaneously or successively, for the purpose
of obtaining a favorable judgment. The test for determining
forum shopping is whether in the two (or more) cases
pending, there is an identity of parties, rights or causes of
action, and relief sought. To guard against this deplorable
practice, Rule 7, Section 5 of the revised Rules of Court
imposes the following requirement
22
23
SEC. 5. Certification against forum shopping.The plaintiff or

principal party shall certify under oath in the complaint or other
initiatory pleading asserting a claim for relief, or in a sworn
certification annexed thereto and simultaneously filed therewith:
(a) that he has not theretofore commenced any action or filed any
claim involving the same issues in any court, tribunal or quasijudicial agency and, to the best of his knowledge, no such other
action or claim is pending therein; (b) if there is such other
pending action or claim, a complete statement of the present
status thereof; and (c) if he should thereafter learn that the same
or similar action or claim has been filed or is pending, he shall
report that fact within five (5) days therefrom to the court wherein
his aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be
curable by mere amendment of the complaint or other initiatory
pleading but shall be cause for the dismissal of the case without
prejudice, unless otherwise provided, upon motion and after
hearing. The submission of a false certification or non-compliance
with any of the undertakings therein shall constitute indirect
19
contempt of court, without prejudice to the corresponding

administrative and criminal
_______________
22
The Executive Secretary v. Gordon, 359 Phil. 266, 271; 298 SCRA 736,
740 (1998).
23
Young v. John Keng Seng, 446 Phil. 823, 833; 398 SCRA 629, 638 (2003).
407
VOL. 504, OCTOBER 16, 2006

407
Sabeniano
actions. If the acts of the party or his counsel clearly constitute
willful and deliberate forum shopping, the same shall be ground
for summary dismissal with prejudice and shall constitute direct
contempt, as well as cause for administrative sanctions.
Although it may seem at first glance that respondent was

simultaneously seeking recourse from the Court of Appeals
and this Court, a careful and closer scrutiny of the details of
the case at bar would reveal otherwise.
It should be recalled that respondent did nothing more
in G.R. No. 152985 than to file with this Court a Motion for
Extension of Time within which to file her Petition for
Review. For unexplained reasons, respondent failed to
submit to this Court her intended Petition within the
reglementary period. Consequently, this Court was prompted
to issue a Resolution, dated 13 November 2002,
declaring G.R. No. 152985 terminated, and the therein
assailed Court of Appeals Decision final and executory.G.R.
No. 152985, therefore, did not progress and respondents
appeal was unperfected.
The Petition for Review would constitute the initiatory
pleading before this Court, upon the timely filing of which,
the case before this Court commences; much in the same way
a case is initiated by the filing of a Complaint before the trial

court. The Petition for Review establishes the identity of
parties, rights or causes of action, and relief sought from this
Court, and without such a Petition, there is technically no
case before this Court. The Motion filed by respondent
seeking extension of time within which to file her Petition for
Review does not serve the same purpose as the Petition for
Review itself. Such a Motion merely presents the important
dates and the justification for the additional time requested
for, but it does not go into the details of the appealed case.
Without any particular idea as to the assignments of error
or the relief respondent intended to seek from this Court, in
light of her failure to file her Petition for Review, there is
actually no second case involving the same parties, rights or
408
408

Sabeniano
causes of action, and relief sought, as that in CA-G.R. CV No.

51930.
It should also be noted that the Certification against
Forum Shopping is required to be attached to the initiatory
pleading, which, in G.R. No. 152985, should have been respondents Petition for Review. It is in that Certification
wherein respondent certifies, under oath, that: (a) she has
not commenced any action or filed any claim involving the
same issues in any court, tribunal or quasi-judicial agency
and, to the best of her knowledge, no such other action or
claim is pending therein; (b) if there is such other pending
action or claim, that she is presenting a complete statement
of the present status thereof; and (c) if she should thereafter
learn that the same or similar action or claim has been filed
or is pending, she shall report that fact within five days
therefrom to this Court. Without her Petition for Review,
respondent had no obligation to execute and submit the
20
foregoing Certification against Forum Shopping. Thus,

respondent did not violate Rule 7, Section 5 of the Revised
Rules of Court; neither did she mislead this Court as to the
pendency of another similar case.
Lastly, the fact alone that the Decision of the Court of
Appeals, dated 26 March 2002, essentially ruled in favor of
respondent, does not necessarily preclude her from appealing
the same. Granted that such a move is ostensibly irrational,
nonetheless, it does not amount to malice, bad faith or abuse
of the court processes in the absence of further proof. Again,
it should be noted that the respondent did not file her
intended Petition for Review. The Petition for Review would
have presented before this Court the grounds for
respondents appeal and her arguments in support thereof.
Without said Petition, any reason attributed to the
respondent for appealing the 26 March 2002 Decision would
be grounded on mere speculations, to which this Court
cannot give credence.
409
VOL. 504, OCTOBER 16, 2006

409
Sabeniano
II
As an exception to the general rule, this Court takes
cognizance of questions of fact raised in the Petition at bar.
It is already a well-settled rule that the jurisdiction of this
Court in cases brought before it from the Court of Appeals by
virtue of Rule 45 of the Revised Rules of Court is limited to
reviewing errors of law. Findings of fact of the Court of
Appeals are conclusive upon this Court. There are, however,
recognized exceptions to the foregoing rule, namely: (1) when
the findings are grounded entirely on speculation, surmises,
or conjectures; (2) when the interference made is manifestly
mistaken, absurd, or impossible; (3) when there is 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 in making its findings, the Court of
Appeals went beyond the issues of the case, or its findings
are contrary to the admissions of both the appellant and the
appellee; (7) when the findings are contrary to those of the
trial court; (8) when the findings are conclusions without
citation of specific evidence on which they are based; (9)
when the facts set forth in the petition as well as in the
petitioners main and reply briefs are not disputed by the
respondent; and (10) when the findings of fact are premised
on the supposed absence of evidence and contradicted by the
evidence on record.
Several of the enumerated exceptions pertain to the
Petition at bar.
It is indubitable that the Court of Appeals made factual
findings that are contrary to those of the RTC, thus, result24
25
_______________
24
Sps. Sta. Maria v. Court of Appeals, 349 Phil. 275, 282-283; 285 SCRA
351, 357-358 (1998).

25
The Court of Appeals modified the trial courts findings and conclusions,
as follows: (1) By declaring the P1,069,847.40 alleged indebtedness of Ms.

Sabeniano as non-existing for failure of Citibank
410
410

Sabeniano
ing in its substantial modification of the trial courts

Decision, and a ruling entirely in favor of the respondent. In
addition, petitioners invoked in the instant Petition for
Review several exceptions that would justify this Courts
review of the factual findings of the Court of Appeals, i.e., the
Court of Appeals made conflicting findings of fact; findings of
fact which went beyond the issues raised on appeal before it;
21
as well as findings of fact premised on the supposed absence

of evidence and contradicted by the evidence on record.
On the basis of the foregoing, this Court shall proceed to
reviewing and re-evaluating the evidence on record in order
to settle questions of fact raised in the Petition at bar.
The fact that the trial judge who rendered the RTC Decision
in Civil Case No. 11336, dated 24 August 1995, was not the
same judge who heard and tried the case, does not, by itself,
render the said Decision erroneous.
The Decision in Civil Case No. 11336 was rendered more
than 10 years from the institution of the said case. In the
course of its trial, the case was presided over by four (4)
different RTC judges. It was Judge Victorio, the fourth judge
assigned to the case, who wrote the RTC Decision, dated 24
August 1995. In his Decision, Judge Victorio made the
following findings
26
27
After carefully evaluating the mass of evidence adduced by the

parties, this Court is not inclined to believe the plaintiffs assertion
that the promissory notes as well as the deeds of assignments of
_______________
to substantiate its allegations; (2) By declaring that there are unpaid
money market placements, current accounts and savings account of Ms.
Sabeniano; and (3) The awarding of damages in favor of Ms. Sabeniano and
against Citibank.
26
Supra note 11.
27
Records, Vol. III, pp. 1612-1613.
411
VOL. 504, OCTOBER 16, 2006

411
Sabeniano
her FNCB Finance money market placements were simulated. The
evidence is overwhelming that the plaintiff received the proceeds
of the loans evidenced by the various promissory notes she had
signed. What is more, there was not an iota of proof save the
plaintiffs bare testimony that she had indeed applied for loan with
the Development Bank of the Philippines.
More importantly, the two deeds of assignment were notarized,
hence they partake the nature of a public document. It makes
more than preponderant proof to overturn the effect of a notarial
attestation. Copies of the deeds of assignments were actually filed
with the Records Management and Archives Office.
Finally, there were sufficient evidence wherein the plaintiff had
admitted the existence of her loans with the defendant Bank in the
total amount of P1,920,000.00 exclusive of interests and penalty
charges (Exhibits 28, 31, 32, and 33).
In fine, this Court hereby finds that the defendants had
established the genuineness and due execution of the various
promissory notes heretofore identified as well as the two deeds of
assignments of the plaintiffs money market placements with
defendant FNCB Finance, on the strength of which the said money
market placements were applied to partially pay the plaintiffs
past due obligation with the defendant Bank. Thus, the total sum
of P1,053,995.80 of the plaintiffs past due obligation was partially
offset by the said money market placement leaving a balance of
P1,069,847.40 as of 5 September 1979 (Exhibit 34).
Disagreeing in the foregoing findings, the Court of Appeals

stressed, in its Decision in CA-G.R. CV No. 51930, dated 26
March
2002,
that
the ponente of
the
herein
assailedDecision is not the Presiding Judge who heard and
tried the case. This brings us to the question of whether the
fact alone that the RTC Decision was rendered by a judge
other than the judge who actually heard and tried the case is
sufficient justification for the appellate court to disregard or
set aside the findings in the Decision of the court a quo?
28
_______________
22
28
Penned by Associate Justice Andres B. Reyes with Associate Justices
Conrado M. Vasquez, Jr. and Amelita G. Tolentino, concurring; Rollo, p. 344.
_______________
412
412
complete and were presumably examined and studied by

Judge Baguilat before he rendered his decision. It is not

Sabeniano
This Court rules in the negative.

What deserves stressing is that, in this jurisdiction, there
exists a disputable presumption that the RTC Decision was
rendered by the judge in the regular performance of his
official duties. While the said presumption is only disputable,
it is satisfactory unless contradicted or overcame by other
evidence. Encompassed in this presumption of regularity is
the presumption that the RTC judge, in resolving the case
and drafting his Decision, reviewed, evaluated, and weighed
all the evidence on record. That the said RTC judge is not the
same judge who heard the case and received the evidence is
of little consequence when the records and transcripts of
stenographic notes (TSNs) are complete and available for
consideration by the former.
In People v. Gazmen, this Court already elucidated its
position on such an issue
29
30
Accused-appellant makes an issue of the fact that the judge who

penned the decision was not the judge who heard and tried the
case and concludes therefrom that the findings of the former are
erroneous. Accused-appellants argument does not merit a lengthy
discussion. It is well-settled that the decision of a judge who did
not try the case is not by that reason alone erroneous.
It is true that the judge who ultimately decided the case had
not heard the controversy at all, the trial having been
conducted by then Judge Emilio L. Polig, who was
indefinitely suspended by this Court. Nonetheless, the
transcripts of stenographic notes taken during the trial were
29
Section 3(m) of Rule 131 of the REVISED RULES OF COURT reads
SEC. 3. Disputable presumptions.The following presumptions are satisfactory if

uncontradicted, but may be contradicted and overcome by other evidence:
xxxx
(m) That official duty has been regularly performed.
30
317 Phil. 495, 501-503; 247 SCRA 414, 419-420 (1995).
413
VOL. 504, OCTOBER 16, 2006

413
Sabeniano
unusual for a judge who did not try a case to decide it on the
basis of the record. The fact that he did not have the
opportunity to observe the demeanor of the witnesses during
the trial but merely relied on the transcript of their
testimonies does not for that reason alone render the
judgment erroneous.
(People vs. Jaymalin, 214 SCRA 685, 692 [1992])
Although it is true that the judge who heard the witnesses
testify is in a better position to observe the witnesses on the stand
and determine by their demeanor whether they are telling the
truth or mouthing falsehood, it does not necessarily follow that a
judge who was not present during the trial cannot render a valid
decision since he can rely on the transcript of stenographic notes
taken during the trial as basis of his decision.
Accused-appellants contention that the trial judge did not have
the opportunity to observe the conduct and demeanor of the
witnesses since he was not the same judge who conducted the
hearing is also untenable. While it is true that the trial judge who
conducted the hearing would be in a better position to ascertain
23
the truth and falsity of the testimonies of the witnesses, it does not
necessarily follow that a judge who was not present during the
trial cannot render a valid and just decision since the latter can
also rely on the transcribed stenographic notes taken during the
trial as the basis of his decision.
(People vs. De Paz, 212 SCRA 56, 63 [1992])
At any rate, the test to determine the value of the testimony of
the witness is whether or not such is in conformity with knowledge
and consistent with the experience of mankind (People vs.
Morre, 217 SCRA 219 [1993]). Further, the credibility of witnesses
can also be assessed on the basis of the substance of their
testimony and the surrounding circumstances (People v.
Gonzales, 210 SCRA 44 [1992]). A critical evaluation of the
testimony of the prosecution witnesses reveals that their
testimony accords with the aforementioned tests, and carries with
it the ring of truth end perforce, must be given full weight and
credit.
Irrefragably, by reason alone that the judge who penned the

RTC Decision was not the same judge who heard the case
and received the evidence therein would not render the
findings in the said Decision erroneous and unreliable. While
the
414
414

Sabeniano
conduct and demeanor of witnesses may sway a trial court

judge in deciding a case, it is not, and should not be, his only
consideration. Even more vital for the trial court judges
decision are the contents and substance of the witnesses
testimonies, as borne out by the TSNs, as well as the object
and documentary evidence submitted and made part of the
records of the case.
This Court proceeds to making its own findings of fact.
Since the Decision of the Court of Appeals in CA-G.R. CV No.

51930, dated 26 March 2002, has become final and executory
as to the respondent, due to her failure to interpose an
appeal therefrom within the reglementary period, she is
already bound by the factual findings in the said Decision.
Likewise, respondents failure to file, within the
reglementary period, a Motion for Reconsideration or an
appeal of the Resolution of the Court of Appeals in the same
case, dated 20 November 2002, which modified its earlier
Decision by deleting paragraph 3(v) of its dispositive portion,
ordering petitioners to return to respondent the proceeds of
her money market placement with AIDC, shall already bar
her from questioning such modification before this Court.
Thus, what is for review before this Court is the Decision of
the Court of Appeals, dated 26 March 2002, as modified by
the Resolution of the same court, dated 20 November 2002.
Respondent alleged that she had several deposits and
money market placements with petitioners. These deposits
and money market placements, as determined by the Court
of Appeals in its Decision, dated 26 March 2002, and as
modified by its Resolution, dated 20 November 2002, are as
follows
415
VOL. 504, OCTOBER 16, 2006

415
Sabeniano
Amount
Deposit/Placement
Dollar deposit with Citibank-Geneva
$
149,632.99
Money market placement with Citibank,
evidenced
by Promissory Note (PN) No. 23356
(which cancels
P
and supersedes PN No. 22526), earning
318,897.34
24
14.5%
interest per annum (p.a.)
Money market placement with Citibank,
evidenced by
PN No. 23357 (which cancels and
supersedes PN No. 22528),
earning 14.5% interest p.a.
Money market placement with FNCB
Finance, evidenced
by PN No. 5757 (which cancels and
earning 17% interest p.a.
Money market placement with FNCB
Finance, evidenced
by PN No. 5758 (which cancels and
earning 17% interest p.a.
Sabeniano
P
203,150.00
P
500,000.00
P
500,000.00
This Court is tasked to determine whether petitioners are

indeed liable to return the foregoing amounts, together with
the appropriate interests and penalties, to respondent. It
shall trace respondents transactions with petitioners, from
her money market placements with petitioner Citibank and
petitioner FNCB Finance, to her savings and current
accounts with petitioner Citibank, and to her dollar accounts
with Citibank-Geneva.
Money market placements with petitioner Citibank
The history of respondents money market placements with
petitioner Citibank began on 6 December 1976, when she
made a placement of P500,000.00 as principal amount, which
was supposed to earn an interest of 16% p.a. and for which
PN No. 20773 was issued. Respondent did not yet claim the
proceeds of her placement and, instead, rolled-over or re416
416

invested the principal and proceeds several times in the

succeeding years for which new PNs were issued by
petitioner Citibank to replace the ones which matured.
Petitioner Citibank accounted for respondents original
placement and the subsequent roll-overs thereof, as follows
Date
(mm/dd/
yyyy)
PN No. Cancels Maturity

PN No.
Date
(mm/dd/
yyyy)
20773 None 01/13/1977
21686 20773 02/08/1977
22526 21686 03/16/1977
22528
21686 03/16/1977
23356 22526 04/20/1977
23357
22528 04/20/1977
12/06/1976
01/14/1977
02/09/1977
03/17/1977
Amount
(P)
Interest
(p.a.)
500,000.00
508,444.44
313,952.59
200,000.00
318,897.34
203,150.00
16%
15%
15-3/4%
15-3/4%
14-1/2%
14-1/2%
Petitioner Citibank alleged that it had already paid to

respondent the principal amounts and proceeds of PNs No.
23356 and 23357, upon their maturity. Petitioner Citibank
further averred that respondent used the P500,000.00 from
the payment of PNs No. 23356 and 23357, plus P600,000.00
sourced from her other funds, to open two time deposit (TD)
accounts with petitioner Citibank, namely, TD Accounts No.
17783 and 17784.
Petitioner Citibank did not deny the existence nor
questioned the authenticity of PNs No. 23356 and 23357 it
issued in favor of respondent for her money market
placements. In fact, it admitted the genuineness and due
execution of the said PNs, but qualified that they were no
longer
out-standing. In Hibberd
v.
Rohde
and
McMillian, this Court delineated the consequences of such
an admission
31
32
_______________
25
31
32
32 Phil. 476, 478-479.
417
VOL. 504, OCTOBER 16, 2006

417
Sabeniano
By the admission of the genuineness and due execution of an
instrument, as provided in this section, is meant that the party
whose signature it bears admits that he signed it or that it was
signed by another for him with his authority; that at the time it
was signed it was in words and figures exactly as set out in the
pleading of the party relying upon it; that the document was
delivered; and that any formal requisites required by law, such as
a seal, an acknowledgment, or revenue stamp, which it lacks, are
waived by him. Hence, such defenses as that the signature is a
forgery (Puritan Mfg. Co. vs. Toti & Gradi, 14 N. M., 425; Cox vs.
Northwestern Stage Co., 1 Idaho, 376; Woollen vs. Whitacre, 73
Ind., 198; Smith vs. Ehnert, 47 Wis., 479; Faelnar vs. Escao, 11
Phil. Rep., 92); or that it was unauthorized, as in the case of an
agent signing for his principal, or one signing in behalf of a
partnership (Country Bank vs. Greenberg, 127 Cal., 26; Henshaw
vs. Root, 60 Inc., 220; Naftzker vs. Lantz, 137 Mich., 441) or of a
corporation (Merchant vs. International Banking Corporation, 6
Phil. Rep., 314; Wanita vs. Rollins, 75 Miss., 253; Barnes vs.
Spencer & Barnes Co., 162 Mich., 509); or that, in the case of the
latter, that the corporation was authorized under its charter to
sign the instrument (Merchant vs. International Banking
Corporation, supra); or that the party charged signed the
instrument in some other capacity than that alleged in the
pleading setting it out (Payne vs. National Bank, 16 Kan., 147); or
that it was never delivered (Hunt vs. Weir, 29 Ill., 83; Elbring vs.
Mullen, 4 Idaho, 199; Thorp vs. Keokuk Coal Co., 48 N.Y., 253;Fire
Association of Philadelphia vs. Ruby, 60 Neb., 216) are cut off by
the admission of its genuineness and due execution.
The effect of the admission is such that in the case of a

promissory note a prima facie case is made for the plaintiff
which dispenses with the necessity of evidence on his part
and entitles him to a judgment on the pleadings unless a
special defense of new matter, such as payment, is interposed
by the defendant (Papa vs. Martinez, 12 Phil. Rep.,
613; Chinese Chamber of Commerce vs. Pua To Ching, 14
Phil. Rep., 222; Banco Espaol-Filipino vs. McKay & Zoeller,
27 Phil. Rep., 183). x x x
Since the genuineness and due execution of PNs No.
23356 and 23357 are uncontested, respondent was able to
establish prima facie that petitioner Citibank is liable to her
for the amounts stated therein. The assertion of petitioner
Citibank
418
418

Sabeniano
of payment of the said PNs is an affirmative allegation of a

new matter, the burden of proof as to such resting on
petitioner Citibank. Respondent having proved the existence
of the obligation, the burden of proof was upon petitioner
Citibank to show that it had been discharged. It has already
been established by this Court that
33
As a general rule, one who pleads payment has the burden of

proving it. Even where the plaintiff must allege non-payment, the
general rule is that the burden rests on the defendant to prove
payment, rather than on the plaintiff to prove non-payment. The
debtor has the burden of showing with legal certainty that the
obligation has been discharged by payment.
When the existence of a debt is fully established by the evidence
contained in the record, the burden of proving that it has been
extinguished by payment devolves upon the debtor who offers such
defense to the claim of the creditor. Where the debtor introduces
some evidence of payment, the burden of going forward with the
26
evidenceas distinct from the general burden of proofshifts to

the creditor, who is then under the duty of producing some
evidence of non-payment.
34
Reviewing the evidence on record, this Court finds that

petitioner Citibank failed to satisfactorily prove that PNs No.
23356 and 23357 had already been paid, and that the
amount so paid was actually used to open one of respondents
TD accounts with petitioner Citibank.
Petitioner Citibank presented the testimonies of two
witnesses to support its contention of payment: (1) That of
Mr. Herminio Pujeda, the officer-in-charge of loans and
placements at the time when the questioned transactions
took
35
_______________
33
Behn, Meyer & Co. v. Rosatzin, 5 Phil. 660, 662 (1906).
34
Jimenez v. National Labor Relations Commission, 326 Phil. 89, 95;256
SCRA 84, 89-90 (1996).

35
Mr. Herminio Pujeda, at the time he testified before the RTC in 1990,
was already the Vice President of petitioner Citibank.

419
VOL. 504, OCTOBER 16, 2006

419
Sabeniano
place; and (2) that of Mr. Francisco Tan, the former
Assistant Vice-President of Citibank, who directly dealt with
respondent with regard to her deposits and loans.
The relevant portion of Mr. Pujedas testimony as to PNs
No. 23356 and 23357 (referred to therein as Exhibits No. 47
and 48, respectively) is reproduced below
36
37
Atty. Mabasa:
Okey [sic]. Now Mr. Witness, you were asked to testify in
this case and this case is [sic] consist [sic] of several
documents involving transactions between the plaintiff and

the defendant. Now, were you able to make your own
memorandum regarding all these transactions?
A Yes, based on my recollection of these facts, I did come up
of [sic] the outline of the chronological sequence of events.
Court:
Are you trying to say that you have personal knowledge or
participation to these transactions?
A Yes, your Honor, I was the officer-in charge of the unit that
was processing these transactions. Some of the documents
bear my signature.
Court:
And this resume or summary that you have prepared is
based on purely your recollection or documents?
A Based on documents, your Honor.
Court:
Are these documents still available now?
A Yes, your honor.
Court:
Better present the documents.
Atty. Mabasa:
Yes, your Honor, that is why your Honor.
_______________
36
Mr. Francisco Tan, at the time of his deposition in 1990, was already
working as Assistant General Manager for Dai-Chi Kangyo Bank in Hong

Kong.
37
TSN, 12 March 1990, pp. 6-10.
420
420

Sabeniano
Atty. Mabasa:
Q Now, basing on the notes that you prepared, Mr.
27
A
Q
A
Q
A
Q
A
Q
A
Q
A
Q
A
Q
Witness, and according to you basing also on your

personal recollection about all the transactions involved
between Modesta Sabeniano and defendant City Bank
[sic] in this case. Now, would you tell us what happened
to the money market placements of Modesta Sabeniano
that you have earlier identified in Exhs. 47 and 48?
The transactions which I said earlier were terminated and
booked to time deposits.
And you are saying time deposits with what bank?
With First National Citibank.
Is it the same bank as Citibank, N.A.?
Yes, sir.
And how much was the amount booked as time deposit
with defendant Citibank?
In the amount of P500,000.00.
And outside this P500,000.00 which you said was
booked out of the proceeds of Exhs. 47 and 48, were
there other time deposits opened by Mrs. Modesta
Sabeniano at that time.
Yes, she also opened another time deposit for
P600,000.00.
So all in all Mr. Witness, sometime in April of 1978 Mrs.
Modesta Sabeneano [sic] had time deposit placements
with Citibank in the amount of P500,000.00 which is the
proceeds of Exhs. 47 and 48 and another
P600,000.00, is it not?
Yes, sir.
And would you know where did the other P600,000
placed by Mrs. Sabeneano [sic] in a time deposit with
Citibank, N.A. came [sic] from?
She funded it directly.
What are you saying Mr. Witness is that the P600,000 is
a [sic] fresh money coming from Mrs. Modesta
Sabeneano [sic]?
That is right.
421
VOL. 504, OCTOBER 16, 2006

421
Sabeniano
In his deposition in Hong Kong, Mr. Tan recounted what
happened to PNs No. 23356 and 23357 (referred to therein as
Exhibits E and F, respectively), as follows
Atty. Mabasa: Now from the Exhibits that you have identified Mr.
Tan from Exhibits A to F, which are Exhibits of the plaintiff.
Now, do I understand from you that the original amount is Five
Hundred Thousand and thereafter renewed in the succeeding
exhibits?
Mr. Tan: Yes, Sir.
Atty. Mabasa: Alright, after these Exhibits E and F matured,
what happened thereafter?
Mr. Tan: Split into two time deposits.
Atty. Mabasa: Exhibits E and F?
Before anything else, it should be noted that when Mr.

Pujedas testimony before the RTC was made on 12 March
1990 and Mr. Tans deposition in Hong Kong was conducted
on 3 September 1990, more than a decade had passed from
the time the transactions they were testifying on took place.
This Court had previously recognized the frailty and
unreliability of human memory with regards to figures after
the lapse of five years. Taking into consideration the
substantial length of time between the transactions and the
witnesses testimonies, as well as the undeniable fact that
bank officers deal with multiple clients and process
numerous transactions during their tenure, this Court is
reluctant to give much weight to the testimonies of Mr.
Pujeda and Mr. Tan regarding the payment of PNs No. 23356
and 23357 and the use by respondent of the proceeds thereof
for opening TD accounts. This Court finds it implausible that
they should remember, after all these years, this particular
38
28
transaction with respondent involving her PNs No. 23356

and 23357 and TD accounts. Both witnesses did not give any
reason as to why,
_______________
38
Lichauco v. Atlantic Gulf & Pacific Co., 84 Phil. 330, 346 (1949).
422
422

Sabeniano
from among all the clients they had dealt with and all the
transactions they had processed as officers of petitioner
Citibank, they specially remembered respondent and her
PNs No. 23356 and 23357. Their testimonies likewise lacked
details on the circumstances surrounding the payment of the
two PNs and the opening of the time deposit accounts by
respondent, such as the date of payment of the two PNs,
mode of payment, and the manner and context by which
respondent relayed her instructions to the officers of
petitioner Citibank to use the proceeds of her two PNs in
opening the TD accounts.
Moreover, while there are documentary evidences to
support and trace respondents money market placements
with petitioner Citibank, from the original PN No. 20773,
rolled-over several times to, finally, PNs No. 23356 and
23357, there is an evident absence of any documentary
evidence on the payment of these last two PNs and the use of
the proceeds thereof by respondent for opening TD accounts.
The paper trail seems to have ended with the copies of PNs
No. 23356 and 23357. Although both Mr. Pujeda and Mr. Tan
said that they based their testimonies, not just on their
memories but also on the documents on file, the supposed
documents on which they based those portions of their
testimony on the payment of PNs No. 23356 and 23357 and
the opening of the TD accounts from the proceeds

thereof, were never presented before the courts nor
made part of the records of the case. Respondents
money market placements were of substantial amounts
consisting of the principal amount of P500,000.00, plus the
interest it should have earned during the years of
placementand it is difficult for this Court to believe that
petitioner Citibank would not have had documented the
payment thereof.
When Mr. Pujeda testified before the RTC on 6 February
1990, petitioners counsel attempted to present in evidence a
document that would supposedly support the claim of peti39
_______________
39
TSN, 6 February 1990, Vol. V, pp. 16-24.
423
VOL. 504, OCTOBER 16, 2006

423
Sabeniano
tioner Citibank that the proceeds of PNs No. 23356 and
23357 were used by respondent to open one of her two TD
accounts in the amount of P500,000.00. Respondents counsel
objected to the presentation of the document since it was a
mere xerox copy, and was blurred and hardly readable.
Petitioners counsel then asked for a continuance of the
hearing so that they can have time to produce a better
document, which was granted by the court. However, during
the next hearing and continuance of Mr. Pujedas testimony
on 12 March 1990, petitioners counsel no longer referred to
the said document.
As respondent had established a prima facie case that
petitioner Citibank is obligated to her for the amounts stated
in PNs No. 23356 and 23357, and as petitioner Citibank
failed to present sufficient proof of payment of the said PNs
29
and the use by the respondent of the proceeds thereof to open

her TD accounts, this Court finds that PNs No. 23356 and
23357 are still outstanding and petitioner Citibank is
still liable to respondent for the amounts stated
therein.
The significance of this Courts declaration that PNs No.
23356 and 23357 are still outstanding becomes apparent in
the light of petitioners next contentionsthat respondent
used the proceeds of PNs No. 23356 and 23357, together with
additional money, to open TD Accounts No. 17783 and 17784
with petitioner Citibank; and, subsequently, respondent preterminated these TD accounts and transferred the proceeds
thereof, amounting to P1,100,000.00, to petitioner FNCB
Finance for money market placements. While respondents
money market placements with petitioner FNCB Finance
may be traced back with definiteness to TD Accounts No.
17783 and 17784, there is only flimsy and unsubstantiated
connection between the said TD accounts and the supposed
proceeds paid from PNs No. 23356 and 23357. With PNs No.
23356 and 23357 still unpaid, then they represent an
obligation of petitioner Citibank separate and distinct from
the obligation of petitioner FNCB Finance arising from
respondents money market placements with the latter.
424
424
17784 were pre-terminated and petitioner Citibank (then

still named First National City Bank) issued Managers
Checks (MC) No. 199253 and 199251 for the amounts of
P500,000.00 and P600,00.00, respectively. Both MCs were
payable to Citifinance (which, according to Mr. Pujeda, was
one with and the same as petitioner FNCB Finance), with
the additional notation that A/C MODESTA R.
SABENIANO. Typewritten on MC No. 199253 is the phrase
Ref. Proceeds of TD 17783, and on MC No. 199251 is a
similar phrase, Ref. Proceeds of TD 17784. These phrases
purportedly established that the MCs were paid from the
proceeds of respondents pre-terminated TD accounts with
petitioner Citibank. Upon receipt of the MCs, petitioner
FNCB Finance deposited the same to its account with Feati
Bank and Trust Co., as evidenced by the rubber stamp mark
of the latter found at the back of both MCs. In exchange,
petitioner FNCB Finance booked the amounts received as
money market placements, and accordingly issued PNs No.
4952 and 4962, for the amounts of P500,000.00 and
P600,000.00, respectively, payable to respondents savings
account with petitioner Citibank, S/A No. 25-13703-4, upon
their maturity on 1 June 1977. Once again, respondent
rolled-over several times the principal
41
42
43
_______________

Sabeniano
Money market placements with petitioner FNCB Finance

According to petitioners, respondents TD Accounts No.
17783 and 17784, in the total amount of P1,100,000.00, were
supposed to mature on 15 March 1978. However, respondent,
through a letter dated 28 April 1977, pre-terminated the
said TD accounts and transferred all the proceeds thereof to
petitioner FNCB Finance for money market placement.
Pursuant to her instructions, TD Accounts No. 17783 and
40
40
Exhibit 37, defendants folder of exhibits, p. 106.
41
Exhibit 37-C, Id., at p. 107.
42
Exhibit 37-F, Id., at p. 108.
43
TSN, 12 March 1990, p. 13.
425
VOL. 504, OCTOBER 16, 2006

425
Sabeniano
30
amounts of her money market placements with petitioner

FNCB Finance, as follows
Date
(mm/dd/
yyyy)
04/29/1977
PN
No.
4952
4962
06/02/1977 5757
5758
8167
08/31/1977
8169
Cancels
PN No.
None
None
4952
4962
5757
5752
Maturity
Date
(mm/dd/yyyy)
06/01/1977
06/01/1977
08/31/1977
08/31/1977
08/25/1978
08/25/1978
Amount
(P)
500,000.00
600,000.00
500,000.00
500,000.00
500,000.00
500,000.00
Interest
(p.a.)
17%
17%
17%
17%
14%
14%
As presented by the petitioner FNCB Finance, respondent

rolled-over only the principal amounts of her money market
placements as she chose to receive the interest income
therefrom. Petitioner FNCB Finance also pointed out that
when PN No. 4962, with principal amount of P600,000.00,
matured on 1 June 1977, respondent received a partial
payment of the principal which, together with the interest,
amounted to P102,633.33; thus, only the amount of
P500,000.00 from PN No. 4962 was rolled-over to PN No.
5758.
Based on the foregoing records, the principal amounts of
PNs No. 5757 and 5758, upon their maturity, were rolled
over to PNs No. 8167 and 8169, respectively. PN No.
8167 expressly canceled and superseded PN No. 5757, while
PN No. 8169 also explicitly canceled and superseded PN No.
5758. Thus, it is patently erroneous for the Court of Appeals
to still award to respondent the principal amounts and
interests covered by PNs No. 5757 and 5758 when these were
already canceled and superseded. It is now incumbent upon
this Court to determine what subsequently happened to PNs
No. 8167 and 8169.
44
45
46
_______________
44
Exhibit 104-C, defendants folder of exhibits, p. 111.
45
Exhibit 105, Id., at p. 112.
46
426
426

Sabeniano
Petitioner FNCB Finance presented four checks as proof of

payment of the principal amounts and interests of PNs No.
8167 and 8169 upon their maturity. All the checks were
payable to respondents savings account with petitioner
Citibank, with the following details
Date of
Check Amount
Notation
Issuance
No.
(P)
(mm/dd/yyyy)
09/01/1978
76962 12,833.34 Interest payment on
PN#08167
09/01/1978
76961 12,833.34 Interest payment on
PN#08169
09/05/1978
77035 500,000.00 Full payment of principal
on PN#08167 which is
hereby cancelled
09/05/ 1978
77034 500,000.00 Full payment of principal
on PN#08169 which is
hereby cancelled
Then again, Checks No. 77035 and 77034 were later returned
to petitioner FNCB Finance together with a memo, dated 6
September 1978, from Mr. Tan of petitioner Citibank, to a
Mr. Bobby Mendoza of petitioner FNCB Finance. According
to the memo, the two checks, in the total amount of
P1,000,000.00, were to be returned to respondents account
with instructions to book the said amount in money market
placements for one more year. Pursuant to the said memo,
Checks No. 77035 and 77034 were invested by petitioner
47
31
FNCB Finance, on behalf of respondent, in money market

placements for which it issued PNs No. 20138 and 20139.
The PNs each covered P500,000.00,
_______________
47
427
VOL. 504, OCTOBER 16, 2006

427
Sabeniano
to earn 11% interest per annum, and to mature on 3
September 1979.
On 3 September 1979, petitioner FNCB Finance issued
Check No. 100168, pay to the order of Citibank N.A. A/C
Modesta Sabeniano, in the amount of P1,022,916.66, as full
payment of the principal amounts and interests of both PNs
No. 20138 and 20139 and, resultantly, canceling the said
PNs. Respondent actually admitted the issuance and
existence of Check No. 100168, but with the qualification
that the proceeds thereof were turned over to petitioner
Citibank. Respondent did not clarify the circumstances
attending the supposed turn over, but on the basis of the
allegations of petitioner Citibank itself, the proceeds of PNs
No. 20138 and 20139, amounting to P1,022,916.66, was used
by it to liquidate respondents outstanding loans. Therefore,
the determination of whether or not respondent is still
entitled to the return of the proceeds of PNs No. 20138 and
20139 shall be dependent on the resolution of the issues
raised as to the existence of the loans and the authority of
petitioner Citibank to use the proceeds of the said PNs,
together with respondents other deposits and money market
placements, to pay for the same.
Savings and current accounts with petitioner Citibank
48
49
Respondent presented and submitted before the RTC deposit

slips and bank statements to prove deposits made to several
of her accounts with petitioner Citibank, particularly,
Accounts No. 00484202, 59091, and 472-751, which would
have amounted to a total of P3,812,712.32, had there been no
withdrawals or debits from the said accounts from the time
the said deposits were made.
Although the RTC and the Court of Appeals did not make
any definitive findings as to the status of respondents
savings
_______________
48
Exhibits 112 and 119, Id., at pp. 121-A, 124.
49
Records, Vol. III, p. 1367.
428
428

Sabeniano
and current accounts with petitioner Citibank, the Decisions

of both the trial and appellate courts effectively recognized
only the P31,079.14 coming from respondents savings
account which was used to off-set her alleged outstanding
loans with petitioner Citibank.
Since both the RTC and the Court of Appeals had
consistently recognized only the P31,079.14 of respondents
savings account with petitioner Citibank, and that
respondent failed to move for reconsideration or to appeal
this particular finding of fact by the trial and appellate
courts, it is already binding upon this Court. Respondent is
already precluded from claiming any greater amount in her
savings and current accounts with petitioner Citibank. Thus,
this Court shall limit itself to determining whether or not
respondent is entitled to the return of the amount of
50
32
P31,079.14 should the off-set thereof by petitioner Citibank

against her supposed loans be found invalid.
Dollar accounts with Citibank-Geneva
Respondent made an effort of preparing and presenting
before the RTC her own computations of her money market
placements and dollar accounts with Citibank-Geneva,
purportedly amounting to a total of United States (US)
$343,220.98, as of 23 June 1985. In her Memorandum filed
with the RTC, she claimed a much bigger amount of deposits
and money market placements with Citibank-Geneva,
totaling US$1,336,638.65. However, respondent herself also
submitted as part of her formal offer of evidence the
computation of her money market placements and dollar
accounts with Citibank-Geneva as determined by the
latter. Citibank51
52
53
_______________
50
Exhibit 34-B, petitioners folder of exhibits, p. 102.
51
Exhibit G, plaintiffs folder of exhibits, pp. 4-15.
52
Records, Vol. III, p. 1, 562.
53
Exhibit J, plaintiffs folder of exhibits, p. 49.
429
VOL. 504, OCTOBER 16, 2006

429
Sabeniano
Geneva accounted for respondents money
placements and dollar accounts as follows
US$
+
US$
US$
US$
MODESTA SABENIANO &/OR

30000.- Principal Fid. Placement
339.06 Interest at 3,875% p.a. from 12.07.
25.10.79
95.- Commission (minimum)
30244.06 Total proceeds on 25.10.1979
market
MODESTA SABENIANO &/OR

114000.- Principal Fid. Placement
1358.50 Interest at 4,125% p.a. from 12.07.
25.10.79
41.17 Commission
US$
+
US$
US$
US$ 115317.33 Total proceeds on 25.10.1979
US$ 145561.39 Total proceeds of both placements on
25.10.1979
+ 11381.31 total of both current accounts
US$
US$ 156942.70 Total funds available
- 149632.99
US$
Transfer to Citibank Manila on 26.10.1979
(counter value of Pesos 1102944.78)
US$
7309.71 Balance in current accounts
6998.84 Transfer to Citibank Zuerichac no.
US$
121359 on March 13, 1980
US$
310.87 various charges including closing charges
According to the foregoing computation, by 25 October 1979,
respondent had a total of US$156,942.70, from which,
US$149,632.99 was transferred by Citibank-Geneva to
petitioner Citibank in Manila, and was used by the latter to
offset respondents outstanding loans. The balance of
respondents accounts with Citibank-Geneva, after the
remittance to petitioner Citibank in Manila, amounted to
US$7,309.71,
430
430

Sabeniano
which was subsequently expended by a transfer to another

account with Citibank-Zuerich, in the amount of
US$6,998.84, and by payment of various bank charges,
33
including closing charges, in the amount of US$310.87.

Rightly so, both the RTC and the Court of Appeals gave more
credence to the computation of Citibank-Geneva as to the
status of respondents accounts with the said bank, rather
than the one prepared by respondent herself, which was
evidently self-serving. Once again, this Court shall limit
itself to determining whether or not respondent is entitled to
the return of the amount of US$149,632.99 should the off-set
thereof by petitioner Citibank against her alleged
outstanding loans be found invalid. Respondent cannot claim
any greater amount since she did not perfect an appeal of the
Decision of the Court of Appeals, dated 26 March 2002, which
found that she is entitled only to the return of the said
amount, as far as her accounts with Citibank-Geneva is
concerned.
III
Petitioner Citibank was able to establish by preponderance of
evidence the existence of respondents loans.
Petitioners version of events
In sum, the following amounts were used by petitioner
Citibank to liquidate respondents purported outstanding
loans
Description
Principal and interests of PNs No. 20138 and
20139
(money market placements with petitioner
FNCB Finance)
Savings account with petitioner Citibank
Dollar remittance from Citibank-Geneva
Amount
P
1,022,916.66
31,079.14
431
VOL. 504, OCTOBER 16, 2006

431
Sabeniano
(peso equivalent
Of US$149,632.99)
Total
1,102,944.78
P 2,156,940.58
According to petitioner Citibank, respondent incurred her

loans under the circumstances narrated below.
As early as 9 February 1978, respondent obtained her first
loan from petitioner Citibank in the principal amount of
P200,000.00,
for
which
she
executed
PN
No.
31504. Petitioner Citibank extended to her several other
loans in the succeeding months. Some of these loans were
paid, while others were rolled-over or renewed. Significant to
the Petition at bar are the loans which respondent obtained
from July 1978 to January 1979, appropriately covered by
PNs (first set). The aggregate principal amount of these
loans was P1,920,000.00, which could be broken down as
follows
54
55
PN
No.
32935
33751
33798
34025
34079
34192
34402
34534
34609
34740
Total
Date of
Issuance
(mm/dd/yyyy)
07/20/1978
10/13/1978
10/19/1978
11/15/1978
11/21/1978
12/04/1978
12/26/1978
01/09/1979
01/17/1979
01/30/1979
Date of
Maturity
(mm/dd/yyyy)
09/18/1978
12/12/1978
11/03/1978
01/15/1979
01/19/1979
01/18/1979
02/23/1979
03/09/1979
03/19/1979
03/30/1979
Principal
Amount
P 400,000.00
100,000.00
100,000.00
150,000.00
250,000.00
100,000.00
300,000.00
150,000.00
150,000.00
220,000.00
P1,920,000.00
Date of
Release
(mm/dd/yyy
07/20/1978
Unrecovered
10/19/1978
11/16/1978
11/21/1978
12/05/1978
12/26/1978
01/09/1979
01/17/1979
01/30/1979
_______________
54
Exhibit 120-H, defendants folder of exhibits, p. 131.
55
Exhibits 1 to 9, Id., at pp. 44-52.
432
34
432

Sabeniano
_______________
When respondent was unable to pay the first set of PNs upon
their maturity, these were rolled-over or renewed several
times, necessitating the execution by respondent of new PNs
in favor of petitioner Citibank. As of 5 April 1979, respondent
had the following outstanding PNs (second set), the
principal amount of which remained at P1,920,000.00
56
PN No. Date of Issuance Date of Maturity

Principal
(mm/dd/yyyy)
(mm/dd/yyyy)
Amount
34510
01/01/1979
03/02/1979
P 400,000.00
34509
01/02/1979
03/02/1979
100,000.00
34534
01/09/1979
03/09/1979
150,000.00
34612
01/19/1979
03/16/1979
150,000.00
34741
01/26/1979
03/12/1979
100,000.00
35689
02/23/1979
05/29/1979
300,000.00
35694
03/19/1979
05/29/1979
150,000.00
35695
03/19/1979
05/29/1979
100,000.00
356946
03/20/1979
05/29/1979
250,000.00
35697
03/30/1979
05/29/1979
220,000.00
Total
P1,920,000.00
All the PNs stated that the purpose of the loans covered
thereby is To liquidate existing obligation, except for PN
No. 34534, which stated for its purpose personal
investment. Respondent secured her foregoing loans with
petitioner Citibank by executing Deeds of Assignment of her
money market placements with petitioner FNCB Finance.
On 2 March 1978, respondent executed in favor of petitioner
Citibank a Deed of Assignment of PN No. 8169, which was
issued by petitioner FNCB Finance, to secure payment of the
credit and banking facilities extended to her by petitioner
Citibank, in the aggregate principal amount of P500,000.00.
On 9 March 1978, respondent executed in favor of petitioner
57
56
Exhibits 18 to 26, Id., at pp. 83-92.
57
Exhibit 13-E, Id., at pp. 65-67.
433
VOL. 504, OCTOBER 16, 2006

433
Sabeniano
Citibank another Deed of Assignment, this time, of PN No.
8167, also issued by petitioner FNCB Finance, to secure
payment of the credit and banking facilities extended to her
by petitioner Citibank, in the aggregate amount of
P500,000.00. When PNs No. 8167 and 8169, representing
respondents money market placements with petitioner
FNCB Finance, matured and were rolled-over to PNs No.
20138 and 20139, respondent executed new Deeds of
Assignment, in favor of petitioner Citibank, on 25 August
1978. According to the more recent Deeds, respondent
assigned PNs No. 20138 and 20139, representing her rolledover money market placements with petitioner FNCB
Finance, to petitioner Citibank as security for the banking
and credit facilities it extended to her, in the aggregate
principal amount of P500,000.00 per Deed.
In addition to the Deeds of Assignment of her money
market placements with petitioner FNCB Finance,
respondent also executed a Declaration of Pledge, in which
she supposedly pledged [a]ll present and future fiduciary
placements held in my personal and/or joint name with
Citibank, Switzerland, to secure all claims the petitioner
Citibank may have or, in the future, acquire against
respondent. The petitioners copy of the Declaration of Pledge
is undated, while that of the respondent, a copy certified by a
Citibank-Geneva officer, bore the date 24 September 1979.
58
59
60
61
35
When respondent failed to pay the second set of PNs upon

their maturity, an exchange of letters ensued between
respondent and/or her representatives, on one hand, and the
representatives of petitioners, on the other.
_______________
58
Exhibit 14-G, Id., at pp. 72-74.
59
Exhibit 15 and Exhibit 17-D, Id., at pp. 77-78, 81-82.
60
Exhibit 38, Id., at pp. 109-110.
61
Exhibit K-1, plaintiffs folder of exhibits, pp. 54-55.
434
434
Please bear with us for a little while, at most ninety days. As

you know, we have a pending loan with the Development Bank of
the Philippines in the amount of P11-M. This loan has already
been recommended for approval and would be submitted to the
Board of Governors. In fact, to further facilitate the early release of
this loan, we have presented and furnished Gov. J. Tengco a xerox
copy of your letter.
You will be doing our corporation a very viable service,

should you grant us our request for a little more time. A
week later or on 3 May 1979, a certain C. N. Pugeda,
designated as Executive Secretary, sent a letter to
petitioner
64

Sabeniano
The first letter was dated 5 April 1979, addressed to

respondent and signed by Mr. Tan, as the manager of
petitioner Citibank, which stated, in part, that
Despite our repeated requests and follow-up, we regret
you have not granted us with any response or payment. We,
therefore, have no alternative but to call your loan of
P1,920,000.00 plus interests and other charges due and
demandable. If you still fail to settle this obligation by
4/27/79, we shall have no other alternative but to refer your
account to our lawyers for legal action to protect the interest
of the bank.
Respondent sent a reply letter dated 26 April 1979,
printed on paper bearing the letterhead of respondents
company, MC Adore International Palace, the body of which
reads
62
63
This is in reply to your letter dated April 5, 1979 inviting my

attention to my loan which has become due. Pursuant to our
representation with you over the telephone through Mr. F. A. Tan,
you allow us to pay the interests due for the meantime.
Please accept our Comtrust Check in the amount of P62,683.33.
_______________
62
63
64
435
VOL. 504, OCTOBER 16, 2006

435
Sabeniano
Citibank, on behalf of respondent. The letter was again
printed on paper bearing the letterhead of MC Adore
International Palace. The pertinent paragraphs of the said
letter are reproduced below
Per instructions of Mrs. Modesta R. Sabeniano, we would like to
request for a re-computation of the interest and penalty charges on
her loan in the aggregate amount of P1,920,000.00 with maturity
date of all promissory notes at June 30, 1979. As she has
personally discussed with you yesterday, this date will more or less
assure you of early settlement.
In this regard, please entrust to bearer, our Comtrust check for
P62,683.33 to be replaced by another check with amount resulting
36
from the new computation. Also, to facilitate the processing of the

same, may we request for another set of promissory notes for the
signature of Mrs. Sabeniano and to cancel the previous ones she
has signed and forwarded to you.
This was followed by a telegram, dated 5 June 1979, and

received by petitioner Citibank the following day. The
telegram was sent by a Dewey G. Soriano, Legal Counsel.
The telegram acknowledged receipt of the telegram sent by
petitioner Citibank regarding the re-past due obligation of
McAdore International Palace. However, it reported that
respondent, the President and Chairman of MC Adore
International Palace, was presently abroad negotiating for a
big loan. Thus, he was requesting for an extension of the due
date of the obligation until respondents arrival on or before
31 July 1979.
The next letter, dated 21 June 1979, was signed by
respondent herself and addressed to Mr. Bobby Mendoza, a
Manager of petitioner FNCB Finance. Respondent wrote
therein
65
66
_______________
65
66
Exhibit 31, Id., at p. .97.
436
436
Re:

Sabeniano
PN No. 20138 for P500,000.00 & PN No.

20139
for
P500,000.00
totalling
P1
Mil
lion, both PNs will mature on 9/3/1979.
This is to authorize you to release the accrued quarterly interests
payment from my captioned placements and forward directly to
Citibank, Manila Attention: Mr. F. A. Tan, Manager, to apply to

my interest payable on my outstanding loan with Citibank.
Please note that the captioned two placements are continuously
pledged/hypothecated to Citibank, Manila to support my personal
outstanding loan. Therefore, please do not release the captioned
placements upon maturity until you have received the instruction
from Citibank, Manila.
On even date, respondent sent another letter to Mr. Tan of

petitioner Citibank, stating that
67
Re:
S/A
No.
25-225928
and C/A No. 484-946
This letter serves as an authority to debit whatever the
outstanding balance from my captioned accounts and credit the
amount to my loan outstanding account with you.
Unlike respondents earlier letters, both letters, dated 21

June 1979, are printed on plain paper, without the letterhead
of her company, MC Adore International Palace.
By 5 September 1979, respondents outstanding and past
due obligations to petitioner Citibank totaled P2,123,843.20,
representing the principal amounts plus interests. Relying on
respondents Deeds of Assignment, petitioner Citibank
applied the proceeds of respondents money market
placements with petitioner FNCB Finance, as well as her
deposit account with petitioner Citibank, to partly liquidate
respondents outstanding loan balance, as follows
68
_______________
67
Exibit 32, Id., at p. 98.
68
Exhibits 34-B and 34-C, Id., at pp. 102-103.
437
VOL. 504, OCTOBER 16, 2006

437
Sabeniano
37
Respondents outstanding obligation

(principal and interest)
Less: Proceeds from respondents
money market placements
with petitioner FNCB Finance
(principal and interest)
Deposits in respondents bank
accounts with petitioner
Citibank
Balance of respondents obligation
P
2,123,843.20
(1,022,916.66)
_______________
69
(31,079.14)
P
1,069,847.40
Mr. Tan of petitioner Citibank subsequently sent a

letter, dated 28 September 1979, notifying respondent of the
status of her loans and the foregoing compensation which
petitioner Citibank effected. In the letter, Mr. Tan informed
respondent that she still had a remaining past-due obligation
in the amount of P1,069,847.40, as of 5 September 1979, and
should respondent fail to pay the amount by 15 October 1979,
then petitioner Citibank shall proceed to off-set the unpaid
amount with respondents other collateral, particularly, a
money market placement in Citibank-Hongkong.
On 5 October 1979, respondent wrote Mr. Tan of
petitioner Citibank, on paper bearing the letterhead of MC
Adore International Palace, as regards the P1,920,000.00
loan account supposedly of MC Adore Finance & Investment,
Inc., and requested for a statement of account covering the
principal and interest of the loan as of 31 October 1979. She
stated therein that the loan obligation shall be paid within
60 days from receipt of the statement of account.
Almost three weeks later, or on 25 October 1979, a certain
Atty. Moises Tolentino dropped by the office of petitioner
Citibank, with a letter, dated 9 October 1979, and printed on
paper with the letterhead of MC Adore International Palace,
which authorized the bearer thereof to represent the
69
respondent in settling the overdue account, this time,

purportedly, of
438
438

Sabeniano
MC Adore International Palace Hotel. The letter was signed

by respondent as the President and Chairman of the Board.
Eventually, Atty. Antonio Agcaoili of Agcaoili &
Associates, as counsel of petitioner Citibank, sent a letter to
respondent, dated 31 October 1979, informing her that
petitioner Citibank had effected an off-set using her account
with Citibank-Geneva, in the amount of US$149,632.99,
against her outstanding, overdue, demandable and unpaid
obligation to petitioner Citibank. Atty. Agcaoili claimed
therein that the compensation or off-set was made pursuant
to and in accordance with the provisions of Articles 1278
through 1290 of the Civil Code. He further declared that
respondents obligation to petitioner Citibank was now fully
paid and liquidated.
Unfortunately, on 7 October 1987, a fire gutted the 7th
floor of petitioner Citibanks building at Paseo de Roxas St.,
Makati,
Metro
Manila.
Petitioners
submitted
a
Certification to this effect, dated 17 January 1991, issued by
the Chief of the Arson Investigation Section, Fire District III,
Makati Fire Station, Metropolitan Police Force. The 7th floor
of petitioner Citibanks building housed its Control Division,
which was in charge of keeping the necessary documents for
cases in which it was involved. After compiling the
documentary evidence for the present case, Atty. Renato J.
Fernandez, internal legal counsel of petitioner Citibank,
70
38
forwarded them to the Control Division. The original copies

of the MCs, which supposedly represent the proceeds of the
first set of PNs, as well as that of other documentary
evidence related to the case, were among those burned in the
said fire.
Respondents version of events
Respondent disputed petitioners narration of the
circumstances surrounding her loans with petitioner
Citibank and the alleged authority she gave for the off-set or
compensation
71
_______________
70
71
TSN, 14 May 1991, Vol. XI, pp. 12-14.
75
439
VOL. 504, OCTOBER 16, 2006

439
Sabeniano
of her money market placements and deposit accounts with
petitioners against her loan obligation.
Respondent denied outright executing the first set of PNs,
except for one (PN No. 34534 in particular). Although she
admitted that she obtained several loans from petitioner
Citibank, these only amounted to P1,150,000.00, and she had
already paid them. She secured from petitioner Citibank two
loans of P500,000.00 each. She executed in favor of petitioner
Citibank the corresponding PNs for the loans and the Deeds
of Assignment of her money market placements with
petitioner FNCB Finance as security. To prove payment of
these loans, respondent presented two provisional receipts of
petitioner CitibankNo. 19471, dated 11 August 1978, and
No. 12723, dated 10 November 1978both signed by Mr.
Tan, and acknowledging receipt from respondent of several
72
73
74
checks in the total amount of P500,744.00 and P500,000.00,

respectively, for liquidation of loan.
She borrowed another P150,000.00 from petitioner
Citibank for personal investment, and for which she executed
PN No. 34534, on 9 January 1979. Thus, she admitted to
receiving the proceeds of this loan via MC No. 228270. She
invested the loan amount in another money market
placement with petitioner FNCB Finance. In turn, she used
the very same money market placement with petitioner
FNCB Finance as security for her P150,000.00 loan from
petitioner Citibank. When she failed to pay the loan when it
became due, petitioner Citibank allegedly forfeited her
money market placement with petitioner FNCB Finance and,
thus, the loan was already paid.
Respondent likewise questioned the MCs presented by
petitioners, except for one (MC No. 228270 in particular), as
_______________
72
TSN, 28 November 1991, Vol. XIII, pp. 5, 15, 23, 28-29.
73
Exhibit QQQ, plaintiffs folder of exhibits, p. 117.
74
Exhibit AAAA, Id., at p. 124.
75
TSN, 28 November 1991, Vol. XIII, pp. 7-8, 23.
440
440

Sabeniano
proof that she received the proceeds of the loans covered by

the first set of PNs. As recounted in the preceding paragraph,
respondent admitted to obtaining a loan of P150,000.00,
covered by PN No. 34534, and receiving MC No. 228270
representing the proceeds thereof, but claimed that she
already paid the same. She denied ever receiving MCs No.
220701 (for the loan of P400,000.00, covered by PN No.
33935) and No. 226467 (for the loan of P250,000.00, covered
39
by PN No. 34079), and pointed out that the checks did not
bear her indorsements. She did not deny receiving all other
checks but she interposed that she received these checks, not
as proceeds of loans, but as payment of the principal amounts
and/or interests from her money market placements with
petitioner Citibank. She also raised doubts as to the notation
on each of the checks that reads RE: Proceeds of
PN#[corresponding PN No.], saying that such notation did
not appear on the MCs when she originally received them
and that the notation appears to have been written by a
typewriter different from that used in writing all other
information on the checks (i.e., date, payee, and
amount). She even testified that MCs were not supposed to
bear notations indicating the purpose for which they were
issued.
As to the second set of PNs, respondent acknowledged
having signed them all. However, she asserted that she only
executed these PNs as part of the simulated loans she and
Mr. Tan of petitioner Citibank concocted. Respondent
explained that she had a pending loan application for a big
amount with the Development Bank of the Philippines
(DBP), and when Mr. Tan found out about this, he suggested
that they could make it appear that the respondent had
outstanding loans with petitioner Citibank and the latter
was already demanding payment thereof; this might
persuade DBP to approve respondents loan application. Mr.
Tan made the respondent sign the second set of PNs, so that
he may have something to show the DBP investigator who
might
76
_______________
76
Id., at pp. 16-23.
441
VOL. 504, OCTOBER 16, 2006
441

Sabeniano
inquire with petitioner Citibank as to respondents loans
with the latter. On her own copies of the said PNs,
respondent wrote by hand the notation, This isa (sic)
simulated non-negotiable note, signed copy given to Mr. Tan.,
(sic) per agreement to be shown to DBP representative. itwill
(sic) be returned to me if the P11=M (sic) loan for MC Adore
Palace Hotel is approved by DBP.
Findings of this Court as to the existence of the loans
After going through the testimonial and documentary
evidence presented by both sides to this case, it is this
Courts assessment that respondent did indeed have
outstanding loans with petitioner Citibank at the time it
effected the offset or compensation on 25 July 1979 (using
respondents savings deposit with petitioner Citibank), 5
September 1979 (using the proceeds of respondents money
market placements with petitioner FNCB Finance) and 26
October 1979 (using respondents dollar accounts remitted
from Citibank-Geneva). The totality of petitioners evidence
as to the existence of the said loans preponderates over
respondents. Preponderant evidence means that, as a whole,
the evidence adduced by one side outweighs that of the
adverse party.
Respondents outstanding obligation for P1,920,000.00 had
been sufficiently documented by petitioner Citibank.
The second set of PNs is a mere renewal of the prior loans
originally covered by the first set of PNs, except for PN No.
34534. The first set of PNs is supported, in turn, by the
existence of the MCs that represent the proceeds thereof
received by the respondent.
It bears to emphasize that the proceeds of the loans were
paid to respondent in MCs, with the respondent specifically
77
78
_______________
40
77
TSN, 7 May 1986, Vol. II, pp. 42-52; TSN, 19 May 1986, Vol. II, pp. 3-28.
78
Sarmiento v. Court of Appeals, 364 Phil. 613, 621; 305 SCRA 138, 146
(1999).
_______________
442
442
petitioner Citibank, the drawee bank, which was ultimately

responsible for the payment of the amount stated in the
checks. Given that a check is more than just an instrument of

Sabeniano
named as payee. MCs checks are drawn by the banks

manager upon the bank itself and regarded to be as good as
the money it represents. Moreover, the MCs were crossed
checks, with the words Payees Account Only. In general,
a crossed check cannot be presented to the drawee bank for
payment in cash. Instead, the check can only be deposited
with the payees bank which, in turn, must present it for
payment against the drawee bank in the course of normal
banking hours. The crossed check cannot be presented for
payment, but it can only be deposited and the drawee bank
may only pay to another bank in the payees or indorsers
account. The effect of crossing a check was described by this
Court in Philippine Commercial International Bank v. Court
of Appeals
79
80
81
[T]he crossing of a check with the phrase Payees Account Only

is a warning that the check should be deposited in the account of
the payee. Thus, it is the duty of the collecting bank PCI Bank to
ascertain that the check be deposited in payees account only. It is
bound to scrutinize the check and to know its depositors before it
can make the clearing indorsement all prior indorsements and/or
lack of indorsement guaranteed.
The crossed MCs presented by petitioner Bank were indeed

deposited in several different bank accounts and cleared by
the Clearing Office of the Central Bank of the Philippines, as
evidenced by the stamp marks and notations on the said
checks. The crossed MCs are already in the possession of
79
Bank of the Philippine Islands v. Court of Appeals, 383 Phil. 538,
553; 326 SCRA 641, 656 (2000), with reference to Tan v. Court of Appeals,239
SCRA 310, 322 (1994).
80
Gempesaw v. Court of Appeals, G.R. No. 92244, 9 February 1993, 218
SCRA 682, 695.

81
403 Phil. 361, 383; 350 SCRA 446, 467 (2001).
443
VOL. 504, OCTOBER 16, 2006

443
Sabeniano
credit used in commercial transactions for it also serves as a
receipt or evidence for the drawee bank of the cancellation of
the said check due to payment, then, the possession by
petitioner Citibank of the said MCs, duly stamped Paid
gives rise to the presumption that the said MCs were already
paid out to the intended payee, who was in this case, the
respondent.
This Court finds applicable herein the presumptions that
private transactions have been fair and regular, and that
the ordinary course of business has been followed. There is
no question that the loan transaction between petitioner
Citibank and the respondent is a private transaction. The
transactions revolving around the crossed MCsfrom their
issuance by petitioner Citibank to respondent as payment of
the proceeds of her loans; to its deposit in respondents
accounts with several different banks; to the clearing of the
MCs by an independent clearing house; and finally, to the
payment of the MCs by petitioner Citibank as the drawee
bank of the said checksare all private transactions which
82
83
84
41
shall be presumed to have been fair and regular to all the

parties concerned. In addition, the banks involved in the
foregoing transactions are also presumed to have followed
the ordinary course of business in the acceptance of the
crossed MCs for deposit in respondents accounts, submitting
them for clearing, and their eventual payment and
cancellation.
The afore-stated presumptions are disputable, meaning,
they are satisfactory if uncontradicted, but may be
contradicted and overcome by other evidence. Respondent,
however, was unable to present sufficient and credible
evidence to dispute these presumptions.
85
_______________
82
Moran v. Court of Appeals, G.R. No. 105836, 7 March 1994, 230 SCRA
799, 311-312.
83
REVISED RULES OF COURT, Rule 131, Section 3(p).
84
Id., Rule 131, Section 3(q).
85
Id., Section 3.
444
444

Sabeniano
It should be recalled that out of the nine MCs presented by

petitioner Citibank, respondent admitted to receiving one as
proceeds of a loan (MC No. 228270), denied receiving two
(MCs No. 220701 and 226467), and admitted to receiving all
the rest, but not as proceeds of her loans, but as return on
the principal amounts and interests from her money market
placements.
Respondent admitted receiving MC No. 228270
representing the proceeds of her loan covered by PN No.
34534. Although the principal amount of the loan is
P150,000.00, respondent only received P146,312.50, because
the interest and handling fee on the loan transaction were

already deducted therefrom. Stamps and notations at the
back of MC No. 228270 reveal that it was deposited at the
Bank of the Philippine Islands (BPI), Cubao Branch, in
Account No. 0123-0572-28. The check also bore the
signature of respondent at the back. And, although
respondent would later admit that she did sign PN No. 34534
and received MC No. 228270 as proceeds of the loan extended
to her by petitioner Citibank, she contradicted herself when,
in an earlier testimony, she claimed that PN No. 34534 was
among the PNs she executed as simulated loans with
petitioner Citibank.
Respondent denied ever receiving MCs No. 220701 and
226467. However, considering that the said checks were
crossed for payees account only, and that they were actually
deposited, cleared, and paid, then the presumption would be
that the said checks were properly deposited to the account of
respondent, who was clearly named the payee in the checks.
Respondents bare allegations that she did not receive the
two checks fail to convince this Court, for to sustain her,
would be for this Court to conclude that an irregularity had
occurred somewhere from the time of the issuance of the said
checks, to
86
87
88
89
_______________
86
87
Exhibits 9-D and 9-G, Id., at p. 52.
88
Exhibit 9-F, Id., at p. 52.
89
TSN, 19 May 1986, Vol. II, p. 10.
445
VOL. 504, OCTOBER 16, 2006

445
Sabeniano
42
their deposit, clearance, and payment, and which would have

involved not only petitioner Citibank, but also BPI, which
accepted the checks for deposit, and the Central Bank of the
Philippines, which cleared the checks. It falls upon the
respondent to overcome or dispute the presumption that the
crossed checks were issued, accepted for deposit, cleared, and
paid for by the banks involved following the ordinary course
of their business.
The mere fact that MCs No. 220701 and 226467 do not
bear respondents signature at the back does not negate
deposit thereof in her account. The liability for the lack of
indorsement on the MCs no longer fall on petitioner
Citibank, but on the bank who received the same for deposit,
in this case, BPI Cubao Branch. Once again, it must be noted
that the MCs were crossed, for payees account only, and the
payee named in both checks was none other than respondent.
The crossing of the MCs was already a warning to BPI to
receive said checks for deposit only in respondents account.
It was up to BPI to verify whether it was receiving the
crossed MCs in accordance with the instructions on the face
thereof. If, indeed, the MCs were deposited in accounts other
than respondents, then the respondent would have a cause of
action against BPI.
BPI further stamped its guarantee on the back of the
checks to the effect that, All prior endorsement and/or Lack
of endorsement guaranteed. Thus, BPI became the indorser
of the MCs, and assumed all the warranties of an
indorser, specifically, that the checks were genuine and in
all respects what they purported to be; that it had a good title
to the checks; that all prior parties had capacity to contract;
and that the checks were, at the time of their indorsement,
valid
90
91
_______________
90
Associated Bank v. Court of Appeals, G.R. No. 89802, 7 May 1992,208
SCRA 465, 469-471.

91
Banco de Oro Savings and Mortgage Bank v Equitable Banking
Corporation, G.R. No. 74917, 20 January 1988, 157 SCRA 188, 199.
446
446

Sabeniano
and subsisting. So even if the MCs deposited by BPIs client,

whether it be by respondent herself or some other person,
lacked the necessary indorsement, BPI, as the collecting
bank, is bound by its warranties as an indorser and cannot
set up the defense of lack of indorsement as against
petitioner Citibank, the drawee bank.
Furthermore, respondents bare and unsubstantiated
denial of receipt of the MCs in question and their deposit in
her account is rendered suspect when MC No. 220701 was
actually deposited in Account No. 0123-0572-28 of BPI Cubao
Branch, the very same account in which MC No. 228270
(which respondent admitted to receiving as proceeds of her
loan from petitioner Citibank), and MCs No. 228203, 228357,
and 228400 (which respondent admitted to receiving as
proceeds from her money market placements) were
deposited. Likewise, MC No. 226467 was deposited in
Account No. 0121-002-43 of BPI Cubao Branch, to which
MCs No. 226285 and 226439 (which respondent admitted to
receiving as proceeds from her money market placements)
were deposited. It is an apparent contradiction for
respondent to claim having received the proceeds of checks
deposited in an account, and then deny receiving the
proceeds of another check deposited in the very same
account.
Another inconsistency in respondents denial of receipt of
MC No. 226467 and her deposit of the same in her account, is
92
93
43
her presentation of Exhibit HHH, a provisional receipt

which was supposed to prove that respondent turned over
P500,000.00 to Mr. Tan of petitioner Citibank, that the said
amount was split into three money market placements, and
that MC No. 226467 represented the return on her invest_______________
92
NEGOTIABLE INSTRUMENTS LAW, Section 66, in connection with
Section 65.
93
Associated Bank v. Court of Appeals, 322 Phil. 677, 697; 252 SCRA 620,
630-631 (1996); Associated Bank v. Court of Appeals, G.R. No. 89802, 7 May
1992, 208 SCRA 465, 472.
447
VOL. 504, OCTOBER 16, 2006

447
Sabeniano
ment from one of these placements. Because of her Exhibit
HHH, respondent effectively admitted receipt of MC No.
226467, although for reasons other than as proceeds of a
loan.
Neither can this Court give credence to respondents
contention that the notations on the MCs, stating that they
were the proceeds of particular PNs, were not there when she
received the checks and that the notations appeared to be
written by a typewriter different from that used to write the
other information on the checks. Once more, respondents
allegations were uncorroborated by any other evidence. Her
and her counsels observation that the notations on the MCs
appear to be written by a typewriter different from that used
to write the other information on the checks hardly convinces
this Court considering that it constitutes a mere opinion on
the appearance of the notation by a witness who does not
possess the necessary expertise on the matter. In addition,
the notations on the MCs were written using both capital and
94
small letters, while the other information on the checks were

written using capital letters only, such difference could easily
confuse an untrained eye and lead to a hasty conclusion that
they were written by different typewriters.
Respondents testimony, that based on her experience
transacting with banks, the MCs were not supposed to
include notations on the purpose for which the checks were
issued, also deserves scant consideration. While respondent
may have extensive experience dealing with banks, it still
does not qualify her as a competent witness on banking
procedures and practices. Her testimony on this matter is
even belied by the fact that the other MCs issued by
petitioner Citibank (when it was still named First National
City Bank) and by petitioner FNCB Finance, the existence
and validity of which were not disputed by respondent, also
bear similar notations that state the reason for which they
were issued.
_______________
94
Plaintiffs Formal Offer of Documentary Exhibits, Records, Vol. I, pp.
504-505; plaintiffs folder of exhibits, p. 110.

448
448

Sabeniano
Respondent presented several more pieces of evidence to

substantiate her claim that she received MCs No. 226285,
226439, 226467, 226057, 228357, and 228400, not as
proceeds of her loans from petitioner Citibank, but as the
return of the principal amounts and payment of interests
from her money market placements with petitioners. Part of
respondents exhibits were personal checks drawn by
respondent on her account with Feati Bank & Trust Co.,
which she allegedly invested in separate money market
95
44
placements with both petitioners, the returns from which

were paid to her via MCs No. 226285 and 228400. Yet, to this
Court, the personal checks only managed to establish
respondents issuance thereof, but there was nothing on the
face of the checks that would reveal the purpose for which
they were issued and that they were actually invested in
money market placements as respondent claimed.
Respondent further submitted handwritten notes that
purportedly computed and presented the returns on her
money market placements, corresponding to the amount
stated in the MCs she received from petitioner Citibank.
Exhibit HHH-1 was a handwritten note, which respondent
attributed to Mr. Tan of petitioner Citibank, showing the
breakdown of her BPI Check for P500,000.00 into three
different money market placements with petitioner Citibank.
This Court, however, noticed several factors which render the
note highly suspect. One, it was written on the reversed side
of Provisional Receipt No. 12724 of petitioner Citibank which
bore the initials of Mr. Tan acknowledging receipt of
respondents BPI Check No. 120989 for P500,000.00; but the
initials on the handwritten note appeared to be that of Mr.
Bobby Mendoza of petitioner FNCB Finance. Second,
according to
96
97
_______________
95
Exhibits GGG and JJJ, plaintiffs folder of exhibits, pp. 109, 113.
96
Plaintiffs folder of exhibits, p. 110.
97
See the initials on Exhibit III-1, plaintiffs folder of exhibits, p. 112.
449
VOL. 504, OCTOBER 16, 2006

449
Sabeniano
Provisional Receipt No. 12724, BPI Check No. 120989 for
P500,000.00 was supposed to be invested in three money
market placements with petitioner Citibank for the period of

60 days. Since all these money market placements were
made through one check deposited on the same day, 10
November 1978, it made no sense that the handwritten note
at the back of Provisional Receipt No. 12724 provided for
different dates of maturity for each of the money market
placements (i.e., 16 November 1978, 17 January 1979, and 21
November 1978), and such dates did not correspond to the 60
day placement period stated on the face of the provisional
receipt. And third, the principal amounts of the money
market placements as stated in the handwritten note
P145,000.00,
P145,000.00
and
P242,000.00totaled
P532,000.00, and was obviously in excess of the P500,000.00
acknowledged on the face of Provisional Receipt No. 12724.
Exhibits III and III-1, the front and bank pages of a
handwritten note of Mr. Bobby Mendoza of petitioner FNCB
Finance, also did not deserve much evidentiary weight, and
this Court cannot rely on the truth and accuracy of the
computations presented therein. Mr. Mendoza was not
presented as a witness during the trial before the RTC, so
that the document was not properly authenticated nor its
contents sufficiently explained. No one was able to
competently identify whether the initials as appearing on the
note were actually Mr. Mendozas.
Also, going by the information on the front page of the
note, this Court observes that payment of respondents
alleged money market placements with petitioner FNCB
Finance were made using Citytrust Checks; the MCs in
question, including MC No. 228057, were issued by petitioner
Citibank. Although Citytrust (formerly Feati Bank & Trust
Co.), petitioner FNCB Finance, and petitioner Citibank may
be affiliates of one another, they each remained separate and
distinct
98
_______________
45
98
Plaintiffs folder of exhibits, p. 112.
450
450

Sabeniano
corporations, each having its own financial system and

records. Thus, this Court cannot simply assume that one
corporation, such as petitioner Citibank or Citytrust, can
issue a check to discharge an obligation of petitioner FNCB
Finance. It should be recalled that when petitioner FNCB
Finance paid for respondents money market placements,
covered by its PNs No. 8167 and 8169, as well as PNs No.
20138 and 20139, petitioner FNCB Finance issued its own
checks.
As a last point on this matter, if respondent truly had
money market placements with petitioners, then these would
have been evidenced by PNs issued by either petitioner
Citibank or petitioner FNCB Finance, acknowledging the
principal amounts of the investments, and stating the
applicable interest rates, as well as the dates of their of
issuance and maturity. After respondent had so meticulously
reconstructed her other money market placements with
petitioners and consolidated the documentary evidence
thereon, she came surprisingly short of offering similar
details and substantiation for these particular money market
placements.
Since this Court is satisfied that respondent indeed
received the proceeds of the first set of PNs, then it proceeds
to analyze her evidence of payment thereof.
In support of respondents assertion that she had already
paid whatever loans she may have had with petitioner
Citibank, she presented as evidence Provisional Receipts No.
19471, dated 11 August 1978, and No. 12723, dated 10
November 1978, both of petitioner Citibank and signed by
Mr. Tan, for the amounts of P500,744.00 and P500,000.00,

respectively. While these provisional receipts did state that
Mr. Tan, on behalf of petitioner Citibank, received
respondents checks as payment for her loans, they failed to
specifically identify which loans were actually paid.
Petitioner Citibank was able to present evidence that
respondent had executed several PNs in the years 1978 and
1979 to cover the loans she secured from the said bank.
Petitioner Citibank did admit that respondent was able to
pay for some of these PNs, and what it
451
VOL. 504, OCTOBER 16, 2006

451
Sabeniano
identified as the first and second sets of PNs were only those
which remained unpaid. It thus became incumbent upon
respondent to prove that the checks received by Mr. Tan
were actually applied to the PNs in either the first or second
set; a fact that, unfortunately, cannot be determined from the
provisional receipts submitted by respondent since they only
generally stated that the checks received by Mr. Tan were
payment for respondents loans.
Mr. Tan, in his deposition, further explained that
provisional receipts were issued when payment to the bank
was made using checks, since the checks would still be
subject to clearing. The purpose for the provisional receipts
was merely to acknowledge the delivery of the checks to the
possession of the bank, but not yet of payment. This bank
practice finds legitimacy in the pronouncement of this Court
that a check, whether an MC or an ordinary check, is not
legal tender and, therefore, cannot constitute valid tender of
payment. In Philippine Airlines, Inc. v. Court of
Appeals, this Court elucidated that:
Since a negotiable instrument is only a substitute for
money and not money, the delivery of such an instrument
99
100
46
does not, by itself, operate as payment (Sec. 189, Act 2031 on

Negs. Insts.; Art. 1249, Civil Code; Bryan Landon Co. v.
American Bank, 7 Phil. 255; Tan Sunco, v. Santos, 9 Phil. 44;
21 R.C.L. 60, 61). A check, whether a managers check or
ordinary check, is not legal tender, and an offer of a check in
payment of a debt is not a valid tender of payment and may
be refused receipt by the obligee or creditor. Mere delivery of
checks does not discharge the obligation under a judgment.
The obligation is not extinguished and remains suspended
until the payment by commercial document is actually
realized (Art. 1249, Civil Code, par. 3).
_______________
TSN, deposition of Mr. Francisco Tan, 3 September 1990, p. 118.
99
100
G.R. No. 49188, 30 January 1990, 181 SCRA 557, 568.

Sabeniano
In the case at bar, the issuance of an official receipt by

petitioner Citibank would have been dependent on whether
the checks delivered by respondent were actually cleared and
paid for by the drawee banks.
As for PN No. 34534, respondent asserted payment
thereof at two separate instances by two different means. In
her formal offer of exhibits, respondent submitted a deposit
slip of petitioner Citibank, dated 11 August 1978, evidencing
the deposit of BPI Check No. 5785 for P150,000.00. In her
Formal Offer of Documentary Exhibits, dated 7 July 1989,
respondent stated that the purpose for the presentation of
the said deposit slip was to prove that she already paid her
loan covered by PN No. 34534. In her testimony before the
RTC three years later, on 28 November 1991, she changed
her story. This time she narrated that the loan covered by
101
102
103
104
452
452
PN No. 34534 was secured by her money market placement

with petitioner FNCB Finance, and when she failed to pay
the said PN when it became due, the security was applied to
the loan, therefore, the loan was considered paid. Given the
foregoing, respondents assertion of payment of PN No. 34534
is extremely dubious.
According to petitioner Citibank, the PNs in the second
set, except for PN No. 34534, were mere renewals of the
unpaid PNs in the first set, which was why the PNs stated
that they were for the purpose of liquidating existing
obligations. PN No. 34534, however, which was part of the
first set, was still valid and subsisting and so it was included
in the second set without need for its renewal, and it still
being the original PN for that particular loan, its stated
purpose
was
for
personal
investment. Respondent
essentially admitted executing the second set of PNs, but
they were only meant to cover simu_______________
101
Exhibit MMM, plaintiffs folder of exhibits, p. 115.
102
103
TSN, 28 November 1991, Vol. XIII, pp. 7-8.
104
TSN, deposition of Mr. Francisco Tan, 3 September 1990, p. 96.
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453
Sabeniano
lated loans. Mr. Tan supposedly convinced her that her
pending loan application with DBP would have a greater
chance of being approved if they made it appear that
respondent urgently needed the money because petitioner
Citibank was already demanding payment for her simulated
loans.
47
Respondents defense of simulated loans to escape liability

for the second set of PNs is truly a novel one. It is
regrettable, however, that she was unable to substantiate the
same. Yet again, respondents version of events is totally
based on her own uncorroborated testimony. The notations
on the second set of PNs, that they were non-negotiable
simulated notes, were admittedly made by respondent
herself and were, thus, self-serving. Equally self-serving was
respondents letter, written on 7 October 1985, or more than
six years after the execution of the second set of PNs, in
which she demanded return of the simulated or fictitious
PNs, together with the letters relating thereto, which Mr.
Tan purportedly asked her to execute. Respondent further
failed to present any proof of her alleged loan application
with the DBP, and of any circumstance or correspondence
wherein the simulated or fictitious PNs were indeed used for
their supposed purpose.
In contrast, petitioner Citibank, as supported by the
testimonies of its officers and available documentation,
consistently treated the said PNs as regular loansaccepted,
approved, and paid in the ordinary course of its business.
The PNs executed by the respondent in favor of petitioner
Citibank to cover her loans were duly-filled out and signed,
including the disclosure statement found at the back of the
said PNs, in adherence to the Central Bank requirement to
disclose the full finance charges to a loan granted to
borrowers.
Mr. Tan, then an account officer with the Marketing
Department of petitioner Citibank, testified that he dealt
directly with respondent; he facilitated the loans; and the
PNs,
454
454

Sabeniano
at least in the second set, were signed by respondent in his

presence.
Mr. Pujeda, the officer who was previously in charge of
loans and placements, confirmed that the signatures on the
PNs were verified against respondents specimen signature
with the bank.
Ms. Cristina Dondoyano, who worked at petitioner
Citibank as a loan processor, was responsible for booking
respondents loans. Booking the loans means recording it in
the General Ledger. She explained the procedure for booking
loans, as follows: The account officer, in the Marketing
Department, deals directly with the clients who wish to
borrow money from petitioner Citibank. The Marketing
Department will forward a loan booking checklist, together
with the borrowing clients PNs and other supporting
documents, to the loan pre-processor, who will check whether
the details in the loan booking checklist are the same as
those in the PNs. The documents are then sent to Signature
Control for verification of the clients signature in the PNs,
after which, they are returned to the loan pre-processor, to be
forwarded finally to the loan processor. The loan processor
shall book the loan in the General Ledger, indicating therein
the client name, loan amount, interest rate, maturity date,
and the corresponding PN number. Since she booked
respondents loans personally, Ms. Dondoyano testified that
she saw the original PNs. In 1986, Atty. Fernandez of
petitioner Citibank requested her to prepare an accounting of
respondents loans, which she did, and which was presented
as Exhibit 120 for the petitioners. The figures from the said
exhibit were culled from the bookings in the General Ledger,
a fact which respondents counsel was even willing to
stipulate.
105
106
107
_______________
105
TSN, deposition of Mr. Francisco A. Tan, 3 September 1990, pp. 13-16.
48
106
TSN, 22 May 1990, Vol. V, pp. 31-61.
107
TSN, 7 March 1991, Vol. IX, pp. 15-19; TSN, 13 March 1991, Vol. X, pp.
7-9.
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455
Sabeniano
Ms. Teresita Glorioso was an Investigation and
Reconcilement Clerk at the Control Department of petitioner
Citibank. She was presented by petitioner Citibank to
expound on the microfilming procedure at the bank, since
most of the copies of the PNs were retrieved from microfilm.
Microfilming of the documents are actually done by people at
the Operations Department. At the end of the day or during
the day, the original copies of all bank documents, not just
those pertaining to loans, are microfilmed. She refuted the
possibility that insertions could be made in the microfilm
because the microfilm is inserted in a cassette; the cassette is
placed in the microfilm machine for use; at the end of the
day, the cassette is taken out of the microfilm machine and
put in a safe vault; and the cassette is returned to the
machine only the following day for use, until the spool is full.
This is the microfilming procedure followed everyday. When
the microfilm spool is already full, the microfilm is developed,
then sent to the Control Department, which double checks
the contents of the microfilms against the entries in the
General Ledger. The Control Department also conducts a
random comparison of the contents of the microfilms with the
original documents; a random review of the contents is done
on every role of microfilm.
Ms. Renee Rubio worked for petitioner Citibank for 20
years. She rose from the ranks, initially working as a
secretary in the Personnel Group; then as a secretary to the
Personnel Group Head; a Service Assistant with the
108
Marketing Group, in 1972 to 1974, dealing directly with

corporate and individual clients who, among other things,
secured loans from petitioner Citibank; the Head of the
Collection Group of the Foreign Department in 1974 to 1976;
the Head of the Money Transfer Unit in 1976 to 1978; the
Head of the Loans and Placements Unit up to the early
1980s; and, thereafter, she established operations training
for petitioner Citibank in
_______________
108
TSN, 19 March 1991, Vol. X, pp. 17-21; TSN, 8 April 1991, Vol. X, pp.
31-34.
456
456

Sabeniano
the Asia-Pacific Region responsible for the training of the

officers of the bank. She testified on the standard loan
application process at petitioner Citibank. According to Ms.
Rubio, the account officer or marketing person submits a
proposal to grant a loan to an individual or corporation.
Petitioner Citibank has a worldwide policy that requires a
credit committee, composed of a minimum of three people,
which would approve the loan and amount thereof. There can
be no instance when only one officer has the power to
approve the loan application. When the loan is approved, the
account officer in charge will obtain the corresponding PNs
from the client. The PNs are sent to the signature verifier
who would validate the signatures therein against those
appearing in the signature cards previously submitted by the
client to the bank. The Operations Unit will check and
review the documents, including the PNs, if it is a clean loan,
and securities and deposits, if it is collateralized. The loan is
then recorded in the General Ledger. The Loans and
49
Placements Department will not book the loans without the

PNs. When the PNs are liquidated, whether they are paid or
rolled-over, they are returned to the client. Ms. Rubio
further explained that she was familiar with respondents
accounts since, while she was still the Head of the Loan and
Placements Unit, she was asked by Mr. Tan to prepare a list
of respondents outstanding obligations. She thus calculated
respondents outstanding loans, which was sent as an
attachment to Mr. Tans letter to respondent, dated 28
September 1979, and presented before the RTC as Exhibits
34-B and 34-C.
Lastly, the exchange of letters between petitioner
Citibank and respondent, as well as the letters sent by other
people working for respondent, had consistently recognized
that respondent owed petitioner Citibank money.
109
110
to a given state of facts, and six or seven witnesses of equal candor,

fairness, intelligence, and truthfulness, and equally well
corroborated by all the remaining evidence, who have no greater
interest in the result of the suit, testify against such state of facts.
Then the preponderance of evidence is determined by the number
of witnesses. (Wilcox vs. Hines, 100 Tenn. 524, 66 Am. St. Rep.,
761.)
112
109
TSN, 18 April 1991, Vol. X, pp. 3-13.
110
Id., at pp. 15-23.
Best evidence rule

This Court disagrees in the pronouncement made by the
Court of Appeals summarily dismissing the documentary
evidence submitted by petitioners based on its broad and
indiscriminate application of the best evidence rule.
In general, the best evidence rule requires that the
highest available degree of proof must be produced.
Accordingly, for documentary evidence, the contents of a
document are best proved by the production of the document
itself, to the exclusion of any secondary or substitutionary
evidence.
111
Folder of defendants exhibits, pp. 102-103.
_______________
111
_______________
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457
Sabeniano
In consideration of the foregoing discussion, this Court finds
that the preponderance of evidence supports the existence of
the respondents loans, in the principal sum of P1,920,000.00,
as of 5 September 1979. While it is well-settled that the term
preponderance of evidence should not be wholly dependent
on the number of witnesses, there are certain instances when
the number of witnesses become the determining factor
The preponderance of evidence may be determined, under certain
conditions, by the number of witnesses testifying to a particular
fact or state of facts. For instance, one or two witnesses may testify
113
114
112
Municipality of Moncada v. Cajuigan, 21 Phil. 184, 190 (1912).
113
J.A.R. Sibal and J.N. Salazar, Jr., COMPENDIUM ON EVIDENCE31
(4th ed., 1995).

114
F.D. Regalado, REMEDIAL LAW COMPENDIUM, Vol. II, p. 571 (8th
ed., 2000).
458
458

Sabeniano
The best evidence rule has been made part of the revised
Rules of Court, Rule 130, Section 3, which reads
SEC. 3. Original document must be produced; exceptions.When
the subject of inquiry is the contents of a document, no evidence
50
shall be admissible other than the original document itself, except

in the following cases:
Sabeniano
Parol evidence of the fact of execution of the documents is allowed
(Hernaez, et al. vs. McGrath, etc., et al., 91 Phil 565). x x x
115
1. (a)When the original has been lost or destroyed, or cannot

be produced in court, without bad faith on the part of the
offeror;
2. (b)When the original is in the custody or under the control
of the party against whom the evidence is offered, and the
latter fails to produce it after reasonable notice;
3. (c)When the original consists of numerous accounts or other
documents which cannot be examined in court without
great loss of time and the fact sought to be established
from them is only the general result of the whole; and
4. (d)When the original is a public record in the custody of a
public officer or is recorded in a public office.
As the afore-quoted provision states, the best evidence rule

applies only when the subject of the inquiry is the contents of
the document. The scope of the rule is more extensively
explained thus
But even with respect to documentary evidence, the best evidence
rule applies only when the content of such document is the subject
of the inquiry. Where the issue is only as to whether such
document was actually executed, or exists, or on the circumstances
relevant to or surrounding its execution, the best evidence rule
does not apply and testimonial evidence is admissible (5 Moran,
op. cit., pp. 76-66; 4 Martin, op. cit., p. 78). Any other
substitutionary evidence is likewise admissible without need for
accounting for the original.
Thus, when a document is presented to prove its existence or
condition it is offered not as documentary, but as real, evidence.
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VOL. 504, OCTOBER 16, 2006

459
In Estrada v. Desierto, this Court had occasion to rule

that
116
It is true that the Court relied not upon the original but only copy
of the Angara Diary as published in the Philippine Daily Inquirer
on February 4-6, 2001. In doing so, the Court, did not, however,
violate the best evidence rule. Wigmore, in his book on evidence,
states that:
Production of the original may be dispensed with, in the trial
courts discretion, whenever in the case in hand the opponent does
not bona fide dispute the contents of the document and no other
useful purpose will be served by requiring production.24
x x x x
In several Canadian provinces, the principle of unavailability
has been abandoned, for certain documents in which ordinarily no
real dispute arised. This measure is a sensible and progressive one
and deserves universal adoption (post, sec. 1233). Its essential
feature is that a copy may be used unconditionally, if the opponent
has been given an opportunity to inspect it. (Emphasis supplied.)
This Court did not violate the best evidence rule when it
considered and weighed in evidence the photocopies and
microfilm copies of the PNs, MCs, and letters submitted by
the petitioners to establish the existence of respondents
loans. The terms or contents of these documents were never
the point of contention in the Petition at bar. It was
respondents position that the PNs in the first set (with the
exception of PN No. 34534) never existed, while the PNs in
the second set (again, excluding PN No. 34534) were merely
executed to cover simulated loan transactions. As for the
MCs representing the proceeds of the loans, the respondent
51
either denied receipt of certain MCs or admitted receipt of

the other MCs
_______________
115
F.D. Regalado, REMEDIAL LAW COMPENDIUM, Vol. II, 571 (8th ed.,
2000).
116
G.R. Nos. 146710-15, 3 April 2001, 356 SCRA 108, 137-138.
460
460

Sabeniano
but for another purpose. Respondent further admitted the

letters she wrote personally or through her representatives to
Mr. Tan of petitioner Citibank acknowledging the loans,
except that she claimed that these letters were just meant to
keep up the ruse of the simulated loans. Thus, respondent
questioned the documents as to their existence or execution,
or when the former is admitted, as to the purpose for which
the documents were executed, matters which are,
undoubtedly, external to the documents, and which had
nothing to do with the contents thereof.
Alternatively, even if it is granted that the best evidence
rule should apply to the evidence presented by petitioners
regarding the existence of respondents loans, it should be
borne in mind that the rule admits of the following
exceptions under Rule 130, Section 5 of the revised Rules of
Court
SEC. 5. When the original document is unavailable.When the
original document has been lost or destroyed, or cannot be
produced in court, the offeror, upon proof of its execution or
existence and the cause of its unavailability without bad faith on
his part, may prove its contents by a copy, or by a recital of its
contents in some authentic document, or by the testimony of
witnesses in the order stated.
The execution or existence of the original copies of the

documents was established through the testimonies of
witnesses, such as Mr. Tan, before whom most of the
documents were personally executed by respondent. The
original PNs also went through the whole loan booking
system of petitioner Citibankfrom the account officer in its
Marketing Department, to the pre-processor, to the signature
verifier, back to the pre-processor, then to the processor for
booking. The original PNs were seen by Ms. Dondoyano, the
processor, who recorded them in the General Ledger. Mr.
Pujeda personally saw the original MCs, proving
respondents receipt of the proceeds of her loans from
petitioner Citibank, when he
117
_______________
117
TSN, 13 March 1991, Vol X, pp. 7-9.
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VOL. 504, OCTOBER 16, 2006

461
Sabeniano
helped Attys. Cleofe and Fernandez, the banks legal
counsels, to reconstruct the records of respondents loans.
The original MCs were presented to Atty. Cleofe who used
the same during the preliminary investigation of the case,
sometime in years 1986-1987. The original MCs were
subsequently turned over to the Control and Investigation
Division of petitioner Citibank.
It was only petitioner FNCB Finance who claimed that
they lost the original copies of the PNs when it moved to a
new office. Citibank did not make a similar contention;
instead, it explained that the original copies of the PNs were
returned to the borrower upon liquidation of the loan, either
through payment or roll-over. Petitioner Citibank proffered
the excuse that they were still looking for the documents in
118
52
their storage or warehouse to explain the delay and difficulty

in the retrieval thereof, but not their absence or loss. The
original documents in this case, such as the MCs and letters,
were destroyed and, thus, unavailable for presentation before
the RTC only on 7 October 1987, when a fire broke out on the
7th floor of the office building of petitioner Citibank. There is
no showing that the fire was intentionally set. The fire
destroyed relevant documents, not just of the present case,
but also of other cases, since the 7th floor housed the Control
and Investigation Division, in charge of keeping the
necessary documents for cases in which petitioner Citibank
was involved.
The foregoing would have been sufficient to allow the
presentation of photocopies or microfilm copies of the PNs,
MCs, and letters by the petitioners as secondary evidence to
establish the existence of respondents loans, as an exception
to the best evidence rule.
_______________
118
TSN, 22 May 1990, Vol. V, pp. 14-17.
462
462

Sabeniano
The impact of the Decision of the Court of Appeals in the Dy

case
In its assailed Decision, the Court of Appeals made the
following pronouncement
Besides, We find the declaration and conclusions of this Court
inCA-G.R. CV No. 15934 entitled Sps. Dr. Ricardo L. Dy and
Rosalind O. Dy vs. City Bank, N.A., et al., promulgated on 15
January 1990, as disturbing taking into consideration the
similarities of the fraud, machinations, and deceits employed by
the defendant-appellant Citibank and its Account Manager

Francisco Tan.
Worthy of note is the fact that Our declarations and conclusions
against Citibank and the person of Francisco Tan inCA-G.R. CV
No. 15934 were affirmed in toto by the Highest Magistrate in
a Minute Resolution dated 22 August 1990 entitledCitibank, N.A.,
vs. Court of Appeals, G.R. 93350.
As the factual milieu of the present appeal created reasonable
doubts as to whether the nine (9) Promissory Notes were indeed
executed with considerations, the doubts, coupled by the findings
and conclusions of this Court in CA-G.R. CV No. 15934 and the
Supreme Court in G.R. No. 93350. should be construed against
herein defendants-appellants Citibank and FNCB Finance.
What this Court truly finds disturbing is the significance

given by the Court of Appeals in its assailed Decision to the
Decision of its Third Division in CA-G.R. CV No. 15934 (or
the Dy case), when there is an absolute lack of legal basis for
doing such. Although petitioner Citibank and its officer, Mr.
Tan, were
also involved in the Dy case, that is about the only
connection between the Dy case and the one at bar. Not only
did the Dy case tackle transactions between parties other
than the par119
_______________
119
Dr. Ricardo L. Dy and Rosalind O. Dy vs. Citibank, N.A., CA-G.R. CV
No. 15934, 15 January 1990, penned by Associate Justice Nicolas P. Lapea,

Jr. with Associate Justices Santiago M. Ka-punan and Emeterio C. Cui,
concurring.
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VOL. 504, OCTOBER 16, 2006

463
Sabeniano
53
ties presently before this Court, but the transactions are

absolutely independent and unrelated to those in the instant
Petition.
In the Dy case, Severino Chua Caedo managed to obtain
loans from herein petitioner Citibank amounting to
P7,000,000.00, secured to the extent of P5,000,000.00 by a
Third Party Real Estate Mortgage of the properties of
Caedos aunt, Rosalind Dy. It turned out that Rosalind Dy
and her husband were unaware of the said loans and the
mortgage of their properties. The transactions were carried
out exclusively between Caedo and Mr. Tan of petitioner
Citibank. The RTC found Mr. Tan guilty of fraud for his
participation in the questionable transactions, essentially
because he allowed Caedo to take out the signature cards,
when these should have been signed by the Dy spouses
personally before him. Although the Dy spouses signatures
in the PNs and Third Party Real Estate Mortgage were
forged, they were approved by the signature verifier since the
signature cards against which they were compared to were
also forged. Neither the RTC nor the Court of Appeals,
however, categorically declared Mr. Tan personally
responsible for the forgeries, which, in the narration of the
facts, were more likely committed by Caedo.
In the Petition at bar, respondent dealt with Mr. Tan
directly, there was no third party involved who could have
perpetrated any fraud or forgery in her loan transactions.
Although respondent attempted to raise suspicion as to the
authenticity of her signatures on certain documents, these
were nothing more than naked allegations with no
corroborating evidence; worse, even her own allegations were
replete with inconsistencies. She could not even establish in
what manner or under what circumstances the fraud or
forgery was committed, or how Mr. Tan could have been
directly responsible for the same.
While the Court of Appeals can take judicial notice of the

Decision of its Third Division in the Dy case, it should not
have given the said case much weight when it rendered the
464
464

Sabeniano
assailed Decision, since the former does not constitute a

precedent. The Court of Appeals, in the challenged Decision,
did not apply any legal argument or principle established in
the Dy case but, rather, adopted the findings therein of
wrongdoing or misconduct on the part of herein petitioner
Citibank and Mr. Tan. Any finding of wrongdoing or
misconduct as against herein petitioners should be made
based on the factual background and pieces of evidence
submitted in this case, not those in another case.
It is apparent that the Court of Appeals took judicial
notice of the Dy case not as a legal precedent for the present
case, but rather as evidence of similar acts committed by
petitioner Citibank and Mr. Tan. A basic rule of evidence,
however, states that, Evidence that one did or did not do a
certain thing at one time is not admissible to prove that he
did or did not do the same or similar thing at another time;
but it may be received to prove a specific intent or
knowledge, identity, plan, system, scheme, habit, custom or
usage, and the like. The rationale for the rule is explained
thus
120
The rule is founded upon reason, public policy, justice and judicial
convenience. The fact that a person has committed the same or
similar acts at some prior time affords, as a general rule, no logical
guaranty that he committed the act in question. This is so because,
subjectively, a mans mind and even his modes of life may change;
and, objectively, the conditions under which he may find himself at
a given time may likewise change and thus induce him to act in a
different way. Besides, if evidence of similar acts are to be
54
1. (1)That each one of the obligors be bound principally, and

that he be at the same time a principal creditor of the
other;
2. (2)That both debts consist in a sum of money, or if the
things due are consumable, they be of the same kind, and
also of the same quality if the latter has been stated;
3. (3)That the two debts be due;
4. (4)That they be liquidated and demandable;
5. (5)That over neither of them there be any retention or
controversy,
commenced
by third
persons
and
communicated in due time to the debtor.
invariably admitted, they will give rise to a multiplicity of

as confuse the court and prolong the trial.
121
The factual backgrounds of the two cases are so different and

unrelated that the Dy case cannot be used to prove specific
_______________
120
REVISED RULES OF COURT, Rule 130, Section 34.
121
J.A.R. Sibal and J.N. Salazar, Jr., COMPENDIUM ON EVIDENCE199-
200 (4th ed., 1995).

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465
Sabeniano
intent, knowledge, identity, plan, system, scheme, habit,
custom or usage on the part of petitioner Citibank or its
officer, Mr. Tan, to defraud respondent in the present case.
IV
The liquidation of respondents outstanding loans were valid
in so far as petitioner Citibank used respondents savings
account with the bank and her money market placements with
petitioner FNCB Finance; but illegal and void in so far as
petitioner Citibank used respon-dents dollar accounts with
Citibank-Geneva.
Savings Account with petitioner Citibank
Compensation is a recognized mode of extinguishing
obligations. Relevant provisions of the Civil Code provides
Art. 1278. Compensation shall take place when two persons, in
their own right, are creditors and debtors of each other.
Art. 1279. In order that compensation may be proper, it is
necessary;
There is little controversy when it comes to the right of

petitioner Citibank to compensate respondents outstanding
466
466

Sabeniano
loans with her deposit account. As already found by this

Court, petitioner Citibank was the creditor of respondent for
her outstanding loans. At the same time, respondent was the
creditor of petitioner Citibank, as far as her deposit account
was concerned, since bank deposits, whether fixed, savings,
or current, should be considered as simple loan
or mutuum by the depositor to the banking institution. Both
debts consist in sums of money. By June 1979, all of
respondents PNs in the second set had matured and became
demandable, while respondents savings account was
demandable anytime. Neither was there any retention or
controversy over the PNs and the deposit account commenced
by a third person and communicated in due time to the
debtor concerned. Compensation takes place by operation of
law, therefore, even in the absence of an expressed
authority from respondent, petitioner Citibank had the right
to effect, on 25 June 1979, the partial compensation or off-set
122
123
55
of respondents outstanding loans with her deposit account,

amounting to P31,079.14.
Money market placements with FNCB Finance
Things though are not as simple and as straightforward as
regards to the money market placements and bank account
used by petitioner Citibank to complete the compensation or
off-set of respondents outstanding loans, which came from
persons other than petitioner Citibank.
Respondents money market placements were with
petitioner FNCB Finance, and after several roll-overs, they
were ultimately covered by PNs No. 20138 and 20139, which,
by 3 September 1979, the date the check for the proceeds of
the said PNs were issued, amounted to P1,022,916.66,
inclusive of the principal amounts and interests. As to these
money market placements, respondent was the creditor and
petitioner
_______________
122
CIVIL CODE, Article 1980; Guingona, Jr. v. City Fiscal of Manila,213
Phil. 516, 523-524; 128 SCRA 577, 584 (1984).

123
CIVIL CODE, Article 1286.
467
VOL. 504, OCTOBER 16, 2006

467
Sabeniano
FNCB Finance the debtor; while, as to the outstanding loans,
petitioner Citibank was the creditor and respondent the
debtor. Consequently, legal compensation, under Article 1278
of the Civil Code, would not apply since the first requirement
for a valid compensation, that each one of the obligors be
bound principally, and that he be at the same time a
principal creditor of the other, was not met.
What petitioner Citibank actually did was to exercise its
rights to the proceeds of respondents money market
placements with petitioner FNCB Finance by virtue of the

Deeds of Assignment executed by respondent in its favor.
The Court of Appeals did not consider these Deeds of
Assignment because of petitioners failure to produce the
original copies thereof in violation of the best evidence rule.
This Court again finds itself in disagreement in the
application of the best evidence rule by the appellate court.
To recall, the best evidence rule, in so far as documentary
evidence is concerned, requires the presentation of the
original copy of the document only when the context thereof
is the subject of inquiry in the case. Respondent does not
question the contents of the Deeds of Assignment. While she
admitted the existence and execution of the Deeds of
Assignment, dated 2 March 1978 and 9 March 1978, covering
PNs No. 8169 and 8167 issued by petitioner FNCB Finance,
she claimed, as defense, that the loans for which the said
Deeds were executed as security, were already paid. She
denied ever executing both Deeds of Assignment, dated 25
August 1978, covering PNs No. 20138 and 20139. These are
again issues collateral to the contents of the documents
involved, which could be proven by evidence other than the
original copies of the said documents.
Moreover, the Deeds of Assignment of the money market
placements with petitioner FNCB Finance were notarized
documents, thus, admissible in evidence. Rule 132, Section
30 of the Rules of Court provides that
468
468

Sabeniano
SEC. 30. Proof of notarial documents.Every instrument duly

acknowledged or proved and certified as provided by law, may be
presented in evidence without further proof, the certificate of
acknowledgement being prima facie evidence of the execution of
the instrument or document involved.
56
Significant herein is this Courts elucidation in De Jesus v.

Court of Appeals, which reads
124
On the evidentiary value of these documents, it should be recalled

that the notarization of a private document converts it into a
public one and renders it admissible in court without further proof
of its authenticity (Joson vs. Baltazar, 194 SCRA 114 [1991]). This
is so because a public document duly executed and entered in the
proper registry is presumed to be valid and genuine until the
contrary is shown by clear and convincing proof (Asido vs.
Guzman, 57 Phil. 652 [1918]; U.S. vs. Enriquez, 1 Phil.
241 [1902]; Favor vs. Court of Appeals, 194 SCRA 308 [1991]). As
such, the party challenging the recital of the document must prove
his claim with clear and convincing evidence (Diaz vs. Court of
Appeals, 145 SCRA 346 [1986]).
The rule on the evidentiary weight that must be accorded a

notarized document is clear and unambiguous. The
certificate of acknowledgement in the notarized Deeds of
Assignment constituted prima facie evidence of the execution
thereof. Thus, the burden of refuting this presumption fell on
respondent. She could have presented evidence of any defect
or irregularity in the execution of the said documents or
raised questions as to the verity of the notary publics
acknowledgment and certificate in the Deeds. But again,
respondent admitted executing the Deeds of Assignment,
dated 2 March 1978 and 9 March 1978, although claiming
that the loans for which they were executed as security were
already paid. And, she assailed the Deeds of Assignment,
dated 25 August 1978,
125
126
_______________
124
G.R. No. 57092, 21 January 1993, 217 SCRA 307, 313-314.
125
Anachuelo v. Intermediate Appellate Court, G.R. No. L-71391, 29
January 1987, 147 SCRA 434, 441-442.

126
Antillon v. Barcelon, 37 Phil. 148, 150-151 (1917).
469
VOL. 504, OCTOBER 16, 2006

469
Sabeniano
with nothing more than her bare denial of execution thereof,
hardly the clear and convincing evidence required to trounce
the presumption of due execution of a notarized document.
Petitioners not only presented the notarized Deeds of
Assignment, but even secured certified literal copies thereof
from the National Archives. Mr. Renato Medua, an
archivist, working at the Records Management and Archives
Office of the National Library, testified that the copies of the
Deeds presented before the RTC were certified literal copies
of those contained in the Notarial Registries of the notary
publics concerned, which were already in the possession of
the National Archives. He also explained that he could not
bring to the RTC the Notarial Registries containing the
original copies of the Deeds of Assignment, because the
Department of Justice (DOJ) Circular No. 97, dated 8
November 1968, prohibits the bringing of original documents
to the courts to prevent the loss of irreplaceable and priceless
documents.
Accordingly, this Court gives the Deeds of Assignment
grave importance in establishing the authority given by the
respondent to petitioner Citibank to use as security for her
loans her money her market placements with petitioner
FNCB Finance, represented by PNs No. 8167 and 8169, later
to be rolled-over as PNs No. 20138 and 20139. These Deeds of
Assignment constitute the law between the parties, and the
obligations arising therefrom shall have the force of law
between the parties and should be complied with in good
faith. Standard clauses in all of the Deeds provide that
127
128
129
The ASSIGNOR and the ASSIGNEE hereby further agree as

follows:
xxxx
57
_______________
127
See Exhibits 13-E, 14-G, 15-D,and 17-D, defendants folder of
exhibits, pp. 65-67, 72-74, 77-78, 81-82.

128
TSN, 7 March 1991, Vol. IX, pp. 3-6.
129
Cuizon v. Court of Appeals, 329 Phil. 456, 482; 260 SCRA 645, 662
(1996).
ART. 2118. If a credit has been pledged becomes due before it is

redeemed, the pledgee may collect and receive the amount due. He
shall apply the same to the payment of his claim, and deliver the
surplus, should there be any, to the pledgor.
470
470
loans. Although the pertinent documents were entitled Deeds

of Assignment, they were, in reality, more of a pledge by
respondent to petitioner Citibank of her credit due from
petitioner FNCB Finance by virtue of her money market
placements with the latter. According to Article 2118 of the
Civil Code

Sabeniano
_______________
2. In the event the OBLIGATIONS are not paid at maturity or

upon demand, as the case may be, the ASSIGNEE is fully
authorized and empowered to collect and receive the
PLACEMENT (or so much thereof as may be necessary) and apply
the same in payment of the OBLIGATIONS. Furthermore, the
ASSIGNOR agrees that at any time, and from time to time, upon
request by the ASSIGNEE, the ASSIGNOR will promptly execute
and deliver any and all such further instruments and documents
as may be necessary to effectuate this Assignment.
xxxx
5. This Assignment shall be considered as sufficient authority
to FNCB Finance to pay and deliver the PLACEMENT or so much
thereof as may be necessary to liquidate the OBLIGATIONS, to
the ASSIGNEE in accordance with terms and provisions hereof.
130
Petitioner Citibank was only acting upon the authority

granted to it under the foregoing Deeds when it finally used
the proceeds of PNs No. 20138 and 20139, paid by petitioner
FNCB Finance, to partly pay for respondents outstanding
loans. Strictly speaking, it did not effect a legal compensation
or off-set under Article 1278 of the Civil Code, but rather, it
partly extinguished respondents obligations through the
application of the security given by the respondent for her
130
Exhibits 13-E, 14-G, 15-D, and 17-D, defendants folder of
exhibits, pp. 65-66, 72-73, 77-78, 81-82.

471
VOL. 504, OCTOBER 16, 2006

471
Sabeniano
PNs No. 20138 and 20139 matured on 3 September 1979,
without them being redeemed by respondent, so that
petitioner Citibank collected from petitioner FNCB Finance
the proceeds thereof, which included the principal amounts
and interests earned by the money market placements,
amounting to P1,022,916.66, and applied the same against
respondents outstanding loans, leaving no surplus to be
delivered to respondent.
Dollar accounts with Citibank-Geneva
Despite the legal compensation of respondents savings
account and the total application of the proceeds of PNs No.
20138 and 20139 to respondents outstanding loans, there
still remained a balance of P1,069,847.40. Petitioner
Citibank then proceeded to applying respondents dollar
accounts with Citibank-Geneva against her remaining loan
58
balance, pursuant to a Declaration of Pledge supposedly

executed by respondent in its favor.
Certain principles of private international law should be
considered herein because the property pledged was in the
possession of an entity in a foreign country, namely,
Citibank-Geneva. In the absence of any allegation and
evidence presented by petitioners of the specific rules and
laws governing the constitution of a pledge in Geneva,
Switzerland, they will be presumed to be the same as
Philippine local or domestic laws; this is known as processual
presumption.
Upon closer scrutiny of the Declaration of Pledge, this
Court finds the same exceedingly suspicious and irregular.
First of all, it escapes this Court why petitioner Citibank
took care to have the Deeds of Assignment of the PNs
notarized, yet left the Declaration of Pledge unnotarized.
This Court would think that petitioner Citibank would take
greater cautionary measures with the preparation and execu131
_______________
131
Wildvalley Shipping Co., Ltd. v. Court of Appeals, 396 Phil. 383,
396; 342 SCRA 213, 223 (2000).

472
472

Sabeniano
tion of the Declaration of Pledge because it involved

respondents all present and future fiduciary placements
with a Citibank branch in another country, specifically, in
Geneva, Switzerland. While there is no express legal
requirement that the Declaration of Pledge had to be
notarized to be effective, even so, it could not enjoy the
same prima facie presumption of due execution that is
extended to notarized documents, and petitioner Citibank
must discharge the burden of proving due execution and

authenticity of the Declaration of Pledge.
Second, petitioner Citibank was unable to establish the
date when the Declaration of Pledge was actually executed.
The photocopy of the Declaration of Pledge submitted by
petitioner Citibank before the RTC was undated. It
presented only a photocopy of the pledge because it already
forwarded the original copy thereof to Citibank-Geneva when
it requested for the remittance of respondents dollar
accounts pursuant thereto. Respondent, on the other hand,
was able to secure a copy of the Declaration of Pledge,
certified by an officer of Citibank-Geneva, which bore the
date 24 September 1979. Respondent, however, presented
her passport and plane tickets to prove that she was out of
the country on the said date and could not have signed the
pledge. Petitioner Citibank insisted that the pledge was
signed before 24 September 1979, but could not provide an
explanation as to how and why the said date was written on
the pledge. Although Mr. Tan testified that the Declaration
of Pledge was signed by respondent personally before him, he
could not give the exact date when the said signing took
place. It is important to note that the copy of the Declaration
of Pledge submitted by the respondent to the RTC was
certified by an officer of Citibank-Geneva, which had
possession of the original copy of the pledge. It is dated 24
September 1979, and this Court shall abide by the
presumption that the written document is truly
132
133
_______________
132
Exhibit 38, defendants folder of exhibits, pp. 109-110.
133
Exhibit K-1, plaintiffs folder of exhibits, 54-55.
473
VOL. 504, OCTOBER 16, 2006

473
59
Sabeniano
dated. Since it is undeniable that respondent was out of the
country on 24 September 1979, then she could not have
executed the pledge on the said date.
Third, the Declaration of Pledge was irregularly filled-out.
The pledge was in a standard printed form. It was
constituted in favor of Citibank, N.A., otherwise referred to
therein as the Bank. It should be noted, however, that in the
space which should have named the pledgor, the name of
petitioner Citibank was typewritten, to wit
134
The pledge right herewith constituted shall secure all claims

which the Bank now has or in the future acquires againstCitibank,
N.A., Manila (full name and address of the Debtor), regardless of
the legal cause or the transaction (for example current account,
securities
transactions,
collections,
credits,
payments,
documentary credits and collections) which gives rise thereto, and
including principal, all contractual and penalty interest,
commissions, charges, and costs.
The pledge, therefore, made no sense, the pledgor and

pledgee being the same entity. Was a mistake made by
whoever filled-out the form? Yes, it could be a possibility.
Nonetheless, considering the value of such a document, the
mistake as to a significant detail in the pledge could only be
committed with gross carelessness on the part of petitioner
Citibank, and raised serious doubts as to the authenticity
and due execution of the same. The Declaration of Pledge had
passed through the hands of several bank officers in the
country and abroad, yet, surprisingly and implausibly, no one
noticed such a glaring mistake.
Lastly, respondent denied that it was her signature on the
Declaration of Pledge. She claimed that the signature was a
forgery. When a document is assailed on the basis of forgery,
the best evidence rule applies
Basic is the rule of evidence that when the subject of inquiry is

the contents of a document, no evidence is admissible other than
_______________
134
REVISED RULES OF COURT, Rule 131, Section 3(u).
474
474

Sabeniano
the original document itself except in the instances mentioned in

Section 3, Rule 130 of the Revised Rules of Court. Mere
photocopies of documents are inadmissible pursuant to the best
evidence rule. This is especially true when the issue is that of
forgery.
As a rule, forgery cannot be presumed and must be proved by
clear, positive and convincing evidence and the burden of proof lies
on the party alleging forgery. The best evidence of a forged
signature in an instrument is the instrument itself reflecting the
alleged forged signature. The fact of forgery can only be
established by a comparison between the alleged forged signature
and the authentic and genuine signature of the person whose
signature is theorized upon to have been forged. Without the
original document containing the alleged forged signature, one
cannot make a definitive comparison which would establish
forgery. A comparison based on a mere xerox copy or reproduction
of the document under controversy cannot produce reliable
results.
135
Respondent made several attempts to have the original copy

of the pledge produced before the RTC so as to have it
examined by experts. Yet, despite several Orders by the
RTC, petitioner Citibank failed to comply with the
production of the original Declaration of Pledge. It is
admitted that Citibank-Geneva had possession of the original
136
60
copy of the pledge. While petitioner Citibank in Manila and

its branch in Geneva may be separate and distinct entities,
they are still incontestably related, and between petitioner
Citibank and respondent, the former had more influence and
resources to convince Citibank-Geneva to return, albeit
temporarily, the original Declaration of Pledge. Petitioner
Citibank did not present any evidence to convince this Court
that it had ex_______________
135
Heirs of Severa P. Gregorio v. Court of Appeals, 360 Phil. 753, 763;300
SCRA 565, 574 (1998).

136
Order, dated 12 November 1985, penned by Judge Ansberto P. Paredes,
Records, Vol. I, p. 310; Order, dated 2 September 1988, Id. and penned by
Judge Francisco X. Velez, Records, Vol. I, p. 449; Order, dated 24 November
1988, penned by Judge Francisco X. Velez, Records, Vol. I, p. 458; Order,
dated 25 April 1989, penned by Judge Francisco X. Velez, Records, Vol. I, pp.
476-477.
475
VOL. 504, OCTOBER 16, 2006

475
Sabeniano
erted diligent efforts to secure the original copy of the pledge,
nor did it proffer the reason why Citibank-Geneva
obstinately refused to give it back, when such document
would have been very vital to the case of petitioner Citibank.
There is thus no justification to allow the presentation of a
mere photocopy of the Declaration of Pledge in lieu of the
original, and the photocopy of the pledge presented by
petitioner Citibank has nil probative value. In addition,
even if this Court cannot make a categorical finding that
respondents signature on the original copy of the pledge was
forged, it is persuaded that petitioner Citibank willfully
suppressed the presentation of the original document, and
137
takes into consideration the presumption that the evidence

willfully suppressed would be adverse to petitioner Citibank
if produced.
Without the Declaration of Pledge, petitioner Citibank had
no authority to demand the remittance of respondents dollar
accounts with Citibank-Geneva and to apply them to her
outstanding loans. It cannot effect legal compensation under
Article 1278 of the Civil Code since, petitioner Citibank itself
admitted that Citibank-Geneva is a distinct and separate
entity. As for the dollar accounts, respondent was the
creditor and Citibank-Geneva is the debtor; and as for the
outstanding loans, petitioner Citibank was the creditor and
respondent was the debtor. The parties in these transactions
were evidently not the principal creditor of each other.
Therefore, this Court declares that the remittance of
respondents dollar accounts from Citibank-Geneva and the
application thereof to her outstanding loans with petitioner
Citibank was illegal, and null and void. Resultantly,
petitioner Citibank is obligated to return to respondent the
amount of US$149,632,99 from her Citibank-Geneva
accounts, or its present equivalent value in Philippine
currency; and, at the same time, respondent continues to be
obligated to
138
_______________
137
Security Bank & Trust Co. v. Triumph Lumber and Construction
Corporation, 361 Phil. 463, 477; 301 SCRA 537, 550 (1999).
138
REVISED RULES OF COURT, Rule 131, Section 3(e).
476
476

Sabeniano
petitioner Citibank for the balance of her outstanding loans

which, as of 5 September 1979, amounted to P1,069,847.40.
61
V
The parties shall be liable for interests on their monetary
obligations to each other, as determined herein.
In summary, petitioner Citibank is ordered by this Court to
pay respondent the proceeds of her money market
placements, represented by PNs No. 23356 and 23357,
amounting to P318,897.34 and P203,150.00, respectively,
earning an interest of 14.5% per annum as stipulated in the
PNs, beginning 17 March 1977, the date of the placements.
Petitioner Citibank is also ordered to refund to respondent
the amount of US$149,632.99, or its equivalent in Philippine
currency, which had been remitted from her CitibankGeneva accounts. These dollar accounts, consisting of two
fiduciary placements and current accounts with CitibankGeneva shall continue earning their respective stipulated
interests from 26 October 1979, the date of their remittance
by Citibank-Geneva to petitioner Citibank in Manila and
applied against respondents outstanding loans.
139
_______________
139
The stipulated interest shall apply as indemnity for the damages
incurred in the delay of payment as provided in Article 2209 of the CIVIL

CODE which reads
ART. 2209. If the obligation consists in the payment of a sum of money, and the debtor
incurs delay, the indemnity for damages, there being no stipulation to the contrary,
shall be the payment of the interest agreed upon, and in the absence of a stipulation,
the legal interest, which is six percent per annum. [Emphasis supplied.]
Note, however, that the legal interest has been increased from six percent
to twelve percent per annum by virtue of Central Bank Circulars No. 416,
dated 29 July 1974, and No. 905, dated 10 December 1982.
477
VOL. 504, OCTOBER 16, 2006

477
Sabeniano
As for respondent, she is ordered to pay petitioner Citibank

the balance of her outstanding loans, which amounted to
P1,069,847.40 as of 5 September 1979. These loans continue
to earn interest, as stipulated in the corresponding PNs, from
the time of their respective maturity dates, since the
supposed payment thereof using respondents dollar accounts
from Citibank-Geneva is deemed illegal, null and void, and,
thus, ineffective.
VI
Petitioner Citibank shall be liable for damages to respondent.
Petitioners protest the award by the Court of Appeals of
moral damages, exemplary damages, and attorneys fees in
favor of respondent. They argued that the RTC did not award
any damages, and respondent, in her appeal before the Court
of Appeals, did not raise in issue the absence of such.
While it is true that the general rule is that only errors
which have been stated in the assignment of errors and
properly argued in the brief shall be considered, this Court
has also recognized exceptions to the general rule, wherein it
authorized the review of matters, even those not assigned as
errors in the appeal, if the consideration thereof is necessary
in arriving at a just decision of the case, and there is a close
inter-relation between the omitted assignment of error and
those
actually
assigned
and
discussed
by
the
appellant. Thus, the Court of Appeals did not err in
awarding the damages when it already made findings that
would justify and support the said award.
140
_______________
140
Radio Communications of the Philippines, Inc. v. National Labor
Relations Commission, G.R. Nos. 101181-84, 22 June 1992, 210 SCRA 222,
226-227; Ortigas, Jr. v. Lufthansa German Airlines, G.R. No. L-28773, 30
June 1975, 64 SCRA 610, 633-634; Hernandez v. Andal, 78 Phil. 196, 209-210
(1947).
62
478
478
142

Sabeniano
Although this Court appreciates the right of petitioner

Citibank to effect legal compensation of respondents local
deposits, as well as its right to the proceeds of PNs No. 20138
and 20139 by virtue of the notarized Deeds of Assignment, to
partly extinguish respondents outstanding loans, it finds
that petitioner Citibank did commit wrong when it failed to
pay and properly account for the proceeds of respondents
money market placements, evidenced by PNs No. 23356 and
23357, and when it sought the remittance of respondents
dollar accounts from Citibank-Geneva by virtue of a highlysuspect Declaration of Pledge to be applied to the remaining
balance of respondents outstanding loans. It bears to
emphasize that banking is impressed with public interest
and its fiduciary character requires high standards of
integrity and performance. A bank is under the obligation to
treat the accounts of its depositors with meticulous care
whether such accounts consist only of a few hundred pesos or
of millions of pesos. The bank must record every single
transaction accurately, down to the last centavo, and as
promptly as possible. Petitioner Citibank evidently failed to
exercise the required degree of care and transparency in its
transactions with respondent, thus, resulting in the wrongful
deprivation of her property.
Respondent had been deprived of substantial amounts of
her investments and deposits for more than two decades.
During this span of years, respondent had found herself in
desperate need of the amounts wrongfully withheld from her.
In her testimony before the RTC, respondent narrated
143
Intermediate Appellate Court, G.R. No. 69162, 21 February 1992, 206 SCRA
408, 412-413.
144
143
141
THE GENERAL BANKING LAW OF 2000, Section 2.
TSN, 28 January 1986, Vol. I, pp. 5-7.
479
142
_______________
Simex International (Manila), Inc, vs. Court of Appeals, G.R. No. 88013,
19 March 1990, 183 SCRA 360, 367; Bank of Philippine Islands vs.
141
144
Philippine National Bank v. Court of Appeals, 373 Phil. 942, 948;315
SCRA 309, 314 (1999).
Q
A
Q
VOL. 504, OCTOBER 16, 2006

479
Sabeniano
By the way Mrs. Witness will you kindly tell us again,
you said before that you are a businesswoman, will
you tell us again what are the businesses you are
engaged into [sic]?
I am engaged in real estate. I am the owner of the
Modesta Village 1 and 2 in San Mateo, Rizal. I am
also the President and Chairman of the Board of
Macador [sic] Co. and Business Inc. which operates
the Macador [sic] International Palace Hotel. I am
also the President of the Macador [sic] International
Palace Hotel, and also the Treasures Home Industries,
Inc. which I am the Chairm an and president of the
Board and also operating affiliated company in the
name of Treasures Motor Sales engaged in car dealers
[sic] like Delta Motors, we are the dealers of the
whole Northern Luzon and I am the president of the
Disto Company, Ltd., based in Hongkong licensed in
Honkong [sic] and now operating in Los Angeles,
California.
What is the business of that Disto Company Ltd.?
Disto Company, Ltd., is engaged in real estate and
construction.
Aside from those businesses are you a member of any
63
national or community organization for social and

civil activities?
Yes sir.
What are those?
I am the Vice-President of thes [sic] Subdivision
Association of the Philippines in 1976, I am also an
officer of the . . . Chamber of Real Estate Business
Association; I am also an officer of the Chatholic [sic]
Womens League and I am also a member of the
CMLI, I forgot the definition.
How about any political affiliation or government
position held if any?
I was also a candidate for Mayor last January 30,
1980.
Where?
In Dagupan City, Pangasinan.
What else?
A
Q
A
Q
A
Q
A
Q
480
480
A
Q
A
A
A
Q

Sabeniano
I also ran as an Assemblywoman last May, 1984,
Independent party in Regional I, Pangasinan.
What happened to your businesses you mentioned as a
result of your failure to recover you [sic] investments and
bank deposits from the defendants?
They are not all operating, in short, I was hampered to
push through the businesses that I have.
[sic] Of all the businesses and enterprises that you
mentioned what are those that are paralyzed and what
remain inactive?
Of all the company [sic] that I have, only the Disto
Company that is now operating in California.
How about your candidacy as Mayor of Dagupan, [sic]
City, and later as Assemblywoman of Region I, what
happened to this?
I won by voting but when election comes on [sic] the
counting I lost and I protested this, it is still pending and
because I dont have financial resources I was not able to
push through the case. I just have it pending in the
Comelec.
Now, do these things also affect your social and civic
activities?
Yes sir, definitely.
How?
I was embarrassed because being a businesswoman I
would like to inform the Honorable Court that I was
awarded as the most outstanding businesswoman of the
year in 1976 but when this money was not given back to
me I was not able to comply with the commitments that I
have promised to these associations that I am engaged
into [sic], sir.
Q
A
Q
A
For the mental anguish, serious anxiety, besmirched

reputation, moral shock and social humiliation suffered by
the respondent, the award of moral damages is but proper.
However, this Court reduces the amount thereof to
P300,000.00, for the award of moral damages is meant to
compensate for
481
VOL. 504, OCTOBER 16, 2006

481
Sabeniano
the actual injury suffered by the respondent, not to enrich
her.
Having failed to exercise more care and prudence than a
private individual in its dealings with respondent, petitioner
Citibank should be liable for exemplary damages, in the
amount of P250,000.00, in accordance with Article 2229 and
2234 of the Civil Code.
145
146
147
64
With the award of exemplary damages, then respondent

shall also be entitled to an award of attorneys
fees. Additionally, attorney's fees may be awarded when a
party is compelled to litigate or to incur expenses to protect
his interest by reason of an unjustified act of the other
party. In this case, an award of P200,000.00 attorneys fees
shall be satisfactory.
In contrast, this Court finds no sufficient basis to award
damages to petitioners. Respondent was compelled to
institute the present case in the exercise of her rights and in
the protection of her interests. In fact, although her
Complaint before the RTC was not sustained in its entirety,
it did raise meritorious points and on which this Court rules
in her favor. Any injury resulting from the exercise of ones
rights is damnum absque injuria.
148
149
150
_______________
145
Tiongco v. Atty. Deguma, 375 Phil. 978, 994-995; 317 SCRA 527, 541
(1999); Zenith Insurance Corporation v. Court of Appeals, G.R. No. 85296, 14

May 1990, 185 SCRA 398, 402-403.
146
Exemplary or corrective damages are imposed, by way of example or
correction for the public good, in addition to the moral, temperate, liquidated
or compensatory damages.
147
While the amount of exemplary damages need not be proved, the
plaintiff must show that he is entitled to moral, temperate or compensatory

damages before the court may consider the question of whether or not
exemplary damages should be awarded. x x x
148
CIVIL CODE, Article 2208(1).
149
Ching Sen Ben vs. Court of Appeals, 373 Phil. 544, 555; 314 SCRA 762,
772-773 (1999).
150
ABS-CBN Broadcasting Corporation v. Court of Appeals, 361 Phil. 498,
531-532; 301 SCRA 572, 604 (1999); Tierra International Construction Corp.
v. National Labor Relations Commission, G.R.
482
482

Sabeniano
IN VIEW OF THE FOREGOING, the instant Petition is

PARTLY GRANTED. The assailed Decision of the Court of
Appeals in CA-G.R. No. 51930, dated 26 March 2002, as
already modified by its Resolution, dated 20 November 2002,
is hereby AFFIRMED WITH MODIFICATION, as follows
1. 1.PNs No. 23356 and 23357 are DECLARED
subsisting and outstanding. Petitioner Citibank is
ORDERED to return to respondent the principal
amounts of the said PNs, amounting to Three
Hundred Eighteen Thousand Eight Hundred NinetySeven Pesos and Thirty-Four Centavos (P318,897.34)
and Two Hundred Three Thousand One Hundred
Fifty Pesos (P203,150.00), respectively, plus the
stipulated interest of Fourteen and a half percent
(14.5%) per annum, beginning 17 March 1977;
2. 2.The remittance of One Hundred Forty-Nine
Thousand Six Hundred Thirty Two US Dollars and
Ninety-Nine
Cents
(US$149,632.99)
from
respondents Citibank-Geneva accounts to petitioner
Citibank in Manila, and the application of the same
against respondents outstanding loans with the
latter, is DECLARED illegal, null and void. Petitioner
Citibank is ORDERED to refund to respondent the
said amount, or its equivalent in Philippine currency
using the exchange rate at the time of payment, plus
the stipulated interest for each of the fiduciary
placements and current accounts involved, beginning
26 October 1979;
3. 3.Petitioner Citibank is ORDERED to pay respondent
moral damages in the amount of Three Hundred
Thousand Pesos (P300,000.00); exemplary damages
65
in the amount of Two Hundred Fifty Thousand Pesos

(P250,000.00); and attorneys fees in the amount of
Two Hundred Thousand Pesos (P200,000.00); and
4. 4.Respondent is ORDERED to pay petitioner Citibank
the balance of her outstanding loans, which, from the
respec
_______________
No. 88912, 3 July 1992, 211 SCRA 73, 81; Saba v. Court of Appeals,G.R.
No. 77950, 24 August 1990, 189 SCRA 50, 55.
Commercial International Bank vs. Court of Appeals, 350

SCRA 446 [2001])
A treasurer of a corporation whose negligence in signing a
confirmation letter for rediscounting of crossed checks,
knowing fully well that the checks were strictly endorsed for
deposit only to the payees account and not to be further
negotiated, resulted in damage to the corporation may be
personally liable therefor. (Atrium Management Corporation
vs. Court of Appeals, 353 SCRA 23 [2001])
o0o
483
VOL. 504, OCTOBER 16, 2006

483
Sabeniano
1. tive dates of their maturity to 5 September 1979, was
computed to be in the sum of One Million Sixty-Nine
Thousand Eight Hundred Forty-Seven Pesos and
Forty Centavos (P1,069,847.40), inclusive of interest.
These outstanding loans shall continue to earn
interest, at the rates stipulated in the corresponding
PNs, from 5 September 1979 until payment thereof.
SO ORDERED.
Panganiban (C.J.,
Chairperson), YnaresSantiago,Austria-Martinez and Callejo, Sr., JJ., concur.
Petition partly granted, assailed decision and resolution
affirmed with modification.
Notes.It is the collecting bank which is bound to
scrutinize the check and to know its depositors before it could
make the clearing indorsement all prior indorsements
and/or lack of indorsement guaranteed. (Philippine
G.R. No. 142641. July 17, 2006.

PACIFICO B. ARCEO, JR., petitioner, vs.PEOPLE OF THE
PHILIPPINES, respondent.
*
Criminal Law; Batas Pambansa Blg. 22 (B.P. 22); A person

who, having sufficient funds in or credit with the drawee bank
66
when he makes or draws and issues a check, shall fail to keep

sufficient funds or to maintain a period of ninety (90) days from the
date appearing thereon, for which reason it is dishonored by the
drawee bank, shall be liable for violating the law on bouncing
checks.Section 1 of BP 22 provides: SECTION 1.Checks without
sufficient funds.Any person who makes or draws and issues any
check to apply on account or for value, knowing at the time of issue
that he does not have sufficient funds in or credit with the drawee
bank for the payment of such check in full upon its presentment,
which check is subsequently dishonored by the drawee bank for
insufficiency of funds or credit or would have been dishonored for
the same reason had not the drawer, without any valid reason,
ordered the bank to stop payment, shall be punished by
imprisonment of not
_______________
*
SECOND DIVISION.
205
VOL. 495, JULY 17, 2006
2
05
Arceo, Jr. vs. People

less than thirty days but not more than one (1) year or by a
fine of not less than but not more than double the amount of the
check which fine shall in no case exceed Two Hundred Thousand
Pesos, or both such fine and imprisonment at the discretion of the
court. The same penalty shall be imposed upon any person who,
having sufficient funds in or credit with the drawee bank when he
makes or draws and issues a check, shall fail to keep sufficient
funds or to maintain a credit to cover the full amount of the check
if presented within a period of ninety (90) days from the date
appearing thereon, for which reason it is dishonored by the drawee
bank. Where the check is drawn by a corporation, company or
entity, the person or persons who actually signed the check in

behalf of such drawer shall be liable under this Act.
Same; Same; The 90-day period provided in the law is not an
element of the offense, neither does it discharge petitioner from his
duty to maintain sufficient funds in the account within a
reasonable time from the date indicated in the check.In Wong v.
Court of Appeals, 351 SCRA 100 (2001), the Court ruled that the
90-day period provided in the law is not an element of the offense.
Neither does it discharge petitioner from his duty to maintain
sufficient funds in the account within a reasonable time from the
date indicated in the check. According to current banking practice,
the reasonable period within which to present a check to the
drawee bank is six months. Thereafter, the check becomes stale
and the drawer is discharged from liability thereon to the extent of
the loss caused by the delay.
Same; Same; The presentment of the check to the drawee bank
120 days after its issue was still within the allowable period.
Cenizals presentment of the check to the drawee bank 120 days
(four months) after its issue was still within the allowable period.
Petitioner was freed neither from the obligation to keep sufficient
funds in his account nor from liability resulting from the dishonor
of the check.
Evidence; Best Evidence Rule; The best evidence rule applies
only where the content of the document is the subject of inquiry, and
not where the issue is the execution or existence of the document or
the circumstances surrounding its execution.Petitioners
insistence on the presentation of the check in evidence as a
condition sine qua non for conviction under BP 22 is wrong.
Petitioner anchors his argument on Rule 130, Section 3, of the
Rules of Court, otherwise known as the best evidence rule.
However, the rule applies only where the content of the document
is the subject of the inquiry. Where the issue is the execution or
existence of the document or the circumstances
67
206
2
06
SUPREME COURT REPORTS

ANNOTATED
surrounding its execution, the best evidence rule does not

apply and testimonial evidence is admissible.
Same; Same; The gravamen of the offense is the act of drawing
and issuing a worthless check, and not the fact of issuance or
execution of the check.The gravamen of the offense is the act of
drawing and issuing a worthless check. Hence, the subject of the
inquiry is the fact of issuance or execution of the check, not its
content.
Criminal Law; Batas Pambansa Blg. 22;The elements of the
offense are: (1) the making, drawing and issuance of any check to
apply to account or for value; (2) knowledge of the maker, drawer,
or issuer that at the time of issue he does not have sufficient funds
in or credit with the drawee bank for the payment of the check in
full upon its presentment; and (3) subsequent dishonor of the check
by the drawee bank for insufficiency of funds or credit, or dishonor
of the check for the same reason had not the drawer, without any
valid cause, ordered the bank to stop payment.Based on the
allegations in the information, petitioner was charged for violating
the first paragraph of BP 22. The elements of the offense are: 1.
the making, drawing and issuance of any check to apply to account
or for value; 2. knowledge of the maker, drawer, or issuer that at
the time of issue he does not have sufficient funds in or credit with
the drawee bank for the payment of the check in full upon its
presentment; and 3. subsequent dishonor of the check by the
drawee bank for insufficiency of funds or credit, or dishonor of the
check for the same reason had not the drawer, without any valid
cause, ordered the bank to stop payment.

Edilberto B. Cosca for petitioner.
The Solicitor General for the People.
207
VOL. 495, JULY 17, 2006

207
CORONA, J.:
This petition for review on certiorari assails the April 28,
1999 decision and March 27, 2000 resolution of the Court of
Appeals in CA-G.R. CR No. 19601 affirming the trial courts
judgment finding petitioner Pacifico B. Arceo, Jr. liable for
violation of Batas Pambansa Blg. (BP) 22, otherwise known
as the Bouncing Checks Law.
The facts of the case as found by the trial court and
adopted by the Court of Appeals follow.
1
On March 14, 1991, [petitioner], obtained a loan from private

complainant Josefino Cenizal [ ] in the amount of P100,000.00.
Several weeks thereafter, [petitioner] obtained an additional loan
of P50,000.00 from [Cenizal]. [Petitioner] then issued in favor of
Cenizal, Bank of the Philippine Islands [(BPI)] Check No. 163255,
postdated August 4, 1991, for P150,000.00, at Cenizals house
located at 70 Panay Avenue, Quezon City. When August 4, 1991
came, [Cenizal] did not deposit the check immediately because
[petitioner] promised [ ] that he would replace the check with cash.
Such promise was made verbally seven (7) times. When his
patience ran out, [Cenizal] brought the check to the bank for
encashment. The head office of the Bank of the Philippine Islands
through a letter dated December 5, 1991, informed [Cenizal] that
the check bounced because of insufficient funds.
Thereafter, [Cenizal] went to the house of [petitioner] to inform
him of the dishonor of the check but [Cenizal] found out that
68
[petitioner] had left the place. So, [Cenizal] referred the matter to
a lawyer who wrote a letter giving [petitioner] three days from
receipt thereof to pay the amount of the check. [Petitioner] still
failed to make good the amount of the check. As a consequence,
[Cenizal] executed on January 20, 1992 before the office of the City
Prosecutor of Quezon City his affidavit and submitted documents
in support of his complaint for [e]stafa and [v]iolation of [BP 22]
against [petitioner].
_______________
1
Penned by Associate Justice Jainal D. Rasul (retired) and concurred in
by Associate Justices Conchita Carpio-Morales (now a member of the

Supreme Court) and Bernardo P. Abesamis (retired) of the Third Division of
the Court of Appeals; Rollo, pp. 17-24.
2
Penned by Associate Justice Bernardo P. Abesamis (retired) and
concurred in by Associate Justices Conchita Carpio-Morales (now a member

of the Supreme Court) and Marina L. Buzon of the Former Third Division of
the Court of Appeals;Rollo, p. 26.
208
208

ANNOTATED
After due investigation, this case for [v]iolation of [BP 22] was filed
against [petitioner] on March 27, 1992. The check in question and
the return slip were however lost by [Cenizal] as a result of a fire
that occurred near his residence on September 16, 1992. [Cenizal]
executed an Affidavit of Loss regarding the loss of the check in
question and the return slip.
3
After trial, petitioner was found guilty as charged. Aggrieved,

he appealed to the Court of Appeals. However, on April 28,
1999, the appellate court affirmed the trial courts decision in
toto. Petitioner sought reconsideration but it was denied.
Hence, this petition.
Petitioner claims that the trial and appellate courts erred

in convicting him despite the failure of the prosecution to
present the dishonored check during the trial. He also
contends that he should not be held liable for the dishonor of
the check because it was presented beyond the 90-day period
provided under the law. Petitioner further questions his
conviction since the notice requirement was not complied
with and he was given only three days to pay, not five
banking days as required by law. Finally, petitioner asserts
that he had already paid his obligation to Cenizal.
Petitioners contentions have no merit.
SIGNIFICANCE
OF
THE
90-DAY
PERIOD
FOR PRESENTMENT OF THE CHECK
Petitioner asserts that there was no violation of BP 22
because the check was presented to the drawee bank only on
December 5, 1991 or 120 days from the date thereof (August
4, 1991). He argues that this was beyond the 90-day period
provided under the law in connection with the presentment
of the check. We disagree.
Section 1 of BP 22 provides:
SECTION 1. Checks without sufficient funds.Any person who
makes or draws and issues any check to apply on account or for
value, knowing at the time of issue that he does not have sufficient
funds in or credit with the drawee bank for the payment of such
check in full upon its presentment, which check is subsequently
dishonored by the drawee bank for insufficiency
_______________
3
CA decision, Rollo, pp. 17-24.
209
VOL. 495, JULY 17, 2006

209
of funds or credit or would have been dishonored for the same

reason had not the drawer, without any valid reason, ordered the
69
bank to stop payment, shall be punished by imprisonment of not

less than thirty days but not more than one (1) year or by a fine of
not less than but not more than double the amount of the check
which fine shall in no case exceed Two Hundred Thousand Pesos,
or both such fine and imprisonment at the discretion of the court.
The same penalty shall be imposed upon any person who,
having sufficient funds in or credit with the drawee bank when he
makes or draws and issues a check, shall fail to keep sufficient
funds or to maintain a credit to cover the full amount of the check
if presented within a period of ninety (90) days from the date
appearing thereon, for which reason it is dishonored by the drawee
bank.
Where the check is drawn by a corporation, company or entity,
the person or persons who actually signed the check in behalf of
such drawer shall be liable under this Act.
22 is wrong. Petitioner anchors his argument on Rule 130,

Section 3, of the Rules of
_______________
4
G.R. No. 117857, 02 February 2001, 351 SCRA 100.
210
210

ANNOTATED
Court, otherwise known as the best evidence rule. However,

the rule applies only where the content of the document is
the subject of the inquiry. Where the issue is the execution or
existence of the document or the circumstances surrounding
its execution, the best evidence rule does not apply and
testimonial evidence is admissible.
The gravamen of the offense is the act of drawing and
issuing a worthless check. Hence, the subject of the inquiry is
the fact of issuance or execution of the check, not its content.
Here, the due execution and existence of the check were
sufficiently established. Cenizal testified that he presented
the originals of the check, the return slip and other pertinent
documents before the Office of the City Prosecutor of Quezon
City when he executed his complaint-affidavit during the
preliminary investigation. The City Prosecutor found a prima
facie case against petitioner for violation of BP 22 and filed
the corresponding information based on the documents.
Although the check and the return slip were among the
documents lost by Cenizal in a fire that occurred near his
residence on September 16, 1992, he was nevertheless able to
adequately establish the due execution, existence and loss of
the check and the return slip in an affidavit of loss as well as
in his testimony during the trial of the case.
Moreover, petitioner himself admited that he issued the
check. He never denied that the check was presented for
5
In Wong v. Court of Appeals, the Court ruled that the 90-day

period provided in the law is not an element of the offense.
Neither does it discharge petitioner from his duty to
maintain sufficient funds in the account within a reasonable
time from the date indicated in the check. According to
current banking practice, the reasonable period within which
to present a check to the drawee bank is six months.
Thereafter, the check becomes stale and the drawer is
discharged from liability thereon to the extent of the loss
caused by the delay.
Thus, Cenizals presentment of the check to the drawee
bank 120 days (four months) after its issue was still within
the allowable period. Petitioner was freed neither from the
obligation to keep sufficient funds in his account nor from
liability resulting from the dishonor of the check.
APPLICABILITY
OF
THE
BEST EVIDENCE RULE
Petitioners insistence on the presentation of the check in
evidence as a conditionsine qua non for conviction under BP
4
70
payment to the drawee bank and was dishonored for having

been drawn against insufficient funds.
PRESENCE
OF
THE
ELEMENTS OF THE OFFENSE
Based on the allegations in the information, petitioner was
charged for violating the first paragraph of BP 22. The
elements of the offense are:
dishonored by the drawee bank for having been drawn

against insufficient funds. There was sufficient evidence on
record that petitioner knew of the insufficiency of his funds
in the drawee bank at the time of the issuance of the check.
_______________
ARCEO, JR. of violation ofBatas Pambansa Blg. 22, committed as follows:
_______________
The undersigned Assistant City Prosecutor accuses PACIFICO B.
That on or about the 15th day of April 1991, in Quezon City, Philippines,
Florenz D. Regalado, REMEDIAL LAW COMPENDIUM, Volume II,
Seventh Revised Edition, 1995, p. 555.
and within the jurisdiction of this Honorable Court, the said accused, did
then and there, willfully, unlawfully and feloniously make, draw and issue in
Tan v. Mendez, Jr., 432 Phil. 760; 383 SCRA 202 (2002).
favor of JOSEFINO CENIZAL a check no. 163255 drawn against the Bank of
The information read:
the Philippine Island[,] a duly established domestic banking institution[,] in

the amount in the amount of P150,000.00 Philippine Currency, postdated
211
VOL. 495, JULY 17, 2006

211
1. 1.the making, drawing and issuance of any check to

apply to account or for value;
2. 2.knowledge of the maker, drawer, or issuer that at
the time of issue he does not have sufficient funds in
or credit with the drawee bank for the payment of the
check in full upon its presentment; and
3. 3.subsequent dishonor of the check by the drawee
bank for insufficiency of funds or credit, or dishonor
of the check for the same reason had not the drawer,
without any valid cause, ordered the bank to stop
payment.
8
All these elements are present in this case.

Both the trial and appellate courts found that petitioner
issued BPI check no. 163255 postdated August 4, 1991 in the
amount of P150,000 in consideration of a loan which he
obtained from Cenizal. When the check was deposited, it was
August 4, 1991, in payment of an obligation, knowing fully well at the time of

issue that [he] did not have the payment of such check; that upon
presentation of said check to said bank for payment, the same was
dishonored for the reason that the drawer thereof, accused Pacifico B. Arceo,
Jr., did not have sufficient funds therein, and despite notice of dishonor
thereof, accused failed and refused and still fails and refuses to redeem or
make good said check, to the damage and prejudice of the said Josefino
Cenizal in the amount aforementioned and in such other amount as may be
awarded under the provisions of the Civil Code.
CONTRARY TO LAW. (Rollo, pp. 17-18).
8
Vaca v. Court of Appeals, 359 Phil. 187; 298 SCRA 656 (1998).
212
212

ANNOTATED
In fact, this was why, on maturity date, he requested the

payee not to encash it with the promise that he would replace
it with cash. He made this request and assurance seven
times but repeatedly failed to make good on his promises
71
despite the repeated accommodation granted him by the

payee, Cenizal.
NOTICE
OF
DISHONOR
TO
PETITIONER
AND PAYMENT OF THE OBLIGATION
The trial court found that, contrary to petitioners claim,
Cenizals counsel had informed petitioner in writing of the
checks dishonor and demanded payment of the value of the
check. Despite receipt of the notice of dishonor and demand
for payment, petitioner still failed to pay the amount of the
check.
Petitioner cannot claim that he was deprived of the period
of five banking days from receipt of notice of dishonor within
which to pay the amount of the check. While petitioner may
have been given only three days to pay the value of the
check, the trial court found that the amount due thereon
remained unpaid even after five banking days from his
receipt of the notice of dishonor. This negated his claim that
he had already paid Cenizal and should therefore be relieved
of any liability.
Moreover, petitioners claim of payment was nothing more
than a mere allegation. He presented no proof to support it.
If indeed there was payment, petitioner should have
redeemed or taken the check
9
_______________
9
Section 2 of BP 22 provides:
Section 2. Evidence of knowledge of insufficient funds.The making,

drawing and issuance of a check payment of which is refused by the drawee
because of insufficient funds in or credit with such bank, when presented
within ninety (90) days from the date of the check, shall be prima
facie evidence of knowledge of such insufficiency of funds or credit unless
such maker or drawer pays the holder thereof the amount due thereon, or
makes arrangements for payment in full by the drawee of such check within
five (5) banking days after receiving notice that such check has not been paid
by the drawee.
213
VOL. 495, JULY 17, 2006

213
back in the ordinary course of business. Instead, the check

remained in the possession of the payee who demanded the
satisfaction of petitioners obligation when the check became
due as well as when the check was dishonored by the drawee
bank.
These findings (due notice to petitioner and nonpayment
of the obligation) were confirmed by the appellate court. This
Court has no reason to rule otherwise. Well-settled is the
rule that the factual findings of the trial court, when
affirmed by the appellate court, are not to be disturbed.
WHEREFORE, the petition is hereby DENIED. The April
28, 1999 decision and March 27, 2000 resolution of the Court
of Appeals in CA-G.R. CR No. 19601 are AFFIRMED.
Costs against petitioner.
SO ORDERED.
Puno (Chairperson), SandovalGutierrez, Azcuna and Garcia, JJ., concur.
10
11
Petition denied, judgment and resolution affirmed.

Notes.The act sought to be prevented by Batas
Pambansa Blg. 22 is the act of making and issuing a check
with the knowledge that, at the time of issue, the drawer
issuing the check does not have sufficient funds in or credit
with the bank. (Sia vs. People, 428 SCRA 206[2004])
Knowledge of insufficiency of funds legally presumed from
the dishonor of the checks for insufficiency of funds. (Ty vs.
People, 439 SCRA 220 [2004])
The gravamen of the offense is the issuance of a bad
check, hence, malice and intent in the issuance thereof is
inconsequential. (Id.)
o0o
72
_______________
10
Tan v. Mendez, Jr., supra; Lim v. People, 420 Phil. 506; 368 SCRA
436 (2001).
11
Miranda v. Besa, G.R. No. 146513, 30 July 2004, 435 SCRA 532.
G.R. No. 166403. November 2, 2006.

BENZON O. ALDEMITA, petitioner, vs. HEIRS OF
MELQUIADES SILVA, represented by RAMON G.
VILLORDON, JR., respondents.
*
Actions; Pleadings and Practice; Motions to Dismiss; As it now

stands, the following defenses are not waived even if not raised in a
motion to dismiss or in the answer: (a) lack of jurisdiction over the
subject matter; (b) litis pendentia; (c) res judicata; and (d)
prescription on the actionfailure to state a cause of action is not
an exception.Section 1, Rule 9 of the Rules of Court, as amended,
provides: SECTION 1. Defenses and objections not pleaded.
Defenses and objections not pleaded either in a motion to dismiss
or in the answer are deemed waived. However, when it appears
from the pleadings or the evidence on record that the court has no
jurisdiction over the subject matter, that there is another action
pending between the same parties for the same cause, or that the
action is barred by a prior judgment or by statute of limitations,
the court shall dismiss the claim. As it now stands, only the
following defenses are not waived even if not raised in a motion to
dismiss or in the answer: (a) lack of jurisdiction over the subject
matter; (b) litis pendentia; (c) res judicata; and (d) prescription on
the action. Failure to state a cause of action is not an exception in
said Rule. Thus, under Section 1, Rule 16, petitioner is deemed to
have waived this ground and cannot now raise it after the case in
the RTC had been submitted for decision or on appeal to the CA.
Same; Same; Same; Causes
of
Action;
Elements;
In
determining whether an initiatory pleading states a cause of action,
the test is as follows: admitting the truth of the facts alleged, can
the court render a valid judgment in accordance with the
prayer?A cause of action, which is an act or omission by which a
party violates the right of another, has these elements: 1) the legal
right of the plaintiff; 2) the correlative obligation of the defendant
to respect that legal right; and 3) an act or omission of the
defendant that violates such right. In the case of Goodyear Phil.,
73
Inc. v. Sy, 474 SCRA 427 (2005), the Court held that in
determining whether an initiatory pleading states a
_______________
*
Evidence; Ancient
Documents; Requisites.An
ancient
document is one that is (1) more than 30 years old, (2) found in the
proper custody, and (3) unblemished by any alteration or by any
circumstance of suspicion. It must on its face appear to be genuine.
FIRST DIVISION.
PETITION for review on certiorari of a decision of the Court

of Appeals.
608
08
Aldemita vs. Heirs of Melquiades Silva
cause of action, the test is as follows: admitting the truth of
the facts alleged, can the court render a valid judgment in
accordance with the prayer? To be taken into account are only the
material allegations in the complaint; extraneous facts and
circumstances or other matters aliunde are not considered. Stated
otherwise, the test is whether the material allegations, assuming
these to be true, state ultimate facts which constitute plaintiffs
cause of action, such that plaintiff is entitled to a favorable
judgment as a matter of law. The general rule is that inquiry is
confined to the four corners of the complaint, and no other.
Same; Same; Same; Exceptions to the Rule that Allegations are
Hypothetically Admitted as True and Inquiry is Confined to the
Face of the Complaint.There are well-recognized exceptions to
the rule that the allegations are hypothetically admitted as true
and inquiry is confined to the face of the complaint. Examples are
whenever there is no hypothetical admission of the veracity of
allegations if their falsity is subject to judicial notice, or if such
allegations are legally impossible, or if these refer to facts which
are inadmissible in evidence, or if by the record or document
included in the pleading these allegations appear unfounded. Also,
inquiry is not confined to the complaint if there is evidence which
has been presented to the court by stipulation of the parties, or in
the course of hearings related to the case. However, none of the
exceptions are present in the instant case.

Rodolfo A. Ugang, Sr. for petitioner.
Alonso & Banaag Law Offices for respondents.
609
VOL. 506, NOVEMBER 2, 2006

609
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorariunder
Rule 45 of the Rules of Court questioning the Decision dated
November 22, 2004 promulgated by the Court of Appeals
(CA) in CA-G.R. CV No. 72445, which affirmed in toto the
Decision dated August 20, 2001 of the Regional Trial Court
(RTC), Branch 11, Cebu City, docketed as Civil Case No.
CEB-23011.
This case originated from a Complaint for Quieting of
Title filed with the RTC by the Heirs of Melquiades Silva,
represented by Ramon G. Villordon, Jr., (respondents) on
November 18, 1998 against the Heirs of Dionisia Vda. De
Zabate (Heirs of Vda. De Zabate), represented by Emelia
Deiparine and Benzon O. Aldemita (petitioner).
The antecedent facts of the case, as found by the RTC and
upheld by the CA, are as follows:
1
On November 25, 1998, a verified complaint dated November 18,

1998 for Quieting of Title was filed by the [respondents] through
counsel with the Regional Trial Court, Cebu City docketed therein
74
as Civil Case No. CEB-23011 and was assigned through raffle to

Branch 11 thereof.
On January 14, 1999, a verified Answer With Special And
Affirmative Defenses, Counter-claim and Cross-claim dated
January 13, 1999 was filed by [petitioner] Benzon O. Aldemita
through counsel with the court a quo.
On April 22, 1999, an Urgent Motion To Declare Defendants
Roger Deiparine and Josephine Deiparine In Default And A
Motion To Set Case For Pre-Trial dated April 20, 1999 was filed by
the petitioners through counsel after the above-named respondents
were substituted for respondent Emilia Deiparine who died last
September 15, 1998 per Order dated February 1, 1999, which
motion was
_______________
1
Penned by Associate Justice Mercedes Gozo-Dadole (now retired), with
Associate Justices Pampio A. Abarintos and Sesinando E. Villon, concurring.

2
Rollo, p. 82.
610
610

granted by the public respondent court per Order dated April 30,
1999 by declaring Roger Deiparine and Josephine Deiparine in
default and setting the case for Pre-trial.
On August 12, 1999, a Pre-trial was conducted by the trial court
wherein the parties made the following stipulations of facts and/or
admissions, to wit:
1) [Petitioner] Benzon O. Aldemita admitted that Lot 11330 of Pcs-945
located in Minglanilla, Cebu has been registered in the name of
Melquiades Silva as shown by Transfer Certificate No. T-18993 of the
Registry of Deeds for the Province of Cebu (Exhibit A) and has been
covered by Tax Declaration No. 25845-R also in the name of Melquiades
Silva (Exhibit B);
2)
[Petitioner]
Benzon
O.
Aldemita
also
admitted
that
the
[respondents] in this case have been the ones in actual physical

possession of Lot 11330 of Pcs-945 except a portion thereof with an area
of 2,000 square meters which said [petitioner] is claiming to be possessed
by him;
3) [Petitioner] Aldemita admitted, too, that a document denominated
as Kalig-onan sa Palit (Exhibit C) which was purportedly executed on
March 15, 1949 by Melquiades Silva in favor of Dionisia Vda. De Zabate
involving the land in question is actually a forged document. However,
[petitioner] contended that another document denominated as Kaligonan sa Panagpalit nga Dayon (Exhibit 1) was executed by Melquiades
Silva in favor of Dionisia Vda. de Zabate and that thereafter this was
confirmed by Proferia Silva and Emeliana Zabate Paran in a Deed of
Confirmation of Previous Deed of Sale executed on February 20, 1979
(Exhibit 2).
On October 25, 1999 per agreement of the parties, the trial

court issued an order appointing the PNP Regional Crime
Laboratory Office VII as commissioner of the court for the purpose
of determining whether the purported signature of Melquiades
Silva in Exhibit 1 and that of Porferia Silva in Exhibit 2 for the
answering defendant Benzon O. Aldemita are really those of
Melquiades Silva and Porferia Silva.
611

611
On February 10, 2000, a Questioned Document Report No. 0132000 by the Document Examiner Romeo Oliva Varona was
submitted to the court.
On March 6, 2000 an Order of even date was issued by the court
giving respondent Aldemita fifteen (15) days to submit his
comment on the Questioned Document Report No. 013-2000 which
he did by submitting to the court his Comment, etc. dated April 3,
2000.
3
75
On September 15, 2000, an order was issued by the trial court

wherein it considered the Questioned Document Report 013-2000
as the findings of fact duly established in the case.
On January 23, 2001 per manifestation of the parties through
their respective counsel that they would submit the case for
decision without need of trial especially that the findings embodied
in the commissioners report have already been considered as the
findings of facts in this case. Nonetheless, the trial court gives the
parties fifteen (15) days within which to file their respective
memorandum if they so desire and thereafter the case was
considered as submitted for decision.
4
On February 8, 2001, petitioner Aldemita filed a Position

Paper with the RTC. On March 24, 2001, Atty. Manuel S.
Paradela, then counsel of petitioner Aldemita, filed a Motion
To Withdraw As Counsel. Immediately thereafter, or on April
2, 2001, the new counsel for petitioner Aldemita, Atty.
Rodolfo A. Ugang, Sr., entered his appearance. On April 6,
2001, petitioner Aldemita, through his newly retained
counsel, filed a Motion to Dismiss for lack of cause of action.
The Motion averred in main that the respondents should first
be declared as heirs of Melquiades Silva in a special
proceeding before
_______________
3
With the following Conclusions:
The questioned signatures of Porferia Silva appearing in the Deed of Confirmation of

Previous Deed of Sale dated February 20, 1979 marked Q-a and Melquiades Silva
appearing in the document denominated as Kalig-onan sa Pagpalit nga Dayon dated
March 15, 1949 marked Q-b are forged. (Records, p. 65)
4
Rollo, pp. 23-26.
612
612

they can be considered as real parties-in-interest to institute

the action in this case. In an Order dated April 20, 2001, the
RTC denied the Motion, thus:
Filed with the Court by the defendant Benzon O. Aldemita is a
motion to dismiss this case on the ground of plaintiffs lack of
cause of action.
The Court finds the motion to be not impressed with merit. As
it may not be amiss to recall, this case was already considered as
submitted to the Court for decision way back on February 8, 2001
pursuant to the order issued in this case on January 23, 2001. The
aforementioned motion to dismiss was filed only on April 6, 2001.
Apparently, the said motion was not filed within the proper
time,i.e., within the time for filing the answer to the complaint as
provided Section 1 of Rule 16 of the 1997 Rules on Civil Procedure.
A motion to dismiss cannot be filed anytime except if the grounds
therefor are lack of jurisdiction over the subject matter, pendency
of another action between the same parties for the same cause and
bar by prior judgment or statute of limitations. The motion filed in
this case is not on account of any of the said exceptional three
grounds.
IN VIEW THEREOF, the Court hereby denies the
aforementioned motion to dismiss.
SO ORDERED.
5
The petitioner, again through his new counsel, filed a Motion

for Reconsideration on June 4, 2001. In an Order dated
August 17, 2001, the RTC denied the motion. This Order
reads:
Anent the motion filed by the defendant Benzon O. Aldemita for
reconsideration of the order issued in this case on April 20, 2001,
the Court finds it to be devoid of merit. There is no gainsaying the
fact that the late Melquiades Silva was the registered owner of Lot
No. 1130 of Pcs-945, Talisay-Minglanilla estate, as shown by TCT
No. T-18993 of the Registry of Deeds for the Province of Cebu.
Thus, if there are claims which are prejudicial to the title to the
76
said land, thereby casting a cloud of doubt on its authenticity and

indefeasibil
_______________
5
Records, p. 142.
613

613
ity, the heirs of Melquiades Silva are certainly the real parties in
interest who could institute an action for quieting of title. It is
therefore surprising why the defendant Benzon O. Aldemita is now
contending very much belatedly that the plaintiffs are not real
parties in interest in the case at bench. The invoking by the said
defendantmovant of the ruling in Heirs of Guido and Isabel
Yaptinchay v. Del Rosario, 304 SCRA 18, is misplaced. Here in
this case, the heirs of Melquiades Silva are significantly
suing through the administrator of the estate of their
decedent. In other words, there is already an on-going
special proceeding wherein the declaration of heirship of
the plaintiffs is being sought. So, the defendant Benzon O.
Aldemita should not insist that the plaintiffs should first be
declared as heirs of Melquiades Silva before they can be
considered as real parties in interest to institute the action
in this case. Things have already been placed in their
proper perspectives. (Emphasis supplied)
WHEREFORE, in view of the foregoing premises, the Court
hereby denies the aforementioned motion for reconsideration.
SO ORDERED.
6
On August 20, 2001, the RTC rendered its Decision, the

dispositive portion of which states:
WHEREFORE, in view of all the foregoing premises, judgment is
hereby rendered by the Court in this case:
a. Declaring the [respondents] as the rightful and absolute

owners of Lot No. 11330 of Pcs-945 (Talisay-Minglanilla Estate)
located in Vito, Minglanilla, Cebu;
b. Declaring as null and void and without force and effect the
documents denominated as Kalig-onan Sa Palit purportedly
executed by Melquiades Silva on March 15, 1949 in favor of
Dionisia Vda. de Zabate (Exhibit C), Kalig-onan sa Panagpalit
nga Dayon which was purportedly executed by Melquiades de
Silva on March 15, 1949 in favor of Dionisia Vda. de Zabate
(Exhibit 1), Deed of Confirmation of Previous Deed of Sale which
was purportedly executed by Porferia de Silva on February 20,
1979 in favor of Emiliana Zabate Paran (Exhibit 2) and the Deed
of Absolute Sale executed
_______________
6
Rollo, p. 79.
614
614

by Emilia Deiparine on April 26, 1996 in favor of [petitioner]

Benzon O. Aldemita (Exhibit 3);
c. Ordering the [Heirs of Vda. de Zabate and petitioner] to
respect and not disturb the [respondents] title to and ownership of
Lot No. 11330 of Pcs-945; and
d. Ordering [petitioner] Benzon O. Aldemita to vacate the
premises of Lot No. 11330 of Pcs-945.
IT IS SO ORDERED.
7
The RTC held that the respondents, as heirs of Melquiades

Silva who appears to be the registered owner under the TCT,
have a cause of action under Article 476 of the Civil Code;
that the petitioner expressly admitted in his Answer to the
petition and also during pre-trial that the Kalig-onan sa
Palit is a true and real forgery; that the Kalig-onan sa
8
77
Panagpalit nga Dayon and the Deed of Confirmation of

Previous Deed of Sale were likewise found by the PNP
Crime Laboratory Office to be forged documents; that, in
view of these reasons, the said documents cannot be the
sources of rights; that the Deed of Absolute Sale dated April
26, 1996 executed by Emilia Deiparine in favor of petitioner
Aldemita has no leg to stand on since, as the saying goes, the
spring cannot rise higher than its source; and that the
respondents, as admitted by petitioner Aldemita, have been
the ones in actual possession of the land in question.
Petitioner Aldemita appealed to the CA claiming that the
RTC erred:
10
11
_______________
7
Id., at p. 85.
Art. 476. Whenever there is a cloud on title to real property or any
interest therein, by reason of any instrument, record, claim, encumbrance or

proceeding which is apparently valid or effective but is in truth and in fact
invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said
title, an action may be brought to remove such cloud or to quiet the title.
9
Exhibit C, Rollo, p. 37.
10
11
615

615
I.
In declaring the [respondents] as the rightful and absolute owners
of Lot No. 11330 of Pcs-945 (Talisay-Minglanilla Estate) located in
Vito, Minglanilla, Cebu, Philippines;
II.
In declaring as null and void and without force and effect the
documents denominated as Kalig-onan sa Panag-palit nga Dayon
(Deed of Absolute Sale), which was purportedly executed by
Melquiades Silva on March 15, 1949 in favor of Dionisia Vda. de
Zabate (Exhibit 1), Deed of Confirmation of Previous Deed of
Sale which was purportedly executed by Porferia Silva and
Emiliana Zabate Paran on February 20, 1979 (Exhibit 2) and the
Deed of Absolute Sale Executed by Emilia Deiparine on April 26,
1996 in favor of [petitioner] Benzon O. Aldemita (Exhibit 3);
III.
In ordering [petitioner] Aldemita to respect and not disturb the
[respondents] title to and ownership of Lot No. 11330 of Pcs-945;
IV.
In ordering [petitioner] Aldemita to vacate the premises of Lot
No. 11330 of Pcs-945.
12
On November 22, 2004, the CA promulgated its Decision

affirming the Decision of the RTC in toto. The dispositive
portion of the CA Decision reads:
WHEREFORE, the foregoing premises considered, this appeal is
DISMISSED. The appealed Decision dated August 20, 2001 by the
Regional Trial Court, Branch 11, Cebu City in Civil Case No.
CEB23011 is affirmed in toto. Costs against the [petitioner].
13
The CA held that the question of whether the respondents

are real parties-in-interest was raised for the first time on
appeal considering that this issue was never raised in the
RTC before the case was submitted for decisionand,
_______________
12
Id., at pp. 26-27.
13
Id., at p. 30.
78
II.
616
616

hence, it cannot be resolved without offending basic rules of

fair play, justice and due process; that the only issues raised
before the RTC were confined to (a) whether the ancient
documents are valid, and (b) whether the various
transactions are valid; that although a Motion to Dismiss
was filed invoking lack of cause of action, this Motion was not
filed within the proper time; that even if this issue were
considered, nonetheless, since the respondents filed and
pursued the case through the administrator of the estate of
their decedent, a declaration of heirship is no longer
necessary; and that since petitioner Aldemita manifested to
submit the case for decision dispensing trial, and having
failed to offer any evidence to prove the due execution and
authenticity of the documents, the findings of the RTC that
the foregoing documents were indeed forged, as confirmed by
the court-appointed commissioner, are binding and
conclusive on the parties.
Hence, the instant Petition assigning the following issues:
I.
WHETHER OR NOT THE COURT A QUO SERIOUSLY ERRED
AND GRAVELY ABUSED ITS DISCRETION WHEN IT
DECLARED THE RESPONDENTS AS THE RIGHTFUL AND
ABSOLUTE OWNERS OF LOT NO. 11330 OF PCS-945
(TALISAYMINGLANILLA ESTATE) LOCATED IN VITO,
MINGLANILLA, CEBU DESPITE THE RESPONDENTS UTTER
FAILURE TO PRESENT PROOF THAT ONE OF THE
RESPONDENTS WAS APPOINTED BY THE COURT AS
ADMINISTRATOR PURSUANT TO RULE 78 OF THE RULES
OF COURT AND THE ABSENCE OF PROOF THAT ALL THE
RESPONDENTS WERE DECLARED LEGAL HEIRS THROUGH
A COURT ORDER.
WHETHER OR NOT COURT A QUO SERIOUSLY ERRED

AND GRAVELY ABUSED ITS DISCRETION WHEN IT RULED
AS NULL AND VOID AND WITHOUT FORCE AND EFFECT
THE DOCUMENTS DENOMINATED AS KALIG-ONAN SA
PANAGPALIT NGA DAYON (DEED OF ABSOLUTE SALE),
WHICH WAS PURPORTEDLY EXECUTED BY MELQUIADES
SILVA ON MARCH 15, 1949 IN FAVOR OF DIONISIA VDA. DE
ZABATE
617

617
(EXHIBIT 1), DEED OF CONFIRMATION OF PREVIOUS

DEED OF SALE WHICH WAS PURPORTEDLY EXECUTED BY
PORFERIA SILVA AND EMILIANA ZABATE PARAN ON
FEBRUARY 20, 1979 (EXHIBIT 2) AND THE DEED OF
ABSOLUTE SALE EXECUTED BY EMILIA DEIPARINE ON
APRIL 26, 1996 IN FAVOR OF THE PETITIONER BENZON O.
ALDEMITA (EXHIBIT 3).
14
The petition must fail.

Under Section 1(g), Rule 16 of the Rules of Court, to wit:
SECTION 1. Grounds.Within the time for but before filing the
answer to the complaint or pleading asserting a claim, a motion to
dismiss may be made on any of the following grounds:
xxxx
(g) That the pleading asserting the claim states no cause of
action;
xxxx
petitioners Motion to Dismiss should have been filed within

the time for but before filing the answer to the complaint or
pleading asserting a claim. As it appears, the motion was
79
filed in the RTC after the case has been submitted for
decision.
Petitioner must have relied on the former Section 2, Rule
9 of the Rules of Court which reads:
15
SEC. 2. Defenses and objections not pleaded deemed waived.

Defenses and objections not pleaded either in a motion to dismiss
or in the answer are deemed waived; except the failure to state a
cause of action which may be alleged in a later pleading, if one is
permitted, or by motion for judgment on the pleadings, or at the
trial on the merits; but in the last instance, the motion shall be
disposed of as provided in Section 5 of Rule 10 in the light of any
evidence which may have been received. Whenever it appears that
_______________
jurisdiction over the subject matter, that there is another action

pending between the same parties for the same cause, or that the
action is barred by a prior judgment or by statute of limitations,
the court shall dismiss the claim.
As it now stands, only the following defenses are not waived

even if not raised in a motion to dismiss or in the answer: (a)
lack of jurisdiction over the subject matter; (b)litis pendentia;
(c) res judicata; and (d) prescription on the action. Failure to
state a cause of action is not an exception in said Rule. Thus,
under Section 1, Rule 16, petitioner is deemed to have waived
this ground and cannot now raise it after the case in the RTC
had been submitted for decision or on appeal to the CA.
Further, a reading of the Petition for Quieting of
Title readily shows that such pleading states a cause of
action.
A cause of action, which is an act or omission by which a
party violates the right of another, has these elements:
16
17
14
Id., at p. 130.
15
Before the effectivity of the 1997 Rules of Civil Procedure on July 1,
1997.
18
_______________
618
618

the court has no jurisdiction over the subject-matter, it shall

dismiss the action.
where failure to state a cause of action was not deemed

waived even if raised after the answer has been filed.
However, the Complaint against petitioner was filed on
November 25, 1998, after the effectivity of the 1997 Rules of
Civil Procedure, amending the Rules of Court.
Section 1, Rule 9 of the Rules of Court, as amended,
provides:
SECTION 1. Defenses and objections not pleaded.Defenses and
objections not pleaded either in a motion to dismiss or in the
answer are deemed waived. However, when it appears from the
pleadings or the evidence on record that the court has no
16
1 FLORENZ D. REGALADO, REMEDIAL LAW COMPENDIUM 163
(1999).
17
Records, pp. 1-3.
18
2 of Rule 2 of the Rules of Court.
619

619
1. 1)the legal right of the plaintiff;

2. 2)the correlative obligation of the defendant to respect
that legal right; and
3. 3)an act or omission of the defendant that violates
such right.
19
80
In the case of Goodyear Phil., Inc. v. Sy, the Court held that
in determining whether an initiatory pleading states a cause
of action, the test is as follows: admitting the truth of the
facts alleged, can the court render a valid judgment in
accordance with the prayer? To be taken into account are
only the material allegations in the complaint; extraneous
facts and circumstances or other mattersaliunde are not
considered. Stated otherwise, the test is whether the
material allegations, assuming these to be true, state
ultimate facts which constitute plaintiffs cause of action,
such that plaintiff is entitled to a favorable judgment as a
matter of law. The general rule is that inquiry is confined to
the four corners of the complaint, and no other.
As the Court has ruled, the Petition for Quieting of Title
sufficiently states a cause of action. Respondents alleged that
they are the heirs of the late Melquiades Silva who died on
20
21
22
23
24
_______________
19
Goodyear Philippines, Inc. v. Sy, G.R. No. 154554, November 9,
2005,474 SCRA 427, 435, citing Jimenez Jr. v. Jordana, G.R. No. 152526,
November 25, 2004, 444 SCRA 250, 259.
20
Supra note 19.
21
Id., at p. 435, citing Jimenez Jr. v. Jordana, supra note 19, at p. 260.
22
Id., citing Jimenez Jr. v. Jordana, Id.
23
Dabuco v. Court of Appeals, 379 Phil. 939, 949; 322 SCRA 853, 862-863
(2000), citing Suyom v. Collantes, G.R. No. L-40337, February 27, 1976, 69
SCRA 514, 520.
24
Dabuco v. Court of Appeals, Id., citing Acua v. Batac Producers
Cooperative Marketing Association, 126 Phil. 896, 901; 20 SCRA 526, 531
(1967); De Jesus v. Santos Belarmino, 50 O.G. 30043068; Verzosa v.
Rigonan, 94 Phil. 794, 796 (1954); Dimayuga v. Dimayuga, 51 O.G. 23972400.
July 3, 1961 and are thus the true owners of a parcel of land
registered in the name of the latter (first and second
elements); that the private documents allegedly executed by
the late Melquiades Silva in favor of the predecessors-ininterest of the petitioner are forged documents (third
element); and that the existence of these documents casts a
cloud over the title of the respondents as owners of the
property (fourth element).
There are well-recognized exceptions to the rule that the
allegations are hypothetically admitted as true and inquiry is
confined to the face of the complaint. Examples are whenever
there is no hypothetical admission of the veracity of
allegations if their falsity is subject to judicial notice, or if
such allegations are legally impossible, or if these refer to
facts which are inadmissible in evidence, or if by the record
or document included in the pleading these allegations
appear unfounded. Also, inquiry is not confined to the
complaint if there is evidence which has been presented to
the court by stipulation of the parties, or in the course of
hearings related to the case. However, none of the
exceptions are present in the instant case.
The petitioner insists that the 54 respondents claiming to
be the heirs of the deceased Melquiades Silva must first
establish their status as legal heirs through a special
proceeding in order to prosecute the instant case as real
parties-ininterest. Without a declaration of heirship and a
court order appointing an administrator of the estate, the
petitioner argues, the respondents have failed to establish
that they are real parties-in-interest, and therefore, the case
must be dismissed for lack of cause of action, citing theHeirs
of Yaptinchay v. Del Rosario. As aptly held by the RTC, the
invocation of petitioner of the ruling in said case is
misplaced. In the Heirs of Yaptinchay, the motion to dismiss
was filed immedi25
26
620
620
81
out in the proper proceeding for declaration of heirs and

settlement of the Estate of said decedent.
Under the second assignment of error, the petitioner
theorizes that the Kalig-onan sa Panagpalit nga
Dayon which
_______________
25
Dabuco v. Court of Appeals, supra note 23, at pp. 950-951; p. 864.
26
363 Phil. 393, 399; 304 SCRA 18, 24 (1999).
30
621

621
ately after the Second Amended Complaint was filed. In the

present case, the Motion to Dismiss was filed only after the
case was submitted for decision.
As earlier pointed out, petitioner did not raise said issue
when he filed his Answer. Moreover, during the pre-trial,
petitioner did not question the capacity of the Heirs of
Melquiades Silva to sue; nor did he question the
representation of Ramon G. Villordon, Jr. as administrator of
the estate of the deceased. In fact, petitioner, in his Pre-Trial
Brief dated July 24, 1999 filed before the RTC, delimited the
issues only to: (1) whether the ancient documents are valid;
and (2) whether the various transactions are valid. It is not
disputed that the parties manifested to the RTC that
they were submitting the case without the need of
trial. Petitioner did not complain in the RTC about the
capability of the Heirs of Melquiades Silva in his Position
Paper. It is only after the case had already been submitted
for decision of the RTC that the issue on the capacity of the
Heirs was raised through a new counsel. As appropriately
denied by the RTC in its Orders dated April 20, 2001 and
August 17, 2001, petitioners motion is without merit, as said
ground was raised belatedly.
At any rate, what is established in this case is that
petitioner does not have any right to the subject property and
that the Heirs of Melquiades Silva are entitled thereto. As to
whether the persons enumerated in the complaint are
actually the Heirs of Melquiades Silva may still be threshed
27
28
29
_______________
27
Rollo, p. 28.
28
RTC Decision dated August 20, 2001, Rollo, pp. 82-85.
29
Records, p. 95.
30
Supra note 10.
622
622

purports to be a deed of absolute sale qualifies as an ancient

document under Section 21 of Rule 132, and, hence,
evidence of authenticity is not necessary. In view of this, the
property in question, petitioner argues, thus transferred to
Emilia Deiparine as successor-in-interest of Dionisia Vda. de
Zabate. The petitioner then predicates his title by virtue of
The Deed of Sale dated April 26, 1996 executed by Emilia
Deiparine in his favor.
We disagree.
An ancient document is one that is (1) more than 30 years
old, (2) found in the proper custody, and (3) unblemished by
any alteration or by any circumstance of suspicion. It must
on its face appear to be genuine.
It must be stressed that during the pre-trial of the case,
the parties agreed to submit the questioned documents to a
commissioner for the purpose of determining whether the
purported signatures of Melquiades Silva in Kalig-onan sa
Panagpalit nga Dayon and Porferia Silva in Deed of
Confirmation of Previous Deed of Sale dated February 20,
1979 are genuine. After the appointed commissioner
31
32
33
34
35
82
submitted his report finding the foregoing signatures as

forgeries, the parties manifested through their respective
counsel to submit the case for decision without need of trial
since the findings embodied in the report have already been
considered as findings of facts in the case. The petitioner,
after confirming that the
_______________
31
SEC. 21. When evidence of authenticity of private document not
necessary.Where a private document is more than thirty years old, is

produced from a custody in which it would naturally be found if genuine, and
is unblemished by any alterations or circumstances of suspicion, no other
evidence of its authenticity need be given. (22a)
32
Exhibit 3, Rollo, p. 46.
33
Cequea v. Bolante, 386 Phil. 419, 427; 330 SCRA 216, 223 (2000).
34
Supra note 10.
35
Supra note 11.
623

623
findings of the RTC, which adopted the commissioners

findings, cannot now spin around and question them,
because he agreed that these findings shall be considered as
the findings of fact of the case without necessity of a trial.
The Court concurs with the findings of the CA:
Moreover, the mere fact that the document designated as Kaligonan sa Panagpalit nga Dayon (Exhibit 1) would be considered
as an ancient document being purportedly executed by Melquiades
Silva in favor of Dionisia Vda. de Zabate on March 15, 1949 and
accordingly being more than thirty (30) years already, it does not
follow that its due execution and authenticity need not be proven
considering that in this case, said document per Questioned
Document Report No. 013-200 by Document Examiner Romeo O.
Varona who was appointed by the trial court as its commissioner,
per Order dated October 25, 1999 is not genuine and is a product
of forgery. Hence, [the petitioner] should have presented evidence
to prove the due execution and authenticity of the said document
which he failed to do so but instead together with the
[respondents] have manifested that they would submit the case for
decision without the need of undergoing trial and having failed to
present and offered any evidence of the due execution and
authenticity of this document, [petitioner] has only himself to be
blamed if the trial court has declared it null and void.
Furthermore, the Deed of Confirmation of Previous Deed of
Sale purportedly executed by Porferia Silva and Emiliana Zabate
Paran having likewise reported by the commissioner document
examiner Romeo Varona, that the signature of Porferia Silva was
forged, said document has no legal effect and has not confirmed
anything.
Due to the foregoing, the trial court did not err when it declared
the documents marked as Exhibits 1 and 2 to be null and void
and no legal effect and as such have not transmitted any rights to
the property in litigation to the Heirs of Dionisia Vda. de Zabate.
Consequently, the Deed of Sale dated April 26, 1996 executed by
Emilia Deiparine has no legal basis and cannot transfer any legal
right to the property in question considering that the documents
on
624
624

which it is based are null and void and can never be the
source ofany rights and title.
WHEREFORE, the instant petition is DENIED and the
assailed Decision of the Court of Appeals is AFFIRMED.
Costs against the petitioner.
SO ORDERED.
Panganiban (C.J.,
Chairperson), YnaresSantiago,Callejo, Sr. and Chico-Nazario, JJ., concur.
36
83
Petition denied, assailed decision affirmed.

Notes.An ancient document refers to a private
document which is more than thirty (30) years old, produced
from a custody in which it would naturally be found if
genuine, and is unblemished by alterations or circumstances
of suspicion. (Heirs of Salud Dizon Salamat vs. Tamayo, 298
SCRA 313 [1998])
The custody to be shown for the purpose of making a
document evidence without proof of execution is not
necessarily that of the person strictly entitled to the
possession of the said documentit is enough that the person
in whose custody the document is found is so connected with
the document that he may reasonably be supposed to be in
possession of it without fraud. (Cleofas vs. St. Peter Memorial
Park, Inc., 324 SCRA 223 [2000])
o0o
_______________
G.R. No. 170491. April 3, 2007.

NATIONAL POWER CORPORATION, petitioner, vs.HON.
RAMON G. CODILLA, JR., Presiding Judge, RTC of Cebu,
Br. 19, BANGPAI SHIPPING COMPANY, and WALLEM
SHIPPING, INCORPORATED, respondents.
*
Evidence; Electronic Documents; Words and Phrases;An

electronic document refers to information or the representation of
information, data, figures, symbols or other models of written
expression, described or however represented, by which a right is
established or an obligation extinguished, or by which a fact may be
proved and affirmed, which is received, recorded, transmitted,
stored, processed, retrieved or produced electronically.An
electronic
document
refers
to information
or
the
representation of information, data, figures, symbols or
other models of written expression, described or however
represented, by which a right is established or an obligation
extinguished, or by which a fact may be proved and
affirmed, which is received, recorded, transmitted, stored,
processed, retrieved or produced electronically. It includes
digitally signed documents and any printout, readable by sight or
other means which accurately reflects the electronic data message
or electronic document. The rules use the word information to
define an electronic document received, recorded, transmitted,
stored, processed, retrieved or produced electronically. This would
suggest that an electronic document is relevant only in terms of
the information contained therein, similar to any other document
which is presented in evidence as proof of its contents. However,
what differentiates an electronic document from a paper-based
document is the manner by which the information is processed;
clearly, the information contained in an electronic document is
received, recorded, transmitted, stored, processed, retrieved or
produced electronically.
84
Same; Same; Having thus declared that the offered

photocopies are not tantamount to electronic documents, it is
consequential that
_______________
*
THIRD DIVISION.
413
VOL. 520, APRIL 3, 2007
41
3
National Power Corporation vs. Codilla, Jr.

the same may not be considered as the functional equivalent of
their original as decreed in the law.A perusal of the information
contained in the photocopies submitted by petitioner will reveal
that not all of the contents therein, such as the signatures of the
persons who purportedly signed the documents, may be recorded
or produced electronically. By no stretch of the imagination can a
persons signature affixed manually be considered as information
electronically received, recorded, transmitted, stored, processed,
retrieved or produced. Hence, the argument of petitioner that since
these paper printouts were produced through an electronic process,
then these photocopies are electronic documents as defined in the
Rules on Electronic Evidence is obviously an erroneous, if not
preposterous, interpretation of the law. Having thus declared that
the offered photocopies are not tantamount to electronic
documents, it is consequential that the same may not be
considered as the functional equivalent of their original as decreed
in the law.
Same; Same; The trial court was correct in rejecting these
photocopies as they violate the best evidence rule and are therefore
of no probative value being incompetent pieces of evidence.No
error can be ascribed to the court a quo in denying admission and
excluding from the records petitioners Exhibits A, C, D, E,
H and its sub-markings, I, J and its sub-markings, K, L,
M and its sub-markings, N and its sub-markings, O, P and

its submarkings, Q and its sub-markings, and R. The trial court
was correct in rejecting these photocopies as they violate the best
evidence rule and are therefore of no probative value being
incompetent pieces of evidence. Before the onset of liberal rules of
discovery, and modern technique of electronic copying, the best
evidence rule was designed to guard against incomplete or
fraudulent proof and the introduction of altered copies and the
withholding of the originals. But the modern justification for the
rule has expanded from the prevention of fraud to a recognition
that writings occupy a central position in the law. The importance
of the precise terms of writings in the world of legal relations, the
fallibility of the human memory as reliable evidence of the terms,
and the hazards of inaccurate or incomplete duplicate are the
concerns addressed by the best evidence rule.
414
4
14

ANNOTATED
Same; When the original document has been lost or destroyed,

or cannot be produced in court, the offeror, upon proof of its
execution or existence and the cause of its unavailability without
bad faith on his part, may prove its contents by a copy, or by a
recital of its contents in some authentic document, or by the
testimony of witnesses in the order stated.When the original
document has been lost or destroyed, or cannot be produced in
court, the offeror, upon proof of its execution or existence and the
cause of its unavailability without bad faith on his part, may prove
its contents by a copy, or by a recital of its contents in some
authentic document, or by the testimony of witnesses in the order
stated. The offeror of secondary evidence is burdened to prove the
predicates thereof: (a) the loss or destruction of the original
without bad faith on the part of the proponent/offeror which can be
85
shown by circumstantial evidence of routine practices of

destruction of documents; (b) the proponent must prove by a fair
preponderance of evidence as to raise a reasonable inference of the
loss or destruction of the original copy; and (c) it must be shown
that a diligent and bona fide but unsuccessful search has been
made for the document in the proper place or places. However, in
the case at bar, though petitioner insisted in offering the
photocopies as documentary evidence, it failed to establish that
such offer was made in accordance with the exceptions as
enumerated under the abovequoted rule. Accordingly, we find no
error in the Order of the court a quodenying admissibility of the
photocopies offered by petitioner as documentary evidence.

of Appeals.
The Solicitor General for petitioner.
Arthur D. Lim for respondent Bangpai Shipping
Company.
Oben, Ventura and Associates and Ruben O. Fruto for
respondent Wallem Shipping, Inc.
415
VOL. 520, APRIL 3, 2007

(herein petitioner) Exhibits A, C, D, E, H and its

sub-markings, I, J, and its sub-markings, K, L, M
and its sub-markings, N and its sub-markings, O, P and
its sub-markings, Q and its sub-markings, R and S and
its sub-markings.
On 20 April 1996, M/V Dibena Win, a vessel of foreign
registry owned and operated by private respondent Bangpai
Shipping, Co., allegedly bumped and damaged petitioners
Power Barge 209 which was then moored at the Cebu
International Port. Thus, on 26 April 1996, petitioner filed
before the Cebu RTC a complaint for damages against
private respondent Bangpai Shipping Co., for the alleged
damages caused on petitioners power barges.
Thereafter, petitioner filed an Amended Complaint dated
8 July 1996 impleading herein private respondent Wallem
Shipping, Inc., as additional defendant, contending that the
latter is a ship agent of Bangpai Shipping Co. On 18
September 1996, Wallem Shipping, Inc. filed a Motion to
Dismiss which was subsequently denied by public respondent
Judge in an Order dated 20 October 1998. Bangpai Shipping
Co. like_______________
415
Penned by Associate Justice Isaias P. Dicdican with Associate Justices
Ramon M. Bato, Jr. and Apolinario D. Bruselas, Jr., concurring; Rollo, pp. 40-
CHICO-NAZARIO, J.:
49.
Before Us is a Petition for Review on Certiorari under Rule

45 of the Rules of Civil Procedure, assailing the Decision of
the Court of Appeals in CA-G.R. CEB-SP No. 00848, dated 9
November
2005,
which
dismissed
the
Petition
for Certiorari filed by the National Power Corporation
seeking to set aside the Order issued by the Regional Trial
Court (RTC) of Cebu, Branch 19 dated 16 November 2004,
denying admission and excluding from the records plaintiffs
Civil Case No. CEB-18662, penned by Judge Ramon G. Codilla, Jr.; Id.,
at pp. 153-160.
416
416

wise filed a Motion to Dismiss which was also denied by

public respondent Judge in an Order issued on 24 January
2003.
86
Petitioner, after adducing evidence during the trial of the

case, filed a formal offer of evidence before the lower court on
2 February 2004 consisting of Exhibits A to V together
with the sub-marked portions thereof. Consequently, private
respondents Bangpai Shipping Co. and Wallem Shipping,
Inc. filed their respective objections to petitioners formal
offer of evidence.
On 16 November 2004, public respondent judge issued the
assailed order denying the admission and excluding from the
records petitioners Exhibits A, C, D, E, H and its
sub-markings, I, J and its sub-markings, K, L, M
and its sub-markings, N and its sub-markings, O, P and
its sub-markings, Q and its sub-markings, R and S and
its sub-markings. According to the court a quo:
The Court finds merit in the objections raised and the motion to
strike out filed respectively by the defendants. The record shows
that the plaintiff has been given every opportunity to present the
originals of the Xerox or photocopies of the documents it offered. It
never produced the originals. The plaintiff attempted to justify the
admission of the photocopies by contending that the photocopies
offered are equivalent to the original of the document on the basis
of the Electronic Evidence (Comment to Defendant Wallem
Philippines Objections and Motion to Strike). But as rightly
pointed out in defendant Wallems Reply to the Comment of
Plaintiff, the Xerox copies do not constitute the electronic evidence
defined in Section 1 of Rule 2 of the Rules on Electronic Evidence
as follows:
(h) Electronic document refers to information or the representation of
information, data, figures, symbols or other models of written expression,
described or however represented, by which a right is established or an
obligation extinguished, or by which a fact may be proved and affirmed,
which is received, recorded, transmitted, stored, processed, retrieved or
produced electronically. It includes digitally signed documents and any
printout, readable by sight or other means which accurately reflects the
electronic data message or electronic document. For the purpose of these

Rules, the term
417
VOL. 520, APRIL 3, 2007

417
electronic document may be used interchangeably with electronic data

message.
The information in those Xerox or photocopies was not received,

recorded, retrieved or produced electronically. Moreover, such
electronic evidence must be authenticated (Sections 1 and 2, Rule
5, Rules on Electronic Evidence), which the plaintiff failed to do.
Finally, the required Affidavit to prove the admissibility and
evidentiary weight of the alleged electronic evidence (Sec. 1, Rule
9, Ibid) was not executed, much less presented in evidence.
The Xerox or photocopies offered should, therefore, be stricken
off the record. Aside from their being not properly identified by any
competent witness, the loss of the principals thereof was not
established by any competent proof.
xxxx
WHEREFORE, plaintiffs Exhibits A, C, D, E, H and its
sub-markings, I, J and its sub-markings, K, L, M and its
sub-markings, N and its sub-markings, O, P and its
submarkings, Q and its sub-markings, and R are hereby
DENIED admission and excluded from the records. However, these
excluded evidence should be attached to the records of this case to
enable the appellate court to pass upon them should an appeal be
taken from the decision on the merits to be rendered upon the
termination of the trial of this case.
Exhibits S and its sub-markings are also DENIED admission
for lack of proper identification since the witness who brought
these pictures expressly admitted that he was not present when
the photos were taken and had not knowledge when the same
where taken.
3
87
Upon denial of petitioners Motion for Reconsideration in an

Order dated 20 April 2005, petitioner filed a Petition
for Certiorari under Rule 65 of the Rules of Civil Procedure
before the Court of Appeals maintaining that public
respondent Judge acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in denying the
admission of its Exhibits A, C, D, E, H and its submarkings, I, J and its
_______________
RTC Order, pp. 5-6; Id., at pp. 54-55.
418
418

sub-markings, K, L, M and its sub-markings, N and its

sub-markings, O, P and its sub-markings, Q and its
submarkings, R and S and its sub-markings.
On 9 November 2005, the appellate court issued a
Decision dismissing petitioners petition for certiorari, the
pertinent portions of which elucidate:
After a judicious scrutiny of the record of the case on hand,
together with the rules and jurisprudence which are applicable in
the premises, we have come up with a finding that the petition for
certiorari filed in this case is not meritorious.
It appears that there is no sufficient showing by the petitioner
that the respondent judge acted with grave abuse of discretion in
issuing the assailed orders in Civil Case No. CEB-18662. As what
our jurisprudence tells us, grave abuse of discretion is meant such
capricious and whimsical exercise of judgment as would be
equivalent to lack of jurisdiction x x x.
In the case at bench, what has been shown to the contrary by
the totality of the record on hand is that the respondent judge
acted correctly and within the pale of his sound discretion in
issuing the assailed order, dated November 16, 2004, in Civil Case
No. CEB-18662.
Indeed, it appears that the pieces of petitioners documentary
evidence which were denied admission by the respondent judge
were not properly identified by any competent witness. As pointed
out by the respondent Bangpai Shipping Company in its comment
on the petition filed in this case which reproduces some excerpts of
the testimonies in the court a quo of Atty. Marianito De Los
Santos, Engr. Nestor Enriquez, Jr. and Mr. Rodulfo I. Pagaling,
the said witnesses did not have personal knowledge of and
participation in the preparation and making of the pieces of
documentary evidence denied admission by respondent judge x x x.
In other words, there was lack of proper identification of said
pieces of documentary evidence. x x x.
Then another ground for denying admission of petitioners
Exhibits A, C, D, E, H, I, J, K, L, M, N, O, P, Q, R, and S by the
respondent judge is that said pieces of documentary evidence were
merely photocopies of purported documents or papers. There is no
gainsaying the fact that the respondent judge acted within the
pale of his
419
VOL. 520, APRIL 3, 2007

419
discretion when he denied admission of said documentary

evidence. Section 3 of Rule 130 of the Rules of Court of the
Philippines is very explicit in providing that, when the subject of
inquiry are the contents of documents, no evidence shall be
admissible other than the original documents themselves, except
in certain cases specifically so enumerated therein, and the
petitioner has not shown that the nonpresentation or nonproduction of its original documentary pieces of evidence falls
under such exceptions. As aptly pointed out by the respondent
judge in the order issued by him on November 16, 2004:
88
x x x The record shows that the plaintiff (petitioner herein) has been
given every opportunity to present the originals of the Xerox or
photocopies of the documents it offered. It never produced said originals.
So, the petitioner has only itself to blame for the respondent
judges denial of admission of its aforementioned documentary
evidence.
Of course, the petitioner tries to contend that the photocopies of
documents offered by it are equivalent to the original documents
that it sought to offer in evidence, based on the Rules on Electronic
Evidence which were in force and effect since August 1, 2001.
However, such a contention is devoid of merit. The pieces of
documentary evidence offered by the petitioner in Civil Case CEB18662 which were denied admission by the respondent judge do
not actually constitute as electronic evidence as defined in the
Rules on Electronic Evidence. The informations therein were not
received, retrieved or produced electronically. The petitioner has
not adequately established that its documentary evidence were
electronic evidence. it has not properly authenticated such
evidence as electronic documents, assuming arguendo that they
are. Lastly, the petitioner has not properly established by affidavit
pursuant to Rule 9 of the Rules on Electronic Evidence the
admissibility and evidentiary weight of said documentary
evidence.
Thus, by any legal yardstick, it is manifest that the respondent
judge did not commit grave abuse of discretion in denying
admission of the aforementioned documentary evidence of
petitioner.
But even if it be granted just for the sake of argument that the
respondent judge committed an error in denying the
aforementioned documentary evidence of the petitioner, still the
petition for certiorari filed in this case must fail. Such error would
at most be only an
420
420

error of law and not an error of jurisdiction. In Lee vs. People, 393
SCRA 397, the Supreme Court of the Philippines said that
certiorari will not lie in case of an error of law. x x x.
WHEREFORE, in view of the foregoing premises, judgment is
hereby rendered by us DISMISSING the petition filed in this case
and AFFIRMING the assailed orders issued by respondent judge
in Civil Case No. CEB-18662.
4
Aggrieved by the aforequoted decision, petitioner filed the

instant petition.
The focal point of this entire controversy is petitioners
obstinate contention that the photocopies it offered as formal
evidence before the trial court are the functional equivalent
of their original based on its inimitable interpretation of the
Rules on Electronic Evidence.
Petitioner insists that, contrary to the rulings of both the
trial court and the appellate court, the photocopies it
presented as documentary evidence actually constitute
electronic evidence based on its own premise that an
electronic document as defined under Section 1(h), Rule 2 of
the Rules on Electronic Evidence is not limited to
information that is received, recorded, retrieved or produced
electronically. Rather, petitioner maintains that an
electronic document can also refer to other modes of written
expression that is produced electronically, such as
photocopies, as included in the sections catch-all proviso:
any print-out or output, readable by sight or other means.
We do not agree.
In order to shed light to the issue of whether or not the
photocopies are indeed electronic documents as contemplated
in Republic Act No. 8792 or the Implementing Rules and
Regulations of the Electronic Commerce Act, as well as the
Rules on Electronic Evidence, we shall enumerate the
89
following documents offered as evidence by the petitioner, to

wit:
which was manually signed by Mr. Nestor G.

Enriquez, Jr.;
7. 7.Exhibit J is a photocopy of a letter containing the
breakdown of the cost estimate, manually signed by
Mr. Nestor G. Enriquez, Jr., with RECEIVED
stamped thereon, together with a handwritten
notation of the date it was received, and other
handwritten notations;
8. 8.Exhibit K is a photocopy of the Subpoena Duces
Tecum Ad Testificandum written using a manual
typewriter, signed manually by Atty. Ofelia Polo-De
Los Reyes, with a handwritten notation when it was
received by the party;
9. 9.Exhibit L is a photocopy of a portion of the
electricity supply and operation and maintenance
agreement between petitioner and Hopewell,
containing handwritten notations and every page
containing three unidentified manually placed
signatures;
10. 10.Exhibit M is a photocopy of the Notice of
Termination with attachments addressed to Rex Joel
C. Malaluan, manually signed by Jaime S. Patinio,
with a handwritten notation of the date it was
received. The sub-markings also contain manual
signatures and/or handwritten notations;
_______________
4
CA Decision, pp. 6-9; Id., at pp. 45-48.
421
VOL. 520, APRIL 3, 2007

421
1. 1.Exhibit A is a photocopy of a letter manually

signed by a certain Jose C. Troyo, with RECEIVED
stamped thereon, together with a handwritten date;
2. 2.Exhibit C is a photocopy of a list of estimated cost
of damages of petitioners power barges 207 and 209
prepared by Hopewell Mobile Power Systems
Corporation and manually signed by Messrs. Rex
Malaluan and Virgilio Asprer;
3. 3.Exhibit D is a photocopy of a letter manually
signed by a certain Nestor G. Enriquez, Jr., with
RECEIVED stamped thereon, together with a
handwritten notation of the date it was received;
4. 4.Exhibit E is a photocopy of a Standard Marine
Protest Form which was filled up and accomplished
by Rex Joel C. Malaluan in his own handwriting and
signed by him. Portions of the Jurat were
handwritten, and manually signed by the Notary
Public;
5. 5.Exhibit H is a photocopy of a letter manually
signed by Mr. Nestor G. Enriquez, Jr. with
RECEIVED stamped thereon, together with a
handwritten notation of the date it was received;
6. 6.Exhibit I is a photocopy of a computation of the
estimated energy loss allegedly suffered by petitioner
422
422

1. 11.Exhibit N is a photocopy of a letter of termination
with attachments addressed to VIrgilio Asprer and
manually signed by Jaime S. Patino. The submarkings contain manual signatures and/or
handwritten notations;
90
2. 12.Exhibit O is the same photocopied document

marked as Annex C;
3. 13.Exhibit P is a photocopy of an incident report
manually signed by Messrs. Malaluan and Bautista
and by the Notary Public, with other handwritten
notations;
4. 14.Exhibit Q is a photocopy of a letter manually
signed by Virgilio Asprer and by a Notary Public,
together with other handwritten notations.
On the other hand, an electronic document refers
toinformation or the representation of information, data,
figures, symbols or other models of written expression,
described or however represented, by which a right is
established or an obligation extinguished, or by which a fact
may be proved and affirmed, which is received, recorded,
transmitted, stored, processed, retrieved or produced
electronically. It includes digitally signed documents and any
printout, readable by sight or other means which accurately
reflects the electronic data message or electronic document.
The rules use the word information to define an
electronic document received, recorded, transmitted, stored,
processed, retrieved or produced electronically. This would
suggest that an electronic document is relevant only in terms
of the information contained therein, similar to any other
document which is presented in evidence as proof of its
contents. However, what differentiates an electronic
document from a paper-based document is the manner by
which the information is processed; clearly, the information
contained in an elec5
_______________
5
RULES ON ELECTRONIC EVIDENCE, Rule 2, Sec. 1, par. (h).
Id.
423
VOL. 520, APRIL 3, 2007

423
tronic document is received, recorded, transmitted, stored,

processed, retrieved or produced electronically.
A perusal of the information contained in the photocopies
submitted by petitioner will reveal that not all of the
contents therein, such as the signatures of the persons who
purportedly signed the documents, may be recorded or
produced electronically. By no stretch of the imagination can
a persons signature affixed manually be considered as
information electronically received, recorded, transmitted,
stored, processed, retrieved or produced. Hence, the
argument of petitioner that since these paper printouts were
produced through an electronic process, then these
photocopies are electronic documents as defined in the Rules
on Electronic Evidence is obviously an erroneous, if not
preposterous, interpretation of the law. Having thus declared
that the offered photocopies are not tantamount to electronic
documents, it is consequential that the same may not be
considered as the functional equivalent of their original as
decreed in the law.
Furthermore, no error can be ascribed to the courta quo in
denying admission and excluding from the records
petitioners Exhibits A, C, D, E, H and its submarkings, I, J and its sub-markings, K, L, M and its
sub-markings, N and its sub-markings, O, P and its submarkings, Q and its sub-markings, and R. The trial court
was correct in rejecting these photocopies as they violate the
best evidence rule and are therefore of no probative value
being incompetent pieces of evidence. Before the onset of
liberal rules of discovery, and modern technique of electronic
copying, the best evidence rule was designed to guard against
incomplete or fraudulent proof and the introduction of
altered copies and the withholding of the originals. But the
7
91
modern justification for the rule has expanded from the

prevention of fraud to a
_______________
7
REVISED RULES ON EVIDENCE, Rule 130, Sec. 2.
Lee v. People, G.R. No. 159288, 19 October 2004, 440 SCRA 662, 683.
424
424

recognition that writings occupy a central position in the

law. The importance of the precise terms of writings in the
world of legal relations, the fallibility of the human memory
as reliable evidence of the terms, and the hazards of
inaccurate or incomplete duplicate are the concerns
addressed by the best evidence rule.
Moreover, as mandated under Section 2, Rule 130 of the
Rules of Court:
9
10
SECTION 2. Original writing must be produced; exceptions.

There can be no evidence of a writing the contents of which is the
subject of inquiry, other than the original writing itself, except in
the following cases:
1. (a)When the original has been lost, destroyed, or cannot be
produced in court;
2. (b)When the original is in the possession of the party
against whom the evidence is offered, and the latter fails
to produce it after reasonable notice;
3. (c)When the original is a record or other document in the
custody of a public officer;
4. (d)When the original has been recorded in an existing
record a certified copy of which is made evidence by law;
5. (e)When the original consists of numerous accounts or other
documents which cannot be examined in court without
great loss of time and the fact sought to be established

from them is only the general result of the whole.
When the original document has been lost or destroyed, or

cannot be produced in court, the offeror, upon proof of its
execution or existence and the cause of its unavailability
without bad faith on his part, may prove its contents by a
copy, or by a recital of its contents in some authentic docu_______________
Id.
Id., citing Seller v. Lucas Films Ltd., 808 F. 2d 1316 (1989).
10
425
VOL. 520, APRIL 3, 2007

425
ment, or by the testimony of witnesses in the order

stated. The offeror of secondary evidence is burdened to
prove the predicates thereof: (a) the loss or destruction of the
original without bad faith on the part of the
proponent/offeror which can be shown by circumstantial
evidence of routine practices of destruction of documents; (b)
the proponent must prove by a fair preponderance of
evidence as to raise a reasonable inference of the loss or
destruction of the original copy; and (c) it must be shown that
a diligent and bona fide but unsuccessful search has been
made for the document in the proper place or
places. However, in the case at bar, though petitioner
insisted in offering the photocopies as documentary evidence,
it failed to establish that such offer was made in accordance
with the exceptions as enumerated under the abovequoted
rule. Accordingly, we find no error in the Order of the court a
quodenying admissibility of the photocopies offered by
petitioner as documentary evidence.
11
12
13
92
Finally, it perplexes this Court why petitioner continued

to obdurately disregard the opportunities given by the trial
court for it to present the originals of the photocopies it
presented yet comes before us now praying that it be allowed
to present the originals of the exhibits that were denied
admission or in case the same are lost, to lay the predicate
for the admission of secondary evidence. Had petitioner
presented the originals of the documents to the court instead
of the photocopies it obstinately offered as evidence, or at the
very least laid the predicate for the admission of said
photocopies, this controversy would not have unnecessarily
been brought before the appellate court and finally to this
Court for adjudication. Had it not been for petitioners
intransigence, the merits of petitioners complaint for
damages would have been decided upon
CA-G.R. CEB-SP No. 00848, dated 9 November 2005 is

hereby AFFIRMED. Costs against petitioner.
SO ORDERED.
Ynares-Santiago (Chairperson), AustriaMartinez and Callejo, Sr., JJ., concur.
Nachura, J., No part.
Petition denied, judgment affirmed.
Note.Offeror not obliged to prove the loss or destruction
of the original document beyond all possibility as it is enough
to prove a reasonable probability of such loss. (Republic vs.
Masongsong,470 SCRA 574 [2005])
o0o
_______________
Id., citing RULES OF COURT, Rule 130, Sec. 5.
11
12
Id., citing United States v. Balzano, 687 Fed. 6; Wright v. Farmers Co-
op, 681 F. 2d. 549.

Id., citing 32 Corpus Juris Secundum, Id., at p. 773.
13
426
426

by the trial court long ago. As aptly articulated by the Court

of Appeals, petitioner has only itself to blame for the
respondent judges denial of admission of its aforementioned
documentary evidence and consequently, the denial of its
prayer to be given another opportunity to present the
originals of the documents that were denied admission nor to
lay the predicate for the admission of secondary evidence in
case the same has been lost.
WHEREFORE, premises considered, the instant petition
is hereby DENIED. The Decision of the Court of Appeals in
93
G.R. No. 170633. October 17, 2007.

MCC
INDUSTRIAL
SALES
CORPORATION,
petitioner,vs. SSANGYONG CORPORATION, respondent.
*
Actions; Pleadings and Practice; Attorneys; Judgments; While

receipt of a copy of the decision by one of several counsels on record
is notice to all, and the period to appeal commences on such date
even if the other counsel has not yet received a copy of the decision,
the rule may be relaxed where it appears that there is an apparent
agreement between the counsels that it would be the collaborating,
not the principal, who would file the appeal brief and the
subsequent pleadings in the Court of Appeals.It cannot be
gainsaid that in Albano v. Court of Appeals, 362 SCRA 667 (2001),
we held that receipt of a copy of the decision by one of several
counsels on record is notice to all, and the period to appeal
commences on such date even if the other counsel has not yet
received a copy of the decision. In this case, when Atty. Samson
received a copy of the CA decision on September 14, 2005, MCC
had only fifteen (15) days within which to file a motion for
reconsideration conformably with Section 1, Rule 52 of the Rules of
Court, or to file a petition for review on certiorari in accordance
with Section 2, Rule 45. The period should not be reckoned from
September 29, 2005 (when Castillo Zamora & Poblador received
_______________
*
Atty. Samson, which filed both MCCs and Chans Brief and Reply
Brief. Apparently, the arrangement between the two counsels was
for the collaborating, not the principal, counsel to file the appeal
brief and subsequent pleadings in the CA. This explains why it
was Castillo Zamora & Poblador which filed the motion for the
reconsideration of the CA decision, and they did so on October 5,
2005, well within the 15-day period from September 29, 2005,
when they received their copy of the CA decision. This could also
be the reason why the CA did not find it necessary to resolve the
question of the timeliness of petitioners motion for
reconsideration, even as the CA denied the same.
Same; Same; Same; Procedural Rules and Technicalities; It
should be remembered that the Rules were promulgated to set
guidelines in the orderly administration of justice, not to shackle
the hand that dispenses it.It should be remembered that the
Rules were promulgated to set guidelines in the orderly
administration of justice, not to shackle the hand that dispenses it.
Otherwise, the courts would be consigned to being mere slaves to
technical rules, deprived of their judicial discretion. Technicalities
must take a backseat to substantive rights. After all, it is
circumspect leniency in this respect that will give the parties the
fullest opportunity to ventilate the merits of their respective
causes, rather than have them lose life, liberty, honor or property
on sheer technicalities.
THIRD DIVISION.
409
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4
09
MCC Industrial Sales Corporation vs. Ssangyong

Corporation
their copy of the decision) because notice to Atty. Samson is
deemed notice to collaborating counsel. We note, however, from the
records of the CA, that it was Castillo Zamora & Poblador, not
Same; Same; Motions for Reconsideration; Mere restatement of

arguments in a motion for reconsideration does not per se result in
a pro forma motion; The pro forma rule will not apply if the
arguments were not sufficiently passed upon and answered in the
decision sought to be reconsidered.Suffice it to say that the mere
restatement of arguments in a motion for reconsideration does
notper se result in a pro forma motion. In Security Bank and Trust
Company, Inc. v. Cuenca, 341 SCRA 781 (2000), we held that a
motion for reconsideration may not be necessarily pro forma even
94
if it reiterates the arguments earlier passed upon and rejected by

the appellate court. A movant may raise the same arguments
precisely to convince the court that its ruling was erroneous.
Furthermore, the pro forma rule will not apply if the arguments
were not sufficiently passed upon and answered in the decision
sought to be reconsidered.
410
10
Corporation
Same; Same; The Supreme Court has ample authority to go
beyond the pleadings when, in the interest of justice or for the
promotion of public policy, there is a need to make its own findings
in order to support its conclusions.The second issue poses a novel
question that the Court welcomes. It provides the occasion for this
Court to pronounce a definitive interpretation of the equally
innovative provisions of the Electronic Commerce Act of 2000 (R.A.
No. 8792) vis-vis the Rules on Electronic Evidence. Although the
parties did not raise the question whether the original facsimile
transmissions are electronic data messages or electronic
documents within the context of the Electronic Commerce Act (the
petitioner merely assails as inadmissible evidence the photocopies
of the said facsimile transmissions), we deem it appropriate to
determine first whether the said fax transmissions are indeed
within the coverage of R.A. No. 8792 before ruling on whether the
photocopies thereof are covered by the law. In any case, this Court
has ample authority to go beyond the pleadings when, in the
interest of justice or for the promotion of public policy, there is a
need to make its own findings in order to support its conclusions.
Electronic
Commerce
Act
of
2000
(R.A.
No.
8792); Evidence;Rules on Electronic Evidence; Best Evidence
Rule; Words and Phrases; To be admissible in evidence as an
electronic data message or to be considered as the functional

equivalent of an original document under the Best Evidence Rule,
the writing must foremost be an electronic data message or an
electronic document.The ruling of the Appellate Court is
incorrect. R.A. No. 8792, otherwise known as the Electronic
Commerce Act of 2000, considers an electronic data message or an
electronic document as the functional equivalent of a written
document for evidentiary purposes. The Rules on Electronic
Evidence regards an electronic document as admissible in evidence
if it complies with the rules on admissibility prescribed by the
Rules of Court and related laws, and is authenticated in the
manner prescribed by the said Rules. An electronic document is
also the equivalent of an original document under the Best
Evidence Rule, if it is a printout or output readable by sight or
other means, shown to reflect the data accurately. Thus, to be
admissible in evidence as an electronic data message or to be
considered as the functional equivalent of an original document
under the Best Evidence Rule,the writing must foremost be an
electronic data message or an electronic document.
411
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Same; Same; Same; Statutory
Construction; Words
and
Phrases; While data message has reference to information
electronically sent, stored or transmitted, it does not necessarily
mean that it will give rise to a right or extinguish an obligation,
unlike an electronic document, nevertheless evident from the law
is the legislative intent to give the two terms the same
construction.The clause on the interchangeability of the terms
electronic data message and electronic document was the result
of the Senate of the Philippines adoption, in Senate Bill 1902, of
95
the phrase electronic data message and the House of

Representatives employment, in House Bill 9971, of the term
electronic document. In order to expedite the reconciliation of the
two versions, the technical working group of the Bicameral
Conference Committee adopted both terms and intended them to
be the equivalent of each one. Be that as it may, there is a slight
difference between the two terms. While data message has
reference to information electronically sent, stored or transmitted,
it does not necessarily mean that it will give rise to a right or
extinguish an obligation, unlike an electronic document. Evident
from the law, however, is the legislative intent to give the two
terms the same construction.
Same; Same; Same; Same; Same; The international origin
mentioned in Section 37 of the Electronic Commerce Act can only
refer to the UNCITRAL Model Law, and the UNCITRALs
definition of data message.As further guide for the Court in its
task of statutory construction, Section 37 of the Electronic
Commerce Act of 2000 provides that Unless otherwise expressly
provided for, the interpretation of this Act shall give due regard to
its international origin and the need to promote uniformity in its
application and the observance of good faith in international trade
relations. The generally accepted principles of international law
and convention on electronic commerce shall likewise be
considered. Obviously, the international origin mentioned in this
section can only refer to the UNCITRAL Model Law, and the
UNCITRALs definition of data message: Data message means
information generated, sent, received or stored by electronic,
optical or similar means including, but not limited to, electronic
data interchange (EDI), electronic mail, telegram, telex or telecopy,
is substantially the same as the IRRs characterization of an
electronic data message.
412
12
Corporation
Same; Same; Same; Same; Same; A construction should be
rejected that gives to the language used in a statute a meaning that
does not accomplish the purpose for which the statute was enacted,
and that tends to defeat the ends which are sought to be attained by
the enactment.Congress deleted the phrase, but not limited to,
electronic data interchange (EDI), electronic mail, telegram, telex or
telecopy, and replaced the term data message (as found in the
UNCITRAL Model Law) with electronic data message. This
legislative divergence from what is assumed as the terms
international origin has bred uncertainty and now impels the
Court to make an inquiry into the true intent of the framers of the
law. Indeed, in the construction or interpretation of a legislative
measure, the primary rule is to search for and determine the
intent and spirit of the law. A construction should be rejected that
gives to the language used in a statute a meaning that does not
accomplish the purpose for which the statute was enacted, and
that tends to defeat the ends which are sought to be attained by
the enactment.
Same; Same; Same; Same; Same; Facsimile
Transmissions;There is no question that when Congress formulated
the term electronic data message, it intended the same meaning as
the term electronic record in the Canada law, which construction
of the term electronic data message, excludes telexes or faxes,
except computergenerated faxes, in harmony with the Electronic
Commerce Laws focus on paperless communications and the
functional equivalent approach that it espouses; Facsimile
transmissions are not paperless but verily are paper-based.
When the Senate consequently voted to adopt the term electronic
data message, it was consonant with the explanation of Senator
Miriam Defensor-Santiago that it would not apply to telexes or
faxes, except computer-generated faxes, unlike the United Nations
96
model law on electronic commerce. In explaining the term

electronic record patterned after the ECommerce Law of Canada,
Senator Defensor-Santiago had in mind the term electronic data
message. This term then, while maintaining part of the
UNCITRAL Model Laws terminology of data message, has
assumed a different context, this time, consonant with the term
electronic record in the law of Canada. It accounts for the
addition of the word electronic and the deletion of the phrase
but not limited to, electronic data interchange (EDI), electronic
mail, telegram, telex or telecopy. Noteworthy is that the Uniform
Law Conference of Canada, explains the term electronic record,
as
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drafted in the Uniform Electronic Evidence Act, in a manner
strikingly similar to Sen. Santiagos explanation during the Senate
deliberations: x x x There is no question then that when Congress
formulated the term electronic data message, it intended the
same meaning as the term electronic record in the Canada law.
This construction of the term electronic data message,
which excludes telexes or faxes, except computer-generated faxes, is
in harmony with the Electronic Commerce Laws focus on
paperless communications and the functional equivalent
approach that it espouses. In fact, the deliberations of the
Legislature are replete with discussions on paperless and digital
transactions. Facsimile transmissions are not, in this sense,
paperless, but verily are paper-based.
Same; Same; Same; Same; Same; Same; A facsimile machine,
which was first patented in 1843 by Alexander Bain, is a device
that can send or receive pictures and text over a telephone line, and
works by digitizing an image; A fax machine is essentially an image

scanner, a modem and a computer printer combined into a highly
specialized package.A facsimile machine, which was first
patented in 1843 by Alexander Bain, is a device that can send or
receive pictures and text over a telephone line. It works by
digitizing an imagedividing it into a grid of dots. Each dot is
either on or off, depending on whether it is black or white.
Electronically, each dot is represented by a bit that has a value of
either 0 (off) or 1 (on). In this way, the fax machine translates a
picture into a series of zeros and ones (called a bit map) that can be
transmitted like normal computer data. On the receiving side, a
fax machine reads the incoming data, translates the zeros and
ones back into dots, and reprints the picture. A fax machine is
essentially an image scanner, a modem and a computer printer
combined into a highly specialized package. The scanner converts
the content of a physical document into a digital image, the modem
sends the image data over a phone line, and the printer at the
other end makes a duplicate of the original document.
Same; Same; Same; Same; Same; Same; In a virtual or
paperless environment, technically, there is no original copy to
speak of, as all direct printouts of the virtual reality are the same,
in all respects, and are considered as originals; Ineluctably, the
laws definition of electronic data message, which, as aforesaid, is
interchangeable with electronic document, could not have
included facsimile transmissions, which have an original paperbased copy as sent and a
414
14
Corporation
paper-based facsimile copy as received; While Congress
anticipated future developments in communications and computer
97
technology when it drafted the law, it excluded the early forms of

technology, like telegraph, telex and telecopy (except computergenerated faxes, which is a newer development as compared to the
ordinary fax machine to fax machine transmission), when it
defined the term electronic data message.In an ordinary
facsimile
transmission,
there
exists
an
original paperbased information or data that is scanned, sent through a phone
line, and re-printed at the receiving end. Be it noted that in
enacting the Electronic Commerce Act of 2000, Congress
intended virtual
or
paperlesswritings
to
be
the functional equivalent and to have the samelegal function as
paper-based documents. Further, in a virtual or paperless
environment, technically, there is no original copy to speak of, as
all direct printouts of the virtual reality are the same, in all
respects, and are considered as originals. Ineluctably, the laws
definition of electronic data message, which, as aforesaid, is
interchangeable with electronic document, could not have
included facsimile transmissions, which have an original paperbased copy as sent and a paper-based facsimile copy as received.
These two copies are distinct from each other, and have different
legal effects. While Congress anticipated future developments in
communications and computer technology when it drafted the law,
it excluded the early forms of technology, like telegraph, telex and
telecopy (except computer-generated faxes, which is a newer
development as compared to the ordinary fax machine to fax
machine transmission), when it defined the term electronic data
message.
Same; Same; Same; Same; Same; Same; Administrative
Law;The power of administrative officials to promulgate rules in
the implementation of a statute is necessarily limited to what is
found in the legislative enactment itself; The IRR went beyond the
parameters of the law when it adopted verbatim the UNCITRAL
Model Laws definition of data message, without considering the
intention of Congress when the latter deleted the phrase but not
limited to, electronic data interchange (EDI), electronic mail,

telegram, telex or telecopy.Clearly then, the IRR went beyond
the parameters of the law when it adopted verbatim the
UNCITRAL Model Laws definition of data message, without
considering the intention of Congress when the latter deleted the
phrase but not limited to, electronic data interchange (EDI),
electronic mail, telegram, telex or telecopy. The inclu415
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Corporation
sion of this phrase in the IRR offends a basic tenet in the
exercise of the rule-making power of administrative agencies. After
all, the power of administrative officials to promulgate rules in the
implementation of a statute is necessarily limited to what is found
in the legislative enactment itself. The implementing rules and
regulations of a law cannot extend the law or expand its coverage,
as the power to amend or repeal a statute is vested in the
Legislature. Thus, if a discrepancy occurs between the basic law
and an implementing rule or regulation, it is the former that
prevails, because the law cannot be broadened by a mere
administrative issuancean administrative agency certainly
cannot amend an act of Congress. Had the Legislature really
wanted ordinary fax transmissions to be covered by the mantle of
the Electronic Commerce Act of 2000, it could have easily lifted
without a bit of tatter the entire wordings of the UNCITRAL
Model Law.
Same; Same; Same; Best
Evidence
Rule; Facsimile
Transmisions; A facsimile transmission cannot be considered as
electronic evidenceit is not the functional equivalent of an
original under the Best Evidence Rule and is not admissible as
electronic
evidence.We,
therefore,
conclude
that
the
98
termselectronic data message and electronic document, as

defined under the Electronic Commerce Act of 2000, do not include
a
facsimile
transmission.
Accordingly,
a facsimile
transmissioncannot be considered as electronic evidence. It is not
the functional equivalent of an original under the Best Evidence
Rule and is not admissible as electronic evidence.
Same; Same; Same; Same; Same; Since
a
facsimile
transmission is not an electronic data message or an electronic
document, and cannot be considered as electronic evidence by the
Court, with greater reason is a photocopy of such a fax
transmission not electronic evidence.Since a facsimile
transmission is not an electronic data message or an electronic
document, and cannot be considered as electronic evidence by the
Court, with greater reason is a photocopy of such a fax
transmission not electronic evidence. In the present case,
therefore, Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2POSTS0401-2 (Exhibits E and F), which are mere photocopiesof
the original fax transmittals, are not electronic evidence, contrary
to the position of both the trial and the appellate courts.
416
16
Corporation
Actions; Contracts; Breach of Contract; Requisites.Despite
the pro forma invoices not being electronic evidence, this Court
finds that respondent has proven by preponderance of evidence the
existence of a perfected contract of sale. In an action for damages
due to a breach of a contract, it is essential that the claimant
proves (1) the existence of a perfected contract, (2) the breach
thereof by the other contracting party and (3) the damages which
he/she sustained due to such breach. Actori incumbit onus
probandi. The burden of proof rests on the party who advances a
proposition affirmatively. In other words, a plaintiff in a civil

action must establish his case by a preponderance of evidence, that
is, evidence that has greater weight, or is more convincing than
that which is offered in opposition to it.
Civil Law; Same; Sales; Elements; In general, contracts are
perfected by mere consent, which is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to
constitute the contract.In general, contracts are perfected by
mere consent, which is manifested by the meeting of the offer and
the acceptance upon the thing and the cause which are to
constitute the contract. The offer must be certain and the
acceptance absolute. They are, moreover, obligatory in whatever
form they may have been entered into, provided all the essential
requisites for their validity are present. Sale, being a consensual
contract, follows the general rule that it is perfected at the moment
there is a meeting of the minds upon the thing which is the object
of the contract and upon the price. From that moment, the parties
may reciprocally demand performance, subject to the provisions of
the law governing the form of contracts. The essential elements of
a contract of sale are (1) consent or meeting of the minds, that is,
to transfer ownership in exchange for the price, (2) object certain
which is the subject matter of the contract, and (3) cause of the
obligation which is established.
Same; Same; Same; Evidence; Best Evidence Rule; Requisites
Before Admission of Secondary Evidence; It has been held that
where the missing document is the foundation of the action, more
strictness in proof is required than where the document is only
collaterally involved.Because these documents are mere
photocopies, they are simply secondary evidence, admissible only
upon compliance with Rule 130, Section 5, which states, [w]hen
the original document has been lost or destroyed, or cannot be
produced in court, the offeror, upon proof of its execution or
existence and the cause of its unavail99
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ability without bad faith on his part, may prove its contents
by a copy, or by a recital of its contents in some authentic
document, or by the testimony of witnesses in the order stated.
Furthermore, the offeror of secondary evidence must prove the
predicates thereof, namely: (a) the loss or destruction of the
original without bad faith on the part of the proponent/offeror
which can be shown by circumstantial evidence of routine practices
of destruction of documents; (b) the proponent must prove by a fair
preponderance of evidence as to raise a reasonable inference of the
loss or destruction of the original copy; and (c) it must be shown
that a diligent and bona fide but unsuccessful search has been
made for the document in the proper place or places. It has been
held that where the missing document is the foundation of the
action, more strictness in proof is required than where the
document is only collaterally involved. Given these norms, we find
that respondent failed to prove the existence of the original fax
transmissions of Exhibits E and F, and likewise did not
sufficiently prove the loss or destruction of the originals. Thus,
Exhibits E and F cannot be admitted in evidence and accorded
probative weight.
Same; Same; Same; Same; Appeals; Evidence not objected to is
deemed admitted and may be validly considered by the court in
arriving at its judgment; Issues not raised on appeal are deemed
abandoned.Pro Forma Invoice No. ST2-POSTS080-1 (Exhibit
X), however, is a mere photocopy of its original. But then again,
petitioner MCC does not assail the admissibility of this document
in the instant petition. Verily, evidence not objected to is deemed
admitted and may be validly considered by the court in arriving at

its judgment. Issues not raised on appeal are deemed abandoned.
Same; Same; Same; Same; Appropriate conduct by the parties
may be sufficient to establish an agreement, and while there may be
instances where the exchange of correspondence does not disclose
the exact point at which the deal was closed, the actions of the
parties may indicate that a binding obligation has been
undertaken.The logical chain of events, as gleaned from the
evidence of both parties, started with the petitioner and the
respondent agreeing on the sale and purchase of 220MT of
stainless steel at US$1,860.00 per MT. This initial contract
wasperfected. Later, as petitioner asked for several extensions to
pay, adjustments in the delivery dates, and discounts in the price
as originally agreed, the parties slightly varied
418
18
Corporation
the terms of their contract, without necessarily novating it, to
the effect that the original order was reduced to 200MT, split into
two deliveries, and the price discounted to US$1,700 per MT.
Petitioner, however, paid only half of its obligation and failed to
open an L/C for the other 100MT. Notably, the conduct of both
parties sufficiently established the existence of a contract of sale,
even if the writings of the parties, because of their contested
admissibility, were not as explicit in establishing a contract.
Appropriate conduct by the parties may be sufficient to establish
an agreement, and while there may be instances where the
exchange of correspondence does not disclose the exact point at
which the deal was closed, the actions of the parties may indicate
that a binding obligation has been undertaken.
100
Same; Same; Same; It is a well-entrenched rule that the failure

of a buyer to furnish an agreed letter of credit is a breach of the
contract between buyer and seller; Damages for failure to open a
commercial credit may, in appropriate cases, include the loss of
profit which the seller would reasonably have made had the
transaction been carried out.With our finding that there is a
valid contract, it is crystal-clear that when petitioner did not open
the L/C for the first half of the transaction (100MT), despite
numerous demands from respondent Ssangyong, petitioner
breached its contractual obligation. It is a well-entrenched rule
that the failure of a buyer to furnish an agreed letter of credit is a
breach of the contract between buyer and seller. Indeed, where the
buyer fails to open a letter of credit as stipulated, the seller or
exporter is entitled to claim damages for such breach. Damages for
failure to open a commercial credit may, in appropriate cases,
include the loss of profit which the seller would reasonably have
made had the transaction been carried out.
Same; Same; Same; Evidence; Breach of Contract; Damages;It
is axiomatic that actual or compensatory damages cannot be
presumed, but must be proven with a reasonable degree of
certainty.This Court, however, finds that the award of actual
damages is not in accord with the evidence on record. It is
axiomatic that actual or compensatory damages cannot be
presumed, but must be proven with a reasonable degree of
certainty. In Villafuerte v. Court of Appeals, 459 SCRA 58 (2005),
we explained that: Actual or compensatory damages are those
awarded in order to compensate a party for an injury or loss he
suffered. They arise out of a sense of natural
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Corporation
4
19
justice and are aimed at repairing the wrong done. Except as

provided by law or by stipulation, a party is entitled to an
adequate compensation only for such pecuniary loss as he has duly
proven. It is hornbook doctrine that to be able to recover actual
damages, the claimant bears the onus of presenting before the
court actual proof of the damages alleged to have been suffered.
Same; Same; Same; Same; Same; Same; In the absence of
corroborative evidence, self-serving statements of account are not
sufficient basis to award actual damagesthe court cannot simply
rely on speculation, conjecture or guesswork as to the fact and
amount of damages, but must depend on competent proof that the
claimant had suffered, and on evidence of, the actual amount
thereof.The statement of account and the details of the losses
sustained by respondent due to the said breach are, at best, selfserving. It was respondent Ssangyong itself which prepared the
said documents. The items therein are not even substantiated by
official receipts. In the absence of corroborative evidence, the said
statement of account is not sufficient basis to award actual
damages. The court cannot simply rely on speculation, conjecture
or guesswork as to the fact and amount of damages, but must
depend on competent proof that the claimant had suffered, and on
evidence of, the actual amount thereof.
Same; Same; Same; Same; Same; Same; Nominal
damages
are recoverable where a legal right is technically violated and must
be vindicated against an invasion that has produced no actual
present loss of any kind or where there has been a breach of
contract and no substantial injury or actual damages whatsoever
have been or can be shown.The Court finds that petitioner
knowingly breached its contractual obligation and obstinately
refused to pay despite repeated demands from respondent.
Petitioner even asked for several extensions of time for it to make
good its obligation. But in spite of respondents continuous
accommodation, petitioner completely reneged on its contractual
101
duty. For such inattention and insensitivity, MCC must be held

liable for nominal damages. Nominal damages are recoverable
where a legal right is technically violated and must be vindicated
against an invasion that has produced no actual present loss of
any kind or where there has been a breach of contract and no
substantial injury or actual damages whatsoever have been or can
be shown. Accordingly, the Court awards nominal damages of
P200,000.00 to respondent Ssangyong.
Before the Court is a petition for review on certiorari of the

Decision of the Court of Appeals in CA-G.R. CV No.
82983and
its
Resolution denying
the
motion
for
reconsideration thereof.
Petitioner MCC Industrial Sales (MCC), a domestic
corporation with office at Binondo, Manila, is engaged in the
business of importing and wholesaling stainless steel
products.3 One of its suppliers is the Ssangyong Corporation
(Ssangyong), an international trading company5 with head
office in
1
420
_______________
20
Corporation
Attorneys Fees; In the instant case, the Court finds the award
of attorneys fees proper considering that the defendants unjustified
refusal to pay has compelled the plaintiff to litigate and to incur
expenses to protect its rights.As to the award of attorneys fees, it
is well-settled that no premium should be placed on the right to
litigate and not every winning party is entitled to an automatic
grant of attorneys fees. The party must show that he falls under
one of the instances enumerated in Article 2208 of the Civil Code.
In the instant case, however, the Court finds the award of
attorneys fees proper, considering that petitioner MCCs
unjustified refusal to pay has compelled respondent Ssangyong to
litigate and to incur expenses to protect its rights.

Zamora, Poblador, Vasquez & Bretaa for petitioner.
Donato, Zarate & Rodriguez for respondent.
Penned by Associate Justice Rodrigo V. Cosico, with Associate Justices
Danilo B. Pine and Arcangelita Romilla-Lontok, concurring; CARollo, pp.

120-131.
2
CA Rollo, pp. 164-165.
Records, p. 2.
TSN, June 18, 2003, pp. 7-8.
TSN, August 21, 2002, p. 7.
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421
Seoul, South Korea and regional headquarters in Makati

City, Philippines. The two corporations conducted business
through telephone calls and facsimile or telecopy
transmissions. Ssangyong would send the pro formainvoices
containing the details of the steel product order to MCC; if
the latter conforms thereto, its representative affixes his
signature on the faxed copy and sends it back to Ssangyong,
again by fax. On April 13, 2000, Ssangyong Manila Office
sent, by fax, a letter addressed to Gregory Chan, MCC
Manager [also the President of Sanyo Seiki Stainless Steel
Corporation], to confirm MCCs and Sanyo Seikis order
6
10
NACHURA, J.:
102
of 220 metric tons (MT) of hot rolled stainless steel under a

preferential rate of US$1,860.00 per MT. Chan, on behalf of
the corporations, assented and affixed his signature on
the conforme portion of the letter.
On April 17, 2000, Ssangyong forwarded to MCC Pro
Forma Invoice No. ST2-POSTSO401 containing the terms
and conditions of the transaction. MCC sent back by fax to
Ssangyong the invoice bearing the conformity signature of
Chan. As stated in the pro forma invoice, payment for the
ordered steel products would be made through an irrevocable
letter of credit (L/C) at sight in favor of Ssangyong. Follow-
10
Records, p. 49.
11
Id., at pp. 336-337; Exhibit W-1.
In the meantime, because of its confirmed transaction

with MCC, Ssangyong placed the order with its steel
manufacturer, Pohang Iron and Steel Corporation (POSCO),
in South Korea and paid the same in full.
Because MCC could open only a partial letter of credit, the
order for 220MT of steel was split into two, one
for110MT covered
by Pro
Forma Invoice
No. ST2POSTS0401-1 and another for 110MT covered by ST2POSTS0401-2, both dated April 17, 2000.
On June 20, 2000, Ssangyong, through its Manila Office,
informed Sanyo Seiki and Chan, by way of a fax transmittal,
that it was ready to ship 193.597MT of stainless steel from
Korea to the Philippines. It requested that the opening of the
L/C be facilitated. Chan affixed his signature on the fax
transmittal and returned the same, by fax, to Ssangyong.
Two days later, on June 22, 2000, Ssangyong Manila
Office informed Sanyo Seiki, thru Chan, that it was able to
secure a US$30/MT price adjustment on the contracted price
of US$1,860.00/MT for the 200MT stainless steel, and that
the goods were to be shipped in two tranches, the first 100MT
on that day and the second 100MT not later than June 27,
2000.
12
Id., at pp. 216-217; Exhibit E-1. The document is an original copy of
_______________
11
12
13
14
_______________
6
Records, p. 198; Exhibit A.
CA Rollo, p. 97.
TSN, August 21, 2002, p. 18.
Records, pp. 336-337; Exhibit W. The document is an original copy of
the fax transmittal in thermal paper received by Ssangyong, however, the

same is accompanied by a photocopy thereof containing a clearer print of its
contents.
15
16
17
18
19
20

15
TSN, August 21, 2002, pp. 41-42, 67-68.
contents.
16
TSN, October 15, 2003, pp. 89-92.
17
Records, p. 215; Exhibit E. This is a mere photocopy of the fax
13
Id.; Exhibit E-2.
14
Id.; Exhibit E-1.
transmittal.
18
422
422

Corporation
ing their usual practice, delivery of the goods was to be made

after the L/C had been opened.
Id., at p. 218; Exhibit F. This is a mere photocopy of the fax
transmittal.
19
Id., at pp. 219-220; Exhibit G. The document is an original copy of the
fax transmittal in thermal paper received by Ssangyong, however, the same

is accompanied by a photocopy thereof containing a clearer print of its
contents.
20
Id.; Exhibit G-1.
103
423
VOL. 536, OCTOBER 17, 2007

Corporation
423
22
23
24
25
26
21
Id., at p. 221; Exhibit H.
22
Id., at p. 223; Exhibit I.
23
Id., at p. 224; Exhibit J.
Id., at p. 226; Exhibit L. The document is a mere photocopy of the
26
21
_______________
Id., at p. 225; Exhibit K.
25
original fax message.
Ssangyong reiterated its request for the facilitation of the

L/Cs opening.
Ssangyong later, through its Manila Office, sent a letter,
on June 26, 2000, to the Treasury Group of Sanyo Seiki that
it was looking forward to receiving the L/C details and a
cable copy thereof that day. Ssangyong sent a separate letter
of the same date to Sanyo Seiki requesting for the opening of
the L/C covering payment of the first 100MT not later than
June 28, 2000. Similar letters were transmitted by
Ssangyong Manila Office on June 27, 2000. On June 28,
2000, Ssangyong sent another facsimile letter to MCC stating
that its principal in Korea was already in a difficult
situation because of the failure of Sanyo Seiki and MCC to
open the L/Cs.
The following day, June 29, 2000, Ssangyong received, by
fax, a letter signed by Chan, requesting an extension of time
to open the L/C because MCCs credit line with the bank had
been fully availed of in connection with another transaction,
and MCC was waiting for an additional credit line. On the
same date, Ssangyong replied, requesting that it be informed
of the date when the L/C would be opened, preferably at the
earliest possible time, since its Steel Team 2 in Korea was
having problems and Ssangyong was incurring warehousing
costs. To maintain their good business relationship and to
support MCC in its financial predicament, Ssangyong offered
to negotiate with its steel manufacturer, POSCO, another
27
24
Id., at pp. 227-228; Exhibit M. The document is an original copy of the
fax transmittal in thermal paper received by Ssangyong, however, the same

is accompanied by a photocopy thereof containing a clearer print of its
contents.
27
Id., at p. 229; Exhibit N.
424
424

Corporation
US$20/MT discount on the price of the stainless steel

ordered. This was intimated in Ssangyongs June 30, 2000
letter to MCC. On July 6, 2000, another follow-up letter for
the opening of the L/C was sent by Ssangyong to MCC.
However, despite Ssangyongs letters, MCC failed to open
a letter of credit. Consequently, on August 15, 2000,
Ssangyong, through counsel, wrote Sanyo Seiki that if the
L/Cs were not opened, Ssangyong would be compelled to
cancel the contract and hold MCC liable for damages for
breach thereof amounting to US$96,132.18, inclusive of
warehouse expenses, related interests and charges.
Later, Pro
Forma Invoice
Nos. ST2-POSTS0801 andST2-POSTS080-2 dated August 16, 2000 were issued
by Ssangyong and sent via fax to MCC. The invoices slightly
varied the terms of the earlier pro forma invoices
(ST2POSTSO401, ST2-POSTS0401-1 and ST2-POSTS04012), in that the quantity was now officially100MT per invoice
and the price was reduced toUS$1,700.00 per MT. As can be
gleaned from the photocopies of the said August 16, 2000
invoices submitted to the court, they both bear the
conformity signature of MCC Manager Chan.
28
29
30
31
32
33
104
On August 17, 2000, MCC finally opened an L/C with

PCIBank for US$170,000.00 covering payment for 100MT of
stainless steel coil under Pro Forma Invoice No. ST2_______________
28
Id., at p. 230; Exhibit O. The document is a mere photocopy of the
original letter.
38
29
Id., at p. 231; Exhibit P.
30
Id., at pp. 232-233; Exhibit Q.
31
Id., at p. 232.
32
Id., at p. 338; Exhibit X. The document is a mere photocopy of the
original fax transmittal.

33
August 15, 2000) and other damages for breach. Chan failed
to reply.
Exasperated, Ssangyong through counsel wrote a letter to
MCC, on September 11, 2000, canceling the sales contract
under ST2-POSTS0401-1/ST2-POSTS0401-2,
and
demanding payment of US$97,317.37 representing losses,
warehousing expenses, interests and charges.
Ssangyong then filed, on November 16, 2001, a civil action
for damages due to breach of contract against defendants
MCC, Sanyo Seiki and Gregory Chan before the Regional
Trial Court of Makati City. In its complaint, Ssangyong
39
_______________
Id., at p. 321; Exhibit 2-C. The document was certified as the true copy
of its original by PCIBank.
34
Id., at pp. 318-320; Exhibits 2, 2-A and 2-B. These documents were
certified as true copies of their originals by PCIBank.
425
VOL. 536, OCTOBER 17, 2007

Corporation
425
POSTS080-2. The goods covered by the said invoice were

then shipped to and received by MCC.
MCC then faxed to Ssangyong a letter dated August 22,
2000 signed by Chan, requesting for a price adjustment of
the order stated in Pro Forma Invoice No. ST2-POSTS080-1,
considering that the prevailing price of steel at that time was
US$1,500.00/MT, and that MCC lost a lot of money due to a
recent strike.
Ssangyong rejected the request, and, on August 23, 2000,
sent a demand letter to Chan for the opening of the second
and last L/C of US$170,000.00 with a warning that, if the
said L/C was not opened by MCC on August 26, 2000,
Ssangyong would be constrained to cancel the contract and
hold MCC liable for US$64,066.99 (representing cost
difference, warehousing expenses, interests and charges as of
34
35
36
37
35
Id., at pp. 300-317; Exhibits 1-B to 1-R.
36
Id., at pp. 378-379; Exhibit DD. The document is an original copy of

contents.
37
Id., at p. 234; Exhibit R.
38
Id., at p. 235; Exhibit S.
39
Id., at pp. 1-10.
426
426

Corporation
alleged that defendants breached their contract when they

refused to open the L/C in the amount of US$170,000.00 for
the remaining 100MT of steel under Pro Forma Invoice
Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2.
After Ssangyong rested its case, defendants filed a
Demurrer to Evidence alleging that Ssangyong failed to
present the original copies of the pro forma invoices on which
40
105
the civil action was based. In an Order dated April 24, 2003,
the court denied the demurrer, ruling that the documentary
evidence presented had already been admitted in the
December 16, 2002 Order and their admissibility finds
support in Republic Act (R.A.) No. 8792, otherwise known as
the Electronic Commerce Act of 2000. Considering that both
testimonial and documentary evidence tended to
substantiate the material allegations in the complaint,
Ssangyongs evidence sufficed for purposes of a prima
facie case.
After trial on the merits, the RTC rendered its Decision on
March 24, 2004, in favor of Ssangyong. The trial court ruled
that when plaintiff agreed to sell and defendants agreed to
buy the 220MT of steel products for the price of US$1,860 per
MT, the contract was perfected. The subject transaction was
evidenced by Pro Forma Invoice Nos. ST2-POSTS04011 and ST2-POSTS0401-2, which were later amended only in
terms of reduction of volume as well as the price per MT,
following Pro
Forma Invoice
Nos. ST2-POSTS0801 and ST2POSTS080-2. The RTC, however, excluded Sanyo
Seiki from liability for lack of competent evidence.
The fallo of the decision reads:
VOL. 536, OCTOBER 17, 2007

Corporation
427
41
42
43
WHEREFORE, premises considered, Judgment is hereby

rendered ordering defendants MCC Industrial Sales Corporation
and Gregory Chan, to pay plaintiff, jointly and severally the
following:
_______________
40
Id., at pp. 262-267.
41
Id., at p. 254.
42
Id., at p. 275.
43
Id., at pp. 408-412.
427
1. 1)Actual damages of US$93,493.87 representing the

outstanding principal claim plus interest at the rate of
6%per annum from March 30, 2001.
2. 2)Attorneys fees in the sum of P50,000.00 plus P2,000.00
per counsels appearance in court, the same being deemed
just and equitable considering that by reason of
defendants breach of their obligation under the subject
contract, plaintiff was constrained to litigate to enforce its
rights and recover for the damages it sustained, and
therefore had to engage the services of a lawyer.
3. 3)Costs of suit.
No award of exemplary damages for lack of sufficient basis.
SO ORDERED.
44
On April 22, 2004, MCC and Chan, through their counsel of

record, Atty. Eladio B. Samson, filed their Notice of
Appeal. On June 8, 2004, the law office of Castillo Zamora &
Poblador entered its appearance as their collaborating
counsel.
In their Appeal Brief filed on March 9, 2005, MCC and
Chan raised before the CA the following errors of the RTC:
45
46
1. I.THE HONORABLE COURT A QUO PLAINLY

ERRED IN FINDING THAT APPELLANTS
VIOLATED THEIR CONTRACT WITH APPELLEE
1. A.THE HONORABLE COURT A QUO PLAINLY
ERRED IN FINDING THAT APPELLANTS
AGREED TO PURCHASE 200 METRIC TONS OF
106
STEEL PRODUCTS FROM APPELLEE, INSTEAD

OF ONLY 100 METRIC TONS.
1 andST2POSTS0401-2 (Exhibits E, E-1 and F) were

admissible in evidence, although they were mere facsimile
printouts of MCCs steel orders. The dispositive portion of
the appellate courts decision reads:
49
1. 1.THE HONORABLE COURT A QUO PLAINLY

ERRED IN ADMITTING IN EVIDENCE THE PRO
FORMA INVOICES WITH REFERENCE NOS.
ST2POSTS0401-1 AND ST2-POSTS0401-2.
WHEREFORE, premises considered, the Court holds:

1. (1)The award of actual damages, with interest, attorneys
fees and costs ordered by the lower court is hereby
AFFIRMED.
2. (2)Appellant Gregory Chan is hereby ABSOLVED from any
liability.
1. II.THE HONORABLE COURT A QUO PLAINLY

ERRED IN AWARDING ACTUAL DAMAGES TO
APPELLEE.
SO ORDERED.
_______________
44
Id., at pp. 411-412.
45
Id., at p. 444.
46
CA rollo, pp. 29-49.
50
A copy of the said Decision was received by MCCs and

Chans principal counsel, Atty. Eladio B. Samson, on
September 14, 2005. Their collaborating counsel, Castillo
Zamora & Poblador, likewise, received a copy of the CA
decision on September 19, 2005.
On October 4, 2005, Castillo Zamora & Poblador, on
behalf of MCC, filed a motion for reconsideration of the said
51
52
428
428
53

Corporation
1. III.THE HONORABLE COURT A QUO PLAINLY
ERRED IN AWARDING ATTORNEYS FEES TO
APPELLEE.
2. IV.THE HONORABLE COURT A QUO PLAINLY
ERRED IN FINDING APPELLANT GREGORY
CHAN JOINTLY AND SEVERALLY LIABLE WITH
APPELLANT MCC.
47
_______________
47
Id., at p. 36.
48
Supra note 1.
49
50
Id., at p. 131.
51
Id., at p. 160.
52
The firms name was later changed to Zamora Poblador Vasquez &
Bretaa.
53
On August 31, 2005, the CA rendered its Decision affirming

the ruling of the trial court, but absolving Chan of any
liability. The appellate court ruled, among others, that Pro
Forma Invoice
Nos. ST2-POSTS0401-
CA Rollo, p. 161.
48
429
VOL. 536, OCTOBER 17, 2007

Corporation
429
107
decision. Ssangyong opposed the motion contending that the

decision of the CA had become final and executory on account
of the failure of MCC to file the said motion within the
reglementary period. The appellate court resolved, on
November 22, 2005, to deny the motion on its
merits, without, however, ruling on the procedural issue
raised.
Aggrieved,
MCC
filed
a
petition
for
review
on certiorari before this Court, imputing the following errors
to the Court of Appeals:
54
55
56
THE COURT OF APPEALS DECIDED A LEGAL QUESTION

NOT IN ACCORDANCE WITH JURISPRUDENCE AND
SANCTIONED A DEPARTURE FROM THE USUAL AND
ACCEPTED COURSE OF JUDICIAL PROCEEDINGS BY
REVERSING THE COURT A QUOS DISMISSAL OF THE
COMPLAINT IN CIVIL CASE NO. 02124 CONSIDERING THAT:
1. I.THE COURT OF APPEALS ERRED IN SUSTAINING
THE ADMISSIBILITY IN EVIDENCE OF THE
PROFORMA INVOICES WITH REFERENCE NOS.
ST2POSTSO401-1 AND ST2-POSTSO401-2, DESPITE
THE FACT THAT THE SAME WERE MERE
PHOTOCOPIES OF FACSIMILE PRINTOUTS.
2. II.THE COURT OF APPEALS FAILED TO APPRECIATE
THE OBVIOUS FACT THAT, EVEN ASSUMING
PETITIONER
BREACHED
THE
SUPPOSED
CONTRACT, THE FACT IS THAT PETITIONER FAILED
TO PROVE THAT IT SUFFERED ANY DAMAGES AND
THE AMOUNT THEREOF.
3. III.THE AWARD OF ACTUAL DAMAGES IN THE
AMOUNT
OF
US$93,493.87
IS
SIMPLY
UNCONSCIONABLE AND SHOULD HAVE BEEN AT
LEAST REDUCED, IF NOT DELETED BY THE COURT
OF APPEALS.
57
_______________
54
Id., at pp. 140-150.
55
Supra note 2.
56
Rollo, pp. 9-26.
57
Id., at p. 15.
430
430

Corporation
In its Comment, Ssangyong sought the dismissal of the

petition, raising the following arguments: that the CA
decision dated 15 August 2005 is already final and executory,
because MCCs motion for reconsideration was filed beyond
the reglementary period of 15 days from receipt of a copy
thereof, and that, in any case, it was a pro forma motion; that
MCC breached the contract for the purchase of the steel
products when it failed to open the required letter of credit;
that the printout copies and/or photocopies of facsimile or
telecopy transmissions were properly admitted by the trial
court because they are considered original documents under
R.A. No. 8792; and that MCC is liable for actual damages
and attorneys fees because of its breach, thus, compelling
Ssangyong to litigate.
The principal issues that this Court is called upon to
resolve are the following:
1. I Whether the CA decision dated 15 August 2005 is
already final and executory;
2. II Whether the print-out and/or photocopies of
facsimile transmissions are electronic evidence and
admissible as such;
3. III Whether there was a perfected contract of sale
between MCC and Ssangyong, and, if in the
108
affirmative, whether MCC breached the said contract;

and
4. IV Whether the award of actual damages and
attorneys fees in favor of Ssangyong is proper and
justified.
-IIt cannot be gainsaid that in Albano v. Court of Appeals, we
held that receipt of a copy of the decision by one of several
counsels on record is notice to all, and the period to appeal
commences on such date even if the other counsel has not yet
58
_______________
58
415 Phil. 761; 362 SCRA 667 (2001).
59
431
VOL. 536, OCTOBER 17, 2007

Corporation
it was Castillo Zamora & Poblador which filed the motion for
the reconsideration of the CA decision, and they did so on
October 5, 2005, well within the 15-day period from
September 29, 2005, when they received their copy of the CA
decision. This could also be the reason why the CA did not
find it necessary to resolve the question of the timeliness of
petitioners motion for reconsideration, even as the CA
denied the same.
Independent of this consideration though, this Court
assiduously reviewed the records and found that strong
concerns of substantial justice warrant the relaxation of this
rule.
In Philippine Ports Authority v. Sargasso Construction
and Development Corporation, we ruled that:
431
received a copy of the decision. In this case, when Atty.

Samson received a copy of the CA decision on September 14,
2005, MCC had only fifteen (15) days within which to file a
motion for reconsideration conformably with Section 1, Rule
52 of the Rules of Court, or to file a petition for review
on certiorari in accordance with Section 2, Rule 45. The
period should not be reckoned from September 29, 2005
(when Castillo Zamora & Poblador received their copy of the
decision) because notice to Atty. Samson is deemed notice to
collaborating counsel.
We note, however, from the records of the CA, that it was
Castillo Zamora & Poblador, not Atty. Samson, which filed
both MCCs and Chans Brief and Reply Brief. Apparently,
the arrangement between the two counsels was for the
collaborating, not the principal, counsel to file the appeal
brief and subsequent pleadings in the CA. This explains why
In Orata v. Intermediate Appellate Court, we held that where

strong considerations of substantive justice are manifest in the
petition, this Court may relax the strict application of the rules of
procedure in the exercise of its legal jurisdiction. In addition to the
basic merits of the main case, such a petition usually embodies
justifying circumstance which warrants our heeding to the
petitioners
_______________
59
G.R. No. 146478, July 30, 2004, 435 SCRA 512.
432
432

Corporation
cry for justice in spite of the earlier negligence of counsel. As we

held in Obut v. Court of Appeals:
[W]e cannot look with favor on a course of action which would place the
administration of justice in a straight jacket for then the result would be
a poor kind of justice if there would be justice at all. Verily, judicial
109
orders, such as the one subject of this petition, are issued to be obeyed,
nonetheless a non-compliance is to be dealt with as the circumstances
attending the case may warrant. What should guide judicial action is the
principle that a party-litigant is to be given the fullest opportunity to
establish the merits of his complaint or defense rather than for him to
lose life, liberty, honor or property on technicalities.
The rules of procedure are used only to secure and not override
or frustrate justice. A six-day delay in the perfection of the appeal,
as in this case, does not warrant the outright dismissal of the
appeal. In Development Bank of the Philippines vs. Court of
Appeals, we gave due course to the petitioners appeal despite the
late filing of its brief in the appellate court because such appeal
involved public interest. We stated in the said case that the Court
may exempt a particular case from a strict application of the rules
of procedure where the appellant failed to perfect its appeal within
the reglementary period, resulting in the appellate courts failure
to obtain jurisdiction over the case. In Republic vs. Imperial, Jr.,
we also held that there is more leeway to exempt a case from the
strictness of procedural rules when the appellate court has already
obtained jurisdiction over the appealed case. We emphasize that:
[T]he rules of procedure are mere tools intended to facilitate the
attainment of justice, rather than frustrate it. A strict and rigid
application of the rules must always be eschewed when it would subvert
the rules primary objective of enhancing fair trials and expediting
justice. Technicalities should never be used to defeat the substantive
rights of the other party. Every party-litigant must be afforded the
amplest opportunity for the proper and just determination of his cause,
free from the constraints of technicalities.
60
_______________
60
Philippine Ports Authority v. Sargasso Construction & Development
Corporation, supra, at pp. 527-528.

433
VOL. 536, OCTOBER 17, 2007

Corporation
433
Moreover, it should be remembered that the Rules were

promulgated to set guidelines in the orderly administration
of justice, not to shackle the hand that dispenses it.
Otherwise, the courts would be consigned to being mere
slaves to technical rules, deprived of their judicial discretion.
Technicalities must take a backseat to substantive rights.
After all, it is circumspect leniency in this respect that will
give the parties the fullest opportunity to ventilate the
merits of their respective causes, rather than have them lose
life, liberty, honor or property on sheer technicalities.
The other technical issue posed by respondent is the
alleged pro
forma nature
of
MCCs
motion
for
reconsideration, ostensibly because it merely restated the
arguments previously raised and passed upon by the CA.
In this connection, suffice it to say that the mere
restatement of arguments in a motion for reconsideration
does not per se result in a pro forma motion. In Security Bank
and Trust Company, Inc. v. Cuenca, we held that a motion
for reconsideration may not be necessarily pro forma even if
it reiterates the arguments earlier passed upon and rejected
by the appellate court. A movant may raise the same
arguments precisely to convince the court that its ruling was
erroneous. Furthermore, the pro formarule will not apply if
the arguments were not sufficiently passed upon and
answered in the decision sought to be reconsidered.
- II The second issue poses a novel question that the Court
welcomes. It provides the occasion for this Court to
pronounce a definitive interpretation of the equally
innovative provisions of the Electronic Commerce Act of 2000
(R.A. No. 8792) vis-vis the Rules on Electronic Evidence.
61
62
_______________
110
61
Yuchengco v. Court of Appeals, G.R. No. 165793, October 27, 2006,505
SCRA 716, 723.

62
396 Phil. 1081; 341 SCRA 781 (2000).
434
434

Corporation
Although the parties did not raise the question whether the
original facsimile transmissions are electronic data
messages or electronic documents within the context of the
Electronic Commerce Act (the petitioner merely assails as
inadmissible evidence the photocopies of the said facsimile
transmissions), we deem it appropriate to determine first
whether the said fax transmissions are indeed within the
coverage of R.A. No. 8792 before ruling on whether the
photocopies thereof are covered by the law. In any case, this
Court has ample authority to go beyond the pleadings when,
in the interest of justice or for the promotion of public policy,
there is a need to make its own findings in order to support
its conclusions.
Petitioner contends that the photocopies of the pro
forma invoices presented by respondent Ssangyong to prove
the perfection of their supposed contract of sale are
inadmissible in evidence and do not fall within the ambit of
R.A. No. 8792, because the law merely admits as the best
evidence the original fax transmittal. On the other hand,
respondent posits that, from a reading of the law and the
Rules on Electronic Evidence, the original facsimile
transmittal of the pro forma invoice is admissible in evidence
since it is an electronic document and, therefore, the best
evidence under the law and the Rules. Respondent further
claims that the photocopies of these fax transmittals
(specifically ST2-POSTS0401-1 and ST2-POSTS0401-2) are
admissible under the Rules on Evidence because the
63
respondent sufficiently explained the nonproduction of the

original fax transmittals.
In resolving this issue, the appellate court ruled as
follows:
_______________
63
Maharlika Publishing Corporation v. Tagle, 226 Phil. 456, 463-464;142
SCRA 553, 561 (1986).

435
VOL. 536, OCTOBER 17, 2007

Corporation
435
Admissibility of Pro Forma

Invoices; Breach of Contract
by Appellants
Turning first to the appellants argument against the admissibility
of the Pro Forma Invoices with Reference Nos. ST2POSTS0401-1
and ST2-POSTS0401-2 (Exhibits E, E-1 and F, pp. 215-218,
Records), appellants argue that the said documents are
inadmissible (sic) being violative of the best evidence rule.
The argument is untenable.
The copies of the said pro-forma invoices submitted by the
appellee are admissible in evidence, although they are mere
electronic facsimile printouts of appellants orders. Such facsimile
printouts are considered Electronic Documents under the New
Rules on Electronic Evidence, which came into effect on August 1,
2001. (Rule 2, Section 1 [h], A.M. No. 01-7-01-SC).
(h) Electronic document refers to information or the representation of
information, data, figures, symbols or other modes of written expression,
described or however represented, by which a right is established or an
obligation extinguished, or by which a fact may be proved and affirmed,
which is received, recorded, transmitted, stored, processed, retrieved or
produced electronically. It includes digitally signed documents and any
111
printout or output, readable by sight or other means, which accurately
(a) Where the law requires a document to be in writing, that requirement is met by
reflects the electronic data message or electronic document. For purposes
an electronic document if the said electronic document maintains its integrity and
of
reliability and can be authenticated so as to be usable for subsequent reference, in
these
Rules,
the
term
electronic
document
may
be
used
interchangeably with electronic data message.
An electronic document shall be regarded as the equivalent of

an original document under the Best Evidence Rule, as long as it is
a printout or output readable by sight or other means, showing to
reflect the data accurately. (Rule 4, Section 1, A.M. No. 01-7-01SC)
The ruling of the Appellate Court is incorrect. R.A. No.

8792, otherwise known as the Electronic Commerce Act of
that
1. (i)The electronic document has remained complete and unaltered, apart from
the addition of any endorsement and any authorized change, or any change
which arises in the normal course of communication, storage and display;
and
2. (ii)The electronic document is reliable in the light of the purpose for which it
was generated and in the light of all the relevant circumstances.
64
_______________
64
1. (b)Paragraph (a) applies whether the requirement therein is in the form of an

obligation or whether the law simply provides consequences for the
document not being presented or retained in its original form.
Entitled An Act Providing for the Recognition and Use of Electronic
Commercial and Non-Commercial Transactions and Documents, Penalties for
2. (c)Where the law requires that a document be presented or retained in its

original form, that requirement is met by an electronic document if
Unlawful Use Thereof and For Other Purposes. Approved on June 14, 2000.
436
436
1. (i)There exists a reliable assurance as to the integrity of the document from

Corporation
2000, considers an electronic data message or an electronic

document as the functional equivalent of a written document
for evidentiary purposes. The Rules on Electronic Evi65
_______________
65
Sections 6, 7 and 10 of R.A. No. 8792 read:
the time when it was first generated in its final form; and
2. (ii)That document is capable of being displayed to the person to whom it is to
be presented: Provided, That no provision of this Act shall apply to vary any
and all
437
VOL. 536, OCTOBER 17, 2007

Corporation
437
purporting to give rise to such legal effect, or that it is merely referred to in that
dence regards an electronic document as admissible in

evidence if it complies with the rules on admissibility
prescribed
_______________
Sec. 6. Legal Recognition of Data Messages.Information shall not be denied legal

effect, validity or enforceability solely on the grounds that it is in the data message
66
Sec. 7. Legal Recognition of Electronic Documents.Electronic documents

shall have the legal effect, validity or enforceability as any other document or legal
writing, and
1. requirements of existing laws on formalities required in the execution of

documents for their validity.
112
For evidentiary purposes, an electronic document shall be the functional equivalent of

a written document under existing laws.
This Act does not modify any statutory rule relating to the admissibility of
electronic data messages or electronic documents, except the rules relating to
authentication and best evidence.
Sec. 10. Original Documents.(1) Where the law requires information to be
presented or retained in its original form, that requirement is met by an electronic
by the Rules of Court and related laws, and is authenticated

in the manner prescribed by the said Rules. An electronic
document is also the equivalent of an original document
under the Best Evidence Rule, if it is a printout or output
readable by sight or other means, shown to reflect the data
accurately.
67
68
_______________
data message or electronic document if:

67
Rule 3 of the Rules on Electronic Evidence reads:
1. (a)The integrity of the information from the time when it was first generated
RULE 3
in its final form, as an electronic data message or electronic document is
ELECTRONIC DOCUMENTS
shown by evidence aliunde or otherwise; and

2. (b)Where it is required that information be presented, that the information is
capable of being displayed to the person to whom it is to be presented.
(2) Paragraph (1) applies whether the requirement therein is in the form of an
obligation or whether the law simply provides consequences for the information not
being presented or retained in its original form.
(3) For the purposes of subparagraph (a) of paragraph (1):
1. (a)the criteria for assessing integrity shall be whether the information has
remained complete and unaltered, apart from the addition of any
endorsement and any change which arises in the normal course of
SECTION 1. Electronic Documents as functional equivalent of paperbased documents.Whenever a rule of evidence refers to the term writing,
document, record, instrument, memorandum or any other form of writing,
such term shall be deemed to include an electronic document as defined in
these Rules.
SEC. 2. Admissibility.An electronic document is admissible in evidence
if it complies with the rules on admissibility prescribed by the Rules of Court
and related laws and is authenticated in the manner prescribed by these
Rules.
68
Rule 4 of the Rules on Electronic Evidence reads:

RULE 4
communication, storage and display; and
BEST EVIDENCE RULE
2. (b)the standard of reliability required shall be assessed in the light of the

purpose for which the information was generated and in the light of all
relevant circumstances.
66
A.M. No. 01-7-01-SC, effective on August 1, 2001.
438
438

Corporation
SECTION 1. Original of an Electronic Document.An electronic document shall be

regarded as the equivalent of an original document under the Best Evidence Rule if it
is a printout or output readable by sight or other means, shown to reflect the data
accurately.
SEC. 2. Copies as equivalent of the originals.When a document is in two or more
copies executed at or about the same time with identical contents, or is a counterpart
produced by the same impression as the original, or from the same matrix, or by
mechanical or electronic re-recording, or by chemical reproduction, or by other
113
equivalent techniques which accurately reproduces the original, such copies or
2. (b)in the circumstances it would be unjust or inequitable to admit the copy in

lieu of the original.
duplicates shall be regarded as the equivalent of the original.

Notwithstanding the foregoing, copies or duplicates shall not be admissible to the
same extent as the original if:
69
the DTI [Department of Trade and Industry], Department of Budget and
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The Electronic Commerce Act of 2000 provides, in its Section 34, that
439
Thus, to be admissible in evidence as an electronic data

message or to be considered as the functional equivalent of
an original document under the Best Evidence Rule, the
writing must foremost be an electronic data message or an
electronic document.
The Electronic Commerce Act of 2000 defines electronic
data message and electronic document as follows:
Sec. 5. Definition of Terms.For the purposes of this Act, the
following terms are defined, as follows:
xxx
c. Electronic Data Message refers to information generated,
sent, received or stored by electronic, optical or similar means.
xxx
f. Electronic Document refers to information or the
representation of information, data, figures, symbols or other
modes of written expression, described or however represented, by
which a right is established or an obligation extinguished, or by
which a fact may be proved and affirmed, which is received,
recorded, transmitted, stored, processed, retrieved or produced
electronically.
The Implementing Rules and Regulations (IRR) of R.A. No.

8792, which was signed on July 13, 2000 by the then Secre69
_______________
1. (a)a genuine question is raised as to the authenticity of the original; or
Management and the Bangko Sentral ng Pilipinas are empowered to enforce

the provisions of the Act and issue implementing rules and regulations
necessary, in coordination with the Department of Transportation and
Communications,
National
Telecommunications
Commission,
National
Computer Center, National Information Technology Council, Commission on

Audit, other concerned agencies and the private sector, to implement the Act
within sixty (60) days after its approval.
440
440

Corporation
taries of the Department of Trade and Industry, the

Department of Budget and Management, and then Governor
of the Bangko Sentral ng Pilipinas, defines the terms as:
Sec. 6. Definition of Terms.For the purposes of this Act and
these Rules, the following terms are defined, as follows:
xxx
(e) Electronic Data Message refers to information generated,
sent, received or stored by electronic, optical or similar means, but
not limited to, electronic data interchange (EDI), electronic mail,
telegram, telex or telecopy. Throughout these Rules, the term
electronic data message shall be equivalent to and be used
interchangeably with electronic document.
xxxx
(h) Electronic Document refers to information or the
representation of information, data, figures, symbols or other
modes of written expression, described or however represented, by
which a right is established or an obligation extinguished, or by
which a fact may be proved and affirmed, which is received,
114
recorded, transmitted, stored, processed, retrieved or produced

electronically. Throughout these Rules, the term electronic
document shall be equivalent to and be used interchangeably with
The phrase but not limited to, electronic data interchange

(EDI), electronic mail, telegram, telex or telecopy in the IRRs
definition of electronic data message is copied from the
Model Law on Electronic Commerce adopted by the United
Nations Commission on International Trade Law
(UNCITRAL), from which majority of the provisions of R.A.
No.
70
_______________
70
On June 12, 1996, the Commission, after consideration of the text of the
draft Model Law as revised by the drafting group, decided to adopt the said
law and to recommend that all States give favorable consideration to the said
Model Law on Electronic Commerce when they enact or revise their laws, in
the term electronic document. In order to expedite the

reconciliation of the two versions, the technical working
group of the Bicameral Conference Committee adopted both
terms and intended them to be the equivalent of each
one. Be that as it may, there is a slight difference between
the two terms. While data message has reference
to information electronically sent, stored or transmitted, it
does not necessarily mean that it will give rise to a right or
extinguish an obligation, unlike an electronic document.
Evident from the law, however, is the legislative intent to
give the two terms the same construction.
The Rules on Electronic Evidence promulgated by this
Court defines the said terms in the following manner:
72
73
74
SECTION 1. Definition of Terms.For purposes of these Rules,

the following terms are defined, as follows:
xxxx
_______________
view of the need for uniformity of the law applicable to alternatives of paperbased forms of communication and storage of information (UNCITRAL Model
Law on Electronic Commerce with Guide to Enactment 1996 with addi
York, 1999).
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Corporation
441
8792 were taken. While Congress deleted this phrase in the

Electronic Commerce Act of 2000, the drafters of the IRR
reinstated it. The deletion by Congress of the said phrase is
significant and pivotal, as discussed hereunder.
The clause on the interchangeability of the terms
electronic data message and electronic document was the
result of the Senate of the Philippines adoption, in Senate
Bill 1902, of the phrase electronic data message and the
House of Representatives employment, in House Bill 9971, of
71
tional article 5 bis as adopted in 1998, United Nations Publication, New

71
Record of the Senate, Vol. III, No. 61, February 16, 2000, p. 405.
72
R.A. No. 8792 is a consolidation of Senate Bill 1902 and House Bill 9971
(Senate Proceedings, June 8, 2000, p. 90).

73
The Electronic Commerce Act and its Implementing Rules and
Regulations, Annotations by Atty. Jesus M. Disini, Jr., Legislative History by

Janette C. Toral, published by the Philippine Exporters Confederation, Inc.
in September 2000.
74
House of Representatives Transcript of Proceedings, June 5, 2000.
442
442

Corporation
115
1. (g)Electronic data message refers to information

generated, sent, received or stored by electronic, optical or
similar means.
2. (h)Electronic document refers to information or the
representation of information, data, figures, symbols or
other modes of written expression, described or however
represented, by which a right is established or an
obligation extinguished, or by which a fact may be proved
and affirmed, which is received, recorded, transmitted,
stored, processed, retrieved or produced electronically. It
includes digitally signed documents and print-out or
output, readable by sight or other means, which accurately
reflects the electronic data message or electronic document.
For purposes of these Rules, the term electronic document
may be used interchangeably with electronic data
message.
Given these definitions, we go back to the original question:

Is an original printout of a facsimile transmission an
electronic data message or electronic document?
The definitions under the Electronic Commerce Act of
2000, its IRR and the Rules on Electronic Evidence, at first
glance,
convey
the
impression
that facsimile
transmissionsare electronic data messages or electronic
documents because they are sent by electronic means. The
expanded definition of an electronic data message under
the IRR, consistent with the UNCITRAL Model Law, further
supports this theory considering that the enumeration x x x
[is] not limited to, electronic data interchange (EDI),
electronic mail, telegram, telex or telecopy. And to telecopy
is to send a document from one place to another via a fax
machine.
As further guide for the Court in its task of statutory
construction, Section 37 of the Electronic Commerce Act of
2000 provides that
75
Unless otherwise expressly provided for, the interpretation of this

Act shall give due regard to its international origin and the need to
promote uniformity in its application and the observance of good
_______________
75
<http://www.webopedia.com/TERM/T/telecopy.html> (visited August 27,
2007).
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443
faith in international trade relations. The generally accepted

principles of international law and convention on electronic
commerce shall likewise be considered.
Obviously, the international origin mentioned in this

section can only refer to the UNCITRAL Model Law, and the
UNCITRALs definition of data message:
Data message means information generated, sent, received or
stored by electronic, optical or similar means including, but not
limited to, electronic data interchange (EDI), electronic mail,
telegram, telex or telecopy.
76
is substantially the same as the IRRs characterization of an

However, Congress deleted the phrase, but not limited to,
electronic data interchange (EDI), electronic mail, telegram,
telex or telecopy, and replaced the term data message (as
found in the UNCITRAL Model Law ) with electronic data
message. This legislative divergence from what is assumed
as the terms international origin has bred uncertainty and
now impels the Court to make an inquiry into the true intent
of the framers of the law. Indeed, in the construction or
interpretation of a legislative measure, the primary rule is to
116
search for and determine the intent and spirit of the law. A
construction should be rejected that gives to the language
used in a statute a meaning that does not accomplish the
purpose for which the statute was enacted, and that tends to
defeat the ends which are sought to be attained by the
enactment.
77
78
_______________
76
UNCITRAL Model Law on Electronic Commerce with Guide to
Enactment 1996 with additional article 5 bis as adopted in 1998, United

Nations publication, New York, 1999.
77
People v. Purisima, 176 Phil. 186, 204; 86 SCRA 542, 559 (1978).
78
De Guia v. Commission on Elections, G.R. No. 104712, May 6, 1992,208
SCRA 420, 425.

444
444

Corporation
Interestingly, when Senator Ramon B. Magsaysay, Jr., the

principal author of Senate Bill 1902 (the predecessor of R.A.
No. 8792), sponsored the bill on second reading, he proposed
to adopt the term data message as formulated and defined
in the UNCITRAL Model Law. During the period of
amendments, however, the term evolved into electronic data
message, and the phrase but not limited to, electronic data
interchange (EDI), electronic mail, telegram, telex or telecopy
in the UNCITRAL Model Law was deleted. Furthermore, the
term electronic data message, though maintaining its
description under the UNCITRAL Model Law, except for the
aforesaid deleted phrase, conveyed a different meaning, as
revealed in the following proceedings:
And then finally, before I leave the Floor, may I please be

allowed to go back to Section 5; the Definition of Terms. In light of
the acceptance by the good Senator of my proposed amendments, it
will then become necessary to add certain terms in our list of
terms to be defined. I would like to add a definition on what is
data, what is electronic record and what is an electronic record
system.
If the gentleman will give me permission, I will proceed with
the proposed amendment on Definition of Terms, Section 5.
Senator Magsaysay. Please go ahead, Senator Santiago.
Senator Santiago. We are in Part 1, short title on the
Declaration of Policy, Section 5, Definition of Terms.
At the appropriate places in the listing of these terms that have
to be defined since these are arranged alphabetically, Mr.
President, I would like to insert the term DATA and its definition.
So,
the
amendment
will
read:
DATA
MEANS
REPRESENTATION, IN ANY FORM, OF INFORMATION OR
CONCEPTS.
_______________
79
III
RECORD,SENATE
11TH
CONGRESS
2ND
SESSION
399
(February 16, 2000).
79
x x x x
Senator Santiago. Yes, Mr. President. I will furnish a copy
together with the explanation of this proposed amendment.
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445
The explanation is this: This definition of data or data as it is

now fashionably pronounced in Americathe definition of data
ensures that our bill applies to any form of information in an
electronic record, whether these are figures, facts or ideas.
So again, the proposed amendment is this: DATA MEANS
REPRESENTATIONS, IN ANY FORM, OF INFORMATION OR
CONCEPTS.
117
Senator Magsaysay. May I know how will this affect the

definition of Data Message which encompasses electronic records,
electronic writings and electronic documents?
Senator Santiago. These are completely congruent with each
other. These are compatible. When we define data, we are simply
reinforcing the definition of what is a data message.
Senator Magsaysay. It is accepted, Mr. President.
Senator Santiago. Thank you. The next term is ELECTRONIC
RECORD. The proposed amendment is as follows:
ELECTRONIC RECORD MEANS DATA THAT IS
RECORDED OR STORED ON ANY MEDIUM IN OR BY A
COMPUTER SYSTEM OR OTHER SIMILAR DEVICE, THAT
CAN BE READ OR PERCEIVED BY A PERSON OR A
COMPUTER SYSTEM OR OTHER SIMILAR DEVICE. IT
INCLUDES A DISPLAY, PRINTOUT OR OTHER OUTPUT OF
THAT DATA.
The explanation for this term and its definition is as follows:
The term ELECTRONIC RECORD fixes the scope of our bill. The
record is the data. The record may be on any medium. It is
electronic because it is recorded or stored in or by a computer
system or a similar device.
The amendment is intended to apply, for example, to data on
magnetic strips on cards or in Smart cards. As drafted, it
wouldnot apply to telexes or faxes, except computergenerated faxes, unlike the United Nations model law on
electronic commerce. It would also not apply to regular digital
telephone conversations since the information is not recorded. It
would apply to voice mail since the information has been recorded
in or by a device similar to a computer. Likewise, video records are
not covered. Though when the video is transferred to a website, it
would be covered because of the involvement of the computer. Music
recorded by a computer system on a compact disc would be covered.
446
446

Corporation
In short, not all data recorded or stored in digital form is covered.
A computer or a similar device has to be involved in its creation or
storage. The term similar device does not extend to all devices that
create or store data in digital form. Although things that are not
recorded or preserved by or in a computer system are omitted from
this bill, these may well be admissible under other rules of law.
This provision focuses on replacing the search for originality
proving the reliability of systems instead of that of individual
records and using standards to show systems reliability.
Paper records that are produced directly by a computer system
such as printouts are themselves electronic records being just the
means of intelligible display of the contents of the record.
Photocopies of the printout would be paper record subject to the
usual rules about copies, but the original printout would be subject
to the rules of admissibility of this bill.
However, printouts that are used only as paper records and
whose computer origin is never again called on are treated as paper
records. In that case, the reliability of the computer system that
produces the record is irrelevant to its reliability.
Senator Magsaysay. Mr. President, if my memory does not fail
me, earlier, the lady Senator accepted that we use the term Data
Message rather than ELECTRONIC RECORD in being
consistent with the UNCITRAL term of Data Message. So with
the new amendment of defining ELECTRONIC RECORD, will
this affect her accepting of the use of Data Message instead of
ELECTRONIC RECORD?
Senator Santiago. No, it will not. Thank you for reminding
me.The term I would like to insert is ELECTRONIC DATA
MESSAGE in lieu of ELECTRONIC RECORD.
Senator Magsaysay. Then we are, in effect, amending theterm
of the definition of Data Message on page 2A, line 31,
to which we have no objection.
Senator Santiago. Thank you, Mr. President.
118
xxxx
Senator Santiago. Mr. President, I have proposed all the
amendments that I desire to, including the amendment on the
effect of error or change. I will provide the language of the
amendment together with the explanation supporting that
amendment to the distinguished sponsor and then he can feel free
to take it up in any session without any further intervention.
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447
Senator Magsaysay. Before we end, Mr. President, I understand

from the proponent of these amendments that these are based on
the Canadian E-commerce Law of 1998. Is that not right?
Senator Santiago. That is correct.
80
Thus, when the Senate consequently voted to adopt the term

electronic data message, it was consonant with the
explanation of Senator Miriam Defensor-Santiago that it
would not apply to telexes or faxes, except computergenerated faxes, unlike the United Nations model law on
electronic commerce. In explaining the term electronic
record patterned after the E-Commerce Law of Canada,
Senator Defensor-Santiago had in mind the term electronic
data message. This term then, while maintaining part of the
UNCITRAL Model Laws terminology of data message, has
assumed a different context, this time, consonant with the
term electronic record in the law of Canada. It accounts for
the addition of the word electronic and the deletion of the
phrase but not limited to, electronic data interchange (EDI),
electronic mail, telegram, telex or telecopy. Noteworthy is
that the Uniform Law Conference of Canada, explains the
term electronic record, as drafted in the Uniform Electronic
Evidence Act, in a manner strikingly similar to Sen.

Santiagos explanation during the Senate deliberations:
Electronic record fixes the scope of the Act. The record is the
data. The record may be any medium. It is electronic because it
is recorded or stored in or by a computer system or similar device.
The Act is intended to apply, for example, to data on magnetic
strips on cards, or in smart cards. As drafted, it would not apply to
telexes or faxes (except computer-generated faxes), unlike the United
Nations Model Law on Electronic Commerce. It would also not
apply to regular digital telephone conversations, since the
information is not recorded. It would apply to voice mail, since the
information has been recorded in or by a device similar to a
computer. Likewise video records are not covered, though when the
video is transferred to a
_______________
80
Senate Transcript of Proceedings, Vol. II, No. 88, April 3, 2000, pp. 32-
37.
448
448

Corporation
Web site it would be, because of the involvement of the computer.

Music recorded by a computer system on a compact disk would be
covered.
In short, not all data recorded or stored in digital form is
covered. A computer or similar device has to be involved in its
creation or storage. The term similar device does not extend to
all devices that create or store data in digital form. Although
things that are not recorded or preserved by or in a computer
system are omitted from this Act, they may well be admissible
under other rules of law. This Act focuses on replacing the search
for originality, proving the reliability of systems instead of that of
119
individual records, and using standards to show systems

reliability.
Paper records that are produced directly by a computer system,
such as printouts, are themselves electronic records, being just the
means of intelligible display of the contents of the record.
Photocopies of the printout would be paper records subject to the
usual rules about copies, but the original printout would be
subject to the rules of admissibility of this Act.
However, printouts that are used only as paper records, and
whose computer origin is never again called on, are treated as
paper records. See subsection 4(2). In this case the reliability of the
computer system that produced the record is relevant to its
reliability.
81
There is no question then that when Congress formulated the

term electronic data message, it intended the same
meaning as the term electronic record in the Canada law.
This construction of the term electronic data message,
which excludes telexes or faxes, except computer-generated
faxes, is in harmony with the Electronic Commerce Laws
focus on paperless communications and the functional
equivalent approach that it espouses. In fact, the delibera82
_______________
81
BLG, Consolidated E-Commerce Statutes, Part II-Electronic Evidence
its Licensors; <www.westlaw.com> (visited August 27, 2007).

In its Guide to Enactment, the UNCITRAL explains the functional-
equivalent approach of the Model Law in this way:
15. The Model Law is based on the recognition that legal requirements
prescribing the use of traditional paper-based documentation constitute the
main obstacle to the development of modern means of communication. In the
preparation of the Model Law, consideration was given to the possibility of
dealing with impediments to the use of electronic commerce posed by such
requirements in national laws by way of extension of the scope of such
notions as writing, signature and original, with a view to encompassing
computer-based techniques. Such an approach is used in a number of existing
legal instruments, e.g., article 7 of the UNCITRAL Model Law on
International Commercial Arbitration and article 13 of the United Nations
Convention on Contracts for the International Sale of Goods. It was observed
that the Model Law should permit States to adapt their domestic legislation
to developments in communications technology applicable to trade law
without necessitating the wholesale removal of the paper-based requirements
themselves or disturbing the legal concepts and approaches underlying those
requirements. At the same time, it was said that electronic fulfillment of
writing requirements might in some cases necessitates the development of
new rules. This was due to one of many distinctions between EDI messages
human eye, while the former were not so readable unless reduced to paper or
displayed on a screen.
16. The Model Law thus relies on a new approach, sometimes referred to
as the functional equivalent approach, which is based on an analysis of the
purposes and functions of the traditional paper-based requirement with a
view to determining how those purposes or functions could be fulfilled
E. The functional-equivalent approach
through electronic-commerce techniques. For example, among the functions

served by a paper document are the following: to provide that a document
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VOL. 536, OCTOBER 17, 2007

Corporation
_______________
and paper-based documents, namely, that the latter were readable by the
Laws, UEEA, Copyright Carswell, a Division of Thomson Canada Ltd. or

82
tions of the Legislature are replete with discussions on

paperless and digital transactions.
449
would be legible by all; to provide that a document would remain unaltered

over time; to allow for the reproduction of a document so that each party
would hold a copy of the same data; to allow for the authentication of data by
means of a signature; and to provide that a document would be in a form
120
acceptable to public authorities and courts. It should be noted that in respect
performing the same function. It should be noted that the functional-
of all of the above-mentioned functions of paper, electronic records can
equivalent approach has been taken in articles 6 to 8 of the Model Law with
provide the same level of secu
respect to the concepts of writing, signature and original but not with
450
450

Corporation
Facsimile transmissions are not, in this sense, paperless,

but verily are paper-based.
_______________
rity as paper and, in most cases, a much higher degree of reliability and
speed, especially with respect to the identification of the source and content
of the data, provided that a number of technical and legal requirements are
met. However, the adoption of the functionalequivalent approach should not
result in imposing on users of electronic commerce more stringent standards
of security (and the related costs) than in a paper-based environment.
17. A data message, in and of itself, cannot be regarded as an equivalent
of a paper document in that it is of a different nature and does not
necessarily perform all conceivable functions of a paper document. That is
why the Model Law adopted a flexible standard, taking into account the
various layers of existing requirements in a paper-based environment: when
adopting the functional-equivalent approach, attention was given to the
existing hierarchy of form requirements, which provides distinct levels of
reliability, traceability and inalterability with respect to paper-based
documents. For example, the requirement that date be presented in written
form (which constitutes a threshold requirement) is not to be confused with
more stringent requirements such as signed writing, signed original or
authenticated legal act.
18. The Model Law does not attempt to define a computerbased
equivalent to any kind of paper document. Instead, it singles out basic
functions of paper-based form requirements, with a view to providing criteria
which, once they are met by data messages, enable such data messages to
enjoy the same level of legal recognition as corresponding paper documents
respect to other legal concepts dealt with in the Model Law. For example,
article 10 does not attempt to create a functional equivalent of existing
storage requirements. (UNCITRAL Model Law on Electronic Commerce with
Guide to Enactment 1996 with additional article 5 bis as adopted in 1998,
United Nations publication, New York, 1999.)
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451
A facsimile machine, which was first patented in 1843 by

Alexander Bain, is a device that can send or receive pictures
and text over a telephone line. It works by digitizing an
imagedividing it into a grid of dots. Each dot is either on or
off, depending on whether it is black or white. Electronically,
each dot is represented by a bit that has a value of either 0
(off) or 1 (on). In this way, the fax machine translates a
picture into a series of zeros and ones (called a bit map) that
can be transmitted like normal computer data. On the
receiving side, a fax machine reads the incoming data,
translates the zeros and ones back into dots, and reprints the
picture. A fax machine is essentially an image scanner, a
modem and a computer printer combined into a highly
specialized package. The scanner converts the content of a
physical document into a digital image, the modem sends the
image data over a phone line, and the printer at the other
end makes a duplicate of the original document. Thus,
in Garvida v. Sales, Jr., where we explained the
unacceptability of filing pleadings through fax machines, we
ruled that:
83
84
85
86
A facsimile or fax transmission is a process involving the

transmission and reproduction of printed and graphic matter by
121
scanning an original copy, one elemental area at a time, and

representing the shade or tone of each area by a specified amount
of electric current. The current is transmitted as a signal over
regular telephone lines or via microwave relay and is used by the
receiver to reproduce an image of the elemental area in the proper
position and the correct shade. The receiver is equipped with a
stylus or other device that produces a printed record on paper
referred to as a facsimile.
_______________
83
<http://inventors.about.com/od/bstartinventors/a/fax_machine.htm>
(visited August 27, 2007).

84
<http://inventors.about.com/gi/dynamic/offsite.htm?zi=1/XJ&sdn=invent
ors&zu=http%3A%2F%2Fweb-opedia.internet.com%2FTERM%2Ff%2Ffaxmachine.html> (visited August 27, 2007).

85
<http://en.wikipedia.org/wiki/Fax_machine> (visited August 27, 2007).
86
338 Phil. 484, 496-497; 271 SCRA 767, 779 (1997).
88
89
_______________
87
Go v. Commission on Elections, G.R. No. 147741, May 10, 2001, 357
SCRA 739, involving the filing of a withdrawal of certificate of candidacy thru

fax, but the original copy thereof was filed on the following day; see
also Justice Cuevas v. Muoz, 401 Phil. 752; 348 SCRA 542 (2000), in which
the facsimile transmission of the request for provisional arrest and other
supporting documents was allowed in extradition proceedings; Heirs of
452
452
the same legal function as paper-based documents. Further,

in a virtual or paperless environment, technically, there is no
original copy to speak of, as all direct printouts of the virtual
reality are the same, in all respects, and are considered as
originals. Ineluctably, the laws definition of electronic data
message, which, as aforesaid, is interchangeable with
electronic document, could not have included facsimile
transmissions, which have an original paper-based copy as
sent and a paper-based facsimile copyas received. These two
copies are distinct from each other, and have different legal
effects.

Corporation
x x x A facsimile is not a genuine and authentic pleading. It is, at

best, an exact copy preserving all the marks of an original. Without
the original, there is no way of determining on its face whether the
facsimile pleading is genuine and authentic and was originally
signed by the party and his counsel. It may, in fact, be a sham
pleading.
87
Accordingly, in an ordinary facsimile transmission, there

exists an original paper-based information or data that is
scanned, sent through a phone line, and re-printed at the
receiving end. Be it noted that in enacting the Electronic
Commerce Act of 2000, Congress intended virtual or
paperless writings to be the functional equivalent and to have
Lourdes Sabanpan v. Comorposa, 456 Phil. 161; 408 SCRA 692 (2003),
concerning
facsimile
signature;
and Cathay
Pacific
Airways
v.
Fuentebella, G.R. No. 142541, December 15, 2005, 478 SCRA 97, which
involves a facsimile transmission of a notice of hearing.
88
III RECORD, SENATE 11th CONGRESS 2nd SESSION 781-783
(March 22, 2000).

89
House of Representatives Transcript of Proceedings, June 5, 2000.
453
VOL. 536, OCTOBER 17, 2007

Corporation
453
While Congress anticipated future developments in

communications and computer technology when it drafted
the law, it excluded the early forms of technology, like
telegraph, telex and telecopy (except computer-generated
90
122
faxes, which is a newer development as compared to the

ordinary fax machine to fax machine transmission), when it
defined the term electronic data message.
Clearly then, the IRR went beyond the parameters of the
law when it adopted verbatim the UNCITRAL Model Laws
definition of data message, without considering the
intention of Congress when the latter deleted the phrase but
not limited to, electronic data interchange (EDI), electronic
mail, telegram, telex or telecopy. The inclusion of this phrase
in the IRR offends a basic tenet in the exercise of the rulemaking power of administrative agencies. After all, the
power of administrative officials to promulgate rules in the
implementation of a statute is necessarily limited to what is
found in the legislative enactment itself. The implementing
rules and regulations of a law cannot extend the law or
expand its coverage, as the power to amend or repeal a
statute is vested in the Legislature. Thus, if a discrepancy
occurs between the basic law and an implementing rule or
regulation, it is the former that prevails, because the law
cannot be broadened by a mere administrative issuancean
administrative agency certainly cannot amend an act of
Congress. Had the Legislature really wanted ordinary fax
transmissions to be covered by the mantle of the Electronic
Commerce Act of 2000, it could have easily lifted without a
bit of tatter the entire wordings of the UNCITRAL Model
Law.
91
92
_______________
90
III
454
454

Corporation
Incidentally, the National Statistical Coordination Board

Task Force on the Measurement of E-Commerce, on
November 22, 2006, recommended a working definition of
electronic commerce, as [a]ny commercial transaction
conducted through electronic, optical and similar medium,
mode, instrumentality and technology. The transaction
includes the sale or purchase of goods and services, between
individuals, households, businesses and governments
conducted over computer-mediated networks through the
Internet, mobile phones, electronic data interchange (EDI)
and other channels through open and closed networks. The
Task Forces proposed definition is similar to the
Organization of Economic Cooperation and Developments
(OECDs) broad definition as it covers transactions made
over any network, and, in addition, it adopted the following
provisions of the OECD definition: (1) for transactions, it
covers sale or purchase of goods and services; (2) for
channel/network, it considers any computer-mediated
network and NOT limited to Internet alone; (3) it excludes
transactions received/placed using fax, telephone or noninteractive mail; (4) it considers payments done online or
offline; and (5) it considers delivery made online
93
_______________
RECORD,SENATE
11TH
CONGRESS
2ND
SESSION
437
93
The Philippine Statistical System (PSS), through the NSCB, created the
(February 21, 2000); III RECORD,SENATE 11th CONGRESS 2nd SESSION
Task Force to address the statistical information requirements of the
450451 (February 22, 2000).
Electronic Commerce Act of 2000. The composition of the Task Force is as
91
Public Schools District Supervisors Association. v. De Jesus, G.R.
157286, June 16, 2006, 491 SCRA 55, 71.

92
Nasipit
Lumber
Co.
v.
National
follows: the Department of Trade and Industry as Chair; the NSCB as Vice
Chair; and the Bangko Sentral ng Pilipinas, the Commission on Audit, the
Wages
and
Commission,352 Phil. 503, 518; 289 SCRA 667, 682 (1998).
Productivity
Department of Budget and Management, the Department of Labor and

Employment, the Department of Science and Technology, the Department of
123
Transportation
and
Communications/National
Telecommunications
Commission, the National Computer Center, the National Economic and

Development Authority, the National Statistics Office, the Statistical
Research and Training Center, and the Philippine Internet Services
Organization, as members.
455
In an action for damages due to a breach of a contract, it is

essential that the claimant proves (1) the existence of a
perfected contract, (2) the breach thereof by the other
contracting party and (3) the damages which he/she
sustained due to such breach. Actori incumbit onus probandi.
The burden of proof rests on the party who advances a
proposition affirmatively.
95
VOL. 536, OCTOBER 17, 2007

Corporation
455
(like downloading of purchased books, music or software

programs) or offline (deliveries of goods).
We, therefore, conclude that the terms electronic data
message and electronic document, as defined under the
Electronic Commerce Act of 2000, do not include a facsimile
transmission. Accordingly, a facsimile transmission cannot
be considered as electronic evidence. It is not the functional
equivalent of an original under the Best Evidence Rule and is
not admissible as electronic evidence.
Since a facsimile transmission is not an electronic data
message or an electronic document, and cannot be
considered as electronic evidence by the Court, with greater
reason is a photocopy of such a fax transmission not
electronic evidence. In the present case, therefore, Pro
Forma Invoice
Nos. ST2-POSTS0401-1 and
ST2POSTS0401-2 (Exhibits E and F), which are mere
photocopies of the original fax transmittals, are not electronic
evidence, contrary to the position of both the trial and the
appellate courts.
- III Nevertheless, despite the pro forma invoices not being
electronic evidence, this Court finds that respondent has
proven by preponderance of evidence the existence of a
perfected contract of sale.
94
_______________
94
Recommendations of the NSCB Task Force on the Measurement of e-
Commerce,
November
22,
2006,
p.
<http://www.nscb.
gov.ph/resolutions/2006/Annex%20BR-16-2006-01.pdf> (visited August 27,

2007).
95
Blacks Law Dictionary, 5th ed. (1979).
456
456

Corporation
In other words, a plaintiff in a civil action must establish his

case by a preponderance of evidence, that is, evidence that
has greater weight, or is more convincing than that which is
offered in opposition to it.
In general, contracts are perfected by mere consent, which
is manifested by the meeting of the offer and the acceptance
upon the thing and the cause which are to constitute the
contract. The offer must be certain and the acceptance
absolute. They are, moreover, obligatory in whatever form
they may have been entered into, provided all the essential
requisites for their validity are present. Sale, being a
consensual contract, follows the general rule that it is
perfected at the moment there is a meeting of the minds
upon the thing which is the object of the contract and upon
the price. From that moment, the parties may reciprocally
96
97
98
99
124
demand performance, subject to the provisions of the law

governing the form of contracts.
The essential elements of a contract of sale are (1) consent
or meeting of the minds, that is, to transfer ownership in
exchange for the price, (2) object certain which is the subject
matter of the contract, and (3) cause of the obligation which
is established.
In this case, to establish the existence of a perfected
contract of sale between the parties, respondent Ssangyong
for-
Exhibit
100
101
E-1
_______________
96
Heirs of Cipriano Reyes v. Calumpang, G.R. No. 138463, October 30,
2006, 506 SCRA 56, 72.

97
Civil Code, Art. 1315.
98
Johannes Schuback & Sons Philippine Trading Corporation v. Court of
Appeals, G.R. No. 105387, November 11, 1993, 227 SCRA 717, 721.
99
San Lazaro Development Corporation v. Court of Appeals, G.R. No.
124242, January 21, 2005, 449 SCRA 99, 111.

100
Civil Code, Art. 1475.
101
San Lazaro Development Corporation v. Court of Appeals, supranote 99,
at p. 113.
E-2
457
VOL. 536, OCTOBER 17, 2007

Corporation
457
mally offered in evidence the testimonies of its witnesses and

the following exhibits:
Exhibit
Description
E
Pro forma Invoice dated 17
April 2000 with Contract
No. ST2-POSTS04011, photocopy
Purpose
To show that
defendants
contracted with
plaintiff for the
delivery of 110 MT
Description
Purpose
of stainless steel
from Korea payable
by way of an
irrevocable letter of
credit in favor of
plaintiff, among
other conditions.
To show that
April 2000 with Contract
defendants sent
No. ST2their confirmation
POSTS0401, contained in
of the (i) delivery to
facsimile/thermal paper faxed it of the specified
by defendants to plaintiff
stainless steel
showing the printed
products, (ii)
transmission details on the
defendants
upper portion of said paper as payment thereof by
coming from defendant MCC on way of an
26 Apr 00 08:41AM
credit in favor of
plaintiff, among
other conditions.
Conforme signature of Mr.
To show that
Gregory Chan, contained in
defendants sent
facsimile/thermal paper faxed their confirmation
by defendants to plaintiff
of the (i) delivery to
showing the printed
it of the total of
transmission details on the
220MT specified
upper portion of said paper as stainless steel
coming from defendant MCC on products, (ii)
26 Apr 00 08:41AM
defendants
payment thereof by
way of an
credit in favor of
125
Exhibit
Description

April 2000with Contract
No. ST2
Purpose
plaintiff, among
other conditions.
To show that
defendants
contracted with
plaintiff for delivery
of
defendants dated
22 June
2000,original
Letter to
defendants dated
26 June
2000,original
Letter to
defendants dated
26 June
2000,original
Letter to
defendants dated
27 June
2000,original
Facsimile
message to
defendants dated
28 June
2000,photocopy
Letter from
defendants dated
29 June
2000,contained in
facsimile/thermal
paper faxed by
defendants to
458
458

ANNOTATED
Corporation
another 110 MT of stainless
POSTSO4012,photocopy
steel from Korea payable by
way of an irrevocable letter of
credit in favor of plaintiff,
among other conditions.
G
Letter to
To prove that defendants were
defendant
informed of the date of L/C
SANYO SEIKE opening and
dated 20 June
defendantsconforme/approval
2000, contained thereof.
in
facsimile/thermal
paper
G-1
Signature of
defendant
Gregory
Chan,contained
in
facsimile/thermal
paper.
H
Letter to
To prove that defendants were
informed of the successful price

adjustments secured by plaintiff
in favor of former and were
advised of the schedules of its
L/C opening.
To prove that plaintiff
repeatedly requested defendants
for the agreed opening of the
Letters of Credit, defendants
failure and refusal to comply
with their obligations and the
problems of plaintiff is
incurring by reason of
defendants failure and refusal
to open the L/Cs.
To prove that defendants admit

of their liabilities to plaintiff,
that they requested for more
extension of time for the
459
VOL. 536, OCTOBER 17, 2007

Corporation
plaintiff showing the
opening of the Letter
459
126
M-1
printed transmission
details on the upper
portion of said paper
as coming from
defendant MCC on 29
June 00 11:12 AM
Signature of defendant
Gregory
Chan,contained in
facsimile/thermal
paper faxed by
defendants to plaintiff
showing the printed
transmission details on
the upper portion of
said paper as coming
from defendant MCC
on June 00 11:12 AM
Letter to defendants
dated 29 June
2000,original
dated 30 June
2000,photocopy
dated 06 July
2000,original
of Credit, and
begging for favorable
understanding and
consideration.
Demand letter to
defendants dated 15
Aug 2000, original

was constrained to
engaged services of a
lawyer for collection
efforts.
460
460

reiterated its request
for defendants to L/C
opening after the
latters request for
extension of time was
granted, defendants
failure and refusal to
comply therewith
extension of time
notwithstanding.

ANNOTATED
Corporation
R
Demand letter to
To prove that
defendants dated 23 Aug
defendants opened the
2000, original
first L/C in favor of
plaintiff, requested for
further postponement
of the final L/C and
for minimal amounts,
were urged to open the
final L/C on time, and
were informed that
failure to comply will
cancel the contract.
S
Demand letter to
To show defendants
defendants dated 11 Sept
refusal and failure to
2000, original
open the final L/C on
time, the cancellation
of the contract as a
consequence thereof,
and final demand upon
defendants to remit its
obligations.
W
Letter from plaintiff
To prove that there
SSANGYONG to
was a perfected sale
defendant SANYO SEIKI and purchase
dated 13 April 2000, with agreement between
127
W-1
W-2
fax back from defendants

SANYO SEIKI/MCC to
plaintiff
SSANGYONG, cont ained
in facsimile/thermal paper
with back-up photocopy
Conforme signature of
defendant Gregory
Chan, contained in
facsimile/thermal paper
with back-up photocopy
Name of sender MCC

Industrial Sales
Corporation
the parties for 220

metric tons of steel
products at the price
of US$1,860/ton.
To prove that
defendants, acting
through Gregory
Chan, agreed to the
sale and purchase of
220 metric tons of
steel products at the
price of US$1,860/ton.
To prove that
defendants sent their
conformity to the sale
and
X-2
X-3
461
VOL. 536, OCTOBER 17, 2007

461
Corporation
purchase agreement by
facsimile transmission.
X
Pro formaInvoice
To prove that
dated 16 August
defendant MCC agreed
2000,photocopy
to adjust and split the
confirmed purchase
order into 2 shipments
at 100 metric tons each
at the discounted price
of US$1,700/ton.
X-1
Notation
To prove that the
1/2,photocopy
present Pro
DD
forma Invoice was the

first of 2 pro
forma invoices.
Ref. No. ST2To prove that the
POSTS080present Pro
1,photocopy
forma Invoice was the
first of 2 pro
forma invoices.
Conformesignature of To prove that
defendant Gregory
defendant MCC, acting
Chan,photocopy
through Gregory Chan,
agreed to the sale and
purchase of the
balance of 100 metric
tons at the discounted
price of US$1,700/ton,
apart from the other
order and shipment of
100 metric tons which
was delivered by
plaintiff
SSANGYONG and
paid for by defendant
MCC.
Letter from defendant To prove that there
MCC to plaintiff
was a perfected sale
SSANGYONG dated and purchase
22 August
agreement between
2000, contained in
plaintiff
facsimile/thermal
SSANGYONG and
paper with back-up
defendant MCC for the
photocopy
balance of 100 metric
tons, apart from the
other order and
shipment of 100 metric
128
tons which was

delivered by plaintiff
462
462

ANNOTATED
Corporation
SSANGYONG and paid for
by defendant MCC.
DD-1
Ref. No. ST2To prove that there was a
POSTS080perfected sale and purchase
1,contained in
agreement between plaintiff
facsimile/thermal
SSANGYONG and
paper with back-up defendant MCC for the
photocopy
balance of 100 metric tons,
apart from the other order
and shipment of 100 metric
tons which was delivered by
plaintiff SSANGYONG and
paid for by defendant MCC.
DD-2
Signature of
To prove that defendant
defendant Gregory
MCC, acting through
Chan,contained in
Gregory Chan, agreed to the
facsimile/thermal
sale and purchase of the
paper with back-up balance of 100 metric tons,
photocopy
apart from the other order
and shipment of 100 metric
tons which was delivered by
plaintiff Ssangyong and paid
for by defendant MCC.
102
Significantly, among these documentary evidence presented

by respondent, MCC, in its petition before this Court, assails
the
admissibility
only
of Pro
Forma Invoice
Nos. ST2POSTS0401-1 and ST2-POSTS0401-2 (Exhibits
E and F). After sifting through the records, the Court
found that these invoices are mere photocopies of their

original fax transmittals. Ssangyong avers that these
documents were prepared after MCC asked for the splitting
of the original order into two, so that the latter can apply for
an L/C with
_______________
102
Records, pp. 193-195 and 332-334.
463
VOL. 536, OCTOBER 17, 2007

Corporation
463
greater facility. It, however, failed to explain why the

originals of these documents were not presented.
To determine whether these documents are admissible in
evidence, we apply the ordinary Rules on Evidence, for as
discussed above we cannot apply the Electronic Commerce
Act of 2000 and the Rules on Electronic Evidence.
Because these documents are mere photocopies, they are
simply secondary evidence, admissible only upon compliance
with Rule 130, Section 5, which states, [w]hen the original
document has been lost or destroyed, or cannot be produced
in court, the offeror, upon proof of its execution or existence
and the cause of its unavailability without bad faith on his
part, may prove its contents by a copy, or by a recital of its
contents in some authentic document, or by the testimony of
witnesses in the order stated. Furthermore, the offeror of
secondary evidence must prove the predicates thereof,
namely: (a) the loss or destruction of the original without bad
faith on the part of the proponent/offeror which can be shown
by circumstantial evidence of routine practices of destruction
of documents; (b) the proponent must prove by a fair
preponderance of evidence as to raise a reasonable inference
of the loss or destruction of the original copy; and (c) it must
129
be shown that a diligent and bona fide but unsuccessful

search has been made for the document in the proper place or
places. It has been held that where the missing document is
the foundation of the action, more strictness in proof is
required than where the document is only collaterally
involved.
Given these norms, we find that respondent failed to prove
the existence of the original fax transmissions of Exhibits E
and F, and likewise did not sufficiently prove the loss or
destruction of the originals. Thus, Exhibits E and F cannot
be admitted in evidence and accorded probative weight.
103
_______________
103
Lee v. People, G.R. No. 159288, October 19, 2004, 440 SCRA 662, 683-
684.
464
464

Corporation
It is observed, however, that respondent Ssangyong did not

rely merely on Exhibits E and F to prove the perfected
contract. It also introduced in evidence a variety of other
documents, as enumerated above, together with the
testimonies of its witnesses. Notable among them are Pro
Forma Invoice Nos. ST2-POSTS080-1 and ST2-POSTS0802 which were issued by Ssangyong and sent via fax to MCC.
As already mentioned, these invoices slightly varied the
terms of the earlier invoices such that the quantity was now
officially 100MT per invoice and the price reduced
to US$1,700.00 per MT. The copies of the said August 16,
2000 invoices submitted to the court bear the conformity
signature of MCC Manager Chan.
Pro Forma Invoice No. ST2-POSTS080-1 (Exhibit X),
however, is a mere photocopy of its original. But then again,
petitioner MCC does not assail the admissibility of this

document in the instant petition. Verily, evidence not
objected to is deemed admitted and may be validly
considered by the court in arriving at its judgment. Issues
not raised on appeal are deemed abandoned.
As to Pro Forma Invoice No. ST2-POSTS080-2(Exhibits
1-A and 2-C), which was certified by PCIBank as a true
copy of its original, it was, in fact, petitioner MCC which
introduced this document in evidence. Petitioner MCC paid
for the order stated in this invoice. Its admissibility,
therefore, is not open to question.
These invoices (ST2-POSTS0401, ST2-POSTS0801and ST2-POSTS080-2), along with the other unchallenged
documentary
evidence
of
respondent
Ssangyong,
preponderate in favor of the claim that a contract of sale was
perfected by the parties.
104
105
_______________
104
Interpacific Transit, Inc. v. Aviles, G.R. No. 86062, June 6, 1990, 186
SCRA 385, 390.

105
Under Rule 130, Section 7, a certified true copy is an admissible
evidence only when the original document is a public record.

465
VOL. 536, OCTOBER 17, 2007

Corporation
465
This Court also finds merit in the following observations of

the trial court:
Defendants presented Letter of Credit (Exhibits 1, 1-A to 1R)
referring
to Pro
Forma Invoice
for
Contract
No.
ST2POSTS080-2, in the amount of US$170,000.00, and which
bears the signature of Gregory Chan, General Manager of MCC.
Plaintiff, on the other hand, presented Pro Forma Invoice referring
to Contract No. ST2-POSTS080-1, in the amount of
130
US$170,000.00, which likewise bears the signature of Gregory

Chan, MCC. Plaintiff accounted for the notation 1/2 on the right
upper portion of the Invoice, that is, that it was the first of two (2)
pro forma invoices covering the subject contract between plaintiff
and the defendants. Defendants, on the other hand, failed to
account for the notation 2/2 in its Pro Forma Invoice (Exhibit 1A). Observably further, both Pro Forma Invoices bear the same
date and details, which logically mean that they both apply to one
and the same transaction.
106
Indeed, why would petitioner open an L/C for the second half
of the transaction if there was no first half to speak of?
The logical chain of events, as gleaned from the evidence
of both parties, started with the petitioner and the
respondent agreeing on the sale and purchase of 220MT of
stainless steel at US$1,860.00 per MT. This initial contract
was perfected. Later, as petitioner asked for several
extensions to pay, adjustments in the delivery dates, and
discounts in the price as originally agreed, the parties
slightly varied the terms of their contract, without
necessarily novating it, to the effect that the original order
was reduced to 200MT, split into two deliveries, and the price
discounted to US$1,700 per MT. Petitioner, however, paid
only half of its obligation and failed to open an L/C for the
other 100MT. Notably, the conduct of both parties
sufficiently established the existence of a contract of sale,
even if the writings of the parties, because of their contested
admissibility, were not as explicit in establishing a contract.
107
_______________
106
Records, p. 411.
107
Standard Bent Glass Corp. v. Glassrobots Oy, 333 F. 3d 440.
Appropriate conduct by the parties may be sufficient to

establish an agreement, and while there may be instances
where the exchange of correspondence does not disclose the
exact point at which the deal was closed, the actions of the
parties may indicate that a binding obligation has been
undertaken.
With our finding that there is a valid contract, it is
crystalclear that when petitioner did not open the L/C for the
first half of the transaction (100MT), despite numerous
demands from respondent Ssangyong, petitioner breached its
contractual obligation. It is a well-entrenched rule that the
failure of a buyer to furnish an agreed letter of credit is a
breach of the contract between buyer and seller. Indeed,
where the buyer fails to open a letter of credit as stipulated,
the seller or exporter is entitled to claim damages for such
breach. Damages for failure to open a commercial credit may,
in appropriate cases, include the loss of profit which the
seller would reasonably have made had the transaction been
carried out.
- IV This Court, however, finds that the award of actual damages
is not in accord with the evidence on record. It is axiomatic
that actual or compensatory damages cannot be presumed,
but must be proven with a reasonable degree of
certainty. In Villafuerte v. Court of Appeals, we explained
that:
108
109
110
111
_______________
108
Maharlika Publishing Corporation v. Tagle, 226 Phil. 456, 468; 142
SCRA 553, 565 (1986), quoting American Jurisprudence 2d., Section 73 (pp.
186-187).
466
466

Corporation
109
Reliance Commodities, Inc. v. Daewoo Industrial Company, Ltd.,G.R.
No. 100831, December 17, 1993, 228 SCRA 545, 555.
131
110
Development Bank of the Philippines v. Court of Appeals, 348 Phil. 15,
34; 284 SCRA 14, 29 (1998).

111
G.R. No. 134239, May 26, 2005, 459 SCRA 58.
467
VOL. 536, OCTOBER 17, 2007

Corporation
467
Actual or compensatory damages are those awarded in order to

compensate a party for an injury or loss he suffered. They arise out
of a sense of natural justice and are aimed at repairing the wrong
done. Except as provided by law or by stipulation, a party is
entitled to an adequate compensation only for such pecuniary loss
as he has duly proven. It is hornbook doctrine that to be able to
recover actual damages, the claimant bears the onus of presenting
before the court actual proof of the damages alleged to have been
suffered, thus:
A party is entitled to an adequate compensation for such pecuniary loss
actually suffered by him as he has duly proved. Such damages, to be
recoverable, must not only be capable of proof, but must actually be
proved with a reasonable degree of certainty. We have emphasized that
these damages cannot be presumed and courts, in making an award must
point out specific facts which could afford a basis for measuring whatever
compensatory or actual damages are borne.
112
In the instant case, the trial court awarded to respondent

Ssangyong US$93,493.87 as actual damages. On appeal, the
same was affirmed by the appellate court. Noticeably,
however, the trial and the appellate courts, in making the
said award, relied on the following documents submitted in
evidence by the respondent: (1) Exhibit U, the Statement of
Account dated March 30, 2001; (2) Exhibit U-1, the details
of the said Statement of Account); (3) Exhibit V, the
contract of the alleged resale of the goods to a Korean
corporation; and (4) Exhibit V-1, the authentication of the
resale contract from the Korean Embassy and certification

from the Philippine Consular Office.
The statement of account and the details of the losses
sustained by respondent due to the said breach are, at best,
selfserving. It was respondent Ssangyong itself which
prepared the said documents. The items therein are not even
substantiated by official receipts. In the absence of
corroborative evidence, the said statement of account is not
sufficient basis
_______________
112
Villafuerte v. Court of Appeals, supra, at p. 69.
468
468

Corporation
to award actual damages. The court cannot simply rely on

speculation, conjecture or guesswork as to the fact and
amount of damages, but must depend on competent proof
that the claimant had suffered, and on evidence of, the actual
amount thereof.
Furthermore, the sales contract and its authentication
certificates, Exhibits V and V-1, allegedly evidencing the
resale at a loss of the stainless steel subject of the parties
breached contract, fail to convince this Court of the veracity
of its contents. The steel items indicated in the sales
contract with a Korean corporation are different in all
respects from the items ordered by petitioner MCC, even in
size and quantity. We observed the following discrepancies:
113
114
List of commodities as stated in Exhibit V:
COMMODITY: Stainless Steel HR Sheet in Coil, Slit Edge

SPEC: SUS304 NO. 1
SIZE/QTY:
132
2.8MM X 1,219MM X C
3.0MM X 1,219MM X C
3.0MM X 1,219MM X C
3.0MM X 1,219MM X C
4.0MM X 1,219MM X C
4.0MM X 1,219MM X C
4.5MM X 1,219MM X C
4.5MM X 1,219MM X C
5.0MM X 1,219MM X C
6.0MM X 1,219MM X C
6.0MM X 1,219MM X C
6.0MM X 1,219MM X C
TOTAL:
8.193MT
7.736MT
7.885MT
8.629MT
7.307MT
7.247MT
8.450MT
8.870MT
8.391MT
6.589MT
7.878MT
8.397MT
95.562MT
115
List of commodities as stated in Exhibit X (the invoice that was

not paid):
_______________
113
Id., at pp. 74-75.
114
Records, p. 245.
115
Id., at pp. 243 and 245.
117
469
VOL. 536, OCTOBER 17, 2007

Corporation
DESCRIPTION: Hot Rolled Stainless Steel Coil SUS
304
SIZE AND QUANTITY:
2.6 MM X 4 X C
10.0MT
3.0 MM X 4 X C
25.0MT
4.0 MM X 4 X C
15.0MT
4.5 MM X 4 X C
15.0MT
5.0 MM X 4 X C
10.0MT
6.0 MM X 4 X C
25.0MT
TOTAL:
100MT116
From the foregoing, we find merit in the contention of MCC

that Ssangyong did not adequately prove that the items
resold at a loss were the same items ordered by the
petitioner. Therefore, as the claim for actual damages was
not proven, the Court cannot sanction the award.
Nonetheless, the Court finds that petitioner knowingly
breached its contractual obligation and obstinately refused to
pay despite repeated demands from respondent. Petitioner
even asked for several extensions of time for it to make good
its obligation. But in spite of respondents continuous
accommodation, petitioner completely reneged on its
contractual duty. For such inattention and insensitivity,
MCC must be held liable for nominal damages. Nominal
damages are recoverable where a legal right is technically
violated and must be vindicated against an invasion that has
produced no actual present loss of any kind or where there
has been a breach of contract and no substantial injury or
actual damages whatsoever have been or can be
shown. Accordingly, the Court awards nominal damages of
P200,000.00 to respondent Ssangyong.
As to the award of attorneys fees, it is well settled that no
premium should be placed on the right to litigate and not
469
_______________
116
Id., at p. 338.
117
Francisco v. Ferrer, Jr., 405 Phil. 741, 751; 353 SCRA 261, 267-268
(2001).
470
470

Corporation
every winning party is entitled to an automatic grant of

attorneys fees. The party must show that he falls under one
of the instances enumerated in Article 2208 of the Civil
133
Code. In the instant case, however, the Court finds the

award of attorneys fees proper, considering that petitioner
MCCs unjustified refusal to pay has compelled respondent
Ssangyong to litigate and to incur expenses to protect its
rights.
WHEREFORE, PREMISES CONSIDERED, the appeal is
PARTIALLY GRANTED. The Decision of the Court of
Appeals in CA-G.R. CV No. 82983 is MODIFIED in that the
award of actual damages is DELETED. However, petitioner
is ORDERED to pay respondent NOMINAL DAMAGES in
the amount of P200,000.00, and the ATTORNEYS FEES as
awarded by the trial court.
SO ORDERED.
Ynares-Santiago (Chairperson), AustriaMartinez,ChicoNazario and Reyes, JJ., concur.
118
Petition partially granted, judgment modified.

Notes.Only the original document is the best evidence
of the fact as to whether the heirs executed a Deed of
Partition wherein the entire inherited property was conveyed
to only one of them. (Santos vs. Santos, 342 SCRA
753 [2000])
Under Section 3, Rule 130, Rules of Court, the original
documents must be produced and no evidence shall be
admissible other than the original document itself. (Llemos
vs. Llemos, 513 SCRA 128 [2007])
o0o
G.R. No. 150171. July 17, 2007.

ACEBEDO OPTICAL AND MIGUEL ACEBEDO III,
petitioners, vs. NATIONAL
LABOR
RELATIONS
COMMISSION
AND
MELENCIA
ASEGURADO,
respondents.
*
Labor Law; Appeals; Judicial review of labor cases does not go

beyond the evaluation of the sufficiency of the evidence upon which
its labor officials findings rest.Elementary is the principle that
this Court is not a trier of facts; only errors of law are generally
reviewed in petitions for review on certiorari criticizing decisions of
the Court of Appeals. Questions of fact are not entertained. And in
labor cases, this doctrine applies with greater force. Factual
questions are for labor tribunals to resolve. Judicial Review of
labor cases does not go beyond the evaluation of the sufficiency of
the evidence upon which its labor officials findings rest. As such,
the findings of facts and
_______________
_______________
118
Tanay Recreation Center and Development Corp. v. Fausto, G.R. No.
THIRD DIVISION.
656
140182, April 12, 2005, 455 SCRA 436, 457.
56
Acebedo Optical vs. National Labor Relations
134
Commission
conclusion of the NLRC are generally accorded not only great
weight and respect but even clothed with finality and deemed
binding on this Court as long as they are supported by substantial
evidence. This Court finds no basis for deviating from said doctrine
without any clear showing that the findings of the Labor Arbiter,
as affirmed by the NLRC, are bereft of substantiation. Particularly
when passed upon and upheld by the Court of Appeals, they are
binding and conclusive upon the Supreme Court and will not
normally be disturbed.
Same; Dismissals; Past infractions for which an employee had
been duly penalized cannot be taken collectively as a justification
for the dismissal from service of the employee.We find no basis for
deviating from the oft-espoused legal tenet that findings of facts
and conclusion of the labor arbiter are generally accorded not only
great weight and respect but even clothed with finality and
deemed binding on this Court as long as they are supported by
substantial evidence, without any clear showing that such findings
of fact, as affirmed by the NLRC, are bereft of substantiation.
More so, when passed upon and upheld by the Court of Appeals,
they are binding and conclusive upon us and will not normally be
disturbed; accordingly, the finding that the alleged absences and
incidences of tardiness of private respondent are but past
infractions for which petitioners had already imposed several
sanctions and for which private respondent had been duly
penalized. And being past infractions, they cannot be taken
collectively as a justification for the dismissal from service of the
employee.
Same; Same; Gross Negligence; To warrant removal from
service, the negligence of an employee should not merely be gross
but also habitual; Gross negligence implies a want or absence of or
failure to exercise even slight care or diligence, or the entire absence
of careit evinces a thoughtless disregard of consequences without
exerting any effort to avoid them.But even assuming for the sake
of argument that the past infractions could still validly be the
subject of future punishment, still there is no basis for petitioners

claim that private respondents supposed habitual absenteeism
and tardiness is a form of gross and habitual neglect of duty.
Under Article 282(b) of the Labor Code, gross and habitual neglect
of duty by the employee of his duties is a just cause for the
termination of the latters employment. To warrant removal from
service, however, the
657
VOL. 527, JULY 17, 2007
65
7

Commission
negligence should not merely be gross but also habitual. In
this case, assuming the absences and tardiness of private
respondent Asegurado to be habitual, can they also be categorized
as gross? Gross negligence implies a want or absence of or failure
to exercise even slight care or diligence, or the entire absence of
care. It evinces a thoughtless disregard of consequences without
exerting any effort to avoid them. Though there may have been
times when private respondents absences were undertaken
without the necessary approved leave applications, nevertheless,
she would send word for when these would occur. Moreover, quite
telling is the fact that nowhere in the memoranda sent to private
respondent was there any mention of a complaint relating to the
quality of her work. As the present case does not show the
presence of one of the two requisites to make the finding of
negligence a just cause for dismissal. At the most, private
respondent should have been further suspended from service for
taking for granted that her leave would be approved by the
personnel department of petitioner corporation. The penalty of
dismissal is too harsh, considering that private respondent had
been with the company for five years and, apparently, the
management had no complaint as regards the formers quality of
work.
135
Same; Same; Same; Evidence; The purpose of the rule

requiring the production of the best evidence is the prevention of
fraud, because if a party is in possession of such evidence and
withholds it, and seeks to substitute inferior evidence in its place (or
none at all save for mere allegation), the presumption naturally
arises that the better evidence is withheld for fraudulent purposes
which its production would expose and defeat.Herein, to our
mind, petitioners have not sufficiently shown that private
respondent had willfully disobeyed the company rules and
regulations respecting absences and tardiness. The cause for the
termination of private respondents employment was not simply
habitual tardiness and/or absenteeism. Petitioners have alleged
time and again that the basis upon which the dismissal of private
respondent was anchored was breach or violation of company
policy. It was their contention that private respondents habitual
tardiness and/or absences were in violation of petitioner companys
rules and regulations. Ironically, though petitioners referred to
their company policies, they never presented a copy of these in
evidence except in their Motion for Reconsiderationtoo late in
the day. Being the basis of the charge against private respondent,
it is without doubt the best evidence available to substantiate
658
58
Commission
the allegations. The purpose of the rule requiring the
production of the best evidence is the prevention of fraud, because
if a party is in possession of such evidence and withholds it, and
seeks to substitute inferior evidence in its place (or none at all save
for mere allegation), the presumption naturally arises that the
better evidence is withheld for fraudulent purposes which its
production would expose and defeat.
Same; Same; Same; Same; Procedural

Rules
and
Technicalities; While it is indeed true that administrative agencies,
like the National Labor Relations Commission (NLRC), are not
bound by the technical rules of procedure and evidence in the
adjudication of cases, this procedural liberty must not be
interpreted to mean an unfettered license to put forth assertions
without at least presenting tangible proof to back them up.It is
indeed true that administrative agencies, like the NLRC, are not
bound by the technical rules of procedure and evidence in the
adjudication of cases. However, this procedural liberty must not be
interpreted to mean an unfettered license to put forth assertions
without at least presenting tangible proof to back them up.
Otherwise, such assertions would just be allegations, and
allegations are not evidence. What is involved here transcends
mere procedural technicality and concerns the more paramount
principles and requirements of due process, which may not be
sacrificed at the altar of expediency. Upon this principle, the
failure to present a copy of the supposed Company Policy to prove
the allegation of their existence must be seen and taken for what
they areinadmissible hearsay. Mere allegation or assertion, by
any stretch of reasoning, cannot be considered substantial
evidence of their existence and of the subsequent violation
complained of.
Same; Same; Same; Same; Burden of Proof; The consistent
rule is that if doubts exist between the evidence presented by the
employer and the employee, the scales of justice must be tilted in
favor of the latter.The dearth of reliable evidence on record
constitutes serious doubt as to the factual basis of the charge of
violation of company policy filed against private respondent. This
doubt shall be resolved in her favor in line with the policy under
the Labor Code to afford protection to labor and construe doubts in
favor of labor. The consistent rule is that if doubts exist between
the evidence presented by the employer and the employee, the
scales of justice must be tilted in favor of the latter. The employer
must affirmatively show rationally
136
659
VOL. 527, JULY 17, 2007
65
9

Commission
adequate evidence that the dismissal was for a justifiable
cause. Having failed to satisfy this burden of proof, we find that
petitioners dismissed private respondent without just cause.
Consequently, the termination of her employment was illegal.
Same; Same; Same; Due Process; Law and jurisprudence
require an employer to furnish the employee two written notices
before termination of his employment may be orderedthe first
notice must inform him of the particular acts or omissions for
which his dismissal is sought, and, the second, of the employers
decision to dismiss the employee after he has been given the
opportunity to be heard and defend himself.As a final nail to the
coffin that is the petitioners recourse to this Court, we find that
private respondent was not accorded due process by petitioners
prior to being dismissed from service. Despite the fact that private
respondent was repeatedly warned through the numerous
memoranda sent to her for coming in late or not reporting at all to
the office, she was never asked to defend her position, much less
voice an objection to the charges leveled at her. Law and
jurisprudence require an employer to furnish the employee two
written notices before termination of his employment may be
ordered. The first notice must inform him of the particular acts or
omissions for which his dismissal is sought; the second, of the
employers decision to dismiss the employee after he has been
given the opportunity to be heard and defend himself. With regard
to private respondent, prior to the Notice of Termination, no
occasion was given to her to explain her side on why she should not
be terminated. There is no evidence that there was anexchange of
communication between petitioners and private respondent
regarding the latters supposed infractions. Lest it be forgotten,
every opportunity and assistance must be accorded to the

employee by the management to enable him to prepare adequately
for his defense, including legal representation. No chance
whatsoever was given to private respondent in this case. She was
simply served her termination notice without being heard in her
defense.

660
660
Acebedo Optical vs. National Labor Relations Commission
The Law Firm of Chan, Robles and Associates for
petitioners.
Rodolfo R. Ranion for respondent.
CHICO-NAZARIO, J.:
The Case
For Review on Certiorari, under Rule 45 of the Rules of
Court, as amended, is the Decision, dated 16 May 2001, of
the Court of Appeals in CA-G.R. SP No. 59471, and
itsResolution dated 19 September 2001, denying the Motion
for Reconsideration of said decision. The Court of Appeals
dismissed the petition for certiorari, filed by herein
petitioners Acebedo Optical (Corporation) and Miguel
Acebedo
III
(Acebedo)
and
affirmed in
toto the Resolution, dated 17 November 1999, of the National
Labor Relations Commission (NLRC)-First Division in NLRC
NCR Case No. 00-01-00651-97, which, in turn, sustained
the Decisiondated 22 May 1998, of Labor Arbiter Emerson C.
Tumanon directing herein petitioners to reinstate private
respondent Melencia B. Asegurado to her former or
1
137
equivalent position without loss of seniority rights, for

illegally terminating the latters employment from petitioner
corporation; and ordering them to pay her full backwages,
service incentive leaves and attorneys fees.
This case stemmed from a complaint for illegal dismissal
with prayer for reinstatement and payment of full backwages
and other benefits. Said grievance was filed by herein private
respondent against herein petitioners on 22 January 1997
before the National Labor Relations Commission.
_______________
1
Rollo, pp. 27-56.
Penned by Associate Justice Romeo J. Callejo (now a retired Associate
Justice of this Court) with Associate Justices Renato C. Dacudao and Perlita
Tria-Tirona, concurring; Id., at pp. 60-71.
3
Id., at pp. 101-114.
661
VOL. 527, JULY 17, 2007

661
The facts of the case as synthesized from the records are as
follows:
On 16 August 1991, petitioners engaged the services of
private respondent as a packaging clerk responsible for the
following tasks:
1. 1.Receives (sic) product from supplier and sort them
out;
2. 2.Record incoming and outgoing deliveries to stock
ledger and stock card;
3. 3.Received (sic) requisition from branch retail outlets;
4. 4.Select products from storage and place them inside
the box, label the boxes and prepare the
corresponding delivery receipts;
5. 5.Make physical count at regular intervals and

reconciles physical count with book records;
6. 6.Other assignments as and when required by
supervisor from time to time.
4
Initially, the private respondents employment status was

probationary. Six months later, or on 1 March 1992, however,
she was regularized.
But before her employment status was made permanent,
private respondent was given a Memorandum by petitioner
Miguel Acebedo III, Operations Manager of petitioner
corporation, reading as follows:
5
TO
: MELENCIA BUTIL
FROM
: THE OPERATIONS DEPARTMENT
SUBJECT
: WRITTEN WARNING on . . . . . . .
DATE
: September 7, 1991
--------------------------------------------------------------------As per report of the Personnel Department on the Absences and
Tardiness for the month of August, you were found to have 1 hr. &
34 mins. late (sic).
_______________
4
Rollo, p. 152.
662
662
Be informed that habitual absences/tardiness is a grave violation
of company policy.
This serves as your written warning.
[Signed]
MIGUEL R. ACEBEDO III
Operations Manager
138
The memorandum was to apprise her of her accumulated

tardiness of one hour and a half for the month of August
1991; likewise, it served as a warning to her that habitual
tardiness/absenteeism is considered a violation of company
policy.
On 15 October 1992, private respondent received another
memorandum essentially warning her that habitual
tardiness was considered a grave violation of Company
Policy; but without actually notifying her of the actual
period of her alleged tardiness. According to said
memorandum, it was to serve as private respondents first
written warning as well. A copy of the communication reads:
6
TO
: MELENCIA BUTIL
FROM
: THE PERSONNEL DEPARTMENT
SUBJECT
: AS STATED
DATE
: October 15, 1992
--------------------------------------------------------------------Be reminded that habitual tardiness is considered a grave
violation of Company Policy and is subject to strict
disciplinary action.
This will serve as your first written warning.
[Signed]
THE PERSONNEL DEPARTMENT
On 22 April 1994, a three-day suspension from work was
imposed on private respondent on the ground of her being
_______________
6
Id., at p. 153.
Id.
663
tardy twenty-six times within the period of January to March

1994.
The
suspension
notice
was
served
on
her via aMemorandum dated the same day. It was averred
that private respondent incurred twenty-six counts of
tardiness within the above-specified months which number
far exceeded the maximum allowable limit per month of only
four times. The third Memorandum states:
8
TO
: MELENCIA ASEGURADO
FROM
SUBJECT
: TARDINESS, Suspension notice on
DATE
: APRIL 22, 1994
--------------------------------------------------------------------The report on tardiness for the period January to March 1994,
showed that you incurred lates (sic) twenty six (26) times (11, 7, 8)
the said numbers exceeded the maximum limit of four times each
month.
It is one of the fundamental duties of any employee to follow
rules and regulations of the company, and (sic) one of the most
basic is the observance of official time. Your 201 file kept two (2)
written warnings on tardiness.
This time, you are given a three (3) days suspension without
pay effective May 10, 11 & 12, 1994.
Please be advised to manage your time very well to avoid future
offenses.
[Signed]
LUTZ PENAFLORIDA
Acting HeadPersonnel
On 28 February 1995, private respondent was served a

fourth Memorandum. For having incurred twenty-one
counts
10
_______________
VOL. 527, JULY 17, 2007

663
139
The Memorandum was signed by Lutz Peaflorida, Acting Head,
Personnel Department of petitioner Acebedo Optical; Id., at p. 154.

9
10
CA Rollo, p. 84.
Rollo, p. 155.
664
664
of tardiness for the months of [unreadable] to December
1994, the latter was meted another suspension, this time for
seven days, or four days longer than the first. More
specifically, it provides:
TO
: MELENCIA ASEGURADO
FROM
SUBJECT
: TARDINESS, Suspension notice of
DATE
: February 28, 1995
--------------------------------------------------------------------The report on tardiness for the period of [unreadable] to December
1994, (sic) showed that you incurred lates (sic) twenty-one (21)
times (3, 9, 9), the said number exceeded the maximum limit of
four times each month.
Despite of (sic) previous notices and suspension, you still failed
to meet the companys policy on attendance. Since the company is
implementing [unreadable] Disciplinary Measures for this kind of
infraction, you are hereby given seven (7) days suspension which
will [unreadable] effective on March 6, 9, 14, 16, 21, 23 & 27, 1995.
Please adhere to the policy [unreadable] failure to improve on
this aspect will result in severe penalties.
For your guidance.
[Signed]
LUTZ PENAFLORIDA
Personnel Manager
On 22 May 1995, private respondent filed an application for

an indefinite leave of absence. In a Memorandum dated 26
May 1995, petitioner corporations Head of Personnel denied
said application, viz.:
11
TO
FROM
SUBJECT
: MELENCIA B. ASEGURADO
: STATEMENT OF CHARGE
_______________
11
Id., at p. 157.
665
VOL. 527, JULY 17, 2007

665
DATE
: May 26, 1995.
--------------------------------------------------------------------Be informed that the indefinite leave of absence which you have
filed last May 22, 1995 is not approved, this nature of leave is not
being considered in our prescribed policy. Be reminded also that
you have accumulated a total of fourteen (14) days absence for this
month alone.
Although, (sic) we understood (sic) your reason (no babysitter),
we are also concerned about the smooth flow of work in your
section. Since you went on leave, some GSD staff took turn (sic) in
doing your function. Due to this situation, I am worried that this
would led (sic) to confusion, error and delay because theres nobody
who is completely in charged (sic) in monitoring their activities.
I am giving you up to the end of the month to sort out your
personal problem. Failure to go back to work on June 01, 1995
would make your extended leave of absence unauthorized (sic).
This would constitutes (sic) a valid ground for the termination of
your services.
For your guidance.
140
[Signed]
LUTZ PENAFLORIDA
PersonnelHead
On 29 August 1995, private respondent was suspended for

the third time, this time for thirteen days. The reason given
for the imposition of such penalty was the employees failure
to
meet
the
company
policy
on
tardiness.
TheMemorandum reads in full:
12
TO
: MS. MELENCIA ASEGURADO

PACKAGING CLERK
FROM
SUBJECT
: SUSPENSION, Notice of
DATE
: August 29, 1995
--------------------------------------------------------------------Based on the Tardiness Report, you have accumulated a total
of17 lates for the quarter (April June).
_____________
12
Id., at p. 156.
666
666
As per company policy, Head Office employees are limited only to
four (4) lates per month or a total of twelve (12) per quarter.
The said policy is being implemented to control excessive
lateness and to prevent time being wasted for non-performance.
Despite of (sic) previous warnings and/or suspension given,
(March 1995) you still failed to meet the company policy on
Tardiness.
You are hereby given a (sic) 13 days suspension which will take
effect on Sept. 6, 7, 11, 12, 13, 14, 18, 19, 20, 21, 25, 26 & 27, 1995.
Be advised to observe the said policy accordingly. Future

offense will be treated with more severe penalty.
For your guidance.
[Signed]
LUTZ PENAFLORIDA
HeadPersonnel
On 12 November 1996, private respondent did not report for

work allegedly due to the demolition of the place that her
family was renting.
On 2 December 1996, private respondent again absented
herself from work this time because her child was allegedly
hospitalized.
Six days later, or on 8 December 1996, the Head of the
Personnel Department of petitioner corporation issued a
Notice of Termination against private respondent. The
memorandum reads:
13
TO
: MELY ASEGURADO
FROM
SUBJECT
: NOTICE OF TERMINATION
DATE
: December 08, 1996
--------------------------------------------------------------------_______________
13
Id., at p. 182.
667
VOL. 527, JULY 17, 2007

667
Despite several warnings both verbal and written accompanied
with suspension, you were found to be abusive in your lates and
absences as shown by the result of 1996 Attendance Report for the
quarter Jan-Mar. 12, April-June 21, July-Sept. 43, Oct.-Nov.
17. Only four (4) lates per month or twelve (12) per quarter is
141
allowed. Regarding absences and leaves, you already exhausted

the company provision of 8 days sick leave plus 7.5 vacation leave
and had accumulated a total of [unreadable] days absences
without pay as of December 7, 1996.
This kind of performance is below company standard. Chronic
absenteeism combined with abusive tardiness is considered as
gross and habitual negligence that constitutes a valid ground for
dismissal. Be reminded that you were suspended for 13 days
(September 95) for similar infraction and were advised to improve
your performance otherwise (sic) facing the maximum penalty is
inevitable.
The management has the prerogative to [unreadable] also
discipline [unreadable] its employees who are not capable of
following their fundamental duty to obey basic rules and
regulations of the company in order to protect its interest. Several
[unreadable] both verbal and written accompanied with
suspension were issued to you but you failed to live up to a higher
standard of responsibility.
Please be informed that your services shall be terminated on
January 15, 1997 due to gross and habitual neglect of your duty.
For your guidance.
[Signed]
LUTZ PENAFLORIDA
Personnel Head
From the aforequoted memorandum, private respondents

dismissal from service was brought on by her supposed
exhaustion of the allowable sick and vacation leaves per
month constituting gross and habitual neglect of your
duty. Notice of the termination of her employment was
received by private respondent under protest and six days
after the fact, or only on 21 January 1997.
14
_______________
14
Id.
668
668
The foregoing state of affairs prompted private respondent to
file a case for illegal dismissal with the NLRC the very next
day.
In a Decision dated 22 May 1998, Labor Arbiter Emerson
C. Tumanon rendered judgment declaring private respondent
illegally dismissed from service. The Labor Arbiter held that
petitioners failed to accord said employee due process of law;
and found that private respondents dismissal from service
was anchored on past infractions for which she had already
been penalized. Accordingly, the dispositve of the decision
states, to wit:
WHEREFORE, judgment is hereby rendered declaring the
dismissal of complainant unlawful and unjustified and ordering
the respondents jointly and severally to reinstate said complainant
to her former or equivalent position without loss of seniority rights
with full backwages which as of the date of this Decision has
ballooned to the amount of P79,716.00 plus other benefits such as
13th month pay in the amount of P6,643.00 and service incentive
leave pay in the amount of P2,628.00.
Respondents are also ordered to pay complainants counsel ten
(10%) percent of the total award recovered as attorneys fees
pursuant to law.
15
On appeal, in a Resolution dated 17 November 1999, public

respondent NLRC rendered a decision dismissing petitioners
appeal for allegedly being filed out of timelong after the
assailed decision of the Labor Arbiter had supposedly become
final and executory. Accordingly, the assailed decision was
affirmed in toto. The decretal portion of the Resolution reads:
142
WHEREFORE, premises considered, the instant appeal is hereby

DISMISSED for lack of merit. The appealed decision dated May
22, 1998 is hereby AFFIRMED.
16
_______________
15
CA Rollo, p. 76.
16
Id., at p. 43.
669
VOL. 527, JULY 17, 2007

669
Petitioners filed a Motion for Reconsideration which public
respondent NLRC denied in its Resolution dated 17 April
2000.
Undaunted, herein petitioners went to the Court of
Appeals via a Petition for Certiorari under Rule 65 of the
Rules of Court, as amended, ascribing grave abuse of
discretion to the National Labor Relations Commission for
ordering the payment of backwages, damages and attorneys
fees to an employee who had been dismissed for just cause.
On 16 May 2001, the Court of Appeals promulgated
itsDecision dismissing the petition, the dispositive of which
states that:
along with the labor arbiter and the NLRC, was unable to
make a categorical finding on the issue of whether or not the
private respondents accumulated absences and/or tardiness
were, indeed, in violation of petitioner companys rules and
regulations. Further, as to the allegation of chronic
absenteeism and/or tardiness for the period of 1991 to 1995,
the appellate court likewise held that the non-presentation of
the Daily Time Records (DTRs) for said period was a grave
error. It held that the numerous memoranda issued to
private re_______________
17
IN LIGHT OF ALL THE FOREGOING, the Petition is DENIED

due course and is hereby DISMISSED.
18
In essence, the Court of Appeals held that herein petitioners

failed to marshal the obligatory quantum of evidence needed
to substantiate a finding of legitimacy or validity in the
termination of employment of private respondent, the reason
for which was supposedly her repeated defiance of company
policy. According to the appellate court, petitioners failure to
adduce in evidence a copy of the contravened company policy
was fatal to their cause. Absent proof of evidence of such
document embodying the flouted rule, the appellate court,
17
Id., at pp. 150-163.
18
Rollo, p. 70.
670
670
spondent were mere self-serving evidence and made the
following observations
Petitioners stance is even incongruent with the evidence on
record. Thus, the Private Respondent was employed, (sic) on a
probationary basis or status x x x [she] incurred tardiness in the
accumulated time of one (1) hour and thirty (30) minutes for the
month of August, 1991, and yet, the Private Respondent was
promoted and made a permanent employee on March 1, 1992.
[A]fter her one (1) hour and thirtyfour (34) minute tardiness
in September 1991, nothing on record reveals that she had been
tardy for the year 1992. The Memorandum reminding the
Private Respondent about her tardiness did not establish that
Private Respondent again incurred any tardiness. It is noted that
Private Respondent was not tardy in the year 1993. Although she
was tardy during the period from January to March 1994,
however, she was ordered suspended on May 10 to 12, 1994.
Thereafter, Private Respondent did not report late for the rest of
143
the year as the next Memorandum of the Petitioner Corporation

was issued on February 28, 1995, informing Private Respondent of
her suspension on March 6, 9, 14, 16, 21, 23 and 27, 1995.
Based on the Memorandum of the Petitioners, the Private
Respondent was tardy for seventeen (17) times for the quarter
from April to June, 1995. However, the Memorandum of the
Petitioners did not indicate the dates and precise times when the
Private Respondent was tardy. Without the Daily Time
Records of the Respondent during the period envisaged in the
Memoranda of the Petitioners, it cannot be ascertained whether
Private Respondents tardiness was habitual and incorrigible.
19
Anent the finding by the NLRC that herein petitioners

appeal was filed out of time, the Court of Appeals clarified
that Sec. 224 of the Labor Code requires that both party and
counsel must be served their respective copies of the decision
of the Labor Arbiter. In the instant case, herein petitioners
received a copy of the Labor Arbiters decision only on 5
March 1999. They then filed an appeal, 15 March 1999.
_______________
19
Id., at pp. 69-70.
671
VOL. 527, JULY 17, 2007

671
Therefore, it cannot be said that their recourse to the NLRC
was filed out of time.
In fine, the Court of Appeals ruled that the appeal, having
been filed with the NLRC within the reglementary period,
dismissal of the employee was too severe a penalty and, thus,
unwarranted. Such conclusion was based on the finding that
even on the assumption that Private Respondent incurred
tardiness and/or absences in the course of her employment,
she had been duly penalized therefor.
20
Hence, petitioners, through the instant Petition for

Review on Certiorari under Rule 45 of the Rules of Court, as
amended, seek recourse to this Court and raise the following
issues:
21
I.
THE HONORABLE COURT OF APPEALS, WITH ALL DUE
RESPECT, COMMITTED PALPABLE AND REVERSIBLE
ERROR OF LAW WHEN IT DECLARED RESPONDENT TO
HAVE
BEEN
ILLEGALLY
DISMISSED
DESPITE
OVERWHELMING
EVIDENCE
SHOWING
THAT
SHE
INCURRED EXCESSIVE TARDINESS AND ABSENTEEISM IN
VIOLATION OF THE COMPANYS RULES AND REGULATIONS
WHICH WARRANTED HER TERMINATION FROM WORK;
[and]
II.
THE HONORABLE COURT OF APPEALS, WITH ALL DUE
RESPECT, COMMITTED PALPABLE AND REVERSIBLE
ERROR OF LAW WHEN IT ORDERED RESPONDENT
REINSTATED TO HER FORMER POSITION OR TO
REINSTATE HER TO HER FOREMER OR EQUIVALENT
POSITION WITH FULL BACKWAGES PLUS OTHER
BENEFITS[,] SUCH AS 13TH MONTH PAY AND SERVICE
INCENTIVE LEAVE PAY.
At the outset, it is pertinent to note that the first issue raised

by petitioners inquires into the factual findings of the
_______________
20
Id., at p. 66.
21
Id., at pp. 39-40.
672
672

144

Court of Appeals. They are fundamentally assailing the
appellate courts finding that whatever evidence is on record,
it is insufficient to establish that company policies were
contravened by private respondent. In effect, petitioners
would have us sift through the data on record and pass upon
whether or not there is sufficient basis to hold private
respondent accountable for continually disobeying the
established company policy respecting tardiness and
absenteeism allegedly amounting to gross and habitual
negligence. This clearly involves a factual inquiry, the
determination of which is the statutory function of the
NLRC.
Elementary is the principle that this Court is not a trier of
facts; only errors of law are generally reviewed in petitions
for review on certiorari criticizing decisions of the Court of
Appeals. Questions of fact are not entertained. And in labor
cases, this doctrine applies with greater force. Factual
questions are for labor tribunals to resolve.
Judicial Review of labor cases does not go beyond the
evaluation of the sufficiency of the evidence upon which its
labor officials findings rest. As such, the findings of facts
and conclusion of the NLRC are generally accorded not only
great weight and respect but even clothed with finality and
deemed binding on this Court as long as they are supported
by substantial evidence. This Court finds no basis for
deviating from said doctrine without any clear showing that
the findings of the Labor Arbiter, as affirmed by the NLRC,
are
22
23
24
25
26
_______________
22
CBL Transit, Inc. v. National Labor Relations Commission, G.R. No.
128425, 11 March 2004, 425 SCRA 367, 373.

23
Alfaro v. Court of Appeals, 416 Phil. 310, 317; 363 SCRA 799, 806
24
San Juan De Dios Educational Foundation Employees Union-Alliance of
Filipino Workers v. San Juan De Dios Educational Foundation, Inc., G.R. No.
143341, 28 May 2004, 430 SCRA 193, 205.
25
Alfaro v. Court of Appeals, supra note 23 at p. 318; p. 806.
26
Progressive
Development
Corp.
v.
National
Labor
Relations
Commission, 398 Phil. 433, 439-440; 344 SCRA 512, 516 (2000).
673
VOL. 527, JULY 17, 2007

673
bereft of substantiation. Particularly when passed upon and
upheld by the Court of Appeals, they are binding and
conclusive upon the Supreme Court and will not normally be
disturbed.
Nevertheless, we have reviewed the records of the case at
bar and find no reversible error committed by the Court of
Appeals concerning the merits of the present petition.
Bearing in mind the facts of the case, petitioners assert
that private respondents numerous tardiness and/or
absenteeism is tantamount to gross habitual neglect of duty
amounting to gross negligence; thus, a valid ground for
dismissal of an employee.
We find the instant petition to be without merit.
The Labor Code, specifically Article 277(b), guarantees the
right of an employee to security of tenure. It provides that
27
ART. 277. MISCELLANEOUS PROVISIONS.x x x

(b) Subject to the constitutional right of workers to security of
tenure and their right to be protected against dismissal except for
a just and authorized cause and without prejudice to the
requirement of notice under Article 283 of this Code, the employer
shall furnish the worker whose employment is sought to be
terminated a written notice containing a statement of the causes
for termination and shall afford the latter ample opportunity to be
heard and to defend himself with the assistance of his
(2001).
145
representative if he so desires in accordance with company rules

and regulations x x x.
From the foregoing, it is quite clear that the dismissal of

private respondent may be upheld only if shown to have been
made for a just or authorized cause and attended with due
process.
Corollary to the preceding legal policy is the equally basic
principle of labor law, that, it is the employer who has the
burden of proving that the dismissal is for just cause, and
_______________
27
Shoppes Manila, Inc. v. National Labor Relations Commission, 464 Phil.
427, 438-439; 419 SCRA 354, 362 (2004).

674
674
failure to do so would necessarily mean that the dismissal
was unjustified; and, therefore, illegal.
In the present petition, the labor arbiter evaluated the
evidence presented by herein parties and concluded that
private respondent Asegurado was not afforded the due
process guaranteed by law and jurisprudence. Moreover, the
alluded incidences of absenteeism and tardiness which
constituted the charge of habitual neglect of duty amounting
to gross negligence were past infractions that have already
been penalized.
On appeal, the NLRC affirmed the finding of illegal
dismissal.
In agreement with the assailed decisions, the Court of
Appeals, heedful of the legal principle that it is the employer
which has the onus probandi to prove that private
respondents dismissal was based on valid ground, ruled that
the Commission committed no grave abuse of discretion
when it affirmed the finding by the labor arbiter that the

evidence on record was insufficient to sustain the legality of
private respondent Asegurados dismissal from service;
therefore, the appellate court dismissed the petition
for certiorari filed by petitioners.
As earlier stated, we find no basis for deviating from the
oft-espoused legal tenet that findings of facts and conclusion
of the labor arbiter are generally accorded not only great
weight and respect but even clothed with finality and deemed
binding on this Court as long as they are supported by
substantial evidence, without any clear showing that such
findings of fact, as affirmed by the NLRC, are bereft of
substantiation. More so, when passed upon and upheld by
the Court of Appeals, they are binding and conclusive upon
us and will not normally be disturbed; accordingly, the
finding that the alleged absences and incidences of tardiness
of private respondent are but past infractions for which
petitioners had already imposed several sanctions and for
which private re28
_______________
28
Id.
675
VOL. 527, JULY 17, 2007

675
spondent had been duly penalized. And being past
infractions, they cannot be taken collectively as a
justification for the dismissal from service of the employee.
But even assuming for the sake of argument that the past
infractions could still validly be the subject of future
punishment, still there is no basis for petitioners claim that
private respondents supposed habitual absenteeism and
tardiness is a form of gross and habitual neglect of duty.
Under Article 282(b) of the Labor Code, gross and habitual
29
146
neglect of duty by the employee of his duties is a just cause

for the termination of the latters employment. To warrant
removal from service, however, the negligence should not
merely be gross but also habitual. In this case, assuming the
absences and tardiness of private respondent Asegurado to
be habitual, can they also be categorized as gross?
Gross negligence implies a want or absence of or failure to
exercise even slight care or diligence, or the entire absence of
care. It evinces a thoughtless disregard of consequences
without exerting any effort to avoid them. Though there may
have been times when private respondents absences were
undertaken without the necessary approved leave
applications, nevertheless, she would send word for when
these would occur. Moreover, quite telling is the fact that
nowhere in the memoranda sent to private respondent was
there any mention of a complaint relating to the quality of
her work. As the present case does not show the presence of
one of the two requisites to make the finding of negligence a
just cause for dismissal. At the most, private respondent
should have been further suspended from service for taking
for granted that her
30
31
_______________
29
Lopez v. National Labor Relations Commission, 358 Phil. 141, 150;297
SCRA 508, 516 (1998).

30
Union Motor Corporation v. National Labor Relations Commission,G.R.
No. 159738, 9 December 2004, 445 SCRA 683, 694-695.

31
Philippine Aeolus Automotive United Corporation v. National Labor
Relations Commission, 387 Phil. 250, 263; 331 SCRA 237, 247 (2000).
676
676
leave would be approved by the personnel department of
petitioner corporation. The penalty of dismissal is too harsh,
considering that private respondent had been with the

company for five years and, apparently, the management had
no complaint as regards the formers quality of work.
Herein, to our mind, petitioners have not sufficiently
shown that private respondent had willfully disobeyed the
company rules and regulations respecting absences and
tardiness. The cause for the termination of private
respondents employment was not simply habitual tardiness
and/or absenteeism. Petitioners have alleged time and again
that the basis upon which the dismissal of private
respondent was anchored was breach or violation of company
policy. It was their contention that private respondents
habitual tardiness and/or absences were in violation of
petitioner companys rules and regulations. Ironically,
though petitioners referred to their company policies, they
never presented a copy of these in evidence except in their
Motion for Reconsiderationtoo late in the day. Being the
basis of the charge against private respondent, it is without
doubt the best evidence available to substantiate the
allegations. The purpose of the rule requiring the production
of the best evidence is the prevention of fraud, because if a
party is in possession of such evidence and withholds it, and
seeks to substitute inferior evidence in its place (or none at
all save for mere allegation), the presumption naturally
arises that the better evidence is withheld for fraudulent
purposes which its production would expose and defeat.
By failing to prove the existence of the company rules in
due time, i.e., non-presentation of an authenticated copy,
unarguably the best evidence, casts skepticism on the factual
basis of the charge of violation thereof; arguably, therefore, it
32
_______________
32
IBM, Phils., Inc. v. National Labor Relations Commission, 365 Phil. 137,
151; 305 SCRA 592, 604 (1999).
147
677
33
VOL. 527, JULY 17, 2007

677
cannot be said that the assailed conduct can be considered
gross neglect of duty.
It is indeed true that administrative agencies, like the
NLRC, are not bound by the technical rules of procedure and
evidence in the adjudication of cases. However, this
procedural liberty must not be interpreted to mean an
unfettered license to put forth assertions without at least
presenting tangible proof to back them up. Otherwise, such
assertions would just be allegations, and allegations are not
evidence. What is involved here transcends mere procedural
technicality and concerns the more paramount principles and
requirements of due process, which may not be sacrificed at
the altar of expediency. Upon this principle, the failure to
present a copy of the supposed Company Policy to prove the
allegation of their existence must be seen and taken for what
they areinadmissible hearsay. Mere allegation or assertion,
by any stretch of reasoning, cannot be considered substantial
evidence of their existence and of the subsequent violation
complained of.
From the preceding discussion, the dearth of reliable
evidence on record constitutes serious doubt as to the factual
basis of the charge of violation of company policy filed
against private respondent. This doubt shall be resolved in
her favor in line with the policy under the Labor Code to
afford protection to labor and construe doubts in favor of
labor. The consistent rule is that if doubts exist between the
evidence presented by the employer and the employee, the
scales of justice must be tilted in favor of the latter. The
employer must affirmatively show rationally adequate
evidence that the dis33
34
35
_______________
Jarcia Machine Shop and Auto Supply v. National Labor Relations
Commission, 334 Phil. 84, 92; 266 SCRA 97, 105-106 (1997).
34
Concepcion v. Court of Appeals, 381 Phil. 90, 97-98; 324 SCRA 85, 93
(2000).
35
Asuncion v. National Labor Relations Commission, 414 Phil. 329,
341; 362 SCRA 56, 68 (2001).

678
678
missal was for a justifiable cause. Having failed to satisfy
this burden of proof, we find that petitioners dismissed
private respondent without just cause. Consequently, the
termination of her employment was illegal.
To finish, as a final nail to the coffin that is the
petitioners recourse to this Court, we find that private
respondent was not accorded due process by petitioners prior
to being dismissed from service. Despite the fact that private
respondent was repeatedly warned through the numerous
memoranda sent to her for coming in late or not reporting at
all to the office, she was never asked to defend her position,
much less voice an objection to the charges leveled at her.
Law and jurisprudence require an employer to furnish the
employee two written notices before termination of his
employment may be ordered. The first notice must inform
him of the particular acts or omissions for which his
dismissal is sought; the second, of the employers decision to
dismiss the employee after he has been given the opportunity
to be heard and defend himself. With regard to private
respondent, prior to the Notice of Termination, no occasion
was given to her to explain her side on why she should not be
terminated. There is no evidence that there was
an exchange of communication between petitioners and
private respondent regarding the latters supposed
infractions. Lest it be forgotten, every opportunity and
36
37
148
assistance must be accorded to the employee by the

management to enable him to prepare adequately for his
defense,
including
legal representation. No chance
whatsoever was given to private respondent in this case. She
was
38
_______________
36
Id., at p. 342; p. 68.
37
Rule
XIV,
Code;National
Book
Service
V,
Omnibus
Corporation
Rules
v.
Implementing
National
Labor
the
Labor
resulting in loss of trust and confidence, financial assistance

may be given the employee. (Camua vs. National Labor
Relations Commission, 279 SCRA 45[1997])
Misconduct, by uniform legal definition, is a transgression
of some established and definite rule of action, more
particularly, unlawful behavior as well as gross negligence by
the public officer. (Advincula vs. Dicen,458 SCRA 696 [2005])
o0o
Relations
Commission,G.R. No. L-69870, 29 November 1988, 168 SCRA 122, 128-129.

38
Pono v. National Labor Relations Commission, 341 Phil. 615, 621-
622; 275 SCRA 611, 619 (1997).

679
VOL. 527, JULY 17, 2007

679
simply served her termination notice without being heard in
her defense.
In retrospection, if, indeed, private respondent was a
delinquent and an errant employee, why did petitioners put
up with such behavior for no less than five years?
WHEREFORE, premises considered, the instant petition
is hereby DENIED. The assailed Decision dated 16 May
2001, and Resolution dated 19 September 2001, both of the
Court of Appeals in CA-G.R. SP No. 59471, are AFFIRMED.
Costs against petitioners Acebedo Optical, Inc. and Miguel
Acebedo III.
SO ORDERED.
Ynares-Santiago (Chairperson), AustriaMartinezand Nachura, JJ., concur.
Petition denied, assailed decision and resolution affirmed.
Notes.Where the reason for the dismissal of the
employee is gross negligence in the performance of his duties
149
G.R. No. 168387. August 25, 2010.*

SALUN-AT MARQUEZ and NESTOR DELA CRUZ,
petitioners, vs. ELOISA ESPEJO, ELENITA ESPEJO,
EMERITA ESPEJO, OPHIRRO ESPEJO, OTHNIEL
ESPEJO, ORLANDO ESPEJO, OSMUNDO ESPEJO,
ODELEJO ESPEJO and NEMI FERNANDEZ, respondents.
Appeals; The question involving the admissibility of evidence
is a legal question that is within the Courts authority to review; A
petition for review should raise only questions of law; Exceptions.
The issues involved herein are not entirely factual. Petitioners
assail the appellate courts rejection of their evidence (as to the
contractual intent) as inadmissible under the Best Evidence Rule.
The question involving the admissibility of evidence is a legal
question that is within the Courts authority to review. Besides,
even if it were a factual question, the Court is not precluded to
review the same. The rule that a petition for review should raise
only questions of law admits of exceptions, among which are (1)
when the findings are grounded entirely on speculations, surmises,
or conjectures; (2) when the inference made is manifestly
mistaken, absurd or impossible; (3) when there is grave abuse of
discretion; (4) when the judgment is based on a misappreciation of
facts; (5) when the findings of fact are conflicting; (6) when, in
making its findings, the same are contrary to the admissions of
both appellant and appellee; (7) when the findings are contrary to
those of the trial court; (8) when the findings are conclusions
without citation of specific evidence on which they are based; (9)
when the facts set forth in the petition as well as in the petitioners
main and reply briefs are not disputed by the respondent; and (10)
when the findings of fact are premised on the supposed absence of
evidence and contradicted by the evidence on record.
Same; When a party merely raises equitable considerations
such as the clean hands doctrine without a clear-cut legal basis
and cogent arguments to support his claim, there should be no
surprise if the Court is not swayed to exercise its appellate
jurisdiction and the appeal is dismissed outright; The dismissal of

an appeal does not
_______________
* FIRST DIVISION.
118
18
Marquez vs. Espejo
always and necessarily mean that the appealed decision is
correct, for it could simply be the result of the appellants
inadequate discussion, ineffectual arguments, or even procedural
lapses.This Court dismissed Rural Bank of Bayombong, Inc.
(RBBI)s earlier petition in G.R. No. 163320 because it failed to
convincingly demonstrate the alleged errors in the Court of
Appeals (CA) Decision. The bank did not point out the
inadequacies and errors in the appellate courts decision but
simply placed the responsibility for the confusion on the
respondents for allegedly misleading the bank as to the identity of
the properties and for misrepresenting that the two lots were not
tenanted. Thus, RBBI argued that respondents did not come to
court with clean hands. These arguments were ineffectual in
convincing the Court to review the appellate courts Decision. It is
the appellants responsibility to point out the perceived errors in
the appealed decision. When a party merely raises equitable
considerations such as the clean hands doctrine without a clearcut legal basis and cogent arguments to support his claim, there
should be no surprise if the Court is not swayed to exercise its
appellate jurisdiction and the appeal is dismissed outright. The
dismissal of an appeal does not always and necessarily mean that
the appealed decision is correct, for it could simply be the result of
the appellants inadequate discussion, ineffectual arguments, or
even procedural lapses.
150
Same; A party cannot be deprived of his right to appeal an

adverse decision just because another party had already appealed
ahead of him, or just because the other partys separate appeal had
already been dismissed.Rural Bank of Bayombong, Inc. (RBBI)s
failure to convince the Court of the merits of its appeal should not
prejudice petitioners who were not parties to RBBIs appeal,
especially because petitioners duly filed a separate appeal and
were able to articulately and effectively present their arguments.
A party cannot be deprived of his right to appeal an adverse
decision just because another party had already appealed ahead of
him, or just because the other partys separate appeal had already
been dismissed.
Judgments; Res Judicata; Under the rule on res judicata, a
judgment (in personam) is conclusive only between the parties and
their successors-in-interest by title subsequent to the commencement
of the action.There is another reason not to bind the petitioners
to the final judgment against Rural Bank of Bayombong, Inc.
(RBBI). RBBI executed the transfer (VLTs) in favor of
petitioners prior to the
119
VOL. 629, AUGUST 25, 2010
11
9
Marquez vs. Espejo

commencement of the action. Thus, when the action for
cancellation of Certificates of Land Ownership Award (CLOA) was
filed, RBBI had already divested itself of its title to the two
properties involved. Under the rule on res judicata, a judgment (in
personam) is conclusive only between the parties and their
successors-in-interest by title subsequent to the commencement of
the action. Thus, when the vendor (in this case RBBI) has already
transferred his title to third persons (petitioners), the said
transferees are not bound by any judgment which may be rendered
against the vendor.
Evidence; Best Evidence Rule; Words and Phrases; The Best

Evidence Rule states that when the subject of inquiry is the contents
of a document, the best evidence is the original document itself and
no other evidence (such as a reproduction, photocopy or oral
evidence) is admissible as a general ruleThe original is preferred
because it reduces the chance of undetected tamperingwith the
document; There is no room for the application of the Best Evidence
Rule when there is no dispute regarding the contents of the
documents.The appellate court erred in its application of the
Best Evidence Rule. The Best Evidence Rule states that when the
subject of inquiry is the contents of a document, the best evidence
is the original document itself and no other evidence (such as a
reproduction, photocopy or oral evidence) is admissible as a
general rule. The original is preferred because it reduces the
chance of undetected tampering with the document. In the instant
case, there is no room for the application of the Best Evidence Rule
because there is no dispute regarding the contents of the
documents. It is admitted by the parties that the respondents
Deed of Sale referred to TCT No. T-62096 as its subject; while the
petitioners Deeds of Voluntary Land Transfer referred to TCT No.
T-62836 as its subject, which is further described as located
inBarangay Murong. The real issue is whether the admitted
contents of these documents adequately and correctly express the
true intention of the parties. As to the Deed of Sale, petitioners
(and RBBI) maintain that while it refers to TCT No. T-62096, the
parties actually intended the sale of the Lantap property (covered
by TCT No. T-62836).
Same; Same; Same; Parol Evidence Rule; The Parol Evidence
Rule excludes parol or extrinsic evidence by which a party seeks to
contradict, vary, add to or subtract from the terms of a valid
agreement or instrument.The Court of Appeals (CA), however,
refused to
120

151
20
Marquez vs. Espejo
look beyond the literal wording of the documents and rejected
any other evidence that could shed light on the actual intention of
the contracting parties. Though the CA cited the Best Evidence
Rule, it appears that what it actually applied was the Parol
Evidence Rule instead, which provides: When the terms of an
agreement have been reduced to writing, it is considered as
containing all the terms agreed upon and there can be, between
the parties and their successors in interest, no evidence of such
terms other than the contents of the written agreement. The
Parol Evidence Rule excludes parol or extrinsic evidence by which
a party seeks to contradict, vary, add to or subtract from the terms
of a valid agreement or instrument. Thus, it appears that what the
CA actually applied in its assailed Decision when it refused to look
beyond the words of the contracts was the Parol Evidence Rule, not
the Best Evidence Rule. The appellate court gave primacy to the
literal terms of the two contracts and refused to admit any other
evidence that would contradict such terms.
Same; Same; Same; Same; The parol evidence rule may not be
invoked where at least one of the parties to the suit is not a party or
a privy of a party to the written document in question, and does not
base his claim on the instrument or assert a right originating in the
instrument.Even the application of the Parol Evidence Rule is
improper in the case at bar. In the first place, respondents are not
parties to the VLTs executed between RBBI and petitioners; they
are strangers to the written contracts. Rule 130, Section 9
specifically provides that parol evidence rule is exclusive only as
between the parties and their successors-in-interest. The parol
evidence rule may not be invoked where at least one of the parties
to the suit is not a party or a privy of a party to the written
document in question, and does not base his claim on the
instrument or assert a right originating in the instrument.
Moreover, the instant case falls under the exceptions to the Parol
Evidence Rule, as provided in the second paragraph of Rule 130,
Section 9: However, a party may present evidence to modify,

explain or add to the terms of the written agreement if he puts in
issue in his pleading: (1) An intrinsic ambiguity, mistake or
imperfection in the written agreement; (2) The failure of the written
agreement to express the true intent and agreement of the parties
thereto; x x x x.121
VOL. 629, AUGUST 25, 2010
12
1
Marquez vs. Espejo

Contracts; Interpretation of Contracts; Well-settled is the rule
that in case of doubt, it is the intention of the contracting parties
that prevails, for the intention is the soul of a contract, not its
wording which is prone to mistakes, inadequacies, or
ambiguities.The resolution of the instant case necessitates an
examination of the parties respective parol evidence, in order to
determine the true intent of the parties. Well-settled is the rule
that in case of doubt, it is the intention of the contracting parties
that prevails, for the intention is the soul of a contract, not its
wording which is prone to mistakes, inadequacies, or ambiguities.
To hold otherwise would give life, validity, and precedence to mere
typographical errors and defeat the very purpose of agreements.

Dominica
Dumangeng-Rosario and Arys
Poynter
Delosofor petitioner.
Basilio P. Rupisan for respondents.
DEL CASTILLO, J.:
When the parties admit the contents of written documents
but put in issue whether these documents adequately and
correctly express the true intention of the parties, the
deciding body is authorized to look beyond these instruments
152
and into the contemporaneous and subsequent actions of the

parties in order to determine such intent.
Well-settled is the rule that in case of doubt, it is the
intention of the contracting parties that prevails, for the
intention is the soul of a contract, not its wording which is
prone to mistakes, inadequacies, or ambiguities. To hold
otherwise would give life, validity, and precedence to mere
typographical errors and defeat the very purpose of
agreements.122
122

Marquez vs. Espejo
This Petition for Review on Certiorari1 assails the October

7, 2003 Decision,2 as well as the May 11, 2005 Resolution3 of
the Court of Appeals (CA) in CA G.R. SP No. 69981. The
dispositive portion of the appellate courts Decision reads:
WHEREFORE, finding reversible error committed by the
Department of Agrarian Reform Adjudication Board, the instant
petition for review is GRANTED. The assailed Decision, dated 17
January 2001, rendered by the Department of Agrarian Reform
Adjudication Board is hereby ANNULLED and SET ASIDE. The
Decision of the Department of Agrarian Reform Adjudication
Board of Bayombong[,] Nueva Vizcaya, dated 17 March 1998, is
REINSTATED. Costs against respondents.
SO ORDERED.4
The reinstated Decision of the Department of Agrarian

Reform Adjudication Board (DARAB) of Bayombong, Nueva
Vizcaya, in turn, contained the following dispositive portion:
Accordingly, judgment is rendered:
1. Finding [respondents] to be the owner by re-purchase
from RBBI [of] the Murong property covered by TCT
No. [T-]62096 (formerly TCT No. 43258);
2. Ordering the cancellation of TCT with CLOA Nos. 395
and 396 in the name[s] of Salun-at Marquez and Nestor
de la Cruz respectively, as they are disqualified to

become tenants of the Lantap property;
3.
Directing RBBI to sell through VOS the Lantap
property to its rightful beneficiary, herein tenantfarmer Nemi Fernandez under reasonable terms and
conditions;
4. Ordering RBBI to return the amount paid to it by
Nestor and Salun-at; and ordering the latter to pay 20
cavans of
_______________
1 Rollo of G.R. No. 168387, pp. 10-26.
2 Id., at pp. 27-35; penned by Associate Justice Perlita J. Tria Tirona and
concurred in by Associate Justices Portia Alino-Hormachuelos and Rosalinda
Asuncion-Vicente.
3 Id., at pp. 36-37.
4 Id., at p. 34.
123
VOL. 629, AUGUST 25, 2010

Marquez vs. Espejo
123
palay per hectare at 46 kilos per cavan unto [respondents]

plus such accrued and unpaid rentals for the past years as
may be duly accounted for with the assistance of the
Municipal Agrarian Reform Officer of Bagabag, Nueva
Vizcaya who is also hereby instructed to assist the parties
execute their leasehold contracts and;
5. The order to supervise harvest dated March 11, 1998
shall be observed until otherwise modified or dissolved
by the appellate body.
SO ORDERED.5
Factual Antecedents
Respondents Espejos were the original registered owners
of two parcels of agricultural land, with an area of two
153
hectares each. One is located at Barangay Lantap, Bagabag,

Nueva Vizcaya (the Lantap property) while the other is
located in Barangay Murong, Bagabag, Nueva Vizcaya
(the Murong property). There is no dispute among the parties
that the Lantap property is tenanted by respondent Nemi
Fernandez (Nemi)6 (who is the husband7of respondent Elenita
Espejo (Elenita), while the Murong property is tenanted by
petitioners Salun-at Marquez (Marquez) and Nestor Dela
Cruz (Dela Cruz).8
The respondents mortgaged both parcels of land to Rural
Bank of Bayombong, Inc. (RBBI) to secure certain loans.
Upon their failure to pay the loans, the mortgaged properties
were foreclosed and sold to RBBI. RBBI eventually
consolidated title to the properties and transfer certificates of
title (TCTs) were issued in the name of RBBI.TCT No. T62096
_______________
5 Regional Agrarian Reform Adjudicators (RARADs) Decision dated
March 17, 1998, pp. 4-5; DARAB records, pp. 101-102.
6 CA Decision, pp. 5-6; Rollo of G.R. No. 168387, pp. 32-33. Respondents
Memorandum, p. 7; id., at p. 125.
7 DARAB records, p. 57.
8 CA Decision, pp. 5-6; Rollo of G.R. No. 168387, pp. 32-33. Respondents
Memorandum, p. 7; id., at p. 125.
124
124

Marquez vs. Espejo
dated January 14, 1985 was issued for the Murong property.
It contained the following description:
Beginning at a point marked I on plan H-176292, S. 44034 W.
1656.31 m. more or less from B.L.L.M. No 1, Bagabag Townsite, K27,
thence N. 28 deg. 20 E., 200.00 m. to point 2;

thence S. 61 deg. 40 E., 100.00 m. to point 3;
thence S. 28 deg. 20 W., 200.00 m. to point 4;
thence N. 61 deg. 40 W., 100.00 m. to point 1; point of
beginning;
Containing an area of 2.000 hectares. Bounded on the northeast,
by Road; on the southeast, and southwest by public land; and on
the northwest by Public Land, properties claimed by Hilario
Gaudia and Santos Navarrete. Bearings true. Declination 0131 E.
Points referred to are marked on plan H-176292. Surveyed under
authority of sections 12-22 Act No. 2874 and in accordance with
existing regulations of the Bureau of Lands by H.O. Bauman
Public Land Surveyor, [in] December 1912-March 1913. Note: All
corners are Conc. Mons. 15x15x60 cm. This is Lot No. 79-A=Lot
No. 159 of Bagabag Townsite, K-27.9
Subsequently, TCT No. T-62836 dated June 4, 1985 was

issued for the Lantap property and contained the following
description:
Beginning at a point marked 1 on plan H-105520, N. 80 deg. 32
W., 1150.21 m. from BLLM No. 122, Irrigation project,
thence N. 61 deg. 40E., 200.00 m. to point 2;
thence N. 28 deg. 20E, 100.00 m. to point 3;
thence S. 61 deg. 40E, 200.00 m. to point 4;
thence S. 28 deg. 20W, 100.00 m. to point 1; point of beginning;
containing an area of 2.0000 hectares. Bounded on the northeast,
southeast, and southwest by Public land; and on the northwest by
Road and public land. Bearings true. Declination 0 deg. 31E.,
points referred to are marked on plan H-105520. Surveyed under
authority of Section 12-22, Act No. 2874 and in accordance with
existing regu_______________
9 DARAB records, p. 74.
125
154
VOL. 629, AUGUST 25, 2010

Marquez vs. Espejo
125
lations of the Bureau of Lands, by H.O. Bauman Public Land

Surveyor, [in] Dec. 1912-Mar. 1913 and approved on January 6,
1932. Note: This is Lot No. 119-A Lot No. 225 of Bagabag Townsite
K-27. All corners are B.I. Conc. Mons. 15x60 cm.10
Both TCTs describe their respective subjects as located in

Bagabag Townsite, K-27, without any reference to
either Barangay Lantap or Barangay Murong.
On February 26, 1985, respondents Espejos bought
backone of their lots from RBBI. The Deed of Sale11 described
the property sold as follows:
x x x do hereby SELL, TRANSFER, and CONVEY, absolutely
and unconditionally x x x that certain parcel of land, situated in
the Municipality of Bagabag, Province of Nueva Vizcaya, and more
particularly bounded and described as follows, to wit:
Beginning at a point marked 1 on plan x x x x Containing
an area of 2.000 hectares. Bounded on the NE., by Road; on
the SE., and SW by Public Land; and on the NW., by Public
Land, properties claimed by Hilario Gaudia and Santos
Navarrete. Bearing true. Declination 013 B. Points referred
to are marked on plan H-176292.
of which the Rural Bank of Bayombong (NV) Inc., is the registered
owner in fee simple in accordance with the Land Registration Act,
its title thereto being evidenced by Transfer Certificate of Title No.
T-62096 issued by the Registry of Deeds of Nueva Vizcaya.
As may be seen from the foregoing, the Deed of Sale did

not mention the barangay where the property was located
but mentioned the title of the property (TCT No. T-62096),
which title corresponds to the Murong property. There is no
evidence, however, that respondents took possession of the
Murong property, or demanded lease rentals from the
petitioners (who continued to be the tenants of the Murong

property), or otherwise exercised acts of ownership over the
_______________
10 Id., at p. 69.
11 Id., at pp. 71-72.
126
126

Marquez vs. Espejo
Murong property. On the other hand, respondent Nemi

(husband of respondent Elenita and brother-in-law of the
other respondents), continued working on the other
propertythe Lantap propertywithout any evidence that
he ever paid rentals to RBBI or to any landowner. The Deed
of Sale was annotated on TCT No. T-62096 almost a decade
later, on July 1, 1994.12
Meanwhile, on June 20, 1990, RBBI, pursuant to Sections
2013 and 2114 of Republic Act (RA) No. 6657,15executed
separate Deeds of Voluntary Land Transfer (VLTs) in favor
of petitioners Marquez and Dela Cruz, the tenants of the
Murong property. Both VLTs described the subject thereof as
an agricultural land located in BarangayMurong and covered
_______________
12 Entry No. 229242DEED OF ABSOLUTE SALE executed by the
Rural Bank of Bayombong, NV, Inc., represented by Manager, Romeo F.
Ramos, Jr., in favor of ELOISA ESPEJO, ELENITA ESPEJO, EMERITA
ESPEJO, OPHIRO ESPEJO, OTHANIEL ESPEJO, ODELEJO ESPEJO,
ORLANDO ESPEJO, OSMONDO ESPEJO, for the sum of P9,562 notarized
by Miguel M. Guevara, Notary Public; under Doc. No. 51; Page No. 11; Book
XIV; Series of 1985 dated February 26, 1985 and inscribed July 1, 1994 at
10:45 A.M. (Id., at p. 74).
13 Section 20.
Voluntary
Land
Transfer.Landowners
of
agricultural lands subject to acquisition under this Act may enter into a
155
voluntary arrangement for direct transfer of their lands to qualified

beneficiaries x x x:
14 Section 21.
17 TCT No. CLOA-395 (DARAB records, p. 84). Registered with the Land
Registration Authority on September 5, 1991.
Payment of Compensation by Beneficiaries under
Voluntary Land Transfer.Direct payment in cash or in kind may be
18 TCT No. CLOA-396 (Id., at p. 85). Registered with the Land

Registration Authority on September 5, 1991.
made by the farmer-beneficiary to the landowner under terms to be mutually
19 TO ALL WHOM THESE PRESENTS SHALL COME, GREETINGS:
agreed upon by both parties, which shall be binding upon them, upon
WHEREAS, pursuant to the provisions of Republic Act No. 6657, dated
registration with and approval by the DAR.
June 10, 1988, INSTITUTING A COMPREHENSIVE AGRARIAN REFORM

Said approval shall be
PROGRAM TO PROMOTE SOCIAL JUSTICE AND INDUSTRIALIZATION
considered given, unless notice of disapproval is received by the farmer-
AND PROVIDING THE MECHANISM FOR ITS IMPLEMENTATION, there
beneficiary within 30 days from the date of registration. x x x
is hereby awarded unto SALUN-AT MARQUEZ [and NESTOR DELA CRUZ],
15 COMPREHENSIVE AGRARIAN REFORM LAW OF 1988.
a parcel of agricultural landsituated in Barangay Murong, Municipality of

Bagabag, Province of Nueva Vizcaya, Island of Luzon, Philippines, containing
127
VOL. 629, AUGUST 25, 2010

Marquez vs. Espejo
127
by TCT No. T-62836 (which, however, is the title

corresponding to the Lantap property).16
After the petitioners completed the payment of the
purchase price of P90,000.00 to RBBI, the DAR issued the
corresponding Certificates of Land Ownership Award
(CLOAs) to petitioners Marquez17 and Dela Cruz18 on
September 5, 1991. Both CLOAs stated that their subjects
were
parcels
of
agricultural
land
situated
19
in BarangayMurong. The CLOAs were registered in the
Registry of Deeds of Nueva Vizcaya on September 5, 1991.
_______________
16 That the LANDOWNER voluntarily transfer his ownership over a
parcel of agricultural land and covered by R.A. 6657 and opted to be paid
directly by the FARMER-BENEFICIARY. The said agricultural land
issituated at Murong, Reservation Bagabag, Nueva Vizcaya and particularly
described as follows:
OCT/TCT No. T-62836
x x x x (CA Rollo, pp. 93 and 96)
an area of TEN THOUSAND (10,000 sq. m.) square meters, more or less,
which is now more particularly bounded and described at the back hereof.
xxxx
Reference: This certificate is a transfer from Transfer Certificate of Title
No. T-62836.
(Id., at pp. 84-85).
128
128

Marquez vs. Espejo
On February 10, 1997 (more than 10 years after the Deed

of Sale in favor of the respondents and almost seven years
after the execution of VLTs in favor of the petitioners),
respondents filed a Complaint20 before the Regional Agrarian
Reform Adjudicator (RARAD) of Bayombong, Nueva Vizcaya
for the cancellation of petitioners CLOAs, the deposit of
leasehold rentals by petitioners in favor of respondents, and
the execution of a deed of voluntary land transfer by RBBI in
favor of respondent Nemi. The complaint was based on
respondents theory that the Murong property, occupied by
the petitioners, was owned by the respondents by virtue of
the 1985 buy-back, as documented in the Deed of Sale. They
156
based their claim on the fact that their Deed of Sale refers to
TCT No. 62096, which pertains to the Murong property.
Petitioners filed their Answer21 and insisted that they
bought the Murong property as farmer-beneficiaries thereof.
They maintained that they have always displayed good faith,
paid lease rentals to RBBI when it became the owner of the
Murong property, bought the same from RBBI upon the
honest belief that they were buying the Murong property,
and occupied and exercised acts of ownership over the
Murong property. Petitioners also argued that what
respondents Espejos repurchased from RBBI in 1985 was
actually the Lantap property, as evidenced by their
continued occupation and possession of the Lantap property
through respondent Nemi.
RBBI answered22 that it was the Lantap property which
was the subject of the buy-back transaction with respondents
Espejos. It denied committing a grave mistake in the
transaction and maintained its good faith in the disposition
of its acquired assets in conformity with the rural banking
rules and regulations.
_______________
20 Id., at pp. 1-8. Docketed as DARAB Case No. II-162-NV-97.
21 Id., at pp. 21-25.
22 Id., at pp. 11-13.
129
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Marquez vs. Espejo
129
OIC-RARAD Decision23
The OIC-RARAD gave precedence to the TCT numbers
appearing on the Deed of Sale and the VLTs. Since TCT No.
T-62096 appeared on respondents Deed of Sale and the said
title refers to the Murong property, the OIC-RARAD
concluded that the subject of sale was indeed the Murong
property. On the other hand, since the petitioners VLTs

referred to TCT No. T-62836, which corresponds to the
Lantap property, the OIC-RARAD ruled that petitioners
CLOAs necessarily refer to the Lantap property. As for the
particular description contained in the VLTs that the subject
thereof is the Murong property, the OIC-RARAD ruled that it
was a mere typographical error.
Further, since the VLTs covered the Lantap property and
petitioners are not the actual tillers thereof, the OIC-RARAD
declared that they were disqualified to become tenants of the
Lantap property and ordered the cancellation of their
CLOAs. It then ordered RBBI to execute a leasehold contract
with the real tenant of the Lantap property, Nemi.
The OIC-RARAD recognized that petitioners only right as
the actual tillers of the Murong property is to remain as the
tenants thereof after the execution of leasehold contracts
with and payment of rentals in arrears to respondents.
DARAB Decision24
Upon appeal filed by petitioners, the DARAB reversed the
OIC-RARAD Decision. It ruled that in assailing the validity
of the CLOAs issued to petitioners as bona fide tenantfarmers, the burden of proof rests on the respondents. There
being no evidence that the DAR field personnel were remiss
in the performance of their official duties when they issued
the corresponding CLOAs in favor of petitioners, the
presumption of
_______________
23 Id., at pp. 79-83.
24 Id., at pp. 145-132. Docketed as DARAB Case No. 7554.
130
130

Marquez vs. Espejo
157
regular performance of duty prevails. This conclusion is

made more imperative by the respondents admission that
petitioners are the actual tillers of the Murong property,
hence qualified beneficiaries thereof.
As for respondents allegation that they bought back the
Murong property from RBBI, the DARAB ruled that they
failed to support their allegation with substantial evidence. It
gave more credence to RBBIs claim that respondents
repurchased the Lantap property, not the Murong property.
Respondents, as owners of the Lantap property, were ordered
to enter into an agricultural leasehold contract with their
brother-in-law Nemi, who is the actual tenant of the Lantap
property.
The DARAB ended its January 17, 2001 Decision in this
wise:
We find no basis or justification to question the authenticity
and validity of the CLOAs issued to appellants as they are by
operation of law qualified beneficiaries over the landholdings;
there is nothing to quiet as these titles were awarded in conformity
with the CARP program implementation; and finally, the Board
declares that all controverted claims to or against the subject
landholding must be completely and finally laid to rest.
WHEREFORE, premises considered and finding reversible
errors[,] the assailed decision is ANNULLED and a new judgment
is hereby rendered, declaring:
1. Appellants Salun-at Marquez and Nestor Dela Cruz as the
bona fide tenant-tillers over the Murong property and therefore
they are the qualified beneficiaries thereof;
2. Declaring Transfer Certificate of Title (TCT) Nos. 395 and
396 issued in the name of [farmer-beneficiaries] Salun-at Marquez
and Nestor Dela Cruz respectively, covered formerly by TCT No.
62096 (TCT No. 43258) of the Murong property as valid and legal;
3. Ordering the co-[respondents] to firm-up an agricultural
leasehold contract with bona fide tenant-tiller Nemi Fernandez
over the Lantap property, [the latter] being the subject matter of
the buy back arrangement entered into between [respondents]

and Rural
131
VOL. 629, AUGUST 25, 2010

Marquez vs. Espejo
131
Bank of Bayombong, Incorporated, and other incidental matters

are deemed resolved.
SO ORDERED.25
Ruling of the Court of Appeals

In appealing to the CA, the respondents insisted that the
DARAB erred in ruling that they repurchased the Lantap
property, while the petitioners were awarded the Murong
property. They were adamant that the title numbers
indicated in their respective deeds of conveyance should
control in determining the subjects thereof. Since
respondents Deed of Sale expressed that its subject is the
property with TCT No. T-62096, then what was sold to them
was the Murong property. On the other hand, petitioners
VLTs and CLOAs say that they cover the property with TCT
No. T-62836; thus it should be understood that they were
awarded the Lantap property. Respondents added that since
petitioners are not the actual tillers of the Lantap property,
their CLOAs should be cancelled due to their lack of
qualification.
The CA agreed with the respondents. Using the Best
Evidence Rule embodied in Rule 130, Section 3, the CA held
that the Deed of Sale is the best evidence as to its contents,
particularly the description of the land which was the object
of the sale. Since the Deed of Sale expressed that its subject
is the land covered by TCT No. T-62096the Murong
propertythen that is the property that the respondents
repurchased.
158
The CA further ruled that as for petitioners VLTs, the

same refer to the property with TCT No. T-62836; thus, the
subject of their CLOAs is the Lantap property. The
additional description in the VLTs that the subject thereof is
located in Barangay Murong was considered to be a mere
typographical error. The CA ruled that the technical
description contained
_______________
Their Motion for Reconsideration was likewise denied

with finality.31 Entry of judgment was made in that case on
De_______________
26 CA Rollo, pp. 142-147.
27 Id., at pp. 247-254.
28 Resolution dated March 19, 2004 (Id., at p. 153) denying RBBIs
Motion for Reconsideration; Resolution dated May 11, 2005 (Id., at pp. 257-
25 DARAB Decision, pp. 13-14; id., at pp. 133-132.
29 Id., at pp. 178-190. Entitled Rural Bank of Bayombong, Inc.
132
132
258) denying herein petitioners Motion for Reconsideration.

Marquez vs. Espejo
in the TCT is more accurate in identifying the subject

property since the same particularly describes the properties
metes and bounds.
Both the RBBI26 and petitioners27 filed their respective
motions for reconsideration, which were separately denied.28
On June 22, 2004, RBBI filed a separate Petition for
Review on Certiorari, docketed as G.R. No. 163320, with this
Court.29 RBBI raised the issue that the CA failed to
appreciate that respondents did not come to court with clean
hands because they misled RBBI to believe at the time of the
sale that the two lots were not tenanted. RBBI also asked
that they be declared free from any liability to the parties as
it did not enrich itself at anyones expense. RBBIs petition
was dismissed on July 26, 2004 for lack of merit. The said
Resolution reads:
Considering the allegations, issues[,] and arguments adduced
in the petition for review on certiorari, the Court Resolves to
DENY the petition for lack of sufficient showing that the Court of
Appeals had committed any reversible error in the questioned
judgment to warrant the exercise by this Court of its discretionary
appellate jurisdiction in this case.30
represented by its President/General Manager Romeo F. Ramos, Jr., vs.

Eloisa Espejo, et al.
30 Rollo of G.R. No. 163320, p. 91.
31 Id., at p. 107.
133
VOL. 629, AUGUST 25, 2010

Marquez vs. Espejo
133
cember 15, 2004.32

On July 27, 2005,33 petitioners filed the instant petition.
Issues
Rephrased and consolidated, the parties present the
following issues for the Courts determination:
I
What is the effect of the final judgment dismissing RBBIs
Petition for Review on Certiorari, which assailed the same CA
Decision
II
Whether the CA erred in utilizing the Best Evidence Rule to
determine the subject of the contracts
III
What are the subject properties of the parties respective
contracts with RBBI
159
Our Ruling
Propriety of the Petition
Respondents maintain that the instant petition for review
raises factual issues which are beyond the province of Rule
45.34
The issues involved herein are not entirely factual.
Petitioners assail the appellate courts rejection of their
evidence (as to the contractual intent) as inadmissible under
the Best Evidence Rule. The question involving the
admissibility of
_______________
32 Id., at p. 108.
33 Upon petitioners motion, the Court issued a Resolution on July 20,
2005 granting petitioners a thirty-(30) day extension to file the Petition for
Review on Certiorari. (Rollo of G.R. No. 168387, p. 8)
34 Respondents Memorandum, p. 9; id., at p. 127.
_______________
35 See People v. Exala, G.R. No. 76005, April 23, 1993, 221 SCRA 494,
499; People v. Judge Seneris, 187 Phil. 558, 560; 99 SCRA 92 (1980);People v.
Alarcon, 78 Phil. 732, 737 (1947).
134
134
those of the trial court; (8) when the findings are conclusions
without citation of specific evidence on which they are based;
(9) when the facts set forth in the petition as well as in the
respondent; and (10) when the findings of fact are premised
on the supposed absence of evidence and contradicted by the
evidence on record.36
In the instant case, we find sufficient basis to apply the
exceptions to the general rule because the appellate court
misappreciated the facts of the case through its erroneous
application of the Best Evidence Rule, as will be discussed
below. Moreover, the disparate rulings of the three reviewing
bodies below are sufficient for the Court to exercise its
jurisdiction under Rule 45.

Marquez vs. Espejo
evidence is a legal question that is within the Courts

authority to review.35
Besides, even if it were a factual question, the Court is not
precluded to review the same. The rule that a petition for
review should raise only questions of law admits of
exceptions, among which are (1) when the findings are
grounded entirely on speculations, surmises, or conjectures;
(2) when the inference made is manifestly mistaken, absurd
or impossible; (3) when there is grave abuse of discretion; (4)
when the judgment is based on amisappreciation of facts; (5)
when the findings of fact areconflicting; (6) when, in making
its findings, the same are contrary to the admissions of both
appellant and appellee; (7) when the findings are contrary to
36 Reyes v. Montemayor, G.R. No. 166516, September 3, 2009, 598 SCRA

61, 74. Emphasis supplied.
135
VOL. 629, AUGUST 25, 2010

Marquez vs. Espejo
135
First Issue
Dismissal of RBBIs appeal
Respondents maintain that the Courts earlier dismissal of
RBBIs petition for review of the same CA Decision is
eloquent proof that there is no reversible error in the
appellate courts decision in favor of the respondents.37
We are not persuaded. This Court dismissed RBBIs
earlier petition in G.R. No. 163320 because it failed to
convincingly demonstrate the alleged errors in the CA
Decision. The bank did not point out the inadequacies and
160
errors in the appellate courts decision but simply placed the

responsibility for the confusion on the respondents for
allegedly misleading the bank as to the identity of the
properties and for misrepresenting that the two lots were not
tenanted. Thus, RBBI argued that respondents did not come
to court with clean hands.
These arguments were ineffectual in convincing the Court
to review the appellate courts Decision. It is the appellants
responsibility to point out the perceived errors in the
appealed decision. When a party merely raises equitable
considerations such as the clean hands doctrine without a
clear-cut legal basis and cogent arguments to support his
claim, there should be no surprise if the Court is not swayed
to exercise its appellate jurisdiction and the appeal is
dismissed outright. The dismissal of an appeal does not
always and necessarily mean that the appealed decision is
correct, for it could simply be the result of the appellants
inadequate discussion, ineffectual arguments, or even
procedural lapses.
RBBIs failure to convince the Court of the merits of its
appeal should not prejudice petitioners who were not parties
to RBBIs appeal, especially because petitioners duly filed a
separate appeal and were able to articulately and effectively
present their arguments. A party cannot be deprived of his
_______________
37 Respondents Memorandum, p. 10; Rollo of G.R. No. 168387, p. 128.
There is another reason not to bind the petitioners to the

final judgment against RBBI. RBBI executed the transfer
(VLTs) in favor of petitioners prior to the commencement of
the action. Thus, when the action for cancellation of CLOA
was filed, RBBI had already divested itself of its title to the
two properties involved. Under the rule on res judicata, a
judgment (in personam) is conclusive only between the
parties and their successors-in-interest by title subsequentto
the commencement of the action.40 Thus, when the vendor (in
this case RBBI) has already transferred his title to third
persons (petitioners), the said transferees are not bound by
any judgment which may be rendered against the vendor.41
Second Issue
Is it correct to apply the Best Evidence Rule?
Citing the Best Evidence Rule in Rule 130, Section 3, the
CA held that the Deed of Sale between respondents and
RBBI is the best evidence as to the property that was sold by
RBBI to the respondents. Since the Deed of Sale stated that
its subject is the land covered by TCT No. T-62096the title
for the Murong propertythen the property repurchased by
the respondents was the Murong property. Likewise, the CA
held that since the VLTs between petitioners and RBBI refer
to TCT No. T-62836the title for the Lantap propertythen
the property transferred to petitioners was the Lantap
property.
_______________
136
136

Marquez vs. Espejo
right to appeal an adverse decision just because another

party had already appealed ahead of him,38 or just because
the other partys separate appeal had already been
dismissed.39
38 See Borromeo v. Court of Appeals, 162 Phil. 430, 438; 70 SCRA 329,
334 (1976).
39 See Citibank, N.A. (Formerly First National City Bank) v. Sabeniano,
G.R. No. 156132, October 16, 2006, 504 SCRA 378, 403-405.
40 RULES OF COURT, Rule 39, Section 47 (b).
41 See De Leon v. De Leon, 98 Phil. 589, 591-592 (1956).
161
137
purpose of the rule requiring the production of the best evidence is the
VOL. 629, AUGUST 25, 2010

Marquez vs. Espejo
137
Petitioners argue that the appellate court erred in using

the best evidence rule to determine the subject of the Deed of
Sale and the Deeds of Voluntary Land Transfer. They
maintain that the issue in the case is not the contents of the
contracts but the intention of the parties that was not
adequately expressed in their contracts. Petitioners then
argue that it is the Parol Evidence Rule that should be
applied in order to adequately resolve the dispute.
Indeed, the appellate court erred in its application of the
Best Evidence Rule. The Best Evidence Rule states that
when the subject of inquiry is the contents of a document, the
best evidence is the original document itself and no other
evidence (such as a reproduction, photocopy or oral evidence)
is admissible as a general rule. The original is preferred
because it reduces the chance of undetected tampering with
the document.42
In the instant case, there is no room for the application of
the Best Evidence Rule because there is no dispute regarding
the contents of the documents. It is admitted by the parties
that the respondents Deed of Sale referred to TCT No. T62096 as its subject; while the petitioners Deeds of
Voluntary Land Transfer referred to TCT No. T-62836 as its
subject,
which
is
further
described
as
located
in Barangay Murong.
The real issue is whether the admitted contents of these
documents adequately and correctly express the true
intention of the parties. As to the Deed of Sale, petitioners
(and
_______________
42 The Best Evidence Rule comes into play when a reproduction of the
prevention of fraud, because if a party is in possession of [the best] evidence

and withholds it, and seeks to substitute inferior evidence in its place, the
presumption naturally arises that the better evidence is withheld for
fraudulent purposes which its production would expose and defeat. Asuncion
v. National Labor Relations Commission, 414 Phil. 329, 339; 362 SCRA 56, 65
(2001).
138
138

Marquez vs. Espejo
RBBI) maintain that while it refers to TCT No. T-62096,the

parties actually intended the sale of the Lantap property
(covered by TCT No. T-62836).
As to the VLTs, respondents contend that the reference to
TCT No. T-62836 (corresponding to the Lantap property)
reflects the true intention of RBBI and the petitioners, and
the reference to Barangay Murong was a typographical
error. On the other hand, petitioners claim that the reference
to Barangay Murong reflects their true intention, while the
reference to TCT No. T-62836 was a mere error. This dispute
reflects an intrinsic ambiguity in the contracts, arising from
an apparent failure of the instruments to adequately express
the true intention of the parties. To resolve the ambiguity,
resort must be had to evidence outside of the instruments.
The CA, however, refused to look beyond the literal
wording of the documents and rejected any other evidence
that could shed light on the actual intention of the
contracting parties. Though the CA cited the Best Evidence
Rule, it appears that what it actually applied was the Parol
Evidence Rule instead, which provides:
When the terms of an agreement have been reduced to writing,
it is considered as containing all the terms agreed upon and there
can be, between the parties and their successors in interest, no
original or oral evidence is offered to prove the contents of a document. The
162
evidence of such terms other than the contents of the written

agreement.43
The Parol Evidence Rule excludes parol or extrinsic

evidence by which a party seeks to contradict, vary, add to or
subtract from the terms of a valid agreement or instrument.
Thus, it appears that what the CA actually applied in its
assailed Decision when it refused to look beyond the words of
the contracts was the Parol Evidence Rule, not the Best
Evidence Rule. The appellate court gave primacy to the
literal terms of
_______________
43 RULES OF COURT, Rule 130, Section 9, first paragraph.
139
VOL. 629, AUGUST 25, 2010

Marquez vs. Espejo
139
the two contracts and refused to admit any other evidence

that would contradict such terms.
However, even the application of the Parol Evidence Rule
is improper in the case at bar. In the first place, respondents
are not parties to the VLTs executed between RBBI and
petitioners; they are strangers to the written contracts. Rule
130, Section 9 specifically provides that parol evidence rule is
exclusive only as between the parties and their successorsin-interest. The parol evidence rule may not be invoked
where at least one of the parties to the suit is not a party or a
privy of a party to the written document in question, and
does not base his claim on the instrument or assert a right
originating in the instrument.44
Moreover, the instant case falls under the exceptions to
the Parol Evidence Rule, as provided in the second
paragraph of Rule 130, Section 9:
However, a party may present evidence to modify,

explain or add to the terms of the written agreement if he
puts in issue in his pleading:
(1) An intrinsic ambiguity, mistake or imperfection in the
written agreement;
(2) The failure of the written agreement to express the true
intent and agreement of the parties thereto;
x x x x (Emphasis supplied)
Here, the petitioners VLTs suffer from intrinsic
ambiguity. The VLTs described the subject property as
covered by TCT No. T-62836 (Lantap property), but they also
describe the subject property as being located in Barangay
Murong. Even the respondents Deed of Sale falls under the
exception to the Parol Evidence Rule. It refers to TCT No. T62096 (Murong property), but RBBI contended that the true
intent was to sell
_______________
44 Lechugas v. Court of Appeals, 227 Phil. 310, 319; 143 SCRA 335, 343
(1986).
140
140

Marquez vs. Espejo
the Lantap property. In short, it was squarely put in issue

that the written agreement failed to express the true intent
of the parties.
Based on the foregoing, the resolution of the instant case
necessitates an examination of the parties respective parol
evidence, in order to determine the true intent of the parties.
Well-settled is the rule that in case of doubt, it is the
intention of the contracting parties that prevails, for the
intention is the soul of a contract,45 not its wording which is
prone to mistakes, inadequacies, or ambiguities. To hold
163
otherwise would give life, validity, and precedence to mere

typographical errors and defeat the very purpose of
agreements.
In this regard, guidance is provided by the following
articles of the Civil Code involving the interpretation of
contracts:
Article 1370. If the terms of a contract are clear and leave no
doubt upon the intention of the contracting parties, the literal
meaning of its stipulations shall control.
If the words appear to be contrary to the evident intention of
the parties, the latter shall prevail over the former.
Article 1371. In order to judge the intention of the contracting
parties, their contemporaneous and subsequent acts shall be
principally considered.
Rule 130, Section 13 which provides for the rules on the

interpretation of documents is likewise enlightening:
Section 13. Interpretation according to circumstances.For
the proper construction of an instrument, the circumstances under
which it was made, including the situation of the subject thereof
and of the parties to it, may be shown, so that the judge may be
placed in the position of those whose language he is to interpret.
Applying the foregoing guiding rules, it is clear that the

Deed of Sale was intended to transfer the Lantap property to
_______________
45 Kilosbayan, Inc. v. Guingona, Jr., G.R. No. 113375, May 5, 1994, 232
SCRA 110, 143.
141
VOL. 629, AUGUST 25, 2010

Marquez vs. Espejo
141
the respondents, while the VLTs were intended to convey the

Murong property to the petitioners. This may be seen from
the contemporaneous and subsequent acts of the parties.
Third issue
Determining the intention of the parties
regarding the subjects of their contracts
We are convinced that the subject of the Deed of Sale
between RBBI and the respondents was the Lantap property,
and not the Murong property. After the execution in 1985 of
the Deed of Sale, the respondents did not exercise acts of
ownership that could show that they indeed knew and
believed that they repurchased the Murong property. They
did not take possession of the Murong property. As admitted
by the parties, the Murong property was in the possession of
the petitioners, who occupied and tilled the same without any
objection from the respondents. Moreover, petitioners paid
leasehold rentals for using the Murong property to RBBI, not
to the respondents.
Aside from respondents neglect of their alleged ownership
rights over the Murong property, there is one other
circumstance that convinces us that what respondents really
repurchased was the Lantap property. Respondent Nemi
(husband of respondent Elenita) is the farmer actually tilling
the Lantap property, without turning over the supposed
landowners share to RBBI. This strongly indicates that the
respondents considered themselves (and not RBBI) as the
owners of the Lantap property. For if respondents
(particularly spouses Elenita and Nemi) truly believed that
RBBI retained ownership of the Lantap property, how come
they never complied with their obligations as supposed
tenants of RBBIs land? The factual circumstances of the case
simply do not support the theory propounded by the
respondents.
We are likewise convinced that the subject of the Deeds of
Voluntary Land Transfer (VLTs) in favor of petitioners was
the Murong property, and not the Lantap property. When the
142
164
142

Marquez vs. Espejo
VLTs were executed in 1990, petitioners were already the

tenant-farmers of the Murong property, and had been paying
rentals to RBBI accordingly. It is therefore natural that the
Murong property and no other was the one that they had
intended to acquire from RBBI with the execution of the
VLTs. Moreover, after the execution of the VLTs, petitioners
remained in possession of the Murong property, enjoying and
tilling it without any opposition from anybody. Subsequently,
after the petitioners completed their payment of the total
purchase price of P90,000.00 to RBBI, the Department of
Agrarian
Reform
(DAR)
officials
conducted
their
investigation of the Murong property which, with the
presumption of regularity in the performance of official duty,
did not reveal any anomaly. Petitioners were found to be in
actual possession of the Murong property and were the
qualified beneficiaries thereof. Thus, the DAR officials issued
CLOAs in petitioners favor; and these CLOAs explicitly refer
to the land in Barangay Murong. All this time, petitioners
were in possession of the Murong property, undisturbed by
anyone for several long years, until respondents started the
controversy in 1997.
All of these contemporaneous and subsequent actions of
RBBI and petitioners support their position that the subject
of their contract (VLTs) is the Murong property, not the
Lantap property. Conversely, there has been no contrary
evidence of the parties actuations to indicate that they
intended the sale of the Lantap property. Thus, it appears
that the reference in their VLT to TCT No. T-62836 (Lantap
property) was due to their honest but mistaken belief that
the said title covers the Murong property. Such a mistake is
not farfetched considering that TCT No. T-62836 only refers
to the Municipality of Bayombong, Nueva Vizcaya, and does
not indicate the particular barangay where the property is
located. Moreover, both properties are bounded by a road and

public land. Hence, were it not for the detailed technical
description, the titles for the two properties are very
similar.143
VOL. 629, AUGUST 25, 2010

Marquez vs. Espejo
143
The respondents attempt to discredit petitioners

argument that their VLTs were intrinsically ambiguous and
failed to express their true intention by asking why
petitioners never filed an action for the reformation of their
contract.46 A cause of action for the reformation of a contract
only arises when one of the contracting parties manifests an
intention, by overt acts, not to abide by the true agreement of
the parties.47 It seems fairly obvious that petitioners had no
cause to reform their VLTs because the parties thereto (RBBI
and petitioners) never had any dispute as to the
interpretation and application thereof. They both understood
the VLTs to cover the Murong property (and not the Lantap
property). It was only much later, when strangers to the
contracts argued for a different interpretation, that the issue
became relevant for the first time.
All told, we rule that the Deed of Sale dated February 26,
1985 between respondents and RBBI covers the Lantap
property under TCT No. T-62836, while the Deeds of
Voluntary Land Transfer and TCT Nos. CLOA-395 and
CLOA-396 of the petitioners cover the Murong propertyunder
TCT No. T-62096. In consequence, the CAs ruling against
RBBI should not be executed as such execution would be
inconsistent with our ruling herein. Although the CAs
decision had already become final and executory as against
RBBI with the dismissal of RBBIs petition in G.R. No.
163320, our ruling herein in favor of petitioners is a
supervening cause which renders the execution of the CA
decision against RBBI unjust and inequitable.
165
WHEREFORE, the Petition for Review on Certiorari is

GRANTED. The assailed October 7, 2003 Decision, as well as
_______________
46 Respondents Memorandum, p. 16; Rollo of G.R. No. 168387, p. 134.
47 Multi-Realty
Development
Corporation
v.
Makati
Tuscany
Condominium Corporation, G.R. No. 146726, June 16, 2006, 491 SCRA 9, 3031, citing Tormon v. Cutanda, 119 Phil. 84, 87-88; 9 SCRA 698, 701 (1963).
144
144

Marquez vs. Espejo
and agreement of the parties. (ACI Philippines, Inc. vs.

Coquia, 558 SCRA 300 [2008])
The courts need only to rely on the faces of the written
contracts to determine their true intention on the principle
that when the parties have reduced their agreements in
writing, it is presumed that they have made the writings the
only repositories and memorials of their true agreement.
(Suatengco vs. Reyes, 574 SCRA 187 [2008])
o0o
Copyright 2015 Central Book Supply, Inc. All rights reserved.
the May 11, 2005 Resolution of the Court of Appeals in CAG.R. SP No. 69981 are REVERSED and SET ASIDE. The
January 17, 2001 Decision of the DARAB Central Office is
REINSTATED. The Deed of Sale dated February 26, 1985
between respondents and Rural Bank of Bayombong, Inc.
covers the Lantap property under TCT No. T-62836, while
the Deeds of Voluntary Land Transfer and TCT Nos. CLOA395 and CLOA-396 of the petitioners cover the Murong
property under TCT No. T-62096. The Register of Deeds of
Nueva Vizcaya is directed to make the necessary corrections
to the titles of the said properties in accordance with this
Decision. Costs against respondents.
SO ORDERED.
Corona (C.J., Chairperson), Velasco, Jr., Leonardo-De
Castro and Perez, JJ., concur.
Petition granted, judgment and resolution reversed and set
aside.
Notes.It is a cardinal rule of evidence that the written
document is the best evidence of its own contents, though a
party may present evidence to modify, explain or add to the
terms of the agreement if he puts in issue in his pleading the
failure of the written agreement to express the true intent
166
G.R. No. 80505. December 4, 1990.

THE PEOPLE OF THE PHILIPPINES, plaintiffappellee,vs. MARIO TANDOY y LIM, defendant-appellant.
*
Dangerous Drugs Act; Drug pushing may be committed at

anytime and at any place.Tandoy submits that "one will not sell
this prohibited drug to another who is a total stranger until the
seller is certain of the identity of the buyer." The conjecture must
be rejected. In People v. Paco, this Court observed: Drug-pushing
when done on a small level as in this case belongs to that class of
crimes that may be committed at anytime and at any place. After
the offer to buy is accepted and the exchange is made, the illegal
transaction is completed in a few minutes. The fact that the
parties are in a public place and in the presence of other people
may not always discourage them from pursuing their illegal trade
as these factors may even serve to camouflage the same. Hence,
the Court has sustained the conviction of drug pushers caught
selling illegal drugs in a billiard hall (People v. Rubio, G.R. No.
66875, June 19, 1986, 142 SCRA 329; People v. Sarmiento, G.R.
No. 72141, January 12, 1987, 147 SCRA 252), in front of a store
(People v. Khan, supra) along a street at 1:45 p.m. (People v.
Toledo, G.R. No. 67609,
_______________
*
FIRST DIVISION.
29
VOL. 192, DECEMBER 4, 1990
2
9
People vs. Tandoy

November 22, 1985, 140 SCRA 259), and in front of a house
(People v. Policarpio, G.R. No. 69844, February 23, 1988).
Same; Same; Evidence; Best Evidence Rule; Presentation of the
"buy-bust money" was not indispensable to the conviction of the
accused-appellant.The Solicitor General, in his Comment,
correctly refuted that contention thus: This assigned error centers

on the trial court's admission of the P10.00 bill marked money
(Exh. E-2-A) which, according to the appellant, is excluded under
the best evidence rule for being a mere xerox copy. Apparently,
appellant erroneously thinks that said marked money is an
ordinary document falling under Sec. 2, Rule 130 of the Revised
Rules of Court which excludes the introduction of secondary
evidence except in the five (5) instances mentioned therein. The
best evidence rule applies only when the contents of the document
are the subject of inquiry. Where the issue is only as to whether or
not such document was actually executed, or exists, or in the
circumstances relevant to or surrounding its execution, the best
evidence rule does not apply and testimonial evidence is
admissible. (Cf. Moran, op. cit., pp. 76-77; 4 Martin, op. cit., p. 78.)
Since the aforesaid marked money was presented by the
prosecution solely for the purpose of establishing its existence and
not its contents, other substitutionary evidence, like a xerox copy
thereof, is therefore admissible without the need of accounting for
the original. Moreover, the presentation at the trial of the "buybust money" was not indispensable to the conviction of the
accused-appellant because the sale of the marijuana had been
adequately proved by the testimony of the police officers. So long
as the marijuana actually sold by the accused-appellant had been
submitted as an exhibit, the failure to produce the marked money
itself would not constitute a fatal omission.
APPEAL from the decision of the Regional Trial Court of

Makati, Metro Manila, Br. 133.
The Solicitor General for plaintiff-appellee.
Public Attorney's Office for defendant-appellant.
CRUZ, J.:
167
The decision of the Regional Trial Court of Makati, Branch

133 dated October 13, 1987, convicting Mario Tandoy of the
crime of violation of Art. II, Sec. 4 of Rep. Act No. 6425
known as the Dangerous Drugs Act of 1972, is before us on
appeal.
The information against the accused-appellant read as
follows:
30
30

People vs. Tandoy
That on or about the 27th day of May 1986, in the Municipality of

Makati, Metro Manila, Philippines, and within the jurisdiction of
this Honorable Court, the above-named accused without being
authorized by law, did then and there willfuly, unlawfully and
feloniously sell eight (8) pieces of dried marijuana flowering tops,
two (2) pieces of dried marijuana flowering tops and crushed dried
marijuana flowering tops, which are prohibited drug, for and in
consideration of P20.00.
Upon arraignment, Tandoy entered a plea of not guilty. After

trial, Judge Buenaventura J. Guerrero rendered a decision
the dispositive portion of which declared:
WHEREFORE, the Court finds Mario Tandoy y Lim guilty beyond
reasonable doubt of violation of Sec. 4, Art. II, Rep. Act No. 6425,
as amended, and is hereby sentenced to life imprisonment and to
pay a fine of P20,000.00 and cost.
The marijuana confiscated in this case is declared confiscated
and forfeited and ordered turned over to the Dangerous Drugs
Board for proper disposal.
SO ORDERED.
The accused-appellant raises the following assignment of

errors in this appeal:
1. 1.The Court a quo erred in finding accused guilty

beyond reasonable doubt of the crime charged despite
lack of evidence to prove that he sold marijuana to
the poseur-buyer.
2. 2.The Court a quo erred in admitting in evidence
against the accused Exh. "E-2-A" which is merely a
xerox copy of the P10.00 bill allegedly used as buybust money.
The evidence of the prosecution may be summarized as
follows:
On May 27, 1986, at about 3:30 p.m. Lt. Salido, Jr. of the
Makati Police Station dispatched Pfc. Herino de la Cruz, and
Detectives Pablo R. Singayan, Nicanor Candolesas, Luisito
de la Cruz, Estanislao Dalumpines, Antonio Manalastas and
Virgilio Padua to conduct a buy-bust operation at Solchuaga
St., Barangay Singkamas, Makati.
The target area was a store along the said street, and
Singayan was to pose as the buyer. He stood alone near the
store waiting for any pusher to approach. The other members
of the
31

People vs. Tandoy
31
team strategically positioned themselves. Soon, three men

approached Singayan. One of them was the accusedappellant, who said without preamble: "Pare, gusto mo bang
umiskor?" Singayan said yes. The exchange was made then
and theretwo rolls/pieces of marijuana for one P10.00 and
two P5.00 bills marked ANU (meaning Anti-Narcotics Unit).
The team then moved in and arrested Tandoy. Manalastas
and Candalesas made a body search of the accused-appellant
and took from him the marked money, as well as eight more
rolls/foils of marijuana and crushed leaves.
168
The arresting officers brought Tandoy to the Office of the

Anti-Narcotics Unit, Makati Police Station, for investigation
by Detective Marvin Pajilan. The accused-appellant chose to
remain silent after having been informed of his constitutional
rights.
These events were narrated under oath by De la Cruz,
Singayan
and
Pajilan. Microscopic,
chemical
and
chromotographic examination was performed on the
confiscated marijuana by Raquel P. Angeles, forensic chemist
of the National Bureau of Investigation, who later testified
that the findings were positive. The marijuana was offered as
an exhibit.
As might be expected, the accused-appellant had a
different story. His testimony was that from 1:30 to 4:00 p.m.
of the day in question, he was playing "cara y cruz" with 15
other persons along Solchuaga St. when somebody suddenly
said that policemen were making arrests. The players
grabbed the bet money and scampered. However, he and a
certain Danny (another "cara y cruz" player) were caught and
taken to the Narcotics Command headquarters in Makati.
There they were mauled and warned that if they did not
point to their fellow pushers, they would rot in jail. The
accused-appellant denied he had sold marijuana to Singayan
and insisted the bills taken from him were the bet money he
had grabbed at the "cara y cruz" game.
The trial court, which had the opportunity to observe the
demeanor of the witnesses and to listen to their respective
testi1
________________
1
TSN, October 1,1986; TSN, November 19,1986; TSN, January 7, 1987.
Exhibit "D."
TSN, February 16, 1987, p. 6; Exhibit "E."
32
32

People vs. Tandoy
monies, gave more credence to the statements of the

arresting officers. Applying the presumption that they had
performed their duties in a regular manner, it rejected
Tandoy's uncorroborated allegation that he had been
manhandled and framed. Tandoy had not submitted
sufficient evidence of his charges, let alone his admission
that he had no quarrel with the peace officers whom he had
met only on the day of his arrest.
In People v. Patog, this Court held:
4
When there is no evidence and nothing to indicate the principal

witness for the prosecution was actuated by improper motives, the
presumption is that he was not so actuated and his testimony is
entitled to full faith and credit.
Tandoy submits that "one will not sell this prohibited drug to
another who is a total stranger until the seller is certain of
the identity of the buyer."
The conjecture must be rejected.
In People v. Paco, this Court observed:
5
Drug-pushing when done on a small level as in this case belongs to

that class of crimes that may be committed at anytime and at any
place. After the offer to buy is accepted and the exchange is made,
the illegal transaction is completed in a few minutes. The fact that
the parties are in a public place and in the presence of other people
may not always discourage them from pursuing their illegal trade
as these factors may even serve to camouflage the same. Hence,
the Court has sustained the conviction of drug pushers caught
selling illegal drugs in a billiard hall (People v. Rubio, G.R. No.
66875, June 19,1986,142 SCRA 329; People v. Sarmiento, G.R. No.
72141, January 12, 1987, 147 SCRA, 252), in front of a store
(People vs. Khan, supra) along a street at 1:45 p.m. (People v.
Toledo, G.R. No. 67609, November 22, 1985, 140 SCRA 259), and
169
in front of a house (People v. Policarpio, G.R. No. 69844, February

23, 1988).
As the Court has also held, "What matters is not an existing

familiarity between the buyer and the seller but their
agreement and the acts constituting the sale and delivery of
the
_______________
4
144 SCRA 429.
170 SCRA 681.
33

People us. Tandoy
33
marijuana leaves."
Under the second assigned error, the accused-appellant
invokes the best evidence rule and questions the admission
by the trial court of the xerox copy only of the marked P10.00
bill.
The Solicitor General, in his Comment, correctly refuted
that contention thus:
6
This assigned error centers on the trial court's admission of the

P10.00 bill marked money (Exh. E-2-A) which, according to the
appellant, is excluded under the best evidence rule for being a
mere xerox copy. Apparently, appellant erroneously thinks that
said marked money is an ordinary document falling under Sec. 2,
Rule 130 of the Revised Rules of Court which excludes the
introduction of secondary evidence except in the five (5) instances
mentioned therein.
The best evidence rule applies only when the contents of the
document are the subject of inquiry. Where the issue is only as to
whether or not such document was actually executed, or exists, or
in the circumstances relevant to or surrounding its execution, the
best evidence rule does not apply and testimonial evidence is

admissible. (Cf. Moran, op. cit., pp. 76-77; 4 Martin, op. cit., p. 78.)
Since the aforesaid marked money was presented by the
prosecution solely for the purpose of establishing its existence and
not its contents, other substitutionary evidence, like a xerox copy
thereof, is therefore admissible without the need of accounting for
the original.
Moreover, the presentation at the trial of the "buy-bust

money" was not indispensable to the conviction of the
accused-appellant because the sale of the marijuana had
been adequately proved by the testimony of the police
officers. So long as the marijuana actually sold by the
accused-appellant had been submitted as an exhibit, the
failure to produce the marked money itself would not
constitute a fatal omission.
We are convinced from the evidence on record that the
prosecution has overcome the constitutional presumption of
innocence in favor of the accused-appellant with proof beyond
reasonable doubt of his guilt. He must therefore suffer the
penalty prescribed by law for those who would visit the
scourge of drug addiction upon our people.
WHEREFORE, the appeal is DISMISSED and the
challenged
________________
6
People v. Rodriguez y Teves, 172 SCRA 742.
34
34

People's Financing Corp. vs. Court of Appeals
decision AFFIRMED in
accusedappellant.
SO ORDERED.
toto, with
costs
against
the
170
Narvasa (Chairman), Gancayco, GrioAquino andMedialdea, JJ., concur.

Decision affirmed.
Notes.So long as the marijuana sold is presented in
court the absence of the marked money does not create a
hiatus in evidence. (People vs. Marcos, 185 SCRA 154.)
Identity of poseur-buyer is vital when accused denies
having sold marijuana to anyone. (People vs. Sahagun, 182
SCRA 91.)
o0o
G.R. No. 172607. October 26, 2007.

PEOPLE OF THE PHILIPPINES, appellee, vs.RUFINO
UMANITO, appellant.
*
Criminal Law; Evidence; New Rule on Deoxyribonucleic

Acid (DNA) Evidence; Deoxyribonucleic Acid (DNA) Testing; If it
can be conclusively determined that the accused did not sire the
alleged rape victims child, this may cast the shadow of reasonable
doubt and allow his acquittal on this basis.Amidst the slew of
assertions and counter-assertions, a happenstance may provide the
definitive key to the absolution of the appellant. This is the fact
that AAA bore a child as a result of the purported rape. With the
advance in genetics and the availability of new technology, it can
now be determined with reasonable certainty whether appellant is
the father of AAAs child. If he is not, his acquittal may be
ordained. We have pronounced that if it can be conclusively
determined that the accused did not sire the alleged victims child,
this may cast the shadow of reasonable doubt and allow his
acquittal on this basis. If he is found not to be the father, the
finding will at least weigh heavily in the ultimate decision in this
case. Thus, we are directing appellant, AAA and her child to
submit themselves to deoxyribonucleic acid (DNA) testing under
the aegis of the New Rule on DNA Evidence (the Rules), which
took effect on 15 October 2007, subject to guidelines prescribed
herein.
Same; Same; Same; Same; Words
and
Phrases;Deoxyribonucleic Acid (DNA) print or identification
technology is now recognized as a uniquely effective means to link a
suspect to a crime, or to absolve one erroneously accused, where
biological evidence is availablefor purposes of criminal
investigation, Deoxyribonucleic Acid (DNA) identification is a
fertile source of both inculpatory and exculpatory evidence.DNA
print or identification technology is now recognized as a uniquely
effective means to link a suspect to a crime, or to absolve one
171
erroneously accused, where biological evidence is available. For

purposes of criminal investigation, DNA identification is a fertile
source of both inculpatory and exculpatory evidence. It can aid
immensely in determining a more accurate account of the
_______________
*
SECOND DIVISION.
553
VOL. 537, OCTOBER 26, 2007
5
53
People vs. Umanito

crime committed, efficiently facilitating the conviction of the
guilty, securing the acquittal of the innocent, and ensuring the
proper administration of justice in every case. Verily, as we
pointed out in People v. Yatar, 428 SCRA 505 (2004), the process of
obtaining such vital evidence has become less arduousThe U.P.
National Science Research Institute (NSRI), which conducted the
DNA tests in this case, used the Polymerase chain reaction (PCR)
amplification method by Short Tandem Repeat (STR) analysis.
With PCR testing, tiny amounts of a specific DNA sequence can be
copied exponentially within hours. Thus, getting sufficient DNA
for analysis has become much easier since it became possible to
reliably amplify small samples using the PCR method.
Same; Same; Same; Remand of Cases; Under Section 4 of the
New Rule on Deoxyribonucleic Acid (DNA) Evidence, the courts are
authorized, after due hearing and notice, motu proprio to order a
Deoxyribonucleic Acid(DNA) testing; Since the Supreme Court is
not a trier of facts and does not, in the course of daily routine,
conduct hearings, it would be more appropriate that the case be
remanded to the Regional Trial Court for reception of evidence in
appropriate hearings, with due notice to the parties.It is obvious
to the Court that the determination of whether appellant is the
father of AAAs child, which may be accomplished through DNA
testing, is material to the fair and correct adjudication of the

instant appeal. Under Section 4 of the Rules, the courts are
authorized, after due hearing and notice, motu proprio to order a
DNA testing. However, while this Court retains jurisdiction over
the case at bar, capacitated as it is to receive and act on the matter
in controversy, the Supreme Court is not a trier of facts and does
not, in the course of daily routine, conduct hearings. Hence, it
would be more appropriate that the case be remanded to the RTC
for reception of evidence in appropriate hearings, with due notice
to the parties.
Same; Same; Same; Offer
of
Evidence;
After
the
Deoxyribonucleic Acid (DNA) analysis is obtained, it shall be
incumbent upon the parties who wish to avail of the same to offer
the results in accordance with the rules of evidence.Should the
RTC find the DNA testing feasible in the case at bar, it shall order
the same, in conformity with Section 5 of the Rules. It is also the
RTC which shall determine the institution to undertake the DNA
testing and the parties are free to manifest their comments on the
choice of DNA testing
554
5
54

ANNOTATED
People vs. Umanito
center. After the DNA analysis is obtained, it shall be

incumbent upon the parties who wish to avail of the same to offer
the results in accordance with the rules of evidence. The RTC, in
evaluating the DNA results upon presentation, shall assess the
same as evidence in keeping with Sections 7 and 8 of the Rules.
Same; Same; Same; In light of the fact that this case
constitutes the first known application of the Rules on
Deoxyribonucleic Acid (DNA) Evidence, the Court is especially
interested in monitoring the implementation thereof in this case, for
its guidance and continuing evaluation of the Rules as
172
implemented.In light of the fact that this case constitutes the

first known application of the Rules, the Court is especially
interested in monitoring the implementation thereof in this case,
for its guidance and continuing evaluation of the Rules as
implemented. For purposes of supervising the implementation the
instant resolution, the Court designates Deputy Court
Administrator Reuben Dela Cruz (DCA Dela Cruz) to: (a) monitor
the manner in which the court a quo carries out the Rules; and (b)
assess and submit periodic reports on said implementation to the
Court. Towards the fulfillment of such end, the RTC is directed to
cooperate and coordinate with DCA Dela Cruz.
Same; Same; Same; In order to facilitate the execution of the
Courts Resolution in the instant case, the costs for the
Deoxyribonucleic Acid (DNA) testing may be advanced by the
Supreme Court if needed.In order to facilitate the execution of
this Resolution, though the parties are primarily bound to bear the
expenses for DNA testing, such costs may be advanced by this
Court if needed.
APPEAL from a decision of the Court of Appeals.

The facts are stated in the resolution of the Court.
The Solicitor General for appellee.
Public Attorneys Office for appellant.
555
to suffer the penalty of reclusion perpetua and ordering him

to indemnify the private complainant in the sum of
P50,000.00.
On 9 January 1990, appellant was charged with the crime
of rape in a Criminal Complaint which reads:
3
That on or about 9:00 P.M. of July 15, 1989, at Brgy[.]

Daramuangan, Municipality of Naguilian, Province of La Union,
Philippines and within the jurisdiction of this Honorable Court,
the abovenamed accused who was armed with a fan knife and by
means of force and threats, did then and there willfully, unlawfully
and feloniously succeeded in having a sexual intercourse to [sic]
the undersigned who is unmarried woman of good reputation, a
woman who is over 12 but below 18 years old [sic] of age, to the
damage and prejudice of the offended party.
CONTRARY TO LAW.
5
It was only five (5) years later, or sometime in 1995, that

appellant was arrested. It took place when he went to the
Municipal Hall of Naguilian to secure a police clearance.
On arraignment, appellant pleaded not guilty.
The appellate courts chronicle of the facts is as follows:
_______________
1
Rollo, pp. 3-15. Penned by Associate Justice Vicente Q. Roxas and
concurred in by Associate Justices Godardo A. Jacinto and Juan Q. Enriquez,
VOL. 537, OCTOBER 26, 2007

People vs. Umanito
555
RESOLUTION
TINGA, J.:
On appeal is the Decision of the Court of Appeals dated 15
February 2006, affirming the Judgment of the Regional Trial
Court (RTC) of Bauang, La Union, Branch 67 dated 15
October 1997 finding Rufino Umanito (appellant) guilty
beyond reasonable doubt of the crime of rape, sentencing him
1
Jr.
2
CA Rollo, pp. 20-34. Penned by Judge Jose G. Paneda.
Id., at p. 34.
Records, p. 1.
Id.
556
556

People vs. Umanito
173
It was around 9:00 oclock in the evening of July 15, 1989, while
on her way to her grandmothers home, when private complainant
[AAA] was accosted by a young male. It was only later when she
learned the name of accused-appellant UMANITO. She recounted
that accused-appellant UMANITO waited for her by the creek, and
then with a knife pointed at [AAA]s left side of the [sic] abdomen,
he forced her to give in to his kisses, to his holding her breasts and
stomach, and to his pulling her by the arm to be dragged to the
Home Economics Building inside the premises of the
Daramuangan Elementary School where accused-appellant
UMANITO first undressed her [AAA] and himself with his right
hand while he still clutched the knife menacingly on his left hand.
Private complainant [AAA] recounted that she could not shout
because she was afraid. She further recounted that accusedappellant UMANITO laid her down on a bench, 4 meters long and
24 inches wide, set the knife down, then mounted her, inserting
his penis into her [AAAs] vagina and shortly thereafter, accusedappellant UMANITO dressed up and threatened [AAA] while
poking the knife at her neck, not to report the incident to the police
or else he said he would kill her. Accusedappellant UMANITO
then left, while the victim [AAA] went on to her grandmothers
house and she noticed that it was already around 1:00 oclock in
the morning when she reached there.
In January 1990, 6 months after the incident, private
complainant [AAAs] mother, [BBB], noticed the prominence on
[AAA]s stomach. It was only then when the victim, private
complainant [AAA], divulged to her mother the alleged rape and
told her the details of what had happened in July, [sic] 1989. After
hearing private complainant [AAA]s story, her mother brought her
to the police station.
6
The real name of the victim is withheld per R.A. No. 7610 and R.A. No.
9262. See People v. Cabalquinto, G.R. No. 167693, 19 September 2006, 502
SCRA 419.
7
The real name of the victims mother is likewise withheld to protect her
and the victims privacy. See People v. Cabalquinto, supra.

8
Supra note 1 at pp. 5-6.
557
VOL. 537, OCTOBER 26, 2007

People vs. Umanito
557
home the whole day, helping his family complete rush work
on picture frames ordered from Baguio. He did not step out of
their house on the evening in question, he added. Concerning
his relationship with AAA, appellant admitted that he had
courted her but she spurned him. He conjectured, though,
that AAA had a crush on him since she frequently visited
him at his house.
Finding that the prosecution had proven appellants guilt
beyond reasonable doubt, the RTC rendered judgment
against him and sentenced him to suffer the penalty
of reclusion perpetua and to indemnify AAA in the sum of
P50,000.00. In so doing, the court a quo held that the
discrepancies in AAAs testimony did not impair her
credibility. Despite some inconsistencies in her statement,
the RTC observed that AAAs demeanor on the witness stand
did not indicate any falsehood in her narration.
The trial court likewise rejected appellants defense of
alibi, ruling that he did not prove that it was physically
impossible for him to be at the scene of the crime given the
testimonies that he and complainant were residing in the
same barrio.
Pursuant to our ruling in People v. Mateo, appellants
appeal before us was transferred to the Court of Appeals for
intermediate review. On 15 February 2006, the appellate
court affirmed the challenged decision. Finding AAA to be a
9
10
11
12
13
Appellants version on the stand was different. Denying the

accusations of AAA, he claimed that on 15 July 1989, he was
_______________
14
174
credible witness, the Court of Appeals agreed with the trial

court that the inconsistencies in her statements were too
trivial and inconsequential to impair the credibility of her
testimony.
15
_______________
9
TSN, 11 February 1997, pp. 6-8.
10
Id., at p. 10.
11
Supra note 2 at pp. 33-34.
12
CA Rollo, p. 31.
13
Id.
14
G.R. Nos. 147678-87, 7 July 2004, 433 SCRA 640.
15
Supra note 1 at pp. 8, 11.
558
558

People vs. Umanito
contradictory declarations on when she met appellant and

the nature of their relationship. He also alludes to AAAs
purportedly inconsistent statements on whether it was
appellant or she herself, upon his orders, who took off her
clothes. Finally, appellant points out the supposedly
conflicting assertions of AAA on whether it was at the creek
or in the school building that he kissed her face and other
parts of her body.
Once again, this Court is called upon to determine
whether the prosecution has successfully met the level of
proof needed to find appellant guilty of the crime of rape.
Among the many incongruent assertions of the
prosecution and the defense, the disharmony on a certain
point stands out. Appellant, on one hand, testified that
although he had
_______________
In this appeal, appellant seeks his acquittal on reasonable

doubt by reason of the belated filing of the case against him
and the questionable credibility of AAA with respect to her
varying allegations.
Appellant asserts that the court a quo erred in giving full
faith and credence to the testimony of the complaining
witness and in not acquitting him on reasonable doubt. He
avers that apparently AAA filed the complaint against him
only upon the prodding of her mother. This aspect, appellant
insists, negates AAAs claim that he was the one who raped
her but rather supports his assertion that the sexual
congress AAA engaged in was with another man, her real
lover who was married to another woman. Appellant further
puts in issue the long delay in AAAs filing of the complaint.
Appellant
capitalizes
on
the
alleged
serious
inconsistencies
in
AAAs
assertions,
and
further
characterizes her actions and contentions as incredible and
unnatural. In particular, appellant highlights AAAs
16
17
18
16
CA Rollo, p. 58.
17
Id. See also TSN, 11 February 1997, pp. 5, 9-10, 12.
18
19
Records, p. 392.
559
VOL. 537, OCTOBER 26, 2007

People vs. Umanito
559
courted AAA, they were not sweethearts. Therefore, this

testimony largely discounts the possibility of consensual
coitus between him and AAA. On the other, AAA made
contradictory allegations at the preliminary investigation
and on the witness stand with respect to the nature of her
relationship with appellant. First, she claimed that she met
appellant only on the day of the purported rape; later, she
stated that they were actually friends; and still later, she
admitted that they were close.
20
19
175
Amidst the slew of assertions and counter-assertions, a

happenstance may provide the definitive key to the
absolution of the appellant. This is the fact that AAA bore a
child as a result of the purported rape. With the advance in
genetics and the availability of new technology, it can now be
determined with reasonable certainty whether appellant is
the father of AAAs child. If he is not, his acquittal may be
ordained. We have pronounced that if it can be conclusively
determined that the accused did not sire the alleged victims
child, this may cast the shadow of reasonable doubt and
allow his acquittal on this basis. If he is found not to be the
father, the finding will at least weigh heavily in the ultimate
decision in this case. Thus, we are directing appellant, AAA
and her child to submit themselves to deoxyribonucleic acid
(DNA) testing under the aegis of the New Rule on DNA
Evidence (the Rules), which took effect on 15 October 2007,
subject to guidelines prescribed herein.
21
22
23
_______________
exculpatory evidence. It can aid immensely in determining a

more accurate account of the crime committed, efficiently
facilitating the conviction of the guilty, securing the acquittal
of the innocent, and ensuring the proper administration of
justice in every case. Verily, as we pointed out in People v.
Yatar, the process of obtaining such vital evidence has
become less arduous
24
25
The U.P. National Science Research Institute (NSRI), which

conducted the DNA tests in this case, used the Polymerase chain
reaction (PCR) amplification method by Short Tandem Repeat
(STR) analysis. With PCR testing, tiny amounts of a specific DNA
sequence can be copied exponentially within hours. Thus, getting
sufficient DNA for analysis has become much easier since it
became possible to reliably amplify small samples using the PCR
method.
26
The ground work for acknowledging the strong weight of

DNA testing was first laid out in Tijing v. Court of
Appeals, where the Court said
27
20
Id., at 3; TSN, 29 March 1995, p. 4; TSN, 13 March 1996, pp. 2-3, 20-24.
21
See In Re: The Writ of Habeas Corpus for De Villa, 442 SCRA
706 (2004).
22
In People v. Marquez (430 Phil. 383; 380 SCRA 561 [2002]), we
characterized
DNA
testing
as
synonymous
to
DNA
typing,
DNA
fingerprinting, DNA profiling, genetic tests, and genetic fingerprinting.

23
A.M. No. 06-11-5-SC, 15 October 2007.
560
560

People vs. Umanito
DNA print or identification technology is now recognized as a

uniquely effective means to link a suspect to a crime, or to
absolve one erroneously accused, where biological evidence is
available. For purposes of criminal investigation, DNA
identification is a fertile source of both inculpatory and
x x x Parentage will still be resolved using conventional methods

unless we adopt the modern and scientific ways available.
Fortunately, we have now the facility and expertise in using DNA
test for identification and parentage testing. The University of the
Philippines Natural Science Research Institute (UP-NSRI) DNA
Analysis Laboratory has now the capability to conduct DNA typing
using short tandem repeat (STR) analysis. The analysis is based
on the fact that the DNA of a child/person has two (2) copies, one
copy from
_______________
24
People v. Yatar, G.R. No. 150224, 19 May 2004, 428 SCRA 504, 514.
25
G.R. No. 150224, 19 May 2004, 428 SCRA 505 (2004).
26
Id., at p. 515.
27
406 Phil. 449; 354 SCRA 17 (2001).
561
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VOL. 537, OCTOBER 26, 2007

People vs. Umanito
561
the mother and the other from the father. The DNA from the
mother, the alleged father and child are analyzed to establish
parentage. Of course, being a novel scientific technique, the use of
DNA test as evidence is still open to challenge. Eventually, as the
appropriate case comes, courts should not hesitate to rule on the
admissibility of DNA evidence. For it was said, that courts should
apply the results of science when competently obtained in aid of
situations presented, since to reject said result is to deny progress.
Though it is not necessary in this case to resort to DNA testing, in
future it would be useful to all concerned in the prompt resolution
of parentage and identity issues.
28
The leading case of Herrera v. Alba, where the validity of a

DNA test as a probative tool to determine filiation in our
jurisdiction was put in issue, discussed DNA analysis as
evidence and traced the development of its admissibility in
our jurisdiction. Thus:
29
DNA is the fundamental building block of a persons entire

genetic make-up. DNA is found in all human cells and is the same
in every cell of the same person. Genetic identity is unique. Hence,
a persons DNA profile can determine his identity.
DNA analysis is a procedure in which DNA extracted from a
biological sample obtained from an individual is examined. The
DNA is processed to generate a pattern, or a DNA profile, for the
individual from whom the sample is taken. This DNA profile is
unique for each person, except for identical twins. We quote
relevant portions of the trial courts 3 February 2000 Order with
approval:
Everyone is born with a distinct genetic blueprint called DNA
(deoxyribonucleic acid). It is exclusive to an individual (except in the
rare occurrence of identical twins that share a single, fertilized egg), and
DNA is unchanging throughout life. Being a component of every cell in
the human body, the DNA of an individuals blood is the very DNA in his
or her skin
_______________
28
Id., at p. 461.
29
G.R. No. 148220, 15 June 2005, 460 SCRA 197. See also Agustin v. Court of
Appeals, G.R. No. 162571, 15 June 2005, 460 SCRA 315.
562
562

People vs. Umanito
cells, hair follicles, muscles, semen, samples from buccal swabs, saliva, or
other body parts.
The chemical structure of DNA has four bases. They are known
as A (adenine), G (guanine), C (cystosine) and T(thymine). The order in
which the four bases appear in an individuals DNA determines his or her
physical makeup. And since DNA is a double-stranded molecule, it is
composed of two specific paired bases, A-T or T-A and G-C or C-G. These
are called genes.
Every gene has a certain number of the above base pairs distributed in
a particular sequence. This gives a person his or her genetic code.
Somewhere in the DNA framework, nonetheless, are sections that differ.
They are known as polymorphic loci, which are the areas analyzed in
DNA
typing
(profiling,
tests,
fingerprinting,
or
analysis/DNA
fingerprinting/genetic tests or fingerprinting). In other words, DNA

typing simply means determining the polymorphic loci.
How is DNA typing performed? From a DNA sample obtained or
extracted, a molecular biologist may proceed to analyze it in several
ways. There are five (5) techniques to conduct DNA typing. They are:
the RFLP (restriction fragment length polymorphism); reverse dot blot or
HLA DQ a/Pm loci which was used in 287 cases that were admitted as
evidence by 37 courts in the U.S. as of November 1994; mtDNA process;
VNTR (variable number tandem repeats); and the most recent which is
known as the PCR-([polymerase] chain reaction) based STR (short
177
tandem repeats) method which, as of 1996, was availed of by most

forensic laboratories in the world. PCR is the process of replicating or
copying DNA in an evidence sample a million times through repeated
cycling of a reaction involving the so-called DNA polymerize enzyme.
STR, on the other hand, takes measurements in 13 separate places and
can match two (2) samples with a reported theoretical error rate of less
than one (1) in a trillion.
Just like in fingerprint analysis, in DNA typing, matches are
determined. To illustrate, when DNA or fingerprint tests are done to
identify a suspect in a criminal case, the evidence collected from the
crime scene is compared with the known print. If a substantial amount
of the identifying features are the same, the DNA or fingerprint is
deemed to be a
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VOL. 537, OCTOBER 26, 2007

People vs. Umanito
563
match. But then, even if only one feature of the DNA or fingerprint is
different, it is deemed not to have come from the suspect.
As earlier stated, certain regions of human DNA show variations
between people. In each of these regions, a person possesses two genetic
types called allele, one inherited from each parent. In [a] paternity test,
the forensic scientist looks at a number of these variable regions in an
individual to produce a DNA profile. Comparing next the DNA profiles of
the mother and child, it is possible to determine which half of the childs
DNA was inherited from the mother. The other half must have been
inherited from the biological father. The alleged fathers profile is then
examined to ascertain whether he has the DNA types in his profile, which
match the paternal types in the child. If the mans DNA types do not
match that of the child, the man is excluded as the father. If the DNA
types match, then he isnot excluded as the father (Emphasis in the
original).
xxxx
The 2002 case of People v. Vallejo discussed DNA analysis as

evidence. This may be considered a 180 degree turn from the
Courts wary attitude towards DNA testing in the 1997 Pe
Lim case, where we stated that DNA, being a relatively new
science, x x x has not yet been accorded official recognition by our
courts. InVallejo, the DNA profile from the vaginal swabs taken
from the rape victim matched the accuseds DNA profile. We
affirmed the accuseds conviction of rape with homicide and
sentenced him to death.
xxxx
Vallejo discussed the probative value, not admissibility, of DNA
evidence. By 2002, there was no longer any question on the
validity of the use of DNA analysis as evidence. The Court moved
from the issue of according official recognition to DNA analysis
as evidence to the issue of observance of procedures in conducting
DNA analysis.
In 2004, there were two other cases that had a significant
impact on jurisprudence on DNA testing:People v. Yatar and In re:
The Writ of Habeas Corpus for Reynaldo de Villa. In Yatar, a
match existed between the DNA profile of the semen found in the
victim and the DNA profile of the blood sample given by appellant
in open
564
564

People vs. Umanito
court. The Court, following Vallejos footsteps, affirmed the

conviction of appellant because the physical evidence, corroborated
by circumstantial evidence, showed appellant guilty of rape with
homicide. In De Villa, the convict-petitioner presented DNA test
results to prove that he is not the father of the child conceived at
the time of commission of the rape. The Court ruled that a
difference between the DNA profile of the convict-petitioner and
the DNA profile of the victims child does not preclude the convictpetitioners commission of rape.
30
178
The 2004 case of Tecson v. Commission on Elections likewise

reiterated the acceptance of DNA testing in our jurisdiction
in this wise: [i]n case proof of filiation or paternity would be
unlikely to satisfactorily establish or would be difficult to
obtain, DNA testing, which examines genetic codes obtained
from body cells of the illegitimate child and any physical
residue of the long dead parent could be resorted to.
It is obvious to the Court that the determination of
whether appellant is the father of AAAs child, which may be
accomplished through DNA testing, is material to the fair
and correct adjudication of the instant appeal. Under Section
4 of the Rules, the courts are authorized, after due hearing
and notice, motu proprio to order a DNA testing. However,
while this Court retains jurisdiction over the case at bar,
capacitated as it is to receive and act on the matter in
controversy, the Supreme Court is not a trier of facts and
does not, in the course of daily routine, conduct
hearings. Hence, it would be more appropriate that the case
be remanded to the RTC for reception of evidence in
appropriate hearings, with due notice to the parties.
31
person who has a legal interest in the matter in litigation, order a

DNA testing. Such order shall issue after due hearing and notice
to the parties upon a showing of the following:
1. (a)A biological sample exists that is relevant to the case;
2. (b)The biological sample: (i) was not previously subjected to
the type of DNA testing now requested; or (ii) was
previously subjected to DNA testing, but the results may
require confirmation for good reasons;
3. (c)The DNA testing uses a scientifically valid technique;
4. (d)The DNA testing has the scientific potential to produce
new information that is relevant to the proper resolution
of the case; and
5. (e)The existence of other factors, if any, which the court
may consider as potentially affecting the accuracy or
integrity of the DNA testing.
32
33
_______________
30
Id., at pp. 209-213. Citations omitted.
31
G.R. No. 161434, 3 March 2004, 424 SCRA 277.
32
Id., at p. 345.
33
Carlos v. Sandoval, 471 SCRA 266 (2005).
565
VOL. 537, OCTOBER 26, 2007

People vs. Umanito
565
The Rule shall not preclude a DNA testing, without need of a

prior court order, at the behest of any party, including law
enforcement agencies, before a suit or proceeding is commenced.
34
Given our earlier pronouncements on the relevance of the

DNA testing, it would be unbecoming of the RTC to conclude
otherwise, Section 4 (d) notwithstanding. The hearing should
be confined to ascertaining the feasibility of DNA testing
with due regard to the standards set in Section 4 (a), (b), (c)
and (e) of the Rules.
Should the RTC find the DNA testing feasible in the case
at bar, it shall order the same, in conformity with Section 5 of
_______________
What should be the proper scope of such hearings? Section 4

of the Rules spells out the matters which the trial court must
determine, thus:
34
SEC. 4. Application for DNA Testing Order.The appropriate

court may, at any time, either motu proprioor on application of any
566
RULE ON DNA EVIDENCE, Sec. 4.
566

People vs. Umanito
179
the Rules. It is also the RTC which shall determine the

institution to undertake the DNA testing and the parties are
free to manifest their comments on the choice of DNA testing
center.
After the DNA analysis is obtained, it shall be incumbent
upon the parties who wish to avail of the same to offer the
results in accordance with the rules of evidence. The RTC, in
evaluating the DNA results upon presentation, shall assess
the same as evidence in keeping with Sections 7 and 8 of the
Rules, to wit:
35
36
SEC. 7. Assessment of probative value of DNA evidence.In

assessing the probative value of the DNA evidence presented, the
court shall consider the following:
_______________
35
SEC. 5. DNA Testing Order.If the court finds that the requirements in
Section 4 hereof have been complied with, the court shall.

1. (a)Order, as appropriate, that biological samples be taken from any
person or crime scene evidence;
2. (b)Impose reasonable conditions on DNA testing designed to protect
the integrity of the biological sample, the testing process and the
reliability of the test results, including a condition that the DNA
test results shall be simultaneously disclosed to parties involved in
the case; and
3. (c)If the biological sample taken is of such an amount that prevents
the conduct of confirmatory testing by the other or the adverse
party and where additional biological samples of the same kind can
36
Among the current known institutions offering DNA testing are the
University of the Philippines Natural Science Research Institute and St.

Lukes Medical Center.
567
VOL. 537, OCTOBER 26, 2007

People vs. Umanito
567
1. (a)The chain of custody, including how the biological

samples were collected, how they were handled, and the
possibility of contamination of the samples;
2. (b)The DNA testing methodology, including the procedure
followed in analyzing the samples, the advantages and
disadvantages of the procedure, and compliance with the
scientifically valid standards in conducting the tests;
3. (c)The forensic DNA laboratory, including accreditation by
any reputable standards-setting institution and the
qualification of the analyst who conducted the tests. If the
laboratory is not accredited, the relevant experience of the
laboratory in forensic casework and credibility shall be
properly established; and
4. (d)The reliability of the testing result, as hereinafter
provided.
The provisions of the Rules of Court concerning the appreciation of
evidence shall apply suppletorily.
SEC. 8. Reliability of DNA testing methodology.In evaluating
whether the DNA testing methodology is reliable, the court shall
consider the following:
no longer be obtained, issue an order requiring all parties to the

case or proceedings to witness the DNA testing to be conducted.
x x x The grant of a DNA testing application shall not be construed as an
automatic admission into evidence of any component of the DNA evidence
that may be obtained as a result thereof.
1. (a)The falsifiability of the principles or methods used, that

is, whether the theory or technique can be and has been
tested;
2. (b)The subjection to peer review and publication of the
principles or methods;
180
3. (c)The general acceptance of the principles or methods by

the relevant scientific community;
4. (d)The existence and maintenance of standards and controls
to ensure the correctness of data gathered;
5. (e)The existence of an appropriate reference population
database; and
6. (f)The general degree of confidence attributed to
mathematical calculations used in comparing DNA
profiles and the significance and limitation of statistical
calculations used in comparing DNA profiles.
indirect contempt of the court wherein such DNA evidence was offered,
presented or sought to be offered and presented.
Where the person from whom the biological sample was taken files a
written verified request to the court that allowed the DNA testing for the
disclosure of his DNA profile and all results or other information obtained
from the DNA testing, the same may be disclosed to the persons named in the
written verified request.
38
SEC. 12. Preservation of DNA evidence.The trial court shall preserve
the DNA evidence, in its totality, including all biological samples, DNA
profiles and results or other genetic information obtained from DNA testing.
For this purpose, the court may order the appropriate government agency to
568
568
preserve the DNA evidence as follows:

People vs. Umanito
1. (a)In criminal cases:
The trial court is further enjoined to observe the

requirements of confidentiality and preservation of the DNA
evidence in accordance with Sections 11 and 12 of the Rules.
1. i.for not less than the period of time that any person is under trial for
_______________
2. ii.in case the accused is serving sentence, until such time as the
37
an offense; or,
38
accused has served his sentence; and

37
SEC. 11. Confidentiality.DNA profiles and all results or other
information obtained from DNA testing shall be confidential. Except upon
569
VOL. 537, OCTOBER 26, 2007

People vs. Umanito
order of the court, a DNA profile and all results or other information obtained
from DNA testing shall only be released to any of the following, under such
terms and conditions as may be set forth by the court:
1. (1)Person from whom the sample was taken;
2. (2)Lawyers representing parties in the case or action where the DNA
evidence is offered and presented or sought to be offered and
presented;
3. (3)Lawyers of private complainants in a criminal action;
4. (4)Duly authorized law enforcement agencies; and
5. (5)Other persons as determined by the court.
Whoever discloses, utilizes or publishes in any form any information
concerning a DNA profile without the proper court order shall be liable for
569
In assessing the probative value of DNA evidence, the RTC

shall consider, among other things, the following data: how
the samples were collected, how they were handled, the
possibility of contamination of the samples, the procedure
followed in analyzing the samples, whether the proper
standards and procedures were followed in conducting the
tests, and the qualification of the analyst who conducted the
tests.
Moreover, the court a quo must ensure that the proper
chain of custody in the handling of the samples submitted by
the parties is adequately borne in the records, i.e.: that the
samples are collected by a neutral third party; that the tested
39
181
parties are appropriately identified at their sample collection

appointments; that the samples are protected with tamper
tape at the collection site; that all persons in possession
thereof at each stage of testing thoroughly inspected the
samples for tampering and explained his role in the custody
of the samples and the acts he performed in relation thereto.
In light of the fact that this case constitutes the first
known application of the Rules, the Court is especially
interested in monitoring the implementation thereof in this
case, for its guidance and continuing evaluation of the Rules
as implemented. For purposes of supervising the
implementation the instant resolution, the Court designates
Deputy Court Administrator Reuben Dela Cruz (DCA Dela
Cruz) to: (a) monitor the manner in which the court a
quo carries out the Rules;
_______________
1. (b)in all other cases, until such time as the decision in the case where
the DNA evidence was introduced has become final and executory.
The court may allow the physical destruction of a biological sample before
the expiration of the periods set forth above provided that:
1. (a)a court order to that effect has been secured; or
2. (b)the person from whom the DNA sample was obtained has
consented in writing to the disposal of the DNA evidence.
39
People v. Vallejo, 431 Phil. 798, 817; 382 SCRA 192, 209 (2002).
570
570

People vs. Umanito
and (b) assess and submit periodic reports on said

implementation to the Court. Towards the fulfillment of such
end, the RTC is directed to cooperate and coordinate with

DCA Dela Cruz.
A final note. In order to facilitate the execution of this
Resolution, though the parties are primarily bound to bear
the expenses for DNA testing, such costs may be advanced by
this Court if needed.
WHEREFORE, the instant case is remanded to the RTC
for reception of DNA evidence in accordance with the terms
of this Resolution. The RTC is further directed to report to
the Court the results of the proceedings below within sixty
(60) days from receipt hereof.
SO ORDERED.
Quisumbing (Chairperson), Carpio, CarpioMorales and Velasco, Jr., JJ., concur.
Case remanded to Regional Trial Court for reception of
DNA evidence.
Notes.DNA (deoxyribonucleic acid) paternity testing
first came to prominence in the United States, where it
yielded its first official results sometime in 1985. In the
decade that followed, DNA rapidly found widespread general
acceptance. Several cases decided by various State Supreme
Courts reflect the total assimilation of DNA testing into their
rules of procedure and evidence. (Agustin vs. Court of
Appeals, 460 SCRA 315 [2005])
Although the DNA (deoxyribonucleic acid) evidence was
undoubtedly discovered after trial, it does not meet the
criteria for newly-discovered evidence that would merit a
new trialsuch evidence disproving paternity could have
been discovered and produced at trial with the exercise of
reasonable diligence. (In Re: The Writ of Habeas Corpus for
Reynaldo De Villa, 442 SCRA 706[2004])
o0o
182
G.R. No. 171348. Novermber 26, 2008.*

PEOPLE
OF
THE
PHILIPPINES,
plaintiffappellee, vs.LARRY ERGUIZA, accused-appellant.
Criminal Law; Rape; This Court ruled that in the review of
rape cases, the Court is guided by the following precepts: (a) an
accusation of rape can be made with facility, but it is more difficult
for the accused, though innocent, to disprove it; (b) the
complainants testimony must be scrutinized with extreme caution
since, by the very nature of the crime, only two persons are normally
involved; and (c) if the complainants testimony is convincingly
credible, the accused may be convicted of the crime.This Court
has ruled that in the review of rape cases, the Court is guided by
the following precepts: (a) an
_______________
* THIRD DIVISION.
635
VOL. 571, NOVERMBER 26, 2008
6
35
People vs. Erguiza

accusation of rape can be made with facility, but it is more
difficult for the accused, though innocent, to disprove it; (b) the
complainants testimony must be scrutinized with extreme caution
since, by the very nature of the crime, only two persons are
normally involved; and (c) if the complainants testimony is
convincingly credible, the accused may be convicted of the crime.
Same; Same; Evidence; When a woman, more so if she is a
minor, says that she has been raped, she says in effect all that is
necessary to show that rape was committed.Generally, when a
woman, more so if she is a minor, says that she has been raped,
she says in effect all that is necessary to show that rape was
committed. And so long as her testimony meets the test of
credibility and unless the same is controverted by competent
physical and testimonial evidence, the accused may be convicted

on the basis thereof. After a judicious examination of the records of
the case, the Court finds that there is testimonial evidence that
contradicts the findings of the RTC and CA on the basis of which
no conviction beyond reasonable doubt could arise. It is
the unrebutted testimony of a credible defense witness. The
testimony of Joy Agbuya (Joy) casts doubt as to the possibility of
rape having taken place as narrated by complainant. In addition,
the testimony of a disinterested defense witness, Juanita Angeles
(Juanita) corroborated the alibi of appellant.
Same; Evidence; Compromise Agreements; An offer of
compromise from an unauthorized person cannot amount to an
admission of the party himself.An offer of compromise from an
unauthorized person cannot amount to an admission of the party
himself. Although the Court has held in some cases that an
attempt of the parents of the accused to settle the case is an
implied admission of guilt, we believe that the better rule is that
for a compromise to amount to an implied admission of guilt, the
accused should have been present or at least authorized the
proposed compromise. Moreover, it has been held that where the
accused was not present at the time the offer for monetary
consideration was made, such offer of compromise would not save
the day for the prosecution.
Same; Same; Rape; The Court is not unmindful of the rule that
the exact date of the commission of the crime of rape is extraneous
to and is not an element of the offense, such that any inconsistency
or discrepancy as to the same is irrelevant and is not to be taken as
a ground for acquittal.The Court is not unmindful of the rule
that636
36
People vs. Erguiza
the exact date of the commission of the crime of rape is
extraneous to and is not an element of the offense, such that any
183
inconsistency or discrepancy as to the same is irrelevant and is not

to be taken as a ground for acquittal. Such, however, finds no
application to the case at bar. AAA and Joy may differ in their
testimonies as to the time they were at the mango orchard, but
there could be no mistake as to the actual day when AAA was
supposed to have been raped; it was the day when AAAs shorts got
hooked to the fence at the mango orchard.
Same; Same; Alibi; This Court is not unmindful of the doctrine
that for alibi to succeed as a defense, appellant must establish by
clear and convincing evidence (a) his presence at another place at
the time of the perpetration of the offense and (b) the physical
impossibility of his presence at the scene of the crime.This Court
is not unmindful of the doctrine that for alibi to succeed as a
defense, appellant must establish by clear and convincing evidence
(a) his presence at another place at the time of the perpetration of
the offense and (b) the physical impossibility of his presence at the
scene of the crime.
Same; Same; What needs to be stressed is that a conviction in
a criminal case must be supported by proof beyond reasonable
doubtmoral certainty that the accused is guilty.What needs to
be stressed is that a conviction in a criminal case must be
supported by proof beyond reasonable doubtmoral certainty that
the accused is guilty. The conflicting testimonies of Joy and
complainant, and the testimony of Juanita that corroborated
appellants alibi preclude the Court from convicting appellant of
rape with moral certainty.
Same; Same; Equipoise Rule; The equipoise rule provides that
where the evidence in a criminal case is evenly balanced, the
constitutional presumption of innocence tilts the scales in favor of
the accused.Faced with two conflicting versions, the Court is
guided by the equipoise rule. Thus, where the inculpatory facts
and circumstances are capable of two or more explanations, one of
which is consistent with the innocence of the accused and the other
consistent with his guilt, then the evidence does not fulfill the test
of moral certainty and is not sufficient to support a conviction. The
equipoise rule provides that where the evidence in a criminal case

is evenly balanced, the constitutional presumption of innocence
tilts the scales in favor of the accused.637
6
37
People vs. Erguiza

Same; Same; It is the primordial duty of the prosecution to
present its side with clarity and persuasion, so that conviction
becomes the only logical and inevitable conclusion.It is the
primordial duty of the prosecution to present its side with clarity
and persuasion, so that conviction becomes the only logical and
inevitable conclusion. What is required of it is to justify the
conviction of the accused with moral certainty. Upon the
prosecutions failure to meet this test, acquittal becomes the
constitutional duty of the Court, lest its mind be tortured with the
thought that it has imprisoned an innocent man for the rest of his
life.

Public Attorneys Office for accused-appellant.
AUSTRIA-MARTINEZ, J.:
The Court is confronted with another case of rape. The
victim, a 13-year-old girl. And although the Court may be
moved by compassion and sympathy, the Court, as a court of
law, is duty-bound to apply the law. Basic is the rule that for
conviction of a crime, the evidence required is proof beyond
reasonable doubtconviction with moral certainty.
For review before this Court is the November 18, 2005
Decision1 of the Court of Appeals (CA) in CA-G.R. CR H. C.
No. 00763 which affirmed with modification the Decision2 of
the Regional Trial Court (RTC) of San Carlos City,
Pangasinan, Branch 57, finding Larry Erguiza (appellant)
184
guilty of one count of rape and sentencing him to suffer the

penalty of reclusion perpetua.
No. 04-10-11-SC, known as, Rule on Violence Against Women and Their
_______________
G.R. No. 176633, September 5, 2007, 532 SCRA 411, citing the case of People
Children effective November 15, 2004. Hence, inPeople v. San Antonio, Jr.,
v. Cabalquinto, G.R. No. 167693, September 19, 2006, 502 SCRA 419, this
1 Penned by Associate Justice Regalado E. Maambong with the
Court resolved to withhold the real name of the victim-survivor and to use
concurrence of Associate Justice Rodrigo V. Cosico and Associate Justice
fictitious initials instead to represent her in its decisions. Likewise, the
Lucenito N. Tagle; Rollo, pp. 3-19.
personal circumstances of the victims-survivors or any other information
2 CA Rollo, pp. 23-28.
immediate family or household members, shall not be disclosed. The names of
638
638
tending to establish or compromise their identities, as well as those of their

People vs. Erguiza
The Information, dated April 10, 2000, in Criminal Case

No. SCC 3282 reads as follows:
That on or about 5:00 oclock in the afternoon of January 5,
2000, at the back of the Bical Norte Elementary School,
municipality of Bayambang, province of Pangasinan, Philippines,
and within the jurisdiction of this Honorable Court, the abovenamed accused, armed with a kitchen knife, by means of force and
intimidation, did then and there, willfully, unlawfully, and
feloniously have sexual intercourse with AAA,3a minor of 13 years
old, against her will and consent and to her damage and
prejudice.4
When
arraigned,
appellant
pleaded
not
guilty.5Thereafter trial ensued.
The prosecution presented four witnesses, namely: private
complainant (AAA), her mother BBB and father CCC, and
Dr. James Sison. The defense presented five witnesses,
namely:
_______________
3 The Supreme Court took note of the legal mandate on the utmost
confidentiality of proceedings involving violence against women and children
set forth in Sec. 29 of Republic Act No. 7610, otherwise known as, AntiViolence Against Women and Their Children Act of 2004; and Sec. 40 of A.M.
such victims, and their immediate family members other than the accused,
shall appear as AAA, BBB, CCC, and so on. Addresses shall appear as
xxx as in No. xxx Street, xxx District, City of xxx.
4 CA Rollo, p. 6.
5 Records, p. 30.
639

People vs. Erguiza
639
Joy Agbuya, Juanito Macaraeg, Juanita Angeles, Albina

Erguiza, and appellant.
On November 27, 2000, the RTC found appellant guilty of
the crime of rape, the dispositive portion of which reads as
follows:
In view whereof, the Court finds the accused LARRY C.
ERGUIZA guilty of RAPE under Article 266-a paragraph 1(a) in
relation to Article 266-b of R.A. 8353 and R.A. 7659 and sentences
(sic) to suffer the penalty of reclusion perpetua and to pay the
offended party, AAA P50,000 as civil indemnity, P50,000 as moral
damages, P50,000 as exemplary damages, to give support to AAAs
offspring and to pay the costs.
SO ORDERED.6
On appeal, the CA aptly summarized the respective

versions of the parties, based on the evidence presented
before the trial court, thus:
185
PROSECUTIONS VERSION:
On January 5, 2000, at around 4:00 oclock in the
afternoon,AAA, a thirteen-year old first year high school
student, together with her friends, siblings Joy and Ricky
Agbuya, went to the mango orchard located at the back of ZZZ
Elementary School to gather fallen mangoes.7 When they were
bound for home at around 5:00 oclock in the afternoon,
AAAs short pants got hooked on the fence. AAA asked Joy
and Ricky to wait for her but they ran away and left her.8
While AAA was trying to unhook her short pants, Larry
suddenly grabbed and pulled her. Poking a knife at her neck,
Larry threatened to hurt her if she would make a noise.9
Accused-appellant dragged AAA towards a place where a
tamarind tree and other thorny plants grow. Then Larry removed
_______________
6 CA Rollo, p. 69.
7 TSN, July 12, 2000, pp. 3-5.
8 TSN, July 12, 2000, pp. 6-7; TSN, July, 13, 2000, p. 14.
9 TSN, July 12, 2000, pp. 8-9; TSN, July 13, 2000, pp. 14-15.
640
640
AAA lingered for a while at the place and kept crying. Having
spent her tears, she wore her panty and short pants and proceeded
to the adjacent store of her Aunt Beth who was asleep. After
staying for some time at the store, AAA decided to come (sic) home.
Upon reaching home, she directly went to bed. Fearing Larrys
threat, AAA kept mum on the incident.12
On April 7, 2000, BBB brought her daughter AAA to her
grandmother (BBBs mother), a hilot residing in XXX, Tarlac, to
consult her on the unusual palpitation on the mid-portion of AAAs
throat and the absence of her monthly period.13 After examining
AAA, her grandmother told BBB that her daughter was pregnant.
BBB asked AAA who was the father of her unborn child but
AAA refused to talk. After much prodding, and in the presence of
her Uncle, Rudy Domingo, AAA finally revealed that she was
raped by accused-appellant.14
On April 8, 2000, AAA, accompanied by her mother and uncle,
went to the police headquarters in YYY, Pangasinan to report the
incident.15 Then the police brought her to YYY District
Hospital16 where Dr. James Sison, Medical Officer III of said
hospital conducted the examination on Michelle. Dr. Sison made
the following findings:
_______________

People vs. Erguiza
his maong pants and forced AAA to lie down on the grassy ground.
Thereafter, he removed her short pants and panty, mounted
himself on top of her and inserted his penis into her private parts
and made push and pull movements. He likewise raised AAAs
sando and mashed her breast. AAA felt pain when accusedappellant entered her and she felt something sticky in her private
part after Larry made the push and pull movements.10
Larry told AAA not to tell anybody about the incident otherwise
he would kill her and all the members of her family and then he
ran away.11
10 TSN, July 12, 2000, pp. 9-11; TSN, July 19, 2000, pp. 4-5.
11 TSN, July 12, 2000, pp. 11-12.
12 TSN, July 12, 2000, p. 13.
13 TSN, July 26, 2000, p. 5
14 TSN, July 12, 2000, p. 15
15 TSN, July 12, 2000, pp. 16-17.
16 TSN, July 12, 2000, p. 18.
641

People vs. Erguiza
641
186
Q. x x x No extragenital injuries noted. Complete healed

hymenal laceration 11:00 oclock. x x x. In laymans term, Dr. Sison
found no physical injury from the breast, the body except the
genital area wherein he found a significant laceration complete
(sic) healed over 11:00 oclock.17 Dr. Sison also testified that a
single sexual intercourse could make a woman pregnant.
BBB testified that her daughter AAA stopped going to school
after she was raped and that no amount of money could bring back
the lost reputation of her daughter.
CCC (AAAs father), testified that on May 2, 2000, the family of
accused-appellant went to their house and initially offered P50,000
and later P150,000; that in January 5, 2000, while they were
repairing his house for the wedding reception,18 Larry left at
around 4:00 oclock p.m.
DEFENSES VERSION
On January 5, 2000, Larry Erguiza helped in the repair of
CCCs19 house from 8:00 oclock in the morning up to 5:00 oclock in
the afternoon. When he reached home at around 5:00 pm, his
mother Albina Erguiza instructed him to fetch a hilot as his wife
Josie was already experiencing labor pains. He proceeded to fetch
the hilot Juanita Angeles and stayed in their house until his wife
delivered a baby at around 3:00 oclock in the morning of January
6, 2000.20
Juanita Angeles corroborated Larrys testimony that he indeed
fetched her at around 5:10 pm on January 5, 2000 to attend to his
wife who was experiencing labor pains and who delivered a baby at
about 3:00 a.m. of January 6, 2000; and that Larry never left his
wifes side until the latter gave birth.
Albina, mother of the accused-appellant, testified that AAA is
the daughter of her balae Spouses CCC and BBB; that her son
Larry, her husband and two others left CCC and BBBs residence
at about 5:00 oclock in the afternoon on January 5, 2000; that she
went
_______________
17 TSN, July 25, 2000, p. 6.

18 CCCs daughter DDD (from his first marriage) got married to Larry
Erguizas brother Carlito on January 20, 2000, fifteen days after the rape
incident.
19 TSN, September 12, 2000, pp. 4-5.
20 TSN, August 28, 2000, pp. 3-7.
642
642

People vs. Erguiza
to Spouses CCC and BBB to talk about the charge of rape against
her son; that Spouses CCC and BBB were asking for P1,000,000.00
which was later reduced to P250,000.00 and that she made a
counter-offer of P5,000.00.21
Joy Agbuya testified that she and AAA were at the
mango orchard of Juanito Macaraeg on January 5,
2000;that she never left AAA when her short pants got
hooked; that they went together to the store of Auntie Beth
where they parted.22
Juanito Macaraeg, the mango orchard caretaker, testified that
the house of Larry was a walking distance of about three minutes
from the mango orchard; that if one runs fast, it would only take a
minute to reach his house; and that he could not recall having seen
Larry in the orchard.23 (Emphasis supplied)
In its Decision dated November 18, 2005, the CA affirmed the
decision of the RTC, but modified the amount of the award of
exemplary damages and costs as follows:
WHEREFORE, in view of all the foregoing circumstances, the
Decision of the Regional Trial Court of San Carlos (Pangasinan),
Branch 57 dated November 27, 2000 in Criminal Case No. SCC3282 is AFFIRMED with MODIFICATION. Accused-appellant
Larry Erguiza is held GUILTY of Rape and is sentenced to suffer
the penalty of reclusion perpetua. He is ordered to pay the victim
AAA P50,000.00 as civil indemnity; P50,000.00 as moral damages,
187
and P25,000.00 as exemplary damages and to give support to

AAAs offspring.
SO ORDERED.24
Hence, herein appeal.

In his appeal Brief,25 appellant raises the following errors:
_______________
The testimonies of victims who are young and of tender age,

like AAA, deserve full credence and should not be dismissed as
mere fabrication especially where they have absolutely no motive
to testify against the accused-appellant as in this case. Larry even
admitted that AAA had no ill motive for charging him with rape.
The Supreme Court in several cases, ruled that full credence is
accorded the testimony of a rape victim who has shown no ill
motive to testify against
21 TSN, August 3, 2000, pp. 4-5; TSN, August 22, 2000, pp. 3-15.
22 TSN, August 1, 2000, p. 9.
23 TSN, August 2, 2000, pp. 8 and 11.
24 Rollo, p. 18.
25 CA Rollo, pp. 43-62.
643

People vs. Erguiza
caution since, by the very nature of the crime, only two

persons are normally involved; and (c) if the complainants
testimony is convincingly credible, the accused may be
convicted of the crime.27
In the case at bar, the CA upheld the conclusion of the
RTC in finding the complainant credible, to wit:
643
1. THE COURT A QUO GRAVELY ERRED IN GIVING

CREDENCE TO THE INCREDIBLE, THUS UNBELIEVABLE
TESTIMONY OF PRIVATE COMPLAINANT AAA.
2. THE COURT A QUO GRAVELY ERRED IN CONVICTING
ACCUSED APPELLANT OF THE CRIME OF RAPE DESPITE
THE FACT THAT THE PROSECUTION EVIDENCE FAILED TO
ESTABLISH HIS GUILT BEYOND REASONABLE DOUBT.
3. THE COURT A QUO GRAVELY ERRED IN NOT
APPRECIATING ACCUSED-APPELLANTS DEFENSE OF
ALIBI CORROBORATED BY THE WITNESSES PRESENTED
BY THE DEFENSE.26
The appeal is meritorious. The prosecutions evidence does

not pass the test of moral certainty.
This Court has ruled that in the review of rape cases, the
Court is guided by the following precepts: (a) an accusation of
rape can be made with facility, but it is more difficult for the
accused, though innocent, to disprove it; (b) the
complainants testimony must be scrutinized with extreme
_______________
26 CA Rollo, p. 45.
27 People v. Gonzales, G.R. No. 141599, June 29, 2004, 433 SCRA 102, 108.
644
644

People vs. Erguiza
the accused. This being so, the trial court did not err in giving full
credence to AAAs testimony.28
This Court does not agree with the CA.

The Court is not unmindful of the general rule that
findings of the trial court regarding credibility of witnesses
are accorded great respect and even finality on
appeal.29 However, this principle does not preclude a
reevaluation of the evidence to determine whether material
facts or circumstances have been overlooked or
misinterpreted by the trial court.30 In the past, this Court has
not hesitated to reverse a judgment of conviction, where
188
there were strong indications pointing to the possibility that

the rape charge was false.31
Generally, when a woman, more so if she is a minor, says
that she has been raped, she says in effect all that is
necessary to show that rape was committed. And so long as
her testimony meets the test of credibility and unless the
same is controverted by competent physical and testimonial
evidence, the accused may be convicted on the basis thereof.32
After a judicious examination of the records of the case, the
Court finds that there is testimonial evidence that
contradicts the findings of the RTC and CA on the basis of
which no conviction beyond reasonable doubt could arise. It
is the unrebutted testimony of a credible defense witness. The
testimony of Joy Agbuya (Joy) casts doubt as to the possibility
of rape having taken place as narrated by complainant. In
addition, the
31 People v. Medel, G.R. No. 123803, February 26, 1998, 286 SCRA 567.
and CCC. The pertinent portions of their testimonies may be

summarized as follows:
Dr. James Sison testified that he conducted the medical
examination of complainant. His diagnosis was that there
was a significant laceration completely healed at the 11:00
oclock position.33 However, Dr. Sison testified that his
findings were not conclusive, but were rather suggestive that
complainant was raped. Furthermore, as to the question of
paternity of the child of complainant, Dr. Sison suggested
doing a DNA match.34
BBB testified the she brought AAA to her grandmother,
a hilot residing in XXX, Tarlac, to consult her on the unusual
palpitation on the mid-portion of complainants throat and
the absence of her monthly period.35 After examining
complainant, the hilot told BBB that her daughter was
pregnant. AAA later revealed that she was raped by
appellant.36 BBB further testified that she accompanied AAA
to the police headquarters in YYY, Pangasinan to report the
incident.37 Afterwards, the police brought complainant to
YYY District Hospital38where Dr. James Sison, Medical
Officer III of said hospital, conducted the examination on
complainant. On cross-
32 People v. Banela, G.R. No. 124973, January 18, 1999, 301 SCRA 84, 87.
_______________
_______________
28 Rollo, pp. 15.
29 People v. Palma, G.R. Nos. 130206-08, June 17, 1999, 308 SCRA 466.
30 People v. Domogoy, G.R. No. 116738, March 22, 1999, 305 SCRA 75.
645

People vs. Erguiza
645
testimony of a disinterested defense witness, Juanita Angeles

(Juanita) corroborated the alibi of appellant.
Before dwelling on the testimonies of Juanita and Joy, the
Court shall first scrutinize the testimonial evidence
presented by the prosecution and the defense.
Aside from the testimony of complainant, the prosecution
presented the following witnesses: Dr. James Sison, BBB,
33 TSN, July 25, 2000, p. 6.

34 TSN, July 25, 2000, p. 11.
35 TSN, July 26, 2000, p. 5.
36 TSN, July 26, 2000, p. 7.
37 TSN, July 12, 2000, pp. 16-17.
38 TSN, July 12, 2000, p. 18.
646
646

People vs. Erguiza
189
examination, BBB testified that the family of appellant

offered her money to settle the case.39
CCC, the father of AAA, was the lone rebuttal witness of
the prosecution. In order to rebut the allegation made by
appellants family that the present case was filed because
appellants family did a poor job in preparing for the wedding
of CCCs daughter DDD and apellants brother Carlito, CCC
testified that on the contrary, the wedding went
smoothly.40 CCC further claimed that the family of appellant
knelt before him crying and offered money to settle the
case.41 Moreover, CCC testified that appellant left his house
at 4:00 p.m. on January 5, 2000.
On the other hand, the defense presented four witnesses,
namely: Juanito Macaraeg (Macaraeg), Albina Erguiza
(Albina), Juanita and Joy.
Macaraeg, the caretaker of the mango orchard, testified
that he did not see appellant on any occasion in the
orchard.42 More specifically, Macaraeg emphasized that he
did not see appellant on January 5, 2000.43However, on crossexamination, he testified that the house of appellant is only a
three-minute walk from the mango orchard and probably a
minute if one walks fast.44
Albina, the mother of appellant, testified that on January
5, 2000, she was with appellant at the house of CCC and
BBB preparing for the wedding of CCCs daughter DDD and
appellants brother Carlito. She said that they left the house
of CCC at around 5:00 p.m.45Albina narrated that when they
arrived home, at around 5:02 or 5:03 p.m., she sent appellant
_______________
39 TSN, July 27, 2000, p. 9.
40 TSN, September 12, 2000, p. 10.
41 TSN, September 12, 2000, p. 10.
42 TSN, August 2, 2000, p. 8.
43 TSN, August 2, 2000, pp. 6-7.
44 TSN, August 2, 2000, p. 11.

45 TSN, August 2, 2000, p. 8.
647

People vs. Erguiza
647
to fetch a hilot, as the wife of appellant was having some

labor pains.46 She said that appellant and the hilotarrived at
around 5:30 p.m.47 According to Albina appellant never left
their house.48
On the day of the wedding, Albina testified that she had
an altercation with BBB regarding the bills and that they
never resolved their quarrel.49 She spoke to BBB and CCC
because she learned that they were falsely accusing
appellant of raping AAA.50 After talking to BBB and CCC,
she and her husband confronted appellant and asked if he
had raped complainant, which appellant denied.51 Albina
claimed that CCC and BBB were demanding P1,000,000.00
and that they later reduced it to P250,000.00.52 Albina said
that she offered P5,000.00 to BBB and CCC only to preserve
their relationship as in-laws and for peace.53
In sum, with the exception of the claim of AAA that she
was raped by appellant, other evidence presented by the
prosecution did not identify appellant as the perpetrator of
the crime.
Moreover, the testimonies of the witnesses for both the
prosecution and the defense conflict on certain points, more
notably the claim by BBB and CCC that the family of
appellant offered to settle the case. This, however, was
denied by Albina, who claimed that it was BBB and CCC who
demanded P1,000,000.00.
The offer of compromise allegedly made by Albina is
critical to the case at bar in light of law and jurisprudence
that an offer of compromise in a criminal case may be
received in
190
_______________
46 TSN, August 2, 2000, p. 8.
However, Albina, the mother of appellant, denied the

foregoing allegations, to wit:
Q.
What happened when you went to the house of BBB and CCC talking
47 TSN, August 2, 2000, p. 9.
with them about their problem of the alleged rape on AAA, their
48 TSN, August 2, 2000, p. 9.
daughter?
49 TSN, August 22, 2000, pp. 11-12.
A.
They were asking for a settlement price for one million pesos but we
50 TSN, August 22, 2000, p. 12.

51 TSN, August 22, 2000, p. 13.
have no money, sir.

Q.
What did you do when they were asking one million pesos from you?
52 TSN, August 22, 2000, p. 13.
_______________
53 TSN, August 22, 2000, p. 14.

54 Rules of Court, Rule 130, Section 24.
648
648

People vs. Erguiza
evidence as an implied admission of guilt.54 In the case at bar,

the offer of compromise was first testified to by BBB on crossexamination, to wit:
Q.Is it not a fact that there was an offer by you to the
mother of the accused that they pay you 1 million and you
have reduced it to P250,000.00?
A.No, sir, it was they who were the ones offering for
settlement, but we never offer them any settlement, sir.55
On rebuttal, CCC corroborated the testimony of BBB that
the family of appellant offered to settle the case, to wit:
Q.
And according to Larry Erguiza as well as his witnesses they told the
Honorable Court that you and your wife are demanding from Larry
55 TSN, July 27, 2000, p. 9.

56 TSN, September 12, 2000, p. 10.
649

People vs. Erguiza
A.
that?
A.
There is no truth about that, sir.
Q.
And what is the truth about it?
A.
It was they who went to my house, they even knelt before me crying
and they were offering money, sir.56
We told them that we do not have that money until they reduced the
price to P250,000.00 but we have no money because we are poor, sir.
Q.
Were you around when BBB testified to the witness stand?
A.
I was here, sir.
Q.
Did you hear what BBB said that you were the one offering money?
A.
Yes, sir, I was here and I heard that.
Q.
What can you say to that allegation of BBB?
A.
That is not true, sir. She was saying that we were the ones offering
money for one million to them but she was telling a lie, it was they
Erguiza and his parents the amount of one million pesos so that you
will not file this case against the accused, what can you say about
649
who were asking for one million pesos, sir.

Q.
What is your proof that is was they who are demanding the amount of
one million and reduced that to two hundred fifty thousand
(P250,000.00)?
A.
We already left because we cannot afford to give that much, sir.
Q.
Aside from the fact that you do not have money, was there any reason
or what was your other reason in going there?
191
A.
Our reason in talking to them was that when Larry said that he did not
commit the alleged rape and so we went there to talk to them so that
we could preserve our relationship as in-laws even if it is for the sake
of peace we could try our best to cope up even P5,000.00 just for the
sake of peace because our intention in going to their house was to
extract the truth, sir.57
On cross-examination, appellant gave the following

statements:
Q.
Before the filing of this case with this Honorable Court, your parents
and you were pleading to the parents of AAA not to continue anymore
the case, is it not?
_______________
An offer of compromise from an unauthorized person

cannot amount to an admission of the party
himself.59Although the Court has held in some cases that an
attempt of the parents of the accused to settle the case is an
implied admission of guilt,60 we believe that the better rule is
that for a compromise to amount to an implied admission of
guilt, the accused should have been present or at least
authorized the proposed compromise.61Moreover, it has been
held that where the accused was not present at the time the
offer for monetary con_______________
58 TSN, September 7, 2000, pp. 13-14.
59 Wigmore, Rules on Evidence, Section 1061, p. 30.
57 TSN, August 22, 2000, pp. 13-15.

650
650
61 People v. Bangcado, G.R. No. 132330, November 28, 2000, 346 SCRA

People vs. Erguiza
A.
Yes, sir, so that the case will not be filed and our relationship will not
be destroyed, sir.
Q.
In fact you asked your parents to do so, is it not?
A.
No, sir. They were the ones who went to the house of AAA, sir.
Q.
But the family of AAA did not agree to the pleadings of your parents
that the case be not filed anymore, is it not?
A.
60 People v. Manzano, No. L-38449, November 25, 1982, 118 SCRA

705; People v. Manuel, G.R. No. 57061, May 9, 1988, 161 SCRA 235, 244-245.
They will agree if we will pay then 1 million, but we do not have 1
million, sir.
Q.
Did you offer them 1 million?
A.
No, sir. They were the ones who told that to us.58 (Emphasis Supplied)
The alleged offer of the parents of appellant to settle the

case cannot be used against appellant as evidence of his
guilt. Appellant testified that he did not ask his parents to
settle the case. Moreover, appellant was not present when
the offer to settle was allegedly made.
189.
651

People vs. Erguiza
651
sideration was made, such offer of compromise would not

save the day for the prosecution.62
In addition, the Court, in weighing the evidence
presented, may give less weight to the testimonies of Albina,
on the one hand, and BBB and CCC, on the other, as they are
related to the appellant and the victim, respectively.63 Their
testimonies relating to the offer of settlement simply
contradict each other. As a matter of fact, even the lower
courts did not consider the alleged offer of settlement in
resolving the case.
Thus, the Court now considers the testimonies of Juanita
and Joy.
192
Testimony of Juanita Angeles

Juanita, a hilot, testified that appellant fetched her at
around 5:10 in the afternoon of January 5, 2000.64 She
asserted that they arrived at the house of appellant at 5:30
p.m. She said that appellants wife gave birth at dawn at 3:00
a.m. of January 6, 2000.65 Juanita said that appellant was
with her the entire time and never left the house.66
Testimony of Joy Agbuya
For a better perspective on the testimony of Joy, it is
necessary to repeat the testimony of AAA. AAA testified that
on January 5, 2000, she was accompanied by 12-year-old Joy
and the latters brother Ricky Agbuya (Ricky) to the mango
orchard at the back of the elementary school to pick fallen
mangoes. Further, complainant claims that she was left
behind by
_______________
A.
Three (3) times, sir.
Q.
When you usually go to the mango orchard of Juanito Macaraeg, where

did you met [sic] with AAA?
A.
In their house, I dropped by her house, sir.
Q.
Was there an occasion wherein you brought your brother Ricky

when you went with AAA to the mango orchard of Juanito
Macaraeg?
A.
No, sir.
Q.
Are we made to understand that Ricky, your brother did not go
A.
Yes, sir.
Q.
According to AAA in her sworn statement she stated that in
even once to the mango orchard of Maning Macaraeg?
[sic] January 5, 2000 you were with your brother Ricky and
AAA in going to the mango orchard, what can you say about
that?
A.
What she is saying is not true. I was not with my brother, sir. I
did not tug him along with me.
Q.
It is also said by AAA that you left her behind in the mango
orchard when her pants was hooked, what can you say about
that?
62 People v. Godoy, G.R. Nos. 115908-09, December 6, 1995, 250 SCRA

676.
63 See People v. Martinez, G.R. No. 124892, January 30, 2001, 350 SCRA
A.
No, sir I waited for her.
Q.
Are we made to understand Madam Witness, that there was no

instance or never that happened that you left her in the
537; People v. Abendan, G.R. Nos. 132026-27, June 28, 2001, 360 SCRA 106.
mango orchard alone?
64 TSN, August 3, 2000, p. 4.

65 TSN, August 3, 2000, p. 5.
A.
No, sir, I waited for her and both of us went home together, sir.
_______________
66 TSN, August 3, 2000, p. 7.

652
67 TSN, July 12, 2000, pp. 5-12.
652

People vs. Erguiza
Joy and Ricky when her shorts got hooked to the fence and
that while she was unhooking her pants from the fence,
appellant grabbed her and raped her.67
This was however contradicted by Joy, to wit:
Q.
653

People vs. Erguiza
Q.
653
Going back to the occasion wherein you were with AAA, who
were with you in going back home?
How many times did you go to the mango orchard of Juanito Macaraeg?
193
A.
Just the two (2) of us, sir.
Q.
In your way home, where did you part or separate with each
Q.
Madam Witness, you said that you have a quarrel with the
private complainant, AAA, will you please tell this Honorable
other?
A.
In front of the store of auntie Beth, sir.68
Court what is the reason or cause of your quarrel with AAA?

A.
Because they wanted me to say another statement that I left
xxxx
AAA behind, sir.71 (Emphasis supplied)
Q.
Is AAA your bestfriend?
A.
Yes, sir.
Q.
Since you said that AAA is your bestfriend was there an occasion
wherein she told you that she was raped?
A.
On re-cross examination, Joy gave the following answers

to the questions of Prosecutor Reintar:
Q.
You said that the reason for your quarrel is that they wanted you to
change your statement, that you left behind AAA, who are those they,
None, sir.69 (Emphasis and underscoring supplied)
On cross-examination, Prosecutor Ely Reintar elicited the

following statements from Joy:
that you are referring to?

INTERPRETER
No answer.
Q.
In the year 2000, when was the last time that you talked to AAA?
Witness
A.
April, sir.
I, sir.
Q.
After April, you did not talk to AAA anymore?
PROS. REINTAR
A.
No more, sir.
Q.
Q.
Your friendship was severed?
A.
Yes, sir.
Q.
Will you please tell the Honorable Court why your friendship became
Q.
Who are these who are telling that?
A.
Because she quarreled with me, sir.
A.
They, sir.
Q.
And because you quarreled, that is the reason why you are now
Q.
Will you please mention them?
A.
BBB, only her, sir.72
severed?
testifying against her?

A.
Yes, sir.70
On re-direct examination, Joy clarified, thus:

_______________
Who told you to change your statement that you left AAA
behind?
A.
Because they are saying that I will change my statement that I

left AAA but I did not sir.
The testimony of 12-year-old Joy makes it impossible for

the appellant to have raped AAA the way complainant
narrated it, to wit:
Q.
You try to understand clearly the question, Madam Witness, and may I
68 TSN, August 1, 2000, pp. 8-9.
repeat that, at the time of the rape when according to you, you were
69 TSN, August 1, 2000, p. 10.
the one raped, where were Joy and Ricky Agbuya?
70 TSN, August 1, 2000, p. 19.
_______________
654
654

People vs. Erguiza
71 TSN, August 2, 2000, p. 2.

72 TSN, August 2, 2000, p. 3.
194
Beths house, indicating that no untoward incident, much

less
655

People vs. Erguiza
A.
655
They left ahead of me because my short pants was hooked at the fence
so I was left behind, sir.
Q.
Were you able to remove the pants of yours at the fence?
A.
I was removing it sir, when he suddenly grabbed me.
Q.
And who is this person you are referring to as the one who grabbed
you?
A.
Larry Erguiza, sir.73
Put simply, complainant could not have been raped

because Joy waited for complainant when the latters shorts
got hooked to the fence and thereafter both went home
together. The Court finds no cogent reason for Joy to lie and
say that she had waited for complainant and that they both
went home together. She had nothing to gain for lying under
oath. Moreover, the records are bereft of any showing or
claim that Joy was related to or was a close friend of
appellant or his family. On the contrary, Joy considers
herself the best-friend and playmate of complainant.74
When Prosecutor Reintar questioned her as to her
understanding of the oath she took, Joy answered, That I
will swear to God, sir. x x x The truth, sir.75Furthermore, Joy
did not succumb to pressure even as she was being
conscientiously examined by Prosecutor Reintar. Joy boldly
testified that BBB, the mother of complainant, was forcing
her to change her statement.
The testimony of Joy clearly lays down the following facts
which are damaging to the case of the prosecution:first, that
Joy did not leave behind AAA when the latters shorts got
hooked to the fence; and secondly, that Joy and AAA left the
orchard, went home together and separated at their Aunt
_______________
73 TSN, July 12, 2000, pp. 8-9.
74 TSN, August 1, 2000, p. 10.
75 TSN, August 1, 2000, p. 13.
656
656

People vs. Erguiza
rape, was committed by appellant at the time and place that

complainant had testified on.
Necessarily, either Joy or AAA lied under oath. It was
thus critical for the prosecution to show that Joy gave false
statements.
Unfortunately for AAA, the prosecution miserably failed to
rebut Joys testimony. Neither complainant nor Ricky, BBB
or any other witness was called to the witness stand to refute
Joys testimony. True, it is up to the prosecution to determine
who to present as witnesses.76 However, considering that the
testimony of Joy critically damaged the case of the
prosecution, it behooved the prosecution to present evidence
to rebut the defense evidence. Witnesses such as Ricky, AAA
and BBB should have been presented by the prosecution to
demolish Joys testimony. The testimony of Ricky is
particularly significant, especially since AAA claimed that he
was with her and his sister Joy at the mango orchard on the
day of the alleged rape incident. The failure on the part of
the prosecution to present Ricky or AAA bolsters the defense
evidence, that no rape happened on the date and time
claimed by AAA.
The prosecution presented CCC, the father of
complainant, as its lone rebuttal witness.77 However, the
testimony of CCC covered facts and issues not related to the
195
testimony of Joy. The testimony of CCC merely rebutted the

allegation made by appellants family that the present case
was filed because appellants family did a poor job of
preparing for the wedding of CCCs daughter DDD and
apellants brother Carlito. To this, CCC testified that on the
contrary, the wedding went smoothly.78 Furthermore, CCC
claimed that the family of appellant knelt before him crying
and offered money to settle
_______________
76 People v. Ruedas, G.R. No. 83372, February 27, 1991, 194 SCRA 553.
77 TSN, September 12, 2000, pp. 2-16.
78 TSN, September 12, 2000, p. 10.
January 5, 2000, to still impute to appellant the crime of

rape is not plausible.
The Court is not unmindful of the rule that the exact date
of the commission of the crime of rape is extraneous to and is
not an element of the offense, such that any inconsistency or
discrepancy as to the same is irrelevant and is not to be
taken as a ground for acquittal.82 Such, however, finds no
application to the case at bar. AAA and Joy may differ in
their testimonies as to the time they were at the mango
orchard, but there could be no mistake as to the actual day
when AAA was supposed to have been raped; it was the day
when AAAs shorts got hooked to the fence at the mango
orchard.
_______________
657

People vs. Erguiza
657
the case.79 In addition, CCC testified that appellant left his

house at 4:00 p.m. on January 5, 2000. Thus, the testimony
of CCC did not in any way rebut the testimony of Joy.
Further, Joy testified that during the three times she
went with AAA to the mango orchard, the time was 1:00
p.m.80 However, AAA testified that she went to the mango
orchard with Joy at 4:00 p.m.81 The variance in the
testimonies of Joy and AAA as to the time they went to the
mango orchard on the day of the alleged rape incident may
be disregarded as they are de minimis in nature and do not
relate to the commission of the crime. There is a common
point uniting the testimonies of both Joy and AAA; that is,
that both referred to the day when AAAs short got hooked to
the fence.
Moreover, assuming arguendo that the variance between
the testimonies of AAA and Joy as to the time they were
together at the mango orchard is an indiciathat AAA may
have been raped by appellant on a different day, not on
79 TSN, September 12, 2000, p. 10.

80 TSN, August 1, 2000, pp. 16-17.
81 TSN, July 12, 2000, p. 5.
82 People v. Lantano, G.R. No. 176734, January 28, 2008, 542 SCRA 640.
658
658

People vs. Erguiza
The RTC and CA unwittingly brushed aside the

testimonies of Juanita and Joy and gave full credence to the
testimony of AAA. As a matter of fact, their probative weight
were not considered or evaluated in the text of the lower
courts decision.
As mentioned earlier, the prosecution could have rebutted
the testimony of Joy, but for some reason or oversight, it
chose not to do so.
Consequently, in view of the unrebutted testimony of Joy,
appellants defense of alibi and denial assumes considerable
weight. It is at this point that the issue as to the time that
the rape was committed plays a significant factor in
196
determining the guilt or innocence of appellant. This Court

must therefore address this issue for a thorough evaluation
of the case.
The Court takes note that Macaraeg, the caretaker of the
orchard, testified that appellants house was only a minute
away from the orchard if one would run.
As earlier mentioned, CCC testified that appellant left
CCCs house at 4:00 p.m. on January 5, 2000, contrary to the
testimony of Albina that she and appellant left at 5:00 p.m.
AAA declared that the alleged rape took place after 5:00 p.m.
Q.
So at 4:00 oclock you were at the house and you left and proceeded at
the back of the school to pick mangoes?
A.
Yes, sir.
Q.
That was already around 5:00 oclock?
A.
Yes, sir. I asked my companion Joy.
Q.
What did you ask of her?
A.
She was wearing a wristwatch and I asked Joy what time is it

and when I looked at her wristwatch, it was already 5:00
oclock, sir.83 (Emphasis Supplied)
_______________
83 TSN, July 12, 2000, pp. 5-6.
659

People vs. Erguiza
659
Moreover, on cross-examination, AAA gave the following

statements, to wit:
Q.
the wristwatch, it was already 5:00 oclock, sir.84(Emphasis

Supplied)
The testimony of Joy makes it impossible for AAA to have

been raped at 4:00 p.m. or 5:00 p.m. or any time thereafter
since it was not rebutted that Joy never left complainant at
the mango orchard even when AAAs shorts got hooked to the
fence, and both went home together without any other
untoward incident.
This Court is not unmindful of the doctrine that for alibi
to succeed as a defense, appellant must establish by clear
and convincing evidence (a) his presence at another place at
the time of the perpetration of the offense and (b) the
physical impossibility of his presence at the scene of the
crime.85
In the case at bar, although the orchard is just a minute
away from the house of appellant, in view of the testimony of
the hilot Juanita that appellant was with her from 5:10 p.m.
and never left his house from that time until his wife gave
birth at 3:00 a.m.; and the testimony of Joy that she never
left AAA in the orchard and that they both went home
together, the defense of alibi assumes significance or
strength when it is amply corroborated by a credible
witness.86 Thus, the Court
_______________
84 TSN, July 13, 2000, p. 13.
85 People v. Obrique, G.R. No 146859, January 20, 2004, 420 SCRA 304.
86 People v. Amestuzo, G.R. No. 104383, July 12, 2001, 361 SCRA 184.
So it is almost 5:00 p.m. When you went to the mango orchard with Joy
Agbuya and Ricky Agbuya?
A.
What I only know was that, it was already about 5:00 oclock then, sir.
Q.
How many minutes did you consume in getting mangoes?
A.
When we went there, we were not able to get some mango and
when I asked sir what was the time then and when I looked at
660
660

People vs. Erguiza
finds that appellants alibi is substantiated by clear and

convincing evidence.
197
What needs to be stressed is that a conviction in a

criminal case must be supported by proof beyond reasonable
doubtmoral certainty that the accused is guilty.87 The
conflicting testimonies of Joy and complainant, and the
testimony of Juanita that corroborated appellants alibi
preclude the Court from convicting appellant of rape with
moral certainty.
Faced with two conflicting versions, the Court is guided by
the equipoise rule.88 Thus, where the inculpatory facts and
circumstances are capable of two or more explanations, one of
which is consistent with the innocence of the accused and the
other consistent with his guilt, then the evidence does not
fulfill the test of moral certainty and is not sufficient to
support a conviction.89The equipoise rule provides that where
the evidence in a criminal case is evenly balanced, the
constitutional presumption of innocence tilts the scales in
favor of the accused.90
It is the primordial duty of the prosecution to present its
side with clarity and persuasion, so that conviction becomes
the only logical and inevitable conclusion.91What is required
of it is to justify the conviction of the accused with moral
certainty.92 Upon the prosecutions failure to meet this test,
acquittal becomes the constitutional duty of the Court, lest
its
_______________
87 People v. Bautista, G.R. No. 123557, February 4, 2002, 376 SCRA 18.
88 Tin v. People, G.R. No. 126480, August 10, 2001, 362 SCRA 594.
89 People v. Agustin, 316 Phil. 828, 832; 246 SCRA 673, 681 (1995).
90 People v. Lagmay, G.R. No. 125310, April 21, 1999, 306 SCRA 157.
91 People v. Fernandez, G.R. Nos. 139341-45, July 25, 2002, 385 SCRA
224, 232.
661

People vs. Erguiza
661
mind be tortured with the thought that it has imprisoned an

innocent man for the rest of his life.93
WHEREFORE, the Decision dated November 18, 2005 of
the Court of Appeals in CA-G.R. CR H.C. No. 00763 is
REVERSED and SET ASIDE. Larry Erguiza is ACQUITTED
and ordered immediately RELEASED from custody, unless
he is being held for some other lawful cause.
The Director of the Bureau of Corrections is ORDERED to
implement this Decision forthwith and to INFORM this
Court, within five (5) days from receipt hereof, of the date
appellant was actually released from confinement.
Costs de oficio.
SO ORDERED.
Puno** (C.J.), Ynares-Santiago (Chairperson), ChicoNazario and Reyes, JJ., concur.
Judgment reversed and set aside, Larry Erguiza acquitted
and ordered released.
Note.When the circumstances are capable of two or
more inferences, as in this case, such that one of which is
consistent with the presumption of innocence and the other is
compatible with guilt, the presumption of innocence must
prevail and the court must acquit. (People vs. Santos, Jr., 536
SCRA 489 [2007])
o0o
_______________
93 People v. Aballe, G.R. No. 133997, May 17, 2001, 357 SCRA 802.
** In lieu of Justice Antonio Eduardo B. Nachura, per Raffle dated
October 13, 2008.

198
G.R. No. 165647. March 26, 2009.*

PHILIPPINES
FIRST
INSURANCE
CO.,
INC.,
petitioner,vs. WALLEM
PHILS.
SHIPPING,
INC.,
UNKNOWN OWNER AND/OR UNKNOWN CHARTERER
OF THE VESSEL M/S OFFSHORE MASTER AND
SHANGHAI FAREAST SHIP BUSINESS COMPANY,
respondents.
Common Carriers; The extraordinary responsibility of the
common carrier lasts from the time the goods are unconditionally
placed in the possession of, and received by the carrier for
transportation until the same are delivered, actually or
constructively, by the carrier to the consignee, or to the person who
has a right to receive them.Common carriers, from the nature of
their business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over the goods
transported by them. Subject to certain exceptions enumerated
under Article 1734 of the Civil Code, common carriers are
responsible for the loss, destruction, or deterioration of the goods.
The extraordinary responsibility of the common carrier lasts from
the time the goods are unconditionally placed in the possession of,
and received by the carrier for transportation until
_______________
* SECOND DIVISION.
458
58
Philippines First Insurance Co., Inc. vs. Wallem Phils.
Shipping Inc.
the same are delivered, actually or constructively, by the
carrier to the consignee, or to the person who has a right to receive
them.
Same; Code of Commerce; Carriage of Goods by Sea Act

(COGSA); For marine vessels, Article 619 of the Code of Commerce
provides that the ship captain is liable for the cargo from the time it
is turned over to him at the dock or afloat alongside the vessel at
the port of loading, until he delivers it on the shore or on the
discharging wharf at the port of unloading, unless agreed
otherwise; Section 2 of the Carriage of Goods by Sea Act (COGSA)
provides that under every contract of carriage of goods by sea, the
carrier in relation to the loading, handling, stowage, carriage,
custody, care, and discharge of such goods, shall be subject to the
responsibilities and liabilities and entitled to the rights and
immunities set forth in the Act.For marine vessels, Article 619 of
the Code of Commerce provides that the ship captain is liable for
the cargo from the time it is turned over to him at the dock or
afloat alongside the vessel at the port of loading, until he delivers
it on the shore or on the discharging wharf at the port of
unloading, unless agreed otherwise. In Standard Oil Co. of New
York v. Lopez Castelo, 42 Phil. 256 (1921), the Court interpreted
the ship captains liability as ultimately that of the shipowner by
regarding the captain as the representative of the ship owner.
Lastly, Section 2 of the COGSA provides that under every contract
of carriage of goods by sea, the carrier in relation to the loading,
handling, stowage, carriage, custody, care, and discharge of such
goods, shall be subject to the responsibilities and liabilities and
entitled to the rights and immunities set forth in the Act. Section 3
(2) thereof then states that among the carriers responsibilities are
to properly and carefully load, handle, stow, carry, keep, care for,
and discharge the goods carried.
Same; Arrastre Operators; Handling cargo is mainly the
arrastre operators principal work so its drivers/operators or
employees should observe the standards and measures necessary to
prevent losses and damage to shipments under its custody.The
functions of an arrastre operator involve the handling of cargo
deposited on the wharf or between the establishment of the
consignee or shipper and the ships tackle. Being the custodian of
199
the goods discharged from a vessel, an arrastre operators duty is

to take good care of the goods and to turn them over to the party
entitled to their possession. Handling cargo is mainly the arrastre
operators principal work so its
459
VOL. 582, March 26, 2009

459
Shipping Inc.
drivers/operators or employees should observe the standards
and measures necessary to prevent losses and damage to
shipments under its custody.
Same; Same; Both the ARRASTRE and the CARRIER are
charged with and obligated to deliver the goods in good condition to
the consignee, though the arrastre operator and the carrier are not
always and necessarily solidarily liable as the facts of a case may
vary the rule.In Firemans Fund Insurance Co. v. Metro Port
Service, Inc., 182 SCRA 455 (1990), the Court explained the
relationship and responsibility of an arrastre operator to a
consignee of a cargo, to quote: The legal relationship between the
consignee and the arrastre operator is akin to that of a depositor
and warehouseman. The relationship between the consignee and
the common carrier is similar to that of the consignee and the
arrastre operator. Since it is the duty of the ARRASTRE to take
good care of the goods that are in its custody and to deliver them in
good condition to the consignee, such responsibility also devolves
upon the CARRIER. Both the ARRASTRE and the CARRIER
are therefore charged with and obligated to deliver the
goods in good condition to the consignee.(Emphasis supplied)
(Citations omitted) The liability of the arrastre operator was
reiterated in Eastern Shipping Lines, Inc. v. Court of Appeals with
the clarification that the arrastre operator and the carrier are not
always and necessarily solidarily liable as the facts of a case may
vary the rule.
Same; Maritime Law; It is settled in maritime law

jurisprudence that cargoes while being unloaded generally remain
under the custody of the carrier.The records are replete with
evidence which show that the damage to the bags happened before
and after their discharge and it was caused by the stevedores of
the arrastre operator who were then under the supervision of
Wallem. It is settled in maritime law jurisprudence that cargoes
while being unloaded generally remain under the custody of the
carrier. In the instant case, the damage or losses were incurred
during the discharge of the shipment while under the supervision
of the carrier. Consequently, the carrier is liable for the damage or
losses caused to the shipment. As the cost of the actual damage to
the subject shipment has long been settled, the trial courts finding
of actual damages in the amount of P397,879.69 has to be
sustained.460
60
Shipping Inc.
Same; Same; Witnesses; The trial courts evaluation as to the
credibility of witnesses is viewed as correct and entitled to the
highest respect because it is more competent to so conclude, having
had the opportunity to observe the witnesses demeanor and
deportment on the stand, and the manner in which they gave their
testimonies.On the credibility of Mr. Talens which is the fourth
issue, the general rule in assessing credibility of witnesses is wellsettled: x x x the trial courts evaluation as to the credibility of
witnesses is viewed as correct and entitled to the highest respect
because it is more competent to so conclude, having had the
opportunity to observe the witnesses demeanor and deportment on
the stand, and the manner in which they gave their testimonies.
The trial judge therefore can better determine if such witnesses
were telling the truth, being in the ideal position to weigh
conflicting testimonies. Therefore, unless the trial judge plainly
200
overlooked certain facts of substance and value which, if

considered, might affect the result of the case, his assessment on
credibility must be respected.
Same; Evidence; Demand Letters; A partys failure to respond
to a demand letter does not constitute an implied admission of
liability.Contrary to petitioners stance on the third issue,
Wallems failure to respond to its demand letter does not constitute
an implied admission of liability. To borrow the words of Mr.
Justice Oliver Wendell Holmes, thus: A man cannot make evidence
for himself by writing a letter containing the statements that he
wishes to prove. He does not make the letter evidence by sending it
to the party against whom he wishes to prove the facts [stated
therein]. He no more can impose a duty to answer a charge than he
can impose a duty to pay by sending goods. Therefore a failure to
answer such adverse assertions in the absence of further
circumstances making an answer requisite or natural has no effect
as an admission.

Astorga & Repol Law Offices for petitioner.
Velicaria Egenias for respondents.
The facts of the case follow.5

On or about 2 October 1995, Anhui Chemicals Import &
Export Corporation loaded on board M/S Offshore Master a
shipment consisting of 10,000 bags of sodium sulphate
anhydrous 99 PCT Min. (shipment), complete and in good
order for transportation to and delivery at the port of Manila
for consignee, L.G. Atkimson Import-Export, Inc. (consignee),
covered by a Clean Bill of Lading. The Bill of Lading reflects
the gross weight of the total cargo at 500,200 kilograms.6 The
Owner and/or Charterer of M/V Offshore Master is unknown
while the shipper of the shipment is Shanghai Fareast Ship
Business Company. Both are foreign firms doing business in
the Philippines, thru its local ship agent, respondent Wallem
Philippines Shipping, Inc. (Wallem).7
_______________
1 Rollo, pp. 3-29.
2 Id., at pp. 31-37. Dated 22 June 2004. Penned by Associate Justice Eloy
R. Bello, Jr. and concurred in by Associate Justices Danilo B. Pine and
Arcangelita Romilla-Lontok.
3 Id., at p. 54. Dated 11 October 2004. Penned by Associate Justice Eloy
R. Bello, Jr. and concurred in by Associate Justices Mario L. Guaria III and
Celia C. Librea-Leagogo.
4 CA Rollo, pp. 37-45. Dated 3 November 1998. Penned by Judge
461
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461
Shipping Inc.
TINGA, J.:
Before us is a Rule 45 petition1 which seeks the reversal of
the Decision2 and Resolution3 of the Court of Appeals in CAG.R. No. 61885. The Court of Appeals reversed the
Decision4 of the Regional Trial Court (RTC) of Manila,
Branch 55 in Civil Case No. 96-80298, dismissing the
complaint for sum of money.
Hermogenes R. Liwag.
5 Gathered from the findings of fact of the RTC decision. Supra note 4.
6 Records, p. 93; Exhibit C.
7 Supra note 4 at p. 37.
462
462

Shipping Inc.
On or about 16 October 1995, the shipment arrived at the

port of Manila on board the vessel M/S Offshore Master from
201
which it was subsequently discharged. It was disclosed

during the discharge of the shipment from the carrier that
2,426 poly bags (bags) were in bad order and condition,
having sustained various degrees of spillages and losses. This
is evidenced by the Turn Over Survey of Bad Order Cargoes
(turn-over survey) of the arrastre operator, Asian Terminals,
Inc. (arrastre operator).8 The bad state of the bags is also
evinced by the arrastre operators Request for Bad Order
Survey.9
Asia Star Freight Services, Inc. undertook the delivery of
the subject shipment from the pier to the consignees
warehouse in Quezon City,10 while the final inspection was
conducted jointly by the consignees representative and the
cargo surveyor. During the unloading, it was found and noted
that the bags had been discharged in damaged and bad order
condition. Upon inspection, it was discovered that 63,065.00
kilograms of the shipment had sustained unrecovered
spillages, while 58,235.00 kilograms had been exposed and
contaminated, resulting in losses due to depreciation and
downgrading.11
On 29 April 1996, the consignee filed a formal claim with
Wallem for the value of the damaged shipment, to no avail.
Since the shipment was insured with petitioner Philippines
First Insurance Co., Inc. against all risks in the amount of
P2,470,213.50,12 the consignee filed a formal claim13 with
petitioner for the damage and losses sustained by the
shipment. After evaluating the invoices, the turn-over
survey,
the
bad
order
certificate
and
other
14
documents, petitioner found the
_______________
8 Records, p. 104. Exhibit H dated 20 October 1995.
9 Id., at p. 105. Exhibit I dated 11 October 1995.
10 Supra note 4 at p. 38.
11 Id.
12 Records, p. 82 and back thereof. Exhibits B and B-1.
13 TSN, 30 June 1996, p. 7.

14 Id., at p. 5.
463
VOL. 582, March 26, 2009

463
Shipping Inc.
claim to be in order and compensable under the marine
insurance policy. Consequently, petitioner paid the consignee
the sum of P397,879.69 and the latter signed a subrogation
receipt.
Petitioner, in the exercise of its right of subrogation, sent
a demand letter to Wallem for the recovery of the amount
paid by petitioner to the consignee. However, despite receipt
of the letter, Wallem did not settle nor even send a response
to petitioners claim.15
Consequently, petitioner instituted an action before the
RTC for damages against respondents for the recovery of
P397,879.69 representing the actual damages suffered by
petitioner plus legal interest thereon computed from the time
of the filing of the complaint until fully paid and attorneys
fees equivalent to 25% of the principal claim plus costs of
suit.
In a decision16 dated 3 November 1998, the RTC ordered
respondents to pay petitioner P397,879.69 with 6% interest
plus attorneys fees and costs of the suit. It attributed the
damage and losses sustained by the shipment to the arrastre
operators mishandling in the discharge of the shipment.
Citing Eastern Shipping Lines, Inc. v. Court of Appeals,17 the
RTC held the shipping company and the arrastre operator
solidarily liable since both the arrastre operator and the
carrier are charged with and obligated to deliver the goods in
good order condition to the consignee. It also ruled that the
ship functioned as a common carrier and was obliged to
observe the degree of care required of a common carrier in
202
handling cargoes. Further, it held that a notice of loss or

damage in writing is not required in this case because said
goods already underwent a joint inspection or survey at the
time of receipt
_______________
15 Supra note 1 at p. 8. Records, pp. 107-108, citing Exhibit K and K1.
16 Supra note 4.
17 G.R. No. 97412, 12 July 1994, 234 SCRA 78.
464
464

Shipping Inc.
thereof by the consignee, which dispensed with the notice

requirement.
The Court of Appeals reversed and set aside the RTCs
decision.18 According to the appellate court, there is no
solidary liability between the carrier and the arrastre
operator because it was clearly established by the court a
quo that the damage and losses of the shipment were
attributed to the mishandling by the arrastre operator in the
discharge of the shipment. The appellate court ruled that the
instant case falls under an exception recognized inEastern
Shipping Lines.19 Hence, the arrastre operator was held
solely liable to the consignee.
Petitioner raises the following issues:
1. Whether or not the Court of Appeals erred in not
holding that as a common carrier, the carriers duties
extend to the obligation to safely discharge the cargo
from the vessel;
2. Whether or not the carrier should be held liable
for the cost of the damaged shipment;
3. Whether or not Wallems failure to answer the
extra judicial demand by petitioner for the cost of the
lost/damaged shipment is an implied admission of the

formers liability for said goods;
4. Whether or not the courts below erred in giving
credence to the testimony of Mr. Talens.
It is beyond question that respondents vessel is a common
carrier.20 Thus, the standards for determining the existence
or absence of the respondents liability will be gauged on the
degree of diligence required of a common carrier. Moreover,
as the shipment was an exercise of international trade, the
pro_______________
18 Supra note 2.
19 Supra note 14.
20 CA Rollo, pp. 41-42.
465
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465
Shipping Inc.
visions of the Carriage of Goods by Sea Act21 (COGSA),
together with the Civil Code and the Code of Commerce,
shall apply.22
The first and second issues raised in the petition will be
resolved concurrently since they are interrelated.
It is undisputed that the shipment was damaged prior to
its receipt by the insured consignee. The damage to the
shipment was documented by the turn-over survey23 and
Request for Bad Order Survey.24 The turn-over survey, in
particular, expressly stipulates that 2,426 bags of the
shipment were received by the arrastre operator in damaged
condition. With these documents, petitioner insists that the
shipment incurred damage or losses while still in the care
and responsibility of Wallem and before it was turned over
and delivered to the arrastre operator.
203
The trial court, however, found through the testimony of

Mr. Maximino Velasquez Talens, a cargo surveyor of
Oceanica Cargo Marine Surveyors Corporation, that the
losses and
of Appeals (G.R. No. 47004. March 8, 1989, 171 SCRA 61), the Court ruled
that with the fault of the arrastre operator in the unloading

of the cargo established it should bear sole liability for the
cost of the damaged/lost cargo.
While it is established that damage or losses were
incurred by the shipment during the unloading, it is disputed
who should be liable for the damage incurred at that point of
transport. To address this issue, the pertinent laws and
jurisprudence are examined.
Common carriers, from the nature of their business and
for reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over the goods
transported by them.26 Subject to certain exceptions
enumerated under Article 173427 of the Civil Code, common
carriers are responsible for the loss, destruction, or
deterioration of the goods. The extraordinary responsibility of
the common carrier lasts from
that the provisions of the Carriage of Goods by Sea Act are merely suppletory
_______________
_______________
21 Commonwealth Act No. 65 (1936).
22 Commonwealth Act No. 65 (1936). Section 1. That the provisions of
Public Act No. 521 of the 74th Congress of the United States, approved on
April 16, 1936, be accepted, as it is hereby accepted to be made applicable to
all contracts for the carriage of goods by sea to and from Philippine ports in
foreign trade: Provided, That nothing in this Act shall be construed as
repealing any existing provision of the Code of Commerce which is now in
force or as limiting its application. Approved on April 22, 1936.
However, in American President Lines, Ltd. v. Klepper, et al., 110 Phil.
243, 248 (1960), reiterated in Maritime Company of the Philippines v. Court
to the Civil Code in view of Articles 1753 and 1756 of the Civil Code.
See also Sea-Land Service, Inc. v. Intermediate Appellate Court, No. L75118, 31 August 1987, 153 SCRA 552.
25 TSN, 5 December 1997, p. 9.

26 Civil Code, Art. 1733.
27 Civil Code, Art. 1734. Common carriers are responsible for the loss,
23 Records, p. 104; Exhibit H.
destruction, or deterioration of the goods, unless the same is due to any of the
24 Id., at p. 105; Exhibit I.
following causes only:

(1) Flood, storm, earthquake, lightning, or other natural disaster or
466
466

Shipping Inc.
damage to the cargo were caused by the mishandling of the

arrastre operator. Specifically, that the torn cargo bags
resulted from the use of steel hooks/spikes in piling the cargo
bags to the pallet board and in pushing the bags by the
stevedores of the arrastre operator to the tug boats then to
the ports.25 The appellate court affirmed the finding of
mishandling in the discharge of cargo and it served as its
basis for exculpating respondents from liability, rationalizing
calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the
containers;
(5)
Order or act of competent public authority.
467
VOL. 582, March 26, 2009

467
Shipping Inc.
204
the time the goods are unconditionally placed in the

possession of, and received by the carrier for transportation
until the same are delivered, actually or constructively, by
the carrier to the consignee, or to the person who has a right
to receive them.28
For marine vessels, Article 619 of the Code of Commerce
provides that the ship captain is liable for the cargo from the
time it is turned over to him at the dock or afloat alongside
the vessel at the port of loading, until he delivers it on the
shore or on the discharging wharf at the port of unloading,
unless agreed otherwise. In Standard Oil Co. of New York v.
Lopez Castelo,29 the Court interpreted the ship captains
liability as ultimately that of the shipowner by regarding the
captain as the representative of the ship owner.
Lastly, Section 2 of the COGSA provides that under every
contract of carriage of goods by sea, the carrier in relation to
the loading, handling, stowage, carriage, custody, care, and
discharge of such goods, shall be subject to the
responsibilities and liabilities and entitled to the rights and
immunities set forth in the Act.30 Section 3 (2) thereof then
states that among the carriers responsibilities are to
properly and carefully load, handle, stow, carry, keep, care
for, and discharge the goods carried.
The above doctrines are in fact expressly incorporated in
the bill of lading between the shipper Shanghai Fareast
Business Co., and the consignee, to wit:
468
468

Shipping Inc.
4. PERIOD OF RESPONSIBILITY. The responsibility of

the carrier shall commence from the time when the goods are
loaded on board the vessel and shall cease when they are
discharged from the vessel.
The Carrier shall not be liable of loss of or damage to the goods
before loading and after discharging from the vessel, howsoever
such loss or damage arises.31
On the other hand, the functions of an arrastre operator

involve the handling of cargo deposited on the wharf or
between the establishment of the consignee or shipper and
the ships tackle.32 Being the custodian of the goods
discharged from a vessel, an arrastre operators duty is to
take good care of the goods and to turn them over to the
party entitled to their possession.33
Handling cargo is mainly the arrastre operators principal
work so its drivers/operators or employees should observe the
standards and measures necessary to prevent losses and
damage to shipments under its custody.34
In Firemans Fund Insurance Co. v. Metro Port Service,
Inc.35 the Court explained the relationship and responsibility
of an arrastre operator to a consignee of a cargo, to quote:
case, no bill of lading shall be issued and that the terms agreed shall be
The legal relationship between the consignee and the arrastre

operator is akin to that of a depositor and warehouseman. The
relationship between the consignee and the common carrier is
similar to that of the consignee and the arrastre operator. Since it
is the duty of the ARRASTRE to take good care of the goods that
are in its custody and to deliver them in good condition to the
consignee, such
embodied in a receipt which shall be a non-negotiable document and marked
_______________
_______________
28 Civil Code, Art. 1736.
29 42 Phil. 256, 262 (1921).
30 This is subject to Section 6 thereof which provides the carrier and the
shipper are at liberty to enter into any agreement in any terms as to the
responsibility and liability of the carrier for such goods provided that in this
as such.
31 Records, dorsal side of p. 93. Exhibit C-1.
205
32 Hijos de F. Escao, Inc. v. National Labor Relations Commission, G.R. No.

59229, 22 August 1991, 261 SCRA 63, 69.
33 Summa Insurance Corporation, v. Court of Appeals, 323 Phil. 214, 223; 253
SCRA 175, 181 (1996).
34 Firemans Fund Insurance Co., v. Metro Port Service, Inc., G.R. No. 83613,
21 February 1990, 182 SCRA 455, 461.
35 G.R. No. 83613, 21 February 1990, 182 SCRA 455.
cargo from the time it is turned over to him until its delivery
at the port of unloading.
In a case decided by a U.S. Circuit Court, Nichimen
Company v. M./V. Farland,37 it was ruled that like the duty
of seaworthiness, the duty of care of the cargo is nondelegable,38
_______________
36 Supra note 14.
469
37 462 F.2d 319, 1972 AMC 1573 (2d Cir. 1972), as cited inSchoenbaum,
VOL. 582, March 26, 2009

469
Shipping Inc.
Thomas J., Admiralty and Maritime Law, Vol. I, 4th Ed. (2004), p. 687.
38 Schoenbaum, id., then cites another case, Sumitomo Corp. of America
v. M./V. Sie Kim, 632 F. Supp. 824, 1987 AMC 160 (S.D.N.Y. 1985)
responsibility also devolves upon the CARRIER. Both the

ARRASTRE and the CARRIER are therefore charged with
and obligated to deliver the goods in good condition to the
consignee. (Emphasis supplied) (Citations omitted)
qualifying that the court ruled therein that a shipper and a carrier could
The liability of the arrastre operator was reiterated

inEastern Shipping Lines, Inc. v. Court of Appeals36 with the
clarification that the arrastre operator and the carrier are
not always and necessarily solidarily liable as the facts of a
case may vary the rule.
Thus, in this case the appellate court is correct insofar as
it ruled that an arrastre operator and a carrier may not be
held solidarily liable at all times. But the precise question is
which entity had custody of the shipment during its
unloading from the vessel?
The aforementioned Section 3(2) of the COGSA states that
among the carriers responsibilities are to properly and
carefully load, care for and discharge the goods carried. The
bill of lading covering the subject shipment likewise
stipulates that the carriers liability for loss or damage to the
goods ceases after its discharge from the vessel. Article 619 of
the Code of Commerce holds a ship captain liable for the
470
enter into a valid agreement placing the duty and expense of loading the
cargo on the shipper and, where damage
470

Shipping Inc.
and the carrier is accordingly responsible for the acts of the

master, the crew, the stevedore, and his other agents. It has
also been held that it is ordinarily the duty of the master of a
vessel to unload the cargo and place it in readiness for
delivery to the consignee, and there is an implied obligation
that this shall be accomplished with sound machinery,
competent hands, and in such manner that no unnecessary
injury shall be done thereto.39 And the fact that a consignee is
required to furnish persons to assist in unloading a shipment
may not relieve the carrier of its duty as to such unloading.40
The exercise of the carriers custody and responsibility
over the subject shipment during the unloading actually
transpired in the instant case during the unloading of the
shipment as testified by Mr. Talens, the cargo surveyor, to
quote:
206
Atty. Repol:
Do you agree with me that Wallem Philippines is a shipping
[company]?
A Yes, sir.
Q And, who hired the services of the stevedores?
A The checker of the vessel of Wallem, sir.41
xxx
Q Mr. Witness, during the discharging operation of this cargo, where was
the master of the vessel?
A On board the vessel, supervising, sir.
Q And, observed the discharging operation?
A Yes, sir.
_______________
is caused by improper stowage performed by a stevedore who was engaged by the shipper and
over whom the carrier has no control, the carrier is not liable.
39 489, 70 Am Jur 2d, citing Kerry v Pacific Marine Co., 121 Cal 546, 54 P 89.
40 375, 70 Am Jur 2d, citing Standard Oil Co. v. Soderling, 112 Ind. App. 437, 42 N.E. 2d 373
(1942).
41 TSN, 5 December 1997, p. 12.
Moreover, the liability of Wallem is highlighted by Mr.

Talens notes in the Bad Order Inspection, to wit:
The bad order torn bags, was due to stevedores[] utilizing steel
hooks/spikes in piling the cargo to [the] pallet board at the vessels
cargo holds and at the pier designated area before and
after discharged that cause the bags to torn [sic].44 (Emphasis
supplied)
The records are replete with evidence which show that the
damage to the bags happened before and after their
discharge45 and it was caused by the stevedores of the
arrastre operator who were then under the supervision of
Wallem.
_______________
42 It is the head checker who manages the operations inside the vessel,
sir. TSN, 5 December 1997, pp. 13-14.
43 Id., at p. 14.
44 Records, p. 130; Exhibit I-f-3.
45 Id., at p. 132. In Exhibit 1-h there is a surveyors note which states:
the bad order torn bags was due to stevedores mishandling snatching of bags
at the inner cargo holds, before discharge and the forklift operator in
471
VOL. 582, March 26, 2009

471
Shipping Inc.
Q And, what did the master of the vessel do when the cargo was being
towing the bags to the designated area at pier apron.

In similar tone, in Exhibit 1-j another surveyors note states: The bad
order torn bags was due to stevedores/winch operator at the inner cargo
holds before discharge and the forklift operator in towing the bag to the
designated area at pier apron after discharged.
unloaded from the vessel?

A He would report to the head checker, sir.
472
Q He did not send the stevedores to what manner in the discharging of
472
the cargo from the vessel?

A Ang head checker po ang siyang nagpapatakbo ng trabaho sa loob ng
barko, sir.42
xxx
Q Is he [the head checker] an employee of the company?
A He is a contractor/checker of Wallem Philippines, sir.43

Shipping Inc.
It is settled in maritime law jurisprudence that cargoes

while being unloaded generally remain under the custody of
the carrier. In the instant case, the damage or losses were
incurred during the discharge of the shipment while under
207
the supervision of the carrier. Consequently, the carrier is

liable for the damage or losses caused to the shipment. As
the cost of the actual damage to the subject shipment has
long been settled, the trial courts finding of actual damages
in the amount of P397,879.69 has to be sustained.
On the credibility of Mr. Talens which is the fourth issue,
the general rule in assessing credibility of witnesses is wellsettled:
x x x the trial courts evaluation as to the credibility of witnesses
is viewed as correct and entitled to the highest respect because it is
more competent to so conclude, having had the opportunity to
observe the witnesses demeanor and deportment on the stand,
and the manner in which they gave their testimonies. The trial
judge therefore can better determine if such witnesses were telling
the truth, being in the ideal position to weigh conflicting
testimonies. Therefore, unless the trial judge plainly overlooked
certain facts of substance and value which, if considered, might
affect the result of the case, his assessment on credibility must be
respected.46
Contrary to petitioners stance on the third issue,

Wallems failure to respond to its demand letter does not
constitute an implied admission of liability. To borrow the
words of Mr. Justice Oliver Wendell Holmes, thus:
A man cannot make evidence for himself by writing a letter
containing the statements that he wishes to prove. He does not
make the letter evidence by sending it to the party against whom
he wishes to prove the facts [stated therein]. He no more can
impose a duty to answer a charge than he can impose a duty to pay
by sending goods. Therefore a failure to answer such adverse
assertions in the
_______________
46 People of the Philippines v. Ramirez, 334 Phil. 305; 266 SCRA 335, 348,
citing People v. Gabris, G.R. No. 116221, 258 SCRA 663, 11 July 1996;
citingPeople v. Vallena, 244 SCRA 685, 1 June 1995.
473
VOL. 582, March 26, 2009

473
Shipping Inc.
absence of further circumstances making an answer requisite or
natural has no effect as an admission.47
With respect to the attorneys fees, it is evident that

petitioner was compelled to litigate this matter to protect its
interest. The RTCs award of P20,000.00 as attorneys fees is
reasonable.
WHEREFORE, the petition is GRANTED. The Decision of
the Court of Appeals dated 22 June 2004 and its Resolution
dated 11 October 2004 are REVERSED and SET ASIDE.
Wallem is ordered to pay petitioner the sum of P397,879.69,
with interest thereon at 6% per annum from the filing of the
complaint on 7 October 1996 until the judgment becomes
final and executory. Thereafter, an interest rate of 12% per
annum shall be imposed.48Respondents are also ordered to
pay petitioner the amount of P20,000.00 for and as attorneys
fees, together with the costs of the suit.
SO ORDERED.
Austria-Martinez,** Corona,*** Velasco, Jr. and Brion, JJ.,
concur.
Petition granted, judgment and resolution reversed and set
aside.
Notes.The Carriage of Goods by Sea Act (COGSA),
which is suppletory to the provisions of the Civil Code,
208
supplements the latter by establishing a statutory provision

limiting the carriers liability in the absence of a shippers
_______________
47 Cited in Ravago Equipment Rentals, Inc. v. Court of Appeals, 337 Phil.
584, 590-591; 271 SCRA 136, 142 (1997) citing A.B. Leach and Co. v. Peirson,
275 US 120 [1927].
48 Supra note 14.
** Additional Member per Special Order No. 593 in lieu of J.Quisumbing
who is on official business.
*** Additional member per Special Order No. 600 in lieu of J. CarpioMorales who is on official business.
G.R. No. 179029. August 9, 2010.*

PEOPLE OF THE PHILIPPINES, appellee, vs. FELIMON
PAGADUAN y TAMAYO, appellant.
Criminal Law; Dangerous Drugs Act; Illegal Sale of
Prohibited Drug; Evidence; To remove any doubt or uncertainty on
the identity and integrity of the seized drug, evidence must
definitely show that the illegal drug presented in court is the same
illegal drug actually recovered from the appellant; otherwise, the
prosecution for possession or for drug pushing under Republic Act
(R.A.) No. 9165 fails.In a prosecution for illegal sale of a
prohibited drug under Section 5 of R.A. No. 9165, the prosecution
must prove the following elements: (1) the identity of the buyer
and the seller, the object, and the consideration; and (2) the
delivery of the thing sold and the payment therefor. All these
require evidence that the sale transaction transpired, coupled with
the presentation in court of the corpus delicti, i.e., the body or
substance of the crime that establishes that a crime has actually
been committed, as shown by presenting the object of the illegal
transaction. To remove any doubt or uncertainty on the identity
and integrity of the seized drug, evidence must definitely show
that the illegal drug presented in court is the same illegal drug
actually recovered from the appellant; otherwise, the prosecution
for possession or for drug pushing under R.A. No. 9165 fails.
Same; Same; Same; Same; Required procedure on the seizure
and custody of drugs is embodied in Section 21, paragraph 1,
Article II of Republic Act (R.A.) No. 9165.The required procedure
on the seizure and custody of drugs is embodied in Section 21,
paragraph 1, Article II of R.A. No. 9165, which states: (1) The
apprehending team
_______________
* THIRD DIVISION.
309
209
VOL. 627, AUGUST 9, 201
30
9
People vs. Pagaduan

having initial custody and control of the drugs shall,
immediately
after
seizure
and
confiscation, physically
inventory andphotograph the same in the presence of the
accused or the person/s from whom such items were confiscated
and/or seized, or his/her representative or counsel, a
representative from the media and the Department of Justice
(DOJ), and any elected public official who shall be required to sign
the copies of the inventory and be given a copy thereof[.]
Same; Same; Same; Same; Strict compliance with the
prescribed procedure is required.Strict compliance with the
prescribed procedure is required because of the illegal drugs
unique characteristic rendering it indistinct, not readily
identifiable, and easily open to tampering, alteration or
substitution either by accident or otherwise. The records of the
present case are bereft of evidence showing that the buy-bust team
followed the outlined procedure despite its mandatory terms.
Same; Same; Same; Same; Procedural lapses however must be
recognized and explained in terms of their justifiable grounds, and
the integrity and evidentiary value of the evidence seized must be
shown to have been preserved.We recognize that the strict
compliance with the requirements of Section 21 of R.A. No. 9165
may not always be possible under field conditions; the police
operates under varied conditions, and cannot at all times attend to
all the niceties of the procedures in the handling of confiscated
evidence. For this reason, the last sentence of the implementing
rules provides that non-compliance with these requirements
under justifiable grounds, as long as the integrity and the
evidentiary value of the seized items are properly preserved by the
apprehending officer/team, shall not render void and invalid such
seizures of and custody over said items[.] Thus, noncompliance
with the strict directive of Section 21 of R.A. No. 9165 is not
necessarily fatal to the prosecutions case; police procedures in the
handling of confiscated evidence may still have some lapses, as in

the present case. These lapses, however, must be recognized
and explained in terms of their justifiable grounds, and the
integrity and evidentiary value of the evidence seized must
be shown to have been preserved.
Same; Same; Same; Same; The justifiable ground for
noncompliance must be proven as a fact. The court cannot presume
what these grounds are or that they even exist.We emphasize that
for the
310
10
People vs. Pagaduan
saving clause to apply, it is important that the prosecution
explain the reasons behind the procedural lapses, and that the
integrity and value of the seized evidence had been preserved. In
other words, the justifiable ground for noncompliance must be
proven as a fact. The court cannot presume what these grounds
are or that they even exist.
Same; Same; Same; Same; Chain of Custody Rule; Definition
of Chain of Custody.Section 1(b) of Dangerous Drugs Board
Regulation No. 1, Series of 2002 which implements R.A. No. 9165
defines Chain of Custody as follows: Chain of Custody means
the duly recorded authorized movements and custody of seized
drugs or controlled chemicals or plant sources of dangerous drugs
or laboratory equipment of each stage, from the time of
seizure/confiscation to receipt in the forensic laboratory to
safekeeping to presentation in court for destruction. Such record of
movements and custody of seized item shall include the identity
and signature of the person who held temporary custody of the
seized item, the date and time when such transfer of custody were
made in the course of safekeeping and use in court as evidence,
and the final disposition[.]
210
Same; Same; Same; Same; Chain of Custody explained in

Malillin v. People, 553 SCRA 619 (2008).In Malillin v. People,
553 SCRA 619 (2008), the Court explained that the chain of
custody rule requires that there be testimony about every link in
the chain, from the moment the object seized was picked up to the
time it is offered in evidence, in such a way that every person who
touched it would describe how and from whom it was received,
where it was and what happened to it while in the witness
possession, the condition in which it was received and the
condition in which it was delivered to the next link in the chain.
Same; Same; Same; Evidentiary presumption that official
duties have been regularly performed cannot by itself overcome the
constitutional presumption of innocence.In sustaining the
appellants conviction, the CA relied on the evidentiary
presumption that official duties have been regularly performed.
This presumption, it must be emphasized, is not conclusive. It
cannot, by itself, overcome the constitutional presumption of
innocence. Any taint of irregularity affects the whole performance
and should make the presumption unavailable. In the present
case, the failure of the apprehending
311
VOL. 627, AUGUST 9, 201
31
1
People vs. Pagaduan

team to comply with paragraph 1, Section 21, Article II of R.A.
No. 9165, and with the chain of custody requirement of this Act
effectively negates this presumption.

of Appeals.
Office of the Solicitor General for appellee.
BRION,
We review the decision1 of the Court of Appeals (CA) in

CA-G.R. CR-H.C. No. 01597 which affirmed in toto the
decision2 of the Regional Trial Court (RTC), Branch 27,
Bayombong, Nueva Vizcaya, in Criminal Case No. 4600,
finding appellant Felimon Pagaduan y Tamayo (appellant)
guilty beyond reasonable doubt of illegal sale of shabu, under
Section 5, Article II of Republic Act (R.A.) No. 9165 or
the Comprehensive Dangerous Drugs Act of 2002.
Background Facts
The prosecution charged the appellant before the RTC
with violation of Section 5, Article II of R.A. No. 9165 under
an Information that states:
That on or about December 27, 2003 at about 4:30 oclock (sic)
in the afternoon, in the Municipality of Solano, Province of Nueva
Vizcaya, Philippines and within the jurisdiction of this Honorable
Court, the above-named accused did then and there willfully,
unlawfully and feloniously sell, trade, dispense, deliver and give
away 0.01
_______________
1 Penned by Associate Justice Mariano C. del Castillo (now a member of this
Court), and concurred in by Associate Justice Arcangelita Romilla Lontok and
Associate Justice Romeo F. Barza; Rollo, pp. 2-15.
2 Penned by Judge Jose B. Rosales; CA Rollo, pp. 9-15.
312
312

People vs. Pagaduan
gram, more or less, of methamphetamine hydrochloride (shabu), a

dangerous drug, as contained in a heat-sealed transparent plastic
sachet to PO3 Peter C. Almarez, a member of the Philippine Drug
Enforcement Agency (PDEA) who posed as a buyer of shabu in the
J.:
211
amount of P200.00, to the damage and prejudice of the Republic of

the Philippines.
CONTRARY TO LAW.3
The appellant pleaded not guilty on arraignment. Trial on

the merits, thereafter, followed.
The evidence for the prosecution reveals the following
facts.
After having received information that the appellant was
selling illegal drugs in Nueva Vizcaya, Captain Jaime de
Vera called, on his cellular phone, PO3 Peter Almarez and
SPO1 Domingo Balidowho were both in Santiago City
and informed them of a planned buy-bust operation. They
agreed to meet at the SSS Building near LMN Hotel in
Bayombong, Nueva Vizcaya.4 On their arrival there, Captain
de Vera conducted a briefing and designated PO3 Almarez as
the poseur buyer. Thereafter, Captain de Vera introduced
PO3 Almarez to the police informant (tipster),5and gave him
(PO3 Almarez) two P100 bills (Exhibits D and E) which
the latter marked with his initials.6
After this briefing, the buy-bust team went to Bintawan
Road, Solano, Nueva Vizcaya to conduct the entrapment
operation.7 PO3 Almarez and the informant rode a tricycle,
while Captain de Vera and SPO1 Balido followed on board a
tinted van.8 The buy-bust team arrived at the target area at
_______________
3 Id., at p. 8.
4 TSN, July 5, 2004, pp. 3-4; TSN, July 26, 2004, p. 3; see also Joint
Affidavit, Records, p. 4.
5 TSN, July 5, 2004, p. 4; Records, p. 4.
6 TSN, July 19, 2004, pp. 7, 13-14; TSN, July 26, 2004, p. 11; Records, p.
4.
7 TSN, July 5, 2004, p. 4.
8 TSN, July 19, 2004, pp. 4 and 6.
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VOL. 627, AUGUST 9, 201

People vs. Pagaduan
313
around 4:30 p.m., and saw the appellant already waiting for
the informant. The informant approached the appellant and
introduced PO3 Almarez to him as a buyer. PO3 Almarez
told the appellant that he needed shabu worth P200, and
inquired from him (appellant) if he had a stock. The
appellant replied in the affirmative, and then handed one
heat-sealed transparent plastic sachet containing white
crystalline substance to PO3 Almarez. PO3 Almarez, in turn,
gave
the
two
pre-marked
P100
bills
to
the
9
appellant. Immediately after, PO3 Almarez made the prearranged signal to his companions, who then approached the
appellant. Captain de Vera took the marked money from the
appellants right pocket, and then arrested him.10 PO3
Almarez, for his part, marked the sachet with his
initials.11Thereafter, the buy-bust team brought the appellant
to the Diadi Police Station for investigation.12
At the police station, Captain de Vera prepared a request
for laboratory examination (Exh. C).13 The appellant was
transferred to the Diadi Municipal Jail where he was
detained.14 Two days later, or on December 29, 2003, PO3
Almarez transmitted the letter-request, for laboratory
examination, and the seized plastic sachet to the PNP Crime
Laboratory, where they were received by PO2 Fernando
Dulnuan.15 Police Senior Inspector (PSI) Alfredo Quintero,
the Forensic Chemist of the PNP Crime Laboratory,
conducted an examination on the specimen submitted, and
found it to be positive for the presence ofshabu (Exh. B).16
_______________
9 TSN, July 5, 2004, pp. 6-8; TSN, July 19, 2004, pp. 5-6; Records, p. 4.
10 TSN, July 5, 2004, p. 9; TSN, July 19, 2004, pp. 16-17.
11 TSN, July 26, 2004, p. 5.
212
12 TSN, July 5, 2004, p. 10.

13 Id., at pp. 10-11.
14 Id., at p. 10; TSN, July 19, 2004, p. 11; Records, pp. 23-24.
15 Records, p. 5.
16 TSN, July 19, 2004, pp. 22-23; Records, p. 12.
314
314

People vs. Pagaduan
On the hearing of August 13, 2004, the prosecution offered

the following as exhibits:
Exhibit Athe shabu confiscated from the appellant
Exhibit Bthe report by the PNP Crime Laboratory
Exhibit Cthe request for laboratory examination
Exhibits D and Ethe buy-bust money
Exhibit Fthe request for laboratory examination received
by Forensic Chemist Quintero
The defense presented a different version of the events,

summarized as follows:
At around 4:30 p.m. of December 27, 2003, Jojo Jose came
to the appellants house and informed him that Captain de
Vera was inviting him to be an asset. The appellant and
Jojo boarded a tricycle and proceeded to the SSS Building
where Captain de Vera was waiting for them.17 As the tricycle
approached the Methodist Church along Bintawan Road, Jojo
dropped his slippers and ordered the driver to stop.
Immediately after, a van stopped in front of the tricycle;
Captain de Vera alighted from the van and handcuffed the
appellant. Captain de Vera brought the appellant inside the
van,
frisked
him,
and
took
P200
from
his
18
pocket. Afterwards, Captain de Vera took the appellant to
the SSS Building, where he (Captain de Vera) and the
building manager drank coffee. Captain de Vera then
brought the appellant to the Diadi Municipal Jail where he

was detained for almost two days.19
On the morning of December 29, 2003, the appellant was
transferred to the Provincial Jail. He signed a document
without the assistance of a lawyer after being told that it
would result in his immediate release.20
_______________
17 TSN, September 13, 2004, pp. 5-6.
18 Id., at pp. 7-8.
19 Id., at pp. 8-9.
20 Id., at p. 10.
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VOL. 627, AUGUST 9, 201

People vs. Pagaduan
315
The RTC, in its decision21 of August 16, 2005, convicted the

appellant of the crime charged, and sentenced him to suffer
the penalty of life imprisonment. The RTC likewise ordered
the appellant to pay a P500,000.00 fine.
The appellant appealed to the CA, docketed as CA-G.R.
CR-H.C. No. 01597. The CA, in its decision22 dated May 22,
2007, affirmed the RTC decision.
The CA found unmeritorious the appellants defense of
instigation, and held that the appellant was apprehended as
a result of a legitimate entrapment operation. It explained
that in inducement or instigation, an innocent person is lured
by a public officer or private detective to commit a crime. In
the case at bar, the buy-bust operation was planned only
after the police had received information that the appellant
was selling shabu.
The CA also held that the failure of the police to conduct a
prior surveillance on the appellant was not fatal to the
prosecutions case. It reasoned out that the police are given
wide discretion to select effective means to apprehend drug
213
dealers. A prior surveillance is, therefore, not necessary,

especially when the police are already accompanied by their
informant.
The CA further ruled that the prosecution was able to
sufficiently prove an unbroken chain of custody of theshabu.
It explained that PO3 Almarez sealed the plastic sachet
seized from the appellant, marked it with his initials, and
transmitted it to the PNP Crime Laboratory for examination.
PSI Quintero conducted a qualitative examination and found
the specimen positive for the presence of shabu. According to
the CA, the prosecution was able to prove that the substance
seized was the same specimen submitted to the laboratory
and presented in court, notwithstanding that this specimen
was turned over to the crime laboratory only after two days.
_______________
21 Supra note 2.
22 Supra note 1.
316
316
The Office of the Solicitor General (OSG) counters with

the argument that the chain of custody of the shabu was
sufficiently established. It explained that the shabu was
turned over by the police officers to the PNP Crime
Laboratory, where it was found by the forensic chemist to be
positive for the presence of shabu. The OSG likewise claimed
that the appellant failed to rebut the presumption of
regularity in the performance of official duties by the police.
The OSG further added that a prior surveillance is not
indispensable to a prosecution for illegal sale of drugs.24
The Courts Ruling
After due consideration, we resolve to acquit the
appellant for the prosecutions failure to prove his guilt
beyond reasonable doubt. Specifically, the prosecution failed
to show that the police complied with paragraph 1, Section
21, Article II of R.A. No. 9165, and with the chain of custody
requirement of this Act.
_______________

People vs. Pagaduan
In his brief,23 the appellant claims that the lower courts

erred in convicting him of the crime charged despite the
prosecutions failure to prove his guilt beyond reasonable
doubt. He harps on the fact that the police did not conduct a
prior surveillance on him before conducting the buy-bust
operation.
The appellant further contends that the prosecution failed
to show an unbroken chain of custody in the handling of the
seized drug. He claims that there was no evidence to show
when the markings were done. Moreover, a period of two
days had elapsed from the time the shabuwas confiscated to
the time it was forwarded to the crime laboratory for
examination.
23 CA Rollo, pp. 30-44.

24 Id., at pp. 57-70.
317
VOL. 627, AUGUST 9, 201

People vs. Pagaduan
317
The
Comprehensive
Dangerous
Drugs
Act: A Brief Background
R.A. No. 9165 was enacted in 2002 to pursue the States
policy to safeguard the integrity of its territory and the wellbeing of its citizenry particularly the youth, from the harmful
effects of dangerous drugs on their physical and mental wellbeing, and to defend the same against acts or omissions
detrimental to their development and preservation.
214
R.A. No. 9165 repealed and superseded R.A. No. 6425,

known as the Dangerous Drugs Act of 1972. Realizing that
dangerous drugs are one of the most serious social ills of the
society at present, Congress saw the need to further enhance
the efficacy of the law against dangerous drugs. The new law
thus mandates the government to pursue an intensive and
unrelenting campaign against the trafficking and use of
dangerous drugs and other similar substances through an
integrated system of planning, implementation and
enforcement of anti-drug abuse policies, programs and
projects.25
Illegal
Sale
of
Drugs
under
Section
5
vis--vis
the
Inventory
and
Photograph
Requirement under Section 21
In a prosecution for illegal sale of a prohibited drug under
Section 5 of R.A. No. 9165, the prosecution must prove the
following elements: (1) the identity of the buyer and the
seller, the object, and the consideration; and (2) the delivery
of the thing sold and the payment therefor. All these require
evidence that the sale transaction transpired, coupled with
the presentation in court of the corpus delicti, i.e., the body or
substance of the crime that establishes that a crime has
actually been committed, as shown by presenting the object
of the
_______________
25 Integrity of Evidence in Dangerous Drugs Cases by Justice (ret.) Josue
N. Bellosillo, 596 SCRA 278 (2009).
318
318

People vs. Pagaduan
illegal transaction.26 To remove any doubt or uncertainty on

the identity and integrity of the seized drug, evidence must
definitely show that the illegal drug presented in court is
the same illegal drug actually recovered from the appellant;

otherwise, the prosecution for possession or for drug pushing
under R.A. No. 9165 fails.27
The required procedure on the seizure and custody of
drugs is embodied in Section 21, paragraph 1, Article II of
R.A. No. 9165, which states:
(1) The apprehending team having initial custody and control of
the
drugs shall,
immediately
after
seizure
and
confiscation,physically inventory and photograph the same in
the presence of the accused or the person/s from whom such items
were confiscated and/or seized, or his/her representative or
counsel, a representative from the media and the Department of
Justice (DOJ), and any elected public official who shall be required
to sign the copies of the inventory and be given a copy thereof[.]
This is implemented by Section 21(a), Article II of

theImplementing Rules and Regulations of R.A. No. 9165,
which reads:
(a) The apprehending officer/team having initial custody and
control of the drugs shall, immediately after seizure and
confiscation, physically inventory and photograph the same in
the presence of the accused or the person/s from whom such items
counsel, a representative from the media and the Department of
to sign the copies of the inventory and be given a copy
thereof: Provided, that the physical inventory and photograph
shall be conducted at the place where the search warrant is served;
or at the nearest police station or at the nearest office of the
apprehending officer/team, whichever is practicable, in case of
warrantless seizures; Provided,
_______________
26 People v. Garcia, G.R. No. 173480, February 25, 2009, 580 SCRA 259, 266.
215
27 See People v. Denoman, G.R. No. 171732, August 14, 2009, 596 SCRA 257,
A:
267.
When we were already in Diadi Police Station, we first put him in jail
in the Municipal Jail of Diadi, Nueva Vizcaya, sir.
_______________
319
VOL. 627, AUGUST 9, 201

People vs. Pagaduan
further, that non-compliance with these requirements under

justifiable grounds, as long as the integrity and the evidentiary
value of the seized items are properly preserved by the
apprehending officer/team, shall not render void and invalid such
seizures of and custody over said items[.]
Strict compliance with the prescribed procedure is

required because of the illegal drugs unique characteristic
rendering it indistinct, not readily identifiable, and easily
open to tampering, alteration or substitution either by
accident or otherwise.28 The records of the present case are
bereft of evidence showing that the buy-bust team followed
the outlined procedure despite its mandatory terms. The
deficiency is patent from the following exchanges at the trial:
PROSECUTOR [EMERSON TURINGAN]:
Q:
After you handed this buy-bust money to the accused, what happened
next?
[PO3 ALMAREZ:]
A:
When the shabu was already with me and I gave him the money[,] I
signaled the two, Captain Jaime de Vera and SPO1 Balido, sir.
xxxx
Q:
After you gave that signal, what happened?
A:
Then they approached us and helped me in arresting Felimon

Pagaduan, sir.
Q:
After Pagaduan was arrested, what happened next?
A:
After arresting Pagaduan[,] we brought him directly in Diadi Police

Station, sir.
Q:
What happened when you brought the accused to the Police Station in
Diadi?
28 People v. Kamad, G.R. No. 174198, January 19, 2010, 610 SCRA 295.
319
320
320

People vs. Pagaduan
Q:
What did you do with the shabu?
A:
The request for laboratory examination was prepared and was

brought to the Crime Lab. of Solano, Nueva Vizcaya, sir.
xxxx
Q:
After making the request, what did you do next[,] if any[,] Mr.
Witness?
A:
After submission of the request to the Crime Lab.[,] we

prepared our joint affidavit for submission of the case to the
Court, sir.29
From the foregoing exchanges during trial, it is evident

that the apprehending team, upon confiscation of the drug,
immediately brought the appellant and the seized items to
the police station, and, once there, made the request for
laboratory examination. No physical inventory and
photograph of the seized items were taken in the presence of
the accused or his counsel, a representative from the media
and the Department of Justice, and an elective official. PO3
Almarez, on cross-examination, was unsure and could not
give a categorical answer when asked whether he issued a
receipt for the shabu confiscated from the appellant.30 At any
rate, no such receipt or certificate of inventory appears in the
records.
In several cases, we have emphasized the importance of
compliance with the prescribed procedure in the custody and
disposition of the seized drugs. We have repeatedly declared
216
that the deviation from the standard procedure dismally

compromises the integrity of the evidence. InPeople v.
Morales,31 we acquitted the accused for failure of the buy-bust
team to photograph and inventory the seized items, without
giving any justifiable ground for the non-observance of the
required procedures. People v. Garcia32likewise resulted in an
acquit-
31 G.R. No. 172873, March 19, 2010, 616 SCRA 223.
implementing rules provides that non-compliance with these

requirements under justifiable grounds, as long as the
integrity and the evidentiary value of the seized items are
properly preserved by the apprehending officer/team, shall
not render void and invalid such seizures of and custody over
said items[.] Thus, noncompliance with the strict directive of
Section 21 of R.A. No. 9165 is not necessarily fatal to the
prosecutions case; police procedures in the handling of
confiscated evidence may still have some lapses, as in the
present case. These lapses, however, must be recognized
and explained in terms of their justifiable grounds,
and the integrity and eviden-
32 Supra note 26.
_______________
_______________
29 TSN, July 5, 2004, pp. 9-13.
30 TSN, July 19, 2004, pp. 17-18.
321
VOL. 627, AUGUST 9, 201

People vs. Pagaduan
321
tal because no physical inventory was ever made, and no

photograph of the seized items was taken under the
circumstances required by R.A. No. 9165 and its
implementing rules. In Bondad, Jr. v. People,33 we also
acquitted the accused for the failure of the police to conduct
an inventory and to photograph the seized items, without
justifiable grounds.
We had the same rulings in People v. Gutierrez,34 People v.
Denoman,35 People v. Partoza,36 People v. Robles,37 andPeople
v. dela Cruz,38 where we emphasized the importance of
complying with the required mandatory procedures under
Section 21 of R.A. No. 9165.
We recognize that the strict compliance with the
requirements of Section 21 of R.A. No. 9165 may not always
be possible under field conditions; the police operates under
varied conditions, and cannot at all times attend to all the
niceties of the procedures in the handling of confiscated
evidence. For this reason, the last sentence of the
33 G.R. No. 173804, December 10, 2008, 573 SCRA 497.

34 G.R. No. 179213, September 3, 2009, 598 SCRA 92.
35 Supra note 27.
36 G.R. No. 182418, May 8, 2009, 587 SCRA 809.
37 G.R. No. 177220, April 24, 2009, 586 SCRA 647.
38 G.R. No. 181545, October 8, 2008, 568 SCRA 273.
322
322

People vs. Pagaduan
tiary value of the evidence seized must be shown to

have been preserved.39
In the present case, the prosecution did not bother to offer
any explanation to justify the failure of the police to conduct
the required physical inventory and photograph of the seized
drugs. The apprehending team failed to show why an
inventory and photograph of the seized evidence had not
been made either in the place of seizure and arrest or at the
nearest police station (as required by the Implementing
Rules in case of warrantless arrests). We emphasize that
for the saving clause to apply, it is important that the
217
prosecution explain the reasons behind the

procedural lapses, and that the integrity and value of
the seized evidence had been preserved.40 In other
words, the justifiable ground for noncompliance must
be proven as a fact. The court cannot presume what
these grounds are or that they even exist.41
The Chain of Custody Requirement
Proof beyond reasonable doubt demands that unwavering
exactitude be observed in establishing thecorpus delictithe
body of the crime whose core is the confiscated illicit drug.
Thus, every fact necessary to constitute the crime must be
established. The chain of custody requirement performs this
function in buy-bust operations as it ensures that doubts
concerning the identity of the evidence are removed.42
_______________
39 People v. Sanchez, G.R. No. 175832, October 15, 2008, 569 SCRA 194,
212.
40 See People v. Almorfe, G.R. No. 181831, March 29, 2010, 617 SCRA 52.
41 People v. de Guzman, G.R. No. 186498, March 26, 2010, 616 SCRA 652.
42 Supra note 39, citing People v. Kimura, 428 SCRA 51 (2004)
andMalillin v. People, 553 SCRA 619 (2008).
323
VOL. 627, AUGUST 9, 201

People vs. Pagaduan
323
Blacks Law Dictionary explains chain of custody in this

wise:
In evidence, the one who offers real evidence, such as the
narcotics in a trial of drug case, must account for the custody of the
evidence from the moment in which it reaches his custody until the
moment in which it is offered in evidence, and such evidence goes
to weight not to admissibility of evidence. Com. V. White, 353
Mass. 409, 232 N.E.2d 335.
Likewise, Section 1(b) of Dangerous Drugs Board

Regulation No. 1, Series of 2002 which implements R.A. No.
9165 defines chain of custody as follows:
Chain of Custody means the duly recorded authorized
movements and custody of seized drugs or controlled chemicals or
plant sources of dangerous drugs or laboratory equipment of each
stage, from the time of seizure/confiscation to receipt in the
forensic laboratory to safekeeping to presentation in court for
destruction. Such record of movements and custody of seized item
shall include the identity and signature of the person who held
temporary custody of the seized item, the date and time when such
transfer of custody were made in the course of safekeeping and use
in court as evidence, and the final disposition[.]
In Malillin v. People,43 the Court explained that the chain

of custody rule requires that there be testimony about every
link in the chain, from the moment the object seized was
picked up to the time it is offered in evidence, in such a way
that every person who touched it would describe how and
from whom it was received, where it was and what happened
to it while in the witness possession, the condition in which
it was received and the condition in which it was delivered to
the next link in the chain.
In the present case, the prosecutions evidence failed to
establish the chain that would have shown that
the shabupre_______________
43 G.R. No. 172953, April 30, 2008, 553 SCRA 619, 632.
324
324

People vs. Pagaduan
sented in court was the very same specimen seized from the
appellant.
218
The first link in the chain of custody starts with the

seizure of the heat-sealed plastic sachet from the appellant.
PO3 Almarez mentioned on cross-examination that he placed
his initials on the confiscated sachet after apprehending
the appellant. Notably, this testimony constituted the
totality of the prosecutions evidence on the marking of the
seized evidence. PO3 Almarezs testimony, however, lacked
specifics on how he marked the sachet and who witnessed the
marking. In People v. Sanchez, we ruled that the marking
of the seized itemsto truly ensure that they are the same
items that enter the chain and are eventually the ones
offered in evidenceshould be done (1)in the presence of
the
apprehended
violator (2)
immediately
upon
confiscation. In the present case, nothing in the records gives
us an insight on the manner and circumstances that
attended the marking of the confiscated sachet. Whether the
marking had been done in the presence of the appellant is
not at all clear from the evidence that merely mentioned that
the evidence had been marked after the appellants
apprehension.
The second link in the chain of custody is its turnover from
the apprehending team to the police station. PO3 Almarez
testified that the appellant was brought to the Diadi Police
Station after his arrest. However, he failed to identify the
person who had control and possession of the seized drug at
the time of its transportation to the police station. In the
absence of clear evidence, we cannot presume that PO3
Almarez, as the poseur buyer, handled the seized sachetto
the exclusion of othersduring its transfer from the place of
arrest and confiscation to the police station. The prosecution
likewise failed to present evidence pertaining to the identity
of the duty desk officer who received the plastic sachet
containing shabu from the buy-bust team. This is
particularly significant since the seized specimen was turned
over to the PNP Crime Laboratory only after two days. It was
not, there325
VOL. 627, AUGUST 9, 201

People vs. Pagaduan
325
fore, clear who had temporary custody of the seized

itemsduring this significant intervening period of time.
Although the records show that the request for laboratory
examination of the seized plastic sachet was prepared by
Captain de Vera, the evidence does not show that he was the
official who received the marked plastic sachet from the buybust team.
As for the subsequent links in the chain of custody, the
records show that the seized specimen was forwarded by PO3
Almarez to the PNP Crime Laboratory on December 29,
2003, where it was received by PO2 Dulnuan, and later
examined by PSI Quintero. However, the person from whom
PO3 Almarez received the seized illegal drug for transfer to
the crime laboratory was not identified. As earlier discussed,
the identity of the duty desk officer who received the shabu,
as well as the person who had temporary custody of the
seized items for two days, had not been established.
The procedural lapses mentioned above show the glaring
gaps in the chain of custody, creating a reasonable doubt
whether the drugs confiscated from the appellant were
the same drugs that were brought to the crime
laboratory for chemical analysis, and eventually
offered in court as evidence. In the absence of concrete
evidence on the illegal drugs bought and sold, the body of the
crimethe corpus delictihas not been adequately
proven.44 In effect, the prosecution failed to fully prove the
elements of the crime charged, creating reasonable doubt on
the appellants criminal liability.
Presumption
of
Regularity
in
the
Performance of Official Duties
219
In sustaining the appellants conviction, the CA relied on

the evidentiary presumption that official duties have been
regularly performed. This presumption, it must be empha_______________
44 Supra note 28.
326
326

People vs. Pagaduan
sized, is not conclusive.45 It cannot, by itself, overcome the

constitutional presumption of innocence. Any taint of
irregularity affects the whole performance and should make
the presumption unavailable. In the present case, the failure
of the apprehending team to comply with paragraph 1,
Section 21, Article II of R.A. No. 9165, and with the chain of
custody requirement of this Act effectively negates this
presumption. As we explained in Malillin v. People:46
The presumption of regularity is merely just thata mere
presumption disputable by contrary proof and which when
challenged by the evidence cannot be regarded as binding truth.
Suffice it to say that this presumption cannot preponderate over
the presumption of innocence that prevails if not overthrown by
proof beyond reasonable doubt. In the present case the lack of
conclusive identification of the illegal drugs allegedly seized from
petitioner, coupled with the irregularity in the manner by which
the same were placed under police custody before offered in court,
strongly militates a finding of guilt.
We are not unmindful of the pernicious effects of drugs in

our society; they are lingering maladies that destroy families
and relationships, and engender crimes. The Court is one
with all the agencies concerned in pursuing an intensive and
unrelenting campaign against this social dilemma.
Regardless of how much we want to curb this menace, we
cannot disregard the protection provided by the Constitution,

most particularly the presumption of innocence bestowed on
the appellant. Proof beyond reasonable doubt, or that
quantum of proof sufficient to produce moral certainty that
would convince and satisfy the conscience of those who act in
judgment, is indispensable to overcome this constitutional
presumption. If the prosecution has not proved, in the first
place, all the elements
_______________
45 See People v. Coreche, G.R. No. 182528, August 14, 2009, 596 SCRA
350, 364.
46 Supra note 43, at p. 623.
327
VOL. 627, AUGUST 9, 201

People vs. Pagaduan
327
of the crime charged, which in this case is the corpus delicti,

then the appellant deserves no less than an acquittal.
WHEREFORE,
premises
considered,
we
hereby
REVERSE and SET ASIDE the May 22, 2007 Decision of the
Court of Appeals in CA-G.R. CR-H.C. No. 01597. Appellant
Felimon Pagaduan y Tamayo is hereby ACQUITTED for
failure of the prosecution to prove his guilt beyond
reasonable doubt. He is ordered immediately RELEASED
from detention unless he is confined for another lawful cause.
Let a copy of this Decision be furnished the Director,
Bureau of Corrections, Muntinlupa City for immediate
implementation. The Director of the Bureau of Corrections is
directed to report the action he has taken to this Court
within five days from receipt of this Decision.
SO ORDERED.
Carpio-Morales
(Chairperson),
Bersamin,
**
Abad andVillarama, Jr., JJ., concur.
220
Judgment
reversed
and
set
FelimonPagaduan y Tamayo acquitted.
aside,
appellant
Note.The presumption of regularity in the performance

of official duty cannot by itself overcome the presumption of
innocence nor constitute proof beyond reasonable doubt.
(People vs. Agulay, 566 SCRA 571 [2008])
o0o
_______________
** Designated additional Member of the Third Division, in view of the
retirement of Chief Justice Reynato S. Puno, per Special Order No. 843 dated
May 17, 2010.
G.R. No. 188900. March 5, 2010.*

PEOPLE OF THE PHILIPPINES, appellee, vs.FERNANDO
HABANA y ORANTE, appellant.
Criminal Law; Dangerous Drugs Act; Evidence; The discretion
on which witness to present in every case belongs to the prosecutor;
As a rule, it is rarely that the prosecutor would present the
informant because of the need to hide his identity and preserve his
invaluable service to the police.Habana points out that the
prosecutions failure to present at the trial the informant, the
investigating officer, and the forensic chemist militates against the
trustworthiness of the prosecutions evidence. But no rule requires
the prosecution to present as witness in a drugs case every person
who had something to do with the arrest of the accused and the
seizure of prohibited drugs from him. The discretion on which
witness to present in every case belongs to the prosecutor. The
non-presentation of the informant cannot prejudice the
prosecutions theory of the case. His testimony would merely be
corroborative since police officers Paras and Tayag who witnessed
everything already testified. Besides, as a rule, it is
_______________
* SECOND DIVISION.
434
34
People vs. Habana
rarely that the prosecutor would present the informant
because of the need to hide his identity and preserve his invaluable
service to the police.
Same; Same; Same; Chain of Custody Rule; The chain of
custody rule requires that testimony be represented about every link
in the chain, from the moment the item was seized up to the time it
is offered in evidence.In all prosecutions for the violation of The
221
Dangerous Drugs Act, the existence of the prohibited drug has to

be proved. The chain of custody rule requires that testimony be
presented about every link in the chain, from the moment the item
was seized up to the time it is offered in evidence. To this end, the
prosecution must ensure that the substance presented in court is
the same substance seized from the accused.
Same; Same; Same; Witnesses; Officer must present justifiable
reason for their imperfect conduct and show that the integrity and
evidentiary value of the seized items had been preserved.While
this Court recognizes substantial adherence to the requirements of
R.A. 9165 and its implementing rules and regulations, not perfect
adherence, is what is demanded of police officers attending to
drugs cases, still, such officers must present justifiable reason for
their imperfect conduct and show that the integrity and
evidentiary value of the seized items had been preserved. Here,
however, they failed to meet these conditions. The police officers
offered no explanation for their failure to observe the chain of
custody rule.
APPEAL from the decision of the Regional Trial Court.

The Solicitor General for appellee.
ABAD, J.:
This case is about whether the forensic examiner and the
police investigator are indispensable witnesses in a drugs
case to establish the chain of custody over the substance
seized from the accused.435
VOL. 614, March 5, 2010

People vs. Habana
435
The Facts and the Case

On July 21, 2003 the public prosecutor of Caloocan City
filed two separate informations1 against the accused
Fernando Habana before the Regional Trial Court (RTC) of
that city in Criminal Cases C-68627 and C-68628 for

violations of Sections 5 and 11, Article II of Republic Act
(R.A.) 9165, otherwise known as the Comprehensive
Dangerous Drugs Act of 2002.
At the trial, the prosecution presented PO1 Fortunato
Paras2 and PO2 Amadeo Tayag.3 On the other hand, the
defense called to the witness stand the accused Habana and
one Amelia Sevilla.4
The prosecution evidence shows that in the morning of
July 17, 2003, members of the Anti-Illegal Drug Task Force
Unit of the Caloocan City Police Station met with an
informant at Chowking Restaurant in Sangandaan, Caloocan
City. The informant told them that a certainLoloy, later on
identified as the accused Habana, was selling shabu on
Salmon Street.5 Acting on this, the group proceeded to the
place and staked it out.6
After locating accused Habana, PO3 Rizalino Rangel held
a short briefing with his unit. They decided to undertake a
buy-bust operation with PO1 Paras as poseur-buyer. Rangel
told Paras to scratch his head by way of signal after he had
made a purchase of drugs and handed over two pieces of fiftypeso bills that made up the buy-bust money.7 Paras placed
his initials FP on the money.8
_______________
1 Records, pp. 1 and 7.
2 TSN, August 3, 2005.
3 TSN, October 26, 2006.
4 TSN, December 13, 2007.
5 TSN, August 3, 2005, p. 3.
6 Id., at p. 4; TSN, October 26, 2006, pp. 6-7.
7 Records, p. 5.
8 TSN, August 3, 2005, p. 4.
436
222
436

People vs. Habana
Accompanied by the informant, Paras approached accused

Habana who asked them how much they wanted to buy.
Paras handed over the money to Habana who pocketed it. In
turn, the latter handed over to Paras one plastic sachet that
contained what appeared to be shabu. After PO1 Paras got
the plastic sachet, he executed the pre-arranged signal,
introduced himself as a policeman, and arrested Habana.9
Tayag rushed to the scene and helped Paras collar
Habana. Tayag searched Habanas body and this yielded two
more plastic sachets containing what appeared to
beshabu and the marked bills.10 The arresting officers handed
over custody of his person and the items seized from him to
PO3 Fernando Moran, the investigator on duty, who placed
his marking on them and submitted the same to the
Philippine National Police (PNP) Crime Laboratory for
forensic examination.Forensic Chemist Police Inspector
Erickson Calabocal submitted Physical Science Report D848-03, which revealed that the white crystalline substance
contained in the plastic sachets tested positive for
Methamphetamine Hydrochloride, otherwise known as
shabu.11
At the pre-trial,12 the parties stipulated: 1) that the
assigned forensic chemist got the police request for
laboratory examination of the specimen involved and, upon
examination, found it positive for methamphetamine
hydrochloride13 and 2) that PO3 Fernando Moran was the
investigating officer assigned to the case to whom the
arresting officers turned over the accused as well as the three
plastic sachets and that it was he who prepared the referral
slip,14 sworn affidavit of the
_______________
9 Id., at p. 5.
10 TSN, October 26, 2006, pp. 23-25.

11 TSN, October 7, 2003.
12 Id., at pp. 23-24.
13 Id., at p. 6, see Physical Science Report D-848-03.
14 Id., at p. 2.
437
VOL. 614, March 5, 2010

People vs. Habana
437
arresting officers,15 and the request for laboratory

examination16 of the specimen subject of this case.17
Accused Habana presented a different version. According
to him, on the afternoon of July 17, 2003 he was on his way
home when five to seven men in civilian clothes blocked his
way. He asked what the matter was and they replied that
they had to search him. He resisted because he was not doing
anything illegal. Still, the men frisked him and took five
hundred pesos from his pocket. They then brought him to the
police station where he was detained. When his wife and
sister came, the police officers told them to produce
P20,000.00 for his freedom. When they failed to give the
amount, they charged him with illegal possession and sale
of shabu.18
Amelia Sevilla testified that on the date of the incident, at
around 6:00 p.m., she was about to close her store when she
saw two men suddenly approach and frisk accused Habana
who was just standing near her store. Habana raised his
hands and said, Bakit ano po ang kasalanan ko bakit ninyo
ako kinakapkapan? After the men frisked him, they got the
coins in his short pants pocket and then left with him. On the
following day, Sevilla heard from her neighbors that the
police had arrested Habana.
On January 21, 2008, the trial court found Habana guilty
of both charges and sentenced him to a penalty of life
imprisonment plus a fine of P500,000.00 in Criminal Case C223
68627 and imprisonment for 12 years and 1 day to 14 years

and a fine of P300,000.00 in Criminal Case C-68628.
Since one of the penalties imposed was life imprisonment,
the case was elevated to the Court of Appeals (CA) for review
_______________
15 Id., at p. 3.
16 Id., at p. 4.
17 Id., at p. 112.
18 TSN, December 7, 2006, pp. 3-12.
438
438

People vs. Habana
and disposition pursuant to the ruling in People v.

Mateo.19Upon review, the CA rendered a Decision20 on June
17, 2009, affirming in full the decision of the trial court. The
case is on appeal to this Court.
The Issues Presented
Two issues are presented:
1. Whether or not the prosecutions failure to present the
forensic chemist and the police investigator assigned to the case is
fatal to its case against accused Habana; and
2. Whether or not the prosecution failed to establish the
integrity of the seized substance taken from Habana along the
chain of custody.
The Rulings of the Court

One. Habana points out that the prosecutions failure to
present at the trial the informant, the investigating officer,
and the forensic chemist militates against
the
trustworthiness of the prosecutions evidence.
But no rule requires the prosecution to present as witness

in a drugs case every person who had something to do with
the arrest of the accused and the seizure of prohibited drugs
from him. The discretion on which witness to present in
every case belongs to the prosecutor.21
The non-presentation of the informant cannot prejudice
the prosecutions theory of the case. His testimony would
merely be corroborative since police officers Paras and Tayag
who witnessed everything already testified. Besides, as a
rule, it is rarely that the prosecutor would present the
informant be_______________
19 G.R. Nos. 147678-87, July 7, 2004, 433 SCRA 640.
20 Rollo, pp. 2-19.
21 People v. Zeng Hua Dian, G.R. No. 145348, June 14, 2004, 432 SCRA
25, 32.
439
VOL. 614, March 5, 2010

People vs. Habana
439
cause of the need to hide his identity and preserve his

invaluable service to the police.22
The prosecution did not deliberately omit the presentation
of the forensic chemist who examined the seized substance or
the investigating officer who was assigned to the case. As the
trial court said in its decision, the prosecution wanted to
present both as witnesses but the parties chose instead to
stipulate on the substance of their testimonies.23
Accused Habana also insists that the RTC should not have
admitted the laboratory report in evidence for failure of the
forensic chemist to testify. But, as the Office of the Solicitor
General correctly pointed out, the parties agreed at the pretrial to dispense with such testimony and just stipulate that
the police submitted the drug specimens involved in the case
224
to the crime laboratory for analysis; that forensic chemist

Calabocal examined it; that the result was positive for
methamphetamine hydrochloride; and that this fact was as
stated in Calabocals report. It is too late for Habana to now
impugn the veracity of such report.
Two. Accused Habana points out that, since the police
officers involved failed to adhere strictly to the requirements
of Section 21(1) of R.A. 9165, the evidence of the
seized shabu cannot be admitted against him.
In all prosecutions for the violation of The Dangerous
Drugs Act, the existence of the prohibited drug has to be
proved.24 The chain of custody rule requires that testimony be
presented about every link in the chain, from the moment the
item was seized up to the time it is offered in evidence. To
this
_______________
22 People v. Ganenas, 417 Phil. 53, 62; 364 SCRA 582, 590 (2001);People
v. Chua Uy, 384 Phil. 70, 87; 338 SCRA 232, 244 (2000).
23 CA Rollo, pp. 22-24.
24 People v. Mendiola, G.R. No. 110778, August 4, 1994, 235 SCRA 116,
120.
440
440

People vs. Habana
end, the prosecution must ensure that the substance

presented in court is the same substance seized from the
accused.While this Court recognizes substantial adherence to
the requirements of R.A. 9165 and its implementing rules
and regulations, not perfect adherence, is what is demanded
of police officers attending to drugs cases,25 still, such officers
must present justifiable reason for their imperfect conduct
and show that the integrity and evidentiary value of the
seized items had been preserved. Here, however, they failed
to meet these conditions. The police officers offered no

explanation for their failure to observe the chain of custody
rule.
The prosecution failed to show how the seized items
changed hands, from when the police officers seized them
from Habana to the time they were presented in court as
evidence. PO1 Paras said that he turned over the sachets
ofshabu to the investigator on duty. But the prosecution did
not adduce evidence on what the investigator on duty did
with the seized articles, how these got to the laboratory
technician, and how they were kept before being adduced in
evidence at the trial.
Usually, the police officer who seizes the suspected
substance turns it over to a supervising officer, who would
then send it by courier to the police crime laboratory for
testing. Since it is unavoidable that possession of the
substance changes hand a number of times, it is imperative
for the officer who seized the substance from the suspect to
place his marking on its plastic container and seal the same,
preferably with adhesive tape that cannot be removed
without leaving a tear on the plastic container. At the trial,
the officer can then identify the seized substance and the
procedure he observed to preserve its integrity until it
reaches the crime laboratory.
If the substance is not in a plastic container, the officer
should put it in one and seal the same. In this way the sub_______________
25 People v. Ara, G.R. No. 185011, December 23, 2009, 609 SCRA 304.
441
VOL. 614, March 5, 2010

People vs. Habana
441
stance would assuredly reach the laboratory in the same

condition it was seized from the accused. Further, after the
225
laboratory technician tests and verifies the nature of the

substance in the container, he should put his own mark on
the plastic container and seal it again with a new seal since
the police officers seal has been broken. At the trial, the
technician can then describe the sealed condition of the
plastic container when it was handed to him and testify on
the procedure he took afterwards to preserve its integrity.
If the sealing of the seized substance has not been made,
the prosecution would have to present every police officer,
messenger, laboratory technician, and storage personnel, the
entire chain of custody, no matter how briefly ones
possession has been. Each of them has to testify that the
substance, although unsealed, has not been tampered with or
substituted while in his care.
Since the failure in this case to comply with the procedure
in the custody of seized drugs compromised the identity and
integrity of the items seized, which is thecorpus delicti of
each of the crimes charged against Habana, his acquittal is
in order.
WHEREFORE, the Court GRANTS the petition,
REVERSES and SETS ASIDE the decision of the Court of
Appeals in CA-G.R. CR-H.C. 03165 dated June 17, 2009 as
well as the decision of the Regional Trial Court of Caloocan
City, Branch 120, in Criminal Cases C-68627 and C-68628,
and
ACQUITS
the
accused-appellant
Fernando
Habana yOrante on the ground of reasonable doubt.
Let a copy of this Decision be furnished the Director,
Bureau of Corrections, Muntinlupa City for immediate
implementation. The Director of the Bureau of Corrections is
DIRECTED to report the action he has taken to this Court
within five days from receipt of this Decision.
SO ORDERED.
Carpio, Brion, Del Castillo and Perez, JJ., concur.
Copyright 2015 Central Book
G.R. No. 188905. July 13, 2010.*

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.
ROSE NANDI y SALI, accused-appellant.
Criminal Law; Dangerous Drugs Act; Illegal Sale of
Dangerous Drugs; Evidence; Appeals; The general rule is that
passing judgment upon the credibility of witnesses is best left to the
trial courts since the latter are in a better position to decide the
question, having heard and observed the witnesses themselves
during the trial; Exceptions.The general rule is that passing
judgment upon the credibility of witnesses is best left to the trial
courts since the latter are in a better position to decide the
question, having heard and observed the witnesses themselves
during the trial. This rule, however, admits of exceptions such as
when facts of weight and substance with direct and material
bearing on the final outcome of the case have been overlooked,
misapprehended or misapplied.
Same; Same; Same; Same; Elements in the Prosecution of
Cases of Illegal Sale of Dangerous Drugs.It is well-settled that in
prosecution of cases of illegal sale of dangerous drugs, the
following elements must be duly established: (1) proof that the
transaction or sale took place; and (2) the presentation in court of
the corpus delicti or the illicit drug as evidence. Proof of thecorpus
delicti in a buy-bust situation requires not only the actual
existence of the transacted drugs but also the certainty that the
drugs examined and presented in court were the very ones seized.
This is a condition sine qua non for conviction since drugs are the
main subject of the illegal sale constituting the crime and their
existence and identification must be proven for the crime to exist.
Same; Same; Same; Same; Section 21 of Republic Act No. 9165
prescribes the procedure on the custody and disposition of
confiscated, seized, and/or surrendered dangerous drugs; Strict
compliance with the prescribed procedure is necessary.Section 21
of the Implementing Rules of R.A. No. 9165 prescribes the
procedure on the custody and disposition of confiscated, seized,
226
and/or surrendered dangerous drugs, given the severity of the

penalties imposed for violations of said law, x x x Strict compliance
with the prescribed
_______________
* SECOND DIVISION.
124
24
People vs. Nandi
procedure is necessary because of the illegal drugs unique
characteristic rendering it indistinct, not readily identifiable, and
easily open to tampering, alteration or substitution either by
accident or otherwise.
Same; Same; Same; Same; To erase all doubts as to the
identity of the seized drugs, the prosecution should establish its
movement from the accused, to the police, to the forensic chemist,
and finally to the court.The prosecution failed to prove beyond
reasonable doubt that the subject substance was the very same
object taken from the accused. To erase all doubts as to the
identity of the seized drugs, the prosecution should establish its
movement from the accused, to the police, to the forensic chemist,
and finally to the court. In Mallillin v. People, 553 SCRA 619
(2008), the Court had the occasion to explain the chain of custody
rule and what constitutes sufficient compliance with this rule.
Same; Same; Same; Same; Links that should be established in
the chain of custody of the confiscated item.The following links
should be established in the chain of custody of the confiscated
item: first, the seizure and marking, if practicable, of the illegal
drug recovered from the accused by the apprehending
officer;second, the turnover of the illegal drug seized by the
apprehending officer to the investigating officer; third, the
turnover by the investigating officer of the illegal drug to the
forensic chemist for laboratory examination; and fourth, the

turnover and submission of the marked illegal drug seized from
the forensic chemist to the court.
Same; Same; Same; Same; Prosecution simply failed to
establish all the elements of the crime with moral certainly.It
could be that the accused had indeed transacted with the police in
a deal involving illegal drugs. But in view of the frailty of the
prosecution evidence and the severity of the imposed penalty, the
Court resolves the doubt in favor of the accused. The prosecution
simply failed to establish all the elements of the crime with moral
certainty.

Office of the Solicitor General for plaintiff-appellee.
Public Attorneys Office for accused-appellant.
125
VOL. 625, JULY 13, 2010

People vs. Nandi
125
MENDOZA, J.:
This is an appeal from the October 23, 2008 Decision1 of
the Court of Appeals (CA), which affirmed in toto the August
2, 2007 Decision2 of the Regional Trial Court (RTC), Branch
103, Quezon City, finding accused Rose Nandi guilty beyond
reasonable doubt of having committed the crime of Violation
of Section 5, Article II of Republic Act (R.A.) No. 9165,
otherwise known as the Comprehensive Drugs Act of 2002,
and sentencing her to suffer the penalty of life imprisonment.
Accused Rose Nandi was arrested in a buy-bust operation
and was eventually indicted in an Information dated July 10,
2003, the accusatory portion of which reads:
That on or about the 9th day of July 2003 in Quezon City,
Philippines, the said accused, not being authorized by law to sell,
dispense, deliver, transport, or distribute any dangerous drug, did
227
then and there, willfully, and unlawfully sell, dispense, deliver,

transport, distribute or act as broker in the said transaction, zero
point zero three (0.03) gram of methylamphetamine hydrochloride,
a dangerous drug.
CONTRARY TO LAW.
During the trial, the prosecution presented its evidence

which basically hinged on the testimony of the poseur-buyer
and documentary exhibits pertaining to the buy-bust
operation.
It appears from the prosecution evidence that on July 9,
2003, at around 7:00 oclock in the evening, Chief of Police
Colonel Ratuita of Police Station 3, Talipapa, Quezon City,
received an information that someone was selling shabualong
Tandang Sora Avenue. Col. Ratuita immediately formed a
buy-bust operation team composed of SPO4 Brigido Ann, its
_______________
1 CA Decision, Rollo, pp. 2-14 (penned by Associate Justice GuevaraSalonga with Associate Justice Magdangal M. De Leon and Associate Justice
Ramon R. Garcia, concurring).
2 RTC Decision, Records, pp. 50-55.
126
126

People vs. Nandi
team leader, and members, PO1 Cecil Collado (PO1 Collado),

PO1 Mendi, and PO1 Virgilio Bernardo. PO1 Collado,
designated as the poseur-buyer, prepared the Five Hundred
Pesos (P500.00) marked money with his initials CCC on the
face of the bill. SPO4 Brigido Ann, in the meantime,
prepared a pre-operations report and recorded the formation
of the buy-bust team in the dispatch book, including the
important details of the buy-bust operation.
At around 11:00 oclock in the evening, the team, together

with the informant, proceeded to Tandang Sora Avenue,
Quezon City and positioned themselves around Culiat High
School where the alleged shabu sale was to take place. The
informant first talked with the accused and later called and
introduced PO1 Collado as the buyer. The accused asked how
much PO1 Collado was buying and the latter replied that he
wanted Two Hundred Pesos (P200.00) worth of shabu. PO1
Collado handed over the marked money to the accused, and,
in return, the latter gave a small transparent plastic sachet.
After examining the contents thereof, PO1 Collado scratched
his head. As this was the pre-arranged signal, the other
team members rushed towards them and apprehended the
accused. PO1 Collado told her that she was being arrested
for selling drugs, frisked her, recovered from her the marked
money, and then informed her of her rights.
The accused was immediately taken to Police Station 3 in
Talipapa, Quezon City, where an inquest paper was prepared
and the recovered items, handed over to the investigator. The
documents and the recovered specimen were then taken to
the crime laboratory, where Forensic Chemist Bernardino M.
Banac, Jr., conducted a three-step examination consisting of
a physical test, a chemical test and the confirmatory test on
the sample from the sachet attached to the letter-request.
The sample tested positive for shabu, and this finding was
contained in Chemistry Report No. D-604-03. Forensic
Chemist Banac, Jr. also placed the marking D-604-03/BMB
on the plastic sachet, on the brown envelope and on the
masking tape that sealed the plastic sachet.127
VOL. 625, JULY 13, 2010

People vs. Nandi
127
The accused, on the other hand, vehemently denied that

she sold shabu and that she was arrested in a buy-bust
operation. She recounted that on July 9, 2003, at about 7:00
oclock in the evening, she was in the Muslim Compound
228
of Barangay Culiat, Tandang Sora, Quezon City. She simply

went there to submit her pictures to her cousin, a certain
Kenex Bagundan, for a possible job application abroad. She
said that she used to work as a domestic helper in Saudi
Arabia and in the United Arab Emirates.
According to her, after leaving the house of her cousin and
while waiting for a ride home, a man dragged her to a parked
vehicle. Inside the vehicle, there were several police officers
who told her not to shout and not to make any noise. Fearing
for her life, she did what she was told. She further asserted
that they first drove to different places before she was finally
taken to the police station. Upon arriving at the station, she
was frisked by a police officer and her personal things like
cellular phone, pieces of jewelry and money were confiscated.
Furthermore, her requests for a female police officer had
been refused and police officers asked her to give the amount
of One Hundred Thousand Pesos (P100,000.00) for her
release. Since she was not able to call her relatives, she told
them that she did not have any money. She also insisted
that it was not PO1 Collado who arrested her as he merely
accompanied her during the inquest. She also claimed that it
was only during the inquest that she first saw the plastic
sachet allegedly seized from her.
On August 2, 2007, the trial court rendered judgment
finding the accused guilty as charged and imposed upon the
accused the penalty of life imprisonment. The dispositive
portion of the RTC decision3 reads:
ACCORDINGLY, judgment is rendered finding the accused
ROSE NANDI Y SALI, GUILTY, beyond reasonable doubt of
violation of Section 5 of RA 9165 (for selling shabu) as charged and
she is
128
128

People vs. Nandi
hereby sentenced to suffer a jail term of LIFE IMPRISONMENT

and to pay a fine of P500,000.00.
The shabu in this case weighing 0.03 gram is ordered
transmitted to PDEA thru DDB for disposal as per RA 9165.
SO ORDERED.
On October 23, 2008, the RTC decision was affirmed in

toto by the Court of Appeals. In sustaining it, the appellate
court stated that the prosecution was able to establish all the
elements of the crime of illegal possession of a dangerous
drug which are: 1] the offender was in possession of an item
or an object identified to be a prohibited or regulated drug; 2]
such possession is not authorized by law; and 3] the accused
was freely and consciously aware of being in possession of the
drug.
The RTC was of the view that the testimony of the
prosecution witnesses evinced a more logical and acceptable
series or flow of events culminating in the commission of the
offense. The accused committed the offense charged as she
was caught red-handed sellingshabu, an illicit drug, in a buybust operation. The appellate court believed that the arrest
of the accused was lawful and beyond reproach, and the
confiscation of the illicit drugs and the marked money from
her possession was not tainted with any irregularity.
Aggrieved, the accused questioned the affirmation of her
conviction before this Court raising the following arguments:
Issue
_______________
3 Records, pp. 50-55.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN

AFFIRMING THE ACCUSED-APPELLANTS CONVICTION
229
BEYOND REASONABLE DOUBT OF THE CRIME

VIOLATION OF SECTION 5, ARTICLE II, R.A. NO. 9165.
OF
The accused maintains that the prosecution failed to

establish beyond reasonable doubt the essential elements of
the offense with which she was charged. Primarily, the
Information filed against her stated that the shabu had a
weight of
129
VOL. 625, JULY 13, 2010

People vs. Nandi
129
0.03 gram.4 In contrast, Forensic Chemist Bernardino M.

Banac, Jr., reported that it weighed 0.23 gram.
Secondly, although the P500.00 peso bill used as buy-bust
money was photocopied and marked, it was done long after
the supposed operation. There is, therefore, no certainty that
it was the same bill used during the operation.
Thirdly, the apprehending team failed to comply with
Section 21 of the Implementing Rules of Republic Act (R.A.)
No. 9165 when it did not immediately conduct a physical
inventory of the seized items and did not photograph the
same in her presence or in the presence of her representative
or counsel, a representative from media and the Department
of Justice (DOJ), or an elected public official. Such failure
casts doubt on the identity of the article seized as there was
no assurance that it was the very same one submitted to the
forensic chemist and found to be positive for shabu.
Moreover, PO1 Collado himself admitted that he was not
present when the subject item was transferred to the crime
laboratory. Hence, a break in the chain of custody of the
seized object seems apparent.
In addition, there were numerous inconsistencies in the
testimony of PO1 Collado, the poseur-buyer.
The Courts Ruling
The general rule is that passing judgment upon the

credibility of witnesses is best left to the trial courts since the
latter are in a better position to decide the question, having
heard and observed the witnesses themselves during the
trial. This rule, however, admits of exceptions such as when
facts of weight and substance with direct and material
bearing on the final outcome of the case have been
overlooked, misapprehended or misapplied.5
_______________
4 CA Records, p. 8.
5 People v. Zaida Kamad, G.R. No. 174198, January 19, 2010, 610 SCRA
295.
130
130

People vs. Nandi
In the case at bench, the Court finds that certain facts of

substance have been overlooked, which if only addressed and
appreciated, would have altered the outcome of the case
against the accused. Accordingly, a departure from the
general rule is warranted.
It is well-settled that in prosecution of cases of illegal sale
of dangerous drugs, the following elements must be duly
established: (1) proof that the transaction or sale took place;
and (2) the presentation in court of the corpus delictior the
illicit drug as evidence. Proof of the corpus delicti in a buybust situation requires not only the actual existence of the
transacted drugs but also the certainty that the drugs
examined and presented in court were the very ones seized.
This is a condition sine qua non for conviction since drugs are
the main subject of the illegal sale constituting the crime and
their existence and identification must be proven for the
crime to exist.6
230
The Court has scrutinized the evidence on record but

found it wanting with respect to the identification of the
seized drug itself. Nebulous can only be the description of the
evidence on how the contraband was handled before and
after the alleged seizure.
Section 21 of the Implementing Rules of R.A. No. 9165
prescribes the procedure on the custody and disposition of
confiscated, seized, and/or surrendered dangerous drugs,
given the severity of the penalties imposed for violations of
said law, viz.:
Sec. 21. Custody and Disposition of Confiscated, Seized
and/or Surrendered Dangerous Drugs, Plant Sources of Dangerous
Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment.The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as
_______________
6 Id.
131
VOL. 625, JULY 13, 2010

People vs. Nandi
131
well as instruments/paraphernalia and/or laboratory so

confiscated, seized and/or surrendered, for disposition in the
following manner:
(a) The apprehending officer/team having initial custody and
control of the drugs shall, immediately after seizure and
confiscation, physically inventory and photograph the same in the
presence of the accused or the person/s from whom such items
counsel, a representative from media and the Department of
to sign the copies of the inventory and be given copy

thereof. Provided, that the physical inventory and the photograph
shall be conducted at the place where the search warrant is served;
or at least the nearest police station or at the nearest office of the
apprehending officer/team, whichever is practicable, in case of
warrantless seizures; Provided, further, that non-compliance with
these requirements under justifiable grounds, as long as the
integrity and evidentiary value of the seized items are properly
preserved by the apprehending team/officer, shall not render void
and invalid such seizures of and custody over said items.
x x x x
Strict compliance with the prescribed procedure is

necessary because of the illegal drugs unique characteristic
rendering it indistinct, not readily identifiable, and easily
open to tampering, alteration or substitution either by
accident or otherwise.7
A closer look at the records of the case reveals that the
prosecution failed to show that there was compliance with
the inventory requirements of R.A. No. 9165. When the
poseur-buyer, PO1 Cecil Collado, took the witness stand, he
failed to describe with particulars how the seized shabuwas
handled and marked after its confiscation. He merely stated
the following on direct examination, to wit:
Q:
A:
After you arrested the accused Rose Nandi, what happened next?
We brought her to our station.
_______________
7 People v. Robles, G.R. No. 177220, April 24, 2009, 586 SCRA 647.
132
132

People vs. Nandi
Q:
How about the item, where was it when you proceeded to the station?
A:
I gave it to the investigator.
231
Q:
Before you gave that, what did you do to that item?
A:
I put my marking CCC.
On cross-examination, PO1 Collado simply replied:

Q:
You testified that the item you confiscated from the accused was
turned over to the investigator, did you happen to know what is that
item?
A:
133
I gave it to the investigator and the document the specimen were

given to the crime lab.9
Moreover, the prosecution failed to prove beyond

reasonable doubt that the subject substance was the very
same object taken from the accused. To erase all doubts as to
the identity of the seized drugs, the prosecution should
establish its movement from the accused, to the police, to the
forensic chemist, and finally to the court.10 In Mallillin v.
People,11 the Court had the occasion to explain the chain of
custody rule and what constitutes sufficient compliance with
this rule:
As a method of authenticating evidence, the chain of custody
rule requires that the admission of an exhibit be preceded by
evidence sufficient to support a finding that the matter in question
is what the proponent claims it to be. It would include testimony
about every link in the chain, from the moment the item was
picked up to the time it is offered into evidence, in such a way that
every person who touched the exhibit would describe how and from
whom it was received, where it was and what happened to it while
in the witnesses possession, the condition in which it was received
and the condition in which it was delivered to the next link in the
chain.
_______________
8 TSN, November 4, 2003, p. 18.
9 Id., at p. 20.
10 People v. Almorfe, G.R. No. 181831, March 29, 2010, 617 SCRA 52.
VOL. 625, JULY 13, 2010

People vs. Nandi
133
These witnesses would then describe the precautions taken to

ensure that there had been no change in the condition of the item
and no opportunity for someone not in the chain to have possession
of the same. [Emphasis supplied]
Thus, the following links should be established in the

chain of custody of the confiscated item: first, the seizure and
marking, if practicable, of the illegal drug recovered from the
accused by the apprehending officer; second, the turnover of
the illegal drug seized by the apprehending officer to the
investigating officer; third, the turnover by the investigating
officer of the illegal drug to the forensic chemist for
laboratory examination; and fourth, the turnover and
submission of the marked illegal drug seized from the
forensic chemist to the court.12
After a closer look, the Court finds that the linkages in the
chain of custody of the subject item were not clearly
established. As can be gleaned from his forequoted
testimony, PO1 Collado failed to provide informative details
on how the subject shabu was handled immediately after the
seizure. He just claimed that the item was handed to him by
the accused in the course of the transaction and, thereafter,
he handed it to the investigator.
There is no evidence either on how the item was stored,
preserved, labeled, and recorded. PO1 Collado could not even
provide the court with the name of the investigator. He
admitted that he was not present when it was delivered to
the crime laboratory.13 It was Forensic Chemist Bernardino
M. Banac, Jr. who identified the person who delivered the
specimen to the crime laboratory. He disclosed that he
received the specimen from one PO1 Cuadra, who was not
11 G.R. No. 172953, April 30, 2008, 553 SCRA 619, 633.
232
even a member of the buy-bust team. Per their record, PO1

Cuadra delivered the letter-request with the attached seized
item to the CPD
_______________
12 People v. Zaida Kamad, supra note 4.
13 TSN, November 4, 2003, pp. 66-68.
134
134

People vs. Nandi
Crime Laboratory Office where a certain PO2 Semacio

recorded it and turned it over to the Chemistry Section.14
In view of the foregoing, the Court is of the considered
view that chain of custody of the illicit drug seized was
compromised. Hence, the presumption of regularity in the
performance of duties cannot be applied in this case.
Given the flagrant procedural lapses the police committed in
handling the seized shabu and the obvious evidentiary gaps in the
chain of its custody, a presumption of regularity in the
performance of duties cannot be made in this case. A presumption
of regularity in the performance of official duty is made in the
context of an existing rule of law or statute authorizing the
performance of an act or duty or prescribing a procedure in the
performance thereof. The presumption applies when nothing in the
record suggests that the law enforcers deviated from the standard
conduct of official duty required by law; where the official act is
irregular on its face, the presumption cannot arise. In light
of the flagrant lapses we noted, the lower courts were obviously
wrong when they relied on the presumption of regularity in the
performance of official duty.15 [Emphasis supplied]
With the chain of custody in serious question, the Court

cannot gloss over the argument of the accused regarding the
weight of the seized drug. The standard procedure is that
after the confiscation of the dangerous substance, it is

brought to the crime laboratory for a series of tests. The
result thereof becomes one of the bases of the charge to be
filed.
The documentary evidence on record, specifically
Chemistry Report No. D-604-0316 as attested by Forensic
Chemist Bernardino M. Banac, Jr., shows that the substance
brought to their office for examination was tested to
be methylamphetamine
hydrochloride and
weighed 0.23 gram.17 The corre_______________
14 TSN, October 20, 2003, pp. 25-26.
15 People v. Zaida Kamad, supra note 4.
16 TSN, October 20, 2003, p. 20.
17 Records, Exhibit D, p. 6.
135
VOL. 625, JULY 13, 2010

People vs. Nandi
135
sponding Information, however, alleges that the substance

only weighed 0.03 gram. When PO1 Collado was confronted
with this discrepancy, he merely deduced this as an error
committed at the forensic laboratory.18 Considering the grave
doubt already cast upon the linkages in the chain of custody,
this explanation is simply unacceptable. Besides, he was not
competent to testify on the discrepancy. He neither
formulated the Information nor prepared the Chemistry
Report.
Going over the records, the Court notes that the accused
has consistently raised this argument from the onset of the
case, but the trial court and the Court of Appeals failed to
address it. It is rather unfortunate that the issue was simply
disregarded.
233
It could be that the accused had indeed transacted with

the police in a deal involving illegal drugs. But in view of the
frailty of the prosecution evidence and the severity of the
imposed penalty, the Court resolves the doubt in favor of the
accused. The prosecution simply failed to establish all the
elements of the crime with moral certainty.
WHEREFORE, the October 23, 2008 Decision of the Court
of Appeals in CA-G.R. CR-H.C. No. 02938, is hereby
REVERSED and SET ASIDE and another judgment entered
ACQUITTING the accused.
The accused is hereby ordered immediately RELEASED
from detention, unless she is being confined for any other
lawful cause.
SO ORDERED.
Carpio
(Chairperson),
Abad,
Villarama,
Jr.**
***
andPerez, JJ., concur.
_______________
18 TSN, November 4, 2003, p. 70.
** Designated as additional member in lieu of Justice Diosdado M.
Peralta, per Special Order No. 858 dated July 1, 2010.
*** Designated as additional member in lieu of Justice Antonio Eduardo
B. Nachura, per Special Order No. 863 dated July 5, 2010.
G.R. No. 173780. March 21, 2011.*

METROPOLITAN BANK AND TRUST COMPANY,
petitioner, vs. MARINA B. CUSTODIO, respondent.
Appeals; Pleadings, Practice and Procedure; Unless the party
availing of the remedy clearly demonstrates at the first opportunity
that the appeal falls under any of the established exceptions, a Rule
45 petition that raises pure questions of fact shall be subject to
dismissal by the Court.In a petition for review on certiorarifiled
under Rule 45, the issues that can be raised are limited only to
questions of law. Questions of fact are not reviewable in a Rule 45
petition. Nonetheless, this rule permits of exceptions, which the
Court has long since recognized. Unless the party availing of the
remedy clearly demonstrates at the first opportunity that the
appeal falls under any of the established exceptions, a Rule 45
petition that raises pure questions of fact shall be subject to
dismissal by the Court, since it is principally not a trier of facts.
Although the emerging trend in the Courts rulings is to afford all
party-litigants the amplest opportunity for the proper and just
determination of their cause, this is not a license for erring
litigants to violate the rules with impunity.
Same; The difference in appreciation by the trial court and the
appellate court of the evidence with respect to the circumstances
surrounding the cash shortage is prima facie justification for the
Supreme Court to review the facts and the records of the case.The
difference in appreciation by the trial court and the appellate court
of the evidence with respect to the circumstances surrounding the
cash shortage is prima facie justification for the Court to review
the facts and the records of the case. While 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, this Court has the authority to review and, in
proper cases, reverse the factual findings of lower courts when the
findings of fact of the trial court are in conflict with those of the
appellate court.
234
_______________
* THIRD DIVISION.
697
VOL. 645, MARCH 21, 2011
69
7
Metropolitan Bank and Trust Company vs. Custodio

Same; Pleadings, Practice and Procedure; Courts will not
entertain and act on petitions that have yet to be properly filed, even
if a copy has been served on the other party.In her Comment,
respondent Custodio likewise assails the separate Petition she
received from Atty. Cachapero, the former counsel of petitioner
Metrobank. She claims that the separate Petition should not be
entertained by the Court, since there is no proof of payment of the
docket fees or proof of service. Moreover, the Petition coming from
Atty. Cachapero should preclude the instant Petition filed by the
banks new counsel, Sediego & Associates. Aside from the fact that
this issue is not raised in respondents Memorandum, nothing in
the record shows that the separate Petition signed by Atty.
Cachapero was ever filed and docketed with the Court. Courts will
not entertain and act on petitions that have yet to be properly
filed, even if a copy has been served on the other party. Moreover,
the separate Petition that came into the hands of respondent has
no bearing on this case, since Atty. Cachapero has already
withdrawn as counsel for petitioner Metrobank. Therefore, the
Court will only confine itself to the instant Petition, which was
duly filed by the banks new counsel and submitted within the
extended reglamentary period, after docket fees were paid and the
Court had given due course to it.
Evidence; Words and Phrases; The concept of preponderance of
evidence refers to evidence that is of greater weight or more
convincing, than that which is offered in opposition to itat
bottom, it means probability of truth.In civil cases such as in the
instant action for a sum of money, petitioner Metrobank carries

the burden of proof and must establish its cause of action by a
preponderance of evidence. The concept of preponderance of
evidence refers to evidence that is of greater weight or more
convincing, than that which is offered in opposition to it; at bottom,
it means probability of truth. The Court sustains the appellate
courts finding that petitioner Metrobank failed to discharge its
burden of proving that respondent Custodio was responsible for
the cash shortage. Petitioner Metrobanks evidence on record does
not sufficiently establish that respondent Custodio took the funds
that were entrusted to her as a bank teller.
Banks and Banking; Negligence; The exacting standard of
diligence from the banking business pertains to the relationship
between a bank and a depositor, and not between a bank and its
employees.The Court of Appeals underscored the highest degree
of diligence
699
VOL. 645, MARCH 21, 2011
69
9

from the banking business, considering that it is impressed
with public interest and of paramount importance. However, as
petitioner Metrobank pointed out, the exacting standard of
diligence required by the appellate court pertains to the
relationship between a bank and a depositor, and not between a
bank and its employees. In this case, no depositors were affected,
as the transactions during that day were accounted for, and no
error was found in the recording thereof. The relevant standard of
diligence that we need to examine here is that of a bank teller who
was entrusted monies by the bank and who may have failed to
account for them. In this case, petitioner Metrobank was unable to
prove that respondent Custodio failed to exercise the necessary
degree of diligence that would justify the banks action for
damages. Respondent Custodio was not remiss in her duties as all
235
her dealings with the banks money were clearly reflected on the
records of the bank.
Same; Same; If theft of the money cannot be established, and
negligence is the only legal phenomenon that is evident on the
records, then the proximate cause of the loss of the banks cash is
the cash custodian who disregarded established procedures and
blindly signed the tellers cash transfer slips without counting the
money turned over to her.If petitioner bank had to attribute any
negligence on the part of its employees, then it should have set its
sights on the acts and/or omissions of Ms. Marinel Castro, the cash
Custodian, and Mr. Hanibal Jara, the security guard. If theft of
the money cannot be established, and negligence is the only legal
phenomenon that is evident on the records, then the proximate
cause of the loss of the banks PhP600,000 is Ms. Castro, who, as
cash custodian, disregarded established procedures and blindly
signed the tellers cash transfer slips without counting the money
turned over to her. Meanwhile, Mr. Jara failed to inspect
respondent Custodios belongings as she left the bank on that day
for lunch. Despite his own suspicions of respondent tellers
conduct, he ignored them and decided not to check the bags. This
omission can conceivably be considered as a grave omission of his
duties as a security guard.
Evidence; Witnesses; A fact elicited from a witness during
testimony cannot be considered in the disposition of the case if it
has been ordered stricken out, unless it is established by any other
evidence on record.During one of the hearings, Mr. Lucas, the
branch manager, explained that it was unusual for respondent
Custodio to
700
00
have requested a cash transfer, considering that she had
sufficient funds to cover the amount. However, as the appellate
court explained, the trial court should not have considered his
testimony in this respect, since the judge had ordered that
particular statement stricken out during the trial court
proceedings. A fact elicited from a witness during testimony cannot
be considered in the disposition of the case if it has been ordered
stricken out, unless it is established by any other evidence on
record.
Same; While the general evidentiary rule is that evidence that
one did or did not do a certain thing at one time is not admissible
to prove that one did or did not do the same or a similar thing at
another time, evidence of similar acts may be received to prove a
specific intent or knowledge, identity, plan system, scheme, habit,
custom or usage and the like.The general evidentiary rule is that
evidence that one did or did not do a certain thing at one time is
not admissible to prove that one did or did not do the same or a
similar thing at another time. However, evidence of similar acts
may be received to prove a specific intent or knowledge, identity,
plan system, scheme, habit, custom or usage and the like.
In Citibank N.A. (Formerly First National City Bank) v.
Sabeniano, 504 SCRA 378 (2006), the Court explained the
rationale for this rule: The rule is founded upon reason, public
policy, justice and judicial convenience. The fact that a person has
committed the same or similar acts at some prior time affords, as a
general rule, no logical guaranty that he committed the act in
question. This is so because, subjectively, a mans mind and even
his modes of life may change; and, objectively, the conditions under
which he may find himself at a given time may likewise change
and thus induce him to act in a different way. Besides, if evidence
of similar acts are to be invariably admitted, they will give rise to a
multiplicity of collateral issues and will subject the defendant to
surprise as well as confuse the court and prolong the trial.
Evidence of similar acts may frequently become relevant,
especially to actions based on fraud and deceit, because it sheds
light on the state of mind or knowledge of a person; it provides
236
insight into such persons motive or intent; it uncovers a scheme,

design or plan, or it reveals a mistake.

of Appeals.
2 Exhibit A-4, id., at p. 262.

3 RTC Pre-Trial Order dated 12 September 1995, id., at p. 60.
4 On 13 June 1995, respondent Custodio received fifty-four thousand nine
hundred twenty-nine and 19/100 Pesos (PhP54,929.19) as her picos from the
cash custodian. (Exhibit B-1, [id., at p. 268]; RTC Decision at pp. 6-7
[Rollo at pp. 94-95]).
5 TSN, II December 1995, at pp. 8-10; Exhibit B-1, RTC records at p.
701
VOL. 645, MARCH 21, 2011

701
SERENO, J.:
This civil case is essentially a demand by a bank for the
recovery of a sum of money from one of its tellers who
allegedly failed to account for funds entrusted to her,
amounting to six hundred thousand pesos (PhP600,000).
Petitioner Metropolitan Bank and Trust Company
(Metrobank) is a banking corporation. On the other hand,
respondent Marina Custodio is a bank teller employed at the
Laoag City branch of petitioner Metrobank.1
On 13 June 1995 at 8:18 a.m.,2 respondent Custodio
reported for work in petitioner banks branch in Laoag
City.3 At the start of the banking day, respondent Custodio
received loose money (picos)4 for the days business and was
assigned as Teller No. 3.5 In the course of performing her
duties, respondent Custodio handled several cash
transactions with the customers on behalf of petitioner bank.6
At 12:10 p.m., a cash transfer of two hundred thousand
pesos (PhP200,000) was made from Teller No. 1 to
respondent Custodio.7 Petitioner Metrobank explained that,
usually, a transfer of money from one teller to another occurs
if the latter needs money, maybe to pay for the
withdrawal.8 How_______________
1 RTC Pre-Trial Order dated 12 September 1995, RTC records at p. 60.
268.
6 RTC Pre-Trial Order dated 12 September 1995 (id., at p. 60); Exhibit
B-1 (id., at p. 268).
7 Exhibit B-2, id., at p. 270.
8 RTC Decision at 6; Rollo at p. 94.
702
702

ever, petitioner bank pointed out that it was unnecessary for

respondent Custodio to borrow from another teller at that
time, since respondent had sufficient cash on hand to cover a
withdrawal in the same amount as the cash transfer.9
At 12:25 p.m., respondent Custodio was reported to have
taken her lunch break alone and returned to work thereafter
at 1:12 p.m.10
The security guard for the Laoag City branch of petitioner
Metrobank, Mr. Hannibal Jara, testified that respondent
Custodio would ordinarily go out for lunch at noon with
another teller, Ms. Mary Paula Castro.11However, he
explained that the two employees did not go out for lunch
together that day, since another teller was on leave.12 Mr.
Jara also noticed that when respondent Custodio went out
for lunch, she was carrying a shoulder bag and a paper
bag.13 He, however, did not check the contents of the bags
carried by respondent.14
At the close of banking hours, respondent Custodio
balanced her transactions for the day and turned over the
237
funds to the banks cash custodian, Ms. Marinel Castro, in

the amount of two million one hundred thirteen thousand
five hundred pesos (PhP2,113,500).15 Ms. Marinel Castro
acknowl_______________
9 At the time of the cash transfer, respondent Custodio had cash on hand
Thereafter, Mr. Lucas instructed all bank employees to

check all desks, drawers and even personal bags.22 The
guards were likewise instructed to search anybody going out
of the office from that time on.23 However, the missing money
was not found.24 Thus, the amount CASH IN VAULT was
reported to be short of PhP600,000.25
_______________
amounting to one million one hundred thirty-nine thousand eight hundred

seventy-four and 32/100 pesos (PhP1,139,874.32). (RTC Decision at pp. 6-7
bundles of five-hundred-peso bills amounting to PhP1,100,00. (Exhibit B-1,
[Rollo at pp. 94-95]; Exhibit B-3 [RTC records at p. 270]; TSN, 11 December
RTC records at p. 271)
1995, at p. 15)
10 Exhibits A-5 and A-6, RTC records at p. 262.
16 RTC Decision at pp. 14-15; Rollo at pp. 102-103.
11 TSN, 02 June 1998, at pp. 64-67; RTC Decision at p. 8 {Rollo at p. 96).
17 On that day, there were four tellers who turned over cash to Castro: (1)
12 TSN, 02 June 1998, at p. 66.
Virginia Asanon; (2) Eliza Piedad; (3) respondent Custodio; and (4) Mary
13 TSN, 03 August 1998, at pp. 83-84; RTC Decision at p. 14 (Rollo at p.
Paula Castro. (RTC Decision at p. 9, Rollo at p. 97)

18 The shortage is broken down as follows: (a) PhP200,000, consisting of
102).
14 Id.
one thousand peso bills; and (b) PhP400,000, consisting of five-hundred-peso
15 Part of the funds transferred by respondent Custodio are bundles of
bills. (RTC Decision at 13 [Rollo at p. 101]; TSN, 11 December 1995, at p. 7).

19 RTC Decision dated 25 July 2003, at p. 13 (Rollo at p. 101); TSN, 11
one-thousand-peso bills amounting to PhP400,000 and
December 1995, at pp. 7-8.

703
20 Id.
VOL. 645, MARCH 21, 2011

703
edged receipt of the bundled cash turned over and signed a

Cash Transfer Slip.16
At around 5:05 p.m., after all tellers had turned over their
cash on hand,17 Ms. Castro discovered that there was a
shortage amounting to PhP600,000.18 She notified Mr.
Adriano Lucas, the branch manager, of the missing
money.19 The latter then instructed the cashier and the
accountant to review all cash transactions to find out the
reason for the cash shortage.20 However, no errors were found
in the records of the transactions, and the shortage was
confirmed.21
21 Id.
22 RTC Decision at p. 13; Rollo at p. 101.
23 RTC Decision at 10 (id., at p. 98); TSN, 11 December 1995, at p. 8.
24 RTC Decision at 13; id., at p. 101.
25 Brief for the Appellant, at 7 (id., at p. 116); TSN, 28 February 2000, at
pp. 97-98.
704
704

Respondent Custodio left work that day, together with

some of the employees, at 8:30 p.m.26
Later on, petitioner Metrobank alleged that it was able to
recover eight bill wrappers only for bundles of five238
hundred-peso bills (without the bills thereunder) that

purportedly corresponded to the missing four hundred
thousand pesos (PhP400,000).27 These bill wrappers bore a
rubber stamp PEPT-3 for Teller No. 3.28 Respondent
Custodio countered that the discovery of the bill wrappers
being attributed to her care was never mentioned at the time
the cash shortage occurred, and that these wrappers could
have been obtained subsequently by stamping unmarked
ones.29
Respondent Custodio was allowed to continue to render
services as a teller in petitioner banks Laoag City branch
from 14 June 1995 to 23 June 199530 She argued that had she
been found responsible for the cash shortage, then she would
not have been allowed to continue working as a teller on
subsequent days.31
On 15 June 1995, investigators from the regional office of
petitioner Metrobank as well as from its Department of
Internal Affairs, Head Office, arrived at the Laoag City
branch to investigate the cash shortage.32 On a one-on-one
basis, the investigators confronted the employees, including
respondent Custodio.33 After these meetings, Ms. Castro, the
cash custodian, allegedly admitted that she received and
acknowledged
_______________
26 Exhibit A-7; RTC records at p. 262.
27 Exhibits G to G-8; id., at p. 276.
28 Exhibits G to G-8; id., at p. 276.
29 Brief for the Appellant, at pp. 13-14; Rollo at pp. 122-123.
VOL. 645, MARCH 21, 2011

the cash bundles and signed the Cash Transfer Slip for the
funds turned over by respondent Custodio.34
On 16 June 1995, employees of the Laoag City branch of
petitioner Metrobankincluding the new accounts clerk, the
remittance clerk and all the other tellerswere made to take
polygraph tests at the National Bureau of Investigation,
except for respondent Custodio.35Respondent was eight
months pregnant at that time and, thus, was not required to
take the lie detector test.36
On 22 June 1995, petitioner Metrobank filed a Complaint
for a sum of money with ex-parte application for a writ of
preliminary attachment, praying that respondent Custodio
pay the amount of PhP600,000, including attorneys fees and
costs of suit.37 The trial court subsequently granted the
application for a writ of preliminary attachment against the
properties of respondent Custodio.38
On 23 June 1995 at around 1:30 p.m., while respondent
Custodio was performing her duties as a teller, she was
served the trial courts summons39 and a copy of petitioner
Metrobanks Complaint, including the attachment writ.40
After she was served the summons, respondent Custodio
was supposedly caught bringing out a tellers copy of the
journal print transactions with the related cash transfer slips
for that particular banking day (23 June 1995).41These bank
records were confiscated from respondent Custodio, when
_______________
30 TSN, 27 September 2002, at pp. 129-130; TSN, 09 July 1996, at p. 34.
34 TSN, 22 August 2002, at p. 114.
31 TSN, 27 September 2002 at pp. 129-130.
35 Answer, RTC records at p. 13.
32 RTC Pre-Trial Order dated 12 September 1995, RTC records at p. 60.
36 CA Decision at 2; Rollo at p. 46.
33 Answer, id., at p. 13.
37 RTC records at pp. 1-6.
705
705
38 RTC Order dated 23 June 1995; id., at p. 17.

39 Id., at p. 9.
239
40 RTC records at p. 10.

41 RTC Decision at pp. 7-8; Rollo at pp. 95-96.
706
706

they were discovered in her dress pocket during a body

search done on all employees leaving the office.42
Respondent teller later explained that she had mistakenly
brought out these records because she was no longer allowed
to go inside the tellers cage to file the transaction journal,
after she was served the summons and Complaint.43 She
claimed that, at that time, she was confused by the banks
Complaint filed against her, so she placed the transaction
journal in her right pocket.44 It was admitted by the bank
manager, however, that no cash shortage occurred on that
day.45
Thereafter, respondent Custodio was relegated to a nonaccountable position.46
Because of her alleged attempt to take the journal print
transactions, Mr. Lucas, the branch manager, recommended
that
respondent
Custodio
be
preventively
suspended.47 Thereafter, respondent received an Inter-Office
Letter48 requiring her to explain why no disciplinary action
should be meted out to her for her attempt to surreptiously
bring out bank records.49 After respondent teller filed her
explanation, petitioner Metrobank found it unacceptable and
suspended her from work for seven days without pay.50
_______________
42 Id.
46 Respondent Custodys Formal Offer of Evidence at pp. 2-3, RTC

records at pp. 303-304; TSN, 12 December 1996, at p. 43.
47 Exhibit 3 (RTC records at p. 88); RTC Decision at p. 8 (Rollo at p. 96).
48 Exhibit C (RTC records at p. 272); id.
49 Pre-Trial Order at p. 1, RTC records at p. 60.
50 Exhibit D (RTC records at p. 273); RTC Decision at p. 8 (Rollo at p.
96).
707
VOL. 645, MARCH 21, 2011

707
On 27 June 1995, respondent Custodio requested from

petitioner Metrobank a copy of the Cash Transfer Slip that
was signed by the cash custodian, Ms. Castro.51 In reply, Mr.
Lucas notified respondent that her request would be sent to
the Head Office of petitioner Metrobank for approval.52 This
request was, however, not acted upon by petitioner.53 Despite
respondents motion to have the Cash Transfer Slip produced
in the trial proceedings54 and the manifestation of petitioner
Metrobanks counsel that it would present the slip,55 the
document was not entered into the records.
On 06 July 1995, respondent Custodio filed an Answer
with Compulsory Counterclaim, denying the allegations of
petitioner Metrobank that she was responsible for the cash
shortage.56 Respondent argued that Ms. Castro, not she, was
the one who incurred the cash shortage, since the loss was
discovered only after the cash and other accountabilities
were turned over to her, as cash custodian.57
After the case was submitted for decision,58 the trial court
rendered its Decision granting petitioner Metrobanks Com_______________
43 RTC Decision at p. 11 (Rollo at p. 99); TSN, 17 March 2000, at p. 105;

TSN, 22 August 2002 at pp. 112-113.
44 RTC Decision at p. 11, Rollo at p. 99.
51 Exhibit 1 (RTC records at p. 308); Pre-Trial Order at p. 1 (RTC

records at 60); RTC Decision at p. 11 (Rollo at p. 99).
45 TSN, 12 December 1996, at p. 44.
240
53 RTC Decision at p. 15 (Rollo at p. 103).
Cachapero, filed in this Court a Motion for Extension of Time

to File Petition for Review on Certiorari.65 On 28 August
2006,
54 Motion for the Issuance of a Subpoena Duces Tecum dated 16
_______________
52 Exhibit 2 (RTC records at p. 309); Pre-Trial Order at pp. 1-2 (RTC

records at pp. 60-61); RTC Decision at p. 11 (Rollo at p. 99).
December 1996; RTC records at pp. 104-107.

55 RTC Order dated 12 March 1997, RTC records at p. 125.
59 WHEREFORE, the complaint is hereby GRANTED. The defendant is
56 Id., at p. 11-16.
hereby directed to pay the plaintiff-bank the amount of six hundred thousand
57 RTC Decision at p. 11; Rollo at p. 99.
pesos
58 After petitioner Metrobank filed its Memorandum on 26 June 2003,
annum beginning June 13, 1995 until fully paid. (RTC Decision at pp. 18-
the trial court deemed the case submitted for decision. Respondent Custodio
(P600,000.00)
plus
interest
at
the
legal
rate
of
12% per
19, Rollo at pp. 106-107)
failed to file a memorandum within the non-extendible forty-five (45) day
60 RTC records at p. 357.
period. (Order dated 02 July 2003; RTC records at p. 323)
61 CA Records at pp. 36-57; Rollo at pp. 108-128.

62 Id., at pp. 77-95; Rollo at pp. 148-165.
708
708
63 Composed of Justices Andres B. Reyes. Jr.. Hakim S. Abdulwahid

plaint and ordering respondent Custodio to pay the amount

of six hundred thousand pesos (PhP600,000) plus interest.59
On 06 August 2003, respondent teller subsequently filed a
Notice of Appeal.60
On 29 July 2004, respondent Custodio, thru her counsel
Atty. Oliver Cachapero, filed a Brief for the
Appellant.61Meanwhile, petitioner Metrobank submitted a
Brief for the Appellee on 15 September 2004.62
On 16 July 2006, the Court of Appeals (10th
Division)63found respondent Custodios appeal meritorious
and reversed the trial courts Decision:
WHEREFORE, the appeal being meritorious, the assailed
decision dated July 25, 2003 of the RTC, Branch 11, Laoag City, in
Civil Case No. 10814 is REVERSED and SET ASIDE.
Consequently, the plaintiff-appellees complaint against defendantappellant is DISMISSED.64
On 10 August 2006, petitioner Metrobank, through the

Sediego & Associates Law Office, in collaboration with Atty.
(ponente) and Estela M. Perlas-Bernabe.

64 CA Decision dated 14 July 2006. CA Records at pp. 98-107; Rollo at pp.
45-54.
65 Rollo at pp. 3-7.
709
VOL. 645, MARCH 21, 2011

709
Atty. Cachapero informed the Court that he had withdrawn

as counsel for petitioner Metrobank.66
Respondent Custodio averred, however, that she received,
through counsel, a separate Petition for Review
on Certiorari filed by petitioner Metrobanks counsel, Atty.
Cachapero, on 07 August 2006.67
Within the thirty-day extension period granted by the
Court,68 petitioner Metrobank filed the Petition for Review
under Rule 45, through its new counsel of record, Sediego &
Associates Law Office.69 On 30 October 2007, respondent
Custodio submitted her Comment on the instant Petition.70In
response, petitioner Metrobank subsequently filed a Reply on
31 January 2008.71
241
After the instant Petition was given due course,72 the

parties submitted their respective memoranda.73
Before resolving the substantial legal issue, the Court will
first resolve the procedural matters with respect to the
propriety of raising questions of fact in the instant Petition
and the receipt by respondent Custodio of another Petition
through Atty. Cachapero.
In a petition for review on certiorari filed under Rule 45,
the issues that can be raised are limited only to questions of
afford all party-litigants the amplest opportunity for the

proper and just determination of their cause,77 this is not a
license for erring litigants to violate the rules with
impunity.78
_______________
No. 163532, 12 March 2010, 615 SCRA 143.
_______________
74 New Rural Bank Guimba (N.E.), Inc. v. Abad, G.R. No. 161818, 20
August 2008, 562 SCRA 503; Rules of Court Rule 45, Sec. 1.
75 Yokohama Tire Philippines, Inc. v. Yokohama Employees Union, G.R.
76 A question of fact can be entertained in a Rule 45 petition for the
66 Id., at pp. 9-10.
following exceptions/reasons: (1) the conclusion is grounded on speculations,
67 Comment at pp. 1-3; Rollo at pp. 175-177. (See Annex 1 of the
surmises or conjectures; (2) the inference is manifestly mistaken, absurd or
Comment)
impossible; (3) there is grave abuse of discretion; (4) the judgment is based
68 Resolution dated 23 August 2006; Rollo at p. 8.
on a misapprehension of facts; (5) the findings of fact are conflicting; (6)
69 Rollo at pp. 12-42.
there is no citation of specific evidence on which the factual findings are
70 Comment dated 08 October 2007; Rollo at pp. 175-182.
based; (7) the finding of absence of facts is contradicted by the presence of
71 Reply dated 30 January 2008; id., at pp. 230-235.
evidence on record; (8) the findings of the CA are contrary to the
72 Resolution dated 13 February 2008, id., at pp. 242-243.
findings of the trial court; (9) the CA manifestly overlooked certain
73 Petitioner Metrobanks Memorandum dated 02 July 2008 (Id., at pp.
relevant and undisputed facts that, if properly considered, would justify a
271-285); Respondent Custodios Memorandum dated 13 June 2009 (Id., at
different conclusion; (10) the findings of the CA are beyond the issues of the
pp. 299-311).
case; and (11) such findings are contrary to the admissions of both parties.
(Serrano v. People, G.R. No. 175023, 05 July 2010, 623 SCRA 322 [footnote
710
710

law.74 Questions of fact are not reviewable in a Rule 45

petition.75 Nonetheless, this rule permits of exceptions, which
the Court has long since recognized.76
Unless the party availing of the remedy clearly
demonstrates at the first opportunity that the appeal falls
under any of the established exceptions, a Rule 45 petition
that raises pure questions of fact shall be subject to dismissal
by the Court, since it is principally not a trier of facts.
Although the emerging trend in the Courts rulings is to
13] citing Pelonia v. People, G.R. No. 168997, 13 April 2007, 521 SCRA 207)
77 Tabujara III v. People, G.R. No. 175162, 29 October 2008, 570 SCRA
229.
78 Marphomsalic v. Cole, G.R. No. 169918, 27 February 2008, 547 SCRA
98.
711
VOL. 645, MARCH 21, 2011

711
Respondent Custodio reasons that the banks Petition

before the Court seeks a review of factual issues, and that
such kind of review is not countenanced by the
242
Rules.79Although she recognizes the exceptions to the

prohibition against raising a question of fact in a Rule 45
petition, respondent insists that the instant Petition fails to
measure up to any of them, which would have permitted a
review of the factual circumstances of the case.80Respondent
Custodios bare allegation that the present controversy81 does
not fall within the established exceptions fails to convince the
Court.
The difference in appreciation by the trial court and the
appellate court of the evidence with respect to the
circumstances surrounding the cash shortage is prima
faciejustification for the Court to review the facts and the
records of the case. While 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, this Court has the authority to review and,
in proper cases, reverse the factual findings of lower courts
when the findings of fact of the trial court are in conflict with
those of the appellate court.82
In her Comment, respondent Custodio likewise assails the
separate Petition she received from Atty. Cachapero, the
former counsel of petitioner Metrobank.83 She claims that the
separate Petition should not be entertained by the Court,
since there is no proof of payment of the docket fees or proof
of service. Moreover, the Petition coming from Atty.
Cachapero should preclude the instant Petition filed by the
banks new counsel, Sediego & Associates. Aside from the
fact that this
_______________
79 Respondent Custodios Comment at p. 4, Rollo at p. 178.
80 Memorandum for Respondent at pp. 10-11; id., at pp. 308-309.
81 Petitioner Metrobanks Memorandum at p. 11, id., at p. 281.
712
712

issue is not raised in respondents Memorandum, nothing in

the record shows that the separate Petition signed by Atty.
Cachapero was ever filed and docketed with the Court.
Courts will not entertain and act on petitions that have
yet to be properly filed, even if a copy has been served on the
other party. Moreover, the separate Petition that came into
the hands of respondent has no bearing on this case, since
Atty. Cachapero has already withdrawn as counsel for
petitioner Metrobank. Therefore, the Court will only confine
itself to the instant Petition, which was duly filed by the
banks new counsel and submitted within the extended
reglamentary period, after docket fees were paid and the
Court had given due course to it.84
The Court now proceeds to the substantial merits of the
case.
The resolution of the instant Petition hinges on whether
there is a preponderance of evidence to establish that
respondent Custodio incurred a cash shortage of PhP600,000
at the close of the banking day on 13 June 1995 and is
therefore liable to pay petitioner Metrobank the said
amount.85
In civil cases such as in the instant action for a sum of
money, petitioner Metrobank carries the burden of proof and
must establish its cause of action by a preponderance of
evidence.86 The concept of preponderance of evidence refers to
evidence that is of greater weight or more convincing, than
that which is offered in opposition to it; at bottom, it means
probability of truth.87
_______________
82 Encinares v. Achero, G.R. No. 161419, 25 August 2009, 597 SCRA 34.
84 Resolution dated 13 February 2008; Rollo at pp. 242-243.
83 Comment at pp. 1-3; Rollo at pp. 175-177.
85 See RTC Pre-Trial Order at p. 2, RTC records at p. 61.
243
86 Rules of Court, Rule 131, Sec. 1; Spouses Montecalvo v. Primero, G.R.

No. 165168, 09 July 2010, 624 SCRA 575.
87 Rizal
Commercial
Banking
Corporation
v.
Marcopper
Mining
Corporation, G.R. No. 170738, 12 September 2008, 565 SCRA 125, citingJison
v. Court of Appeals, G.R. No. 124853, 24 February 1998, 286 SCRA 495, 532.
713
VOL. 645, MARCH 21, 2011

713
The Court sustains the appellate courts finding that

petitioner Metrobank failed to discharge its burden of
proving that respondent Custodio was responsible for the
cash shortage. Petitioner Metrobanks evidence on record
does not sufficiently establish that respondent Custodio took
the funds that were entrusted to her as a bank teller.
The issue of respondent Custodios civil liability for the
cash shortage turns on whether she is the proximate or direct
cause of the loss. There is nothing on record that will show
that there were any missing bundles of one-thousand-peso
and five-hundred-peso bills when respondent Custodio
turned over the funds to the cash custodian, Ms. Marinel
Castro. As the appellate court correctly found, the Cash
Transfer Slip was the best evidence that respondent Custodio
had properly turned over the amounts in her care, and that
the cash custodian received them without any shortage.88
Although the Cash Transfer Slip was not introduced in
evidence, Ms. Castro admitted having signed it. Had there
been any cash shortage at that point, then the cash custodian
could have refused to sign the Cash Transfer Slip, and
respondent Custodio could have been required to account for
any missing funds. However, having acknowledged receipt of
the funds from respondent, it is reasonably presumed that
Ms. Castro found nothing out of order in respondents records
of cash transactions and the amounts transferred.
Petitioner Metrobank admits the existence of the cash

transfer slip and the custodians signature thereon. It
reasons, though, that it was not unusual for the custodian to
sign the slip without counting the money, since she trusted
her co-employees. Petitioner seeks to impress upon this
Court that the custodians negligence wa s in good faith and
should not exonerate respondent Custodio from the cash
shortage.
_______________
88 The cash transfer slip is the best evidence that appellant (Custodio)
turned over the amount of P2,113,500.00 on June 13, 1995. (CA Decision at
p. 6; Rollo at p. 50).
714
714

As the Court of Appeals correctly surmised, Ms. Castros

procedural lapse in trusting her co-employees by
automatically signing the cash transfer slip without ensuring
its correctness contributed significantly to the loss of the
banks money.89 The proper accounting of funds through the
cash transfer slip was precisely instituted as a safety
mechanism to trace the flow of money from one employee to
another. Specifically, the cash transfer slip was meant to
ensure that the tellers had properly counted the money that
they turned over to the cash custodian.90 If Ms. Castro, as
cash custodian, had not been remiss in her responsibilities,
petitioner Metrobank would have been able to identify who
among the tellers failed to turn over the proper amount as
reflected in the Cash Transfer Slip. The cash custodian is not
to be admonished for reposing her trust in her co-employees;
nonetheless, she was negligent, insofar as ignoring
established bank procedures meant to prevent loss, especially
when one of her co-employees had broken that trust.
244
The Court of Appeals underscored the highest degree of

diligence from the banking business, considering that it is
impressed with public interest and of paramount
importance.91 However, as petitioner Metrobank pointed
out,92 the exacting standard of diligence required by the
appellate court pertains to the relationship between a bank
and a depositor, and not between a bank and its employees.
In this case, no
90 TSN, 27 September 2002, at p. 120.
If petitioner bank had to attribute any negligence on the

part of its employees, then it should have set its sights on the
acts and/or omissions of Ms. Marinel Castro, the cash
Custodian, and Mr. Hanibal Jara, the security guard. If theft
of the money cannot be established, and negligence is the
only legal phenomenon that is evident on the records, then
the proximate cause of the loss of the banks PhP600,000 is
Ms. Castro, who, as cash custodian, disregarded established
procedures and blindly signed the tellers cash transfer slips
without counting the money turned over to her. Meanwhile,
Mr. Jara failed to inspect respondent Custodios belongings
as she left the bank on that day for lunch. Despite his own
suspicions of respondent tellers conduct, he ignored them
and decided not to check the bags. This omission can
conceivably be considered as a grave omission of his duties as
a security guard. The
91 CA Decision at 9 (Rollo at p. 53) citing Bank of the Philippine Islands
_______________
_______________
89 But the cash custodian was negligent in not following the standard
operating procedure of the bank. Her negligence was the root cause why the
cash shortage was not discovered earlier because, had she counted first the
money bills delivered to her before signing the cash transfer, the shortage
could have been detected. (CA Decision at p. 9; Id., at p. 53)
v. Casa Montessori Internationale, 430 SCRA 261, 283 (2004).

92 Petitioner Metrobanks Memorandum at pp. 9-11; Rollo at pp. 279-281.
93 A tellers relationship with the bank is necessarily one of trust and

confidence. The teller as a trustee is expected to possess a high degree of
715
VOL. 645, MARCH 21, 2011

715
depositors were affected, as the transactions during that day

were accounted for, and no error was found in the recording
thereof. The relevant standard of diligence that we need to
examine here is that of a bank teller who was entrusted
monies by the bank and who may have failed to account for
them.93 In this case, petitioner Metrobank was unable to
prove that respondent Custodio failed to exercise the
necessary degree of diligence that would justify the banks
action for damages. Respondent Custodio was not remiss in
her duties as all her dealings with the banks money were
clearly reflected on the records of the bank.
fidelity to trust and must exercise utmost diligence and care in handling
cash. A teller cannot afford to relax vigilance in the performance of his
duties. (Fuentes v. National Labor Relations Commission, G.R. No. 75955, 28
October 1988, 166 SCRA 752, citing Galsim v. PNB, G.R. No. 23921, 24
August 1969, 29 SCRA 293; Allied Banking Corporation v. Castro, et al., G.R.
No. L-70608, 22 December 1987, 156 SCRA 789)
716
716

Court of Appeals succinctly explained both matters in this

wise:
The foregoing circumstance is not sufficient basis for the court
to assume that the said paper and shoulder bag contained the cash
shortage (P600,000). Ordinary diligence dictates that as a security
245
guard, Jara should have checked and inspected the things of all
the bank employees, especially those who were in charge of
handling money before going out of the premises. Upon seeing a
teller going out for lunch with an expandable shoulder bag
and paper bag, prudence dictates that the security guard
should have inspected and checked the tellers bags. But
the security guard failed to do so. It should be noted that the
security guards testimony reveals that the said shoulder bag had
been used by appellant even prior to June 13, 1995, and on said
days, there were no shortages.
xxx
The signature of the cash custodian in the transfer slip means
that the amount reflected therein corresponds to the bills turned
over to her. The cash transfer slip is the best evidence that
appellant turned over the amount of P2,113,500.00 on June 13,
1995. The cash transfer slip signed by the cash custodian was not
presented despite the written requires of appellant. However, the
existence of the signed transfer slip was admitted by the cash
custodian. She even admitted that she did not follow the
banks standard operating procedure to count the money
delivered by the teller to her before signing the cash
transfer slip, x x x.
xxx
In her testimony, the cash custodian, attested that it was not
only the cash transfer slip of appellant which she signed without
counting the money submitted to her, but also those of the other
tellers. Under the circumstance, it cannot be determined at what
point of the transactions the shortage occurred. But the cash
custodian was negligent in not following the standard
operating procedure of the bank. Her negligence was the
root cause why the cash shortage was not discovered
earlier because, had she counted first the money bills
delivered to her before
717
VOL. 645, MARCH 21, 2011

717
signing the cash transfer slip, the shortage could have been
detected. x x x (Emphasis supplied)94
Verily, it is highly doubtful that Ms. Castro and Mr. Jara

had performed the necessary care and caution required of
bank employees in this instance, which directly contributed
to the loss of PhP600,000 for petitioner Metrobank.
Considering the failure of the cash custodian and the
security guard to abide by the procedural safeguards,
petitioner bank is now left to find other evidence to
determine the person liable for the cash shortage. The Court,
however, is not sufficiently convinced that petitioner
Metrobank has introduced a preponderance of circumstantial
evidence to show that respondent Custodio was liable for the
missing bundles of cash worth PhP600,000.
As regards respondents receipt of PhP200,000 from
another teller during the course of the business day, it was
never demonstrated that the cash transfer was highly
irregular. Neither was it conclusively proven that respondent
took the money that was transferred by the other teller.
During one of the hearings, Mr. Lucas, the branch
manager, explained that it was unusual for respondent
Custodio to have requested a cash transfer, considering that
she had sufficient funds to cover the amount.95However, as
the appellate court explained, the trial court should not have
considered his testimony in this respect, since the judge had
ordered that particular statement stricken out during the
trial court proceedings.96 A fact elicited from a witness during
testimony cannot be considered in the disposition of the case
if it has been ordered stricken out, unless it is established by
any other evidence on record.97
_______________
246
96 CA Decision at p. 5; Rollo at p. 49.
serve the branchs clients fully. The daily time records

submitted by petitioner Metrobank even show that there
were other in-
97 Striking out answer.Should a witness answer the question before
_______________
94 CA Decision, at pp. 6-9; Rollo at pp. 50-53.

95 TSN, 11 December 1995, at p. 15.
the adverse party had the opportunity to voice fully its objection to the same, and such objection is found to be meritorious, the court shall
718
718

Even if the Court were to take cognizance of the bank

managers statement, the unusual cash transfer does not
tend to prove that respondent Custodio took the money.
There was no reason why respondent Custodio would
appropriate several bundles of cash from another teller,
because the transfer would be reflected in her transaction
journals and those of the other teller anyway. Besides,
respondent would be held to account for all the transactions
and funds at the end of the banking day. If at all, the cash
transfer, which was reflected in the records, indicated a
movement of funds from one teller to another, but did not
establish the movement from the banks coffers to respondent
Custodios pockets. In any case, based on the transaction
journal, no error was found in the records, as all the entries
were duly accounted for by respondent Custodio and the
other teller.
The security guards testimony that respondent Custodio
left for lunch alone with an expandable shoulder bag and a
paper bag is inadequate proof for the Court to believe that
she carted away the missing cash. Although she ordinarily
took her lunch break at noon with another tellerMs. Mary
Castrothe same security guard explained that respondent
deviated from her usual practice, because one of the tellers
was on leave. Presumably, respondent Custodio had to take
her lunch alone, rather than go with Ms. Castro. Otherwise,
the branch would have been left under-staffed and unable to
sustain the objection and order the answer given to be stricken off the
record.
On proper motion, the court may also order the striking out of answers
which are incompetent, irrelevant, or otherwise improper. (Rule 132, Sec. 39)
719
VOL. 645, MARCH 21, 2011

719
stances in which respondent did not have lunch together with

her co-teller, yet, no cash shortage was reported.98
On the other hand, the bags carried by respondent
Custodio when she went out for lunch were never inspected
by the security guard. The latter failed to search these bags,
which could have determined whether respondent teller had
carried away the banks missing money during her break. As
it were, the security guard saw nothing unusual or out of the
ordinary, with respect to respondent Custodios bags that
would have aroused his suspicion and prompt him to inspect
her belongings before she left.
Meanwhile, the eight wrappers of five-hundred-peso bills
allegedly recovered by petitioner Metrobank are likewise of
doubtful credibility and are inconclusive in determining
liability. The bill wrappers bear the stamp assigned to Teller
No. 3, who is respondent Custodio. Yet, as respondent
explains, these stamped wrappers can easily be procured by
stamping unmarked bill wrappers with tools and materials
that are readily available to petitioner Metrobank. Moreover,
the wrappers offered into evidence by petitioner bank do not
247
bear respondent Custodios initials to prove that the bundles

of money which these wrappers correspond to were in
respondents care, as is the common practice in the branch
and as testified to by the cash custodian, Ms. Castro:
Q:
Madam witness, going over Exhibit G, you claim that these bill
wrappers belong to defendant Marina Custodio because all these bill
wrappers are stamped PEPT-3?
A:
Yes, sir.
Q:
Despite
the
fact
that
Marina
Custodio did
not
affix
her
signature on these hill wrappers, you claim that these belong to her
investigators conducted a one-on-one meeting with the

employees two days after the incident. Not even a report by
the investigation team of petitioner Metrobank regarding the
incident was submitted to show when the bill wrappers were
discovered, or when respondent Custodio was suspected of
taking the money.101
It appears highly unlikely that respondent Custodio would
be able to cart away several bundles of cash without being
detected at all, only to carelessly leave the purported wrap_______________
just by the mere stamp?

A:
Yes, sir.
99 TSN, 28 February 2000 at p. 95.
_______________
100 Id., at pp. 90-91.

101 Further, Mr. Lucas, the manager of appellee bank admitted that
98 Exhibit 4 (RTC records at pp. 311-312); TSN 03 August 1998, at pp. 78-80.
investigators from their Regional Office and from their head office, the
Department of Internal Affairs conducted an investigation on the shortage
720
and submitted a written report. Interestingly, the manager of appellee bank
720
Q:
Is it not a fact, madam witness, that the date when these ball
wrappers are turned over to you is supposed to be reflected?
A:
It is supposed to reflect the date, sir; in fact, it is supposed to

contain their signatures.99
Moreover, the circumstances surrounding the discovery of

these bill wrappers by petitioner Metrobank remain unclear.
Despite the bank managers instructions and the bank
employees efforts in conducting a thorough search for the
missing cash bundles, neither the money nor the bill
wrappers were found on the day of the cash shortage. The
cash custodian who identified these bill wrappers did not
explain how she came to discover them.100
In addition, respondent Custodio was never confronted
with these wrappers when the cash shortage was discovered.
Neither were the wrappers presented to her when the banks
had to refer to the written investigation report during the cross-examination

to refresh his memory. But appellant was not even furnished with a copy of
the said report nor was such report presented to enlighten the trial court of
what really transpired. (CA Decision at p. 9, Rollo at p. 53)
721
VOL. 645, MARCH 21, 2011

721
pers of the stolen cash, wrappers stamped with marks that

might lead to her identity. The sudden appearance of these
bill wrappers begs the question as to where and when they
were discovered by petitioner Metrobank. If these empty bill
wrappers were allegedly found to be under the account of
respondent Custodio soon after the cash shortage was
discovered, then there was no reason for petitioner
Metrobank to have allowed her to continue with her duties in
handling bank funds. Yet, respondent Custodio was
248
subsequently permitted to report for work after the incident

until 23 June 1995.
Contrary
to
the
banks
assertions
in
the
102
Complaint, respondent Custodio was never asked to account
for and/or turn over the missing money. Neither did the
bank, prior to the service of the summons and the complaint,
demand that she return the money. Respondent Custodio
was only informed that she was accused of stealing the
missing funds when the summons was served upon her on 23
June 1995.103 Indeed, after the discovery of the cash shortage,
every employee was held suspect,104 and respondent was
never singled out for the loss until petitioner bank filed the
Complaint with the trial court.
Petitioner Metrobank also argues that respondent
Custodios prior involvement in a cash shortage in its Cubao
branch is admissible as evidence to prove a scheme or habit
on her part.105
The general evidentiary rule is that evidence that one did
or did not do a certain thing at one time is not admissible to
received to prove a specific intent or knowledge, identity,

plan system, scheme, habit, custom or usage and the
like.107 In Citibank N.A., (Formerly First National City Bank)
v. Sabeniano, the Court explained the rationale for this rule:
The rule is founded upon reason, public policy, justice and
judicial convenience. The fact that a person has committed the
same or similar acts at some prior time affords, as a general rule,
no logical guaranty that he committed the act in question. This is
so because, subjectively, a mans mind and even his modes of life
may change; and, objectively, the conditions under which he may
find himself at a given time may likewise change and thus induce
him to act in a different way. Besides, if evidence of similar acts
are to be invariably admitted, they will give rise to a multiplicity of
as confuse the court and prolong the trial.108
Evidence of similar acts may frequently become relevant,

especially to actions based on fraud and deceit, because it
sheds light on the state of mind or knowledge of a person; it
provides insight into such persons motive or intent; it
uncovers a scheme, design or plan, or it reveals a mistake.109
In this case however, respondent Custodios prior
involvement in a cash shortage in the banks Cubao branch
does not conclusively prove that she is responsible for the
loss of PhP600,000 in the Laoag City branch, subject of the
instant case.
104 TSN, 28 February 2000, at p. 97.
_______________
_______________
102 4.
That the plaintiff appealed and demanded from defendant to
account and/or turn over the said sum of P600,00[0].00 but the latter refused
and failed and still refuses and fails to honor plaintiffs demand. (Complaint
at p. 2, RTC records at p. 2)
105 Petition for Review at 25 (Rollo at p. 36); Memorandum for Petitioner

at p. 11 (Rollo at p. 281).
722
722
106 Rules of Court, Rule 130, Sec. 34.

107 Id.
108 G.R. No. 156132, 16 October 2006, 504 SCRA 378, citing J.A.R.SIBAL

prove that one did or did not do the same or a similar thing
at another time.106 However, evidence of similar acts may be
AND
J.N. SALAZAR, JR., COMPENDIUM ON EVIDENCE 199-200 (4th ed., 1995).
109 Tanzo v. Drilon, G.R. No. 106671, 30 March 2000, 329 SCRA 147,
citing Cruz v. Court of Appeals, 293 SCRA 239, 255 (1998).
723
249
VOL. 645, MARCH 21, 2011

723
Although the previous cash shortage in Cubao could

possibly shed light on the intent, scheme or habit of
respondent Custodio, that previous cash shortage is not
sufficient to affirm a definitive finding of fact that she took
the funds in the Laoag City branch. If the prior cash shortage
in Cubao showed a reasonable intent or habit on the part of
respondent, then there was no reason for petitioner
Metrobank to continue to employ her, considering the degree
of trust and confidence required of a bank teller.
Nevertheless, respondent Custodio continued to serve the
bank even after the case in petitioner Metrobanks Cubao
branch. Her continued employment was an affirmation that
she was still worthy of the banks trust, insofar as she was
allowed to continue to handle sums of money in the Laoag
City branch.
With respect to the taking of the journal transaction slip
by respondent Custodio, no correlation was ever established
between this incident and the cash shortage subject of the
instant case. The same journal transaction slip, which
respondent allegedly attempted to take away, has to do with
transactions occurring on 23 June 1995. It does not pertain to
the transactions on 13 June 1995, the day of the cash
shortage. No reasonable explanation has been offered
regarding how this incident is relevant to the instant case or
how it tends to prove that respondent Custodio was the one
responsible for a cash shortage that occurred ten days
earlier. This incident was distinct and separate from the cash
shortage, as shown by the fact that she was subsequently
penalized with a seven-day preventive suspension for the
incident on 23 June 1995, a penalty that is not the subject of
the instant proceedings.
In any event, respondent Custodio sufficiently explains
that the incident arose from confusion on her part. It is
understandable that at the time she was caught with the

journal transaction slip, she was just confronted with
petitioner Metrobanks serious accusations that she had
taken the missing funds. When the complaint was presented
to her and she
724
724

was barred from entering the tellers cage, respondent must

have been so confused that she mistakenly placed the
transaction journals in her pocket. That no cash shortage
occurred at that time emphasizes that there was no direct
and causal link between the transaction journal slip and the
cash shortage.
It is not denied that petitioner Metrobank discovered the
lost money after all the tellers had turned over their cash for
the day, and the cash custodian had signed the Cash
Transfer Slip. Without the cash custodian counting the
money before signing the Cash Transfer Slip, many
probabilities arise.110 The shortage may have occurred even
prior to the turnover of the cash by respondent Custodio. The
missing cash may have also resulted from the transfers done
by the other tellers, and not necessarily by respondent
Custodio. It may have been taken away during the counting
of the money by the cash custodian and the other tellers
themselves.
Petitioner Metrobank even argued that respondent
Custodio may have taken the money after the cash custodian
had returned the amounts turned over to the tellers and
other employees for sorting and counting.111 To begin with,
this position is directly contrary to petitioner Metrobanks
theory that respondent Custodio carried away the money in
the morning of 13 June 1995. In addition, the cash custodian
had asked for assistance from the other bank employees to
speed up the counting and sorting, which necessarily opens
250
the possibility that any of those involved could have been a

sus-
counting the money submitted to her, but also those of the other tellers of the
PhP600,000 from petitioner Metrobank and is liable to

return the amount to the latter.
In view of the foregoing, the Court DENIES the instant
Petition for Review filed by Metropolitan Bank and Trust
Company. The Court of Appeals 14 July 2006 Decision,
which dismissed the complaint against respondent Marina
Custodio, is hereby AFFIRMED.
bank. Under the circumstance, it cannot be determined at what point of the
_______________
_______________
110 In her testimony, the cash custodian, attested that it was not only
the cash transfer slip of appellant (Custodio) which she signed without
transactions the shortage occurred. (CA Decision at p. 9, Rollo at p. 53)

111 Brief for the Appellee at p. 9, Rollo at p. 158.
112 Q:
Is it not a fact that on said date after all the bundles were
turned over to you, when you made a bundle count before you placed these
725
VOL. 645, MARCH 21, 2011

725
pect as well.112 Respondent Custodio even argued that the

money she had counted and sorted were funds turned over by
other tellers, and not the same funds she herself had given to
the cash custodian.113 More disconcerting is the failure of the
cash custodian to even remember who were the employees
who had helped her in counting the cash at that time, since
everybody was in a hurry to go home.114The procedural
shortcuts resorted to by petitioner banks employees threw
open the doors to a multitude of probable scenarios, leading
to ambiguity in determining civil liability.
The secondary and incidental facts offered by petitioner
Metrobank do not prove the primary factual issue that it
wishes to establish in demanding the instant relief from the
courtsthat respondent Custodio took the money.
Regrettably, the evidence offered by petitioner Metrobank
is insufficient to convince to the Court that the probability of
respondent Custodios having taken the money is greater
than its having been taken by another employee. Verily,
weighing the evidence on record, the Court finds that
petitioner Metrobank failed in its burden of proving by a
preponderance of evidence that respondent Custodio took
bundles of cash inside the vault, there were also bundles missing from other
tellers in the person of Mary Paula Castro?
A:
Yes, sir. (TSN 28 February 2000, at p. 96).

114 TSN, 12 May 2003, at p. 6.
726
726

SO ORDERED.
Carpio-Morales
(Chairperson),
Bersamin andVillarama, Jr., JJ., concur.
Brion,
Petition denied, judgment affirmed.

Notes.The defense of due care in the selection and
supervision of employees provided in the last paragraph of
Article 2180 of the New Civil Code may be availed of only
where the liability arises from culpa aquiliana and not
from culpa contractual. (Herbosa vs. Court of Appeals, 374
SCRA 578 [2002])
Evidence should only be considered for the purpose it was
formally offered. (People vs. Ignas, 412 SCRA 311 [2003])
o0o
251
G.R. No. 116730. November 16, 1995.

PEOPLE
OF
THE
PHILIPPINES,
plaintiffappellee, vs.WILFREDO DE GUZMAN, accused-appellant.
*
Criminal Law; Murder; The great goal of our criminal law

and procedure is not to send people to the gaol but to do justice
especially to the innocent.Accused-appellant WILFREDO DE
GUZMAN was convicted of the crime of MURDER by the Regional
Trial Court of Dagupan City, Branch 43, on the basis of
circumstantial evidence. He pleads for his acquittal, the Solicitor
General agrees and we find merit in the plea.
_______________
*
SECOND DIVISION.
119
1
19
People vs. De Guzman

We hold once more that the great goal of our criminal law and
procedure is not to send people to the gaol but to do justice
especially to the innocent.
Same; Same; Evidence; Circumstantial
Evidence; Requisites
for circumstantial evidence to be sufficient for conviction.
Patently, there is no direct evidence linking the accused-appellant
to the killing of Diosdado Capurno. The present appeal thus hinges
on the sufficiency of the circumstantial evidence presented against
the accused-appellant. Circumstantial evidence is sufficient for
conviction if: (a) There is more than one circumstance; (b) The facts
from which the inferences are derived are proven; and (c) The
combination of all the circumstances is such as to produce a
conviction beyond a reasonable doubt.
Same; Same; Same; Presumption of Innocence; Where the
inculpatory facts and circumstances are capable of two or more
explanations, one of which is consistent with innocence and other
with guilt, the evidence does not fulfill the test of moral certainty
and is not sufficient to convict an accused.No inflexible rule has
been formulated as to the exact quantity of circumstantial
evidence which will suffice for conviction. All that the case law
requires is that the circumstances proved must be consistent with
each other, consistent with the hypothesis that the accused is
guilty, and at the same time inconsistent with the hypothesis that
he is innocent, and with every other rational hypothesis except
that of guilty. In accord with the constitutional presumption of
innocence, jurisprudence also holds that where the inculpatory
facts and circumstances are capable of two or more explanations,
one of which is consistent with innocence and the other with guilt,
the evidence does not fulfill the test of moral certainty and is not
sufficient to convict an accused.
Same; Same; Same; Paraffin
Test; Paraffin
test
is
inconclusivethe presence of nitrates should be taken only as an
indication of a possibility or even of a probability but not of
infallibility that a person has fired a gun, since nitrates are also
admittedly found in substances other than gunpowder.In a
recent case, we reiterated the rule that paraffin test is
inconclusive. We held: Scientific experts concur in the view that
the paraffin test has . . . proved extremely unreliable in use. The
only thing that it can definitely establish is the presence or
absence of nitrates or nitrites on the hand. It cannot be established
from this test alone that the source of the nitrates or nitrites was
the discharge of firearm. The person may have handled one or
more of a number of substances which give the same positive
reaction for nitrates or nitrites, such as explosives, fireworks,
fertilizers, Pharmaceuticals, and leguminous plants
120
20
252
such as peas, beans, and alfalta. A person who uses tobacco

may also have nitrate or nitrite deposits on his hands since these
substances are present in the products of combustion of tobacco.
The presence of nitrates should be taken only as an indication of a
possibility or even of a probability but not of infallibility that a
person has fired a gun, since nitrates are also admittedly found in
substances other than gunpowder. In the case at bar, we note, too,
that accused-appellants left hand alone is positive of nitrates. His
right hand has no trace of nitrate. Did he use his left hand in
shooting the victim? Is he left handed? The evidence of the
prosecution does not provide the answer.
Same; Same; Same; Alibi; Accuseds defense of alibi may be
weak, as all defenses rooted on alibi are weak, but the prosecution
evidence is weakerand cannot convict.Accused-apellants
defense of alibi may be weak as all defenses rooted on alibi are
weak. However, the prosecution evidence is weaker. It failed to
pass the test of moral certainty. It cannot convict.
APPEAL from a decision of the Regional Trial Court of

Dagupan City, Br. 43.
Orlando C. De Guzman for accused-appellant.
PUNO, J.:
Accused-appellant WILFREDO DE GUZMAN was convicted
of the crime of MURDER by the Regional Trial Court of
Dagupan City, Branch 43, on the basis ofcircumstantial
evidence. He pleads for his acquittal, the Solicitor General
agrees and we find merit in the plea. We hold once more that
the great goal of our criminal law and procedure is not to
send people to the gaol but to do justice especially to the
innocent.
1
The information against accused-appellant reads:

That on or about August 9, 1993 in the evening along the road of
Malanay-Tuliao, municipality of Sta. Barbara, province of
Pangasinan,
_________________
1
Docketed as Criminal Case No. D-12248.
121

121
Philippines, and within the jurisdiction of this Honorable Court,

the above-named accused, armed with a handgun, with intent to
kill, treachery and evident premeditation, did, then and there
wilfully, unlawfully and feloniously shoot DIOSDADO CAPURNO
y SANTOS inflicting upon him gunshot wounds which caused his
instant death, to the damage and prejudice of his heirs.
CONTRARY to Article 248, Revised Penal Code.
When arraigned on February 8, 1994, accused-appellant

pleaded not guilty. He underwent trial.
The facts show that in the evening of August 9, 1993, the
lifeless body of DIOSDADO CAPURNO, a tricycle driver, was
found lying along the road of Malanay-Tuliao in Sta.
Barbara, Pangasinan. The victim sustained several stab
wounds on his body and a single gunshot wound on the
forehead.
Dr. Cristito Garcia, Rural Health Physician of Sta.
Barbara, Pangasinan, autopsied the victims body. His
examination revealed that some of the stab wounds
penetrated the victims vital organs, particularly the heart
and the right lung. The gunshot wound and the stab wounds
were considered fatal.
The Exhumation Report prepared by Dr. Ronald
Bandonill, Medico-Legal Officer of the National Bureau of
2
253
Investigation (NBI) in Baguio City, showed a more detailed

list of the injuries suffered by the victim, thus:
1. 1.Hematoma, above the eyebrow;
2. 2.Peri-orbital hematoma;
3. 3.Hematoma, occipital area, right;
4. 4.Contusion, shoulder, right;
5. 5.Gunshot woundsEntrance: 0.7 cm. x 0.8 cm. behind the
left external auditory meatus making an exit: 1.5 cms.
behind the right external auditory meatus;
6. 6.Stab wounds 1.2 in number, one on top of the other, area,
of 6.0 cms. x 5.0 cms. on the chest; 4.0 cms. irregular still
on the chest;
________________
2
Original Records, p. 129.
Exhibit A; Original Records, p. 19.
Exhibit B; Original Records, p. 107.
122
122

1. 4.0 cms. ovaloid, edges clean cut in the lumbar area.
2. 7.Scalp hematoma;
3. 8.Fracture, cranial fossa, right;
4. 9.Intracranial Hemorrhage, massive, generalized;
5. 10.Hemopericardium, Massive;
6. 11.Hemoperitoneum, Minimal;
7. 12.Visceral organs are pale.
Dr. Garcia concluded that more than one (1) person attacked
the victim. Dr. Bandonill shared the same opinion.
5
The prosecution presented JAYSON LOPEZ to prove its

case against the appellant. He testified that, at about 9:00
p.m., of August 9, 1993, he was at the junction leading to
Barangay Malanay when he spotted Diosdado Capurnos
tricycle at the waiting shed. When the tricycle started
towards Malanay proper, he chased it and shouted at
Diosdado to wait for him. The tricycle stopped and he was
about to board it when one of the passengers told him that
they had already hired it. A passenger jeepney came from the
opposite direction and its headlights illuminated the area.
Lopez got a glimpse of Diosdados three (3) passengers. They
were Ismael Ico, Conrado de Vera, and another passenger
whom Lopez did not know. It was De Vera, the incumbent
barangay captain of Malanay, who dissuaded him from
riding the tricycle. Lopez was left without any option and he
walked the road leading to Barangay Malanay.
Soon, Diosdados tricycle overtook Lopez but it stopped
after negotiating a short distance. Thereafter, Lopez saw
Diosdado run and shout for help. Two (2) men appeared from
the right side of the road, blocked Diosdados path, and
mauled him. Lopez did not recognize the two (2) men due to
darkness. For his own safety, Lopez hid himself from the
assailants. Lopez then saw De Vera and Ico chase Diosdado.
He heard two (2) gunshots but did not see the gun-wielder
because of the commotion. Moments later, De Vera
instructed his companions to check the surroundings. Ico
looked at the back of the tricycle and found nobody. The
6
______________
5
TSN, January 21, 1994, p. 14; TSN, January 26, 1994, pp. 43-44.
TSN, February 27, 1994, pp. 11-14.
TSN, February 7, 1994, p. 16; TSN, February 8, 1994, p. 9.
123
123
254

five (5) assailants then headed towards Malanay proper,
leaving the fallen Diosdado behind. Engulfed with fear,
Lopez did not proceed to Malanay. Instead, he returned to
the junction and boarded a bus bound for Dagupan City.
In the morning of August 29, 1993, Lopez claimed he
happened to ride the tricycle of accused-appellant Wilfredo
De Guzman. Along the way, an acquaintance of accusedappellant also boarded the tricycle. They struck a
conversation. Lopez co-passenger mentioned to accusedappellant the latters rumored involvement in a case.
Accused-appellant replied, I do not know what to do. Lopez
co-passenger advised accused-appellant, You cant do
otherwise but tell the truth. A curtain of silence descended
on accused-appellant.
The
prosecutor
also
presented
CHRISTOPHER
CAPURNO, nephew of Diosdado. He recalled that on August
9, 1993, at around 7:00 p.m., his uncles tricycle was hired by
Arsenio Cabral. Arsenio, Christopher and his stepfather,
Delfin Bolinas, were to attend thePamamahayag at the
Iglesia ni Kristo Chapel in Sta. Barbara. Diosdado was to
wait for them at the junction of Barangay Malanay. When
they returned to the said junction, Christopher saw accusedappellant with his tricycle parked beside Diosdados tricycle.
Accused-appellant was also waiting for passengers for his
tricycle.
Christopher, Arsenio and Delfin boarded Diosdados
tricycle on their way home. When they were about to leave,
barangay captain De Vera, who was then with Ico and an
unidentified companion, told Diosdado to fetch them
back. Diosdado agreed and proceeded to bring his passengers
to Malanay. That was the last time Christopher saw his
uncle Diosdado alive. At around 9:00 p.m., while preparing to
go to bed, Christopher heard two (2) gunshots.
The following day, at about 8:00 a.m., Christopher went to

the residence of accused-appellant to look for his uncle
Diosdado.
_______________
10
11
12
TSN, February 7, 1994, pp. 17-27.
TSN, February 7, 1994, pp. 29-33.
10
TSN, March 8, 1994, pp. 30-31, 35-36.
11
TSN, March 8, 1994, pp. 39-40.
12
Ibid., pp. 43-44.
124
124

Accused-appellant allegedly told him, Your uncle was (sic)

already in the morgue being swarmed with flies.
In his initial sworn statement, dated August 11, 1993,
Christopher tagged Barangay Captain De Vera as the last
person who hired Diosdados tricycle that fateful evening.
The following day, he executed another statement and
included the names of accused-appellant and Arsenio Cabral,
among others, as probable culprits. Christopher charged
that Diosdado and accused-appellant were not in good terms.
Allegedly, accused-appellant was grabbing (sinusulot)
Diosdados passengers. He also revealed that accusedappellant has a .38 caliber gun which, at one time, he
brandished to Diosdado, with the words: I am confident to
drive during night time because I have this (gun).
The prosecution also presented the nitrate report on
accused-appellant. On August 11, 1993, barangay captain De
Vera and accused-appellant were examined for the presence
of nitrates. Chemistry Report No. C-93-839, dated August 31,
1993, revealed that accused-appellants left hand was
positive for ni-trates. De Veras paraffin cast, on the other
hand, yielded negative results.
13
14
15
16
17
255
In a Decision, dated June 2, 1994, accused-appellant was

found guilty of murder. He was sentenced to suffer the
penalty of reclusion perpetua. He was further ordered to pay
the victims legal heir the following: P50,000.00 as
indemnity, P30,000.00 as moral damages, P15,000.00 as
actual damages, with costs.
Hence, the appeal.
We required the Office of the Solicitor General to file the
appellees brief. In lieu thereof, it filed a Manifestation and
Motion, recommending the acquittal of accused-appellant on
reasonable doubt.
18
______________
13
Ibid., pp. 45-46.
14
Exhibit O; Original Records, p. 155.
15
Exhibit F Original Records, p. 154.
16
Exhibit G; Original Records, p. 114.
17
Exhibit H Original Records, p. 117.
18
Decision, dated June 2, 1994; Rollo, pp. 89-123.
125

125
In the case at bar, the trial court cited several circumstances

to justify the conviction of accused-appellant, thus:
1. 1.A few hours before the killing, accused-appellant was
seen at the junction leading to Brgy. Malanay, Sta.
Barbara, Pangasinan, several meters away from the
crime scene;
2. 2.The day after the murder, accused-appellant
sarcastically told Christopher Capurno: Your uncle
was (sic) already in the morgue being swarmed with
flies;
3. 3.The victim and the accused-appellant were not in

good terms becarse accused-appellant was taking
some of the victims passengers. Accused-appellant
owns a .38 caliber gun, which he brandished to the
victim boasting that he was confident to operate his
tricycle at night because of his gun;
4. 4.The August 29, 1993 conversation between accusedappellant and his acquaintance which was allegedly
overheard by Lopez while Lopez was riding the
tricycle of accused-appellant.
5. 5.Several suspects, namely, Brgy. Captain Conrado De
Vera, Ismael Ico, Roger Loresco, Teofilo Bernardino,
Virgilio Santos, Arsenio Cabral, and Rupino Abon,
were tested for the presence of nitrates. Only
accused-appellants paraffin cast yielded positive
results for the presence of nitrates.
Patently, there is no direct evidence linking the accusedappellant to the killing of Diosdado Capurno. The present
appeal thus hinges on the sufficiency of the circumstantial
evidence
presented
against
the
accused-appellant.
Circumstantial evidence is sufficient for conviction if:
1. (a)There is more than one circumstance;
2. (b)The facts from which the inferences are derived are
proven; and
3. (c)The combination of all the circumstances is such as
to produce a conviction beyond a reasonable doubt.
No inflexible rule has been formulated as to the exact
quantity of circumstantial evidence which will suffice for
conviction. All that the case law requires is that the
circumstances proved must be consistent with each other,
consistent with the hypothesis that the accused is guilty, and
256
at the same time inconsistent with the hypothesis that he is

innocent, and with every other rational
126
126

hypothesis except that of guilty. In accord with the

constitutional presumption of innocence, jurisprudence also
holds that where the inculpatory facts and circumstances are
capable of two or more explanations, one of which is
consistent with innocence and the other with guilt, the
evidence does not fulfill the test of moral certainty and is not
sufficient to convict an accused.
Prescinding from these premises, we agree with the
recommendation of the Solicitor General that the accusedappellant should be acquitted. The various circumstantial
evidence relied upon by the trial court are too equivocal to
justify his conviction.
We hold that there was nothing unusual about the
presence of accused-appellant at the junction leading to
barangay Malanay a few hours before the murder of the
victim. It was established that tricycle drivers who ply the
Malanay-Tuliao route normally wait for their passengers in
the said junction. The records do not show that accusedappellant displayed any kind of hostility while posted at said
junction waiting for the customary passengers. His presence
at the junction cannot lead to any inference that he killed the
victim a couple of hours later.
Similarly, we cannot convict accused-appellant on the
basis of his August 29, 1993 conversation with an
unidentified co-passenger of Lopez. The conversation
allegedly went as follows:
19
20
21
(PROS. DUMLAO)
Q While you and that person beside you were riding in that
tricycle being driven by Wilfredo de Guzman . . ., what
happened next. . .?
(WITNESS)
A The person who rode in the tricycle gave greeting to
Wilfredo de Guzman, sir.
Q And what did Wilfredo de Guzman say, if he said
anything?
________________
19
People vs. Adolfma, G.R. No. 109778, December 8, 1994, 239 SCRA
67; People vs. Macatana, No. L-57061, May 9, 1988, 161 SCRA 235, 240.
20
People v. Cruz, G.R. No. 102880, April 25, 1994, 231 SCRA 759, 771-
772.
21
TSN, February 7, 1994, pp. 31-33.
127

127
A Wilfredo de Guzman said its (sic) fine, sir.
Q And then when Wilfredo de Guzman respondent (sic)
it is fine. . . what happened next after that?
A Then the person told him, I heard news that you are
also involved in a case, sir.
xxx xxx
xxx
Q And what was the response of Wilfredo de Guzman?
A He answered, I do not know what to do, sir.
xxx xxx
xxx
COURT:
Q After accused told, I do not know what to do, what
happened next?
A The person told him, you cant do otherwise but to tell
the truth, sir.
xxx xxx
xxx
PROS. DUMLAO:
Q And what was the response of Wilfredo de Guzman?
A He was silent, sir.
257
The alleged co-passenger of Lopez was not presented as a

witness by the prosecution. By itself, the conversation is too
loose to tie up accused-appellant to the killing of Capurno.
Reference was made to a case where accused-appellant
allegedly got involved. It is unclear whether it is a court case
and whether it is civil or criminal in nature. The nature of
his involvement was undefined. The tenor of the conversation
does not establish a fact from which it can be rationally
deduced that accused-appellant murdered Capurno.
The prosecution tried to establish the motive of accusedappellant in killing Capurno but in vain. Allegedly,
accusedappellant had been grabbing the tricycle passenger of
Capurno. If this were so, it should be Capurno who should
entertain a grudge against accused-appellant. Christopher
Capurnos logic is topsy-turvy and nobody corroborated the
alleged enmity between the accused-appellant and Diosdado
Capurno.
The records show that Christopher Capurno named other
suspects who allegedly had an axe to grind against the
victim. At least two (2) of them, Ico and De Vera, were
positively identified by Lopez as having chased the victim
that fateful night. And yet,
128
128

Medico-Legal Officer, Dr. Bandonill, stated was that the

gunshot wound of the victim could have been caused by a .32
or a .38 caliber bullet.
Finally, we come to the result of the paraffin test of
accused-appellant which revealed the presence of nitrates on
his left hand.
In a recent case, we reiterated the rule that paraffin test
is inconclusive. We held: Scientific experts concur in the
view that the paraffin test has . . . proved extremely
unreliable in use. The only thing that it can definitely
establish is the presence or absence of nitrates or nitrites on
the hand. It cannot be established from this test alone that
the source of the nitrates or nitrites was the discharge of
firearm. The person may have handled one or more of a
number of substances which give the same positive reaction
for nitrates or nitrites, such as explosives, fireworks,
fertilizers, pharmaceuticals, and leguminous plants such as
peas, beans, and alfalta. A person who uses tobacco may also
have nitrate or nitrite deposits on his hands since these
substances are present in the products of combustion of
tobacco. The presence of nitrates should be taken only as an
indication of a possibility or even of a probability but not of
infallibility that a person has fired a gun, since nitrates are
also admittedly found
23
24
________________
they were not immediately included in the murder charge.

Likewise, we cannot infer the guilt of the accusedappellant from the uncorroborated testimony of Christopher
that accused-appellant has a .38 caliber gun which he
brandished to the victim on one occasion. From this fact,
however, we cannot jump to the conclusion that the alleged
.38 caliber gun of accused-appellant is the murder weapon or
that it was accused-appellant who fired it to kill Capurno.
The evidence does not show the specific type of gun used in
the killing of Capurno. Nor the bullets. All that the NBI
22
22
Later on, however, Ico and De Vera were charged with Murder in the
Regional Trial Court of Dagupan City. The case against them, docketed as
Criminal Case No. 00704, is still pending before Branch 43.
23
TSN, January 26, 1994, p. 28.
24
See
Criminalities, Bankcroft
Whitney
Co.,
1915
ed.,
p.
141;
Richardson, Modern Scientific Evidence, Anderson Co., p. 495, cited inPeople

vs. Teehankee, Jr., G.R. Nos. 111206-08, October 6, 1995.
129
258

o0o
129
in substances other than gunpowder. In the case at bar, we

note, too, that accused-appellants left hand alone is positive
of nitrates. His right hand has no trace of nitrate. Did he use
his left hand in shooting the victim? Is he left handed? The
evidence of the prosecution does not provide the answer.
Accused-appellants defense of alibi may be weak as all
defenses rooted on alibi are weak. However, the prosecution
evidence is weaker. It failed to pass the test of moral
certainty. It cannot convict.
IN VIEW WHEREOF, the impugned decision of the
Regional Trial Court of Dagupan City (Branch 43), in
Criminal Case No. 12248, is REVERSED and SET ASIDE,
and accused-appellant WILFREDO DE GUZMAN is hereby
ACQUITTED of the crime charged due to reasonable doubt.
His immediate release from confinement is hereby ordered,
unless there is any other lawful cause for his continued
detention. Costs de oficio.
SO ORDERED.
Narvasa (C.J.,
Chairman), Regalado and Mendoza,
JJ., concur.
Francisco, J., On leave.
25
______________
Judgment reversed and set aside, accused-appellant

acquitted.
Notes.It does not necessarily follow that if accused is
negative for nitrites and nitrates he could not have fired a
gun. (People vs. Barte, 230 SCRA 401 [1994])
The constitutional presumption of innocence guaranteed
to every individual is of primary importance, and courts
should not precipitately conclude that a person is guilty when
his alibi appears weak. (People vs. Pidia, 249 SCRA
687 [1995])
259
G.R. No. 109169. December 12, 1997.

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.PO2
ROLANDO ABRERA, SPO3 ALMIRANTE GUILLERMO,
PO3 ARNOLD ARAZA, SPO3 GEORGE CRUZ and PO3
ROGER REYES, accused, PO2 ROLANDO ABRERA and
SPO3 ALMIRANTE GUILLERMO, accused-appellants.
*
Criminal Law; Murder; Evidence; Requisites in order that

circumstantial evidence may justify a conviction.Under the law,
circumstantial evidence may justify a conviction if the following
requisites concur: (a) there is more than one circumstance; (b) the
facts from which the inferences are derived are proven; and (c) the
combination of all the circumstances is such as to produce a
conviction beyond reasonable doubt.
________________
*
THIRD DIVISION.

People vs. Abrera
Same; Same; Same; Sworn statements, being taken ex-parte,

are almost always incomplete and often inaccurate, sometimes from
partial suggestion or for want of suggestions and inquiries.It is
hornbook knowledge, however, that sworn statements, being
taken ex-parte, are almost always incomplete and often inaccurate,
sometimes from partial suggestion or for want of suggestions and
inquiries. Thus, affidavits or sworn statements are generally
considered inferior to the testimony in open court where the
defense is given the opportunity to verify or becloud the testimony
of a prosecution witness.
Same; Same; Same; A finding that the paraffin test yielded
negative results is not conclusive evidence that an accused had not
fired a gun.Appellant Guillermos claim that the negative result

of the paraffin test conducted on him reflects his innocence of the
crime charged may not prosper. A finding that the paraffin test
yielded negative results is not conclusive evidence that an accused
had not fired a gun. It is possible for a person to fire a gun and yet
be negative for the presence of nitrates, as when he wore gloves or
washed his hands afterwards.
Same; Same; Same; Conspiracy; Conspiracy, like the crime
itself, must be proven beyond reasonable doubt and ones presence
in the crime scene, does not make an accused a conspirator.
However, contrary to the trial courts findings, conspiracy may not
be inferred from the proven inculpatory acts of the appellants. The
fast sequence of acts leading to the killing of Borbe elicited the
spontaneous, though erroneous and immoral, reactions of the
appellants. The spontaneous and impulsive acts of appellants
cannot but produce the conclusion that the same were triggered
without prior or apparent deliberation. Conspiracy, like the crime
itself, must be proven beyond reasonable doubt and ones presence
in the crime scene, does not make an accused a conspirator. The
absence of proof beyond reasonable doubt of the existence of
conspiracy among the appellants and their companions resulted in
their assumption of separate and individual responsibilities for the
crime of murder.
APPEAL from a decision of the Regional Trial Court of

Quezon City, Branch 86.
3

People vs. Abrera

Venancio C. Reyes, Jr. for accused-appellant Rolando
Abrera.
260
The Law Firm of Ross B. Bautista for accusedappellant Almirante Guillermo.

ROMERO, J.:
PO2
ROLANDO
ABRERA,
SPO3
ALMIRANTE
GUILLERMO, PO3 ARNOLD ARAZA, SPO3 GEORGE
CRUZ AND PO3 ROGER REYES, all members of the
Regional Police Intelligence Unit of the Philippine National
Police in Camp Karingal, Quezon City were charged with
MULTIPLE MURDER for the killing of Daniel Borbe, Jr., in
an information which reads:
Criminal Case No. O-92-36131.
That on or about the 14th day of May, 1992, in Quezon City,
Philippines, the above-named accused, conspiring, confederating
with and mutually helping one another, with intent to kill,
qualified with evident premeditation with the aid of armed men
and with the use of superior strength, did then and there, willfully,
unlawfully and feloniously attack, assault and employ personal
violence upon the person of one Daniel Borbe, Jr. y Paredes by
then and there shooting him with guns hitting him on the different
parts of his body, thereby inflicting upon him serious and mortal
wounds which were the direct and immediate cause of his death, to
the damage and prejudice of the heirs of the said Daniel Borbe, Jr.
y Paredes.
The same above-named accused were also charged with

FRUSTRATED MURDER for the wounding of Manuel
Aniban in another information which reads:
Criminal Case No. 36132.
That on or about the 14th day of May, 1992, in Quezon City,
Philippines, the above-named accused conspiring, confederating
with and mutually helping one another, with intent to kill,
qualified

People vs. Abrera
with evident premeditation, with the aid of armed men and with
the use of superior strength, did then and there, willfully,
unlawfully and feloniously attack, assault and employ personal
violence upon the person of MANUEL S. ANIBAN by then and
there shooting him with a gun, hitting him on the left chest,
thereby inflicting upon him serious and grave wounds which would
have caused the death of said Manuel S. Aniban, thus performing
all the acts of execution which would have produced the crime of
Murder as a consequence but nevertheless did not produce it by
reason or causes independent of their will, that is the timely and
able medical assistance rendered to said Manuel S. Aniban which
prevented his death, to the damage and prejudice of said Manuel
S. Aniban.
Araza and Reyes remained at large. Consequently, only

Abrera, Guillermo and Cruz were arraigned, all of whom
pleaded not guilty to the offenses charged.
The prosecution established that at around 10:30 or 11:00
in the evening of May 13, 1992, Manuel Aniban, Aris
Katapang (Aries Catapang), Samuel Perez, Nikki Tuason
and Ramil Reyes were in Casa Leoniza at the corner of
Examiner Street and Quezon Avenue, Quezon City, drinking
beer. Realizing that he had lost the ring he was wearing,
Manuel looked for it in the comfort room, then sought the
help of the police passing by in a mobile car, but the latter
just told him to go home. After having consumed three
pitchers of beer, the group left. When they arrived at the
Aniban home, Manuel asked his brother, Marlon Aniban, to
accompany him back to Casa Leoniza to search for their
fathers ring.
Failing to find the ring, Anibans group left Casa Leoniza
at around 2:00 a.m. As they did so, someone from the group
261
of Daniel (Dennis) Borbe poured beer on Manuels head while

another threw a glass at him. When two of Borbes
companions approached him, Manuel picked up a rattan
stick (yantok) and hit Alexis Aguilar, Borbes companion, on
the face. Manuel then fled towards a taxicab that his
companions had already boarded.
Despite the prosecution witnesses divergent testimonies,
the following sequence of events were found to have
transpired.
5

People vs. Abrera
Five armed men blocked the taxi and told the driver to stop.
Three of them stood in front of the cab while two others took
positions on each side of the same vehicle. Manuel, who was
near the left rear door of the taxicab, was shot. His brother
Marlon pulled him inside the cab but the man who shot
Manuel ordered all of them to get out after which they were
made to lie face down on the ground. As the man who shot
Manuel pointed his gun at him, Manuel said, Hindi ako
masamang tao, anak din ako ng police. (I am not a bad man,
I am also a son of a policeman).
When Manuel told them that he was wounded, two of the
armed men approached the cab. The one who came near the
left side of the cab was Araza. The other one, Guillermo,
went to the right side of the cab. Three of the armed men,
including Abrera and Cruz, remained in front of the cab.
Guillermo opened the door of the cab and told Aris to lie face
down on the ground. Araza was then talking with Marlon
who was pleading that his brother Manny be brought to a
hospital.
Meanwhile, Dennis Borbe was held by the collar by one of
the armed men and told to lie down on his belly, after which
the Aniban group was ordered to get back inside the cab
while Dennis was also told to sit in front beside the driver.
Thereafter, a man in blue shirt pulled out Denis from the

taxi and he said, Isa ka pa. Once outside the taxi, he was
repeatedly hit (pinagpapalo) with an instrument. Samuel
recognized one of the assailants as Abrera. When Dennis fell,
three armed men positioned near his head shot him
repeatedly (pinagbabaril).
Alexis recognized three of the armed men. Two of them
were in the courtroom as he testifiedGuillermo and Abrera.
During the incident, Alexis did not really see them fire their
guns but he heard shots being fired. However, as he went to
where Dennis was, Alexis passed Abrera and saw Guillermo
with a gun, near Dennis head.
Daniel Borbe, Jr. y Paredes, 24 years old, sustained the
following injuries: (a) a gunshot wound on the left side of his
face with the bullet exiting at the left side of the neck below
the left external auditory meatus; (b) a gunshot wound also
on the left side of the face below the left external auditory
mea6

People vs. Abrera
tus, fracturing the mandible and second and third cervical

vertebra, and lacerating the spinal cord, with the bullet
exiting at the right side of the neck; (c) a gunshot wound at
the thoracic area of the back with the bullet exiting at the
left shoulder, and (d) a gunshot wound at the posterior
aspect, proximal third of the forearm with the bullet exiting
at the anterior aspect, proximal third of the forearm. He also
sustained a grazing wound on the right arm and hematoma
on the left side of the face.
Manuel S. Aniban, 20 years old, suffered a gunshot wound
on the left chest that pierced the lung, with the bullet exiting
at the back. His injury required medical attendance for more
than one month.
1
262
Flordeliza Borbe, the physician-mother of the victim,

incurred expenses from May 14, 1992 up to the time she
testified in connection with the death of her son, in the total
amount of P308,106.07. The family spent P40,000.00 for
casket and services, P25,000.00 for food and similar
expenses, P17,296.17 for Himlayang Pilipino, or a total of
P82,518.70. According to Dr. Borbe, her son, Daniel, was a
third year law student at the MLQU College of Law while
working at the Quezon City Assessors Office with a monthly
salary of P3,000.00 at the time of his death.
The defendants did not deny their presence at the crime
scene when Borbe was killed. In the evening of May 13, 1992,
defendant SPO3 George Cruz was in a jeep with PO2
Cabrera and PO3 Araza. In another jeep were SPO3
Guillermo and SPO3 Reyes. They were cruising along
Quezon Boulevard in Quezon City because a phone call
informed the police that someone was selling shabu in the
area. Near the Pancake House, while Cruz was talking with
a bystander, he heard someone shouting, Hold-up, hold-up!
His companions suddenly jumped out of the jeeps. Araza
fired one shot. Abrera,
3
___________________
1
Exh. C.
Exh. N.
TSN, December 1, 1992, pp. 24-26.

People vs. Abrera
who was driving the jeep where Cruz rode, alighted

therefrom and fired a shot upwards. Then Cruz heard
another shot. He was so surprised that he called to Araza,
saying, Bakit, huwag! (Why, stop it!). Araza ignored him
and continued running towards the person who was
shouting. Cruz walked towards the parked taxi. When he

was already behind the taxi, Cruz heard successive shots.
Speculating on what would transpire next (nakiramdam
muna ako), Cruz saw Araza and Reyes aiming their guns at
a person sprawled on the ground. Cruz stepped backwards
the better to see the victim. Because he was around fifteen
(15) meters away, Cruz was powerless to pacify Araza and
Reyes. Apprehensive, Cruz left with Abrera to report the
matter to their office.
According to PO3 Rolando Abrera, he was with Cruz,
Guillermo, Reyes and Araza conducting a surveillance
mission after having been tipped off that someone was selling
shabu in front of the Pancake House in Quezon Avenue,
Quezon City. He was seated at the drivers seat when they
stopped cruising along the avenue as they heard someone
shout, Hold-up, hold-up. Then he saw a group chasing
another group. By then, the jeep where Guillermo and Reyes
rode was parked behind Abreras jeep five meters away on
the right lane going to the Welcome Rotonda. Upon hearing
the commotion, Abrera alighted from the jeep and pulled his
gun. Araza was already running six (6) meters ahead of him
towards the source of the shouts behind their jeep. Thinking
that he should defend himself, Abrera fired his gun upwards
after seeing Araza fire a warning shot. The taxi was about
fifteen (15) meters away while Araza was in front of Abrera
by ten (10) meters. After firing the first warning shot, Araza
fired another but Abrera did not see where the shot was
aimed at. Abrera proceeded to the left rear door of the taxi
and introduced themselves as policemen. Abrera pointed his
gun at the taxi passengers because he did not know then
whether they were the hold-uppers. He ordered them to
alight from the taxi but the passengers protested that they
were not
4
__________________
263
TSN, December 11, 1992, pp. 20-24.

People vs. Abrera
hold-uppers as in fact, they were sons of a policeman. One of

them named Marlon Aniban, who was seated at the rear
passenger seat, was clutching his brother Manuel who was
seated on the ground. Abrera noticed that Manuel had been
hit on the left shoulder.
As Abrera talked with Marlon, Araza went to the right
side of the taxi. Araza and Reyes started pulling out a person
from the taxi but before they could do so, a woman at the
rear seat said, He was the one who held us up. Then Abrera
heard successive shots. When he looked at the source of the
gunfire, Abrera saw Araza and Reyes side by side with their
guns still pointed at the man lying on the ground. By the
headlight of the taxi, Abrera saw a man sprawled around ten
(10) meters from him. Abrera went towards Arazas direction
and when they met, he asked Araza, Pare, bakit binaril
ninyo? Araza answered, Pare, hold-upper yan. Thereafter,
Araza boarded the taxi with the Anibans and told Abrera, I
am going to attend to this person who was hit. Abrera
wanted to approach the dead man but because the latters
companions were already approaching him, Abrera had
second thoughts, fearing that he might be involved in the
shooting even though he did not know why the man was shot.
Instead, Abrera went back to his vehicle. He did not see
Reyes who seemed to have suddenly disappeared. When he
was inside the jeep, Abrera told Cruz who was approaching,
Let us go to the office and report the matter. Cruz went
with him while Guillermo drove the vehicle.
SPO3 Almirante Guillermo was told by Reyes to follow the
vehicle of Abrera. When Guillermo was about to park the
jeep he was driving in front of the Pancake House in Quezon
5
Avenue, he heard a commotion behind them. Someone was

shouting, Hold-up, hold-up! from the direction of Examiner
Road near Quezon Avenue. Guillermo failed to park his jeep
properly because he saw Araza running towards the source of
the noise. Reyes suddenly jumped out of the jeep and
followed Araza. Abrera also followed the two. Guillermo then
heard
__________________
5
TSN, January 7, 1993, pp. 4-16.

People vs. Abrera
two gunshots and shouts of mga pulis kami. He did not

notice who fired the first shot but it was Abrera who fired the
second. Abrera directed his shot upwards and went to where
Araza and Reyes were. Guillermo saw Cruz talking with
someone inside a taxi and so he joined the latter. When he
reached the taxicab, Guillermo heard successive shots from
the front of the taxi which Araza and Reyes blocked in the
middle of Quezon Avenue. Guillermo failed to see who fired
the successive shots because his attention was directed at the
persons from Examiner Street who were chasing the taxi.
The incident happened so fast that when Guillermo noticed
Cruz moving backwards towards Abreras jeep, he also
boarded his jeep. He went back to their office in Sikatuna to
report the incident.
The trial court found Abrera and Guillermo guilty of the
crime of murder for the killing of Daniel Borbe and imposed
on them the penalty of reclusion perpetua and the payment
of indemnity in the amount of P50,000.00 and actual or
compensatory damages in the sum of P82,087.00. The same
accused were acquitted of the crime of frustrated murder for
6
264
the wounding of Manuel Aniban. Cruz was acquitted of both

charges.
In so ruling against the said defendants, the trial court
summarized the incident as follows:
There was no shout or shouts of Hold-up, hold-up. This was
merely an imaginary scenario created by the accused to justify
their unusually violent intervention. The incident, in actuality,
was no more than a commotion caused by the chasing of the
Aniban group by the Borbe group. There was absolutely no need
for the use of firearms. Clearly, the accused over-reacted.
As peace officers, their purpose should have been to pacify, and
to prevent harm or injury being inflicted on any one. Instead of
pursuing this purpose, they themselves inflicted the harm and
injury to the unarmed victims without inquiring into or
investigating what the commotion was all about.
_________________
6
TSN, January 11, 1993, pp. 3-7.
10
10
who approached the taxi on the left side. As regards

Guillermo, the trial court discredited his claim that he was
innocent simply because of the chemistry report indicating a
negative result of the paraffin test conducted on him to
determine whether or not he fired a gun. It ruled that said
report was hearsay evidence and therefore of no probative
value considering that the chemist who conducted the test
was not presented in court as a witness.
While finding that evident premeditation did not qualify
the killing, the trial court nonetheless held that murder was
committed in view of the presence of the qualifying
circumstances of taking advantage of superior strength and
aid of armed men. In conclusion, the trial court said that the
killing of unarmed Borbe was an execution without trial, in
the absence of not even a token inquiry or investigation on
what was the chasing of one group by the other group all
about.
Appellants Abrera and Guillermo are now before this
Court challenging the trial courts ruling on their culpability.
Appellant Abrera contends that the trial court erred in
convict-ing him of the crime of murder despite utter lack of
identification that he was (the) one who shot the victim,
Daniel Borbe, Jr., and in holding that the killing of Borbe
was at-

People vs. Abrera
That must be the scenario reported by the accused to their officer

at Camp Karingal, Quezon City, that same morning. Thus, the
only question asked by this officer from Aris Katapang (Aries
Catapang), was whether they asked help from the policemen, to
which Katapang answered: No sir. (November 13, 1992, p. 3).
__________________
7
Decision, p. 10.
Ibid., pp. 13-14.
The trial court ascribed responsibility for the wounding of

Manuel Aniban solely to Araza, repudiating in the process,
the prosecutions theory of conspiracy among the police
officers present in the crime scene. However, in the murder
case, it ruled that there was conspiracy among the policemen,
as shown by their acts, to kill Daniel Borbe, Jr. It found that
Abrera twisted the facts when he claimed that it was he
11

People vs. Abrera
11
tended with the circumstances of aid of armed men and

abuse of superior strength. Appellant Guillermo, for his part,
alleges that the trial court committed the following errors:
265
1. (1)disregarding the chemistry report in his favor for

being hearsay;
2. (2)brushing aside the defense evidence while giving
weight to the inconsistent and conflicting testimonies
of prosecution witnesses;
3. (3)convicting him of murder despite the prosecutions
glaring failure to prove his guilt beyond reasonable
doubt;
4. (4)finding the presence of conspiracy in the killing of
Borbe but ruling out conspiracy in the wounding of
Aniban;
5. (5)convicting him based on the qualifying
circumstances of superior strength and with the aid
of armed men; and
6. (6)convicting him and appellant Abrera while
acquitting their co-accused Cruz.
Considering the admission of appellants that they were in
the crime scene when Borbe was killed, the main issue that
should be resolved is the extent of their participation in the
commission of the crime.
Manuel Aniban, who was himself a victim of violence
inflicted by a member of appellant polices team, testified
that he saw three sparkling (kumikislap) guns that were
fired at Borbe. He failed to identify the three gunmen but
Samuel Perez confirmed the fact that three of the accused
fired their guns at Borbe.
Aris Catapang testified that it was appellant Guillermo
who approached the taxi at the right side where he was
situated and pointed a gun at them. However, it was
appellant Abrera who was in front of the taxi with Cruz.
After they were told to alight from the taxi and lie face down
on the ground, Aris heard successive shots. When he raised
his head, he saw three armed men pointing their guns at
Borbe. Two of
9
10
___________________
9
10
TSN, November 24, 1992, pp. 10-12.

TSN, November 26, 1992, pp. 56-60.
12
12

People vs. Abrera
them had their backs towards him but one was facing him.
Aris later identified the latter as Araza. On crossexamination, Aris identified one of the two men whose backs
were turned to him as appellant Abrera.
Aris did not mention appellant Abrera in his statement
simply because nobody asked him about the latter. He was a
bit confused about the person who would answer to the name
of Abrera but Aris was sure that appellant Abrera was one of
the two whose back was turned toward him as they assaulted
the victim.
Damaso Borbe, the victims brother, testified that aside
from the man in blue who was later identified as Araza,
appellant Guillermo also pulled his brother out of the taxicab
and brought him in front of it. Because he was concentrating
on asking his companions where his brother would be
brought, Damaso failed to see who fired the first shot. When
he went near his brother as continuous and rapid firing was
taking place, Damaso identified Araza and appellant
Guillermo as two of the armed men he saw pointing their
guns at his brother immediately after the firing of successive
shots that snuffed out his brothers life.
Alexis Aguilar was more categorical in identifying
appellants Abrera and Guillermo as the perpetrators of the
crime.
All these testimonial evidence point to the culpability of
appellants. All witnesses were one in identifying Araza as
one of the three gunmen. Aris Catapang and Alexis Aguilar
11
12
13
14
15
16
266
pinpointed Abraza and Abrera as two of the three

Damaso Borbe and Alexis Aguilar were certain
appellant Guillermo was the third gunman.
concentration of testimonies indubitably prove
appellants were two of the
while
that
This
that
__________________
11
TSN, November 16, 1992, pp. 22-23, 27-29.
12
TSN, November 17, 1992, pp. 21-23.
13
Ibid., p. 24.
14
TSN, November 25, 1992, p. 50.
15
Ibid., p. 51.
16
TSN, November 20, 1992, pp. 22-24.
victim, as they all appear to have seen the appellants only

immediately after hearing the successive shots, may not
suffice to bail appellants out of culpability. Under the law,
circumstantial evidence may justify a conviction if the
following requisites concur: (a) there is more than one
circumstance; (b) the facts from which the inferences are
derived are proven; and (c) the combination of all the
circumstances is such as to produce a conviction beyond
reasonable doubt. In this case, the following circumstances
have been proven:
18
1. (1)Appellants were in the crime scene when it

occurred.
2. (2)They were all armed with guns as policemen.
3. (3)They were seen pointing their guns at the victim
lying on the ground immediately after the witnesses
heard the successive gunshots, and
13

People vs. Abrera
13
three armed men who converged on the helpless unarmed

victim, inflicting on him four (4) wounds that caused his
death on the spot. These wounds are congruent with the
foregoing testimonial evidence that the victim was near the
assailants who shot him.
According to Dr. Rolando Mendez who conducted the
autopsy on the victim, the muzzle of the gun was more or less
24 inches from the face of the victim. He opined that with
respect to the first wound on the left side of the victims face,
the assailant would have been on top and a little to the left
and a little behind the victim. The second wound would have
likewise been caused by an assailant who was in front and a
little to the left of the victim. Dr. Mendez made the same
opinion with respect to the third and fourth wounds of the
victimthe assailant would have been behind and a little to
the left of the victim.
Considering that the incident happened quickly, the
eyewitnesses failure to actually see the shooting of the
17
_________________
17
TSN, November 12, 1992, pp. 15-20.
18
Sec. 4, Rule 133, Revised Rules on Evidence, People v. Bracamonte,G.R.
No. 95939, June 17, 1996, 257 SCRA 380, 394-395.

14
14

People vs. Abrera
1. (4)Not one member of the two groups chasing each
other was proven to have been carrying any firearm
during the incident.
From these circumstances, it can easily be inferred that

appellants were the culprits. These circumstances were
established by the testimonies of prosecution witnesses
267
whose credibility could not be demolished by the defense.

Accordingly, the trial court correctly gave weight and
credence to said testimonies especially because it was in a
better position to gauge the credibility of the witnesses than
this Court.
In an effort to obtain exoneration from the crime of
murder,
appellant
Guillermo
points
out
certain
inconsistencies in the prosecution evidence. These alleged
inconsistencies are those between sworn statements and
testimonies of witnesses Catapang and Marlon Aniban. It is
hornbook knowledge, however, that sworn statements, being
taken ex-parte, are almost always incomplete and often
inaccurate, sometimes from partial suggestion or for want of
suggestions and inquiries. Thus, affidavits or sworn
statements are generally considered inferior to the testimony
in open court where the defense is given the opportunity to
verify or becloud the testimony of a prosecution witness.
The other alleged inconsistencies may not derail at all
evidence proving appellants culpability considering that
these are minor ones. Notably, the failure of Manuel to
identify the three gunmen was explained by the fact that he
himself was already wounded at the time and could not be
expected to focus on the identities of Borbes assailants.
Witness Damaso Borbes failure to identify appellant
Guillermo in his sworn statement was brought about by the
fact that he still did not know him by name then. Neither
may his testimony that only one person blocked the taxi belie
the testimonies of the other witnesses. As earlier noted, the
incident happened so fast that the perceptions of all
witnesses could not be expected to be congruous with the
others. In fact, the failure of
19
__________________
19
People v. Bayani, G.R. No. 120894, October 3, 1996, 262 SCRA 660, 680.
15

People vs. Abrera
15
the prosecution witnesses to testify uniformly bespeaks the

truth. They could not have been expected to see everything
and everyone considering the fast pace of the incident and
the different perspectives they had. What is important is that
all of the witnesses identified appellants as the policemen
who brutally shot Daniel Borbe.
Appellant Guillermos claim that the negative result of the
paraffin test conducted on him reflects his innocence of the
crime charged may not prosper. A finding that the paraffin
test yielded negative results is not conclusive evidence that
an accused had not fired a gun. It is possible for a person to
fire a gun and yet be negative for the presence of nitrates, as
when he wore gloves or washed his hands afterwards.
However, contrary to the trial courts findings, conspiracy
may not be inferred from the proven inculpatory acts of the
appellants. The fast sequence of acts leading to the killing of
Borbe elicited the spontaneous, though erroneous and
immoral, reactions of the appellants. The spontaneous and
impulsive acts of appellants cannot but produce the
conclusion that the same were triggered without prior or
apparent deliberation. Conspiracy, like the crime itself,
must be proven beyond reasonable doubt and ones presence
in the crime scene, does not make an accused a
conspirator. The absence of proof beyond reasonable doubt of
the existence of conspiracy among the appellants and their
companions resulted in their assumption of separate and
individual responsibilities for the crime of murder.
The killing of Borbe was qualified by abuse of superior
strength. Clearly, the victim was no match to his three
armed
20
21
22
23
____________________
268
20
People v. Hubilo, G.R. No. 101741, March 23, 1993, 220 SCRA 389, 399
citing People v. Pasiliao, G.R. Nos. 98152-53, October 26, 1992, 215 SCRA
163.
21
People v. Ducay, G.R. No. 86939, August 2, 1993, 225 SCRA 1, 18.
22
People v. Lacao, Sr., G.R. No. 95320, September 4, 1991, 201 SCRA 317,
329.
23
People v. Dulatre, Jr., 318 Phil. 128, 141-142 (1995).
16
16

People vs. Abrera
assailants. Unarmed, he could not have even entertained the

thought of defending himself since appellants had identified
themselves as policemen. Appellants sudden entry into the
crime scene when he saw the two groups of young men
chasing each other may be commendable if done in
accordance with their duty to enforce the law. However, after
appellant Guillermo pulled the victim from the taxicab,
Abrera repeatedly beat him, causing him to collapse. It was
in this defenseless position that appellants and Araza
repeatedly fired their guns at him.
The other aggravating circumstance of aid of armed men
may not be appreciated in this case considering that the
appellants and their companions were themselves all armed
and apparently acting under the same impulsive purpose.
The trial court therefore correctly imposed upon
appellants the penalty of reclusion perpetua for the crime of
murder in view of the absence of mitigating or aggravating
circumstances in the commission of the crime. We find,
however, that the award of compensatory damages had not
been fully justified, the prosecution having failed to present
receipts evidencing the expenses incurred by the victims
family as a consequence of the commission of the crime.
Accordingly, pursuant to existing jurisprudence, appellants
shall indemnify the victims family in the amount of
24
P50,000.00. Moreover, because the crime resulted in moral

shock as it was committed by peace officers who are
supposed to uphold the law, the appellants shall pay the
victims family moral damages of P100,000.00. The
commission of the crime likewise calls for the imposition of
exemplary damages in the amount of P20,000.00 by way of
example for the public good.
The life of a working law student would not have been
wasted had the police officers involved in this case acted in
accordance with law and with due restraint in the use of
force. By their senseless act of immediately firing at people
after
25
__________________
24
See: People v. Piring, 63 Phil. 546, 553 (1936).
25
Arts. 2217 & 2219(1), Civil Code.
17

People vs. Abrera
17
initially firing warning shots and without as much as

verifying what all the commotion was about, appellants and
their companions sadly demonstrated that indeed there was
police brutality in this case. Their indiscriminate use of
firearms blitzkrieg-style, once more defiled the name and
reputation of the police force that is expected to protect the
citizenry. What saddens us doubly is the apparent laxity with
which the appellants superiors treated the other accused in
this case. They were allowed to go scot-free notwithstanding
that, as early as the day of the crime, their involvement had
been established by the investigating officer. Protecting ones
peers or subordinates may be laudable only if done in
accordance with law but a cover-up is not justifiable.
On the other hand, the courageous act of the Aniban and
Borbe groups in setting aside partisanship to take the
269
witness stand in order that the erring police officers could be

meted the full force of the law, should be commended. Were it
not for their vivid recollection of the incident, undesirable
elements within the ranks of the police force can hardly be
weeded out.
WHEREFORE, the Decision appealed from finding
appellants Rolando Abrera and Almirante Guillermo guilty
beyond reasonable doubt of the crime of murder for the
killing of Daniel Borbe, Jr. and imposing on them the penalty
of reclusion perpetua, is hereby AFFIRMED subject to the
MODIFICATION that appellants shall be liable solidarily to
the heirs of the victim for civil indemnity in the amount of
P50,000.00, moral damages of P100,000.00 and exemplary
damages of P20,000.00.
Let a copy of this decision be furnished the Department of
Interior and Local Government so that proper administrative
sanctions, if warranted, may be imposed on the superiors of
Arnold Araza and Roger Reyes for having allowed them to
escape from the clutches of the law. The same Department
and the National Bureau of Investigation, which shall
similarly be furnished a copy of this Decision, are enjoined to
cause the immediate apprehension of Arnold Araza and
Roger Reyes so that they may be prosecuted for the crimes
subject of this decision. Costs against appellants.
witnesses for the prosecution were the ones telling the truth.
(People vs. Tuson, 261 SCRA 711[1996])
o0o
18
18

Tan vs. Court of Appeals
SO ORDERED.
Narvasa (C.J.
Chairman), Melo, Francisco andPanganiban, JJ., concur.
Appealed decision affirmed with modification.
Note.The congruence between the testimonial and the
physical evidence leads to the inevitable conclusion that the
270
G.R. No. 121195. November 27, 1996.

PEOPLE
OF
THE
PHILIPPINES,
plaintiffappellee, vs.ENEMESIO ABELLANOSA and CRISANTO
ABELLANOSA, JR., defendants-appellants.
*
Criminal Law; Evidence; Witnesses; Conclusions and findings

of fact of the trial court are entitled to great weight on appeal and
should not be disturbed except for strong and valid reasons, such as
when the trial judge gave credence to the obviously incredible and
patently fabricated testimonies of the prosecutions witnesses.It is
____________________________
*
THIRD DIVISION.
723
7
23
People vs. Abellanosa

hornbook doctrine that ordinarily, conclusions and findings of
fact of the trial court are entitled to great weight on appeal and
should not be disturbed except for strong and valid reasons
because the trial court is in a better position to examine the
demeanor of the witnesses while testifying. However, after a
thorough review of the evidence presented, we find that the
aforecited rule of evidence does not hold in this case: It is evident
to us that the trial judge gave credence to the obviously incredible
and patently fabricated testimonies of the prosecutions witnesses.
Same; Same; Same; Proof of the crime without sufficient proof
of the identity of its author cannot result in a conviction.The duty
of the prosecution is not only to show clearly that a crime had been
committed, but more importantly, to prove beyond reasonable
doubt the identity of the person or persons who committed the
crime. Proof of the crime without sufficient proof of the identity of
its author cannot result in a conviction. In the present case, the
identification of accused-appellants does not measure up to the
standard of moral certainty required in criminal cases and,

consequently, their conviction cannot be upheld.
Same; Same; Same; We have no test of the truth of human
testimony, except its conformity to our knowledge, observation, and
experience.We cannot emphasize enough the oft-stated rule that
evidence to be believed, must proceed not only from the mouth of
a credible witness but the same must be credible in itself.
Evidence is credible when it is such as the common experience of
mankind can approve as probable under the circumstances. We
have no test of the truth of human testimony, except its conformity
to our knowledge, observation, and experience. In this case, the
trial court relied mainly on the testimonies of prosecution
witnesses Crispulo Sanchez and Victoriano Damas who swore that
they were squatting out in the open, husking corn a mere 10
meters away from the sleeping Memong, when out of nowhere
accused-appellants appeared, and completely unmindful of the
presence
of
the
two
onlookers,
with
unsurpassed sangroid,murdered the victim in his sleep. Moreover,
they also testified that after having witnessed the brutal and
gruesome slaying of their master, they did not even bother to check
if he was still alive, nor did they attempt to seek help from their
neighbors. Oddly, they continued husking corn, as if nothing had
happened.
724
24
Same; Same; Murder; The significance of physical evidence in
the determination of the guilt or innocence of the accused is
paramount.Quite apart from the fact that the prosecution
witnesses testimonies by their very nature are not deserving of
credence, the physical evidence introduced contradicted the import
of their testimony, particularly as to the place where the victim
was killed. This doubt is brought out by the observation of Rodolfo
271
Pagayon, the PNP officer in Salvador, Lanao del Norte who

investigated the incident the morning after the crime was
committed. He said that when he examined the cadaver and the
surroundings, he did not see any blood stains under the victims
folding bed or on the peelings of corn piled beneath the bed.
Furthermore, we take note of the fact that a garand rifle is a semiautomatic rifle which expels an empty shell everytime a shot is
fired. Prosecution witnesses Sanchez and Damas testified that the
firearms used in the shooting were fired twelve times. But PNP
investigating officer Rodolfo Pagayon testified that he did not find
even one empty shell at the scene of the crime. Nor was he able
to locate the garand rifle of the victim. These material findings as
to the physical evidence render the testimony of the two
prosecution witnesses unworthy of credit. Moreover, the
prosecution failed to present in evidence the folding bed and the
clothes worn by the victim when he was shot, which, had they been
presented, could have thrown light upon the questions at hand.
The significance of the physical evidence in the determination of
the guilt or innocence of the accused is paramount. The failure of
the prosecution to account for the whereabouts of the folding bed
and clothes of the victim does not inspire belief in the already
tenuous and questionable proof of the guilt of the accused.
Same; Same; Same; Paraffin Test; The fact that the accused
tested positive for gunpowder nitrates does not conclusively show
that they had indeed fired the murder weapon, or any gun for that
matter, for such forensic evidence should be taken only as an
indication of possibility or even of probability but not of
infallibility, since nitrates are also admittedly found in substances
other than gunpowder.So too, the fact that both accusedappellants tested positive for gunpowder nitrates does not
conclusively show that they had indeed fired the murder weapon,
or any gun for that matter, for such forensic evidence should be
taken only as an indication of possibility or even of probability but
not of infallibility, since nitrates are also admittedly found in
substances other than gunpowder. In this case, the accusedappellants claim that the companion of officer
725
7
25

Robas fired a gun immediately prior to the test, held the spent
shells in his hand and deliberately rubbed the palm on the back of
their hands while taking the paraffin test, should have placed the
trial court and the prosecution on alert for the possibility that the
paraffin test could have been rigged.
Same; Same; Same; Alibi; When an accused puts up the
defense of alibi, the courts should not at once have a mental
prejudice against him, for, taken in the light of all the evidence on
record, it may be sufficient to acquit him.Juxtaposed against the
prosecutions theory that the accused-appellants were the ones
who did in the victim are the latters denial and defense of alibi.
While it has been held that alibi is indeed the weakest of all
defenses, however, judges should not at once look with disfavor at
the defense of alibi. Alibi should be considered in the light of all
the evidence on record for it can tilt the scales of justice in favor of
the accused. Stated differently, (w)hen an accused puts up the
defense of alibi, the courts should not at once have a mental
prejudice against him. For, taken in the light of all the evidence on
record, it may be sufficient to acquit him. It is precisely when the
prosecutions cause is weak, as in this instance, that the defense of
alibi interposed by the accused-appellants assumes importance
and becomes crucial in negating x x x criminal liability.
Same; Same; Same; Same; Although alibi is weak, it should
not be outrightly dismissed as false, like when the accuseds alibi
appears to be the truth when viewed in the light of the inherent
weaknesses of the prosecutions case.The accused-appellants both
claim that in the wee hours of the night when the victim was slain,
they were already sleeping in their respective dwellings and were
272
awakened only by the sound of the gunfire. Prior thereto, the

accused contend that they had had dinner with their kin and
Enemesio Abellanosa in particular claims having watched
betamax after dinner and before turning in for the night. These
are all actuations not contrary to but in accord with ordinary
human experience. Although alibi is weak, it should not be
outrightly dismissed as false. The appellants alibi in fact appears
to be the truth when viewed in the light of the inherent
weaknesses of the prosecutions case.
Same; Same; Same; Constitutional
Law; Presumption
of
Innocence; It is axiomatic that an accused under our law is entitled
to an acquittal unless his guilt is proved beyond reasonable
doubt.The
PANGANIBAN, J.:
Fundamental is the doctrine that the prosecution must rely
on the strength of its own evidence rather than on the
weakness of the defenses. And when faithful observance of
this principle is wanting, as in the instant case, the
constitutional presumption of innocence prevails and the
accused are entitled to an acquittal.
This is an appeal from the judgment of conviction for
murder dated February 10, 1995 rendered by the Regional
Trial Court of Iligan City, Branch 6, against the accused
Enemesio Abellanosa and Crisanto Abellanosa, Jr.
The Information filed by Provincial Prosecutor Felix
Fajardo before the trial court on June 2, 1993 reads as
follows:
1
726

Frederico M. Gapuz for accused-appellant.
26
Constitution provides that in all criminal prosecutions, the
accused shall be presumed innocent until the contrary is proved.
It is thus axiomatic that an accused under our law is entitled to
an acquittal unless his guilt is proved beyond reasonable doubt.
In fact, unless the prosecution discharges the burden of proving
the guilt of the accused beyond reasonable doubt the latter need
not even offer evidence in his behalf. Clearly, the prosecution has
utterly failed to discharge its burden of proof. A review of the
decision and the evidence on record merely engenders more doubts
in our mind as to the guilt of the accused-appellants. We perforce
rule that Enemesio Abellanosa and Crisanto Abellanosa, Jr. are
entitled to a mandatory acquittal.
APPEAL from a judgment of the Regional Trial Court of

Iligan City, Br. 6.
____________________________
1
In Crim. Case No. 07-4724. Rollo, pp. 46-57.
Presided by Judge Valerio M. Salazar.
Rollo, p. 27.
727

727
That on or about the 26th day of April, 1993 at Salvador, Lanao

del Norte, Philippines and within the jurisdiction of this Honorable
Court, the above-named accused, conspiring, confederating and
mutually helping one another with John Doe, who is still at large
and whose case is still pending in the lower court, did then and
there willfully, unlawfully and feloniously, with treachery, evident
premeditation, taking advantage of superior strength and
nighttime, and with intent to kill, attack, assault and use personal
violence upon one Maximo Abadies by shooting the latter with
273
firearms thereby inflicting upon him gunshot wounds which were

the direct and immediate cause of his death soon thereafter.
CONTRARY to and in VIOLATION of Article 248 of the
Revised Penal Code.
Arraigned on June 2, 1993, both accused, assisted by their

counsel, individually pleaded not guilty to the crime
charged. They were re-arraigned on July 5, 1993 as the
original Information failed to include the word Jr. in
appellant Crisantos name. In any event, both entered the
same plea of not guilty at their re-arraignment.
The
Facts
According to the Prosecution
The version of the prosecution, as summarized by the trial
court, is based on the testimonies of prosecution witnesses
Crispulo Sanchez, Victoriano Damas, Ernesto Tabalina,
Remedios Damas, Elena Abadies, Dr. Cesar Anthony Sta.
Maria, SPO3 Elmer F. Robas and Senior Inspector Filipinas
Francisco Papa, as follows:
4
On April 26, 1993 Maximo Abadies was a resident of Bgy.

Mabatao, Salvador, Lanao del Norte. He was also the incumbent
Bgy. Captain. He owned about 64 hectares of coconut and corn
lands, a substantial portion of which is located in his barangay. In
addition, he was engaged in the business of making hollow blocks
at
____________________________
4
Record, p. 57.
Decision, pp. 1-3, rollo, pp. 46-48.
728
728

his residence. His live-in worker was Crispulo Sanchez who has
been with him for two years. He also owned two tractors which he
hired out for plowing. At about 7:00 oclock in the evening of April
26, 1993, Maximo Abadies brought along Crispulo Sanchez and

Victoriano Damas, a tenants son, to his corn land some 200 meters
away from his residence to guard the newly harvested corn which
were piled thereat. They brought with them a canvass or tarpaulin
tent, a folding bed and a wick lamp. Mr. Abadies carried a garand
rifle. Upon arrival at the cornfield, they set up the tent. They
erected a steel post in front of a coconut tree and installed a
parallel bar connecting the post and the tree. They draped the
canvass across the parallel bar and tied the four ends of the
canvass to corn stalks on the ground. Then they unfolded the bed
on the ground under the tent directly below and along the same
line as the parallel bar. Maximo Abadies laid down on the bed,
placed his rifle on his side and went to sleep. His head was
towards the coconut tree and his feet were near the post. On the
ground near his feet was the lighted wick lamp. Victoriano and
Crispulo went to their respective piles of corn about ten meters
from the tent. Each squatted before their piles of corn facing
towards the feet of Mr. Abadies and proceeded to unhusk the corn.
At about 11:45 oclock in (the) evening, Crispulo stood up and went
inside the cornfield to defecate. After relieving himself, he
returned to his corn pile and continued unhusking corn. At this
juncture, Crispulo and Victoriano noticed three persons standing
by the bed where Maximo Abadies was sleeping. (They) recognized
two of them as Enemesio Abellanosa and Crisanto Abellanosa, Jr.
but the third person was a stranger. Enemesio was holding a
garand rifle while Crisanto, Jr., was holding a revolver. Thereupon
Enemesio shot the sleeping Maximo Abadies eight times after
which he stepped back and said: Maximo Abadies is dead.
Crisanto, Jr., picked up the garand rifle of the victim and fired four
shots to the air. Then they left.
Crispulo and Victoriano remained rooted squatting in front of
their piles of corn. (They) stayed in this position, unmoving and
without sleep until 5:00 oclock in the morning of April 27 when
Francisca Alforo arrived. She went directly to her pile of corn
nearer the bed of the victim and proceeded to unhusk the corn
274
without noticing that Mr. Abadies was dead. Neither Crispulo nor
Victoriano told her. A few minutes later, Victoriano left telling
Crispulo that he will pasture his cow and the cow of Mr. Abadies.
Later, Tony Alestre arrived and discovered that Mr. Abadies was
lying dead on his bed. Several persons also arrived even as
Crispulo went home to the
729

729
house of the deceased. He met Mrs. Elena Abadies and told her
Mr. Abadies was dead but the latter already knew about it. He did
not tell her who killed her husband. Later that morning, the police
brought Crispulo and Victoriano to the Salvador Police Station
where they were investigated. They told the police that they did
not know who shot and killed the deceased.
On April 29, 1993, they were again brought to the Salvador
Police Station where they saw Angelito Bation, Pedro Bation,
Federico Bacus, Enemesio Abellanosa and Crisanto Abellanosa, Jr.
SPO3 Elmer Robas, a Crime Laboratory Technician of the PNP
Regional Unit 10, Cagayan de Oro City, took paraffin casts of the
hands of all seven of them upon the request of the Salvador Police
Station. Mr. Robas took the paraffin casts to the Crime Laboratory
in Cagayan de Oro City and submitted them to Sr. Inspector
Filipinas Francisco Papa, forensic analyst, for forensic
examination. Inspector Papa performed the required examination
and reduced his (sic) findings in writing under Chemistry Report
No. C-0007-93, Exh. N. The results revealed that the paraffin casts
of Enemesio Abellanosa, Crisanto Abellanosa, Jr. and Crispulo
Sanchez were positive for gunpowder contents or nitrates. She
concluded that the three fired firearms. The results for the other
four were negative. This report was transmitted to the Salvador
Police Station.
On May 4, 1993, Crispulo Sanchez was arrested at the house of
the victim on the basis of the results of the paraffin test. He was
detained at the Salvador Municipal Jail. He found that Enemesio

Abellanosa and Crisanto Abellanosa, Jr. were also detained. The
three of them were incarcerated in the same cell. In the late
afternoon of May 5, Crispulo was released but he slept overnight in
the Municipal Building. At about 10:00 oclock in the morning of
May 6, he was brought to the Maranding Police Station, Lala,
Lanao del Norte and later to the Tubod Police Station, Tubod,
Lanao del Norte. He was presented to the CIS agent Boy Sanchez,
who is not a relative. He slept at the house of Agent Sanchez. On
May 7, 1993, he executed an affidavit taken by CIS Agent Tirso
Taclob at the CIS Sub-headquarters in Tubod, Lanao del Norte
revealing formally for the first time that the assailants of Maximo
Abadies were accused Enemesio Abellanosa and Crisanto
Abellanosa, Jr.
Meanwhile, Victoriano Damas was brought by a son-in-law of
the victim, to Municipal Judge Demetrio Sira, Jr. who was
conducting a preliminary investigation in connection with a
complaint for murder filed on May 4, 1993 by the Officer-in-Charge
of Salvador Police Station, SPO4 Juan Albino against Enemesio
Abellanosa,
730
730

Crisanto Abellanosa and Crispulo Sanchez before the 5th MCTC of

Lala-Salvador. He executed an affidavit before Judge Demetrio
Sira, Jr., Exh. B. On May 7, 1993, he executed another affidavit
taken by CIS agent Tirso Taclob at the CIS Subheadquarters in
Tubod, Lanao del Norte, Exh. A. In both affidavits, he pointed to
the accused Enemesio Abellanosa and Crisanto Abellanosa, Jr. as
the perpetrators in the killing of Maximo Abadies.
Version of the Defense

The Solicitor General, who recommended acquittal of the
accused for failure of the prosecution to discharge its
275
bounden duty to prove their guilt beyond reasonable doubt,

summarizes their story as follows:
6
x x x appellants denied having perpetrated the murder. Appellant

Crisanto Abellanosa testified that on that fateful night of April 26,
1993, after taking his supper, he watched betamax at appellant
Enemesio Abellanosas (his uncle) house where he also resides
from 7:30 P.M. up to 9:00 P.M., after which he went to sleep (pp. 67, TSN, August 2, 1994).
While asleep he was jolted by two (2) gunshots followed by
three (3) more. He remained lying down until he heard Gleceria
Bocus call for appellant Enemesio. Then Gleceria asked Enemesio
about the shots who told her that the shots were merely fired into
the air (pp. 8-10, TSN, ibid.). The next morning, April 27, 1993,
Crisanto, as was his routine work, fed the horses, after which he
fetched water. While fetching water, he met Raul Abellanosa who
told him that Memong, (referring to Maximo Abadies) their
Barangay Captain, was dead. Crisanto went back to their house,
then proceeded to the farm passing by the barn owned by Memong
which was unoccupied (pp. 12-13, ibid.).
On April 29, 1993, he was picked up by policemen of Salvador,
Lanao del Norte and brought to the Salvador Police Station where
he was told that he was a suspect in the killing of Memong (pp. 1415, ibid.). A policeman from Cagayan de Oro City ordered him to
wash his hands with soap. After waiting for sometime inside the
____________________________
6
Manifestation and Motion In Lieu of Appellees Brief, submitted by the Office
of the Solicitor General on October 4, 1996, pp. 7-11.
731

731
police station, he heard two (2) gunshot from the outside. The
person who must have fired the shots entered with two (2) spent
shells on hand and ordered him to place his hands atop the table
palms down. The policeman then tapped Crisantos back hand and
rubbed it on with his own hands. After which Crisantos hands
were poured with melted wax over which a cotton was laid (pp. 1517), TSN, August 2, 1994). After a few moments, the wax softened
and Crisanto was told to pull out his hands. Next to undergo the
same process was his uncle appellant Enemesio (pp. 17-18, ibid.).
Meanwhile, appellant Enemesio Abellanosa, for his part,
testified that on the morning of April 26, 1993, after taking
breakfast, he, together with his wife, three children, a cousin,
Raul, a nephew (coappellant Crisanto Abellanosa) and some
laborers, went to his coconut plantation to extract copra meat from
gathered coconuts (pp. 4-6, TSN, August 3, 1994). They stopped
work that day between 4:00 to 5:00 P.M. after which they
proceeded home. Thereat, while the children and his wife attended
to some household chores, he viewed Betamax films. Then Enteng
Abadies, son of Memong (the victim, the then Barangay Captain),
fetched his wife, Patricia, she being the Barangay Treasurer.
Patricia left and came back about 6:30 P.M. After taking supper,
he returned to watch TV and about 9:00 P.M., he retired (pp. 711, ibid.).
Having dozed for sometime, he was awakened by gunshots. He
roused his wife, told her about the shots, then lighted a lamp.
Conscious of prevalent cattle rustling and livestock thieveries in
their area, he opened a window fronting their corral to see if the
animals were still there. Then, a certain Nang Ceria (Gleceria
Bacus) called for him and inquired about the shots which she also
heard. He advised Nang Ceria to just stay inside her house (which
was a mere 25 meters away from his) and told her to just listen
and observe for more developments. Nang Tasia (Anastacia
Borlaza) came and inquired about the reason for the shots as she
was anxious about her husband who at that time was still tending
to their cornfield. Together with the rest of the household,
appellant went back to sleep. He woke up about 5:00 or 6:00 A.M.
the next day. His cousin, Raul, arrived and informed him that Noy
Memong was dead (pp. 12-21, TSN, ibid.).
276
He and his wife immediately went to the death scene and there
saw the dead body of Memong lying on a folding bed. On board a
motorcycle thereafter, they left for the municipal hall of Salvador
as his wife was to attend a conference of all barangay treasurers of
the municipality. Upon reaching the municipal hall, he saw some
732
732

policemen revving up the patrol car preparing to go to Mabatao,

the place of the incident, with the Municipal Mayor. Having
dropped his wife at the municipal hall, he went home with Itsoy
Tumogsok, a PC and son-in-law of the victim, who rode with him
in tandem. Upon reaching Mabatao, they proceeded to the victims
house. Itsoy alighted while Enemesio went home to garage his
motorcycle. He returned to Memongs house to assist the victims
family in whatever way he can. While there, he would occasionally
talk to Nang Elen, the widow, on the matter of her husbands
death (pp. 22-26, ibid.).
Incidentally, pictures of the victims cadaver submitted on

record show that the right portion of the victims head was
shattered and the left side of his abdomen had a bullet hole.
The certificate of death states the cause of death as massive
cerebral injury and gunshot wounds.
Although the trial court was cognizant of the prosecutions
lapses in the presentation of evidence, it nonetheless gave
weight to the eyewitness testimonies of Crispulo Sanchez and
Victoriano Damas and to the fact that gunpowder residue
was found on the hands of both accused-appellants. Hence, it
ruled that the latters defense of alibi may not prevail over
the positive identification by the prosecutions witnesses. The
court a quo found appellants guilty, thus:
7
WHEREFORE, the court finds the accused ENEMESIO

ABELLANOSA and CRISANTO ABELLANOSA, JR. guilty beyond
reasonable doubt as principals of the crime of murder, qualified by

treachery, defined and penalized in Art. 248 of the Revised Penal
Code and there being neither mitigating nor aggravating
circumstances present hereby sentences each of the said accused to
suffer the penalty of RECLUSION PERPETUA with all the
accessory penalties prescribed by law and to indemnify the Heirs
of Maximo Abadies the sums of P105,788.00 for and as actual
damages, including attorneys fees, P100,000.00 for and as moral
damages and P50,000.00 for and as death indemnity.
____________________________
7
Record, pp. 236-237.
TSN, May 11, 1994, p. 5.
733

733
Since the accused have been under preventive imprisonment

since May 5, 1993, the period of such detention shall be credited in
full in their favor in the service of their sentences.
The Issues
In their brief, appellants assigned the following errors:
1. IThat the trial court erred in giving credence to the

testimonies of prosecution witnesses Crispulo Sanchez and
Victoriano Damas
2. IIThat the trial court erred in not disregarding the
testimony of Crispulo Sanchez despite the fact that the
trial court found Crispulo Sanchez to have lied on a very
vital matter
3. IIIThat the trial court erred in not holding that the
(testimonies) of Crispulo Sanchez and Victoriano Damas to
be incredible and not worthy of belief
4. IVThat the trial court erred in not holding that the physical
evidence clearly show that deceased victim Maximo
277
Abadies was killed in some other place and not in the

place claimed by prosecution witnesses
5. VThat the trial court erred in holding that physical
evidence were available to accused-appellant and yet
accused-appellant did not use court processes to produce
the same and hence the prosecution is not guilty of willful
suppression of evidence
6. VIThat the trial court erred in not dismissing the instant
case and rendering a verdict of acquittal in favor of
accused-appellants
presumption of innocence guaranteed by the Constitution in

favor of accused-appellants? The answer to this threshold
question will determine whether the judgment of the court a
quo will stand or fall. The issues in the case can be reduced
to four (4) and will be discussed in seriatim as follows:
all of which may be summed up as challenging the trial

courts assessment of the credibility of witnesses, and its
appreciation of the weight and sufficiency of the prosecutions
evidence, vis-a-vis, that of the defense.
As earlier stated, the Solicitor General, the Peoples
counsel, in his Manifestation and Motion in Lieu of
Appellees
The
Courts
Ruling
First Issue: Credibility of Witnesses
It is hornbook doctrine that ordinarily, conclusions and
findings of fact of the trial court are entitled to great weight
on appeal and should not be disturbed except for strong and
valid reasons because the trial court is in a better position to
examine
the
demeanor
of
the
witnesses
while
testifying. However, after a thorough review of the evidence
presented,
____________________________
9
11
Appellants Brief, pp. 1-2, rollo p. 72.
734
734
1. 1.Credibility of witnesses;
2. 2.Sufficiency of evidence;
3. 3.The defense of alibi; and
4. 4.Presumption of innocence.

Brief dated September 25, 1996, submitted the following

conclusion and recommendation:
10
PREMISES CONSIDERED, it is respectfully recommended that

appellants be acquitted for failure of the prosecution to discharge
its bounden duty to prove their guilt beyond reasonable doubt.
As this Court sees it, the resolution of this case hinges on the
pivotal question of whether the guilt of the accusedappellants had been proved beyond reasonable doubt by the
prosecutions evidence. Put differently, was the evidence
presented by the prosecution sufficient to overturn the
____________________________
10
Manifestation and Motion In Lieu of Appellees Brief, page 24.
11
Collado vs. Intermediate Appellate Court, 206 SCRA 206, 212-213,
February 13, 1992.

735

735
we find that the aforecited rule of evidence does not hold in

this case: It is evident to us that the trial judge gave credence
to the obviously incredible and patently fabricated
testimonies of the prosecutions witnesses.
The duty of the prosecution is not only to show clearly that
a crime had been committed, but more importantly, to prove
278
beyond reasonable doubt the identity of the person or persons

who committed the crime. Proof of the crime without
sufficient proof of the identity of its author cannot result in a
conviction. In the present case, the identification of accusedappellants does not measure up to the standard of moral
certainty required in criminal cases and, consequently, their
conviction cannot be upheld.
We cannot emphasize enough the oft-stated rule that
evidence to be believed, must proceed not only from the
mouth of a credible witness but the same must be credible in
itself. Evidence is credible when it is such as the common
experience of mankind can approve as probable under the
circumstances. We have no test of the truth of human
testimony, except its conformity to our knowledge,
observation, and experience. In this case, the trial court
relied mainly on the testimonies of prosecution witnesses
Crispulo Sanchez and Victoriano Damas who swore that they
were squatting out in the open, husking corn a mere 10
meters away from the sleeping Memong, when out of
nowhere accused-appellants appeared, and completely
unmindful of the presence of the two onlookers, with
unsurpassed sangfroid, murdered the victim in his sleep.
Moreover, they also testified that after having witnessed
the brutal and gruesome slaying of their master, they did
not even bother to check if he was still alive, nor did they
attempt to seek help from their neighbors. Oddly, they
continued
12
13
14
____________________________

husking corn, as if nothing had happened. The testimony of
Crispulo Sanchez on this point is very striking:
15
Q And you want the Honorable Court to understand that for

four hours you were there sheevering (sic), crouching
together with Victoriano Damas you waited until morning
to report the death of your employer, Maximo Abadies?
A Yes, sir.
Q And all the time you and Victoriano Damas were sitting,
crouching in the pile of corn?
A Yes, sir.
Q You and Victoriano Damas did not even attempt to go to
the tent where Maximo Abadies was lying dead in the
space of six hours, is that not correct?
A No, sir.
Q In that space of six hours together with Victoriano Damas
(you) did not even shout for help, is that not correct?
A No, sir.
Q And you want the Honorable Court to understand despite
the fact you have witness (sic) the shooting occurrence
you became mute for six hours?
Atty. Padilla:
That was answered already, your Honor.
Witness:
Yes, sir.
Such inaction is hardly the normal conduct one may expect
from a person under identical circumstances. Furthermore,
their reaction immediately thereafter raises eyebrows. Again,
we continue with the testimony of Crispulo Sanchez as
follows:
16
12
Tuason vs. Court of Appeals, 241 SCRA 695, 701, February 23, 1995.
13
People vs. Escalante, 238 SCRA 554, 563, December 1, 1994.
14
TSN, July 5, 1993, p. 12, and August 2, 1993, pp. 68-70.
736
736
Atty. Gapuz: (continuing)

Q At what time did Damas leave the pile of corn where you
were staying for six hours?
A 6:00 oclock in the morning.
____________________________
279
15
TSN, July 5, 1993, pp. 29-30.
Ibid., pp. 31-32.
16
737

737
Q At 6:00 oclock in the morning you and Victoriano
Damas talked and he said he will go to his house
while you will go to the house of Maximo Abadies, is
that correct?
A Victoriano Damas told me he will go ahead because
he will pasture his cow.
Q Will you kindly look to the court. So at 6:00 in the
morning, you and Damas talked together on what you
will do, is that correct?
A No, sir.
Q You want the court to understand that this Damas just
merely told you I will go home because I will pasture
my cow?
Atty. Padilla:
Argumentative, your Honor.
Court:
Witness may answer.
Witness:
Yes, sir.
Atty. Gapuz: (continuing)
Q And you did not ask him to accompany you to the
house of Maximo Abadies so that both of you Damas
will tell the wife that Maximo Abadies is already
killed and has been killed by the accused?
A I asked him but he told me he will just follow me.
Q And you left walking going to the house of Maximo
Abadies?
A Yes, sir.
Q You did not run?
A No, sir.
Q You walked in an ordinary manner?
A Yes, sir.
In connection with the above-quoted testimonies, the
accused-appellants aptly observe that:
17
x x x The acts of [witnesses] Crispulo Sanchez and Victoriano

Damas are NOT natural. Their acts as claimed by them,
individually and jointly, are not in accord with the normal conduct
of human beings when faced with such an occurrence, such as the
shooting of
____________________________
17
Appellants Brief, p. 5.
738
738

their employer and companion. To remain rooted to the spot for six
(6) hours doing nothing is incredible. To fail to inform the
immediate members of the family of the deceased compounds the
incredibility of their testimony. Their failure to verify what
happened to Maximo Abadies after the alleged shooting together
with their failure to ask for help from nearby houses only adds
more to the incredibility of their testimonies.
The incredible testimony of aforementioned witnesses had

evoked the following observation from the trial court:
18
To be sure, there were aspects of their testimonies which, at first

impression, elicit raised eyebrows. They are: (1) the fact that they
remained rooted and unmoving in their respective positions at the
time of the shooting at about 11:45 P.M. of April 26 until 5:00 A.M.
of April 27, 1993, and (2) their refusal to reveal the identities of
the accused to the police authorities and relatives of the victim
despite repeated queries and investigations until May 4, 1993.
280
Indeed the reaction of Sanchez and Damas immediately after

the shooting of their employer/landlord appeared unusual. They
did not move. They did not approach the victim to verify if he was
still alive. The following morning they did not inform those who
arrived of the fate which befell Mr. Abadies x x x.
However, the trial court simply brushed aside these

observations of unnatural behavior and dismissed them as
the result of the witnesses having been shocked into
insensibility x x x (and) gripped with fear, their senses in
turmoil and their minds incapable of rational judgment. The
court a quo then concluded that (t)hat makes their reaction
not really strange or unusual.
We disagree. Such unfeeling and unnatural reactions are
definitely inconsistent with human experience and simple
common sense. As the Solicitor General pointedly argues:
This finding by the Court is not only most contrary to human
nature but is the most incredible reaction a witness to a brutal
murder could demonstrate. To just squat and continue husking
corn
____________________________
18
Victoriano Damas were definitely not in a state of shock.

They were able to converse and lie to the former. The salient
portions of her testimony are as follows:
20
Q
A
Q
A
Q
A
Q
A
While you were shouting, what happened, if any?

Somebody answered.
Who was that person who answered?
Tony Alistre (sic).
And what did Tony Alistre say?
He said, whom are you calling?
And what did you answer?
I said, I am calling for Vicente because he is in Patag and
I am very worried because I heard shots.
And what did Tony Alistre tell you?
He said, somebody is guarding that area.
What else did he say, if any?
Nothing more.
So when Tony Alistre assured you that somebody is
guarding that area, what did you do?
I walked towards the back of the school and kept on
calling.
Did you pass by the school?
Yes.
And when you passed by the school, what did you see
next?
There were two (2) persons who answered.
What did these two (2) persons say?
They said, it is nothing, Manang, because it was Noy
Mimong who fired those shots.
Q
A
Q
A
Q
A
Q
A
Q
Decision, p. 7.
739

739
for more than six (6) hours after the killing without giving a
curious look at the victim belie the conclusion of shocked
insensibility by the trial court. There was not even an iota of
consciousness lost and consciousness regained on the part of the
alleged eyewitnesses. The trial court should have noticed (sic) this
into serious consideration.
A
Q
A
____________________________
19
Manifestation and Motion in Lieu of Appellees Brief, pp. 13-14.
20
TSN, June 21, 1994, pp. 14-19.
19
Moreover, the unrebutted testimony of defense witness

Catalina Villarta shows that Crispulo Sanchez and
740
740

281
Q
A
Q
A
Q
A
Q
A
Q
A
Q
A
Q
A
Q
A
Q
A
Q
A
Q
A
Q
A
Q

When these two persons mentioned of Noy Mimong, to
whom are they referring?
Maximo Abadiez (sic).
Were you able to go near those persons who answered?
I went near them.
And were you able to recognize who were these two
persons who answered?
Yes.
Who were they?
Victoriano and Crispolo (sic).
Whats the family name of Victoriano?
Damas.
(What) About Crispolo?
Sanchez.
When you saw Victoriano Damas and Crispolo Sanchez,
how far were they from you?
Around 2 and one-half to three (2) meters.
That was the distance when you first saw them?
Yes.
When you were near them, what did you do?
I asked them where those shots came from.
What did they tell you?
They said, it is nothing, Manang, it was just Noy
Mimong who fired those shots, in fact, he is there,
sleeping.
When they said Noy Mimong, what are they trying to
tell you?
That Maximo Abadiez was their companion.
To what place did they point as the place where Noy
Mimong was sleeping?
In that other coconut tree, a little distant to where they
piled the corn.
And what were these two persons, namely, Victoriano
Damas and Crispolo Sanchez, doing at the time you saw
A
Q
A
Q
A
them?
They were husking corn.
And when you saw them husking corn, did you ask them
why they were still husking corn?
I asked them.
And what was their answer?
They answered, we are husking corn because we dont
feel sleepy. (italics supplied)
741

741
This uncanny ability of Crispulo Sanchez and Victoriano

Damas to concoct a lie as to the source of the gunshots, and
the location and condition of the victim refutes the trial
judges belief that the former were in a state of shocked
insensibility. At this point, we cannot help but wonder
whether the two were in fact associated with the commission
of the crime and were acting thus in order to save their own
skins and avoid detection. It will be noted that Crispolo
Sanchez tested positive for gunpowder residue and nitrates.
Furthermore, their failure to report the crime immediately
and to identify the authors thereof, and their initial denial of
any knowledge as to the identities of the killers cast a
shadow on the veracity of their testimony, and as noted by
the Solicitor General:
21
x x x It was only on May 7, 1993 that Crispulo, when arrested for

the second time, told the police who the killers were. But at several
previous instances, he admitted not having known the killers of
Maximo Abadies. The first of these instances was when Francisca
Alfaro and Tony Alistre arrived at the scene the morning of April
27, 1993, Sanchez and Damas did not inform them of Maximos
death (p. 24, TSN, August 2, 1993). And when asked by the widow
who killed her husband, Sanchez denied knowing the killers
allegedly for fear of his life (p. 19, TSN, July 5, 1993). x x x
282
Thus, the foregoing conduct of the prosecution witnesses is

likewise not in accord with human nature and experience
because (t)he natural tendency of a person who has
witnessed the commission of a crime is to report it, and
describe the malefactors at the earliest possible opportunity.
This is particularly true where the victim is so closely related
to the witness who claims to have seen the commission of the
crime. It is true that such testimony may not be deemed
unworthy of belief if the delay in the disclosure of the crime
or of the identities of its authors had been satisfactorily
explained. Yet, no such satisfactory explanation for the delay
22
____________________________
21
Manifestation and Motion in Lieu of Appellees Brief, p. 17.
22
People vs. Escalante, 238 SCRA 554, 566, December 1, 1994.
742
742

was ever proffered. Sanchez and Damas merely claimed that

they feared for their lives, but this fails to persuade as it is
not supported by any showing that the accused were indeed
troublemakers or otherwise violently disposed. Even the
testimony of Crispulo Sanchez himself shows otherwise:
Q During these two days period while you were in prison

you were together with Enemesio Abellanosa and
Crisanto Abellanosa inside the police station of
Salvador,Lanao del Norte?
A Yes, sir.
Q Now will you inform this court during the time that you
were together with Enimesio and Crisanto Abellanosa
whether you converse with each other?
A Yes, sir.
Q And, what did you talk about?
A Enimesio Abellanosa talked to me, Sir.
Q
A
And what did Enimesio Abellanosa tell you if any?

He told me that he will ask favor from me that I will tell
the truth that they are not the killers of Maximo Abadies.
What else if did Enimesio Abadies tell you if any?
Only that.
Q
A
23
Second Issue: Sufficiency of Other Evidence

Quite apart from the fact that the prosecution witnesses
testimonies by their very nature are not deserving of
credence, the physical evidence introduced contradicted the
import of their testimony, particularly as to the place where
the victim was killed. This doubt is brought out by the
observation of Rodolfo Pagayon, the PNP officer in Salvador,
Lanao del Norte who investigated the incident the morning
after the crime was committed. He said that when he
examined the cadaver and the surroundings, he did not see
any blood stains under the victims folding bed or on the
peelings of corn piled beneath the bed. He testified in this
manner:
____________________________
23
TSN, July 5, 1993, pp. 23-24.
743

Q Were there lots of blood on the ground under the
folding bed?
A We could not see the blood under the bed because
there were plenty of peelings of corn.
Q How about on the peelings of corn have you seen
blood?
A No, sir.
743
24
This finding is significant in view of the fact that the victims

head had been shattered and a big part thereof blown away
by shots from the powerful garand rifle. The head wounds,
283
together with other gunshot wounds, particularly one in the

abdomen, would have produced profuse bleeding. So too, the
folding bed on which he was allegedly shot, and its
immediate vicinity, would have also been blood-soaked.
Surprisingly, signs of massive hemorrhaging were not found
thereat. Thus, there is an irreconcilable gap between the
prosecution witnesses claim that the victim was shot there,
and the physical evidence (or lack thereof) which negate the
truth of such statements. Such inconsistency of their
statements in comparison with the physical evidence is
emphasized in the testimony of practicing surgeon Cesar
Anthony Sta. Maria, to wit:
25
Q May I ask you a few questions. Head wounds caused a lot

of blood clots or bleeding?
A Definitely.
Q As a matter of fact, a shattered head will be so profuse
bleeding that a place where a person fell as you may be fell
or you would likely fell down, you will be saturated with
blood because of the shattered wound?
A Yes.
Q How about wounds affecting, hitting the right side of the
stomach just below the ribs, a punctured wound, let us say,
projected bullet through and through. Will that cause a
profuse bleeding?
A It would cause profuse bleeding.
Q And that would also cause a persons death?
____________________________
24
TSN, June 27, 1994, p. 7.
25
TSN, May 11, 1994, pp. 11-13.
744
744
A

Yes.
How about a wound for example on the right thigh which

is through and through by a fast moving (projectile) let
us say caliber 30. Would that cause profuse bleeding
somewhere in the center of the thigh?
It would cause bleeding. It depends on the (projectile)
that hit on the legs, it might hit on the muscles, it might
hit on the major artery, major vein, it depends.
Supposed it hit on the major artery?
If it hit on the major artery, there must be a massive
bleeding.
In case of only in the muscle?
If it hit the muscle, there will be not much blood
compared in an injury hitting the major artery.
In case of a head injury, the head shattered with a brain
going out, as a matter of fact being exposed. Would
bleeding be so massive?
Yes definitely.
For example on the person who is lying on a pillow,
would this pillow clottered with blood?
Yes.
Are you sure of that, Doctor?
Yes.
Q
A
Q
A
Q
A
Q
A
Q
A
Furthermore, we take note of the fact that a garand rifle is a

semi-automatic rifle which expels an empty shell everytime a
shot is fired. Prosecution witnesses Sanchez and Damas
testified that the firearms used in the shooting were fired
twelve times. But PNP investigating officer Rodolfo Pagayon
testified that he did not find even one empty shell at the
scene of the crime. Nor was he able to locate the garand
rifle of the victim. These material findings as to the physical
evidence render the testimony of the two prosecution
witnesses unworthy of credit.
26
27
____________________________
26
Appellants Brief, p. 15.
284
27
TSN, July 5, 1993, pp. 12-13, 16-17. Crispulo Sanchez alleged in his
testimony that Enemesio Abellanosa had used his own garand rifle in
shooting the victim eight times and that Crisanto Abellanosa who had a
revolver tucked in his waist had picked up the victims garand rifle and fired
it four times in the air.
745

745
Moreover, the prosecution failed to present in evidence the

folding bed and the clothes worn by the victim when he was
shot, which, had they been presented, could have thrown
light upon the questions at hand. The significance of the
physical evidence in the determination of the guilt or
innocence of the accused is paramount. The failure of the
prosecution to account for the whereabouts of the folding bed
and clothes of the victim does not inspire belief in the already
tenuous and questionable proof of the guilt of the accused.
Even the trial court decried this lapse of the prosecution:
The Court agrees that the bed, the victims clothing, the blanket
and pillow used by him and the canvass tent are significant
evidences. Taking off from the testimonies of Damas and Sanchez
the bed should have tears or rips coinciding with the holes on the
clothing indicating the trajectory of the bullets. The blanket and
pillow should be soaked with blood. The eight bullets or at least
some should be embedded in the ground under the bed. The
canvass tent should show bullet holes through which Crisanto, Jr.
fired four shots with the victims garand rifle. These are physical
evidences which do not lie. Their presentation would have strongly
confirmed the eyewitnesses testimonies or as the accused would
have it, categorically debunked them.
So too, the fact that both accused-appellants tested positive

for gunpowder nitrates does not conclusively show that they
had indeed fired the murder weapon, or any gun for that
matter, for such forensic evidence should be taken only as

an indication of possibility or even of probability but not of
infallibility, since nitrates are also admittedly found in
substances other than gunpowder. In this case, the
accused-appellants claim that the companion of officer
Robas fired a gun immediately prior to the test, held the
spent shells in his hand and deliberately rubbed the palm on
the back of their hands while taking the paraffin
test, should have placed the trial court and the prosecution
on alert for the possibility that
28
29
____________________________
28
People vs. Adofina, 239 SCRA 67, 81, December 8, 1994.
29
Decision, p. 9.
746
746

the paraffin test could have been rigged. It should also be

stressed that the appellants accuser, Crispulo Sanchez,
himself tested positive for gunpowder residue and nitrates.
Before moving on to the next issue, we make the final note
that the testimonies of said witnesses are replete with
improbabilities and raise more questions than answers. For
instance, it is almost unimaginable that the appellantsif
they were really the authors of the murderwould allow
Sanchez and Damas to remain as they were and continue
husking corn even after having witnessed the fatal shooting.
Would they not have finished off the two, if only to eliminate
any eyewitnesses to the killing and eradicate any risk of
identification? And in the first place, would such witnesses
not have instinctively taken cover or scampered away upon
hearing the gunshots?
Third Issue: Alibi
30
285
Juxtaposed against the prosecutions theory that the

accused-appellants were the ones who did in the victim are
the latters denial and defense of alibi. While it has been held
that alibi is indeed the weakest of all defenses, however,
judges should not at once look with disfavor at the defense of
alibi. Alibi should be considered in the light of all the
evidence on record for it can tilt the scales of justice in favor
of the accused. Stated differently, (w)hen an accused puts
up the defense of alibi, the courts should not at once have a
mental prejudice against him. For, taken in the light of all
the evidence on record, it may be sufficient to acquit him. It
is precisely when the prosecutions cause is weak, as in this
instance, that the defense of alibi interposed by the accusedappellants assumes importance and becomes crucial in
31
32
____________________________
30
TSN, September 17, 1993, p. 20.
31
Tuason vs. Court of Appeals, supra, p. 707.
32
People vs. Escalante, supra, p. 571, citing People vs. Villacorte, 55 SCRA
640, February 28, 1974.
35
36
37
____________________________
747

747
negating x x x criminal liability. The accused-appellants

both claim that in the wee hours of the night when the victim
was slain, they were already sleeping in their respective
dwellings and were awakened only by the sound of the
gunfire. Prior thereto, the accused contend that they had
had dinner with their kin and Enemesio Abellanosa in
particular claims having watched betamax after dinner and
before turning in for the night. These are all actuations not
contrary to but in accord with ordinary human experience.
Although alibi is weak, it should not be outrightly dismissed
as false. The appellants alibi in fact appears to be the truth
33
34
when viewed in the light of the inherent weaknesses of the

prosecutions case.
Fourth Issue: Presumption of Innocence
The Constitution provides that in all criminal prosecutions,
the accused shall be presumed innocent until the contrary is
proved. It is thus axiomatic that an accused under our law
is entitled to an acquittal unless his guilt is proved beyond
reasonable doubt. In fact, unless the prosecution discharges
the burden of proving the guilt of the accused beyond
reasonable doubt the latter need not even offer evidence in
his behalf. Clearly, the prosecution has utterly failed to
discharge its burden of proof. A review of the decision and
the evidence on record merely engenders more doubts in our
mind as to the guilt of the accused-appellants. We perforce
rule that Enemesio Abellanosa and Crisanto Abellanosa, Jr.
are entitled to a mandatory acquittal.
WHEREFORE, the appeal is hereby GRANTED. The
Decision of the court a quo is hereby REVERSED and
VACATED.
33
People vs. Adofina, supra, p. 81.
34
TSN, August 2, 1994, p. 8, and TSN, August 3, 1994, p. 12.
35
Article III, 14.
36
People vs. Bostre, 230 SCRA 139, 143, February 18, 1994.
37
People vs. Baclayon, 231 SCRA 578, 584, March 29, 1994, cit-
ing People vs. Garcia, 215 SCRA 349, November 4, 1992.

748
748

Accused-appellants Enemesio Abellanosa and Crisanto

Abellanosa, Jr. are hereby ACQUITTED on reasonable
doubt. Their immediate release is herewith ordered, unless
there are other valid causes for their continued detention.
286
SO ORDERED.
Narvasa (C.J.,
Jr., Melo andFrancisco, JJ., concur.
Chairman), Davide,
Appeal granted. Judgment reversed and vacated.

Appellants Enemesio Abellanosa and Crisanto Abellanosa,
Jr. acquitted.
Note.Where the peoples evidence fails to meet the
quantum required to overcome the constitutional
presumption of innocence, the accused is entitled to acquittal
regardless of the weakness of his defense of denial and
uncorroborated alibi. (People vs. Alcantara, 240 SCRA
122 [1995])
o0o
encumbrance therein regarding petitioners right to repurchase.

No new agreement was entered into by the parties as stipulated in
the deed of pac to de retro, if the vendors a retro failed to exercise
their right of redemption after ten years. If, as alleged, petitioner
exerted no effort to procure the signature of Pio Altera after he had
recovered from his illness, neither did the Alteras repudiate the
deed that their son-in-law had signed. Thus, an implied agency
must be held to have been created from their silence or lack of
action, or their failure to repudiate the agency.
Same; Laches; Respondents delay for 24 years in instituting
action for quieting of title and adverse and uninterrupted
possession of the lot by the petitioner renders respondent guilty of
laches.Possession of the lot in dispute having been adversely and
uninterruptedly with petitioner from 1945 when the document of
repurchase was executed, to 1969, when she instituted this action,
or for 24 years, the Alteras must be deemed to have incurred in
laches.
_______________
*
FIRST DIVISION.
246
No. L-40242. December 15, 1982.

DOMINGA CONDE, petitioner, vs. THE HONORABLE
COURT OF APPEALS, MANILA, PACIENTE CORDERO,
together with his wife, NICETAS ALTERA, RAMON
CONDE, together with his wife, CATALINA T. CONDE,
respondents.
*
Civil Law; Agency; Implied agency created from silence or lack

of action or failure to repudiate the agency.If, as opined by both
the Court a quo and the Appellate Court, petitioner had done
nothing to formalize her repurchase, by the same token, neither
have the vendees-a-retro done anything to clear their title of the
46
Conde vs. Court of Appeals
Same; Sale; Purchaser in bad faith; Vendors who bought
property despite being put on notice of the condition in the title that
the property was subject to repurchase deemed purchasers in bad
faith.Private respondents Ramon Conde and Catalina Conde, to
whom Pio Altera sold the disputed property in 1965, assuming
that there was, indeed, such a sale, cannot be said to be purchasers
in good faith. OCT No. 534 in the name of the Alteras specifically
contained the condition that it was subject to the right of
287
repurchase within 10 years from 1938. Although the ten-year

period had lapsed in 1965 and there was no annotation of any
repurchase by petitioner, neither had the title been cleared of that
encumbrance. The purchasers were put on notice that some other
person could have a right to or interest in the property. It
behooved Ramon Conde and Catalina Conde to have looked into
the right of redemption inscribed on the title, and particularly the
matter of possession, which, as also admitted by them at the pretrial, had been with petitioner since 1945.
Same; Same; Contracts; Interpretation; Vendors bound by
clear terms of memorandum of repurchase; Where contract is plain
and unequivocal in its terms, vendors are bound thereby; Duty of
every contracting party to learn and know contents of document
before he signs and delivers it.Private respondent must be held
bound by the clear terms of the Memorandum of Repurchase that
he had signed wherein he acknowledged the receipt of P165.00 and
assumed the obligation to maintain the repurchasers in peaceful
possession should they be disturbed by other persons. It was
executed in the Visayan dialect which he understood. He cannot
now be allowed to dispute the same. x x x If the contract is plain
and unequivocal in its terms he is ordinarily bound thereby. It is
the duty of every contracting party to learn and know its contents
before he signs and delivers it.
Same; Same; Same; Same; Parol evidence rule; Oral testimony
cannot prevail over a written agreement of the document of
repurchase; Purpose of parol evidence rule.There is nothing in
the document of repurchase to show that Paciente Cordero had
signed the same merely to indicate that he had no objection to
petitioners right of repurchase. Besides, he would have had no
personality to object. To uphold his oral testimony on that point,
would be a departure from the parol evidence rule and would
defeat the purpose for which the doctrine is intended. x x x The
purpose of the rule is to give stability to written agreements, and
to remove the temptation and possibility of perjury, which would

be afforded if parol evidence was admissible.
247

247
APPEAL by certiorari to review the decision of the Court of

Appeals.
MELENCIO-HERRERA, J.:
An appeal by Certiorari from the Decision of respondent
Court of Appeals (CA-G.R. No. 48133-R) affirming the
judgment of the Court of First Instance of Leyte, Branch IX,
Tacloban City (Civil Case No. B-110), which dismissed
petitioners Complaint for Quieting of Title and ordered her
to vacate the property in dispute and deliver its possession to
private respondents Ramon Conde and Catalina Conde.
The established facts, as found by the Court of Appeals,
show that on 7 April 1938, Margarita Conde, Bernardo
Conde and the petitioner Dominga Conde, as heirs of
Santiago Conde, sold with right of repurchase, within ten
(10) years from said date, a parcel of agricultural land
located in Maghubas, Burauen, Leyte, (Lot 840), with an
approximate area of one (1) hectare, to Casimira Pasagui,
married to Pio Altera (hereinafter referred to as the Alteras),
for P165.00. The Pacto de Retro Sale further provided:
1
x x x (4) if at the end of 10 years the said land is not repurchased,

a new agreement shall be made between the parties and in no case
title and ownership shall be vested in the hand of the party of the
SECOND PART (the Alteras).
xxx
x x x (Exhibit B)
288
On 17 April 1941, the Cadastral Court of Leyte adjudicated

Lot No. 840 to the Alteras subject to the right of redemption
by Dominga Conde, within ten (10) years counting from April
7, 1983, after returning the amount of P165.00 and the
amounts paid by the spouses in concept of land tax x x x
(Exhibit 1). Original Certificate of Title No. N-534 in the
_______________
1
Tenth Division composed of J. Ramon C. Fernandez, ponente;concurred
in by JJ. Ricardo C. Puno and B. S. de la Fuente.

248
248

name of the spouses Pio Altera and Casimira Pasagui,

subject to said right of repurchase, was transcribed in the
Registration Book of the Registry of Deeds of Leyte on 14
November 1956 (Exhibit 2).
On 28 November 1945, private respondent Paciente
Cordero, son-in-law of the Alteras, signed a document in the
Visayan dialect, the English translation of which reads:
MEMORANDUM OF REPURCHASE OVER A PARCEL OF
LAND SOLD WITH REPURCHASE WHICH DOCUMENT GOT
LOST
WE, PIO ALTERA and PACIENTE CORDERO, both of legal
age, and residents of Burauen, Leyte, Philippines, after having
been duly sworn to in accordance with law free from threats and
intimidation, do hereby depose and say:
1. 1.That I, PIO ALTERA bought with the right of repurchase
two parcels of land from DOMINGA CONDE, BERNARDO
CONDE AND MARGARITA CONDE, all brother and
sisters.
2. 2.That these two parcels of land were all inherited by the
three.
3. 3.That the document of SALE WITH THE RIGHT OF

REPURCHASE got lost in spite of the diligent efforts to
locate the same which was lost during the war.
4. 4.That these two parcels of land which was the subject
matter of a Deed of Sale with the Right of Repurchase
consists only of one document which was lost.
5. 5.Because it is about time to repurchase the land, I have
allowed the representative of Dominga Conde, Bernardo
Conde and Margarita Conde in the name of EUSEBIO
AMARILLE to repurchase the same.
6. 6.Now, this very day November 28, 1945, I or We have
recieved together with Paciente Cordero who is my son-inlaw the amount of ONE HUNDRED SIXTY-FIVE PESOS
(P165.00) Philippine Currency of legal tender which was
the consideration in that sale with the right of repurchase
with respect to the two parcels of land.
That we further covenant together with Paciente Cordero who
is my son-in-law that from this day the said Dominga Conde,
Bernardo
249

249
Conde and Margarita Conde will again take possession of the

aforementioned parcel of land because they repurchased the same
from me. If and when their possession over the said parcel of land
be disturbed by other persons, I and Paciente Cordero who is my
son-in-law will defend in behalf of the herein brother and sisters
mentioned above, because the same was already repurchased by
them.
IN WITNESS WHEREOF, I or We have hereunto affixed our
thumbmark or signature to our respective names below this
document or memorandum this 28th day of November 1945 at
Burauen, Leyte, Philippines, in the presence of two witnesses.
289
PIO ALTERA
(Sgd.)ACIENTE CORDERO
WITNESSES:
1. (SGD.) TEODORO C. AGUILLON
To be noted is the fact that neither of the vendees-a-retro, Pio

Altera nor Casimira Pasagui, was a signatory to the deed.
Petitioner maintains that because Pio Altera was very ill at
the time, Paciente Cordero executed the deed of resale for
and on behalf of his father-in-law. Petitioner further states
that she redeemed the property with her own money as her
co-heirs were bereft of funds for the purpose.
The pacto de retro document was eventually found.
On 30 June 1965 Pio Altera sold the disputed lot to the
spouses Ramon Conde and Catalina T. Conde, who are also
private respondents herein. Their relationship to petitioner
does not appear from the records. Nor has the document of
sale been exhibited.
Contending that she had validly repurchased the lot in
question in 1945, petitioner filed, on 16 January 1969, in the
Court of First Instance of Leyte, Branch IX, Tacloban City, a
Complaint (Civil Case No. B-110), against Paciente Cordero
and bis wife Nicetas Altera, Ramon Conde and his wife
Catalina T. Conde, and Casimira Pasagui (Pio Altera having
died in 1966), for quieting of title to real property and
declaration of ownership.
Petitioners evidence is that Paciente Cordero signed the
Memorandum of Repurchase in representation of his fatherin-law Pio Altera, who was seriously sick on that occasion,
and of
250
250

his mother-in-law who was in Manila at the time, and that

Cordero received the repurchase price of P165.00.
Private respondents, for their part, adduced evidence that

Paciente Cordero signed the document of repurchase merely
to show that he had no objection to the repurchase; and that
he did not receive the amount of P165.00 from petitioner
inasmuch as he had no authority from his parents-in-law
who were the vendees-a-retro.
After trial, the lower Court rendered its Decision
dismissing the Complaint and the counterclaim and ordering
petitioner to vacate the property in dispute and deliver its
peaceful possession to the defendants Ramon Conde and
Catalina T. Conde.
On appeal, the Court of Appeals upheld the findings of the
Court a quo that petitioner had failed to validly exercise her
right of repurchase in view of the fact that the Memorandum
of Repurchase was signed by Paciente Cordero and not by Pio
Altera, the vendee-a-retro, and that there is nothing in said
document to show that Cordero was specifically authorized to
act for and on behalf of the vendee a retro, Pio Altera.
Reconsideration having been denied by the Appellate
Court, the case is before us on review.
There is no question that neither of the vendees-a-retro
signed the Memorandum of Repurchase, and that there was
no formal authorization from the vendees for Paciente
Cordero to act for and on their behalf.
Of signifance, however, is the fact that from the execution
of the repurchase document in 1945, possession, which
heretofore had been with the Alteras, has been in the hands
of petitioner as stipulated therein. Land taxes have also been
paid for by petitioner yearly from 1947 to 1969 inclusive
(Exhibits D to D-15; and E. If, as opined by both the
Court a quo and the Appellate Court, petitioner had done
nothing to formalize her repurchase, by the same token,
neither have the vendees-a-retro done anything to clear their
title of the encumbrance therein regarding petitioners right
to repurchase. No new agreement was entered into by the
290
parties as stipulated in the deed of pacto de retro, if the

vendors a retro failed to exercise
251

251
their right of redemption after ten years. If, as alleged,

petitioner exerted no effort to procure the signature of Pio
Altera after he had recovered from his illness, neither did the
Alteras repudiate the deed that their son-in-law had signed.
Thus, an implied agency must be held to have been created
from their silence or lack of action, or their failure to
repudiate the agency.
Possession of the lot in dispute having been adversely and
uninterruptedly with petitioner from 1945 when the
document of repurchase was executed, to 1969, when she
instituted this action, or for 24 years, the Alteras must be
deemed to have incurred in laches. That petitioner merely
took advantage of the abandonment of the land by the
Alteras due to the separation of said spouses, and that
petitioners possession was in the concept of a tenant, remain
bare assertions without proof.
Private respondents Ramon Conde and Catalina Conde, to
whom Pio Altera sold the disputed property in 1965,
assuming that there was, indeed, such a sale, cannot be said
to be purchasers in good faith. OCT No. 534 in the name of
the Alteras specifically contained the condition that it was
subject to the right of repurchase within 10 years from 1938.
Although the ten-year period had lapsed in 1965 and there
was no annotation of any repurchase by petitioner, neither
had the title been cleared of that encumbrance. The
purchasers were put on notice that some other person could
have a right to or interest in the property. It behooved
Ramon Conde and Catalina Conde to have looked into the
right of redemption inscribed on the title, and particularly
2
the matter of possession, which, as also admitted by them at

the pre-trial, had been with petitioner since 1945.
Private respondent must be held bound by the clear terms
of the Memorandum of Repurchase that he had signed
wherein he acknowledged the receipt of P165.00 and
assumed the obligation to maintain the repurchasers in
peaceful possession should they be disturbed by other
persons. It was executed in the Visayan dialect which he
understood. He cannot now be
_______________
2
Art. 1869, Civil Code.
Arcuino
vs.
Aparis, 22
SCRA
407 (1968); Mejia
de
Lucas
vs.
Gamponia, 100 Phil. 278 (1956).

252
252

allowed to dispute the same. x x x If the contract is plain

and unequivocal in its terms he is ordinarily bound thereby.
It is the duty of every contracting party to learn and know its
contents before he signs and delivers it.
There is nothing in the document of repurchase to show
that Paciente Cordero had signed the same merely to
indicate that he had no objection to petitioners right of
repurchase. Besides, he would have had no personality to
object. To uphold his oral testimony on that point, would be a
departure from the parol evidence rule and would defeat the
purpose for which the doctrine is intended.
4
x x x The purpose of the rule is to give stability to written

agreements, and to remove the temptation and possibility of
perjury, which would be afforded if parol evidence was
admissible.
6
291
In sum, although the contending parties were legally

wanting in their respective actuations, the repurchase by
petitioner is supported by the admissions at the pre-trial that
petitioner has been in possession since the year 1945, the
date of the deed of repurchase, and has been paying land
taxes thereon since then. The imperatives of substantial
justice, and the equitable principle of laches brought about
by private respondents inaction and neglect for 24 years,
loom in petitioners favor.
WHEREFORE, the judgment of respondent Court of
Appeals is hereby REVERSED and SET ASIDE, and
petitioner
_______________
4
Tan Tua Sia vs. Yu Biao Sontua, 56 Phil. 711 (1932).
Sec. 7. Evidence of written agreements.When the terms of an
agreement have been reduced to writing, and, therefore, there can be,
between the parties and their successors in interest, no evidence of the terms
of the agreement other than the contents of the writing, except in the
following cases:
1. (a)Where a mistake or imperfection of the writing, or its failure to express the
true intent and agreement of the parties, or the validity of the agreement is
put in issue by the pleadings;
2. (b)When there is an intrinsic ambiguity in the writing.
The term agreement includes wills. (Lim Yhi Luya vs. Court of Appeals, 99 SCRA
692 (1980).
6
Tan Tua Sia vs. Yu Biao Sontua, supra.
253

253
is hereby declared the owner of the disputed property. If the

original of OCT No. N-534 of the Province of Leyte is still
extant at the office of the Register of Deeds, then said official

is hereby ordered to cancel the same and, in lieu thereof,
issue a new Transfer Certificate of Title in the name of
petitioner, Dominga Conde.
No costs.
SO ORDERED.
Teehankee (Chairman), Plana, Vasquez, Relova andG
utierrez, Jr., JJ., concur.
Judgment reversed and set aside.
Notes.The right of redemption provided for by Section
6, Act No. 3135, like any other property, maybe transferred
or assigned by its owner. (Gorospe vs. Santos, 69 SCRA 191.)
Where petitioners contention that they should possess the
property pendente lite has no leg to stand on and where the
private respondent has in the meantime secured a writ of
possession from another court by virtue of the redemption
made by it of the property in question, the orderly
administration of justice that, pending judgment in the three
cases between the same parties over the same property, the
possession thereof should be given to respondent. (Sambajon
vs. Tutoan, 78 SCRA 87.)
The attestation clause duly signed is the best evidence as
to the date of signing of the will because it preserves in
permanent form a recital of all the material facts attending
the execution of the will. (Gonzales vs. Court of Appeals, 90
SCRA 183.)
Secondary evidence is admissible where the records of
adoption proceedings were actually lost or destroyed. Prior to
the introduction of the secondary evidence however, the
proponent must established the former existence of the
instrument. (Lazatin vs. Campos, Jr., 92 SCRA 250.)
Pedigree testimony is not admissible to prove adoption of
child. (Lazatin vs. Campos, Jr., 92 SCRA 250.)
254
292
254

People vs. Rodriguez
A statement that has not been offered in evidence cannot be

taken up in evidence no matter what its purpose was.
Appellate court cannot take up as evidence a statement
annexed in a motion in the trial court which was not formally
offered in evidence. (People vs. Court of Appeals,116 SCRA
505.)
The examination, docket and service cards of the Civil
Service Commission are public records and are admissible
under the rule on admission of secondary evidence when the
original has been lost or destroyed. (Buentipo vs. Civil
Service Commission, 9 SCRA 856.)
It is not necessary to prove the loss of the original
document beyond all possibility of mistake. A reasonable
probability of its loss is sufficient if it is shown that despite
diligent search in the place the document is likely to be
found, location thereof had been futile. (Paylago vs.
Jarabe,22 SCRA 1247.)
o0o
G.R. No. 151040. October 5, 2005.

ALLIED BANKING CORPORATION, petitioner, vs.CHENG
YONG and LILIA GAW, respondents.
*
G.R. No. 154109. October 5, 2005.

CHENG YONG and LILIA GAW, petitioners, vs. ALLIED
BANKING CORPORATION and EX-OFFICIO SHERIFF OF
MALABON, METRO MANILA, respondents.
Evidence; Parol Evidence Rule; When the parties have reduced
their agreement into writing, they are deemed to have intended
such written agreement to be the sole repository and memorial of
everything that they have agreed upon.The appellate court is
correct in declaring that under the parol evidence rule, when the
parties have reduced their agreement into writing, they are
deemed to have intended such written agreement to be the sole
repository and memorial of everything that they have agreed upon.
All their prior and contemporaneous agreements are deemed to be
merged in the written document so that, as between them and
their successors-in-interest, such writing becomes exclusive
evidence of the terms thereof and any verbal agreement which
tends to vary, alter or modify the same is not admissible.
Civil
Law; Commercial
Law; Ownership; Mortgages;Insurance; When the vessel sank before
the chattel mortgage could be foreclosed, uninsured as it is, its loss
must be borne by the spouses Ong who own the said vessel.Allied
Banks foreclosure of the chattel mortgage constituted over the
vessel Jean III was justified. On this score, we also rule that the
loss of the mortgaged chattel brought about by its sinking must be
borne not by Allied Bank but by the spouses Cheng. As owners of
the fishing vessel, it was incumbent upon the spouses to insure it
against loss. Thus, when the vessel sank before the chattel
mortgage could be foreclosed, uninsured as it is, its loss must be
borne by the spouses Cheng.
293
_______________
*
THIRD DIVISION.
102
102

Allied Banking Corporation vs. Cheng Yong
PETITIONS for review on certiorari of the decision and

Law Firm of Tanjuatco & Partners for respondents
inG.R. No. 154109 and petitioners in G.R. No. 151040.
Bartolome D. Yu for petitioners in G.R. No. 154109and
respondents in G.R. No. 151040.
Acsay, Pascual & Associates for respondents in G.R.
No. 151040.
GARCIA, J.:
Chairman of the Board and concurrent President Marilyn

Javier, obtained from Allied Banking Corporation (Allied
Bank), a packing credit accommodation amounting to One
Million Seven Hundred Fifty Two Thousand Pesos
(P1,752,000.00).
_______________
1
Penned by Associate Justice Wenceslao I. Agnir, Jr., (ret.) with Associate
Justices B.A. Adefuin-De La Cruz (ret.) and Rebecca De Guia-Salvador,

concurring; Rollo of G.R. No. 154109, pp. 36-51.
2
Rollo of G.R. No. 154109, pp. 53 & 54.
103
VOL. 472, OCTOBER 5, 2005

103
To secure the obligation, Marilyn Javier and the spouses

Cheng Yong and Lilia Gaw (spouses Cheng, for short),
executed
a Continuing
Guaranty/Comprehensive
Suretybearing date 27 March 1981.
Later, Philippine Pacific, due to business reverses and
alleged misuse of corporate funds by its operating officers,
defaulted in the payment of said obligation.
An intra-corporate dispute among its stockholders
followed, prompting the filing against Philippine Pacific of a
petition for receivership before the Securities and Exchange
Commission (SEC), which petition was docketed as SEC Case
No. 2042. Likewise, a criminal case for Estafa was filed
against Marilyn Javier.
Thereafter, the corporation was reorganized, following
which the spouses Cheng Yong and Lilia Gaw were elected as
its president and treasurer, respectively. The spouses Cheng
also hold similar positions in another company, the Glee
Chemicals Phils., Inc. (GCPI), which, incidentally, also had a
credit line with Allied Bank.
3
Before us are these two (2) petitions for review

on certiorariunder Rule 45 of the Rules of Court to nullify
and set aside the following issuances of the Court of Appeals
(CA) in CA-G.R. CV 41280, to wit:
1. 1.Decision dated 11 December 2001, partially
reversing and setting aside an earlier decision of the
Regional Trial Court at Makati, Branch 145, in its
Civil Case No. 10947; and
2. 2.Resolution dated 01 July 2002, denying Cheng
Yong and Lilia Gaws motion for reconsideration.
1
The material facts:

Sometime before 1981, Philippine Pacific Fishing
Company, Inc. (Philippine Pacific), through its then Vice-
294
Meanwhile, on 27 July 1981, the parties in SEC Case No.

2042 agreed to create and constitute a management
committee, instead of placing Philippine Pacific under
receivership. Hence, in an order dated 14 August 1981, the
SEC formally created a management committee whose
functions, include, among others, the following:
1. 1.To take custody and possession of all assets, funds,
properties and records of the corporation and to prepare
an inventory thereof;
2. 2.To administer, manage and preserve such assets, funds
and records;
xxx
xxx
xxx
_______________
3
Rollo of G.R. No. 151040, pp. 44 & 45.
104
104

1. 7.To acquire, lease, sell, mortgage or otherwise
encumber such assets with the prior approval of the
Commission.
Cheng also signed the note in their personal capacities and

as co-makers thereof.
As it turned out, Philippine Pacific failed to pay according
to the schedule of payments set out in the promissory note of
12 August 1981, prompting the spouses Cheng to secure the
note with substantial collateral by executing a deed of chattel
mortgage in favor of Allied Bank over a fishing vessel, Jean
III, a Japanese-manufactured vessel with refrigerated
hatches and glass freezers, owned by the spouses and
registered in their names.
Philippine Pacific again defaulted payment. Hence, on 18
September 1984, Allied Bank filed with the sheriff of Navotas
an application for extrajudicial foreclosure of the chattel
mortgage constituted on Jean III.
Pursuant thereto, notices of extrajudicial sale dated 21
September 1981 were served on the concerned parties by
the Ex-Officio sheriff of Malabon while the vessel was moored
at the Navotas Fishing Port Complex and under a charter
contract with Lig Marine Products, Inc.
On 27 September 1984, the spouses Cheng, to prevent the
auction sale of the vessel, filed with the Regional Trial Court
at Quezon City an action for declaratory relief with prayer
for
_______________
It appears, however, that two (2) days prior to the

constitution of the management committee, Allied Bank and
Philippine Pacific agreed to restructure and convert the
packing credit accommodation into a simple loan.
Accordingly, Philippine Pacific executed in favor of Allied
Bank a promissory note dated 12 August 1981 in the same
amount as the packing credit accommodation. Aside from
affixing their signatures on the same promissory note in
their capacity as officers of Philippine Pacific, the spouses
5
See pp. 2 & 3 of the Court of Appeals decision.
Rollo of G.R. No. 151040, pp. 46 & 47.
105

105
injunctive remedies. Initially, that court issued a writ of

preliminary injunction restraining the sale but later lifted it
upon dismissal of the main case for declaratory relief on 29
March 1985.
295
In the meantime, the vessel sank at the port of Navotas on

22 June 1985, resulting to its total loss. As per certification of
the Harbor Master of the Philippine Fisheries Development
Authority, the vessel sank due to unnoticed defects caused by
its prolonged stay in the fish port and the abandonment
thereof. Shortly before the loss, charterer Lig Marine
Products, Inc. offered to purchase the vessel for Four Million
Pesos (P4,000,000.00).
On 26 June 1985, the spouses Cheng filed with the
Regional Trial Court at Makati a complaint for Injunction,
Annulment of Contracts and Damages with the provisional
remedy of Preliminary Injunction, against Allied Bank and
the Ex-Officio Sheriff of Malabon, therein praying, inter
alia,that the promissory note dated 12 August 1981 be
declared void and unenforceable because it was executed
without the prior approval or ratification of the SEC-created
management committee in SEC Case No. 2042, and to
declare invalid the deed of chattel mortgage over the vessel
Jean III for having been constituted to secure a void or
unenforceable obligation. The complaint was docketed
as Civil Case No. 10947 and raffled to Branch 145 of the
court.
Meanwhile, on 02 August 1985, Allied Bank filed with
the Ex-Officio Sheriff of Pasig an application for extrajudicial
foreclosure of the real estate mortgage constituted by the
Cheng spouses over their parcel of land covered by TCT No.
(222143) 23843, located in San Juan, Metro Manila
(hereinafter referred to as the San Juan property), together
with the improvement thereon, consisting of a two-storey
building belonging to GCPI. It appears that said property
was mortgaged by the spouses in favor of Allied Bank on 31
May 1983
6
_______________
6
Rollo of G.R. No. 151040, pp. 48-50.
106
106

to partially secure the payment of the time loan granted by

the Bank to GCPI. Despite GCPIs full payment of said loan,
Allied Bank refused to release the mortgage on theSan Juan
property, theorizing that it also secured the obligation of the
spouses Cheng as Philippine Pacifics co-makers of the
promissory note dated 12 August 1981, in accordance with
the stipulation in the deed of mortgage extending coverage of
the guaranty to any other obligation owing to the
mortgagee.
On 22 August 1985, the spouses Cheng filed in Civil Case
No. 10947 an amended complaint praying, among others,
that: (a) the promissory note of 12 August 1981 be declared
void and unenforceable; (b) the vessel be declared a total loss;
and (c) Allied Bank be ordered to pay them the value of the
loss. And, in order to prevent Allied Bank and the ExOfficio Sheriff of Pasig from foreclosing the real estate
mortgage over their San Juan property, the spouses Cheng
filed a supplemental complaint with an application for a writ
of preliminary injunction. A writ of preliminary injunction
was, thereafter, issued by the trial court.
On 17 October 1985, Allied Bank filed a motion to dismiss
the amended as well as the supplemental complaints.
In its order of 12 March 1986, the trial court denied the
motion with respect to the amended complaint, for lack of
merit, while deferring the resolution thereof as regards the
supplemental complaint until after trial because the ground
alleged did not appear to be indubitable.
Eventually, in a decision dated 08 February 1989, the
trial court declared both the promissory note dated 12
August 1981 and the deed of chattel mortgage over the vessel
Jean III invalid and unenforceable. Dispositively, the
decision reads:
7
296
WHEREFORE, premises considered, the Court renders judgment

declaring both the promissory Note (Exh. M) and the Deed of
Chattel Mortgage (Exh. 5) not valid and unenforceable; perma_______________
7
Rollo of G.R. No. 151040, pp. 37-43.
107

107
nently enjoining defendants Allied Banking Corporation and theexofficio sheriff of Malabon and his deputies, agents and
representatives from proceeding with the foreclosure and auction
sale of the fishing vessel JEAN III; permanently enjoining the
defendants-bank and ex-officio sheriff of Pasig from proceeding
with the foreclosure and auction sale of the plaintiffs real property
covered by TCT No. (222143) 23843 including the building thereon
owned by Glee Chemicals Philippines, Inc.; ordering defendant
bank to pay plaintiffs the sum of Four Million Pesos
(P4,000,000.00), Philippine Currency, for the loss of the
aforementioned vessel, the sum of Thirty Thousand Pesos
(P30,000.00), Philippine Currency as moral and exemplary
damages, the further sum of Thirty Thousand Pesos (P30,000.00),
Philippine Currency, as attorneys fees; and the costs of the suit.
The motion to dismiss the supplemental complaint filed by
defendant is denied for lack of merit.
Finally, within three (3) days from the finality of this decision,
defendant bank is hereby compelled to execute the necessary
release or cancellation of mortgage covering the aforesaid parcels
of land, and deliver the two Torrens titles in its possession to
herein plaintiffs.
SO ORDERED.
Therefrom, Allied Bank went to the Court of Appeals

(CA)via ordinary appeal under Rule 41 of the Rules of Court,
which appellate recourse was docketed as CA-G.R. CV No.

41280.
As stated at the outset hereof, the Court of Appeals, in its
Decision dated 11 December 2001, partially reversed and set
aside the appealed decision of the trial court insofar as it (a)
declared the promissory note as not valid and unenforceable
and (b) ordered Allied Bank to pay the spouses Cheng the
amount of Four Million Pesos (P4,000,000.00) for the loss of
the fishing vessel and the sum of Thirty Thousand Pesos
(P30,000.00) as moral and exemplary damages. In all other
respects, the appellate court affirmed the trial court, thus:
WHEREFORE, the foregoing considered, the appealed decision is
REVERSED and SET ASIDE insofar as it (1) DECLARED the
108
108

Promissory Note dated 12 August 1981 as NOT VALID and

unenforceable, and (2) ORDERED appellant Bank to pay to
appellee-spouses Cheng the amount of Four Million Pesos
(P4,000,000.00) for the loss of the fishing vessel JEAN III and
the amount of Thirty Thousand Pesos (P30,000.00) for moral and
exemplary damages. In all other respects, the decision is
AFFIRMED.
SO ORDERED.
Dissatisfied, Allied Bank immediately filed with this Court

its petition for review on certiorari in G.R. No. 151040,
seeking to set aside and reverse only that portion of the
appellate courts decision which affirmed certain aspects of
the trial courts decision, i.e., (a) enjoining Allied Bank and
the Ex-Officio Sheriff of Pasig from proceeding with the
foreclosure of the Real Estate Mortgage over the San Juan
property; (b) ordering Allied Bank to execute a release of the
same mortgage in favor of the spouses Cheng; (c) ordering
297
Allied Bank to deliver the two (2) Torrens titles in favor of

the spouses; and (d) ordering Allied Bank to pay attorneys
fees and costs. In short, Allied Bank faults the Court of
Appeals for not reversing the trial courts decision in its
entirety. More specifically, it submits:
In General, THE HONORABLE COURT OF APPEALS GRAVELY
ERRED WHEN IT DID NOT REVERSE AND SET ASIDE THE
DECISION OF THE REGIONAL TRIAL COURT OF MAKATI
CITY, BRANCH 145 IN ITS ENTIRETY.
In Particular, THE HONORABLE COURT OF APPEALS
PATENTLY ERRED WHEN IT UPHELD RESPONDENTS
ASSERTION THAT THE REAL ESTATE MORTGAGE DATED
MAY 31, 1983 CANNOT BE FORECLOSED WITH RESPECT TO
THE OBLIGATION OF PHILIPPINE PACIFIC TO PETITIONER.
Mortgage, being a mere accessory agreement, is

likewise not valid and enforceable in the absence of a
valid principal contract; and
2. 2.the Loss of the mortgaged Fishing Vessel Jean III
must be borne by the respondent bank considering
that the vessel was in its possession and control at
the time of the loss.
Per this Courts Resolution dated 20 November 2002, the two
(2) separate petitions were ordered consolidated, involving,
as they do, the same decision of the appellate court.
As we see it, the common issues to be resolved are:
8
1. I.Whether or not the promissory note dated 12 August

1981 is valid;
2. II.Whether or not the chattel mortgage over the
fishing vessel Jean III can be foreclosed for
Philippine Pacifics failure to comply with its
obligation under the promissory note dated 12 August
1981; and
3. III.Whether or not the real estate mortgage
constituted over spouses Chengs parcel of land
covered by TCT No. (222143) 23843 [San Juan
property] also secured the spouses obligation as comakers of the promissory note dated 12 August 1981.
For their part, the spouses Cheng filed with the Court of
Appeals a motion for reconsideration, disputing the appellate
courts pronouncement that the August 12, 1981 promissory
note and the deed of chattel mortgage over the fishing vessel
Jean III are valid and enforceable and that the loss of said
109

109
vessel must be borne by them. In its resolution of 1 July

2002, the appellate court denied the motion.
Hence, the spouses Chengs own petition for review
oncertiorari in G.R. No. 154109, seeking the reversal and
setting aside of both the appellate courts decision of 11
December 2001 and resolution of 01 July 2002, it being their
submission that said court committed a grave and serious
reversible error in not holding that:
1. 1.the subject Promissory Note is not valid and
enforceable for non-fulfillment of a suspensive
condition and consequently, the Deed of Chattel
In justifying its reversal of the trial courts finding that the

validity and effectivity of the promissory note dated 12 Au_______________
8
Rollo of G.R. No. 154109, p. 146.
110
110

298
gust 1981 were conditioned upon the ratification thereof by

the SEC-created management committee in SEC Case No.
2042, the appellate court explained that the terms of the
subject promissory note are clear and leave no doubt upon
the intention of the parties. On this score, it ruled that the
parol evidence introduced by the Cheng spouses to the effect
that the validity and enforceability of the note are
conditioned upon its approval and ratification by the
management committee should have been discarded by the
trial court, consistent with the parol evidence rule embodied
in Rule 130, Section 9 of the Rules of Court. Says the
appellate court in its challenged decision:
9
Instead, We agree with [Allied Bank] that there is no evidence to

support the court a quos finding that the effectivity of the
promissory note was dependent upon the prior ratification or
confirmation of the management committee formed by the SEC in
SEC Case No. 2042.
To begin with, there is nothing on the face of the promissory
note requiring said prior ratification for it to become valid. Basic is
_______________
The term agreement includes wills.
111

111
the rule that if the terms of the contract are clear and leave no
doubt upon the intention of the parties, the literal meaning of its
stipulations shall control (Article 1370, Civil Code; Honrado, Jr.
vs. CA, 198 SCRA 326).
This basic rule notwithstanding, the court a quo admitted in
evidence the alleged verbal stipulation made by [the spouses
Cheng] to the effect that the validity of the promissory note was
dependent upon its ratification by the management committee.
Such parol evidence should not have been allowed as it had the
effect of altering the provisions of the promissory note which are in
clear and unequivocal terms.
Under the parol evidence rule, the terms of a contract are
conclusive upon the parties and evidence which shall vary a
complete and enforceable agreement embodied in a document is
inadmissible (Magellan Manufacturing Corporation vs. CA, 201
SCRA 106). (Words in bracket ours).
10
SEC. 9. Evidence of written agreements.When the terms of an agreement
have been reduced to writing, it is considered as containing all the terms agreed
upon and there can be, between the parties and their successors in interest, no
evidence of such terms other than the contents of the written agreement.
However, a party may present evidence to modify, explain or add to the terms
of the written agreement if he puts in issue in his pleading:
1. (a)An intrinsic ambiguity, mistake or imperfection in the written
agreement;
2. (b)The failure of the written agreement to express the true intent and
agreement of the parties thereto;
3. (c)The validity of the written agreement; or
4. (d)The existence of other terms agreed to by the parties or their
We agree.
The appellate court is correct in declaring that under the
parol evidence rule, when the parties have reduced their
agreement into writing, they are deemed to have intended
such written agreement to be the sole repository and
memorial of everything that they have agreed upon. All their
prior and contemporaneous agreements are deemed to be
merged in the written document so that, as between them
and their successors-in-interest, such writing becomes
exclusive evidence of the terms thereof and any verbal
agreement which tends to vary, alter or modify the same is
not admissible.
11
successors in interest after the execution of the written agreement.
299
Here, the terms of the subject promissory note and the

deed of chattel mortgage are clear and explicit and devoid of
any conditionality upon which its validity depends. To be
sure, Allied Bank was not a party to SEC Case No. 2042
where the management committee was ordered created;
_______________
10
Rollo of G.R. No. 154109, pp. 43-44.
11
Cu vs. Court of Appeals, 195 SCRA 647 (1991); De la Rama vs.
Ledesma, 227 Phil. 1; 143 SCRA 1 (1986); and Ortaez vs. Court of
Appeals, 334 Phil. 514; 266 SCRA 561 (1997).
112
112

hence, it would not be correct to presume that it had notice of

the existence of the management committee which,
incidentally, was still to be created when the subject
promissory note was executed on 12 August 1981. Notably,
while the parties in SEC Case No. 2042 agreed to form the
management committee on 27 July 1981, it was only on 14
August 1981 when the committee was actually created and
its members appointed. Clearly then, the subject promissory
note was outside the realm of authority of the management
committee. Corollarily, the chattel mortgage accessory to it is
likewise valid.
We thus declare and so hold that Allied Banks foreclosure
of the chattel mortgage constituted over the vessel Jean III
was justified. On this score, we also rule that the loss of the
mortgaged chattel brought about by its sinking must be
borne not by Allied Bank but by the spouses Cheng. As
owners of the fishing vessel, it was incumbent upon the
spouses to insure it against loss. Thus, when the vessel sank
before the chattel mortgage could be foreclosed, uninsured as
it is, its loss must be borne by the spouses Cheng.
We proceed to the third issue. Both the trial court and the
appellate court are unanimous in finding that the real estate
mortgage executed by the spouses Cheng over theirSan Juan
property to secure the loan of GCPI cannot be held to secure
the spouses obligation as co-makers of the promissory note
dated 12 August 1981. We see no reason to depart from the
findings of the two courts below.
Article 2126 of the Civil Code is explicit:
ART. 2126. The mortgage directly and immediately subjects the
property upon which it is imposed, whoever the possessor may be,
to the fulfillment of the obligation for whose security it was
constituted.
The agreement between the Cheng spouses and Allied Bank

as evidenced by the receipt signed by Allied Banks
representative is that the San Juan property shall
collateralize the approved loan of GCPI, thus indicating the
specific
113

113
loan to be secured and nothing else. To be sure, the

obligation of GCPI was already paid in full. Hence the real
estate mortgage accessory to it was inevitably extinguished.
All told, we find no reversible error committed by the
appellate court in rendering the assailed 11 December 2001
Decision and subsequent 01 July 2002 Resolution in CA-G.R.
CV 41280.
WHEREFORE, the consolidated petitions are DENIED
and the challenged decision and resolution of the Court of
Appeals AFFIRMED in toto.
SO ORDERED.
Panganiban (Chairman), SandovalGutierrez,Corona and Carpio-Morales, JJ., concur.
300
Consolidated petitions denied, challenged decision and

resolution affirmed in toto.
Notes.When the terms of an agreement have been
reduced to writing, it is to be considered as containing all the
G.R. No. 171036.
October 17, 2008.*
ADELA G. RAYMUNDO, EDGARDO R. RAYMUNDO,

LOURDES R. RAYMUNDO, TERESITA N. RAYMUNDO,
EVELYN R. SANTOS, ZENAIDA N. RAYMUNDO, LUIS N.
RAYMUNDO, JR. and LUCITA R. DELOS REYES,
petitioners, vs. ERNESTO LUNARIA, ROSALINDA RAMOS
and HELEN MENDOZA, respondents.
Evidence; Parol Evidence Rule; Exception; The parol evidence
rule forbids any addition to or contradiction of the terms of a
written instrument by testimony or other evidence purporting to
show that, at or before the execution of the parties written
agreement, other or different terms were agreed upon by the parties,

varying the purport of the written contract.We rule for the
respondents. To begin with, we agree with petitioners claim that
the parol evidence rule does not apply to the facts of this
case. First, the parol evidence rule forbids any addition to or
contradiction of the terms of a written instrument by testimony or
other evidence purporting to show that, at or before the execution
of the parties written agreement, other or different terms were
agreed upon by the parties, varying the purport of the written
contract. Notably, the claimed verbal agreement was agreed upon
not prior to but subsequent to the written agreement. Second, the
validity of the written agreement is not the matter which is being
put in issue here. What is questioned is the validity of the claim
that a subsequent verbal agreement was agreed upon by the
parties after the execution of the written agreement which
substantially modified their earlier written agreement.
Same; Quantum of Proof; Words and Phrases; By
preponderance of evidence is meant that the evidence as a whole
adduced by one side is superior to that of the other.By
preponderance of evidence 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.
Judgments; Once an issue has been adjudicated in a valid
final judgment of a competent court, it can no longer be
controverted anew and
_______________
* SECOND DIVISION.
527
301
VOL. 569, OCTOBER 17, 2008
5
27
Raymundo vs. Lunaria

should be finally laid to rest.The general rule is that once an
issue has been adjudicated in a valid final judgment of a
competent court, it can no longer be controverted anew and should
be finally laid to rest. In this case, petitioners failed to address the
issue on their solidary liability when they appealed to the Court of
Appeals. They are now estopped to question that ruling. As to
them, the issue on their liability is already valid and binding.

Padilla Law Office for petitioners.
Leandro B. Fernandez for respondents.
QUISUMBING, J.:
Assailed in this petition for review are the Court of
Appeals Decision1 dated October 10, 2005 and the
Resolution2 dated January 10, 2006 in CA-G.R. CV No.
75593.
The facts in this case are as follows:
Sometime in May 1996, petitioners approached
respondent Lunaria to help them find a buyer for their
property situated at Marilao, Bulacan with an area of 12,126
square meters for the amount of P60,630,000. Respondent
Lunaria was promised a 5% agents commission in the event
that he finds a buyer. After respondents found a buyer,
Cecilio Hipolito, an Exclusive Authority to Sell3 was
executed embodying the agreement made by the parties.
After the corresponding Deed of Absolute Sale of Real
Property4 was registered in the Registry of Deeds, a copy
thereof was given to the
_______________
1 Rollo, pp. 28-40. Penned by Associate Justice Fernanda Lampas-Peralta

with Associate Justices Delilah Vidallon-Magtolis and Josefina GuevaraSalonga concurring.
2 Id., at p. 43. Penned by Associate Justice Fernanda Lampas Peralta
with Associate Justices Roberto A. Barrios and Josefina Guevara-Salonga
concurring.
3 Exhibit A, folder of exhibits, p. 1.
4 Exhibit 3, folder of exhibits, pp. 6-10.
528
528

Far East Bank and Trust Co., which was then holding in
escrow the amount of P50,000,000 to be disbursed or paid
against the total consideration or price of the property.
On February 14, 1997, Ceferino G. Raymundo, one of the
co-owners, advised respondents to go to the bank to receive
the amount of P1,196,000 as partial payment of their total
commission. Also, respondents were instructed to return
after seven days to get the balance of the commission due
them.
On February 21, 1997, respondents returned to the bank.
However, the check covering the balance of their commission
was already given by the bank manager to Lourdes R.
Raymundo, the representative of the petitioners.
Respondents tried to get the check from the petitioners,
however, they were told that there is nothing more due them
by way of commission as they have already divided and
distributed the balance of the commissions among their
nephews and nieces.
For their part, petitioners counter that there was a
subsequent verbal agreement entered into by the parties
after the execution of the written agreement. Said verbal
agreement provides that the 5% agents commission shall be
divided as follows: 2/5 for the agents, 2/5 for Lourdes
302
Raymundo, and 1/5 for the buyer, Hipolito. The share given
to Lourdes Raymundo shall be in consideration for the help
she would extend in the processing of documents of sale of
the property, the payment of the capital gains tax to the
Bureau of Internal Revenue and in securing an order from
the court. The 1/5 commission given to Hipolito, on the other
hand, will be used by him for the payment of realty taxes.
Hence, for failure of the respondents to receive the balance
of their agents commission, they filed an action for the
collection of a sum of money before the Regional Trial Court
of Valenzuela City, Branch 172. On January 22, 2002, the
trial court rendered a Decision5 in favor of the respondents.
The dispositive portion of said decision reads:
_______________
5 Rollo, pp. 54-60. Penned by Judge Floro P. Alejo.
529
VOL. 569, OCTOBER 17, 2008

529
WHEREFORE, judgment is hereby rendered as follows:

1) Ordering the defendants, jointly and severally, to pay the
plaintiffs the amount of P1,834,900.00, representing the unpaid
commission, plus interest thereon at the legal rate from the filing
of this case until fully paid;
2) Ordering the defendants to, jointly and severally, pay the
plaintiffs the amount of P200,000.00 as moral damages and the
amount of P100,000.00 as exemplary damages; and
3) Ordering the defendants [to], jointly and severally, pay the
plaintiffs the amount of P150,000.00 as attorneys fees, plus the
costs of suit.
SO ORDERED.6
Aggrieved, petitioners appealed. In a Decision dated

October 10, 2005, the Court of Appeals affirmed the decision
of the trial court with the modification that the amount of

moral and exemplary damages awarded to respondents shall
be reduced. The dispositive portion reads:
WHEREFORE, the appealed Decision dated January 22, 2002
is affirmed, subject to the modification that the award of moral
damages is reduced to P50,000.00 and exemplary damages to
P25,000.00.
SO ORDERED.7
On October 28, 2005, petitioners filed a Motion for

Reconsideration.8 However, it was denied in a Resolution
dated January 10, 2006. Hence, the instant petition raising
the following issues:
I.
THE HONORABLE COURT SERIOUSLY ERRED IN APPLYING
THE PAROLE EVIDENCE RULE IN THIS CASE (DECISION,
PAGE 7, PARAGRAPH 1). THIS PRINCIPLE HAS NO
APPLICATION TO THE FACTS OF THE INSTANT CASE.
_______________
6 Id., at p. 60.
7 Id., at p. 40.
8 CA Rollo, pp. 166-175.
530
530

II.
FURTHER, IT ERRED IN REQUIRING, ALBEIT IMPLICITLY,
THE
PETITIONERS
TO
ESTABLISH
THE
VERBAL
AGREEMENT
MODIFYING
THE
EARLIER
WRITTEN
AGREEMENT (THE EXCLUSIVE AUTHORITY TO SELL) BY
MORE THAN A PREPONDERANCE OF EVIDENCE
(DECISION, PAGE 8). THIS IS PLAINLY CONTRARY TO LAW
303
THAT MERELY REQUIRES PREPONDERANCE OF EVIDENCE

IN CIVIL CASES.
III.
FINALLY, EVEN CONCEDING FOR THE SAKE OF
ARGUMENT THAT PETITIONERS STILL OWE THE
RESPONDENTS THE BALANCE OF THEIR COMMISSION,
THE HONORABLE COURT ERRED IN RULING THE
PETITIONERS
ARE
EACH JOINTLY
AND
SEVERALLY[LIABLE]
FOR
THE
PAYMENT
OF
THE ENTIRE BROKERS FEES. THIS RULING HAS NO
LEGAL BASIS AND IS CONTRARY TO ART. 1207 OF THE NEW
CIVIL CODE.9
Plainly stated, the issues for resolution are: Did the Court
of Appeals err (1) in applying the parol evidence rule; (2) in
requiring petitioners to establish their case by more than a
preponderance of evidence; and (3) in holding petitioners
jointly and severally liable for the payment of the entire
brokers fees?
Anent the first issue, petitioners contend that the Court of
Appeals erred in applying the parol evidence rule to the facts
of the case because the verbal agreement was entered into
subsequent to the written agreement. Further, they aver that
there is no rule that requires an agreement modifying an
earlier agreement to be in the same form as the earlier
agreement in order for such modification or amendment to be
valid.
Conversely, respondents argue that the Court of Appeals
did not apply the parol evidence rule in this case. Although
the appellate court stated and emphasized the general legal
principle and rule on parol evidence, it did not apply the
parol evidence rule with regard to the evidence adduced by
the petitioners.
_______________
9 Rollo, p. 17.
531
VOL. 569, OCTOBER 17, 2008

531
We rule for the respondents. To begin with, we agree with

petitioners claim that the parol evidence rule does not apply
to the facts of this case. First, the parol evidence rule forbids
any addition to or contradiction of the terms of a written
instrument by testimony or other evidence purporting to
show that, at or before the execution of the parties written
agreement, other or different terms were agreed upon by the
parties,
varying
the
purport
of
the
written
contract.10 Notably, the claimed verbal agreement was agreed
upon not prior to but subsequent to the written
agreement. Second, the validity of the written agreement is
not the matter which is being put in issue here. What is
questioned is the validity of the claim that a subsequent
verbal agreement was agreed upon by the parties after the
execution of the written agreement which substantially
modified their earlier written agreement.
Nonetheless, even if we apply the parol evidence rule in
this case, the evidence presented by the petitioners fell short
in proving that a subsequent verbal agreement was in fact
entered into by the parties. We subscribe to the findings of
both the trial court and the appellate court that the evidence
presented by petitioners did not establish the existence of the
alleged subsequent verbal agreement. As pointed out by the
trial court:
Note that no written evidence was presented by the defendants
to show that the plaintiffs [herein respondents] agreed to the
above-sharing of the commission. The fact is that the plaintiffs are
denying having ever entered into such sharing agreement. For if
the plaintiffs as sales agents indeed agreed to share the
commission they are entitled to receive by virtue of the Exclusive
304
Authority to Sell with Lourdes G. Raymundo and Hipolito, it

passes understanding why no written agreement to that effect was
ever made. The absence of such written agreement is mute but
telling testimony that no such sharing arrangement was ever
made.11
As to the second issue, petitioners contend that the

appellate court erred in requiring them to prove the existence
of the subsequent verbal agreement by more than a mere
preponderance of
_______________
10 Roble v. Arbasa, G.R. No. 130707, July 31, 2001, 362 SCRA 69, 82.
11 Rollo, pp. 58-59.
532
532

evidence since no rule of evidence requires them to do so. In

support of this allegation, petitioners presented petitioner
Lourdes Raymundo who testified that she was given 2/5
share of the commission pursuant to the verbal sharing
scheme because she took care of the payment of the capital
gains tax, the preparation of the documents of sale and of
securing an authority from the court to sell the property.
For their part, respondents counter that the appellate
court did not require petitioners to prove the existence of the
subsequent oral agreement by more than a mere
preponderance of evidence. What the appellate court said is
that the petitioners failed to prove and establish the alleged
subsequent verbal agreement even by mere preponderance of
evidence.
Petitioners abovecited allegation has no merit. By
preponderance of evidence is meant that the evidence as a
whole adduced by one side is superior to that of the other.12It
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.13
Both the appellate court and trial court ruled that the
evidence presented by the petitioners is not sufficient to
support their allegation that a subsequent verbal agreement
was entered into by the parties. In fact, both courts correctly
observed that if Lourdes Raymundo was in reality offered the
2/5 share of the agents commission for the purpose of
assisting respondent Lunaria in the documentation
requirement, then why did the petitioners not present any
written court order on her authority, tax receipt or sales
document to support her self-serving testimony? Moreover,
even the worksheet allegedly reflecting the commission
sharing was
_______________
12 Floralde v. Court of Appeals, G.R. No. 123048, August 8, 2000, 337
SCRA 371, 377.
13 Ong v. Yap, G.R. No. 146797, February 18, 2005, 452 SCRA 41, 49-50.
533
VOL. 569, OCTOBER 17, 2008

533
unilaterally prepared by petitioner Lourdes Raymundo

without any showing that respondents participated in the
preparation thereof or gave their assent thereto. Even the
alleged payment of 1/5 of the commission to the buyer to be
used in the payment of the realty taxes cannot be given
credence since the payment of realty taxes is the obligation of
the owners, and not the buyer. Lastly, if the said sharing
agreement was entered into pursuant to the wishes of the
305
buyer, then he should have been presented as witness to

corroborate the claim of the petitioners. However, he was not.
As to the third issue, petitioners contend that the
appellate court erred in holding that the petitioners were
each jointly and severally liable for the payment of the
brokers fees. They contend that the Civil Code provides that
unless the parties have expressly agreed to be jointly and
severally liable for the entire brokers fees, each of the
petitioners should only be held liable to the extent of
theirpro-indiviso share in the property sold.
For their part, respondents argue that the appellate court
did not err in affirming the joint and several liability of the
petitioners. They aver that if there was error on the part of
the trial court, it was not raised or assigned as error by
petitioners in their appeal. It was also not included in the
Statement of Issues in their brief which they submitted for
resolution by the Court of Appeals. In fact, the same was
never mentioned, much less questioned, by petitioners in
their brief.
On this score, we agree with respondents. The general
rule is that once an issue has been adjudicated in a valid
final judgment of a competent court, it can no longer be
controverted anew and should be finally laid to rest.14 In this
case, petitioners failed to address the issue on their solidary
liability when they appealed to the Court of Appeals. They
are now estopped to question that ruling. As to them, the
issue on their liability is already valid and binding.
terms agreed upon and there can be, between the parties
and their successors-in-interest, no evidence of such terms
other than the contents of the written agreement. (Lapulapu
Foundation, Inc. vs. Court of Appeals, 421 SCRA 328 [2004])
When the terms of an agreement have been reduced to
writing, it is considered as containing all the terms agreed
upon by the parties and there can be, between the parties
and their successors in interest, no evidence of such terms
other than the contents of the written agreement.
(Milwaukee Industries Corp. vs. Pampanga III Electric
Cooperative, Inc.,430 SCRA 389 [2004])
o0o
114
_______________
14 Rudecon Management Corporation v. Camacho, Adm. Case No. 6403,
August 31, 2004, 437 SCRA 202, 206.
G.R. No. 172820. June 23, 2010.*

DULCE PAMINTUAN, petitioner, vs. PEOPLE OF THE
PHILIPPINES, respondent.
306
Criminal Law; Estafa (Swindling); Elements; Words and

Phrases; The words convert and misappropriate connote the act
of using or disposing of anothers property as if it were ones own, or
of devoting it to a purpose or use different from that agreed upon.
Article 315, paragraph 1(b) of the Revised Penal Code, as
amended, under which the petitioner was charged and prosecuted,
states: x x x The elements of estafa under this provision are: (1) the
offenders
_______________
* THIRD DIVISION.
539
VOL. 621, JUNE 23, 2010
53
9
Pamintuan vs. People

receipt of money, goods, or other personal property in trust, or
on commission, or for administration, or under any other
obligation involving the duty to deliver, or to return, the same; (2)
misappropriation or conversion by the offender of the money or
property received, or denial of receipt of the money or property; (3)
the misappropriation, conversion or denial is to the prejudice of
another; and (4) demand by the offended party that the offender
return the money or property received. The essence of this kind
of estafa is the appropriation or conversion of money or property
received to the prejudice of the entity to whom a return should be
made. The words convert and misappropriate connote the act of
using or disposing of anothers property as if it were ones own, or
of devoting it to a purpose or use different from that agreed upon.
To misappropriate for ones own use includes not only conversion
to ones personal advantage, but also every attempt to dispose of
the property of another without right. In proving the element of
conversion or misappropriation, a legal presumption of
misappropriation arises when the accused fails to deliver the
proceeds of the sale or to return the items to be sold and fails to

give an account of their whereabouts.
Same; Same; When the accused failed at the first instance (and
in fact she continuously failed), despite demands, to return at least
the value of the ring, the crime of estafa was consummatedthe
return after seven years of its value only addressed the civil liability
that the consummated crime of estafa carried with it.The
prosecution proved the third and fourth elements through evidence
of demands and the continued failure to return the ring or its
value for seven years (1996 to 2003) despite demand. Based on the
records, the return of the value of the ring came only in 2003 after
the execution of the mortgage deed that, strangely, while marked
as Exh. 4, was never offered in evidence and is thus technically
not an evidence we can appreciate. The demand letters, on the
other hand, were never disputed and thus clearly showed the
failure to return the ring or its value. In fact, even if the mortgage
deed were to be given evidentiary value, it can only stand as
evidence of the return of the value of the ring in 2003, not of
anything else. The basis of the estafa charge is the failure to return
the ring or to pay for its value in cash within the period stipulated
in the Katibayan. We do not find it disputed that the ring was
never returned despite demands. The value of the ring was not
also made available to Jeremias until seven years after its delivery
to the petitioner. When she failed at the first
540
40
instance (and in fact she continuously failed), despite
demands, to return at least the value of the ring, the crime
of estafa was consummated. The return after seven years of its
value only addressed the civil liability that the consummated
crime of estafacarried with it, as the RTC and the CA correctly
stated in their decisions.
307
Same; Same; Evidence; Parol Evidence Rule; Under the parol

evidence rule, no additional or contradictory terms to this written
agreement can be admitted to show that, at or before the signing of
the document, other or different terms were orally agreed upon by
the parties.If only to address the petitioners issue regarding the
legal significance of the un-offered mortgage deed, we observe that
it could not have raised any reasonable doubt about the nature of
the transaction between the parties. Under the circumstances, the
best evidence to ascertain the nature of the parties diamond ring
transaction is the Katibayan which is the written evidence of their
agreement that should be deemed to contain all the terms they
agreed upon. Under the parol evidence rule, no additional or
contradictory terms to this written agreement can be admitted to
show that, at or before the signing of the document, other or
different terms were orally agreed upon by the parties. Thus, the
terms of the Katibayan should be the prevailing terms of the
transaction between the parties, not any oral or side agreement
the petitioner alleged. We consider, too, in this regard that the
post-Katibayan acts of the parties strengthened, rather than
negated, the Katibayan terms, particularly the petitioners
obligation to return the diamond ring; otherwise, she would not
have attempted to return the value of the ring when the criminal
complaint was filed against her, nor secured the execution of the
mortgage deed, had no such obligation existed.

BRION, J.:
We review in this Rule 45 petition the decision1 and the
_______________
1 Dated January 12, 2006; penned by CA Presiding Justice Conrado M.
Vasquez, Jr., and concurred in by CA Associate Justice
541
VOL. 621, JUNE 23, 2010

541
resolution2 of the Court of Appeals (CA) that totally affirmed

the decision3 of the Regional Trial Court (RTC), Branch 2,
Batangas City in Criminal Case No. 11002.
The RTC found Dulce Pamintuan (petitioner) guilty
beyond
reasonable
doubt
of
the
crime
of estafa, penalizedunder Article 315, paragraph 1(b) of the
Revised Penal Code, as amended, and sentenced her to
imprisonment of four (4) years and two (2) months of prision
correccional, as minimum, to twenty (20) years of reclusion
temporal, as maximum.
The Information charging the petitioner with estafa, as
defined and penalized under Article 315, paragraph 1(b) of
the Revised Penal Code, as amended, reads:
That on or about February 16, 1996 at Batangas City,
Philippines and within the jurisdiction of this Honorable Court,
the above-named accused, after having received in trust and on
commission from one Jeremias Victoria a diamond ring worth
SEVEN HUNDRED SIXTY FIVE THOUSAND (P765,000.00)
PESOS, Philippine Currency, with the understanding and
agreement that the same shall be sold by her on cash basis at a
price not less than its value and that the overprice, if any, shall be
her commission and the proceeds of the sale shall be remitted to
Jeremias Victoria immediately upon sale thereof, and if unsold,
said diamond ring will be returned to Jeremias Victoria within a
period of three (3) days from the date of receipt, but said accused,
far from complying with her obligation to return the unsold
diamond ring, with grave abuse of confidence, with intent to
defraud, did then and there willfully, unlawfully and feloniously
convert and misappropriate the same to her own personal use and
benefit and despite demands made upon her to return the said
jewelry, she failed and refused to do so, to the damage and
308
prejudice of Jeremias Victoria in the aforementioned amount of

P765,000.00, Philippine Currency.
return the diamond ring. Subsequently, Jeremias, through

his law-
_______________
_______________
(now Supreme Court Associate Justice) Mariano C. Del Castillo and CA

Associate Justice Magdangal M. De Leon; Rollo, pp. 33-39.
2 Dated May 19, 2006; id., at pp. 43-44.
3 Dated July 21, 2004; id., at pp. 60-66. Penned by Judge (now CA Associate
Justice) Mario V. Lopez.
5 Exhibit A; id., at p. 76.

6 Exhibit A-2; id. at p. 76; The pertinent portion of the Katibayan
provides: KABUUANG HALAGA P765,000.00 (Seven Hundred Sixty Five
Thousand Pesos Only) nasa mabuting kalagayan upang ipagbili ng
KALIWAAN lamang sa loob ng 3 araw mula ng aking pagkalagda; kung
542
542
4 Id., at p. 60.
hindi ko maipagbili ay isasauli ko ang lahat ng alahas sa loob ng taning na

CONTRARY TO LAW.4
The petitioner pleaded not guilty to the charge; trial on

the merits followed.
The Prosecution Evidence
panahong nakatala sa itaas; kung maipagbili ko naman ay dagli [kong]

isusulit at ibibigay ang buong pinagbilhan sa may-ari ng mga alahas. Ang
aking gantimpala ay ang mapapahigit na halaga sa nakatakdang halaga sa
itaas ng bawat alahas; HINDI AKO pinahihintulutang ipa-utang o ibigay na
hulugan ang alin mang alahas; ilalagak, ipagkakatiwala, ipahihiram,
isasangla o ipananagot kahit sa anong paraan ang alin mang alahas sa ibang
tao o tao.
543
The prosecution presented two witnessesJeremias

Victoria and Aurora C. Realonto establish its case.
Jeremias testified that on February 16, 1996, the petitioner
received from him a diamond ring worth P765,000.00 on the
condition that it would be sold on commission basis. At the
time she received the ring, the petitioner signed a document
entitled Katibayan,5 authorizing the sale of the ring under
the following express conditions: the petitioner was to sell
the ring for cash and with an overprice as her profit, and
remit the full payment to Jeremias; she would not entrust
the ring to anybody; and if unsold within three days, she
must return the ring, or pay for it in cash.6
The petitioner failed to remit payment for the diamond
ring despite the lapse of the agreed period. Neither did she
VOL. 621, JUNE 23, 2010

543
yer, sent two (2) formal demand letters7 for the petitioner to
comply with her obligations under the Katibayan. The
demand letters went unheeded. Thus, the petitioner failed to
comply with her obligations to Jeremias.8
As rebuttal evidence, Jeremias claimed that the petitioner
failed to return the diamond ring because she pawned it.
Jeremias also denied that he received any jewelry from the
petitioner in exchange for the diamond ring.9
The Defense Evidence
The petitioner testified in her behalf and admitted that
she received the diamond ring from Jeremias in exchange for
seven (7) pieces of jewelry valued at P350,000.00 that she
309
also then delivered to Jeremias for cleaning and eventual

sale. The petitioner likewise stated that the delivery of the
seven pieces of jewelry was evidenced by a receipt that
Jeremias signed,10 and that she subsequently tried to return
the diamond ring but he refused to accept it. Although the
petitioner acknowledged signing theKatibayan, she claimed
that Jeremias entrusted the diamond ring to her before he
left for abroad, and that she only heard from him again after
the criminal case had been filed against her. The petitioner
likewise claimed that she tried to return the diamond ring
during the preliminary investigation of the case, but
Jeremias refused to accept it.
As sur-rebuttal evidence, the petitioner presented a Deed
of Real Estate Mortgage dated August 25, 2003 (mortgage
deed),11 executed by Danilo Pamintuan, the petitioners
husband. According to the terms of the mortgage deed,
Danilo admitted that Jeremias had entrusted the diamond
ring to
_______________
8 Ibid.
The RTC found the petitioner guilty beyond reasonable

doubt of estafa.12 It also found that the defense failed to refute
the prosecution evidence establishing all the elements of the
crime charged. The RTC ruled, too, that the mortgage deed
only served as proof of the restitution of or reparation for the
value of the diamond ring and thus addressed only the
petitioners civil liability, not her criminal liability. The
dispositive portion of the RTC decision reads:
WHEREFORE,
finding
the
accused DULCE
PAMINTUANguilty beyond reasonable doubt for the crime of
estafa, defined and penalized under Article 315, par. 1 (b) of the
Revised Penal Code, without modifying circumstances, she is
hereby sentenced to suffer the indeterminate penalty of four (4)
years and two (2) months of prision correccional as minimum to
twenty (20) years ofreclusion temporal as maximum.
Considering that there is already a settlement as to the
payment of the civil liability, as embodied in the Real Estate
Mortgage executed by the parties, this Court hereby refrains to
pronounce the corresponding civil indemnity.
SO ORDERED.
The petitioner appealed to the CA.
9 Id., at p. 62.
The CA Ruling
10 Exhibit 1; Records, p. 163; II Folder of Exhibits, p. 3.

11 Rollo, pp. 77-78.
544
544

him on February 16, 1996, not to the petitioner, and that the
mortgage deed was constituted in consideration of Danilos
promise to return the diamond ring to Jeremias.
The RTCs Ruling
The CA agreed with the RTC that the petitioner was

guilty beyond reasonable doubt of estafa and thus dismissed
the petitioners appeal.13 The CA ruled that the prosecution
evi_______________
12 Supra note 3.
545
VOL. 621, JUNE 23, 2010
545
310

dence showed that Jeremias entrusted possession of the
diamond ring to the petitioner, not to her husband. The CA
observed that the prosecution duly proved the petitioners
misappropriation by showing that she failed to return the
diamond ring upon demand. That misappropriation took
place was strengthened when the petitioner failed to refute
Jeremias allegation that she pawned the diamond ringan
act that ran counter to the terms of her agency under
the Katibayan.
The petitioner moved to reconsider the CA decision,
arguing that the CA disregarded the legal significance of the
mortgage deed, and filed the present petition after the CA
denied her motion.
The Issues
The petitioner raises the following issues:
1. whether the CA correctly disregarded the effect of the
mortgage deed on her criminal liability; and
2.
whether the elements of the crime of estafa under
Article 315, paragraph 1(b) of the Revised Penal Code,
as amended, were duly proven beyond reasonable
doubt.
The petitioner asserts that the terms of the mortgage deed
negated the element of misappropriation, and the RTC and
the CA did not at all consider these when they convicted her.
At the same time, she disputes the terms of
the Katibayan, as its stipulations, written in fine print, did
not truly disclose the real nature of the transaction between
her and Jeremias. She also claims that she became the owner
of the diamond ring after it was turned over to her. The
petitioner
further
insists
that
she
signed
the Katibayan without taking heed of its terms because she
trusted Jeremias.
The Courts Ruling
We find the petition unmeritorious.546
546

The issues raised by the petitioner are essentially

encapsulated by the second issue outlined above
i.e.,whether the crime of estafa has been sufficiently
established; the first issue relating to the mortgage deed is a
matter of defense that should be considered in resolving the
second issue.
Article 315, paragraph 1(b) of the Revised Penal Code, as
amended, under which the petitioner was charged and
prosecuted, states:
Art. 315. Swindling (estafa).Any person who shall defraud
another by any of the means mentioned hereinbelow shall be
punished by:
1st. The penalty of prision correccional in its maximum period
to prision mayor in its minimum period, if the amount of the fraud
is over 12,000 pesos but does not exceed 22,000 pesos; and if such
amount exceeds the latter sum, the penalty provided in this
paragraph shall be imposed in its maximum period, adding one
year for each additional 10,000 pesos; but the total penalty which
may be imposed shall not exceed twenty years. In such cases, and
in connection with the accessory penalties which may be imposed
and for the purpose of the other provisions of this Code, the
penalty shall be termed prision mayor or reclusion temporal, as the
case may be[.]
xxxx
1. With unfaithfulness or abuse of confidence, namely:
xxxx
(b)
By misappropriating or converting, to the prejudice of
another, money, goods or any other personal property received by
the offender in trust, or on commission, or for administration, or
under any other obligation involving the duty to make delivery of,
or to return the same, even though such obligation be totally or
partially guaranteed by a bond; or by denying having received such
money, goods, or other property[.]
311
The elements of estafa under this provision are: (1) the

offenders receipt of money, goods, or other personal property
in trust, or on commission, or for administration, or under
any other obligation involving the duty to deliver, or to
return, the same; (2) misappropriation or conversion by the
offender of
misappropriated or converted the diamond ring precisely

because she was its owner.
_______________
14 Perez v. People, G.R. No. 150443, January 20, 2006, 479 SCRA 209,
218-219.
15 Serona v. Court of Appeals, 440 Phil. 508, 518; 392 SCRA 35, 42 (2002).
547
VOL. 621, JUNE 23, 2010

547
the money or property received, or denial of receipt of the

money or property; (3) the misappropriation, conversion or
denial is to the prejudice of another; and (4) demand by the
offended party that the offender return the money or
property received.14
The essence of this kind of estafa is the appropriation or
conversion of money or property received to the prejudice of
the entity to whom a return should be made.15 The words
convert and misappropriate connote the act of using or
disposing of anothers property as if it were ones own, or of
devoting it to a purpose or use different from that agreed
upon.16 To misappropriate for ones own use includes not only
conversion to ones personal advantage, but also every
attempt to dispose of the property of another without
right.17 In proving the element of conversion or
misappropriation, a legal presumption of misappropriation
arises when the accused fails to deliver the proceeds of the
sale or to return the items to be sold and fails to give an
account of their whereabouts.18
In this case, the petitioner asserts that the prosecution
failed to sufficiently prove the first and second elements of
the crime. The petitioner also asserts that these elements
were negated by her testimony and by the mortgage deed
that showed she received the diamond ring as owner, and not
as an agent. The petitioner argues that she could not have
16 Ibid.
17 Ibid.
18 U.S. v. Rosario de Guzman, 1 Phil. 138, 139 (1902).
548
548

The First Element: Receipt of Goods in Trust

The prosecution proved the first element of the crime
through the testimony of Jeremias who related that he gave
the petitioner the diamond ring for sale on commission basis.
The unequivocal terms of the Katibayancorroborated
Jeremias testimony and showed the fiduciary relationship
between the two parties as principal and agent, where the
petitioner was entrusted with the diamond ring under the
specific authority to sell it within three days from its receipt
and to return it if it remains unsold within that period.
Significantly, the petitioner admitted the fiduciary
relationship between herself and Jeremiasan aspect of the
case that the RTC and the CA duly noted through the finding
that the petitioner admitted receiving the diamond ring from
Jeremias to be sold on commission basis.19
Against the prosecutions case, the defense submitted its
own evidence and varying theories that unfortunately
suffered from serious contradictions.
First, at the earliest stages of the trial proper, the
petitioner categorically admitted on the witness stand that
she received the diamond ring in order to sell it on
312
commission basis. Immediately after, she testified that she

gave several pieces of jewelry (evidenced by a receipt) to
Jeremias in exchange for the diamond ring. As the RTC
noted, however, the written receipt of the pieces of jewelry
did not support the theory that they had been given by way
of exchange for the diamond ring. The RTC observed:
[T]here is nothing in the document to show that it was received,
nor it was given to the private complainant in exchange of the
latters ring. There is not even, in the said list, any valuation or
costing of each [jewelry] x x x What is contained in the list are the
words for
_______________
19 Supra note 3, at p. 63; supra note 1, at p. 37.
549
Both the RTC and the CA recognized the theory as

unmeritorious given the clear terms of the mortgage deed.
These terms did not speak of the petitioner or Danilos
ownership of the ring, merely of Danilos intended return of
the ring. The mortgage deed reads:
[T]he MORTGAGOR [DANILO PAMINTUAN], for and in
consideration of my promise to return within thirty (30) days from
today to JERRY VICTORIA, Filipino citizen, of legal age, married
and a resident of San Isidro Village, Batangas City, hereinafter
referred to as the MORTGAGEE, the jewelry subject matter of
Criminal Case No. 11002, in the same order and condition when it
was entrusted to me by the MORTGAGEE on February 16, 1996,
hereby convey by way of first mortgage unto the said
MORTGAGEE x x x [.]21
_______________
VOL. 621, JUNE 23, 2010

549
cleaning which purports no other meaning that would favor the

cause of the accused.20
Second, the defense next attacked the identity of the

recipient of the diamond ring. As sur-rebuttal, the petitioner
presented the mortgage deed to show that the diamond ring
was entrusted to her husband, Danilo, and not to her. This
mortgage deed, however, was executed only on August 25,
2003, or long after the ring was delivered on February 16,
1996, together with the Katibayan that the petitioner duly
signed. It likewise contradicted the petitioners earlier
admission that she took delivery of the diamond ring. Not
surprisingly, the lower courts did not give the submitted deed
any evidentiary value.
Lastly, the defense propounded the theory that the
petitioner and her husband jointly owned the diamond ring,
citing the mortgage deed as proof and basis of this claim.

21 Id., at p. 65.
550
550

The Second Element: The Misappropriation

The second elementthe misappropriation of the diamond
ringwas proven by Jeremias testimony that the petitioner
failed to return the diamond ring after the lapse of the
agreed period or afterwards, despite the clear terms of
the Katibayan. He further testified that the petitioner could
not return the ring because she had pawned it. She strangely
did not respond to this allegation. This silence, coupled with
her undeniable failure to return the diamond ring,
immeasurably strengthened the element of misappropriation.
Her silence assumes great significance since the pawning of
the
diamond
ring
was
a
clear
violation
of
313
the Katibayan which only gave her the authority to sell on

commission or to return the ring. Acting beyond the mandate
of this agency is the conversion or misappropriation that the
crime of estafa punishes.
Third and Fourth Elements: Prejudice and Demand
The prosecution proved the third and fourth elements
through evidence of demands and the continued failure to
return the ring or its value for seven years (1996 to 2003)
despite demand. Based on the records, the return of the value
of the ring came only in 2003 after the execution of the
mortgage deed that, strangely, while marked as Exh. 4,
was never offered in evidence and is thus technically not an
evidence we can appreciate.22 The demand letters, on the
other hand, were never disputed and thus clearly showed the
failure to return the ring or its value. In fact, even if the
mortgage deed were to be given evidentiary value, it can only
stand as evidence of the return of the value of the ring in
2003, not of anything else.
The basis of the estafa charge is the failure to return the
ring or to pay for its value in cash within the period
stipulated in the Katibayan. We do not find it disputed that
the
_______________
years of its value only addressed the civil liability that the
consummated crime of estafa carried with it, as the RTC and
the CA correctly stated in their decisions.
If only to address the petitioners issue regarding the legal
significance of the un-offered mortgage deed, we observe that
it could not have raised any reasonable doubt about the
nature of the transaction between the parties. Under the
circumstances, the best evidence to ascertain the nature of
the parties diamond ring transaction is theKatibayan which
is the written evidence of their agreement that should be
deemed to contain all the terms they agreed upon.23 Under
the parol evidence rule, no additional or contradictory terms
to this written agreement can be admitted to show that, at or
before the signing of the document, other or different terms
were orally agreed upon by the parties.24 Thus, the terms of
the Katibayan should be the prevailing terms of the
transaction between the parties, not any oral or side
agreement the petitioner alleged. We consider, too, in this
regard that the post-Katibayan acts of the parties
strengthened, rather than negated, the Katibayan terms,
particularly the petitioners obligation to return the diamond
ring; otherwise, she would not have attempted to return the
value of the ring when the criminal complaint was filed
against her, nor secured the execution of the mortgage deed,
had no such obligation existed.
_______________
551
VOL. 621, JUNE 23, 2010

551
ring was never returned despite demands. The value of the

ring was not also made available to Jeremias until seven
years after its delivery to the petitioner. When she failed at
the first instance (and in fact she continuously failed),
despite demands, to return at least the value of the ring, the
crime of estafa was consummated. The return after seven

24 Sps. Agbada v. Inter-Urban Developers, Inc., 438 Phil. 168, 192; 389
SCRA 430 (2002).
552
552

314
Viewed in their totality, we hold that the prosecution

presented proof beyond reasonable doubt of the petitioners
guilt, and both the RTC and the CA did not err in their
conclusions. The prosecution evidence was clear and
categorical, and systematically established every element of
the crime; the defense evidence, on the other hand, glaringly
suffered from contradictions, changes of theories, and
deficiencies that placed its merit in great doubt.
The Penalty
The decisive factor in determining the criminal and civil
liability for the crime of estafa depends on the value of the
thing or the amount defrauded. In this case, the established
evidence showed that the value of the diamond ring is
P765,000.00. The first paragraph of Article 315 provides the
appropriate penalty if the value of the thing or the amount
defrauded exceeds P22,000.00, as follows:
1st. The penalty of prision correccional in its maximum
period to prision mayor in its minimum period, if the amount of
the fraud is over 12,000 pesos but does not exceed 22,000 pesos;
and if such amount exceeds the latter sum, the penalty provided in
this paragraph shall be imposed in its maximum period, adding
one year for each additional 10,000 pesos; but the total penalty
which may be imposed shall not exceed twenty years.
With the given penalty range pegged at the maximum

ofprision mayor in its minimum period and an additional one
year for every P10,000.00 in excess of P22,000.00, the
maximum imposable penalty shall exceed twenty years when
computed, twenty years of imprisonment should be imposed
as maximum.
The minimum of the imposable penalty depends on the
application of the Indeterminate Sentence Law pursuant to
which the maximum term is that which, in view of the
attending circumstances, could be properly imposed under

the Revised Penal Code, and the minimum shall be within
553
VOL. 621, JUNE 23, 2010

553
the range of the penalty next lower to that prescribed for the
offense. The penalty next lower should be based on the
penalty prescribed by the Code for the offense, without first
considering any modifying circumstance attendant to the
commission of the crime. The determination of the minimum
penalty is left by law to the sound discretion of the court and
it can be anywhere within the range of the penalty next
lower without any reference to the periods into which it
might be subdivided. The modifying circumstances are
considered only in the imposition of the maximum term of
the indeterminate sentence.
Since the penalty prescribed by law for the crime
ofestafa is prision
correccional maximum
to prision
mayorminimum, the penalty next lower would then
be prision correccional minimum to medium. Thus, the
minimum term of the indeterminate sentence should be
anywhere within six (6) months and one (1) day to four (4)
years and two (2) months, while the maximum term of the
indeterminate sentence should at least be six (6) years and
one (1) day because the amounts involved exceeded
P22,000.00, plus an additional one (1) year for each
additional P10,000.00.25
Under these norms, the penalty of four (4) years and two
(2) months of prision correccional, as minimum term, to
twenty (20) years of reclusion temporal, as maximum term, is
correct. The RTC and the CA were correct in not awarding
civil liability since the execution of the mortgage deed
satisfied the value of the unreturned diamond ring.
WHEREFORE, we hereby DENY the petition for lack of
merit, and consequently AFFIRM the decision dated January
315
12, 2006 and the resolution dated May 19, 2006 of the Court
of Appeals in CA-G.R. CR No. 28785, finding petitioner Dulce
Pamintuan guilty beyond reasonable doubt of the crime of
_______________
25 See People v. Temporada, G.R. No. 173473, December 17, 2008, 574
SCRA 258, 301-304; and the seminal case of People v. Gabres, 335 Phil. 242,
256-257; 267 SCRA 581, 596 (1997).
554
554

estafa, defined and penalized under Article 315, paragraph

1(b) of the Revised Penal Code, as amended. No costs.
SO ORDERED.
Carpio-Morales
(Chairperson),
Bersamin,
**
Abad andVillarama, Jr., JJ., concur.
Petition denied, judgment and resolution affirmed.
Notes.In a prosecution for estafa, while demand is not
necessary where there is evidence of misappropriation or
conversion, failure to account upon demand for funds or
property held in trust is circumstantial evidence of
misappropriation. (Cosme, Jr. vs. People, 508 SCRA 190
[2006])
Where one states that the future profits or income of an
enterprise shall be a certain sum, but he actually knows that
there will be none, or that they will be substantially less than
he represents, the statements constitute an actionable fraud
where the hearer believes him and relies on the statement to
his injury. (Joson vs. People, 559 SCRA 649 [2008])
o0o
G.R. No. 74851. December 9, 1999.

RIZAL
COMMERCIAL
BANKING
CORPORATION,
petitioner, vs. INTERMEDIATE APPELLATE COURT AND
BF HOMES, INC., respondents.
*
Corporation Law; Creditors; Issue of whether or not preferred

creditors of distressed corporations stand on equal footing with all
other creditors gains relevance and materiality only upon the
appointment of a management committee, rehabilitation receiver,
board, or body.The issue of whether or not preferred creditors of
distressed corporations stand on equal footing with all other
creditors gains relevance and materiality only upon the
appointment of a management committee, rehabilitation receiver,
board, or body. Insofar as petitioner RCBC is concerned, the
provisions of Presidential Decree No. 902-A are not yet applicable
and it may still be allowed to assert its preferred status because it
foreclosed on the mortgage prior to the appointment of the
management committee on March 18, 1985. The Court, therefore,
grants the motion for reconsideration on this score.
Same; Same; Suspension of claims against a corporation
under rehabilitation is counted or figured up only upon the
appointment of a management committee or a rehabilitation
receiver.It is thus adequately clear that suspension of claims
against a corporation under rehabilitation is counted or figured up
only upon the appointment of a management committee or a
rehabilitation receiver. The holding that suspension of actions for
claims against a corporation under rehabilitation takes effect as
soon as the application or a petition for rehabilitation is filed with
the SECmay, to some, be more logical and wise but
unfortunately, such is incongruent with the clear language of the
law. To insist on such ruling, no matter how practical and noble,
would be to encroach upon legislative prerogative to define the
wisdom of the lawplainly judicial legislation.
316
Same; Same; Statutory Construction; When the law is clear

and free from any doubt or ambiguity, there is no room for
construction or interpretation; Only when the law is ambiguous or
of doubt______________
*
EN BANC.
280
80
Rizal Commercial Banking Corporation vs.
Intermediate Appellate Court
ful meaning may the court interpret or construe its true
intent.It bears stressing that the first and fundamental duty of
the Court is to apply the law. When the law is clear and free from
any doubt or ambiguity, there is no room for construction or
interpretation. As has been our consistent ruling, where the law
speaks in clear and categorical language, there is no occasion for
interpretation; there is only room for application (Cebu Portland
Cement Co. vs. Municipality of Naga, 24 SCRA 708 [1968]). x x x
Only when the law is ambiguous or of doubtful meaning may the
court interpret or construe its true intent. Ambiguity is a condition
of admitting two or more meanings, of being understood in more
than one way, or of referring to two or more things at the same
time. A statute is ambiguous if it is admissible of two or more
possible meanings, in which case, the Court is called upon to
exercise one of its judicial functions, which is to interpret the law
according to its true intent.
Same; Same; A petition for rehabilitation does not always
result in the appointment of a receiver or the creation of a
management committee; Instances before a management committee
and receivers may be appointed.As relevantly pointed out in the
dissenting opinion, a petition for rehabilitation does not always
result in the appointment of a receiver or the creation of a
management committee. The SEC has to initially determine

whether such appointment is appropriate and necessary under the
circumstances. Under Paragraph (d), Section 6 of Presidential
Decree No. 902-A, certain situations must be shown to exist before
a management committee may be created or appointed, such as:
(1.) when there is imminent danger of dissipation, loss, wastage or
destruction of assets or other properties; or (2.) when there is
paralization of business operations of such corporations or entities
which may be prejudicial to the interest of minority stockholders,
parties-litigants or to the general public. On the other hand,
receivers may be appointed whenever: (1.) necessary in order to
preserve the rights of the parties-litigants; and/or (2.) protect the
interest of the investing public and creditors. (Section 6 [c], P.D.
902-A.)
Same; Same; Same; Once
a
management
committee,
rehabilitation receiver, board or body is appointed pursuant to
Presidential Decree 902-A, all actions for claims against a
distressed corporation pending before any court, tribunal, board or
body shall be suspended accordingly; Suspension shall not
prejudice or render ineffective the status of a secured creditor as
compared to a totally unse281
2
81

cured creditor; In the event that rehabilitation is no longer
feasible and claims against the distressed corporation would
eventually have to be settled, the secured creditors shall enjoy
preference over the unsecured creditors subject only to the
provisions of the Civil Code on Concurrence and Preferences of
Credit.In other words, once a management committee,
rehabilitation receiver, board or body is appointed pursuant to
P.D. 902-A, all actions for claims against a distressed corporation
pending before any court, tribunal, board or body shall be
317
suspended accordingly. This suspension shall not prejudice or

render ineffective the status of a secured creditor as compared to a
totally unsecured creditor. P.D. 902-A does not state anything to
this effect. What it merely provides is that all actions for claims
against the corporation, partnership or association shall be
suspended. This should give the receiver a chance to rehabilitate
the corporation if there should still be a possibility for doing so.
(This will be in consonance withAlemars, BF Homes,
Araneta, and RCBC insofar as enforcing liens by preferred
creditors are concerned.) However, in the event that rehabilitation
is no longer feasible and claims against the distressed corporation
would eventually have to be settled, the secured creditors shall
enjoy
preference
over
the
unsecured
creditors
(still
maintaining PCIB ruling), subject only to the provisions of the
Civil Code on Concurrence and Preferences of Credit (our ruling
in State Investment House, Inc. vs. Court of Appeals, 277 SCRA 209
[1997]).
PANGANIBAN, J., Separate Opinion:

Corporation
Law; Creditors; Securities
and
Exchange
Commission; Securities and Exchange Commission acquires
jurisdiction over the distressed companies upon the submission of a
petition for suspension of payments; When the legal requirements
are complied with, it has the authority to issue injunctive reliefs for
the effective exercise of its jurisdiction.It is obvious from the
above-quoted provisions that the SEC acquires jurisdiction over
the distressed companies upon the submission of a petition for
suspension of payments. And when the legal requirements are
complied with, it has the authority to issue injunctive reliefs for
the effective exercise of its jurisdiction. I would like to emphasize
that this power to issue restraining orders or preliminary
injunctions, upon the prayer of the petitioning corporation, may be
the only buffer that could save a company from being feasted on by
any vulture-
282
82
creditor, prior to the appointment
committee or a rehabilitation receiver.
of
a management
MOTION FOR RECONSIDERATION of a decision of the

Supreme Court.
The facts are stated in the resolution of the Court.
Siguion Reyna, Montecillo & Ongsiako for petitioner.
Benjamin B. Bernardino for private respondent.
RESOLUTION
MELO, J.:
On September 14, 1992, the Court passed upon the case at
bar and rendered its decision, dismissing the petition of Rizal
Commercial Banking Corporation (RCBC), thereby affirming
the decision of the Court of Appeals which canceled the
transfer certificate of title issued in favor of RCBC, and
reinstating that of respondent BF Homes.
This will now resolve petitioners motion for
reconsideration which, although filed in 1992 was not
deemed submitted for resolution until in late 1998. The delay
was occasioned by exchange of pleadings, the submission of
supplemental papers, withdrawal and change of lawyers, not
to speak of the case having been passed from one departing
to another retiring justice. It was not until May 3, 1999,
when the case was re-raffled to herein ponente, but the
record was given to him only sometime in the late October
1999.
By way of review, the pertinent facts as stated in our
decision are reproduced herein, to wit:
318
On September 28, 1984, BF Homes filed a Petition for

Rehabilitation and for Declaration of Suspension of Payments
(SEC Case No. 002693) with the Securities and Exchange
Commission (SEC).
283

283
Rizal Commercial Banking Corporation vs. Intermediate
Appellate Court
One of the creditors listed in its inventory of creditors and
liabilities was RCBC. On October 26, 1984, RCBC requested the
Provincial Sheriff
of Rizal to extra-judicially foreclose its real estate mortgage on
some properties of BF Homes. A notice of extra-judicial foreclosure
sale was issued by the Sheriff on October 29, 1984, scheduled on
November 29, 1984, copies furnished both BF Homes (mortgagor)
and RCBC (mortgagee).
On motion of BF Homes, the SEC issued on November 28, 1984
in SEC Case No. 002693 a temporary restraining order (TRO),
effective for 20 days, enjoining RCBC and the sheriff from
proceeding with the public auction sale. The sale was rescheduled
to January 29, 1985.
On January 25, 1985, the SEC ordered the issuance of a writ of
preliminary injunction upon petitioners filing of a bond. However,
petitioner did not file a bond until January 29, 1985, the very day
of the auction sale, so no writ of preliminary injunction was issued
by the SEC. Presumably, unaware of the filing of the bond, the
sheriffs proceeded with the public auction sale on January 29,
1985, in which RCBC was the highest bidder for the properties
auctioned.
On February 5, 1985, BF Homes filed in the SEC a consolidated
motion to annul the auction sale and to cite RCBC and the sheriff
for contempt. RCBC opposed the motion.
Because of the proceedings in the SEC, the sheriff withheld the
delivery to RCBC of a certificate of sale covering the auctioned
properties.
On February 13, 1985, the SEC in Case No. 002693 belatedly

issued a writ of preliminary injunction stopping the auction sale
which had been conducted by the sheriff two weeks earlier.
On March 13, 1985, despite SEC Case No. 002693, RCBC filed
with the Regional Trial Court, Br. 140, Rizal (CC 10042) an action
for mandamus against the provincial sheriff of Rizal and his
deputy to compel them to execute in its favor a certificate of sale of
the auctioned properties.
In answer, the sheriffs alleged that they proceeded with the
auction sale on January 29, 1985 because no writ of preliminary
injunction had been issued by SEC as of that date, but they
informed the SEC that they would suspend the issuance of a
certificate of sale to RCBC.
284
284
Appellate Court
On March 18, 1985, the SEC appointed a Management Committee
for BF Homes.
On RCBCs motion in the mandamus case, the trial court issued
on May 8, 1985 a judgment on the pleadings, the dispositive
portion of which states:
WHEREFORE, petitioners Motion for Judgment on the pleadings is
granted and judgement is hereby rendered ordering respondents to
execute and deliver to petitioner the Certificate of the Auction Sale of
January 29, 1985, involving the properties sold therein, more particularly
those described in Annex C of their Answer. (p. 87, Rollo.)
On June 4, 1985, B.F. Homes filed an original complaint with

the IAC pursuant to Section 9 of B.P. 129 praying for the
annulment of the judgment, premised on the following:
x x x: (1) even before RCBC asked the sheriff to extra-judicially foreclose
its mortgage on petitioners properties, the SEC had already assumed
exclusive jurisdiction over those assets, and (2) that there was extrinsic
fraud in procuring the judgment because the petitioner was not
impleaded as a party in the mandamus case, respondent court did not
319
acquire jurisdiction over it, and it was deprived of its right to be heard.
(CA Decision, p. 88, Rollo).
On April 8, 1986, the IAC rendered a decision, setting aside the

decision of the trial court, dismissing the mandamus case and
suspending issuance to RCBC of new land titles, until the
resolution of case by SEC in Case No. 002693, disposing as
follows:
WHEREFORE, the judgment dated May 8, 1985 in Civil Case No.
10042 is hereby annulled and set aside and the case is hereby dismissed.
In view of the admission of respondent Rizal Commercial Banking
Corporation that the sheriffs certificate of sale has been registered on BF
Homes TCTs . . . (here the TCTs were enumerated) the Register of Deeds
for Pasay City is hereby ordered to suspend the issuance to the
mortgagee-purchaser, Rizal Commercial Banking Corporation, of the
owners copies of the new land titles replacing them until the matter shall
have been resolved by the Securities and Exchange Commission in SEC
Case No. 002693.
(pp. 257-260, Rollo; also pp. 832834, 213 SCRA 830 [1992];
Emphasis in the original.)
285

285
Appellate Court
On June 18, 1986, RCBC appealed the decision of the then
Intermediate Appellate Court (now, back to its old revered
name, the Court of Appeals) to this Court, arguing that:
1. 1.Petitioner did not commit extrinsic fraud in excluding
private respondent as party defendant in Special Civil
Case No. 10042 as private respondent was not
indispensable party thereto, its participation not being
necessary for the full resolution of the issues raised in said
case.
2. 2.SEC Case No. 2693 cannot be invoked to suspend

Special Civil Case No. 10042, and for that matter, the
extra-judicial foreclosure of the real estate mortgage in
petitioners favor, as these do not constitute actions
against private respondent contemplated under Section
6(c) of Presidential Decree No. 902-A.
3. 3.Even assuming arguendo that the extrajudicial sale
constitute an action that may be suspended under Section
6(c) of Presidential Decree No. 902-A, the basis for the
suspension thereof did not exist so as to adversely affect
the validity and regularity thereof.
4. 4.The Regional Trial Court had jurisdiction to take
cognizance of Special Civil Case No. 10042.
5. 5.The Regional Trial Court had jurisdiction over
Special Civil Case No. 10042.
(p. 5, Rollo.)
On November 12, 1986, the Court gave due course to the
petition. During the pendency of the case, RCBC brought to
the attention of the Court an order issued by the SEC on
October 16, 1986 in Case No. 002693, denying the
consolidated Motion to Annul the Auction Sale and to cite
RCBC and the Sheriff for Contempt, and ruling as follows:
WHEREFORE, the petitioners Consolidated Motion to Cite
Sheriff and Rizal Commercial Banking Corporation for Contempt
and to Annul Proceedings and Sale, dated February 5, 1985,
should be as is, hereby DENIED.
While we cannot direct the Register of Deeds to allow the
consolidation of the titles subject of the Omnibus Motion dated
September 18, 1986 filed by the Rizal Commercial Banking Corpo
286
286
Appellate Court
320
ration, and therefore, denies said Motion, neither can this

Commission restrain the said bank and the Register of Deeds from
effecting the said consolidation.
SO ORDERED.
(p. 143, Rollo.)
By virtue of the aforesaid order, the Register of Deeds of

Pasay City effected the transfer of title over subject pieces of
property to petitioner RCBC, and the issuance of new titles
in its name. Thereafter, RCBC presented a motion for the
dismissal of the petition, theorizing that the issuance of said
new transfer certificates of title in its name rendered the
petition moot and academic.
In the decision sought to be reconsidered, a greatly divided
Court (Justices Gutierrez, Nocon, and Melo concurred with
the ponente, Justice Medialdea; Chief Justice Narvasa,
Justices Bidin, Regalado, and Bellosillo concurred only in the
result; while Justice Feliciano dissented and was joined by
Justice Padilla, then Justice, now Chief Justice Davide, and
Justice Romero; Justices Grio-Aquino and Campos took no
part) denied petitioners motion to dismiss, finding basis for
nullifying and setting aside the TCTs in the name of RCBC.
Ruling on the merits, the Court upheld the decision of the
Intermediate Appellate Court which dismissed the
mandamus case filed by RCBC and suspended the issuance
of new titles to RCBC. Setting aside RCBCs acquisition of
title and nullifying the TCTs issued to it, the Court held that:
. . . whenever a distressed corporation asks the SEC for
rehabilitation and suspension of payments, preferred creditors
may no longer assert such preference, but . . . stand on equal
footing with other creditors. Foreclosure shall be disallowed so as
not to prejudice other creditors, or cause discrimination among
them. If foreclosure is undertaken despite the fact that a petition
for rehabilitation has been filed, the certificate of sale shall not be
delivered pending rehabilitation. Likewise, if this has also been
done, no transfer of title shall be effected also, within the period of
rehabilitation. The rationale behind PD 902-A, as amended, is to

effect a feasible and
287

287
Appellate Court
viable rehabilitation. This cannot be achieved if one creditor is
preferred over the others.
In this connection, the prohibition against foreclosure attaches
as soon as a petition for rehabilitation is filed. Were it otherwise,
what is to prevent the petitioner from delaying the creation of a
Management Committee and in the meantime dissipate all its
assets. The sooner the SEC takes over and imposes a freeze on all
the assets, the better for all concerned.
(pp. 265-266, Rollo; also p. 838,
213 SCRA 830 [1992].)
Then Justice Feliciano (joined by three other Justices),

dissented and voted to grant the petition. He opined that the
SEC acted prematurely and without jurisdiction or legal
authority in enjoining RCBC and the sheriff from proceeding
with the public auction sale. The dissent maintain that
Section 6 (c) of Presidential Decree 902-A is clear and
unequivocal that, claims against the corporations,
partnerships, or associations shall be suspended only upon
the appointment of a management committee, rehabilitation
receiver, board or body. Thus, in the case under
consideration, only upon the appointment of the
Management Committee for BF Homes on March 18, 1985,
should the suspension of actions for claims against BF
Homes have taken effect and not earlier.
In support of its motion for reconsideration, RCBC
contends:
The restraining order and the writ of preliminary injunction issued
by the Securities and Resolution Exchange Commission enjoining
the foreclosure sale of the properties of respondent BF Homes were
321
issued without or in excess of its jurisdiction because it was

violative of the clear provision of Presidential Decree No. 902-A,
and are therefore null and void; and
Petitioner, being a mortgage creditor, is entitled to rely solely
on its security and to refrain from joining the unsecured creditors
in SEC Case No. 002693, the petition for rehabilitation filed by
private respondent.
We find the motion for reconsideration meritorious.

288
288
Appellate Court
The issue of whether or not preferred creditors of distressed
corporations stand on equal footing with all other creditors
gains relevance and materiality only upon the appointment
of a management committee, rehabilitation receiver, board,
or body. Insofar as petitioner RCBC is concerned, the
provisions of Presidential Decree No. 902-A are not yet
applicable and it may still be allowed to assert its preferred
status because it foreclosed on the mortgage prior to the
appointment of the management committee on March 18,
1985. The Court, therefore, grants the motion for
reconsideration on this score.
The law on the matter, Paragraph (c), Section 6 of
Presidential Decree 902-A, provides:
Sec. 6. In order to effectively exercise such jurisdiction, the
Commission shall possess the following powers:
c) To appoint one or more receivers of the property, real and
personal, which is the subject of the action pending before the
Commission in accordance with the pertinent provisions of the
Rules of Court in such other cases whenever necessary to preserve
the rights of the parties-litigants to and/or protect the interest of
the investing public and creditors; Provided, however, that the
Commission may, in appropriate cases, appoint a rehabilitation
receiver of corporations, partnerships or other associations not
supervised or regulated by other government agencies who shall

have, in addition to the powers of a regular receiver under the
provisions of the Rules of Court, such functions and powers as are
provided for in the succeeding paragraph (d) hereof: Provided,
finally, That upon appointment of a management committee,
rehabilitation receiver, board or body, pursuant to this Decree, all
actions for claims against corporations, partnerships or
associations under management or receivership pending before any
court, tribunal, board or body shall be suspended accordingly. (As
amended by PDs No. 1673, 1758 and by PD No. 1799. Emphasis
supplied.)
It is thus adequately clear that suspension of claims against

a corporation under rehabilitation is counted or figured up
only upon the appointment of a management committee or a
rehabilitation receiver. The holding that suspension of
actions for claims against a corporation under
289

289
Appellate Court
rehabilitation takes effect as soon as the application or a
petition for rehabilitation is filed with the SECmay, to
some, be more logical and wise but unfortunately, such is
incongruent with the clear language of the law. To insist on
such ruling, no matter how practical and noble, would be to
encroach upon legislative prerogative to define the wisdom of
the lawplainly judicial legislation.
It bears stressing that the first and fundamental duty of
the Court is to apply the law. When the law is clear and free
from any doubt or ambiguity, there is no room for
construction or interpretation. As has been our consistent
ruling, where the law speaks in clear and categorical
language, there is no occasion for interpretation; there is only
room for application (Cebu Portland Cement Co. vs.
Municipality of Naga, 24 SCRA 708 [1968]).
322
Where the law is clear and unambiguous, it must be taken to mean

exactly what it says and the court has no choice but to see to it
that its mandate is obeyed (Chartered Bank Employees Association
vs. Ople, 138 SCRA 273 [1985]; Luzon Surety Co., Inc. vs. De
Garcia, 30 SCRA 111 [1969]; Quijano vs. Development Bank of the
Philippines, 35 SCRA 270 [1970]).
Only when the law is ambiguous or of doubtful meaning may

the court interpret or construe its true intent. Ambiguity is a
condition of admitting two or more meanings, of being
understood in more than one way, or of referring to two or
more things at the same time. A statute is ambiguous if it is
admissible of two or more possible meanings, in which case,
the Court is called upon to exercise one of its judicial
functions, which is to interpret the law according to its true
intent.
Furthermore, as relevantly pointed out in the dissenting
opinion, a petition for rehabilitation does not always result in
the appointment of a receiver or the creation of a
management committee. The SEC has to initially determine
whether such appointment is appropriate and necessary
under the circumstances. Under Paragraph (d), Section 6 of
Presidential Decree No. 902-A, certain situations must be
290
290
Appellate Court
shown to exist before a management committee may be
created or appointed, such as:
1. 1.when there is imminent danger of dissipation, loss,
wastage or destruction of assets or other properties; or
2. 2.when there is paralization of business operations of such
corporations or entities which may be prejudicial to the
interest of minority stockholders, parties-litigants or to the
general public.
On the other hand, receivers may be appointed whenever:

1. 1.necessary in order to preserve the rights of the
partieslitigants; and/or
2. 2.protect the interest of the investing public and creditors.
(Section 6 [c], P.D. 902-A.)
These situations are rather serious in nature, requiring the

appointment of a management committee or a receiver to
preserve the existing assets and property of the corporation
in order to protect the interests of its investors and creditors.
Thus, in such situations, suspension of actions for claims
against a corporation as provided in Paragraph (c) of Section
6, of Presidential Decree No. 902-A is necessary, and here we
borrow the words of the late Justice Medialdea, so as not to
render the SEC Management Committee irrelevant and
inutile and to give it unhampered rescue efforts over the
distressed firm (Rollo, p. 265).
Otherwise, when such circumstances are not obtaining or
when the SEC finds no such imminent danger of losing the
corporate assets, a management committee or rehabilitation
receiver need not be appointed and suspension of actions for
claims may not be ordered by the SEC. When the SEC does
not deem it necessary to appoint a receiver or to create a
management committee, it may be assumed, that there are
sufficient assets to sustain the rehabilitation plan and, that
the creditors and investors are amply protected.
Petitioner additionally argues in its motion for
reconsideration that, being a mortgage creditor, it is entitled
to rely
291

291
Appellate Court
323
on its security and that it need not join the unsecured

creditors in filing their claims before the SEC appointed
receiver. To support its position, petitioner cites the Courts
ruling in the case of Philippine Commercial International
Bank vs. Court of Appeals, (172 SCRA 436[1989]) that an
order of suspension of payments as well as actions for claims
applies only to claims of unsecured creditors and cannot
extend to creditors holding a mortgage, pledge, or any lien on
the property.
Ordinarily, the Court would refrain from discussing
additional matters such as that presented in RCBCs second
ground, and would rather limit itself only to the relevant
issues by which the controversy may be settled with finality.
In view, however, of the significance of such issue, and the
conflicting decisions of this Court on the matter, coupled with
the fact that our decision of September 14, 1992, if not
clarified, might mislead the Bench and the Bar, the Court
resolved to discuss further.
It may be recalled that in the herein en banc majority
opinion (pp. 256-275, Rollo, also published as RCBC vs.
IAC, 213 SCRA 830 [1992]), we held that:
. . . whenever a distressed corporation asks the SEC for
rehabilitation and suspension of payments, preferred creditors
may no longer assert such preference, but . . . stand on equal
footing with other creditors. Foreclosure shall be disallowed so as
not to prejudice other creditors, or cause discrimination among
them. If foreclosure is undertaken despite the fact that a petition
for rehabilitation has been filed, the certificate of sale shall not be
delivered pending rehabilitation. Likewise, if this has also been
done, no transfer of title shall be effected also, within the period of
rehabilitation. The rationale behind PD 902-A, as amended, is to
effect a feasible and viable rehabilitation. This cannot be achieved
if one creditor is preferred over the others.
In this connection, the prohibition against foreclosure attaches
as soon as a petition for rehabilitation is filed. Were it otherwise,
what is to prevent the petitioner from delaying the creation of a

Management Committee and in the meantime dissipate all its
292
292
Appellate Court
assets. The sooner the SEC takes over and imposes a freeze on all
the assets, the better for all concerned.
(pp. 265-266, Rollo; also
p. 838, 213 SCRA 830 [1992].
Emphasis supplied.)
The foregoing majority opinion relied upon BF Homes, Inc.

vs. Court of Appeals (190 SCRA 262 [1990]perCruz,
J.: First Division) where it was held that when a corporation
threatened by bankruptcy is taken over by a receiver, all the
creditors should stand on an equal footing. Not anyone of
them should be given preference by paying one or some of
them ahead of the others. This is precisely the reason for the
suspension of all pending claims against the corporation
under receivership.Instead of creditors vexing the courts with
suits against the distressed firm, they are directed to file their
claims with the receiver who is a duly appointed officer of the
SEC (pp. 269-270; emphasis in the original). This ruling is a
reiteration of Alemars Sibal & Sons, Inc. vs. Hon. Jesus M.
Elbinias (pp. 99-100; 186 SCRA 94 [1990]perFernan, C.J.:
Third Division).
Taking the lead from Alemars Sibal & Sons, the Court
also applied this same ruling in Araneta vs. Court of
Appeals (211 SCRA 390 [1992]per Nocon, J.: Second
Division).
All the foregoing cases departed from the ruling of the
Court in the much earlier case of PCIB vs. Court of
Appeals (172 SCRA 436 [1989]per Medialdea, J.: First
Division) where the Court categorically ruled that:
324
SECs order for suspension of payments of Philfinance as well as

for all actions of claims against Philfinance could only be applied to
claims of unsecured creditors. Such order can not extend to
creditors holding a mortgage, pledge or any lien on the
property unless they give up the property, security or lien in favor
of all the creditors of Philfinance . . .
(p. 440, Emphasis supplied)
293

293
Appellate Court
Thus, in BPI vs. Court of Appeals (229 SCRA 223 [1994]
per Bellosillo, J.: First Division) the Court explicitly stated
that . . . the doctrine in the PCIB Case has since been
abrogated. In Alemars Sibal & Sons v. Elbinias,BF Homes,
Inc. v. Court of Appeals, Araneta v. Court of
Appeals and RCBC v. Court of Appeals, we already ruled that
whenever a distressed corporation asks SEC for
rehabilitation and suspension of payments, preferred
creditors may no longer assert such preference, but shall
stand on equal footing with other creditors . . . (pp. 227-228).
It may be stressed, however, that of all the cases cited by
Justice Bellosillo in BPI, which abandoned the Courts ruling
in PCIB, only the present case satisfies the constitutional
requirement that no doctrine or principle of law laid down
by the court in a decision rendered en banc or in division may
be modified or reversed except by the court sitting en
banc (Sec. 4, Article VIII, 1987 Constitution). The rest were
division decisions.
It behooves the Court, therefore, to settle the issue in this
present resolution once and for all, and for the guidance of
the Bench and the Bar, the following rules of thumb are laid
down:
1. 1.All claims against corporations, partnerships, or

associations that are pending before any court, tribunal, or
board, without distinction as to whether or not a creditor
is secured or unsecured, shall be suspended effective upon
the appointment of a management committee,
rehabilitation receiver, board, or body in accordance with
the provisions of Presidential Decree No. 902-A.
2. 2.Secured creditors retain their preference over unsecured
creditors, but enforcement of such preference is equally
suspended upon the appointment of a management
committee, rehabilitation receiver, board, or body. In the
event that the assets of the corporation, partnership, or
association are finally liquidated, however, secured and
preferred credits under the applicable provisions of the
Civil Code will definitely have preference over unsecured
ones.
294
294
Appellate Court
In other words, once a management committee,
rehabilitation receiver, board or body is appointed pursuant
to P.D. 902-A, all actions for claims against a distressed
corporation pending before any court, tribunal, board or body
shall be suspended accordingly.
This suspension shall not prejudice or render ineffective
the status of a secured creditor as compared to a totally
unsecured creditor. P.D. 902-A does not state anything to
this effect. What it merely provides is that all actions for
claims against the corporation, partnership or association
shall be suspended. This should give the receiver a chance to
rehabilitate the corporation if there should still be a
possibility for doing so. (This will be in consonance
325
with Alemars, BF Homes, Araneta, and RCBC insofar as

enforcing liens by preferred creditors are concerned.)
However, in the event that rehabilitation is no longer
feasible and claims against the distressed corporation would
eventually have to be settled, the secured creditors shall
enjoy preference over the unsecured creditors (still
maintaining PCIB ruling), subject only to the provisions of
the Civil Code on Concurrence and Preferences of Credit (our
ruling in State Investment House, Inc. vs. Court of
Appeals, 277 SCRA 209 [1997]).
The majority ruling in our 1992 decision that preferred
creditors of distressed corporations shall, in a way, stand on
equal footing with all other creditors, must be read and
understood in the light of the foregoing rulings. All claims of
both a secured or unsecured creditor, without distinction on
this score, are suspended once a management committee is
appointed. Secured creditors, in the meantime, shall not be
allowed to assert such preference before the Securities and
Exchange Commission. It may be stressed, however, that this
shall only take effect upon the appointment of a management
committee, rehabilitation receiver, board, or body, as opined
in the dissent.
In fine, the Court grants the motion for reconsideration for
the cogent reason that suspension of actions for claims
commences only from the time a management committee or
295

295
Appellate Court
receiver is appointed by the SEC. Petitioner RCBC,
therefore, could have rightfully, as it did, move for the
extrajudicial foreclosure of its mortgage on October 26, 1984
because a management committee was not appointed by the
SEC until March 18, 1985.
WHEREFORE, petitioners motion for reconsideration is

hereby GRANTED. The decision dated September 14, 1992 is
vacated, the decision of Intermediate Appellate Court in ACG.R. No. SP-06313 REVERSED and SET ASIDE, and the
judgment of the Regional Trial Court National Capital
Judicial Region, Branch 140, in Civil Case No. 10042
REINSTATED.
SO ORDERED.
Davide,
Jr. (C.J.), Bellosillo, Puno, Vitug,Kapunan, Mendoza, Quisu
mbing, Purisima, Pardo,Buena, GonzagaReyes, YnaresSantiago and De Leon, Jr., JJ., concur.
Panganiban, J., Please see Separate (Concurring)
Opinion.
SEPARATE OPINION
PANGANIBAN, J.:
The issue as to when suspension of payments takes effect
upon a petition of a distressed corporation is a contentious
one. The ponencia in the case under consideration, Rizal
Commercial Banking Corporation (RCBC) v. Immediate
Appellate Court, has ruled that the prohibition against
foreclosure attaches as soon as a petition for rehabilitation is
filed. Were it otherwise, what is to prevent the [creditors]
1
_______________
1
213 SCRA 830, September 14, 1992. (Concurring unqualifiedly with
Justice Medialdeas ponencia were Gutierrez, Jr., Nocon, and Melo, JJ.;
concurring
in
Bellosillo, JJ.;
the
result
dissenting
were
were
Narvasa, C.J., Bidin,

Feliciano,
Padilla,
Regalado
Davide,
Jr.
and
and
Romero, JJ.; Cruz, Grio-Aquino and Campos, JJ., did not take part in the
voting.)
296
326
296
Appellate Court
partnerships or other associations supervised or regulated by other
from delaying the creation of the Management Committee

and in the meantime [seizing] all [the debtors] assets. The
sooner the SEC takes over and imposes a freeze on all the
assets, the better for all concerned.
Suspension
Takes
Effect
Only
Upon
Constitution of Management Committee
A Dissent debunking the quoted ruling was written by the
esteemed Justice Florentino P. Feliciano as follows:
______________
I understand the above quoted portion of the ponencia to be

saying that suspension of actions for claims against the corporation
which applies for rehabilitation takes effect as soon as the
application or a petition for rehabilitation is filed with the SEC.
I would point out with respect, that the actual language used in
Section 6 (c) and (d) of P.D. No. 902-A, as amended,
does not support the position taken in the ponencia. The pertinent
provision of Section 6 (c) is as follows:
Sec. 6. In order to effectively exercise such jurisdiction, the Commission
shall possess the following powers:
xxx
xxx
xxx
c) To appoint one or more receivers of the property, real and personal,

which is the subject of the action pending before the Commission in
accordance with the pertinent provisions of the Rules of Court in such
cases whenever necessary to preserve the rights of the parties-litigants to
and/or protect the interest of the investing public and creditors; Provided,
however, That the Commission may, in appropriate cases, appoint a
rehabilitation receiver of corporations, partnerships or other associations
not supervised or regulated by other government agencies who shall
have, in addition to the powers of a regular receiver under the provisions
of the Rules of Court, such functions and powers as are provided for in
the succeeding paragraph (d) hereof; Provided, further, that the
Commission may appoint a rehabilitation receiver of corporations,
government agencies, such as banks and in
Ibid., p. 838.
297

297
Appellate Court
surance companies, upon request of the government agency concerned;
Provided, finally, that upon appointment of a management committee,
rehabilitation receiver, board or body pursuant to this Decree, all actions
for claims against corporations, partnerships or associations under
management or receivership pending before any court, tribunal, board or
body shall be suspended accordingly.
It should be pointed out that the appointment of a management

committee or a rehabilitation receiver is not ordinarily effected
immediately upon the filing of an application for suspension of
payments and for rehabilitation. The reason is that the SEC must
first determine whether the jurisdictional requirements for the
appointment of a management committee are present. There are at
least two (2) sets of requirements: (a) the requirements in respect
of the petition for declaration of suspension of payments; and (b)
the requirements concerning the petition for creation and
appointment of a management committee.
xxx
xxx
xxx
As already noted, SEC took just about six (6) months after the
filing of the petition of B.F. Homes to decide to create and appoint
a management committee. Only upon such appointment of the
management committee did the proviso in Section 6(c) which
decrees suspension of actions for claims against the petitioning
corporation take effect.
It is only then that the SEC determines that the circumstances
warranting, under the statute, the appointment of a management
327
committee do exist, i.e., that there is imminent danger of

dissipation, loss, wastage or destruction of assetsor paralization
of business operationswhich [would] be prejudicial to the
interest of minority stockholders, parties litigant or the general
public. Only when such circumstances have been determined to
exist is there justification for suspending actions for claims against
the corporation so placed under SEC management. The authority
of the SEC to suspend or freeze the judicial enforcement of claims
against a corporation is an extraordinary authority, most
especially where credits secured by specific liens on property, like
real estate mortgages, are involved; such authority cannot lightly
be assumed to have arisen simply because the corporation on its
own initiative goes to the SEC and there seeks shelter from its
lawful creditors.
3
______________
3
Ibid., pp. 839-844.
298
court action is ipso jure suspended only upon the appointment of a

management committee or a rehabilitation receiver.
As a member of the then First Division which

promulgated Barotac, I concurred in the aforequoted ruling.
To repeat, Barotac and Justice Felicianos Dissent are clearly
supported by Section 6, paragraph (c) of Presidential Decree
902-A. It is basic in statutory construction that in the
absence of doubt or ambiguity, there is no necessity for
construction or interpretation of the law, as in this case.
Where the law speaks in clear and categorical language,
there is no room for interpretation. There is only room for
application.
SEC
Retains
Power
to
Issue Injunctive Relief
Left unsaid in RCBC, Barotac and even in the present
Resolution, however, is the existence of two competing
economic interests in the determination of the issue. On the
one
5
298
Appellate Court
______________
The foregoing Dissent found jural expression in a later

case, Barotac Sugar Mills, Inc. v. Court of Appeals, penned by
then Associate, now Chief Justice Hilario G. Davide, Jr.:
Narvasa,C.J.; Melo, Francisco and Panganiban, JJ., of the Courts First
The appointment of a management committee or rehabilitation

receiver may only take place after the filing with the SEC of an
appropriate petition for suspension of payments. This is clear from
a reading of sub-paragraph (d) of Section 5 and sub-paragraph (d)
of Section 6 of P.D. No. 902-A as amended by P.D. Nos. 1653 and
1758. x x x
xxx
xxx
xxx
The conclusion then is inevitable that pursuant to the
underscored proviso in sub-paragraph (c) of the aforementioned
Section 6, taken together with sub-paragraph (d) of Section 6, a
August 22, 1968, per Fernando, J.
275
SCRA
497,
July
15,
1997.
(With
the
concurrence
of
Division)
5
Cebu Portland Cement Co. v. Municipality of Naga, 24 SCRA 708,
299

299
Appellate Court
hand, there is the creditor; on the other, the corporation and
its stockholders. Under the RCBC ponencia of Justice
Medialdea, an unscrupulous company can seek shelter in a
petition for suspension of payments in order to evade or at
least unfairly delay the payment of just obligations. This
328
course of action would clearly prejudice its creditors, who

would be barred from judicially enforcing their rightful
claims, simply because a petition for suspension has been
filed. Indeed, to paraphrase Justice Medialdea, what is to
prevent the debtor from delaying the creation of the
management committee, in the meantime dissipating all its
assets?
On the other hand, if the bare ruling of Barotac were to be
applied strictly, a distressed company would be exposed to
grave danger that may precipitate its untimely demise, the
very evil sought to be avoided by a suspension of payments.
Notably, the appointment of a management committee takes
place only after several months, even years, from submission
of the petition. The appointment entails hearings and the
submission of documentary evidence to determine whether
the requisites for suspension of payments have been met. By
the time a management committee or receiver is appointed,
creditors, upon knowledge of the application for suspension of
payments, will have feasted on the distressed corporation.
Money lenders will demand satisfaction of their credits by
precipitately foreclosing on their mortgages. Particularly
vulnerable are liquid assets which can be attached and
rendered useless. Payrolls will be frozen and suppliers will
lose faith in the company. Verily, the distressed companys
credit standing would be zero-rated. Indeed, after the
vultures feast, the remaining corporate carcass can no longer
be resurrected into a viable enterprise. When this happens,
there will be no more company left to rehabilitate, thus
rendering ineffectual the very law which was enacted
precisely to effect such rehabilitation. In the business world,
bridge liquidity and credit are sometimes even more
important than profits.
The prudent way to avoid the disastrous consequence of a
strict application of said law is to call attention to the power
300
300
Appellate Court
of the SEC to issue injunctive reliefs. Herein movant (RCBC)
raises the issue of the validity of the restraining order and
the writ of preliminary injunction later issued by the
Securities and Exchange Commission (SEC) prior to the
appointment of the management committee. It contends that
the issuance of the injunctive reliefs effectively results in the
suspension of actions against the petitioning distressed
corporation.
Movant is thus saying that the SEC has no jurisdiction to
issue injunctive reliefs in favor of the distressed corporation
petitioning for suspension of payments prior to the
appointment of a management committee. I disagree.
Sec. 5(d) of PD 902-A clearly enumerates the cases over
which the SEC has original and exclusive jurisdiction to hear
and decide:
SEC. 5. In addition to the regulatory and adjudicative functions of
the Securities and Exchange Commission over corporations,
partnerships and other forms of associations registered with it as
expressly granted under existing laws and decrees, it shall have
original and exclusive jurisdiction to hear and decide cases
involving:
xxx
xxx
xxx
d) Petitions of corporations, partnerships or associations to be
declared in the state of suspension of payments in cases where the
corporation, partnership or association possesses sufficient
property to cover all its debts but foresees the impossibility of
meeting them when they respectively fall due or in cases where the
corporation, partnership or association has no sufficient assets to
cover its liabilities, but is under the management of a
Rehabilitation Receiver or Management Committee created
pursuant to this Decree.
Section 6 (a) of said Decree goes on further to say:

329
SECTION 6. In order to effectively exercise such jurisdiction, the

Commission shall possess the following powers:
1. a)To issue preliminary or permanent injunctions, whether
prohibitory or mandatory, in all cases in which it has
jurisdiction,
Note.A court action is ipso jure suspended only upon

the appointment of a management committee or a
rehabilitation receiver. (Barotac Sugar Mills, Inc. vs. Court of
Appeals, 275 SCRA 497 [1997])
o0o
301

301
Appellate Court
1. and in which cases the pertinent provisions of the Rules of
Court shall apply;
2. x x x
Thus, it is obvious from the above-quoted provisions that the

SEC acquires jurisdiction over the distressed companies upon
the submission of a petition for suspension of payments. And
when the legal requirements are complied with, it has the
authority to issue injunctive reliefs for the effective exercise
of its jurisdiction. I would like to emphasize that this power
to issue restraining orders or preliminary injunctions, upon
the prayer of the petitioning corporation, may be the only
buffer that could save a company from being feasted on by
any vulture-creditor, prior to the appointment of a
management committee or a rehabilitation receiver.
WHEREFORE, I vote to GRANT the Motion for
Reconsideration, subject to the caveat that the Securities and
Exchange Commission, in meritorious cases, may issue
injunctive reliefs.
Motion for reconsideration granted, decision of the
Supreme Court vacated, judgment of the then Intermediate
Appellate Court reversed and set aside. That of the court a
quo reinstated.
330
[No. L-12727. February 29, 1960]

MANILA JOCKEY CLUB, INC.,
petitioner and appellant, vs. GAMES
AND AMUSEMENTS BOARD, ET AL.,
respondents
and
appellees.
PHILIPPINE RACING CLUB, INC.,
petitioner-intervenor and appellant.
1. 1.HORSE RACING; HOLDING OF
RACES BY PRIVATE INDIVIDUALS
AND
EXTITIES
MERELY
PERMISSIVE.Section 4 of Republic
Act No. 309, as amended by Republic
Act No. 983, specifically reserved 23
Sundays and 16 Saturdays for the
Philippine Anti-Tuberculosis Society,
the White Cross, Inc. and the
Philippine Charity Sweepstakes Office,
and 12 Saturdays to the President for
other charitable, relief or civic
purposes. The remaining racing days
were assigned to private individuals
and entities duly licensed by the
Games and Amusements Board, like

the appellants. When Republic Act No.
1502 increased the sweepstake draw
and races to twelve but without
specifying the days on which they are
to be run, the Games and Amusement
Board resolved to reduce the number
of racing days assigned to private
individuals and entities by six.
Appellants protested, contending that
the said increase should be taken from
the Saturdays reserved to the
President, or should be assigned to any
other day of the week besides Sunday,
Saturday,
and
legal
holiday. Held: Appellants
have
no
vested right to
152
152
PHILIPPINE REPORTS ANNOTATE

Manila Jockey Club, Inc. vs. Games and Amusements Boa
1. the unreserved racing days because

their holding of races on those days is
331
merely permissive, subject to the

licensing and determination by the
Games and Amusements Board. When,
therefore, Republic Act No. 1502
increased by six the sweepstakes draw
and races but without specifying the
days for holding them, the Board had
no alternative except to make room for
the additional races from among the
only available racing days unreserved
by the law.
1. 2.ID.; ID.; HORSE
RACING
ON
WEEK DAYS PROHIBITED.The
law does not authorize the holding of
horse races with betting on week days
(Article 198 of the Revised Penal
Code).
1. 3.STATUTORY
CONSTRUCTION; INTERPRETATIO
N OF STATUTES; INTENTION OF
AUTHOR MUST NOT ONLY BE
ASCERTAINED
BUT
IT
IS
NECESSARY
THAT
SUCH
INTENTION
HAS
BEEN
EXPRESSED IN SUCH A WAY AS TO
GIVE IT LEGAL EFFECT AND
VALIDITY.In the interpretation of a
legal document, especially a statute,
unlike in the interpretation of an
ordinary written document, it is not
enough to obtain information as to the
intention or meaning of the author or
authors, but also to see whether the
intention or meaning has been
expressed in such a way as to give it
legal effect and validity. In short, the
purpose of the inquiry, is not only to
know what the author meant by the
language he used, but also to see that
the
language
used
sufficiently
expresses that meaning'. The legal act,
so to speak, is made up of two
elementsan internal and an external
332
one; it originates in intention and is

perfected by expression. Failure of the
latter may defeat the former. (59 C. J.,
1017).
APPEAL from a judgment of the Court

of First Instance of Manila. Lantin, J.
The facts are stated in the opinion of
the Court.
Lichauco, Picazo & Agcaoili for
appellant.
First Assistant Government Corporate
Counsel
Simen
M.
Gopengco and Attorney
Pedro
L.
Bautista for appellee PCSO.
Assistant Solicitor General Jos P.
Alejandro andSolicitor Pacifico P. de
Castro for the other appellees.
Csar S. de Guzmn for appellant.
BARRERA, J.:
This is a petition for declaratory relief

filed by petitioner Manila Jockey Club,
Inc., in the Court of First Instance of
153
VOL. 107, FEBRUARY 29, 1960

Manila Jockey Club, Inc. vs. Games and Amusements Board
Manila (Civil Case No. 31274), in which

the Philippine Racing Club, Inc.
intervened as party in interest with
leave of court, praying that judgment
be rendered against respondents
Games and Amusements Board (GAB),
Philippine Charity Sweepstakes Office
(PCSO), and Executive Secretary
Fortunato de Leon:
1. "(a)Interpreting Republic Acts
Nos. 309 and 1502 in such a
manner that the 30 Sundays
unreserved
for
charitable
institutions
and
therefore
belonging to the private racing
clubs under Section 4 of Republic
333
Act No. 309 continue to pertain to

said private entities. and that the
6 additional sweepstakes races
authorized under Republic Act No.
1502 should be held on 6 of the 12
Saturdays not reserved for any
private
entity
or
particular
charitable
institution
under
Section 4 of Republic Act No. 309,
or on any other day of the week
besides Sunday, Saturday and
legal holiday;
2. "(b)Holding that respondent PCSO
does not have the right or power to
appropriate or use the race tracks
and equipment of petitioner
without its consent, nor can
respondents compel petitioner to
so allow such use of its race tracks
and equipment under pain of
having its license revoked."
Respondents duly filed their respective

answers to said petition and the case
was heard. After hearing, the court, on
July 5, 1957, rendered a decision which,
in part, reads:
"The court does not deem it necessary to rule on the deprivation of
property of the petitioner and the intervenor without due process
of law, as feared by them, because as they have stated, the
Philippine Charity Sweepstakes Office is using their premises and
equipment under separate contracts of lease voluntarily and
willingly entered into by the parties upon payment of a
corresponding rental. There is therefore no deprivation of property
without due process of law.
"Wherefore, the court is of the opinion and so holds that once a
month on a Sunday not reserved for the Anti-Tuberculosis Society,
the White Cross and other charitable institutions by Section 4 of
Republic Act No. 309, the Philippine Charity Sweepstakes Office is
authorized to hold one regular sweepstakes draw and races,
pursuant to Section 9 of Republic Act No. 1502, thus reducing the
number of Sundays which may be alloted to private entities by the
Games and Amusements Board. * * *,"
334
From this judgment, petitioner and

intervenor interposed the present
appeal.
licensed by the GAB, other Sundays not

reserved under this Act, as may be determined by the GAB ......................................
or 30 for Leap years
Total for the year ...........................
or 53 for leap years
154
154
PHILIPPINE REPORTS ANNOTATEDB. Saturdays:
Manila Jockey Club, Inc. vs. Games and Amusements Board(1)
et al.For the Philippine Anti-Tuberculosis Society
(2) For the White Cross, Inc., ..............................
The issue is the proper placement of
(3) For private Individuals and entities duly
licensed by GAB and as may be determined
the six (6) additional racing days given
by it ...........................................................
to the Philippine Charity Sweepstakes
(4) For races authorized by the President for
charitable, relief, or civic purposes other
Office, in virtue of Republic Act No.
than the particular charitable institutions
named above, all other Saturdays not
1502, approved on June 16, 1956.
reserved for the latter .................................
The
authorized
racing
days
Total ...............................................
C. Legal Holidays: All, except Thursday and Friday of the Holy
specifically designated and distributed
Week, July 4th and December 30th, have been reserved for
in Section 4 of Republic Act No. 309,
private individuals and entities duly licensed by the GAB.
the basic law on horse racing in the

Philippines, as later amended by
Republic Act No. 983, are as follows:
A. Sundays:
(1) For the Philippine Anti-Tuberculosis Society
(2) For the Philippine Charity Sweepstakes Office
(PCSO) .......................................................
(3) For the White Cross, Inc ................................
(4) For the Grand Derby Race of the Philippine
Anti-Tuberculosis Society ...........................
Total
(5) For private individuals and entities duly
52 Sun
12 Sat
4 Satu
21 Sat
12 Sat
52 Sat
155

As stated, Republic Act No. 1502

12 Sundays
increased the sweepstakes draw and
6 Sundays
races of the PCSO to twelve, but
4 Sundays
without specifying the days on which
1 Sunday
they are to be run. To accommodate
23 Sundays
these additional races, the GAB
29 Sundays
335
resolved to reduce the number of

Sundays
assigned
to
private
individuals and entities by six.
Appellants protested, contending that
the said increased should be taken from
the 12 Saturdays reserved to the
President, for charitable, relief, or civic
purposes, or should be assigned to any
other day of the week besides Sunday,
Saturday, and legal holiday.
Appellants' contention cannot be
sustained. Section 4 of Republic Act No.
309, as amended by Republic Act No.
983, by express terms, specifically
reserved 23 Sundays and 16 Saturdays
for the Philippine Anti-Tuberculosis
Society, the White Cross, Inc. and the
PCSO, and 12 Saturdays to the
President for other charitable, relief, or
civic purposes. These days can not be
disposed of by the GAB without
authority of law. As to the remaining

racing days, the law provides:
"SEC. 4. Racing days.Private individuals and entities duly
licensed by the Commission on Races (now GAB) may hold horse
races on Sundays not reserved under this Act, on twenty-four
Saturdays as may be determined by the said Commission (GAB),
and on legal holidays, except Thursday and Friday of Holy Week,
July fourth, commonly known as Independence Day, and
December thirtieth, commonly known as Rizal Day."
It is clear from the above-quoted

provision that appellants have no
vested right to the unreserved Sundays,
or even to the 24 Saturdays (except,
perhaps, on the holidays), because their
holding of races on these days is merely
permissive, subject to the licensing and
determination by the GAB. When,
therefore, Republic Act No. 1502 was
enacted increasing by six (6) the
sweepstakes draw and races, but
without specifying the days for holding
them, the GAB had no alternative
336
except to make room for the additional

races, as it did, from among the only
available
a whole day is necessary for the mixing

of the sweepstakes balls, the drawing of
winning sweepstakes numbers, and the
running of the sweepstakes races. Be
156
156
PHILIPPINE REPORTS ANNOTATED
that as it may, since the law has given
Manila Jockey Club, Inc. vs. Games and Amusements Board et al.
certain amount of discretion to the GAB
racing days unreserved by any law
in determining and allocating racing
the Sundays on which the private
days not specifically reserved, and since
individuals and entities have been
the court does not find that a grave
permitted to hold their races, subject to
abuse of this discretion has been
licensing and determination by the
committed, there seems to be no
GAB.
reason, legal or otherwise, to set aside
It is suggested that the GAB should
the resolution of the GAB.
have chosen any week days or Saturday
Furthermore, appellants contend that
afternoons. In the first place, weeks
even granting that the six (6)
days are out of the question. The law
additional sweepstakes races should be
does not authorize the holding of horse
run on Sundays, yet if they are held on
races with betting on week days (See
a club race day, the GAB should only
Article 198 of the Revised Penal Code).
insert them in the club races and not
Secondly, sweepstakes races have
give the whole day to the PCSO, to the
always been held on Sundays. Besides,
exclusion of appellants. In support of
it is not possible to hold them on
this contention, the following quotation
Saturdays afternoons as, it is claimed,
337
from the debate in the House of

Representatives before the voting on
House Bill No. 5732, which became
Republic Act No. 1502, is cited:
explanatory statements by members of

the legislature may be resorted to, to
throw light on the meaning of the
words used in the statutes. Upon the
other hand, the appellees, likewise,
'Mr. ABELEDA. If there are no more amendments, I move that we
quote in their briefs other authorities to
vote on the measure.
the effect that statements made by the
"Mr. MARCOS. Mr. Speaker, before we proceed to vote on this
individual members of the legislature
bill, I want to make it of record that it is the clear intention of the
as to the meaning of provisions in the
House to increase by two the ten regular and special Sweepstakes
bill subsequently enacted into law,
races making it all in all, twelve, and that in cases where a
made during the general debate on the
sweepstake face falls in a club race days the Sweepstakes race
bill on the floor of each legislative
should be inserted in the club race.
house, following its presentation by a
157
157
standing
committee,
are generally held
Manila Jockey Club, Inc. vs. Games and Amusements Board et al.
to be inadmissable as an aid in
"Mr. ABELEDA. The gentleman from Ilocos Norte is correct. * * *."
construing the statute. Legislative
(t.s.n., Proceedings in House of Representatives, Congress, May 17,
debates are expressive of the views and
1956; italics supplied.)
motives of individual members and are
Appellants cite in their briefs a number
not safe guides and, hence, may not be
of authorities sustaining the view that
resorted to in ascertaining the meaning
in the interpretation of statutes
and purpose of the lawmaking body. It
susceptible
of
widely
differing
is impossible to determine with
constructions, legislative debates and
338
certainty what construction was put

upon an act by the members of the
legislative body that passed the bill, by
resorting to the speeches of the
members thereof. Those who did not
speak, may not have agreed with those
who did; and those who spoke, might
differ from each other.
In
view
of
these
conflicting
authorities, no appreciable reliance can
safely be placed on any of them. It is to
be noted in the specific case before us,
that while Congressmen Marcos and
Abeleda were, admittedly, of the view
that the additional sweepstakes races
may be inserted in the club races, still
there is nothing in Republic Act No.
1502, as it was finally enacted, which
would
indicate
that
such
an
understanding on the part of these two
members
1
________________
Sutherland on Statutory Construction, 499-501; Ramos vs.Alvarez 97
Phil., 844; 51 Off. Gaz. [II] 56087,
158
158

of the Lower House of Congress

received the sanction or conformity of
their colleagues, for the law is
absolutely
devoid
of
any
such
indication. This is, therefore, not a case
where a doubtful wording is sought to
be interpreted; rather, if we adopt
appellants' theory, we would be
supplying something that does not
appear in the statute. It is pertinent to
observe here that, as pointed out by one
of appellants' own cited authorities, in
the interpretation of a legal document,
especially a statute, unlike in the
interpretation of an ordinary written
document, it is not enough to obtain
information to the intention or meaning
of the author or authors, but also to see
2
339
whether the intention or meaning has

been expressed in such a way as to give
it legal effect and validity. In short, the
purpose of the inquiry, is not only to
know what the author meant by the
language he used, but also to see that
the
language
used
sufficiently
expresses that meaning. The legal act,
so to speak, is made up of two
elementsan internal and an external
one; it originates in intention and is
perfected by expression. Failure of the
latter may defeat the former. The
following, taken from 59 Corpus Juris
1017, is in line with this theory:
"The intention of the legislature to which effect must be given is
that expressed in the statute and the courts will not inquire into
the motives which influence the legislature, or individual
members, in voting for its passage; nor indeed as to the intention
of the draftsman, or the legislature, so far as it has been expressed
in the act. So, in ascertaining the meaning of a statute the court
or all members of the legislature or its legislative committees or

any other persons."
Upon the other hand, at the time of the

enactment of Republic Act No. 1502 in
June, 1956, the long, continuous, and
uniform
practice
was
that
all
sweepstakes draws and
________________
Vaughan Hawkins, in appendix to Thayer's Preliminary Treatise on
Evidence.
159

races were held on Sundays and during

the whole day. With this background,
when Congress chose not to specify in
express terms how the additional
sweepstakes draws and races would be
held, it is safe to conclude that it did
not intend to disturb the then
prevailing situation and practice.
will not be governed or influenced by the views or opinions of any

340
"On the principle of contemporaneous

exposition, common usage and practice
under the statute, or a course of
conduct
indicating
a
particular
undertaking of it, will frequently be of
great value in determining its real
meaning, especially where the usage
has been acquired in by all parties
concerned and has extended over a long
period of time; * * *. (59 C. J. 1023)
Likewise, the language of Republic
Act No. 1502 in authorizing the
increase, clearly speaks of regular
sweepstakes draws and races. If the
intention of Congress were to authorize
additional sweepstakes draws only
which could, admittedly, be inserted in
the club races, the law would not have
included regular
races; and
since
regular
sweepstakes
races
were
specifically authorized, and it would be
confusing,
inconvenient,
if
not
impossible to mix these sweepstakes

races with the regular club races all on
the same day (and it has never been
done before), the conclusion seems
inevitable
that
the
additional
sweepstakes draws and races were
intended to be held on a whole day,
separate and apart from the club races.
Appellants' contention that to compel
them to permit the PCSO to use their
premises and equipment against their
will would constitute deprivation of
property without due process of law,
deserves no serious consideration. As
the lower court has found, every time
the PCSO uses appellants' premises
and equipment, they are paid rentals in
accordance with the terms of separate
contracts of lease existing between
them and the PCSO.
341
The decision appealed from, being in

consonance with the above findings and
considerations of this Court, the
160
160

Smith, Bell & Co., Ltd., vs. Phil Milling Co.
same is hereby affirmed, with costs

against the appellants. So ordered.
Pars,
C.
J., Bengzon, Labrador, Concepcin, Rey
es, J. B. L., Endencia, and Gutirrez
David, JJ., concur.
Judgment affirmed.
342
G.R. No. 75290.November 4, 1992.

AMADO T. GURANGO and ESTER
GURANGO,
petitioners, vs.INTERMEDIATE
APPELLATE COURT and EDWARD L.
FERREIRA, respondents.
*
Civil Law; Contracts; Appeal; Generally

only legal questions are reviewable by the
Court on appeals from decisions of the Court
of Appeals.As a rule, only legal questions
are reviewable by this Court on appeals
from decisions of the Court of Appeals.
However, one of the exceptions to the rule is
when there is a conflict in factual findings of
the Court of Appeals and the trial court.
Same; Same; Remedial
Law; Parol
Evidence Rule; The mistake contemplated as
an exception to the parol evidence rule is one
which is a mistake of fact mutual to the
parties.The mistake contemplated as an
exception to the parol evidence rule is one
which is a mistake of fact mutual to the

parties, which is not present in this case.
Moreover, in view of the parties conflicting
claims regarding the true nature of the
agreement executed by them, We find the
version of the private respondent more
credible for the terms of said agreement are
clear and require no room for interpretation
since the intention of the parties, as
expressly specified in said agreement, do not
contradict each other.
PETITION for review on certiorari of

the decision of the then Intermediate
Appellate Court.
the Court.
NOCON,J.:
This is a petition for review on
certiorari to annul and set aside the
decision dated March 12, 1986 of the
343
then
Intermediate
Appellate
Court reversing the decision of the trial
court
1
_______________
SECOND DIVISION.
Rollo, pp. 13-16, Ponente: Justice Leonor Ines Luciano with the
concurrence of Justice Ramon G. Gaviola, Jr., Justice Eduardo P. Caguioa

and Justice Maria Rosario Quetulio-Losa.
Id., at pp. 18-24. Penned by Judge Celso L. Magsino.
333
VOL.215,NOVEMBER4,1992
Gurango vs. Intermediate Appellate Court
333
and ordering petitioners spouses

Amado and Ester Gurango to pay
private respondent Edward Ferreira
the sum of P36,000.00 representing the
price of the car and P5,000.00 as
attorneys fees, as well as the
Resolution dated July 11, 1986 denying
petitioners Motion for Reconsideration
in the appealed decision.
3
It appears on record that, on January

26, 1977, private respondent Edward
Ferreira sold to petitioner Amado
Gurango one (1) booklet of raffle tickets
valued at Five Hundred (P500.00)
Pesos consisting of one hundred (100)
tickets bearing ticket numbers 162501
to 162600 in connection with a fundraising project sponsored by the Makati
Jaycees to be held in the evening of
April 14, 1977 at the Manila Peninsula
Hotel.
At around 10:00 p.m. of April 14,
1977, ticket number 162574 in the
name of Armando Boyet Gurango, a
minor son of the petitioners, but in the
custody or possession of private
respondent, won a Toyota Corolla car.
Petitioner Amado Gurango alleged
that on April 14, 1977, he issued Check
No. 00730 dated April 12, 1977 for the
payment of the sixty (60) raffle tickets
344
in the amount of Three Hundred

(P300.00) Pesos. Thereafter, petitioner
called his cashier, Miriam Burgo, and
instructed the latter to fill up the stubs
of the one hundred (100) raffle tickets
with the names of his family members
before surrendering the same to the
messenger of private respondent who
would go there to collect the check for
the payment of said raffle tickets.
When petitioner arrived at his office
in the afternoon of that same day, his
cashier gave him the one hundred (100)
claim stubs and informed him that the
messenger of the private respondent
took the check as well as all the raffle
tickets.
Thereafter,
petitioner
instructed his cashier to keep said
claim stubs as he was in a hurry to
return to Cavite City for the induction
of the officers and directors of the
Cavite Jaycees.
The following morning or on April 15,

1977, private respondent called up
petitioner Amado Gurango to inform
the latter that he had already paid
petitioners remaining unpaid balance
of Two Hundred (P200.00) Pesos to the
Makati Jaycees the
_______________
Id., at p. 17.
334
334

previous night during the raffle and,

subsequently, arranged a meeting with
the petitioner for the latter to turnover
the forty (40) claim stubs representing
the unpaid balance. During said
telephone
conversation,
petitioner
inquired from the private respondent if
any of his tickets won a car during the
raffle but was told by the latter that no
Jaycee had won any car in said raffle.
345
Upon private respondents arrival at

the office of the petitioner, the latter
inquired again from the former if any of
his tickets won a car to which private
respondent answered again in the
negative. When private respondent
asked for the forty (40) claim stubs
from the petitioner, the latter informed
the former that he is still willing to
honor their previous agreement and
even tendered a check for Two Hundred
(P200.00) Pesos dated April 30, 1977
but private respondent refused to
accept said check maintaining that the
money he advanced the previous night
will be charged against his company
and he only needs the claim stubs of
said tickets to justify said expense.
As petitioner was in a hurry to finish
his income tax return, he handed all
the claim stubs to the private
respondent who selected forty (40)
claim stubs from the lot representing

the unpaid balance. Thereafter, private
respondent asked the petitioner to put
down their agreement into writing
which the latter did on a piece of yellow
paper and in his own handwriting, to
wit:
14 April 1977
This is a mutual agreement between Mads Gurango & Ed Ferreira
that they bought a booklet of Raffle Tickets of Makati JC worth
P500.00. All the stubs in our possessions remains our share and
any number happened to win in the raffle corresponding to the
stub numbers each one of us is holding will own the prize solely
w/o the other party claims co-ownership, even that the name
printed in the such raffle stubs is in the name of one party or any
other person.
(SGD.)
MADS GURANGO
(SGD.)
EDWARD L. FERREIRA
Furthermore any holder of the winning stub shall be printed as the

sole winner and owner, even though it was in others name.
335
335
346

This is a Gentlemen and Jayceely agreement that both of us will
stick to this simple and binding agreement.
(SGD.)
MADS GURANGO
(SGD.)
EDWARD L. FERREIRA
On April 18, 1977, petitioner was

shown a copy of Daily Express and
learned from an item in said newspaper
that ticket No. 162574 won a Toyota
Corolla car but was surprised to find
out that the winning stub was among
those taken by the private respondent.
That
same
evening,
petitioner
attended a meeting of the Metropolitan
Jaycees at the Metro Jaycee Clubhouse
and confronted private respondent
about the winning stub. Upon being
shown a copy of their agreement,
petitioner realized his mistake in
dating said agreement on April 14,
1977 instead of April 15, 1977 which he
distinctly remembered to be the date
said agreement was executed since it
was the last day to file the income tax

return but must have erroneously
wrote down the wrong date due to his
tight schedule on that day.
On
the
other
hand,
private
respondent claimed that on April 12,
1977, petitioner informed the former
that he is only buying sixty (60) tickets
and offered to return the remaining
forty (40) tickets since he needed the
money for the payment of his income
tax on April 15, 1977, which was
accepted by the private respondent and
the latter agreed to appropriate for
himself the remaining tickets.
Consequently, in the morning of April
14, 1977, petitioner turned over the one
hundred (100) tickets to be dropped in
the tambiolo and his check for Three
Hundred (P300.00) Pesos for the sixty
(60) tickets he bought from the private
respondent.
347
Upon noticing that all the returned

tickets were in the name of the
petitioner Amado Gurango or members
of his family, private respondent,
during his meeting with the petitioner
at Manila Midtown Ramada Hotel at
around 6 p.m. of April 14, 1977, asked
the latter to write down their
agreement which petitioner did as
shown by the agreement signed by
them on April 14, 1977 (Exhibit A).
private respondent to the petitioner to comply with their

agreement were ignored by the latter.
Consequently, on August 25, 1977, private respondent filed a
complaint for damages against petitioners with the then Court of
First Instance of Rizal, Branch XX in Civil Case No. 27163.
After trial on the merits, a decision was rendered by the
Regional Trial Court, the dispositive portion of which reads as
follows:
IN VIEW OF ALL THE FOREGOING, the Court dismisses the
complaint, for failure on the part of the plaintiff to have
established a cause of action against the defendants.
On the counterclaim, the Court orders the plaintiff to pay the
_______________
defendants the sum of Ten Thousand Pesos (P10,000.00) as moral
Id., at pp. 3-4.
damages, and the sum of Two Thousand Five Hundred Pesos
336
(P2,500.00.)) as and for attorneys fees and expenses of litigation.
336
SUPREMECOURTREPORTSANNOTATED
Thereafter, private respondent and petitioner met at the Metro

Jaycee Clubhouse where the former asked the latter to comply
with their agreement but petitioner refused and wrote a letter to
the Makati Jaycees disclaiming said agreement. Eventually, the
car was awarded to petitioners son. Subsequent demands by the
However, the defendants are ordered to reimburse the plaintiff the

sum of Two Hundred Pesos (P200.00), the balance of the price of
the forty (40) tickets paid for by the plaintiff.
Not satisfied with said decision, private

respondent appealed to the respondent
court which reversed the decision of the
348
trial court. The pertinent portion of its

decision reads:
We find therefore and so hold that the agreement (Exh. A or A-1)
was prepared and signed by the parties on April 14, 1977 before
the raffle. Considering the business and social backgrounds of the
parties, Exhibit A or A-1 is the most practical covenant for their
mutual protection before the raffle.
WHEREFORE, the decision of the lower court appealed from is
hereby REVERSED ordering defendants-appellees to pay plaintiffappellant the sum of P36,000.00 representing the price of the car
and the sum of P5,000.00 as and for counsel fees. No damages and
costs.
and private respondent on April 14,

1977.
As a rule, only legal questions are
reviewable by this Court on appeals
from decisions of the Court of Appeals.
However, one of the exceptions to the
rule is when there is a conflict in
factual findings of the Court of Appeals
and the trial court.
Section 9, Rule 130 of the Revised
Rules of Court in the Philippines
provides that:
7
Sec.9.Evidence of written agreements.When the terms of an

________________
agreement have been reduced to writing, it is to be considered as
Id., at p. 24.
containing all such terms, and, therefore, there can be, between
Id., at p. 16.
the parties and their successors in interest, no evidence of the
337
terms of the agreement other than the contents of the writing,
337
The principal issue presented to Us in

the instant case is the validity of the
agreement executed between petitioner
except in the following cases:

(a)Where a mistake or imperfection of the writing, or its failure
to express the true intent and agreement of the parties, or the
validity of the agreement is put in issue by the pleading;
(b)When there is an intrinsic ambiguity in the writing.
349
Under the aforementioned provision,

when the parties have reduced their
agreement in writing, the contents of
said agreement are rendered conclusive
upon
the
parties
and
evidence aliunde is inadmissible to
change a valid and enforceable
agreement embodied in a document.
The mistake contemplated as an
exception to the parol evidence rule is
one which is a mistake of fact mutual to
the parties, which is not present in
this case. Moreover, in view of the
parties conflicting claims regarding the
true nature of the agreement executed
by them, We find the version of the
private respondent more credible for
the terms of said agreement are clear
and require no room for interpretation
since the intention of the parties, as
expressly specified in said agreement,
do not contradict each other.
8
_______________
Co vs. Court of Appeals, 193 SCRA 198, 206, citing Raneses vs.
Intermediate Appellate Court,187 SCRA 397, and Remolete vs. Tibe, 158
SCRA 138.
8
Magellan
Manufacturing
Marketing
Corporation
vs.
Court
of
Appeals, 201 SCRA 102[1991].
338
338

The fact that the agreement was prepared and written by

petitioner himself further indicates that said agreement was
entered into by the parties freely and voluntarily which renders
petitioners claim of fraud in the execution of the agreement
unbelievable. Being the author of the agreement, petitioner is
presumed to have actual knowledge of the true intent of the
parties and the surrounding circumstance that attended the
preparation of the document in question including the date when
said agreement was executed. If it is true that the date of
execution was on April 15, 1977, petitioner should have written
said date on the agreement and not April 14, 1977 considering that
one does not usually forget a date that has a special significance to
him as alleged by the petitioner. In the instant case, it is highly
350
improbable that petitioners consent was given through fraud since

the document was prepared and executed by petitioner himself.
Therefore, the agreement is valid and binding upon petitioner and
respondent.
WHEREFORE, finding no reversible

error in the questioned decision of the
appellate court, the petition for
certiorari is hereby DENIED for lack of
merit.
SO ORDERED.
Feliciano, Regalado andCampos,
Jr., JJ., concur.
Narvasa (C.J., Chairman), On
official leave.
Petition denied.
Note.Ambiguous
contract
is
construed against the party who caused
the ambiguity (De Leon vs. Court of
Appeals, 186 SCRA 345).
o0o
351
G.R. No. 107372. January 23, 1997.

RAFAEL
S.
ORTAEZ,
petitioner, vs. THE
COURT
OF
APPEALS, OSCAR INOCENTES AND
ASUNCION LLANES INOCENTES,
respondents.
*
Evidence; Parol
Evidence; Contracts; Under the general rule
in Section 9 of Rule 130 of the Rules of
Court, when the terms of an agreement were
reduced to writing, it is deemed to contain
all the terms agreed upon and no evidence of
such terms can be admitted other than the
contents thereof.The parol evidence herein
introduced is inadmissible. First, private
respondents oral testimony on the alleged
conditions, coming from a party who has an
interest in the outcome of the case,
depending exclusively on human memory, is
not as reliable as written or documentary
evidence. Spoken words could be notoriously
unreliable unlike a written contract which
speaks of a uniform language. Thus, under

the general rule in Section 9 of Rule 130 of
the Rules of Court, when the terms of an
agreement were reduced to writing, as in
this case, it is deemed to contain all the
terms agreed upon and no evidence of such
terms can be admitted other than the
contents thereof. Considering that the
written deeds of sale were the only
repository of the truth, whatever is not
found in said instruments must have been
waived and abandoned by the parties.
Examining the deeds of sale, we cannot even
make an inference that the sale was subject
to any condition. As a contract, it is the law
between the parties.
_______________
*
THIRD DIVISION.
562
56
SUPREME COURT REPORTS ANNOT
2
Ortaez vs. Court of Appeals
352
Same; Same; The parol evidence herein

sought to be introduced would vary,
contradict or defeat the operation of a valid
instrument.The parol evidence herein
contradict or defeat the operation of a valid
instrument, hence, contrary to the rule that:
The parol evidence rule forbids any
addition to x x x the terms of a written
instrument by testimony purporting to show
that, at or before the signing of the
document, other or different terms were
orally agreed upon by the parties.
Same; Same; Parol evidence is admissible
to explain the meaning of a contract but
cannot
incorporate
additional
contemporaneous conditions which are not
mentioned at all in the writing unless there
has been fraud or mistake.Although parol
evidence is admissible to explain the
meaning of a contract, it cannot serve the
purpose of incorporating into the contract
additional
contemporaneous
conditions
which are not mentioned at all in the
writing unless there has been fraud or
mistake. No such fraud or mistake exists in
this case.
Same; Same; Private respondents did not
expressly plead that the deeds of sale were
incomplete or that it did not reflect the
intention of the buyer and the seller.We
are not persuaded by private respondents
contention that they put in issue by the
pleadings the failure of the written
agreement to express the true intent of the
parties. Record shows that private
respondents did not expressly plead that the
deeds of sale were incomplete or that it did
not reflect the intention of the buyer
(petitioner)
and
the
seller
(private
respondents). Such issue must be squarely
presented.
Private
respondents
merely alleged that the sale was subject to
four (4) conditions which they tried to prove
353
during trial by parol evidence. Obviously,

this cannot be done, because they did not
plead any of the exceptions mentioned in the
parol evidence rule. Their case is covered by
the general rule that the contents of the
writing are the only repository of the terms
of the agreement.
parcels of registered land in Quezon

City for a consideration of P35,000.00
and P20,000.00, respectively. The first
deed of absolute sale covering Transfer
Certificate of Title (TCT) No. 258628
provides in part:
PETITION for review on certiorari of a

decision of the Court of Appeals.
THOUSAND (P35,000.00) PESOS, receipt of which in full is
The facts are stated in the resolution of

the Court.
Efren Santos for petitioner.
Oscar Inocentes & Associates for
private respondents.
563
VOL. 266, JANUARY 23, 1997
That for and in consideration of the sum of THIRTY FIVE
hereby acknowledged, we have sold, transferred and conveyed, as

we hereby sell, transfer and convey, that subdivided portion of the
property covered by TCT No. 258628 known as Lot No. 684-G-1-B2 in favor of RAFAEL S. ORTAEZ, of legal age, Filipino, whose
marriage is under a regime of complete separation of property, and
a resident of 942 Aurora Blvd., Quezon City, his heirs or assigns.
while the second deed of absolute sale

covering TCT No. 243273 provides:
563
That for and in consideration of the sum of TWENTY
RESOLUTION
THOUSAND (P20,000.00) PESOS receipt of which in full is hereby
FRANCISCO, J.:
acknowledged, we have sold, transferred and conveyed, as we
On September 30, 1982, private

respondents sold to petitioner two (2)
hereby sell, transfer and convey, that consolidated-subdivided

portion of the property covered by TCT No. 243273 known as Lot
No. 5 in favor of RAFAEL S. ORTAEZ, of legal age, Filipino,
354
whose marriage is under a regime of complete separation of

property, and a resident of 942 Aurora Blvd., Cubao, Quezon City
his heirs or assigns.
Private respondents received the

payments for the abovementioned lots,
but failed to deliver the titles to
petitioner. On April 9, 1990 the latter
demanded from the former the delivery
of said titles. Private respondents,
however, refused on the ground that
the title of the first lot is in the
possession
3
Offshoot, petitioner sued private

respondents for specific performance
before the RTC. In their answer with
counterclaim
private
respondents
merely alleged the existence of the
following oral conditions which were
never reflected in the deeds of sale:
5
3.3.2 Title to the other property (TCT No. 243273) remains with
the defendants (private respondents) until plaintiff (petitioner)
shows proof that all the following requirements have been met:
1. (i)Plaintiff will cause the segregation of his right of way
amounting to 398 sq. m.;
_______________
2. (ii)Plaintiff will submit to the defendants the approved plan
Annex B, Records, p. 79; Rollo, pp. 27-28.
Annex A, p. 77; Rollo, p. 28.
Rollo, p. 24; Records, p. 7.
for the segregation:

3. (iii)Plaintiff will put up a strong wall between his property
and that of defendants lot to segregate his right of way;
4. (iv)Plaintiff will pay the capital gains tax and all other
564
SUPREME COURT REPORTS ANNOTATED expenses that may be incurred by reason of sale. x x x.
564
of another person, and petitioners

acquisition of the title ofthe other lot is
subject to certain conditions.
4
During trial, private respondent Oscar

Inocentes, a former judge, orally
testified that the sale was subject to the
355
above
conditions, although
such
condition were not incorporated in the
deeds of sale. Despite petitioners
timely objections on the ground that
the introduction of said oral conditions
was barred by the parol evidence rule,
the lower court nonetheless, admitted
them and eventually dismissed the
complaint as well as the counterclaim.
On appeal, the Court of Appeals (CA)
affirmed the court a quo. Hence, this
petition. We are tasked to resolve the
issue on the admissibility of parol
evidence to establish the alleged oral
conditions7
________________
565
VOL. 266, JANUARY 23, 1997
precedent to a contract of sale, when

the deeds of sale are silent on such
conditions.
The parol evidence herein introduced
is
inadmissible.
First,
private
respondents oral testimony on the
alleged conditions, coming from a party
who has an interest in the outcome of
the case, depending exclusively on
human memory, is not as reliable as
written
or
documentary
evidence. Spoken words could be
notoriously unreliable unlike a written
contract which speaks of a uniform
language. Thus, under the general rule
in Section 9 of Rule 130 of the Rules of
Court, when the terms of an agreement
were reduced to writing, as in this case,
it is deemed to contain all the terms
agreed upon and no evidence of such
8
The title is with a certain Atty. Joson for the purpose of subdividing the
said lot, which fact is allegedly known to petitioner.

5
Records, p. 21.
Rollo, p. 26.
TSN, Oscar Inocentes, February 27, 1991, pp. 4-5.
10
356
terms can be admitted other than the

contents thereof. Considering that the
written deeds of sale were the only
repository of the truth, whatever is not
found in said instruments must have
been waived and abandoned by the
parties. Examining the deeds of sale,
we cannot even make an inference that
the sale was subject to any condition.
As a contract, it is the law between the
parties.
Secondly, to buttress their argument,
private respondents rely on the case
of Land Settlement Development, Co. vs.
Garcia Plantation where the Court
ruled that a condition precedent to a
contract may be established by parol
evidence. However, the material facts
of that case are different from this case.
In the former, the contract sought to be
enforced expressly stated that it is
subject to an agreement containing
_______________
11
Abella vs. CA, G.R. No. 107606, June 20, 1996.
De Leon vs. CA, 204 SCRA 612.
10
Formerly Sec. 7 of Rule 130.
11
Siasat v. IAC, 139 SCRA 238; Enriquez vs. Ramos, 116 Phil. 525.
12
Cu vs. CA, 195 SCRA 647, citing Moran, Comments on the Rules of
12
Court, Vol. V, 1980 ed., p. 101.

13
405.
14
117 Phil. 761 (1963).
15
Exhibit L.
13
14
15
Manila Bay Club Corp. vs. CA, 245 SCRA 715; Gaw vs. IAC, 220 SCRA
566
566
SUPREME COURT REPORTS ANNOTA

the conditions-precedent which were

proven
through
parol
evidence.
Whereas, the deeds of sale in this case,
made no reference to any pre-conditions
or other agreement. In fact, the sale is
denominated as absolute in its own
terms.
357
Third, the parol evidence herein

contradict or defeat the operation of a
valid instrument, hence, contrary to
the rule that:
specifically, the alleged failure of the

agreement to express the true intent of
the parties. Such exception obtains only
in the following instance:
The parol evidence rule forbids any addition to x x x the terms of
that the contractual intention of the parties cannot be understood
a written instrument by testimony purporting to show that, at or
from a mere reading of the instrument. In such a case, extrinsic
before the signing of the document, other or different terms were
evidence of the subject matter of the contract, of the relations of
orally agreed upon by the parties.
the parties to each other, and of the facts and circumstances
16
17
Although parol evidence is admissible

to explain the meaning of a contract, it
cannot
serve
the
purpose
ofincorporating into
the
contract
additional contemporaneous conditions
which are not mentioned at all in the
writing unless there has been fraud or
mistake. No such fraud or mistake
exists in this case.
Fourth, we disagree with private
respondents argument that their parol
evidence is admissible under the
exceptions provided by the Rules,
18
[W]here the written contract is so ambiguous or obscure in terms
surrounding them when they entered into the contract may

_______________
16
Tupue vs. Urgel, 161 SCRA 417; Continental Airlines vs. Santiago, 172
SCRA 490; Gerales vs. CA, 218 SCRA 640.

17
Heirs of del Rosario vs. Santos, 194 Phil. 671; 108 SCRA 43.
18
Pioneer Savings and Loan Bank vs. CA, 226 SCRA 740, 744 (1993)
citing dela Rama vs. Ledesma, 143 SCRA 1 and Yu Tek vs. Gonzales, 29 Phil. 384.
567
VOL. 266, JANUARY 23, 1997
be received to enable the court to make a proper interpretation of
the instrument.
19
358
In this case, the deeds of sale are clear,

without any ambiguity, mistake or
imperfection, much less obscurity or
doubt in the terms thereof.
Fifth, we are not persuaded by
private respondents contention that
they put in issue by the pleadings the
failure of the written agreement to
express the true intent of the parties.
Record shows that private respondents
did not expressly plead that the deeds of
sale were incomplete or that it did not
reflect the intention of the buyer
(petitioner) and the seller (private
respondents). Such issue must be
squarely
presented. Private
respondents merelyalleged that the sale
was subject to four (4) conditions which
they tried to prove during trial by parol
evidence. Obviously, this cannot be
done, because they did not plead any of
the exceptions mentioned in the parol
20
21
22
23
evidence rule. Their case is covered by

the general rule that the contents of the
writing are the only repository of the
terms of the agreement. Considering
that
private
respondent
Oscar
Inocentes is a lawyer (and former
judge) he was supposed to be steeped
in legal knowledge and practices and
was
expected
to
know
the
consequences of his signing a deed of
absolute sale. Had he given an iotas
attention to scrutinize the deeds, he
would have
24
25
_______________
19
Heirs of del Rosario vs. Santos, supra., (Phil.) at 687 citing Francisco,
Vicente J.; The Revised Rules of Court in the Philippines, vol. VII, pp. 161-162
(1973).
20
Private respondents answer with counterclaim filed before the lower
court does not mention nor refer to the parol evidence rule and the exceptions
therein. All that they pleaded were the alleged conditions for which petitioner
must first comply.
359
court for proper disposition in

accordance with this ruling.
Tolentino vs. Gonzales, 50 Phil. 558, 567 (1927).
SO ORDERED.
Phil. National Railways vs. CIR of Albay, Br. I, supra.
Narvasa (C.J.,
Ibid.
Chairman), Davide,
See Pioneer Savings and Loan Bank vs. CA, supra, at 744.
Jr., Melo andPanganiban, JJ., concur.
568
568
Judgment reversed, records of the case
remanded to court a quo.
incorporated important stipulations
Note.Even when a document
that the transfer of title to said lots
appears on its face to be a sale with
were conditional.
pacto de retro the owner of the property
One
last
thing,
may prove that a contract is really a
assuming arguendo that
the
parol
loan with mortgage by raising as an
evidence is admissible, it should
issue the fact that the document does
nonetheless be disbelieved as no other
not express the rule intent and
evidence appears from the record to
agreement of the parties, and parol
sustain the existence of the alleged
evidence then becomes competent and
conditions. Not even the other seller,
admissible to prove that the instrument
Asuncion Inocentes, was presented to
was given merely as a security for
testify on such conditions.
repayment of the loan. (Olea vs. Court
ACCORDINGLY,
the
appealed
of Appeals, 247 SCRA 274 [1995])
decision is REVERSED and the records
21
Phil. National Railways vs. CIR of Albay, Br. 1, 83 SCRA 569.
22
23
24
25
26
of this case REMANDED to the trial
o0o
360
G.R. No. 138941. October 8, 2001.

AMERICAN HOME ASSURANCE
COMPANY, petitioner,vs. TANTUCO
ENTERPRISES, INC., respondent.
*
Insurance; In construing the words used

descriptive of a building insured, the greatest
liberality is shown by the courts in giving
effect to the insurance.In construing the
words used descriptive of a building insured,
the greatest liberality is shown by the courts
in giving effect to the insurance. In view of
the custom of insurance agents to examine
buildings before writing policies upon them,
and since a mistake as to the identity and
character of the building is extremely
unlikely, the courts are inclined to consider
that the policy of insurance covers any
building which the parties manifestly
intended to insure, however inaccurate the
description may be. Notwithstanding,
therefore, the misdescription in the policy, it
is beyond dispute, to our mind, that what

the parties manifestly intended to insure
was the new oil mill.
Same; Pleadings and Practice; Parole
Evidence Rule; A party may present evidence
to modify, explain or add to the terms of the
written agreement if he puts in issue in his
pleading, among others, its failure to express
the true intent and agreement of the parties
thereto.These facts lead us to hold that the
present case falls within one of the
recognized exceptions to the parole evidence
rule. Under the Rules of Court, a party may
present evidence to modify, explain or add to
the terms of the written
_______________
FIRST DIVISION.
741

American Home Assurance Company vs. Tantuco Enter
agreement if he puts in issue in his

pleading, among others, its failure to
361
express the true intent and agreement of the

parties thereto. Here, the contractual
intention of the parties cannot be
understood from a mere reading of the
instrument. Thus, while the contract
explicitly stipulated that it was for the
insurance of the new oil mill, the boundary
description written on the policy concededly
pertains to the first oil mill. This
irreconcilable difference can only be clarified
by admitting evidence aliunde,which will
explain the imperfection and clarify the
intent of the parties.
Same; In determining what the parties
intended, the courts will read and construe
the policy as a whole and if possible, give
effect to all the parts of the contract, keeping
in mind always, however, the prime rule that
in the event of doubt, this doubt is to be
resolved against the insurer.We again
stress that the object of the court in
construing a contract is to ascertain the
intent of the parties to the contract and to

enforce the agreement which the parties
have entered into. In determining what the
parties intended, the courts will read and
construe the policy as a whole and if
possible, give effect to all the parts of the
contract, keeping in mind always, however,
the prime rule that in the event of doubt,
this doubt is to be resolved against the
insurer. In determining the intent of the
parties to the contract, the courts will
consider the purpose and object of the
contract.
Same; Not only are warranties strictly
construed against the insurer, but they
should, likewise, by themselves be reasonably
interpreted.It ought to be remembered
that not only are warranties strictly
construed against the insurer, but they
should, likewise, by themselves be
reasonably interpreted. That reasonableness
is to be ascertained in light of the factual
362
52221 promulgated on January 14,

1999,
which
affirmed in
toto the
Decision of the Regional Trial Court,
Branch 53, Lucena City in Civil Case
No. 92-51 dated October 16, 1995.
Respondent Tantuco Enterprises, Inc.
is engaged in the coconut oil milling
and refining industry. It owns two oil
PETITION for review on certiorari of a
mills. Both are located at its factory
decision of the Court of Appeals.
compound at Iyam, Lucena City. It
appears that respondent commenced its
business operations with only one oil
the Court.
mill. In 1988, it started operating its
Redentor A. Salonga for petitioner.
second oil mill. The latter came to be
Gilbert D. Camaligan for private
commonly referred to as the new oil
respondent.
mill.
742
742
The two oil mills were separately
American Home Assurance Company vs. Tantuco Enterprises, Inc.
covered by fire insurance policies issued
PUNO, J.:
by
petitioner
American
Home
Assurance Co., Philippine Branch. The
Before us is a Petition for Review on
first oil mill was insured for three
Certiorari assailing the Decision of the
million pesos (P3,000,000.00) under
Court of Appeals in CA-G.R. CV No.
conditions prevailing in each case. Here, we
find that there is no more need for an
internal hydrant considering that inside the
burned building were: (1) numerous portable
fire extinguishers, (2) an emergency fire
engine, and (3) a fire hose which has a
connection to one of the external hydrants.
363
Policy No. 306-7432324-3 for the period

March 1, 1991 to 1992. The new oil mill
was insured for six million pesos
(P6,000,000.00) under Policy No. 3067432321-9 for the same term. Official
receipts indicating payment for the full
amount of the premium were issued by
the petitioners agent.
A fire that broke out in the early
morning of September 30, 1991 gutted
and consumed the new oil mill.
Respondent immediately notified the
petitioner of the incident. The latter
then sent its appraisers who inspected
the burned premises and the properties
destroyed. Thereafter, in a letter dated
October 15, 1991, petitioner rejected
respondents claim for the insurance
proceeds on the ground that no policy
was issued by it covering the burned oil
mill. It stated that the description of
the insured establishment referred to
2
another building thus: Our policy Nos.

306-7432321-9 (Ps 6M) and 3067432324-4 (Ps 3M) extend insurance
coverage to your oil
_______________
Decision, CA-G.R. CV No. 52221, p. 1; Rollo, p. 27.
Exhibit K, Folder of Exhibits, p. 54.
Exhibit C, Folder of Exhibits, p. 22.
O.R. No. 1043, Exhibit E, Folder of Exhibits, p. 32; O.R. No. 1044,
Exhibit Q, Folder of Exhibits, p. 70.
743

American Home Assurance Company vs. Tantuco Enterpr
mill under Building No. 5, whilst the

affected oil mill was under Building No.
14.
A complaint for specific performance
and
damages
was
consequently
instituted by the respondent with the
RTC, Branch 53 of Lucena City. On
October 16, 1995, after trial, the lower
court rendered a Decision finding the
5
364
petitioner liable on the insurance policy

thus:
WHEREFORE, judgment is rendered in favor of the plaintiff
ordering defendant to pay plaintiff:
1. (a)P4,406,536.40 representing damages for loss by fire of its
insured property with interest at the legal rate;
Petitioner moved for reconsideration.

The motion, however, was denied for
lack of merit in a Resolution
promulgated on June 10, 1999.
Hence, the present course of action,
where petitioner ascribes to the
appellate court the following errors:
2. (b)P80,000.00 for litigation expenses;

3. (c)P300,000.00 for and as attorneys fees; and
4. (d)Pay the costs.
_______________
Exhibit H, Folder of Exhibit, p. 35.
SO ORDERED.
Petitioner assailed this judgment

before the Court of Appeals. The
appellate court upheld the same in a
Decision promulgated on January 14,
1999, the pertinent portion of which
states:
WHEREFORE, the instant appeal is hereby DISMISSED for lack
of merit and the trial courts Decision Sated October 16, 1995 is
hereby AFFIRMED in toto.
SO ORDERED.
Decision, Civil Case No. 92-15, RTC, Branch 53, Lucena City, p. 14;
Original Record, p. 168.

Decision, CA-G.R. CV No. 52221, p. 6; Rollo, p. 32.
744
744

1. (1)The Court of Appeals erred in

its conclusion that the issue of
non-payment of the premium was
beyond its jurisdiction because it
was raised for the first time on
appeal.
8
365
2. (2)The Court of Appeals erred in

its legal interpretation of Fire
Extinguishing
Appliances
Warranty of the policy.
3. (3)With
due
respect,
the
conclusion of the Court of Appeals
giving no regard to the parole
evidence rule and the principle of
estoppel is erroneous.
not to the burned oil mill, but to the

other mill. In other words, the oil mill
gutted by fire was not the one described
by the specific boundaries in the
contested policy.
What
exacerbates
respondents
predicament, petitioner posits, is that it
did not have the supposed wrong
description or mistake corrected.
Despite the fact that the policy in
The petition is devoid of merit.
question was issued way back in 1988,
The primary reason advanced by the
or about three years before the fire, and
petitioner in resisting the claim of the
despite the Important Notice in the
respondent is that the burned oil mill is
policy that Please read and examine
not covered by any insurance policy.
the policy and if incorrect, return it
According to it, the oil mill insured is
immediately for alteration,respondent
specifically described in the policy by
apparently did not call petitioners
its boundaries in the following manner:
attention
with
respect
to
the
Front:
by a driveway thence at 18 meters distance by Bldg. No. 2.
Right:
by an open space thence by Bldg. No. 4.
misdescription.
9
10
Left:
Rear:
adjoining thence an imperfect wall by Bldg. No. 4.

by an open space thence at 8 meters distance.
However, it argues that this specific

boundary description clearly pertains,
_______________
Verified Petition for Review, p. 99; Rollo, p. 17.
366
greatest liberality is shown by the

courts in giving effect to the
Petition n 14: Rollo, p. 93
insurance. In view of the custom of
745
745
insurance
agents
to examine buildings
before writing policies upon them, and
By way of conclusion, petitioner argues
since a mistake as to the identity and
that respondent is barred by the
character of the building is extremely
parole evidence rule from presenting
unlikely, the courts are inclined to
evidence (other than the policy in
consider that the policy of insurance
question) of its self-serving intention
covers any building which the parties
(sic) that it intended really to insure
manifestly intended to insure, however
the burned oil mill, just as it is barred
inaccurate the description may be.
by estoppel from claiming that the
Notwithstanding,
therefore,
the
description of the insured oil mill in the
misdescription in the policy, it is
policy was wrong, because it retained
beyond dispute, to our mind, that what
the policy without having the same
the parties manifestly intended to
corrected before the fire by an
insure was the new oil mill. This is
endorsement in accordance with its
obvious from the categorical statement
Condition No. 28.
embodied in the policy, extending its
These contentions can not pass
protection:
judicial muster.
9
Petition, p. 11; Rollo, p. 19.
10
11
12
In construing the words used

descriptive of a building insured, the
On machineries and equipment with complete accessories usual to

a coconut oil mill including stocks of copra, copra cake and copra
367
earlier, the first oil mill is already

covered under Policy No. 306-7432324UNNO. ALONG NATIONAL HIGHWAY, BO. IYAM, LUCENA
4 issued by the petitioner. It is
CITY UNBLOCKED. (emphasis supplied.)
unthinkable for respondent to obtain
_______________
the other policy from the very same
company. The latter ought to know that
See Martinez, Philippine Insurance Code Annotated, p. 324, citing
a second agreement over that same
Richard vs. Ins. Co., 27 N.W. 586 (1886), which gives the following
realty results in its overinsurance.
illustration: A policy upon a school house was held sufficient to identify the
The imperfection in the description of
building insured in which a school was kept, although it was not an ordinary
the insured oil mills boundaries can be
school house; the term store was held to be a sufficient description of a
attributed to a misunderstanding
building used as a restaurant and bakery.
between the petitioners general agent,
Vance on Insurance, pp. 816-817.
Mr. Alfredo Borja, and its policy issuing
Exhibit C-2, Folder of Exhibits, p. 24.
clerk, who made the error of copying
746
746
the boundaries of the first oil mill when
typing the policy to be issued for the
If the parties really intended to protect
new one. As testified to by Mr. Borja:
the first oil mill,then there is no need to
Atty. G. Camaligan:
Q: What did you do when you received the report?
specify it as new.
A: I told them as will be shown by the map the intention really of Mr. E
Indeed, it would be absurd to assume
cover the new oil mill that is why when I presented the existing poli
policy issuing clerk just merely (sic) copied the wording from the ol
that respondent would protect its first
typed is that the description of the boundaries from the old policy
oil mill for different amounts and leave
inserted covering the new oil mill and to me at that time the impo
covered the new oil mill because it is just within one compound a
uncovered its second one. As mentioned
mills whilst contained in the new oil mill building, situate (sic) at
13
11
12
13
368
oil mill[s] and so just enough, I had the policy prepared. In fact, two policies were prepared
cannot be understood from a
having the same date one for the old one and the other for the new oil mill and exactly the
same policy period, sir. (emphasis supplied)
reading of the instrument. Thus,
mere
while
It is thus clear that the source of the
the contract explicitly stipulated that it
discrepancy happened during the
was for the insurance of the new oil
preparation of the written contract.
mill, the boundary description written
These facts lead us to hold that the
on the policy concededly pertains to the
present case falls within one of the
first oil mill. This irreconcilable
recognized exceptions to the parole
difference can only be clarified by
evidence rule. Under the Rules of
admitting evidence aliunde, which will
Court, a party may present evidence to
explain the imperfection and clarify the
modify, explain or
intent of the parties.
Anent petitioners argument that the
_______________
respondent is barred by estoppel from
claiming that the description of the
TSN, Mach 31, 1993, pp. 31-32.
747
insured oil mill in the policy was wrong,
747
we
find
that
the same proceeds from a
wrong assumption. Evidence on record
add to the terms of the written
reveals that respondents operating
agreement if he puts in issue in his
manager, Mr. Edison Tantuco, notified
pleading, among others, its failure to
Mr. Borja (the petitioners agent with
express the true intent and agreement
whom respondent negotiated for the
of the parties thereto. Here, the
contract)
about
the
inaccurate
contractual intention of the parties
14
14
15
369
description in the policy. However, Mr.

Borja assured Mr. Tantuco that the use
of the adjectivenew will distinguish the
insured property. The assurance
convinced respondent that, despite the
impreciseness in the specification of the
boundaries, the insurance will cover
the new oil mill. This can be seen from
the testimony on cross of Mr. Tantuco:
We again stress that the object of the

court in construing a contract is to
ascertain the intent of the parties to
the contract and to enforce the
agreement which the parties have
entered into. In determining what the
parties intended, the courts will read
and construe the policy as a whole and
if possible, give effect to all the parts of
ATTY. SALONGA:
the contract, keeping in mind always,
Q: You mentioned, sir, that at least in so far as Exhibit A is concern you have read what the
policy contents, (sic) Kindly take a look in the page of Exhibit A which
was marked as
however,
the prime rule that in the
Exhibit A-2 particularly the boundaries of the property insured by the insurance policy
event
ofstated
doubt,
this doubt is to be
Exhibit A, will you tell us as the manager of the company whether the
boundaries
in
Exhibit A-2 are the boundaries of the old (sic) mill that was burned or
not.
resolved
against the insurer. In
A: It was not, I called up Mr. Borja regarding this matter and He told me that what is important
the intent of the parties to
is the word new oil mill. Mr. Borja said, as a matter of fact, you can determining
never insured (sic) one
property with two (2) policies, you will only do that if you will
the contract, the courts will consider
the purpose and object of the contract.
_______________
In a further attempt to avoid liability,
Rule 130, Section 9, Rules of Court.
petitioner claims that respondent
748
forfeited the renewal policy for its
748
failure
American Home Assurance Company vs. Tantuco Enterprises,
Inc. to pay the full amount of the
make to increase the amount and it is by indorsement not by another
policy, sir.
premium
and breach of the Fire
Extinguishing Appliances Warranty.
17
15
16
370
The amount of the premium stated on

the face of the policy was P89,770.20.
From the admission of respondents
own witness, Mr. Borja, which the
petitioner cited, the former only paid it
P75,147.00, leaving a difference of
P14,623.20. The deficiency, petitioner
argues, suffices to invalidate the policy,
in accordance with Section 77 of the
Insurance Code.
The Court of Appeals refused to
consider this contention of the
petitioner. It held that this issue was
raised for the first time on appeal,
hence, beyond its jurisdiction to resolve,
pursuant to Rule 46, Section 18 of the
Rules of Court.
18
19
_______________
TSN, April 20, 1993, pp. 25-26.
16
Vance on Insurance 809 (3rd ed., 1951).
17
The provision states:
18
Sec. 77. An insurer is entitled to payment of the premium as soon as the thing insured
is exposed to the peril insured against. Notwithstanding any agreement to the
contrary, no policy or contract of insurance issued by an insurance company is valid
and binding unless and until the premium thereof has been paid, except in the case of
a life or an industrial life policy whenever the grace period provision applies.
19
Now Rule 44, Section 15 of the 1997 Rules of Civil Procedure:
749

Petitioner, however, contests this

finding of the appellate court. It insists
that the issue was raised in paragraph
24 of its Answer, viz.:
24. Plaintiff has not complied with the condition of the policy and
renewal certificate that the renewal premium should be paid on or
before renewal date.
Petitioner adds that the issue was the

subject of the cross-examination of Mr.
Borja, who acknowledged that the paid
amount was lacking by P14,623.20 by
reason of a discount or rebate, which
rebate under Sec. 361 of the Insurance
Code is illegal.
371
The argument fails to impress. It is

true that the asseverations petitioner
made in paragraph 24 of its Answer
ostensibly spoke of the policys
condition for payment of the renewal
premium on time and respondents noncompliance with it. Yet, it did not
contain any specific and definite
allegation that respondent did not pay
the premium, or that it did not pay the
full amount, or that it did not pay the
amount on time.
Likewise, when the issues to be
resolved in the trial court were
formulated at the pre-trial proceedings,
the
question
of
the
supposed
inadequate payment was never raised.
Most significant to point, petitioner
fatally neglected to present, during the
whole course of the trial, any witness to
testify that respondent indeed failed to
pay the full amount of the premium.
The thrust of the cross-examination of

Mr. Borja, on the other hand, was not
for the purpose of proving this fact.
Though it briefly touched on the alleged
deficiency, such was made in the course
of discussing a discount or rebate,
which the agent apparently gave the
respondent. Certainly, the whole tenor
of Mr. Borjas testimony, both during
direct
and
cross
examinations,
implicitly assumed a valid and
subsisting insurance policy. It must be
remembered that he was
_______________
Sec. 15. Questions that may be raised on appeal.Whether or not the

appellant has filed a motion for new trial in the court below, he may include
in his assignment of errors any question of law or fact that has been raised in
the court below and which is within the issues framed by the parties.
750
750

372
called to the stand basically to

demonstrate that an existing policy
issued by the petitioner covers the
burned building.
Finally, petitioner contends that
respondent violated the express terms
of the Fire Extinguishing Appliances
Warranty. The said warranty provides:
WARRANTED that during the currency of this Policy, Fire
Extinguishing Appliances as mentioned below shall be maintained
in efficient working order on the premises to which insurance
applies:
PORTABLE EXTINGUISHERS
INTERNAL HYDRANTS
EXTERNAL HYDRANTS
FIRE PUMP
24-HOUR SECURITY SERVICES
BREACH of this warranty shall render this policy null and void
and the Company shall no longer be liable for any loss which may
occur.
20
Petitioner argues that the warranty

clearly obligates the insured to
maintain all the appliances specified
therein. The breach occurred when the
respondent failed to install internal fire

hydrants inside the burned building as
warranted. This fact was admitted by
the oil mills expeller operator, Gerardo
Zarsuela.
Again, the argument lacks merit. We
agree with the appellate courts
conclusion that the aforementioned
warranty did not require respondent to
provide for all the fire extinguishing
appliances
enumerated
therein.
Additionally, we find that neither did it
require that the appliances are
restricted to those mentioned in the
warranty. In other words, what the
warranty mandates is that respondent
should maintain in efficient working
condition within the premises of the
insured
property,
fire
fighting
equipments such as, but not limited to,
those identified in the list, which will
serve as the oil mills first line of
373
defense in case any part of it bursts

into flame.
To be sure, respondent was able to
comply with the warranty. Within the
vicinity of the new oil mill can be found
the following
be ascertained in light of the factual

conditions prevailing in each case.
Here, we find that there is no more
need
for
an
internal
hydrant
considering that inside the burned
building were: (1) numerous portable
fire extinguishers, (2) an emergency
_______________
fire engine, and (3) a fire hose which
has a connection to one of the external
Exhibit C-4-C, Folder of Exhibits, p. 29.
hydrants.
751
751
IN
VIEW
WHEREOF, finding no
reversible error in the impugned
devices:
numerous
portable
fire
Decision, the instant petition is hereby
extinguishers, two fire hoses, fire
DISMISSED.
hydrant, and an emergency fire
SO ORDERED.
engine. All of these equipments were
Davide,
Jr. (C.J.,
in efficient working order when the fire
Chairman), Pardo and Ynaresoccurred.
Santiago, JJ., concur.
It ought to be remembered that not
Kapunan, J., On official leave.
only are warranties strictly construed
Petition dismissed.
against the insurer, but they should,
Notes.As it is also a contract of
likewise, by themselves be reasonably
adhesion, an insurance contract should
interpreted. That reasonableness is to
20
21
22
23
24
374
be liberally construed in favor of the

insured and strictly against the
insurance company. (Verendia vs. Court
of Appeals, 217 SCRA 417 [1993])
An insurance contract should be so
interpreted as to carry out the purpose
for which the parties entered into the
contract which is, to insure against
risks of loss or damage to the goods.
(Malayan Insurance Corporation vs.
Court of Appeals, 270 SCRA 242 [1997])
o0o
_______________
21
Exhibits T, T-1 and T-13, Folder of Exhibits, pp. 73 and 77.
22
Exhibit T-12, Folder of Exhibits, p. 77.
23
Exhibit T-14, Folder of Exhibits, p. 77.
24
See Qua Chee Gan v. Law Union and Rock Insurance Co., Ltd., 98 Phil.
85 (1955).
375
Nos. L-47859; L-57132. October 30,

1981.
SAN MAURICIO MINING COMPANY,
MARSMAN AND COMPANY, INC.,
and PEDRO L. MOYA, petitionersappellants vs. HONORABLE
CONSTANTE A. ANCHETA, as
Presiding Judge of Branch III, Court of
First Instance of Camarines Norte,
PHILIPPINE
SMELTERS
CORPORATION,
NATIONAL
SHIPYARDS
AND
STEEL
CORPORATION,
DIRECTOR
OF
LANDS, COMMISSIONER OF LAND
REGISTRATION and REGISTER OF
DEEDS OF CAMARINES NORTE,
respondents-appellees.
*
Evidence; The failure of a document to

express the true intent of the parties must be
expressly alleged as a prerequisite to
presentation of evidence to that effect.If, as
petitioners now contend, they could have
shown at the trial that the said document

did not express the true intent and
agreement of the parties they should have
made such allegation then, were they really
candid with the court. Under the parol
evidence rule, such allegation of failure of a
document to express the true intent of the
parties must be alleged in the pleadings as
an
indispensable
predicate
for
the
presentation of any evidence to such effect.
And it is not sufficient excuse for the
omission of petitioners to make such
allegation in their answer that in its own
complaint Smelters premised its causes of
action on the deeds of
_______________
*
SECOND DIVISION
696
69
6
San Mauricio Mining Co. vs. Ancheta
376
November 23, 1973 (Exh. C-2) and June

26, 1975 (Exh. C-8) therein referred to, for
evidently, As We understand respondents
theory in its complaint, the reference to said
later documents was made only as premise
in order to attack their intrinsic legal import
in the light of Proclamation 500 and
Presidential Decree 837, and, alternatively,
albeit hypothetically, to invoke the right of
the government therein to withdraw what
had been reconveyed to petitioners by
NASSCO thereunder.
Same; Due Process; There cannot be a
denial of due process where a party who
holds a document withholds its contents
from the court.Certainly, the essence of
denial of due process cannot contemplate a
situation wherein the party who has
knowledge of and holds a document that
would bring out the truth as to a given
situation withholds such document, whether
as a matter of forensic strategy or bad faith.
Due process is no more than the

indispensability of fairness and opportunity
to be heard. Understandably then, it cannot
be pretended that there has been denial
thereof in a situation where precisely, as a
matter of candidness and honesty to the
court, the party claiming to be aggrieved is
the one who for tactical reasons or otherwise
is the one guilty of not disclosing to the
court the vital document that contains the
most conclusive evidence regarding the
matter in dispute.
Same; Same; Political Law; Mines and
Mining; Government officials who acted on
an erroneous assumption, re: grant of surface
rights on mineral lands, in approving
certain documents cannot in law find the
State on a matter affecting government
proprietary rights.And truth to tell, We
are in the dark as to how those latter
documents came to mention surface rights.
The only explanation We could gather from
377
the record, and in the absence of direct

evidence on the part of petitioners that the
1957 document did not intend to mean what
it says, is that the government officials who
took part in the preparation of the 1973 and
1975 documents invoked by petitioners
acted on the basis of an erroneous
assumption, which error cannot in law bind
the state on a matter adversely affecting the
proprietary rights of the government.
Same; Same; Same; Same; Ultra
vires
acts of government officials not binding on
the government.To Our mind, the
contention of petitioners counsel that the
subsequent acts of NASSCO prove the
failure of the 1957 document to express the
true intent of the parties cannot be better
supported in a new trial, since under the
provi697
VOL. 108, OCTOBER 30, 1981
sions of Proclamation 500, NASSCO was

a mere administrator of the properties in
question and any actuation thereof
bartering away the rights of the state under
the clear terms of the 1957 document cannot
be but ultra vires, if not erroneous, hence
not binding on the government and people of
the Philippines.
Same; Effect of failure to object to
evidence not included in the causes of
action.Indeed, it may be noted that
seemingly, Smelters position in the latter
stages of the proceedings appear rather
variant from the allegations in its
complaint, but We are not told and We have
not found in the record any indication that
such change or alteration, if there was in
essence any, of Smelters fundamental
causes of action, was ever objected to by
petitioners, so much so that when, quite
697
unnecessary (from
the point of view of
Section 5 of Rule 10 providing that failure
378
to so amend does not affect the result of the

trial of these issues), respondent filed a
motion to amend its complaint in order to
make a portion thereof conform with the
evidence it had unopposedly offered, no
wonder said motion for such amendment
was allowed.
Same; Document relied upon should be
attached to the complaint or copied therein
as a matter of fair play.As We see it,
petitioners are now trying desperately to
make it appear that legally the production of
the Deed of Absolute Sale of November 19,
1957 which reveals what really was
acquired by NASSCO thereunder was only
surface rights was incumbent upon
Smelters. We cannot agree. Without
necessarily accusing petitioners of bad faith,
it is to Our mind indisputable that even
disregarding the rule on actionable
documents, if only as a matter of fair play
and placing all cards on the table without
any hidden ace, petitioners should have

revealed to the trial court said document by
properly attaching or copying the same in
their answer, with the appropriate
allegation, if such is indeed what happened,
that the same failed to express the real
intent of the parties, and thereafter
supporting such allegation by competent
evidence. It is too late in the day now to
correct that omission by beclouding the
issue with an invocation of denial of an
opportunity to be heard, which, to be sure,
they were the ones who refrained to avail of
such opportunity to themselves for reasons
of their own.
RESOLUTION
BARREDO, J.:
Motion dated July 30, 1981 filed by
petitioners-appellants in
698
698

379
these cases for the reconsideration of

the decision of this Court rendered on
July 10, 1981. Comment thereon was
filed by private respondents under date
of August 31, 1981 and a reply of
petitioners dated October 22, 1981 to
said comment.
Acting on the foregoing pleadings, the
Court studied carefully and deliberated
maturely
on
the
following
considerations:
1. 1.Originally, petitioners filed the
petition in G.R. No. L-17859 for
review under Republic Act 5440
only of the partial summary
judgment of the trial court of
September 22, 1977 and the
subsequent order of said court of
November 8, 1977 for the
immediate execution of its partial
judgment. As such, that appeal
was purely on questions of law.
Later, upon agreement of the

parties during the hearing on
March 28, 1979, We issued an
order on April 18, 1979, modifying
an earlier restraining order We
had issued, by allowing the trial
court to proceed with the hearing
of the whole case. Still later, on
May 30, 1979, We resolved to
permit the trial court to render
judgment, provided it should not
order execution thereof.
2. 2.When the trial court rendered
final judgment on August 21,
1979, petitioners herein perfected
an appeal to the Court of Appeals
which was docketed therein as CAG.R. No. 65677.
3. 3.Under date of December 13,
1979, respondents filed a motion
for joint consolidation and joint
decision.
In
other
words,
380
respondent prayed that the Court

order the elevation by the Court of
Appeals to this Court of the
records of CA-G.R. No. 65677 in
order that the same may be
treated by Us also as an appeal
under Republic Act 5440. In
regard to this motion, petitioners
filed the following:
COMMENT
COME NOW the petitioners, through the
undersigned counsel, and to his Honorable
Court respectfully state that they offer no
objection to the Joint Motion for
Consolidation and Joint Decision, dated
December 13, 1979, filed by private
respondents, as
1. Undoubtedly, the main legal issues in
the instant case and in CA-G.R. No. 65677R pending before the Court of Appeals being
the validity of:
699
VOL. 108, OCTOBER 30, 1981
1. (a)The issuance of Original Certificate

of Title No. 0440 and, thereafter,
Transfer Certificates of Title to the
respondent PHILIPPINE SMELTERS
CORPORATION (SMELTERS) over
lands of the public domain, pursuant
to P.D. No. 837, dated December 6,
1975, over the mineral claims of the
petitioners SAN MAURICIO MINING
CO., and MARSMAN & CO., INC.
which had been duly located, staked,
registered, occupied, explored and
exploited in accordance with the
provisions of the Act of Congress of the
United States of America of July 1,
1902, and amendatory laws, and which
were later recognized and recorded by
the Director of Mines on September 23,
1976, pursuant to Section 101 of
381
Presidential Decree No. 463, and the

applicable judicial pronouncements in
the leading cases of McDaniel v.
Apacible, 42 Phil. 749; Gold Creek
Mining Corp. vs. Rodriguez, 66 Phil.
259; Salacot Mining Company v.
Rodriguez, 67 Phil. 97; Salacot Mining
Company
v.
Abadilla, 67
Phil.
110; Bambao v. Lednicky,L-15495,
January 28, 1961, 1 SCRA 330;
and Comilang v. Buendia, L-24757,
October 25, 1967, 21 SCRA 468; and
2. (b)The validity and effectivity of the
Deed of Sale between the National
Shipyards and Steel Corporation
(NASSCO) and SMELTERS, dated
December 29, 1975, marked as Annex
B to the complaint; and
2. That petitioners are not precluded from
raising other issues, both legal and factual,
as may be pertinent for a just consideration
of the cases at bar.
WHEREFORE, in the interest of a speedy

and
fair
administration
of
justice,
petitioners hereby conform to the instant
motion. (P. 754-755, Record.)
4. While it is true that petitioners

qualified their conformity to the
consolidation proposed by respondents
by stating that petitioners are not
precluded from raising other issues,
both
legal
and factual, etc.,
in
resolving the questions of fact We
cannot but give due consideration to
the findings of the trial court sustained
by substantial evidence. Anyway,
whatever issues petitioners have
claimed in their brief as well as in their
motion for reconsideration to be of fact
are actually legal questions, for all that
they ask of Us is to interpret, construe
or otherwise evaluate the legal import
of documents that are in the records
and in this connection.
382
that interest was conveyed or sold by SAN

700
MAURICIO to NASSCO by the Contract of
Sale and Assignment of Rights of 1957.
For instance, in one portion of the trial
While it may be true that in 1973, NASSCO
courts decision, it found and held:
resold the same property or right of SAN
5. MARSMAN and SAN MAURICIO
MAURICIO and the latter was succeeded
contend that Proclamation 500, and for that
thereto by MARSMAN, it is equally true
matter P.D. 837, should be construed to
that at the time of the sale on November 23,
respect existing private rights claiming that
1973,
NASSCO
was
merely
an
MARSMAN by a series of transactions had
administrator of the property under
acquired existing mining rights under the
Proclamation No. 500, Series of 1968 and it
Philippine Bill of 1902. We consider the
had no authority to sell or dispose of the
evidence presented in support of the claim as
land or any interest therein. Defendants
not competent because it does not sufficiently
cannot disclaim knowledge of the effects of
show how MARSMAN or SAN MAURICIO
Proclamation No. 500 and/or its provisions.
acquired said rights. In fact, there is no
They should know or ought to have known
proof as to who was in possession of the
that on November 23, 1973 said
property upon the passage of the Philippine
Proclamation was still in effect, not having
Bill of 1902 and the successional rights
been repealed and/or recalled. The
thereto from 1902 to the present. But
effectivity of Proclamation on said date is an
assuming, however, that SAN MAURICIO,
indisputable proof that the Office of the
as predecessor-in-interest of MARSMAN
President could not have approved the
had some interest in the land prior to 1957,
700
383
supposed Sale (Exh. C-2) for the simple

reason that a Deed of Sale or Assignment of
Rights cannot repeal and/or adversely affect
a Proclamation.
With respect to the contract of June 26,
1975 (Exh. C-8), we have already discussed
on it earlier. The Court believes that its
findings and conclusions with respect to said
contract applies with greater force in
disposing of the argument of MARSMAN as
to its right under the Philippine Bill of 1902.
Moreover, as the Court has pointed out,
the approval of the Contract of Sale with
Assignment of Rights of November 23, 1973
(Exh. C-2) by the then Assistant Executive
Secretary, Mr. Ronaldo B. Zamora, is a
forgery and no right could spring therefrom,
no obligations were created as if no contract
was executed by the parties. The contract on
the other hand, the contract of June 26,
1975 (Exh. C-8) is subject to the right of the
government to withdraw at anytime from
the assignee the use of surface rights in the

land sub701
VOL. 108, OCTOBER 30, 1981
ject matter of said agreement. This was

withdrawn by P.D. 837 when it vested in
NASSCO absolute ownership of the land
covered by it and authorized NASSCO to
sell or dispose of the land either by public
bidding or by negotiation, as NASSCO did
with the sale thereof to SMELTERS on
December 29, 1975. (Pp. 742-743, Record,
italics Ours.)
We cannot take the above conclusions

of the trial court lightly. True it is that
the matter of whether or not the
signature of Secretary Zamora was a
forgery or not and whether or not there
was in fact an approval by Secretary
Reyes of the 1975 document may be
deemed as involving weighing of the
respective evidence of the parties, but
384
aside from Our view expressed in Our

decision as well as elsewhere in this
resolution that, at any rate, if indeed
there
were
such
approvals
by
Secretaries Zamora and Reyes, the
transactions purportedly sanctioned by
them are in law ultra vires, Our own
appraisal of the evidence on these
factual matters is that the same
preponderates in favor of respondents
position in regard thereto:
In the light of these considerations,
and after giving due attention and
studying the arguments of the parties
in the pleadings aforementioned, the
Court resolved to DENY petitioners
motion for reconsideration on the
following grounds inter alia:
a. That this Court took into account
Appendix A of respondent SMELTERS
brief reading verbatim as follows:
DEED OF ABSOLUTE SALE
KNOW ALL MEN BY THESE PRESENTS:

That the SAN MAURICIO MINING
COMPANY, a corporation duly organized
and existing under and by virtue of the laws
of the Philippines, with main office at Anda
and Sta. Lucia Streets, Intramuros, Manila,
is the owner of Twenty (20) mining claims
located on those certain Twenty (20) parcels
of land with an area of One Hundred FortyFour Hectares and Sixty-Two (144.62), more
or less, situated at the Municipality of Jose
Panganiban,
Camarines
Norte,
the
respective descriptions and boundaries of
which appear in Annex A hereto attached
and made an integral part of this
instrument;
702
702

That the SAN MAURICIO MINING

COMPANY is likewise the owner of all the
improvements erected and existing on those
385
parcels of land wherein the mining claims

above-mentioned
are
found,
said
improvements being more particularly
itemized and described in Annex B hereto
attached and made an integral part of this
instrument;
That the mining claims of the SAN
MAURICIO MINING COMPANY located on
those parcels of land described in Annex A
hereof, as well as the improvements erected
and existing thereon itemized and described
in Annex B of this instrument are, among
others,
mortgaged
to
the
REHABILITATION
FINANCE
CORPORATION to secure the payment of a
principal obligation amounting to ONE
MILLION FIVE HUNDRED THOUSAND
PESOS
(P1,500,000.00),
Philippine
Currency, and the performance of other
obligations under the terms and conditions
specified in said Deed of Mortgage executed
by
the
SAN
MAURICIO
MINING
COMPANY
in
favor
of
the
REHABILITATION
FINANCE
CORPORATION on August 10, 1951, under
faith of Notary Public Felipe Cuaderno, Jr.
of Manila and entered as Doc. No. 164; Page
No. 47; Book No. XIII, Series of 1951, of said
officers notarial register;
That for and in consideration of the
amount of TWO HUNDRED THOUSAND
PESOS (P200,000.00), Philippine Currency,
to be paid by the NATIONAL SHIPYARDS
AND STEEL CORPORATION, a corporation
organized and existing under and by virtue
of the laws of the Philippines, with office at
Engineer Island, Port Area, Manila, the
SAN MAURICIO MINING COMPANY,
convey unto the NATIONAL SHIPYARDS
AND STEEL CORPORATION, any and all
of its rights, participations, equities and
interests in and to those twenty (20) mining
claims located on the parcels of land
itemized and described in Annex A of this
386
instrument, as well as to all those

improvements erected and existing thereon
more specifically itemized and described in
Annex B hereof;
It is a specific condition of this
instrument that the consideration of TWO
HUNDRED
THOUSAND
PESOS
(P200,000.00), Philippine Currency, will be
paid to the REHABILITATION FINANCE
CORPORATION against a corresponding
deduction ot an equivalent amount from the
indebtedness of the SAN MAURICIO
MINING
COMPANY
to
the
REHABILITATION
FINANCE
CORPORATION which is secured by the
Deed of Mortgage above recited.
It is further a condition of this
instrument that upon the payment to the
REHABILITATION
FINANCE
CORPORATION of
703
VOL. 108, OCTOBER 30, 1981
the
amount
of
TWO
HUNDRED
THOUSAND PESOS (P200,000.00), the
REHABILITATION
FINANCE
CORPORATION will release the mining
claims located on those parcels of land
described in Annex A as well as the
improvements erected and existing thereon
itemized and described in Annex B hereof,
from the mortgage liability.
The
SAN
MAURICIO
MINING
COMPANY shall forthwith, after such
payment by the NATIONAL SHIPYARDS
AND STEEL CORPORATION and release
by the REHABILITATION FINANCE
CORPORATION, waive unto and in favor of
the NATIONAL SHIPYARDS AND STEEL
CORPORATION any and all of its rights,
title and interests in and to those Twenty
(20) mining claims located on the parcels of
land described in Annex A as well as those
buildings and improvements recited in
703
Annex B hereof.
387
IN TRUTH WHEREOF, A. L. Velilla and

F. H. Burgess, Director and Secretary and
Treasurer, respectively, of the SAN
MAURICIO MINING COMPANY, duly
authorized to represent said company for
this purpose, have hereunto signed this
instrument on this 19th day of November,
1957, at Manila, Philippines.
SAN MAURICIO MINING COMPANY
(VENDOR)
By:
(SIGNED)
A. L. VELILLA
Director and Secretary
F. H. BURGES
Treasurer
SIGNED IN THE PRESENCE OF:
(SGD.) ILLEGIBLE
(SGD.) ILLEGIBLE
ACKNOWLEDGMENT
REPUBLIC OF THE PHILIPPINES) S.S.

CITY OF MANILA)
704
704

Before me, a notary public in and for the

City of Manila, personally appeared on this
19th day of November, 1957, A. L. Velilla
with Residence Certificate No. A-0113642,
issued at Manila on January 18, 1957, and
F. H. Burgess with Residence Certificate No.
A-0188950, issued at Manila on January 22,
1957, in their capacities as Director and
Secretary and Treasurer, respectively, of
San Mauricio Mining Company, the vendor
herein, to me known and known to me to be
the same persons who executed the
foregoing Deed of Absolute Sale and who
acknowledged to me that they did so as their
free and voluntary act and deed as well as
the free and voluntary act and deed of the
388
corporation they represent they being duly

authorized so to do for the uses and
purposes therein mentioned.
WITNESS my hand and the official seal
on the date and at the place first abovementioned.
(SGD.) MELCHOR R. FLORES
Notary Public
Until December 31, 1958
cannot constitute a denial neither of

due process nor of an opportunity on
the part of petitioners to be heard as to
the true import thereof.
(1) The document in question was
petitioners main actionable document
to bolster their defense that therein or
together therewith there was a
collateral agreement that NASSCO
would resell surface rights to them.
Accordingly, the bringing out of the
said document by any party at any
later stage of the proceedings could not
have caught petitioners by surprise.

Indeed, under the rules, petitioners
should have attached the same to their
answer. (Section 7, Rule 8) Instead, in
an allegation which, to put it mildly,
could mislead any court, in paragraph
XXVI11 of their answer they alleged, in
relation to the deed of November 19,
1957 in question, the following: That
on November 19, 1957, defendant SAN
MAURICIO
MINING
COMPANY
executed in favor of NASSCO a Deed of
Absolute Sale of the surface rights over
144.62 hectares of land covering its
twenty mineral claims in Jose
Panganiban,
Camarines
Norte,
together with all the improvements
thereon, subject to a collateral
understanding between them to the
effect that when NASSCO stops the
operation of the smelting plant thereon,
or, abandons the site,
389
705
VOL. 108, OCTOBER 30, 1981
SAN MAURICIO would have the first

option to reacquire from NASSCO the
surface rights over its said mineral
claims and all the improvements
thereon. (Italics Ours)
thereby referring very distinctly and
definitely to the object of the
transaction as only surface rights,
when the naked truth is that the text of
the agreement, as can be read above
does not even mention surface rights
anywhere within its four corners.
If, as petitioners now contend, they
could have shown at the trial that the
said document did not express the true
intent and agreement of the parties
they should have made such allegation
then, were they really candid with the
court. Under the parol evidence rule,
such allegation of failure of a document
to express the true intent of the parties

705
must be alleged
in the pleadings as an
indispensable
predicate
for
the
presentation of any evidence to such
effect. And it is not sufficient excuse for
the omission of petitioners to make
such allegation in their answer that in
its own complaint Smelters premised
its causes of action on the deeds of
November 23, 1973 (Exh. C-2) and June
26, 1975 (Exh. C-8) therein referred to,
for evidently, as We understand
respondents theory in its complaint,
the reference to said later documents
was made only as premise in order to
attack their intrinsic legal import in
the light of Proclamation 500 and
Presidential
Decree
837,
and,
alternatively, albeit hypothetically, to
invoke the right of the government
therein to withdraw what had been
390
reconveyed to petitioners by NASSCO

thereunder.
Certainly, the essence of denial of due
process cannot contemplate a situation
wherein the party who has knowledge
of and holds a document that would
bring out the truth as to a given
situation withholds such document,
whether as a matter of forensic
strategy or bad faith. Due process is no
more than the indispensability of
fairness and opportunity to be heard.
Understandably then, it cannot be
pretended that there has been denial
thereof in a situation where precisely,
as a matter of candidness and honesty
to the court, the party claiming to be
aggrieved is the one who for tactical
reasons or otherwise is the one guilty of
not disclosing to the court the vital
document that contains the most
conclusive evidence
matter in dispute.
regarding
the
706
706

1. (2)As held in Our decision, it is to

Us, at most of only secondary
significance to dwell on the issue
of whether or not the said 1973
and
1975
documents
were
approved by the Office of the
President, albeit Our appraisal of
the evidence, with due respect to
the arguments of distinguished
counsel
of
petitioners,
that
Secretary
Ronaldo
Zamoras
signature is a forgery and the
alleged
approval
supposedly
signed by Secretary Roberto Reyes
has not been satisfactorily proven.
And truth to tell, We are in the
dark as to how those latter
391
documents came to mention

surface
rights.
The
only
explanation We could gather from
the records, and in the absence of
direct evidence on the part of
petitioners
that
the
1957
document did not intent to mean
what it stays, is that the
government officials who took part
in the preparation of the 1973 and
1975 documents invoked by
petitioners acted on the basis of an
erroneous assumption, which error
cannot in law bind the state on a
matter adversely affecting the
proprietary
rights
of
the
government.
2. (3)To Our mind, the contention of
petitioners counsel that the
subsequent acts of NASSCO prove
the failure of the 1957 document to
express the true intent of the
parties cannot be better supported

in a new trial, since under the
provisions of Proclamation 500,
NASSCO
was
a
mere
administrator of the properties in
question and any actuation thereof
bartering away the rights of the
state under the clear terms of the
1957 document cannot be but ultra
vires, if not erroneous, hence not
binding on the government and
people of the Philippines.
3. (4)Indeed, it may be noted that
seemingly, Smelters position in
the latter stages of the proceedings
appear rather than variant from
the allegations in its complaint,
but We are not told and We have
not found in the record any
indication that such change or
alteration, if there was in essence
any, of Smelters fundamental
392
causes of action, was ever objected

to by petitioners, so much so that
when, quite unnecessarily (from
the point of view of Section 5 of
Rule 10 providing that failure to
so amend does not affect the result
of the trial of these issues),
respondent filed a motion to
amend its complaint in order to
make a portion thereof conform
with the
707
VOL. 108, OCTOBER 30, 1981
1. evidence it has unopposedly

offered, no wonder said motion for
such amendment was allowed.
2. (5)As to the prayer that these
cases be referred to the Court en
banc on the ground that a question
of unconstitutionality is involved,
it is quite clear, as We have
already explained, that the factual

premises for the attack on
constitutional grounds has not
been established by petitioners. In
other words, Our conclusions of
fact that the properties in
question, including the mines,
were acquired by NASSCO on
November 19, 1957 and was never
reacquired validly by petitioners
leads necessarily to the conclusion
that P.D. 837 does not deprive the
petitioners
of any property at all.
707
In other words, the premise for the
issue of whether or not P.D. 837 is
unconstitutional to arise has not
been established.
The long and short of the merits of
these cases is that petitioners would
want Us to hold, without complying
with the prerequisites of the rule on
pleadings on the point, and without
393
convincing evidence before Us or any

that they could possibly present in a
new trial, that Presidential Decree No.
837 deprives them of property without
due process of law. Indeed, there would
have been such deprivation, if from the
evidence on record it appeared
convincingly that the properties in
dispute were still owned by petitioners
when P.D. 837 was issued. But as We
have found and explained above, such
is not the fact. By the Deed of Absolute
Sale of November 19, 1957, petitioners
sold their mining rights to NASSCO.
Petitioners omitted to allege and prove
at the trial that said document did not
mean what it says. And now, on the
basis of subsequent actuations of
officials which We hold to be ultra
vires,petitioners
claim
the
said
properties were reconveyed to them.
1
Verily, petitioners have the right to

contend and argue that their evidence
_______________
1
A careful reading of petitioners brief and
motion
for
reconsideration
and
rejoinder
indicates that they rely mostly on documents

already in evidence and which We say are ultra
vires, hence no amount of supposed admissions
of Smelters or Nassco in regard thereto can in
law improve their invalidity and inefficacy, the
object or subject matter in issue herein being
portions of the public domain.
708
708

proves their position, but We reject any

attempt to impose upon this Court a
theory that is plainly wanting in basis
under the rules of pleading and
evidence. The resort to the basic
principle of right to be heard and denial
of due process, as We have already
394
explained, lacks basis. As We see it,

petitioners are now trying desperately
to make it appear that legally the
production of the Deed of Absolute Sale
of November 19, 1957 which reveals
what really was acquired by NASSCO
thereunder was only surface rights was
incumbent upon Smelters. We cannot
agree. Without necessarily accusing
petitioners of bad faith, it is to Our
mind
indisputable
that
even
disregarding the rule on actionable
documents, if only as a matter of fair
play and placing all cards on the table
without any hidden ace, petitioners
should have revealed to the trial court
said document by properly attaching or
copying the same in their answer, with
the appropriate allegation, if such is
indeed what happened, that the same
failed to express the real intent of the
parties, and thereafter such allegation
by competent evidence. It is too late in

the day now to correct that omission by
beclouding the issue with an invocation
of denial of an opportunity to be heard,
which, to be sure, they were the ones
who refrained to avail of such
opportunity to themselves for reasons
of their own.
Premises considered, the subject
motion
for
reconsideration
of
petitioners is hereby DENIED for lack
of merit, and if the Court has taken
pains in this resolution to once more
discuss the same issues already raised
before Our decision was rendered, it is
only to place said decision in clearer
light and to set aright, if possible,
petitioners perspectives in regard
thereto.
This denial is FINAL.
Concepcion, Jr., Fernandez, Abad
Santos and De Castro, JJ., concur.
395
Mr. Justice Ramon C. Aquino, did

not take part.
Mr.
Justice
Ramon
C.
Fernandez, was designated to sit in the
Second Division.
709
VOL. 108, OCTOBER 30, 1981
Motion for Reconsideration denied.

Notes.Grounds of motion for
reconsideration are different from
grounds of motion for new trial. (Gapoy
vs. Adil, 81 SCRA 739).
The mere citation of additional
authorities by the petitioner in his last
motion for reconsideration reiterating
his thricerejected identical arguments
as to the sufficiency of his amended
complaints did not salvage the said
motion from the proper application
thereto of the pro-forma doctrine.
(Luzon Brokerage Co., Inc. vs. Maritime
Building Co., Inc., 86 SCRA 305).
A motion for reconsideration in

arbitrated cases should point out why a
certain part of the decision is contrary
to law or evidence. (Santiago vs.
Gonzales, 79 SCRA 494).
Where motion for reconsideration
709
fails to point
out specifically the
findings or conclusions of the judgment
not supported by evidence or contrary
to law, motion is considered pro-forma.
(Magallanes vs. Kayanan, 69 SCRA 28).
A motion for reconsideration which
does not make out a new matter
sufficiently persuasive to induce
modification of judgment will be
denied. (Philippine Commercial and
Industrial Bank vs. Escolin, 67 SCRA
202).
A written statement is inadmissible
where the person who made the same
was not produced and the records on
which it was based were not presented
396
in evidence. (Cia Maritima vs. Allied

Free Workers Union, 79 SCRA 24).
The Forestry Map cannot be relied
upon for the purpose of determining the
true boundary line between two
forestry concessions where the same
conflicts with the description contained
in the licenses issued to the
concessionairies concerned. (Lianga
Lumber Co. vs. Lianga Timber Co., 76
SCRA 197).
An affidavit executed by the vendors
on April 1, 1960 that they repurchased
the property they sold on April 30, 1955
is self-serving in the absence of the
deed of repurchase. (Castillo vs.
Castillo, 95 SCRA 40).
An order of the trial court
establishing receivership over the
property in question and prohibiting
both parties from enter-
People vs. Centeno
ing the same until the issue of

ownership has been divided is valid to
preserve peace and order and protect
the receiver. No violation of P.D. 605
was committed by the trial court.
(Lambiquit vs. Morave, 85 SCRA 305).
o0o
Copyrig
710
710

397
No. L-18077. September 29, 1962.

RODRIGO ENRIQUEZ, ET AL.,
plaintiffs-appellants, vs.SOCORRO A.
RAMOS, defendant-appellee.
Gelacio L. Dimaano for plaintiffsappellants.

Vicente K. Aranda for defendantappellee.
Evidence; Rule when terms of agreement

have been reduced to writing; Parole
evidence permissible if there is allegation in
the pleadings that agreement does not
express true intent.Section 22, Rule 123 of
the Rules of Court, which provides that
when the terms of an agreement have been
reduced to writing it is to be considered as
containing all that has been agreed upon,
and that no evidence other than the terms
thereof can be admitted between the parties,
holds true only if there is no allegation in
the pleadings that the agreement does not
express the true intent of the parties.
BAUTISTA ANGELO, J.:
220
220
This is an action for foreclosure of a

real estate mortgage.
It is alleged that on November 24,
1958
defendant
purchased
from
plaintiffs 20 parcels of land located in
Quezon City and covered by transfer
certificates of title for the amount of
P235,056.00 of which only the amount
of P35,056.00 was paid on the date of
sale, the balance of P200,000.00 being
payable within two years from the date
of sale, with 6% interest per annum
during the first year, and the
remainder to draw 12% interest per
annum if paid thereafter, provided that
Enriquez vs. Ramos
at least P100,000.00 should be paid
398
during the first year, otherwise the

whole unpaid balance would become
immediately demandable; that to
secure the payment of the balance of
P200,000.00 defendant executed a
mortgage in favor of plaintiffs upon the
20 parcels of land sold and on a half
interest over a parcel of land in
Bulacan which was embodied in the
same deed of sale; that said deed of sale
with mortgage was registered in the
Offices of the Registers of Deeds of
Quezon City and Pampanga; and that
as defendant broke certain stipulations
contained in said deed of sale with
mortgage, plaintiffs instituted the
present foreclosure proceedings.
Defendant set up as affirmative
defense that the contract mentioned in
the complaint does not express the true
agreement of the parties because
certain important conditions agreed
upon were not included therein by the

counsel who prepared the contract; that
the stipulation that was omitted from
the contract was the promise assumed
by plaintiffs that they would construct
roads in the lands which were to be
subdivided for sale on or before
January, 1959; that said condition was
not placed in the contract because,
according to plaintiffs counsel, it was a
superfluity, inasmuch as there is an
ordinance in Quezon City which
requires the construction of roads in a
subdivision before lots therein could be
sold; and that, upon the suggestion of
plaintiffs counsel, their promise
221
VOL. 6, SEPTEMBER 29, 1962
Enriquez vs. Ramos
to construct the roads was not included

in the contract because the ordinance
was deemed part of the contract.
Defendant further claims that the true
399
purchase price of the sale was not

P235,056.00 but only P185,000.00, the
difference of P50,000.00 being the
voluntary contribution of defendant to
the cost of the construction of the roads
which plaintiffs assumed to do as
abovementioned.
After the reception of the evidence,
the trial court sustained the contention
of defendant and dismissed the
complaint on the ground that the action
of plaintiffs was premature. It found
that plaintiffs really assumed the
construction of the roads as a condition
precedent to the fulfillment of the
obligation stipulated in the contract on
the part of defendant, and since the
same has not been undertaken,
plaintiffs have no cause of action. In
due time, plaintiffs have appealed.
The evidence of record discloses the
following facts: On November 6, 1966,
plaintiffs entered into a contract of

conditional sale with one Pedro del
Rosario covering a parcel of land in
Quezon City described in Transfer
Certificate of Title No. 11483 which has
a total area of 77,772 square meters in
consideration of a purchase price of
P10.00 per square meter. To guarantee
the performance of the conditions
stipulated therein a performance bond
in the amount of P100,000.00 was
executed by Pedro del Rosario. Del
Rosario was given possession of the
land for development as a subdivision
at his expense. He undertook to pay for
the subdivision survey, the construction
of roads, the installation of light and
water, and the income tax plaintiffs
may be required to pay arising from the
transaction, in consideration of which
Del Rosario was allowed to buy the
property for P600,000.00 within a
400
period of two years from November 6,

1956 with the condition that, upon his
failure to pay said price when due, all
the improvements introduced by him
would automatically become part of the
property without any right on his part
to reimbursement and the conditional
sale would be rescinded.
Unable to pay the consideration of
P600,000.00 as agreed upon, and in
order to avoid court litigation, plaintiffs
and Del Rosario, together with
defendant Socorro A. Ramos.
herein involved at the rate of P16.00

per square meter on condition that she
will assume the payment of P50,000.00
as her share in the construction of
roads and other improvements required
in the subdivision. This situation led to
the execution of the contract of sale
Exhibit A subject of the present
foreclosure proceedings.
The main issues posed in this appeal
are: (1) Is the purchase price of the 20
lots bought by defendant from plaintiffs
the sum of P185,000.00, as claimed by
defendant, or P235,056.00, as claimed
222
222
by plaintiffs?; and (2) Was an oral
Enriquez vs. Ramos
agreement, coetaneous to the execution
who turned out to be a partner of the
of the contract of sale, entered into
latter, entered into a contract of
between the parties to the effect that
rescission on November 24, 1958. To
plaintiffs
would
undertake
the
release the performance bond and to
construction of the roads on the lots
enable defendant to pay some of the
sold before defendant could be required
lots for her own purposes, plaintiffs
to comply with her financial obligation?
allowed defendant to buy 20 of the lots
401
Defendant contends that the contract

of sale Exhibit A does not express the
true agreement of the parties because
certain important conditions agreed
upon were not included therein by
plaintiffs counsel among which is the
promise assumed by plaintiffs that they
would undertake to construct the roads
that may be required in the subdivision
subject of the sale on or before January,
1959; that said condition was not
placed in the contract because
plaintiffs counsel said that it was a
superfluity inasmuch as there was then
in Quezon City an ordinance which
requires the construction of roads in a
subdivision before the lots therein could
be sold; and that, upon the suggestion
of plaintiffs counsel, such commitment
was not included in the contract
because the ordinance aforesaid was
already deemed to be part of the

contract.
Plaintiffs, on the other hand, dispute
the above contention arguing that there
was no such oral agreement or
understanding because all that was
agreed upon between the parties was
already expressed and included in the
contract of sale Exhibit A executed
between the parties, and since
defendant failed to pay the balance of
her obli223
Enriquez vs. Ramos
gation within the period stipulated, the

whole obligation became due and
demandable thus giving plaintiffs the
right to foreclose the mortgage in
accordance with law. After considering
and evaluating the evidence submitted
by both parties, the court a quo found
defendants
contention
well-taken,
402
thereby concluding that the action of

plaintiffs was premature. In reaching
this conclusion; the court a quomade
the following comment:
x x x The Court is of the opinion that the
construction of the roads was a condition
precedent to the enforcement of the terms of
Exhibit A, particularly the foreclosure of
mortgage, for the reason that the
subdivision regulations of Quezon City
requires, as a matter of law, that the sellers
of lands therein to be converted into
subdivision lots must construct the roads in
said subdivision before the lots could be
sold. This requirement must have been
uppermost in the mind of the parties in this
case which led to the execution of the socalled Explanation (Exhibit 3) wherein it is
stated that the sum of P50,000.00 was a
contribution of the herein defendant for the
construction of the roads which the plaintiffs
would undertake in accordance with the
provisions of the City Ordinance of Quezon

City (Exhibit 3). It is to be noted that
Exhibit 3 was executed on November 24,
1958, the very day when Exhibit A was also
executed. Exhibit 3 also proves that the
purchase price is not, as appearing in the
deed of sale with mortgage, Exhibit A,
actually P235,000.00 but only P185,000.00
which would approximately be the price of
the entire area of the land sold at the rate of
P16.00 per square meter.
We find no error in the conclusion

reached by the court a quo for indeed
that is the condition to be expected by a
person who desires to purchase a big
parcel of land for purposes of
subdivision. In a subdivision the main
improvement to be undertaken before it
could be sold to the public is feeder
roads as otherwise it would be
inaccessible and valueless and would
offer no attraction to the buying public.
403
And so it is correct to presume was the

court a quodid, that when the sale in
question was being negotiated the
construction of roads in the prospective
subdivision must have been uppermost
in the mind of defendant for her
purpose in purchasing the property was
to develop it into a subdivision. That
such requirement was uppermost in the
mind of defendant is proven by the
execution by the plaintiffs of the socalled Explana-
Quezon City. It is to be noted that said

document specifically states that the
amount of P50,000.00 should be
deducted from the purchase price of
P235,056.00 appearing in the deed of
sale, and this is a clear indication that
the real purchase price is only
P185,000.00, as claimed by defendant,
which would approximately be the price
of the entire area of the land at the rate
of P16.00 per square meter.
A circumstance which lends cogency
to
defendants
claim
that
the
224
224
commitment of plaintiffs to construct
Enriquez vs. Ramos
the roads was not inserted in the
tion (Exhibit 3) on the very day the
contract because of the assurance made
deed of sale was executed wherein it
by their counsel that it would be a
was stated that the sum of P50,000.00
superfluity is the fact that in Quezon
was advanced by defendant as her
City there was really an ordinance
contribution to the construction of the
which requires the construction of
roads which plaintiffs assumed to
roads in a subdivision before lots
undertake in accordance with the
therein could be sold, and considering
provisions of the City Ordinance of
404
that this assurance came from the very

counsel who prepared the document
who even intimated that the ordinance
was deemed part of the contract,
defendant must have agreed to the
omission relying on the good faith of
plaintiffs and their counsel. At any
rate, the execution of the document
Exhibit 3 clarifies whatever doubt may
have existed with regard to the true
terms of the agreement on the matter.
It is argued that the court a quo erred
in allowing the presentation of parole
evidence
to
prove
that
a
contemporaneous oral agreement was
also reached between the parties
relative to the construction of the roads
for the same is in violation of our rule
which provides that when the terms of
an agreement had been reduced to
writing it is to be considered as
containing all that has been agreed
upon and that no evidence other than

the terms thereof can be admitted
between the parties (Section 22, Rule
123). This rule, however, only holds
true if there is no allegation that the
agreement does not express the true
intent of the parties. If there is and this
claim is put in issue in the pleadings,
the same may be the subject of
225
Enriquez vs. Ramos
parole evidence (Idem.). The fact that

such failure has been put in issue in
this case is patent in the answer
wherein defendant has specifically
pleaded that the contract of sale in
question does not express the true
intent of the parties with regard to the
construction of the roads.
It appearing that plaintiffs have
failed to comply with the condition
precedent relative to the construction of
405
the roads in the subdivision in

question, it follows that their action is
premature as found by the court a
quo. The failure of defendant to pay the
realty and income taxes as agreed
upon, as well as to register the
mortgage with respect to the Bulacan
property, aside from being minor
matters, appear sufficiently explained
in the brief of defendant-appellee.
WHEREFORE, the decision appealed
from is affirmed, with costs against
appellants.
Bengzon,
C.J., Padilla, Labrador, Reyes,
J.B.L.,Paredes, Dizon and Makalintal,
JJ., concur.
Regala, J., did not participate.
Decision affirmed.
Notes.Parole
Evidence
Rule
requires that when the terms of an
agreement have been reduced to
writing, it is to be considered as
containing all such terms, and,
therefore, there can be, between the
parties and their successors in interest,
no evidence of the terms of the
agreement other than the contents of
the writing (Sec. 7, Rule 130, Rules of
Court; Legarda v. Zarate, 36 Phil.
68; De Guzman v. Calma, L-6800, Nov.
29, 1956). Exceptions to the Parole
Evidence Rule are: (1) where a mistake
or imperfection of the writing is put in
issue by the pleadings; (2) where the
writings fail to express the true intent
and agreement of the parties; (3) where
the validity of the agreement is put in
issue by the pleadings; (4) where there
is an intrinsic ambiguity in the writing
(See Sec. 7, Rule 130, Rules of Court).
On reformation of a written contract,
see Articles 1359 and 1361 of the new
Civil Code.
406
G.R. No. 103038. March 31, 1993.

JULIA
ANG
ENG
MARIANO,
petitioner, vs. THE
COURT
OF
APPEALS, JUANITO FAUSTINO and
TERESITA FAUSTINO, respondents.
*
Evidence; Parole evidence rule admits of

exceptions.As can be clearly gleaned from
the foregoing, the rule making a writing the
exclusive evidence of the agreement therein
stated, is not applicable when the validity of
such agreement is the fact in dispute. A
contract may be annulled where the consent
of one of the contracting parties was
procured by mistake, fraud, intimidation,
violence or undue influence (Art. 1330, New
Civil Code). In fact, as early as 1919 in the
case of Bough v. Cantiveros, 40 Phil. 209,
this Court laid down the rule that where the
validity of the agreement is the issue, parol
evidence may be introduced to establish
illegality or fraud.
Same; Deed of sale actually an equitable

mortgage.Considering these unanswered
questions in relation to the deed of sale and
mortgage proviso above quoted, We find that
the appellate court's ratiocinationon why
this deed of sale is, in reality, a sham
transactionmore in accord with business
common sense and ordinary experience of
mankind.
_______________
*
SECOND DIVISION.
717
VOL. 220, MARCH 31, 1993
Mariano vs. Court of Appeals
Same; Same.The
fallacy
of
the
argument is readily apparent. The first of
the two mortgages was executed on October
28, 1986, the second, on January 15, 1987.
The deed of sale was excecuted on
September 29, 1987. Both mortgage
accounts therefore were not yet due on the
date of the deed of sale, consequently the
407
motivation for the sale stated by the

appellee is not true.
PETITION for review of the decision of

the Court of Appeals.
the Court.
Alfredo M. Lazaro for petitioner.
Ramon
V.
Sison for
private
respondents.
NOCON, J.:
Petitioner, Julia Ang Eng Mariano,
claims that the appellate court erred in
declaring the Deed of Sale dated
September 29, 1987 executed in her
favor by the private respondents, the
spouses Faustino, as null and void and
TCT No. 156493 in her name cancelled.
Emphasizing that the trial court's
findings of fact carry more weight on
appeal than those of public respondent,
petitioner asks Us to reverse the

questioned
decision and
resolution. Private respondents claim,
however, that they were tricked by
petitioner into signing over their
property to her. A question arises: Is
parol evidence admissible to resolve the
controversy between the parties? Yes, it
is admissible.
Petitioner claims that the private
respondents approached her on October
28,1986 for a loan of P250,000.00 on
the security of a mortgage on their lot
with an area of 2,035 square meters
located at Deparo, Kalookan City and
covered by TCT No. 129613 in their
names. On January 15, 1987, they
secured another loan of P250,000.00 on
the basis of the same security.
Forseeing their inability to pay this
when they become due, private
1
408
respondents sold the same parcel of

land mortgaged to petitioner for an
On
the
other
hand,
private
respondents' story is that all they
wanted was to transform their small
_______________
piece of land, which they had inherited
from their parents, into a subdivision.
"Faustino vs. Mariano," CA-G.R. CV No.
They looked for financiers who would
25535,
May
15,
1991,
Camilon, J.,
be able to lend them money for their
ponente, Magsino and Luna, JJ., concurring;
project and petitioner expressed her
Rollo, pp. 43-47.
desire to help them.
Ibid., November 25, 1991, Camilon J.,
Being unschooled farmers, and
ponente, Magsino and Luna,JJ., concurring:
relying completely on the trust and
Rollo, p. 48.
confidence they have on petitioner, they
718
718
signed the prepared mortgage forms
that petitioner told them to sign. They
additional P320,550.00 on September
first mortgaged their land on October
29, 1987. Thus, a deed of sale was
28, 1986 for P250,000.00 with the
drawn up on said date and a new TCT
condition that they were to construct a
No. 156493 issued in petitioner's name.
house on said lot so that they would be
However, the private respondents
able to secure another P250,000.00
refused to turn over possession of the
with the house and lot as security. They
land to her and instead sued her for
received, however, only P150,000.00 for
annulment of deed of sale and
the first mortgage. After the house was
damages.
1
409
constructed, they were made to sign

another
document
for
another
P250,000.00 on January 15, 1987 for
which they received again only P
150,000.00. Thereafter, petitioner told
them that she could easily secure a
bank loan of P1,000,000.00 for their
project but they had to sign over their
property to her as the bank would
require that the property be in her
name for the loan to be processed.
Thus, trusting her completely, they
signed on September 29, 1987 a
prepared deed of sale which petitioner
handed over to them for their
signature. When they discovered that
there was no loan and that they were
being asked to vacate their land, they
took petitioner to court.
Private respondents sued petitioner
for annulment of the deed of sale and
the cancellation of the Transfer
Certificate of Title in her name. The

trial court, however, dismissed their
complaint relying on the validity of the
deed of sale as the best evidence of the
transaction between the parties.
On appeal, the appellate court saw
otherwise and ruled as follows:
"WHEREFORE, the appealed decision is
reversed and set aside. The deed of sale
dated September 29, 1987 is declared null
and void and TCT No. 156493 in the name of
Julia Ang Eng Mariano is cancelled.
719
VOL. 220, MARCH 31, 1993
The Register of Deeds is ordered to issue a

new one in lieu thereof in the name of
Juanito Faustino, married to Teresita R.
Faustino. Further, the appellee is ordered to
pay attorneys fees of P10,000.00."
3
Petitioner now comes to Us raising as

errors of the appellate court the
following:
410
"I
"X
X
X
IN
ANNULLING
THE
QUESTIONED
DEED
CONSIDERING
THAT THERE IS NEED FOR A MORE
CONVINCING PROOF, GREATER THAN
PREPONDERANCE OF EVIDENCE TO
ANNUL AND SET ASIDE THE EFFICACY
OF THE DULY EXECUTED AND
ATTESTED PUBLIC DOCUMENTS; and
parties and "drawn up with all the

solemnities prescribed by law" and
properly notarized, a sham transaction
as claimed by the private respondents?
A similar question cropped up
in Pagsuyuin vs. Intermediate Appellate
Court where this Court ruled as
follows:
5
"The rule on parol evidence recognizes the

following exceptions:
"II
1. (a)where a mistake or imperfection of

the writing, or its failure to express the
true intent and agreement of the
parties, or the validity of the
agreement is put in issue by the
pleadings;
2. (b)xxx xxx (Sec. 7, Rule 130).
"X X X IN ARRIVING AT FACTUAL

CONCLUSIONS BASED ON FALLACIOUS
PREMISES WHICH ARE NOT BORNE BY
THE RECORDS OF THE CASE."
4
"I
Behind this flowery legalese is the
simple question adverted to at the start
of this decision: can parol evidence be
admitted to show that the Deed of Sale,
which
petitioner
claims
truly
represented the contract between the
_______________
3
Rollo, pp. 45-47.
Rollo, p. 138.
411
tainted with fraud as to place it beyond the

6 193 SCRA 547.
scrutiny of extrinsic evidence. This evidence
overcomes the known presumption fraus est
720
720
odiosa et non praesumenda (Yturralde v.
Vagilidad, 28 SCRA 393[1969])."
As can be clearly gleaned from the foregoing,
In the case at bar, petitioner relies
the rule making a writing the exclusive
heavily on the notarial certification of
evidence of the agreement therein stated, is
the Deed of Absolute Sale by Notary
not applicable when the validity of such
Public Alfonso B. Capacillo on
agreement is the fact in dispute. A contract
September 24, 1987 that said document
may be annulled where the consent of one of
was executed by the parties named
the contracting parties was procured by
therein in the presence of witnesses
mistake, fraud, intimidation, violence or
Juanito Chan and Gaspar Dandan.
undue influence (Art. 1330, New Civil Code).
On
the
other
hand,
private
In fact, as early as 1919 in the case of Bough
respondents' evidence clearly shows
v. Cantiveros, 40 Phil. 209, this Court laid
that all they wanted was to contact a
down the rule that where the validity of the
financier who would lend them money
agreement is the issue, parol evidence may
to finance the transformation of their
be introduced to establish illegality or fraud.
inherited agricultural land in Deparo,
xxx
xxx
xxx
Caloocan City into a subdivision. In the
"While the writing itself may have been
meantime they had already spent
accompanied
by
the
most
solemn
P6,000.00 for
the
subdivision
formalities, no instrument is so sacred when
5
Petitioner's Memorandum, p. 6; Rollo, p. 139.
10
11
12
412
survey. A certain person approached

them and told them that a certain Julia
Ang could help them in the
development of their subdivision. After
private respondent
13
14
Ibid., p.
5;
Ibid., at pp. 552-554.
TSN, January 4,1990, p. 4, petitioner Julia
Ang Eng Mariano on direct examination.

9
10
Exhibit "3", Original Records, pp. 26-27.

TSN, February 27, 1989, p. 5, private
respondent
Juanito
Faustino
on
direct
examination.
11
Juanito
Faustino
on
cross
examination.
12
Comment, p. 5; Rollo, p. 59.
13
TSN, February 27, 1989, p. 14; private
respondent
examination.
Juanito
721
VOL. 220, MARCH 31, 1993
Juanito Faustino was introduced to

Julia Ang, the latter promised him that
he will be given a loan of P250,000.00
to start the development of his
subdivision. After
the
private
respondents signed the mortgage
document for P250,000.00, petitioner
gave them only P150,000.00 saying
that the balance covered interest and
other expenses. Private respondents,
however, had to construct a house on
the property as required by petitioner
to be able to get additional loans for the
development
of
their
subdivision. Thereafter, an additional
mortgage document was prepared for
P250,000.00 but, as before they were
only given P150,000.00.
15
16
TSN, February 27, 1989, p. 20, private
respondent
respondent
Faustino on direct ex
14
_______________
private
Juanito
Faustino
on
direct
17
18
413
When pressed for the P1,000,000.00

loan that petitioner promised them for
the development of their proposed
subdivision, petitioner allegedly told
private respondents that the bank
required that the title to their house
and lot be transferred to her name as
she is known to the bank as a
businesswoman of repute with capital
which the bank could run after in case
the mortgage loan would not be
paid. The
private
respondents,
therefore, signed the Deed of Sale over
their property in favor of petitioner.
Private respondents' version was, in
fact, corroborated by petitioner when
she testified on cross-examination that
the real intention of the parties in the
execution of the deed of sale was to
secure a loan of P1,000,000.00 on the
property in her name and that
whatever private respondents owed her
19
20
would be deducted from the proceeds of

the loan with the private respondents
assuming the payment thereof. Her
own words make out a case amination.
21
_______________
15
Ibid., pp. 5-6; private respondent Juanito
Faustino on direct examination.

16
respondent
Juanito
Faustino
on
cross
examination.
17
TSN, January 4, 1990, p. 8; petitioner Julia
Ang Eng Mariano on cross-examination.

18
Op. cit.
19
respondent
Juanito
Faustino
on
cross-
examination.
20
Ibid.
21
"Q. Is it not a fact that after the second
mortgage, you were trying to collect interest

from the Faustinos and they could not pay the
722
414
722

"A. Yes, sir.
"Q. But you were not able to get that loan?
"A. Yes, sir.
of fraud which she practised upon the
"Q. Now, your understanding then was that when you will be able to ge
owed by them to you will be deducted from that loan and they will a
"A. Yes, sir."
Moreover, petitioner could have easily
(TSN, January 4, 1990, pp. 10-11; petitioner Julia Ang Eng Marian
examination; Italics supplied)
rebutted
and
belied
private
respondents' negative averment in the

trial court. All she had to do was to
present the Notary Public who
notarized the Deed of Sale and the two
witnesses to the deed. Upon their word
that private respondents had signed
the deed of sale in their presence and
had received the consideration of
P320,550.00,
22
23
_______________
interest that is why you convinced them to
make a loan for which you told them you will
help them in getting that loan?
22
"x
x when a
negative
is
averred
in
pleading, or plaintiffs case depends upon the

establishment of a negative and the means of
proving the fact are equally within the control of
each party, then the burden of proof is upon the
party averring the negative; but when the
opposite party must, from the nature of the case,
himself be in possession of full and plenary proof
to disprove the negative proof, then it is
manifestly just and reasonable that the party
which is in possession of the proof should be
required to adduce it; or, upon his failure to do
so, we must presume it does not exist which of
itself established a negative. x x x" (United
"A. Yes, sir. At that time the economy of our country is down so I was unable
loan
Statesto secure
vs. aDenver
& Rio Grande Railroad
from the bank.
"Q. In your desire to help them in getting a loan, you showed them yourCompany,
capacity as a191 U.S. 84; 48 L. Ed 106, at US 91,
businesswoman so that you can immediately get a loan for them for92;
P1 Million
L. Ed.Pesos,
109; you
italics supplied)
showed them your business name, your auditor's certificate and your trucking business?
415
23
Almendra vs. IAC, 204 SCRA 142, cited by
petitioner in her Memorandum on page 9

(Rollo, p. 142) is very applicable in the case at
bar, to wit:
"While petitioners' contention is basically
correct, we agree with
723
VOL. 220, MARCH 31, 1993
private respondents would have had to

kiss their cause of action goodbye.
No such testimony was given by the
petitioner in the trial court and her
corroborating testimony cited in the
footnote shows whythere is no such
loan, the deed of sale was a scheme to
get
the
property
from
private
respondents.
II
The first mortgage document was
executed on October 28, 1986 while the
second was executed on January 15,
1987. On both deeds the following
24
25
provision, common to both, is written,

to wit:
"It is of the essence of this contract that if
the mortgagor fails to pay the principal
obligation within One Year (1), then this
mortgage shall be foreclosed and the
abovementioned property shall be sold in
723
accordance with
law; but if the Mortgagor
pays said obligation together with the
interest, then this mortgage shall become
null and void and of no effect."
On the other hand, the Deed of Sale

dated September 29, 1987 simply
stated, as follows:
xxx
That for and in consideration of the sum of
THREE HUN
_______________
the appellate court that there is no valid, legal
and
convincing
reason
for
nullifying
the
questioned deeds of sale. Petitioner had not

416
presented any strong, complete and conclusive
acknowledged and confessed by the VENDOR
proof to override the evidentiary value of the
from the VENDEE, the VENDOR does hereby by
duly notarized deeds of sale. Moreover, the
these presents SELL, CEDE, TRANSFER and
testimony of the lawyer who notarized the deeds
CONVEY in a manner absolute and irrevocable,
of sale that he saw not only Aleja signing and
the property above-described together with all
affixing her thumbmark on the questioned deeds
the improvements built thereon, unto the said
but also Angeles and Aleja counting money
VENDEE, his heirs, assigns and successors.
between them, deserves more credence than the
That the VENDOR hereby warrant(s) his title
self-serving allegations of the petitioners. Such
over the property above-described, with full
testimony is admissible as evidence without
power and authority to dispose of the same, free
further proof of the due execution of the deeds in
from all liens and encumbrances, and that
question and is conclusive as to the truthfulness
henceforth, full ownership and possession shall
of their contents in the absence of clear and
pertain to the VENDEE.
convincing evidence to the contrary." (At p. 148;
In the light of the fact that petitioner is

admittedly a businesswoman of repute,
managing a profitable business, the
following questions come to mind:
italics supplied)
24
Rollo, pp. 36-37.
25
Ibid., pp. 38-39.
724
SUPREME COURT REPORTS ANNOTATED1. 1.Why were the

October 28, 1986
724
DRED
TWENTY
HUNDRED
FIVE
FIFTY
THOUSAND
PESOS
FIVE
(P325,550.00),
Philippine Currency, receipt of which is hereby
encumbrances of
and January 15,
1987 not mentioned in the deed of
sale as pre-existing encumbrances,
although said encumbrances, by
417
way of mortgages, may have been

made in petitioner's favor?
2. 2.Should not the prior mortgage
amounts of P500,000.00 have been
included
together
with
the
additional
cash
price
of
P320,550.00 to make a total
consideration of P820,550.00 with
the added explanation that by the
execution of the deed of sale said
P500,000.00 would have been
considered fully paid, as was
petitioner's contention?
"Were reliance to be placed exclusively on

the deed of sale, there is no doubt that
appellants' protests would have to be
rejected. However, in cases such as this one
where the parties are seriously at odds on
the nature of the transaction between them,
the circumstances, before and after, must be
scrutinized.
"1. Appellee has stated below
Considering
these
unanswered
questions in relation to the deed of sale
and mortgage proviso above quoted, We
find that the appellate court's
ratiocinationon why this deed of sale
is, in reality, a sham transactionmore
in accord with business common sense
and ordinary experience of mankind,
which We quote with approval:
question was twice mortgaged to her to secure
'x x defendant testified that previous to the sale,

the lot in
725
VOL. 220, MARCH 31, 1993
two loans of P250,000.00 each both maturing

within
one
(1)
year. When
their
aggregate
obligation of P500,000.00 matured, plaintiffs

could not pay the same. They thus decided to sell
the land to defendant for an additional amount
of P320,550.00. '(Memorandum, p. 4, Record, p.
86).
418
The argument is repeated, almost verbatim,

in the brief (at p. 16).
"The fallacy of the argument is readily
apparent. The first of the two mortgages
was executed on October 28, 1986, the
second, on January 15, 1987. The deed of
sale was executed on September 29, 1987.
Both mortgage accounts therefore were not
yet due on the date of the deed of sale,
consequently the motivation for the sale
stated by the appellee is not true.
"2. Appellee says in her brief
The consideration of P320,550.00 stated in the
deed of sale is more consistent with the claim of
the appellee that it is in addition to the previous
loans of appellants in the aggregate amount of
P550,000.00' (at pp. 13-14)
In the course of her testimony however,

the appellee said the only consideration
for the deed of sale was the
P320,550.00 'because the P500,000.00
is considered as a mortgage.' (tsn,

January 4, 1990, p. 7)
"3. Appellee herself revealed the true nature
of the deed of sale when she said, on crossexamination, that the intention was merely
to secure a loan of P1M on the property, on
her credit as a businesswoman and that
whatever the appellants owed her would be
deducted from the proceeds, to be paid to
her, the appellants to assume the P1M
mortgage (ibid., pp. 10-11). Additionally, as
stated earlier, the P1M mortgage loan never
materialized.
"Finally, having ostensibly acquired full
ownership of the land on September 29,
1987, appellee has not taken any step to get
possession, although the appellants stay on
the premises. As a matter of fact, her
answer dated November 22, 1988 did not
even interpose any counterclaim on
possession.
419
Decision affirmed.
Notes.There is a presumption that
an instrument sets out the true
agreement of the parties thereto and
that it was executed for valuable
consideration (Gatmaitan vs. Court of
Appeals, 200 SCRA 37).
error in the decision appealed from the
Failure of either party to demand
petition is hereby DISMISSED for lack
performance of the obligation of the
of merit. This is without prejudice to
other for an unreasonable length of
whatever action the petitioner
time renders a contract ineffective
(Villamor us. Court of Appeals, 202
726
726
SCRA 607).
Province of Pangasinan vs. Court of Appeals
"These circumstances taken together lead
to the conclusion espoused by the
appellants, that the deed of sale is a sham
transaction, not representing the true intent
of the parties and that no consideration
passed or was received. x x x.
may take on the actual amount loaned

to private respondents. We AFFIRM
the questioned public respondent's
decision and resolution in toto. Costs
against the petitioner.
SO ORDERED.
Narvasa (C.J.,
Chairman), Padilla, Regalado andCam
pos, Jr., JJ., concur.
o0o
420
G.R. No. 75504. April 2, 1991.

VICENTE
CU,
petitioner, vs. THE
HONORABLE COURT OF APPEALS,
BRAULIO ABAD and CAMARO
PAINT
MANUFACTURING
ENTERPRISES, INC., respondents.
*
Civil Procedure; Motions; The Habaluyas

ruling was given a prospective application by
virtue of the resolution dated May 30, 1986,
rendered in the same case, i.e., the doctrine
will apply only after June 30, 1986.We
need not delve on the first issue raised by
petitioner.
Suffice
it
to
say
that
theHabaluyas decision had been given a
prospective application in the resolution of
May 30, 1986 in the same case meaning that
it would apply only after June 30, 1986 and
therefore, compliance with the said ruling
case had not yet been strictly enforced when
the motions for extension of time herein
questioned were filed. That at least two such
motions were filed a day after the expiration
of the previously extended periods should

not, in the interest of justice, likewise detain
us further in resolving the second issue
raised considering that we find the same to
be meritorious.
Contracts; Evidence; Parol
Evidence;Parol evidence cannot serve the
additional
contemporaneous
conditions
which are not mentioned at all in the writing
unless there has been fraud or mistake.
Thus, while parol evidence is admissible in a
variety of ways to explain the meaning of
written contracts, it cannot serve the
additional
contemporaneous
conditions
which are not mentioned at all in the writing
unless there has been fraud or mistake.
PETITION for certiorari to review the

421

the Court.
De Jesus, Paguio & Manimtim for
petitioner.
Victor
J.
Lee for
private
respondents.
FERNAN, C.J.:
In this petition for review on certiorari,
Vicente Cu seeks the reversal and
setting aside of the resolution dated
September 18,
_______________
*
THIRD DIVISION.
648
648
reconsideration of the decision of May

31, 1984 affirmingin toto the lower
courts decision. In effect, the said
appellate court entered a new decision
dismissing Cus complaint for a sum of
money and accounting.
The records show that Cu did
business under the name of Camaro
Enterprises. He was engaged in the
manufacture and sale of acrylic paints
with the trademark of McGills &
Devices. Said trademark was duly
registered in Cus name under
Trademark Certificate Registration No.
SR-1150 with the Philippine Patent
Office on December 22, 1969.
In anticipation of his projected
migration to Canada, on February 9,
1971, Cu sold his business to Abad
under the following contract.
1

Cu vs. Court of Appeals
1985 and July 30, 1986 of the then

Intermediate Appellate Court granting
the motion filed by respondents Braulio
Abad and Camaro Paint Manufacturing
Enterprises,
Inc.
for
the
CONTRACT OF SALE
422
KNOW ALL MEN BY THESE PRESENTS:

This contract, made and executed at the
City of Manila, Philippines, this 9(th) day of
February, 1971, by and between:
VICENTE CU, Filipino, married, of legal
age, and with residence and postal address
at 100-C Cordillera St., Quezon City,
Philippines, hereinafter referred to as the
VENDOR; and
BRAULIO ABAD, Filipino, married, of
legal age, and with residence and postal
address at 74 San Vicente Street, S.F. del
Monte,
Quezon
City,
Philippines,
hereinafter referred to as the VENDEE,
and by these presents
W I T N E S S E T H:
WHEREAS, the VENDOR is the sole
proprietor of CAMARO ENTERPRISES, a
company engaged in the manufacture of
Acrylic Paints, with office and factory
likewise situated at 100-C Cordillera,

Quezon City;
WHEREAS, the VENDEE has agreed to
purchase all the rights
_______________
1
Exhs. D, D & D-1.
Exh. B.
649
VOL. 195, APRIL 2, 1991
649
and interests over the said firm and the

paints brand McGills, together with all
the furnitures and stocks of CAMARO
ENTERPRISES as of January 15, 1971.
NOW, THEREFORE, for and in
consideration of the sum of ONE
HUNDRED FIFTY THOUSAND PESOS
(P150,000.00), Philippine Currency, due and
payable upon the signing and for which the
corresponding official receipt shall be signed
upon receipt thereof, and the VENDOR
hereby
SELLS,
TRANSFERS
and
423
CONVEYS unto and in favor of the

VENDEE,
his
heirs,
executors,
administrators or assigns, the said rights
and interests mentioned above, with the
following stipulations:
1. 1.That the VENDOR hereby certify
(sic) that there are no creditors holding
claims due or which shall become due,
for, or on account of goods and
supplies, merchandise and materials
which are part of what is being
conveyed, sold and transferred, and
that all the properties hereby conveyed
are free from liens and encumbrances;
PROVIDED, that whatever accounts
receivable and payable, or any tax
obligations made in the name of
CAMARO ENTERPRISES on or before
January 15, 1971, as well as goods
purchased by VENDOR on or after
said date pending receipt by VENDOR
of the total consideration agreed upon,
shall be paid by the VENDEE and/or

belong exclusively to said VENDEE;
2. 2.That this sale carried with it the
condition that the VENDOR is entitled
to ONE PER CENTUM (1%) royalty on
the gross sales of all the paints,
whether it is acrylic lacquer or enamel,
together with its auxiliary lines, such
as primers, thinners or other solvents,
putties, additives and waxes; but not
on the other products in which the
VENDEE is presently engaged or
going to engage in the future;
including silkscreen paint and others;
3. 3.That it is likewise agreed and
covenanted that the VENDEE shall
submit to the VENDOR together with
the yearly royalty payments, a
statement in the form acceptable to the
VENDOR, certified as to the accuracy
by an independent C.P.A., showing the
number and kind of the product
424
manufactured, sold or otherwise

disposed of during such year, the sales
prices thereof and details of deduction,
and the royalty payment due to the
VENDOR on account thereof; and
4. 4.That the VENDEE can assign or
transfer the rights acquired by virtue
of this contract to any person or
persons, natural or juridical, provided
that prior permission/consent is
secured from VENDOR upon showing
that the ASSIGNEE is willing and able
to assume the obligations created by
this contract.
Vendor
Vendee
Signed in the presence of two

witnesses, the contract was duly
notarized on February 11, 1971.
Shortly thereafter, Cu left for abroad.
After Camaro Paint Manufacturing
Enterprises, Inc. (Camaro for short)
had been organized and registered, on
June 14, 1971, Abad transferred all his
rights and interests in the business he
had acquired from Cu in favor of said
corporation
for
the
amount
of
P150,000.00
in
a
document
denominated as deed of absolute
sale. In said document Abad certified
that the business had no creditors and
that its properties were free from liens
and encumbrances; undertook to
surrender to the corporation all the
pertinent documents he had acquired
from x x x Camaro Enterprises in
connection with the registration of the
paint brand McGills with the PATENT
3
IN WITNESS WHEREOF we hereunto

affixed our signatures at the City of Manila,
Philippines, this 11(th) day of February,
1971.
650
650
Sgd.
VICENTE CU

Sgd.
BRAULIO ABAD
425
OFFICE
and
all
other
letters
pertaining thereto for the VENDEE to
establish its rights over the registered
brand McGills; and promised to
make himself available should his
presence be required by the Patent
Office.
Camaro then used the trademark of
McGills
with
the
inscriptions
Formula Provided by: John Meek &
Associates, Chicago, Illinois and
Under
License
From:
Camaro
Enterprises 56 Eugenio Perez, St.,
Q.C. in advertising its paint and allied
products.
After the declaration of martial law,
all firms were required to prove foreign
tie-ups. Inasmuch as he had not
received from Cu any papers pertaining
to the registration of any tie-up with
Meek & Associates, on October 25,
1972, Abad wrote Cu a letter
4
requesting for a copy of the contract

with Meek and Associates and the
registration papers appertaining to said
contract. Abad stated therein that said
documents had to be supplied by
7
_______________
3
Exh. 13.
Exhs. I-1 & I-2.
Exhs. G, G-1 & G-2.
This requirement was allegedly based on
Presidential Decree No. 49 on the protection of

intellectual property.
7
Exh. 2.
651
VOL. 195, APRIL 2, 1991
651
Cu otherwise he would not be able to

remit to Cu the 1% royalty stipulated in
the contract of sale between them in
view of the restrictions of the Bureau of
Internal Revenue and the Central
Bank.
426
Cu never replied to said letter. His

silence
notwithstanding,
Camaro
provided for Cus royalties in its
financial statements: P2,261.42 for
1971, P4,431.48 for 1972 and P7,964.74
for 1973. On April 4, 1975, Abad
formally assigned the rights he had
acquired from Cu over the trademark of
McGills & Devices to Camaro of
which Abad was, at that time, also the
president.
Meanwhile, in 1974, Cu executed a
special power of attorney in favor of
Mauro M. Castro extending to the
latter the general control
and
supervision over his business and
property in the Philippines. Pursuant
to said power of attorney, on June 13,
1974, Castro demanded from Abad the
payment to Cu of the 1% royalty
stipulated in the February 11, 1971
8
10
contract for the years 1971 to 1973. In

his reply to said letter, Abad said:
11
We are willing to fulfill our part of the

contract but we also ask your client to do the
samefulfill his commitment. You will note
in our Deed of Sale that we agreed to give
him a royalty of 1%. It is a common
knowledge that royalty paid should be in
exchange of a certain service and it was our
agreement that while in the United States
he will work for us for the registration
papers, license, etc. Naturally, he will incur
expense in moving around to fulfill this
obligation and that is where the 1% came in
although it was not written on the contract
what it is for. Mr. James Cu, his father, and
Messrs. Noah and Tommy Cu, his brothers,
can testify to the veracity of this agreement
verbally entered into between me and my
associates and Vicente Cu. I will hand this
letter to you personally and can further
elaborate on the subject at that time.
427
Abad added that they had discontinued

advertising that they were associated
with Meek & Associates and had to
destroy and throw away the labels
mentioning said foreign company for
fear
_______________
8
Rollo, p. 69.
Exh. E, E-1.
10
Exh. A.
11
Exh. 8.
13
652
652
the
corporations
products
from
January 16, 1971 to December 31, 1974
and for the payment of the sum of
P33,000.62 allegedly the total amount
of the royalties due Cu as of December
31, 1974 as well as moral, nominal and
exemplary damages and attorneys
fees.
In their answer, Abad and Camaro
alleged that the contract of February
11, 1971 which was hastily prepared by
Cu, failed to express the true intent
and agreement of the parties as it did
not
incorporate
the
following
representations and warranties of Cu:
(a) the sale included the right of tie-up
with Meek & Associates which Cu had
warranted as valid and existing at the
time of the sale, that the vendees could
advertise such connection and that they
would receive from time to time new or
improved formula for their acrylic paint

of being accused of misrepresentation.

Apparently, Castro and Abad failed to
arrive at an agreement regarding the
payment of the 1% royalty because on
July 2, 1975, Castro filed for Cu in the
Court of First Instance of Rizal, a
complaint against Abad and Camaro
praying for an accounting of the sales of
12
428
products; (b) the total contract price of

P150,000 actually included the amount
of P80,000 which Cu allegedly spent for
the acquisition of his right to a tie-up
with Meek & Associates; (c) upon his
arrival in the United States, Cu would
make the necessary arrangements with
Meek & Associates and later forward to
the defendants the corresponding
licensing agreement with said foreign
entity; (d) the 1% royalty on annual
gross sales was to cover the royalty to
Meek & Associates for the defendants
continued enjoyment of the said right of
tie-up as well as the plaintiffs moving
expenses in the renewal of the
licensing agreement with said foreign
entity.
The
defendants
prayed
that
paragraphs 2, 3 and 4 of the contract of
sale be declared rescinded and null and
void ab initio; and that the plaintiff be
required to pay the defendants the

following amounts: (a) P80,000 which
was fraudulently obtained by the
plaintiff from the defendants through
false representation, with interest
from February 11, 1971 until
_______________
12
Exh. 9.
13
Civil Case No. Q-20247.
653
VOL. 195, APRIL 2, 1991
653
fully paid; (b) P2,500 as indemnity for

the labels which defendants had to
discard; (c) moral and exemplary
damages, and (d) P10,000 as reasonable
attorneys fees.
On January 22, 1979, the lower
court rendered a decision which in part
reads:
14
15
Upon due consideration of the evidence, the

Court finds unsupported defendants theory
429
that plaintiff had assumed to work for the

renewal of a licensing agreement. The
contract of sale (Exh. B) is totally bereft of
any mention of this alleged licensing
agreement. If indeed there was such
agreement, the defendants would not have
allowed such an important item to be missed
as a condition. Even the sale from defendant
Abad to defendant Camaro (Exh. 13) of the
business acquired from plaintiff does not
mention any licensing agreement with John
Meek & Associates. In fact the very labels
used by plaintiff and continued to be used by
the defendants only mentioned that the
formula for the paint and allied products
manufactured by them was formulated by
John Meek & Associates. It was never
mentioned therein that the paint and its
allied products were being manufactured
under license from John Meek & Associates.
The paint carried the duly registered
trademark McGills which plaintiff duly
assigned to the defendants including the

formula. Defendants admit that nobody has
ever questioned them in the use of the
trademark and of the formula. The Court
concludes that the 1% royalty must have
been the consideration for defendants
continued use of the trademark and the
formula.
The alleged goodwill could not have been
for an alleged obligation assumed by the
plaintiff for the renewal of a licensing
agreement which at the outset did not exist
and was never incorporated in the contract
of sale. It is generally understood that
goodwill is the standing or degree of
acceptance of the product by the public.
When plaintiff sold the business of the
Camaro Enterprises, the acrylic paint sold
under the trademark McGills had already
found wide acceptance as a good paint.
Defendants, in recognition of the goodwill of
plaintiffs business, had even seen fit to
430
carry the name Camaro in the new

corporation formed by it to take over the
said business. Also, the Court particularly
notes the contradiction in defendant Abads
and Lim Siongs testimonies. While
defendant Abad stated that the goodwill of
plaintiffs business was valued at P80,000,
Lim Siong testified that its
_______________
14
Original Record on Appeal. pp. 12-13.
15
Presided by Judge Eduardo C. Tutaan.
654
654

value was P100,000. This only lends support

to plaintiffs theory that the alleged
licensing agreement was an after-thought
on the part of the defendants in trying to
evade their obligation to pay plaintiff his 1%
royalty on gross sales.
While attorneys fees must be conceded
plaintiff, there is no sufficient evidence to
warrant the award of moral and/or

exemplary damages.
WHEREFORE, judgment is hereby
rendered in favor of the plaintiff and against
the defendants as follows:
1. 1.Defendants are held jointly and
severally liable to plaintiff in the
amount of P33,000.62, allegedly due
the plaintiff as of December 31, 1974,
plus such further amount as may be
found to be due him as will be shown
by the statements of accounting that
the defendants will render and submit
pursuant to the contract of sale
marked Exh. 8 with interest thereon
at the legal rate beginning December
31 for the corresponding year when it
must have been due until fully paid;
2. 2.Defendants are ordered to render or
submit to plaintiff complete and
accurate yearly accountings, duly
certified to by a certified public
431
accountant and showing the gross

sales of goods or products covering the
period from January 16, 1971 to
December 31, 1978 and every year
thereafter;
3. 3.Defendants are held jointly and
severally liable to plaintiff in the
amount of P10,000.00 for attorneys
fees plus the costs of suit.
Accordingly,
defendants
counterclaims are dismissed.
SO ORDERED.
_______________
16
Rollo, pp. 90-91.
17
Penned by Justice Desiderio P. Jurado and
16
The defendants appealed to the then

Intermediate Appellate Court which, in
its
decision of
May
31,
1984,
affirmed in toto the decision of the
lower court.
Abad and Camaro received a copy of
the appellate court decision on June 21,
1984. On the 15th day thereafter, or on
July 6, 1984, they filed a motion for a
17
30-day extension of time to file a

motion for reconsideration.
On August 6, 1984 or a day after the
expiration of the extended period of
time, Abad and Camaro filed another
motion for a 15-day extension of time to
file the motion for reconsideration. One
day after the expiration of said period
or on August
concurred in by Justices Porfirio V. Sison,

Abdulwahid A. Bidin and Marcelino R. Veloso.
655
VOL. 195, APRIL 2, 1991
655
22, 1984, Abad and Camaro filed the

said
motion
for
reconsideration
asserting that Cu was not entitled to
the 1% royalty as their consent to the
contract was obtained through fraud
432
and false representation thereby

nullifying said stipulation for want of
any valid consideration.
Alleging that there were persuasive
facts and evidence on record that had
been overlooked in arriving at its
decision, on September 18, 1985, the
appellate court granted the motion for
reconsideration. The dispositive portion
of the resolution states:
18
19
WHEREFORE, appellants motion for

reconsideration should be as it is hereby
granted. The decision promulgated on May
31, 1984 is hereby reconsidered and set
aside, and a new one is hereby entered,
reversing the decision of the lower court
appealed from and dismissing appellees
complaint; and on the counterclaim,
ordering the appellee to refund to appellants
the sum of P80,000.00 with interest thereon
from February 11, 1971 until fully paid, and
to pay appellants the sum of P10,000.00 as

attorneys fees, plus costs.
SO ORDERED.
Cu
filed
a
motion
for
the
reconsideration of said resolution which
was duly opposed by Abad and Camaro.
On July 30, 1986, the appellate court
denied for lack of merit said motion for
reconsideration. It stated further that
(A)ll the matters therein were
squarely
presented,
exhaustively
ventilated and carefully considered
before it promulgated the resolution of
September 18, 1985. Justices Porfirio
V. Sison, Jorge R. Coquia and Ma.
Rosario Quetulio-Losa (who substituted
for the late Justice Marcelino Veloso)
voted for such denial while Justices
Desiderio P. Jurado and Abdulwahid A.
Bidin dissented in a separate opinion
penned by the former but which mainly
433
quoted Cus contentions in his motion

for reconsideration.
20
_______________
18
Rollo, p. 125.
19
Penned by Justice Porfirio V. Sison and
concurred in by Justices Marcelino R. Veloso and

Jorge R. Coquia. Justices Desiderio P. Jurado
and Abdulwahid A. Bidin voted for the denial of
the motion for reconsideration on the ground
that the matters raised therein had been
threshed out and resolved in the decision.
20
Rollo, pp. 79-84.
656
656

Hence, Cu interposed the instant

petition for review on certiorari
submitting to this Court these issues:
(a) whether or not the May 31, 1984
decision had become final and
executory in view of this Courts ruling
in Habaluyas vs. Japson that the 1521
day period to file a motion for

reconsideration cannot be extended;
and (b) granting that the May 31, 1984
decision was not yet final and
executory, whether or not the appellate
court erred in arriving at the conclusion
that Cu employed the degree of active
and vitiating fraud that effectively
sever(ed) the binding terms of the
February 11, 1971 contract.
We need not delve on the first issue
raised by petitioner. Suffice it to say
that the Habaluyas decision had been
given a prospective application in the
resolution of May 30, 1986 in the same
case meaning that it would apply only
after June 30, 1986 and therefore,
compliance with the said ruling case
had not yet been strictly enforced when
the motions for extension of time herein
questioned were filed. That at least two
such motions were filed a day after the
22
23
434
expiration of the previously extended

periods should not, in the interest of
justice, likewise detain us further in
resolving the second issue raised
considering that we find the same to be
meritorious.
Petitioner contends herein that no
fraud
or
insidious
words
or
machinations vitiated the consent of
private respondent Abad as to be a
cause for the annulment of the contract
of February 11, 1971. On the other
hand, private respondents assail the
validity of said contract specifically the
provision therein for a 1% royalty on
gross sales on the ground that the same
was obtained through false and
insidious representations. They aver
that Abad entered into the said
contract on the belief that there was a
tie-up between petitioner and Meek &
Associates and when the said tie-up
subsequently proved to be non-existent,

the stipulation for a 1% royalty became
null and void for want of any valid
consideration.
24
_______________
21
G.R. No. 70895, August 5, 1985, 138 SCRA
46.
22
142 SCRA 208.
23
Singh vs. Intermediate Appellate Court, G.R.
No. 74108, February 27, 1987, 148 SCRA 277.

24
Memorandum, pp. 18-19.
657
VOL. 195, APRIL 2, 1991
657
A contract is the law between the

parties. It is deemed to contain all
agreements arrived at by them. Hence,
Section 7, Rule 130 of the Rules of
Court provides:
25
Sec. 7. Evidence of Written Agreements.

When the terms of an agreement have been
reduced to writing, it is to be considered as
435
containing all such terms, and, therefore,

there can be, between the parties and their
successors in interest, no evidence of the
terms of the agreement other than the
contents of the writing, except in the
following cases:
1. a)When a mistake or imperfection of
the writing or its failure to express the
true intent and agreement of the
parties, or the validity of the
agreement is put in issue by the
pleadings;
2. b)Where there is an intrinsic
ambiguity in the writing. The term
agreement includes wills.
This provision is based on the

presumption that the parties had made
a written instrument the only
repository and memorial of the truth
and whatever is not found in said
instrument must have been waived and
abandoned by the parties. Thus, while

parol evidence is admissible in a
variety of ways to explain the meaning
of written contracts, it cannot serve the
purpose of incorporating into the
contract additional contemporaneous
conditions which arenot mentioned at
all in the writing unless there has been
fraud or mistake.
Article 1338 of the Civil Code
provides that (t)here is fraud when,
through
insidious
words
or
machinations of one of the contracting
parties, the other is induced to enter
into a contract which, without them, he
would not have agreed to. Allegations
of fraud must, however, be established
by clear and convincing evidence. Mere
preponderance of evidence is not
sufficient. In
this
case,
private
respondents failed to measure up to
this
26
27
28
29
436
_______________
25
Now Section 9 of Rule 130 under the Revised
Rules on Evidence which took effect on July 1,

1989.
26
Moran, Comments on the Rules of Court, Vol.
V. 1980 ed., p. 101.

27
De la Rama vs. Ledesma, L-28498, July 14,
1986, 143 SCRA 1 citing Yu Tek & Co. vs.

Gonzales, 29 Phil. 384.
28
Carenan vs. Court of Appeals, G.R. No.
84358, May 31, 1989, 173 SCRA 711.

29
Centenera vs. Garcia Palicio, 29 Phil. 470.
658
658

requirement.
While Abad and Camaro stated in
their answer to the complaint the
allegedly unincorporated stipulations in
the February 11, 1971 contract, they
had not backed up said allegations by
convincing evidence. Not one evidence
was ever presented clearly pointing to

the alleged machinations of Cu which
enticed Abad to enter into the contract.
The pieces of evidence consisting of the
indorsement of the Philippine ViceConsul in Chicago, Illinois to the effect
that John Meek & Associates was a
non-entity insofar as the Association of
Commerce and Industry was concerned
(Exh. 11-A) and a certification from the
Office of the Quezon City Mayor to the
effect that Cu did not secure a permit
for the manufacture and sale of acrylic
paint products, do not really bolster
their position that the contract did not
reflect the true intent of the parties or
that it was vitiated by fraud on the part
of Cu. Even Abads testimony was not
of much help. In fact, he admitted that
he and Camaro did not really see the
necessity of the contract between Cu
30
437
and John Meek & Associates until the

issuance of Presidential Decree No. 49.
All these point to the fact that the
respondents allegations of fraud and
the noninclusion of their true intent in
the contract were devises meant to
avoid paying the 1% royalty to Cu. Had
they really meant to nullify the
stipulation on the said royalty, they
could have done so by initiating an
action to annul the same when they
learned of the inexistence of a contract
between Cu and Meek & Associates.
They could not have waited for Cu to
file an action for the enforcement of
said stipulation. Indeed, with the kind
of business respondents were doing
which
31
_______________
30
In his affidavit of October 20, 1975, which
the plaintiff presented as Exhibit H, John Meek
stated that he was a chemical engineer employed

as operations manager of the Institute of Gas
Technology in Chicago; that he furnished his
brother-in-law, Vicente Cu, a basic formulation
for acrylic automotive paint; and that he
authorized Cu to use the said formulation for
commercial purposes, along with the right to the
use of (his) name for purposes related to said
formulation, including production and sale in
the Philippines and other places as Cu might
deem fit and proper.
31
TSN, June 16, 1977, p. 14.
659
VOL. 195, APRIL 2, 1991
Amberti vs. Court of Appeals
659
certainly reflect good business acumen

on their part, they could not have
missed on important agreements which
would entail diminution of their
income.
WHEREFORE, the resolutions of the
respondent court dated September 18,
1985 and July 30, 1986 are hereby
438
reversed and set aside and the decision

of May 31, 1984 reinstated. Costs
against the private respondents.
SO ORDERED.
Gutierrez,
Jr., Feliciano andDavide,
Jr.,
JJ.,
concur.
Bidin, J., No part. I participated
in the appealed decision as a member of
respondent court.
Resolutions reversed and set aside.
Note.While parol evidence is
admissible in a variety of ways to
explain the meaning of written
contracts, it cannot serve the purpose of
incorporating
into
the
contract
additional contemporaneous conditions
which are not mentioned at all in
writing, unless there has been fraud or
mistake. (Dela Rama vs. Ledesma, 143
SCRA 1.)
o0o
439
[No. 11346. March 21, 1918.]

ESPIRIDIONA CANUTO, plaintiff and
appellee, vs. JUAN
MARIANO,
defendant and appellant.
1. 1.SALE
WITH
RIGHT
OF
REPURCHASE; EXTENSION
OF
REDEMPTION.Plaintiff executed a
deed of sale of a parcel of land to
defendant reserving the right to
repurchase within a year. A few days
before the expiration of the redemption
period defendant promised, orally, to
extend the redemption period for one
month upon plaintiff's promise that
she would find the money and
repurchase
within
that
period, Held: That defendant is bound
to carry out his oral promise, plaintiff
having made a bona, fide offer or
tender of the price agreed upon for the
repurchase of the land within the
extended redemption period.
1. 2.EVIDENCE; PAROL
EVIDENCE
AFFECTING WRITINGS.The rule
forbidding the admission of parol or
extrinsic evidence to alter, vary, or
contradict a written instrument does
not apply so as to prohibit the
establishment
by
parol
of
an
agreement between the parties in
writing, entered into subsequent to the
time when the written instrument was
executed,
notwithstanding
such
agreement may have the effect of
adding to, changing, modifying, or
even
altogether
abrogating
the
contract of the parties as evidenced by
the writing; for the parol evidence does
not in any way deny that the original
agreement of the parties was that
which the writing purports to express,
but merely goes to show that the
parties have exercised their right to
change or abrogate the same, or to
440
make
a new
and
independent
contract. It makes no difference how
soon after the execution of the written
contract the parol one was made. If it
was in fact subsequent and is
otherwise unobjectionable it may be
proved and enforced.
1. 3.SALE
WITH
RIGHT
OF
REPURCHASE; TENDER
OF
PAYMENT.The settled rule. in this
jurisdiction is that abona fide offer
or tender of the price agreed upon for
the repurchase is sufficient to preserve
the rights of the party making it,
without the necessity of making
judicial deposit, if the offer or tender is
refused;
841
VOL. 37, MARCH .21, 1918
Canuto vs. Mariano.
1. and in the case of Fructo vs. Fuentes

(15 Phil. Rep., 362) we said that in
such cases when diligent effort is made
by the vendor of the land to exercise
the right to repurchase reserved by
him in his deed of sale "and fails by
reason of circumstances over which he
has no control, we are of the opinion
and so hold that he does not lose his
right to repurchase the land, by
reason of his f failure to repurchase on
the day of maturity."
APPEAL from a judgment of the Court

of First Instance of Manila. Ostrand, J.
the court.
Alfredo
Chicote,
Jose
Arnaiz and Pascual
B.
Azanza for
appellant.
841
Alfonso E. Mendoza
for appellee.
CARSON, J.:
441
This is an appeal from a judgment of

the Court of First Instance of Manila,
providing for the execution of a deed
evidencing the repurchase by the
plaintiff of a parcel of land from the
defendant, upon the payment by the
former of the sum of P360.
On December 4, 1913, the plaintiff
executed a deed of sale of the parcel of
land described in the complaint, to the
defendant, for the sum of P860,
reserving the right to repurchase the
land for that amount within one year
from the date of the deed of sale. The
redemption period having elapsed, and
the plaintiff having failed to exercise
her right of repurchase within that
period, the defendant set up a claim of
absolute ownership to the land,
notwithstanding the insistent demand
of the plaintiff that she be permitted to
exercise
her
reserved
right
of
repurchase in accordance with an

alleged oral agreement for the
extension of the redemption period
down to the end of the month of
December, 1914. She claims that on the
second day of December, 1914, two days
before the expiration of the original
redemption period, she asked the
defendant for an extension of time for
the repurchase of the land and that
upon her promise to make the
repurchase during the month of
December, 1914, the defendant agreed
to extend the redemption
842
842

Canuto vs. Mariano.
period set out in the written contract,

to the end of that month; that after the
expiration of the original redemption
period, she sought to make the
repurchase in accordance with the
agreement as to the extension of the
442
time therefor; but that the defendant

failed to appear at the time and place
agreed upon for the payment of the
purchase price, and has refused since
that time to execute a deed of resale, or
to reserve the purchase price agreed
upon, despite the plaintiff's repeated
demands and tender of the purchase
price.
The plaintiff testified that on the
morning of December the second, 1914,
while she was washing clothes near a
well, the defendant passed by; that she
seized the opportunity to beg an
extension of time in which to
repurchase the land, promising the
defendant that she would borrow the
money and make payment if he would
extend the redemption period until the
end of the month; that after some
demur the defendant agreed to allow
her the whole of the' month of
December in which to redeem the land;

that the following Sunday she went to
the house of the defendant and that he
promised to meet her at the house of
Mercado, an attorney, at 4 o'clock of the
next day, there to receive the purchase
price and execute the necessary
documents evidencing the transaction;
that she took the money to the lawyer's
office at the time appointed, and waited
there until dark, but that the defendant
failed to meet his engagement; that she
then went to his house, but was told
that he was not at home; and that since
that time defendant has refused to
carry out his oral agreement, claiming
that the redemption period set out in
the original deed of sale expired on the
fourth day of December, 1914, and that
she had no right to repurchase the land
after that date. Severino Pascual, who
was present when the oral agreement
443
to extend the time for the repurchase of

the land was made, corroborated her
testimony in this regard, and we find
nothing in the record which would
justify us in disturbing the findings of
the trial judge who accepted her
testimony as a substantially true
account of all that occurred, and
declined to believe
843
VOL. 37, MARCH 21, 1918
Canuto vs. Mariano.
the conflicting testimony of the

defendant which he characterizes as
vague and incredible.
The defendant having extended the
time within which the plaintiff could
repurchase the land on condition that
she would find the money and make the
repurchase within the extended period,
it is clear that he cannot be permitted
to repudiate his promise, it appearing
that the plaintiff stood ready to make
the payment within the extended

period, and was only prevented from
doing so by the conduct of the
defendant
himself.
(Villegas vs. Capistrano,9 Phil. Rep.,
416; Fructo vs. Fuentes, 15 Phil. Rep.,
362;Retes vs. Suelto, 20
Phil.
Rep.,
394; Rosales vs. Reyes
and
Ordoveza, 25 Phil. Rep., 495.)
The contention that the plaintiff
should not be843permitted to alter, vary,
or contradict the terms of the written
instrument by the introduction of oral
evidence is manifestly untenable under
the circumstances of the case, as will
readily appear from the following
citation from 17 Cyc., p. 734, and
numerous cases cited in support of the
doctrine:
'The rule forbidding the admission of parol
or extrinsic evidence to alter, vary, or
contradict a written instrument does not
444
apply so as to prohibit the establishment by

parol of an agreement between the parties to
a writing, entered into subsequent to the
time when the written instrument was
executed, notwithstanding such agreement
may have the effect of adding to, changing,
modifying, or even altogether abrogating the
contract of the parties as evidenced by the
writing; for the parol evidence does not in
any way deny that the original agreement of
the parties was that which the writing
purports to express, but merely goes to show
that the parties have exercised their right to
change or abrogate the same, or to make a
new and independent contract.
"It makes no difference how soon after the
execution of the written contract the parol
one was made. If it was in fact subsequent
and is otherwise unobjectionable it may be
proved and enforced."
The contention that the plaintiff lost

her right to redeem
844
844

Sun Life Insurance Co. of Canada vs. Rueda Hermanos
because she failed to make judicial

deposit of the purchase price when the
defendant declined to receive it, is not
entitled to serious consideration in view
of the repeated decisions of this court to
the contrary collated and discussed in
the case of Rosales vs. Reyes and
Ordoveza (25 Phil. Rep., 495). In that
case and in the cases cited therein we
declared that the settled rule in this
jurisdiction is that a bona fide offer
or tender of the price agreed upon for
the repurchase is sufficient to preserve
the rights of the party making it,
without the necessity of making judicial
deposit, if the offer or tender is refused;
and in the case of Fructo vs.Fuentes (15
Phil. Rep., 362) we said that in such
cases when diligent effort is made by
the vendor of the land to exercise the
445
right to repurchase reserved by him in

his deed of sale "and fails by reason of
circumstances over which he has no
control, we are of the opinion and so
hold that he does not lose his right to
repurchase the land, by reason of his
failure to repurchase on the day of
maturity."
We conclude that the judgment
entered in the court below should be
affirmed with costs of this instance
against the appellant.' So ordered.
Arellano,
C.
J., Street, Malcolm, Avancea, and Fish
er, JJ., concur.
Torres, and Araullo, JJ., concur in
the result.
Johnson, J., did not sign.
Judgment affirmed.
______________
446
G.R. No. 172102. July 2, 2010.*

REPUBLIC OF
THE
PHILIPPINES, petitioner, vs.HANOVE
R
WORLWIDE
TRADING
CORPORATION, respondent.
started on 12 June 1945 or earlier.As the law now stands, a mere

showing of possession and occupation for 30 years or more is not
sufficient. Therefore, since the effectivity of P.D. 1073 on January
25, 1977, it must now be shown that possession and occupation of
the piece of land by the applicant, by himself or through his
Land Registration; The setting of the initial hearing is the
predecessors-in-interest, started on June 12, 1945 or earlier. This
duty of the land registration court and not the applicant.As to
provision is in total conformity with Section 14 (1) of P.D.
the first assigned error, however, the Court is not persuaded by
1529.Thus, pursuant to the aforequoted provisions of law,
petitioners contention that the RTC did not acquire jurisdiction
applicants for registration of title must prove: (1) that the subject
over the case. It is true that in land registration cases, the
land forms part of the disposable and alienable lands of the public
applicant
jurisdictional
domain, and (2) that they have been in open, continuous, exclusive
requirements. In the instant case, though, there is no dispute that
and notorious possession and occupation of the same under a bona
respondent complied with the requirements of the law for the court
fide claim of ownership since June 12, 1945, or earlier.
must
strictly
comply
with
the
to acquire jurisdiction over the case.With respect to the setting of
Same; Appeals; Factual findings of the court a quo are
the initial hearing outside the 90-day period set forth under
generally binding on the Supreme Court; Exceptions.It is true, as
Section 23 of P.D. 1529, the Court agrees with the CA in ruling
respondent argues, that an examination of these requisites involve
that the setting of the initial hearing is the duty of the land
registration court and not the applicant.
Same; As the law now stands, a mere showing of possession
and occupation for 30 years or more is not sufficientit must be
shown that possession and occupation of the piece of land by the
applicant, by himself or through his predecessors-in-interest,
* SECOND DIVISION.
731
VOL. 622, JULY 2, 2010
73
1
Republic vs. Hanover Worldwide Trading

Corporation
447
delving into questions of fact which are not proper in a petition for
respondent neither show that its predecessors possession and
review on certiorari. Factual findings of the court a quo are
occupation of the subject land is for the period or duration required
generally binding on this Court, except for certain recognized
by law. The earliest date of the Tax Declarations presented in
exceptions, to wit: (1) When the conclusion is a finding grounded
evidence by respondent is 1965, the others being 1973, 1980, 1992
entirely on speculation, surmises and conjectures; (2) When the
and 1993. Respondent failed to present any credible explanation
inference
or
why the realty taxes due on the subject property were only paid
impossible;(3) Where there is a grave abuse of discretion; (4)
starting in 1965. While tax declarations are not conclusive
When the judgment is based on a misapprehension of facts; (5)
evidence
When the findings of fact are conflicting; (6) When the Court of
ownership. In the present case, the payment of realty taxes
Appeals, in making its findings, went beyond the issues of the case
starting 1965 gives rise to the presumption that respondents
and the same is contrary to the admissions of both appellant and
predecessors-in-interest claimed ownership or possession of the
appellee; (7) When the findings are contrary to those of the trial
subject lot only in that year.
made
is
manifestly
mistaken,
absurd
of
ownership,
they constitute proof
of
claim
of
Court;(8) When the findings of fact are conclusions without
Same; Same; Land Reclassification; It is not enough for the
citation of specific evidence on which they are based; (9)
Provincial Environment and Natural Resources Offices (PENRO)
When the facts set forth in the petition as well as in the
or Community Environment and Natural Resources Offices
(CENRO) to certify that a land is alienable and disposableit must
respondents; and (10) When the findings of fact of the Court of
also be shown that the DENR Secretary had approved the land
Appeals are premised on the supposed absence of evidence and
classification and released the land of the public domain as
contradicted by the evidence on record.
alienable and disposable, and that the land subject of the
Same; Tax Declarations; While tax declarations are not
application for registration falls

732
conclusive evidence of ownership, they constitute proof of claim of

ownership.The pieces of documentary evidence submitted by
7
32

ANNOTATED
448

Corporation
within the approved area per verification through survey by
the PENRO or CENRO.In the present case, to prove the
alienability and disposability of the subject property, Hanover
submitted a Certification issued by the Community Environment
and Natural Resources Offices (CENRO) attesting that lot 4488,
CAD-545-D, containing an area of ONE HUNDRED THREE
THOUSAND THREE HUNDRED FIFTY (103,350) square meters,
more or less, situated at Sacsac, Consolacion, Cebu was found to
be within Alienable and Disposable Block-1, land classification
project no. 28, per map 2545 of Consolacion, Cebu. However, this
certification is not sufficient. In Republic v. T.A.N. Properties, Inc.,
555 SCRA 477 (2008), this Court held that it is not enough for the
Provincial Environment and Natural Resources Offices (PENRO)
or CENRO to certify that a land is alienable and disposable, thus:
x x x The applicant for land registration must prove that the
DENR Secretary had approved the land classification and released
the land of the public domain as alienable and disposable, and that
the land subject of the application for registration falls within the
approved area per verification through survey by the PENRO or
CENRO. In addition, the applicant for land registration must
present a copy of the original classification approved by the DENR
Secretary and certified as a true copy by the legal custodian of the

official records. These facts must be established to prove that the
land is alienable and disposable x x x.
Same; Evidence; It is settled that a document or writing
admitted as part of the testimony of a witness does not constitute
proof of the facts stated therein.In the instant case, even the
veracity of the facts stated in the CENRO Certification was not
confirmed as only the President and General Manager of
respondent corporation identified said Certification submitted by
the latter. It is settled that a document or writing admitted as part
of the testimony of a witness does not constitute proof of the facts
stated therein. In the present case, Hanovers President and
General Manager, who identified the CENRO Certification, is a
private individual. He was not the one who prepared the
Certification. The government official who issued the Certification
was not presented before the RTC so that he could have testified
regarding its contents. Hence, the RTC should not have accepted
the contents of the Certification as proof of the facts stated therein.
The contents of the Certification are hearsay, because Hanovers
President and General Manager was incompetent to testify on the
truth of the contents of such Certification. Even if the
733
VOL. 622, JULY 2, 2010
73
449
Romulo B. Lumauig for respondent.
3
Corporation
subject Certification is presumed duly issued and admissible in
evidence, it has no probative value in establishing that the land is
alienable and disposable.
Same; Same; The Community Environment and Natural
PERALTA, J.:
Before the Court is a petition for
review on certiorari under Rule 45 of
the Rules of Court, seeking the reversal
and setting aside of the Decision dated
May 6, 2005 of the Court of Appeals
(CA) in CA-G.R. CV No. 70077, which
affirmed the August 7, 1997 Decision of
the Regional Trial Court (RTC) of
Mandaue City, Branch 56, in LAND
REG. CASE NO. N-281. Petitioner also
assails the CA Resolution dated March
30, 2006, denying its Motion for
Reconsideration.
The facts of the case are as follows:
[1]
Resources Offices (CENRO) is not the official repository or legal

custodian of the issuances of the Department of Environment and
Natural Resources (DENR) Secretary declaring the alienability and
disposability of public lands.The CENRO is not the official
repository or legal custodian of the issuances of the DENR
Secretary declaring the alienability and disposability of public
lands.
Thus,
the
CENRO
Certification should
have
been
[2]
accompanied by an official publication of the DENR Secretarys

issuance declaring the land alienable and disposable.
PETITION for review on certiorari of

the decision and resolution of the
Court of Appeals.
the Court.
Office of the Solicitor Generalfor
petitioner.
_______________
[1]
Penned by Associate Justice Arsenio J. Magpale, with Associate
Justices Sesinando E. Villon and Enrico A. Lanzanas, concurring; Rollo, pp.

40-47.
[2]
Rollo, p. 48.
450
734
734

Corporation
On October 15, 1993, Hanover

Worldwide Trading Corporation filed
an application for Registration of Title
over Lot No. 4488 of Consolacion Cad545-D (New) under Vs-072219-000396,
situated in Barrio Sacsac, Consolacion,
Cebu, containing an area of One
Hundred Three Thousand Three
Hundred Fifty (103,350) square meters,
more or less, pursuant to Presidential
Decree (P.D.) No. 1529, otherwise
known as the Property Registration
Decree. The application stated that
Hanover is the owner in fee simple of
Lot No. 4488, its title thereto having
been obtained through purchase
evidenced by a Deed of Absolute Sale.
Attached to the petition are: 1) a
Verification Survey Plan; 2) a copy of
the approved Technical Description of

Lot
4488;
3) a copy of the Deed of Sale in favor of
Hanovers President and General
Manager; 4) a copy of a Waiver
executed by the President and General
Manager of Hanover in favor of the
latter; 5) a Geodetic Engineers
Certificate attesting that the property
was surveyed; 6) a Tax Declaration; 7)
a tax clearance; 8) a Municipal
Assessors Certification stating, among
others, the assessed value and market
value of the property; and 9) a CENRO
Certification on the alienability and
disposability of the property.
Except for the Republic, there were
no other oppositors to the application.
The Republic contended, among others,
that
neither
Hanover
nor
its
predecessors-in-interest are in open,
continuous, exclusive and notorious
451
possession and occupation of the land

in question since June 12, 1945 or prior
thereto; the muniments of title, tax
declarations and receipts of tax
payments attached to or alleged in the
application do not constitute competent
and sufficient evidence of a bona
fideacquisition of the lands applied for;
Hanover is a private corporation
disqualified under the Constitution to
hold alienable lands of the public
domain; the parcels of land applied for
are portions of the public domain
belonging to the Republic and are not
subject to private appropriation.
735
VOL. 622, JULY 2, 2010
Corporation
735
The case was then called for trial and

respondent
proceeded
with
the
presentation of its evidence. The
Republic was represented in the
proceedings by officers from the Office

of the Solicitor General (OSG) and the
Department of Environment and
Natural Resources (DENR).
On August 7, 1997, the RTC rendered
its
Decision approving
Hanovers
application for registration of the
subject lot. It held that from the
documentary
and
oral
evidence
presented by Hanover, the trial court
was convinced that Hanover and its
predecessors-in-interest had been in
open, public, continuous, notorious and
peaceful possession, in the concept of
an owner, of the land applied for
registration of title, and that it had
registrable title thereto in accordance
with Section 14 of P.D. 1529.
On appeal by the State, the judgment
of the RTC was affirmed by the
CA via the presently assailed Decision
and Resolution.
[3]
452
Hence, the instant petition based on

the following grounds:
I
THE DEFECTIVE AND/OR WANT OF
NOTICE BY PUBLICATION OF THE
INITIAL HEARING OF THE CASE A
QUO DID NOT VEST THE TRIAL
COURT WITH JURISDICTION TO
TAKE COGNIZANCE THEREOF.
II
DEEDS
OF
SALE
AND
TAX
DECLARATIONS/CLEARANCES DID
NOT CONSTITUTE THE WELLNIGH
INCONTROVERTIBLE
EVIDENCE
NECESSARY
TO
ACQUIRE
TITLE
THROUGH
ADVERSE OCCUPATION.
Petitioner claims that the RTC failed
to acquire jurisdiction over the case. It
avers that the RTC set the initial
hearing of the case on September 25,
1995 in an Order dated June 13,
[4]
_______________
[3] Id., at pp. 125-131.
[4]
Id., at p. 23.
736
736

Corporation
1995. Petitioner contends, however,

that, pursuant to Section 23 of P.D.
1529, the initial hearing of the case
must be not earlier than forty-five (45)
days and not later than ninety (90)
days from the date of the Order setting
the date and hour of the initial hearing.
Since the RTC Order was issued on
June 13, 1995, the initial hearing
should have been set not earlier than
July 28, 1995 (45 days from June 13,
1995) and not later than September 11,
1995 (90 days from June 13, 1995).
Unfortunately, the initial hearing was
scheduled and actually held on
453
September 25, 1998, some fourteen (14)

days later than the prescribed period.
Petitioner
also
argues
that
respondent
failed
to
present
incontrovertible evidence in the form of
specific facts indicating the nature and
duration of the occupation of its
predecessor-in-interest to prove that
the latter has been in possession of the
subject lot under a bona fideclaim of
acquisition of ownership since June 12,
1945 or earlier.
The petition is meritorious.
As to the first assigned error,
however, the Court is not persuaded by
petitioners contention that the RTC did
not acquire jurisdiction over the case. It
is true that in land registration cases,
the applicant must strictly comply with
the jurisdictional requirements. In the
instant case, though, there is no
dispute that respondent complied with
the requirements of the law for the

court to acquire jurisdiction over the
case.
With respect to the setting of the
initial hearing outside the 90-day
period set forth under Section 23 of
P.D. 1529, the Court agrees with the
CA in ruling that the setting of the
initial hearing is the duty of the land
registration court and not the
applicant. Citing Republic v. Manna
Properties, Inc., this Court held
in Republic
v.
San
Lorenzo
Development Corporation that:
[5]
[6]
_______________
[5] G.R. No. 146527, January 31, 2005, 450 SCRA 247.
[6] G.R. No. 170724, January 29, 2007, 513 SCRA 294, 300-301.
737
VOL. 622, JULY 2, 2010
Corporation
737
The duty and the power to set the hearing date lie with the
land registration court. After an applicant has filed his application,
454
the law requires the issuance of a court order setting the initial
hearing date. The notice of initial hearing is a court document. The
notice of initial hearing is signed by the judge and copy of the
notice is mailed by the clerk of court to the LRA [Land
Registration Authority]. This involves a process to which the
party-applicant absolutely has no participation. x x x
xxx
x x x a party to an action has no control over the Administrator
or the Clerk of Court acting as a land court; he has no right to
meddle unduly with the business of such official in the
performance of his duties. A party cannot intervene in matters
within the exclusive power of the trial court. No fault is
attributable to such party if the trial court errs on matters within
its sole power. It is unfair to punish an applicant for an act or
omission over which the applicant has neither responsibility nor
control, especially if the applicant has complied with all the
requirements of the law.
Moreover, it is evident in Manna Properties, Inc. that what is
more important than the date on which the initial hearing is set is
the
giving
of
sufficient
proceedings via publication. x x x
notice
of
the
registration
In the instant case, there is no

dispute that sufficient notice of the
registration proceedings viapublication
was duly made.
Moreover, petitioner concedes (a) that
respondent should not be entirely
faulted if the initial hearing that was
conducted on September 25, 1995 was
outside the 90-day period set forth
under Section 23 of Presidential Decree
No. 1529, and (b) that respondent
substantially
complied
with
the
requirement relating to the registration
of the subject land.
Hence, on the issue of jurisdiction,
the Court finds that the RTC did not
commit any error in giving due course
to
respondents
application
for
registration.
The foregoing notwithstanding, the
Court agrees with petitioner on the
455
more important issue that respondent

failed to
738
738

Corporation
present sufficient evidence to prove

that it or its predecessors-in-interest
possessed and occupied the subject
property for the period required by law.
Section 14 (1) of P.D. 1529, as
amended, provides:
SEC. 14. Who may apply.The following persons may file in
the proper Court of First Instance an application for registration of
title to land, whether personally or through their duly authorized
Section 48. The
following
described
citizens
of
the
Philippines, occupying lands of the public domain or claiming to

own any such lands or an interest therein, but whose titles have
not been perfected or completed, may apply to the Court of First
Instance [now Regional Trial Court] of the province where the land
is located for confirmation of their claims and the issuance of a
certificate of title therefor, under the Land Registration Act, to wit:
xxxx
(b)
Those who by themselves or through their
predecessors-in-interest have been in open, continuous,

exclusive and notorious possession and occupation of
agricultural lands of the public domain, under a bona
representatives:
(1)
Likewise,
Section
48
(b)
of
Commonwealth Act 141, as amended by
Section 4 of P.D. 1073, states:
Those who by themselves or through their
predecessors-in-interest have been in open, continuous,

exclusive and notorious possession and occupation of
alienable and disposable lands of the public domain under
abona fide claim of ownershipsince June 12, 1945, or
earlier.[7]
fideclaim of acquisition of ownership, since June 12,

1945, or earlier, immediately preceding the filing of the
application
for
confirmation
of
title
except
when
prevented by war or force majeure. These shall be

conclusively
presumed
to
have
performed
all
the
conditions essential to a Government grant and shall be
456
entitled to a certificate of title under the provisions of this

chapter.[8]
_______________
[7] Emphasis supplied.
[8] Emphasis supplied.
739
VOL. 622, JULY 2, 2010
Corporation
739
As the law now stands, a mere

showing of possession and occupation
for 30 years or more is not sufficient.
Therefore, since the effectivity of P.D.
1073 on January 25, 1977, it must now
be shown that possession and
occupation of the piece of land by the
applicant, by himself or through his
predecessors-in-interest, started on
June 12, 1945 or earlier. This provision
is in total conformity with Section 14
(1) of P.D. 1529.
Thus, pursuant to the aforequoted
provisions of law, applicants for
[9]
registration of title must prove: (1) that

the subject land forms part of the
disposable and alienable lands of the
public domain, and (2) that they have
been in open, continuous, exclusive and
notorious possession and occupation of
the same under a bona fide claim of
ownership since June 12, 1945, or
earlier.
It is true, as respondent argues, that
an examination of these requisites
involve delving into questions of fact
which are not proper in a petition for
review on certiorari. Factual findings of
the court a quo are generally binding
on this Court, except for certain
recognized exceptions, to wit:
[10]
(1) When the conclusion is a finding grounded entirely on

speculation, surmises and conjectures;
(2)
When the inference made is manifestly mistaken,
absurd or impossible;
(3)
Where there is a grave abuse of discretion;

457
(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;
_______________
[9]
Republic v. Tsai, G.R. No. 168184, June 22, 2009, 590 SCRA 423, 433.
[10] Ong v. Republic, G.R. No. 175746, March 12, 2008, 548 SCRA 160, 166.
740
740

Corporation
(7)
When the findings 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

respondents; and
(10)
When the findings of fact of the Court of Appeals are
premised on the supposed absence of evidence and contradicted by

the evidence on record.[11]
The Court finds that the instant case

falls under the third and ninth
exceptions.
A careful reading of the Decisions of
the RTC and the CA will show that
there is neither finding nor discussion
by both the trial and appellate courts
which would support their conclusion
that
respondents
predecessors-ininterest had open, continuous, exclusive
and
notorious
possession
and
occupation of the disputed parcel of
land since June 12, 1945 or earlier.
No
testimonial
evidence
was
presented to prove that respondent or
its predecessors-in-interest had been
possessing and occupying the subject
property since June 12, 1945 or earlier.
Manager testified only with respect to
his claim that he was the former owner
of the subject property and that he
458
acquired the same from the heirs of a

certain Damiano Bontoyan; that he
caused the payment of realty taxes due
on the property; that a tax declaration
was issued in favor of Hanover; that
Hanover caused a survey of the subject
lot, duly approved by the Bureau of
Lands; and that his and Hanovers
possession of the property started in
1990.
[12]
_______________
[11] Manila Electric Company v. Vda. de Santiago, G.R. No. 170482,
September 4, 2009, 598 SCRA 315, 321-322. (Emphasis supplied.)

[12] See TSN, February 3, 1997, pp. 2-8.
741
VOL. 622, JULY 2, 2010
Corporation
741
The pieces of documentary evidence

submitted by respondent neither show
that its predecessors possession and
occupation of the subject land is for the
period or duration required by law. The
earliest date of the Tax Declarations

presented in evidence by respondent is
1965, the others being 1973, 1980, 1992
and 1993. Respondent failed to present
any credible explanation why the realty
taxes due on the subject property were
only paid starting in 1965. While tax
declarations
are
not
conclusive
evidence of ownership, they constitute
proof of claim of ownership. In the
present case, the payment of realty
taxes starting 1965 gives rise to the
presumption
that
respondents
predecessors-in-interest
claimed
ownership or possession of the subject
lot only in that year.
Settled is the rule that the burden of
proof in land registration cases rests on
the applicant who must show by clear,
positive and convincing evidence that
his alleged possession and occupation of
the land is of the nature and duration
[13]
459
required by law. Unfortunately, as

petitioner contends, the pieces of
evidence presented by respondent do
not
constitute
the
well-nigh
incontrovertible proof necessary in
cases of this nature.
Lastly, the Court notes that
respondent failed to prove that the
subject lot had been declared alienable
and disposable by the DENR Secretary.
The well-entrenched rule is that all
lands not appearing to be clearly of
private dominion presumably belong to
the State. The onus to overturn, by
incontrovertible
evidence,
the
presumption that the land subject of an
application for
[14]
[15]
_______________
[13] Spouses Melchor and Saturnina Alde v. Ronald B. Bernal, et al., G.R.
No. 169336, March 18, 2010, 616 SCRA 60.

[14] Ong v. Republic, supra note 10, at 168.
[15] Republic v. T.A.N. Properties, Inc., G.R. No. 154953, June 26, 2008,
555 SCRA 477, 486.
742
742

Corporation
registration is alienable and disposable

rests with the applicant.
In the present case, to prove the
alienability and disposability of the
subject property, Hanover submitted a
Certification issued by the Community
Environment and Natural Resources
Offices (CENRO) attesting that lot
4488, CAD-545-D, containing an area of
ONE HUNDRED THREE THOUSAND
THREE HUNDRED FIFTY (103,350)
square meters, more or less, situated at
Sacsac, Consolacion, Cebu was found
to be within Alienable and Disposable
Block-1, land classification project no.
28, per map 2545 of Consolacion,
[16]
460
Cebu. However, this certification is not

sufficient.
In Republic v. T.A.N. Properties,
Inc. this Court held that it is not
enough for the Provincial Environment
and
Natural
Resources
Offices
(PENRO) or CENRO to certify that a
land is alienable and disposable, thus:
[17]
x x x The applicant for land registration must prove that the

DENR Secretary had approved the land classification and released
the land of the public domain as alienable and disposable, and that
the land subject of the application for registration falls within the
approved area per verification through survey by the PENRO or
CENRO. In addition, the applicant for land registration must
present a copy of the original classification approved by the DENR
Secretary and certified as a true copy by the legal custodian of the
official records. These facts must be established to prove that the
land is alienable and disposable x x x.[18]
In the instant case, even the veracity

of the facts stated in the CENRO
Certification was not confirmed as only
the President and General Manager of

respondent corporation identified said
Certification submitted by the latter. It
is settled that a document or writing
admitted as part of the testimony of a
witness does not constitute proof of the
facts stated
_______________
[16] Id.
[17] Id.
[18] Id., at p. 489.
743
VOL. 622, JULY 2, 2010
Corporation
743
therein. In the present case,

Manager, who identified the CENRO
Certification, is a private individual. He
was not the one who prepared the
Certification. The government official
who issued the Certification was not
presented before the RTC so that he
[19]
461
could have testified regarding its

contents. Hence, the RTC should not
have accepted the contents of the
Certification as proof of the facts stated
therein. The contents of the
Certification are hearsay, because
Manager was incompetent to testify on
the truth of the contents of such
Certification. Even if the subject
Certification is presumed duly issued
and admissible in evidence, it has no
probative value in establishing that the
land is alienable and disposable.
[20]
Moreover, the CENRO is not the

official repository or legal custodian of
the issuances of the DENR Secretary
declaring
the
alienability
and
disposability of public lands. Thus, the
CENRO Certification should have been
accompanied by an official publication
of the DENR Secretarys issuance
[21]
declaring the land alienable and

disposable.
Respondent, however, failed to
comply
with
the
foregoing
requirements.
WHEREFORE,
the
petition
is
GRANTED. The May 6, 2005 Decision
and March 30, 2006 Resolution of the
Court of Appeals in CA-G.R. CV No.
70077 and the August 7, 1997 Decision
of the Regional Trial Court of Mandaue
City, Branch 56 in Land Registration
Case No. N-281 are SET ASIDE.
Respondent
Hanover
Worldwide
Trading Corporations application for
registration of Lot No. 4488 of
Consolacion Cad-545-D (New), under
Vs-072219-000396,
Barrio
Sacsac,
Consolacion, Cebu, is DENIED.
_______________
[19] Id., at p. 491.
[20] Id.
462
[21] Id., at p. 490.
744
744

Corporation
SO ORDERED.
Carpio
(Chairperson),
Bersamin,** Abad and Mendoza,
JJ., concur.
Petition granted, judgment and
resolution set aside.
Notes.In cases of conveyance of the
land
subject
of
a
registration
proceeding by an instrument executed
between the time of filing of the
application for registration and the
issuance of the decree of title, the
application for registration need not be
amendedit is only required (a) that
the instrument be presented to the
court by the interested party together
with a motion that the same be
considered
in
relation
to
the
application; and, (b) that prior notice be

given to the parties to the case. (Heirs
of Eugenio Lopez, Sr. vs. Enriquez, 449
SCRA 173 [2005])
The real purpose of the Torrens
System of land registration is to quiet
title to land and put stop forever to any
question as to the legality of the title.
(Pioneer
Insurance
and
Surety
Corporation vs. Heirs of Vicente
Coronado, 595 SCRA 263 [2009])
o0o
_______
463
No. L-59524. February 18, 1985.

JOVITO
R.
SALONGA,
petitioner, vs. HON. ERNANI CRUZ
PAO, Presiding Judge of the Court of
First Instance of Rizal, Branch XVIII
(Quezon
City),
HON.
JUDGE
RODOLFO ORTIZ, Presiding Judge of
the Court of First Instance of Rizal,
Branch XXXI (Quezon City) CITY
FISCAL SERGIO APOSTOL of Quezon
City; COL. BALBINO DIEGO and
COL.
ROMAN
MADELLA,
respondents.
*
Criminal Procedure; Certiorari; An order

denying a motion to quash or to dismiss,
while interlocutory can be the subject of a
petition for certiorari in the interest of
substantial justice.There is no disputing
the validity and wisdom of the rule invoked
by the respondents. However, it is also
recognized that, under certain situations,
recourse to the extraordinary legal remedies
of certiorari, prohibition or mandamus to

question the denial of a motion to quash is
considered proper in the interest of more
enlightened and substantial justice, as was
so declared in Yap v. Lutero, G.R. No. L12669, April 30, 1969.
Same; Words and Phrases; Prima facie
evidence defined.The term prima facie
evidence denotes evidence which, if
unexplained or uncontradicted, is sufficient
to sustain the proposition it supports or to
establish the facts, or to counterbalance the
presumption of innocence to warrant a
conviction. The question raised before us
now is: Were the evidences against the
petitioner uncontradicted and if they were
unexplained or uncontradicted, would they,
standing alone, sufficiently overcome the
presumption of innocence and warrant his
conviction?
Same; Same; Evidence; A testimony on
preliminary investigation which is based on
464
the affidavits of others is hearsay and can

hardly qualify as prima facie evidence.
Such testimony, being based on affidavits of
other persons and purely hearsay, can
hardly qualify as prima facie evidence of
subversion. It should not have been given
credence by the court in the first place.
Hearsay evidence, whether objected to or
not, has no probative value as the affiant
could not have been cross-examined on the
facts stated therein. (See People v. Labinia,
115 SCRA 223; People v. Valero, 112 SCRA
661). Moreover,
_______________
*
EN BANC.
439
Salonga vs. Cruz Pao
as Victor Lovely, himself, was personally

examined by the court, there was no need
for the testimony of Col. Diego. Thus, the
inquest judge should have confined his
investigation to Victor Burns Lovely, the

sole
witness
whose
testimony
had
apparently implicated petitioner in the
bombings which eventually led to the filing
of the information.
Same; Senator Salonga cannot be held
probably guilty as being the mastermind of
the bombing incidents in question by mere
visit or contact made by Victor Burns Lovely,
Jr.The contact point theory or what the
petitioner calls the guilt by visit or guilt by
association theory is too tenuous a basis to
conclude that Senator Salonga was a leader
or mastermind of the bombing incidents. To
indict a person simply because some
plotters, masquerading as visitors, have
somehow met in his house or office would be
439
to establish
a dangerous precedent. The
right of citizens to be secure against abuse of
governmental
processes
in
criminal
prosecutions
would
be
seriously
undermined.
465
Same; Presence of Victor Burns Lovely,

Jr. in a group picture with Sen. Salonga is
not enough proof of criminal conspiracy.
The presence of Lovely in a group picture
taken at Mr. Raul Dazas birthday party in
Los Angeles where Senator Salonga was a
guest is not proof of conspiracy. As stated by
the petitioner, in his many years in the
turbulent world of politics, he has posed
with all kinds of people in various groups
and various places and could not possibly
vouch for their conduct. Commenting on the
matter, newspaper columnist Teodoro
Valencia stated that Filipinos love to pose
with important visitors and the picture
proves nothing.
Same; Same.It is likewise probable
that a national figure and former politician
of Senator Salongas stature can expect
guests and visitors of all kinds to be visiting
his home or office. If a rebel or subversive
happens to pose with the petitioner for a
group picture at a birthday party abroad, or

even visit him with others in his home, the
petitioner does not thereby become a rebel
or subversive, much less a leader of a
subversive group. More credible and
stronger evidence is necessary for an
indictment. Nonetheless, even if we discount
the flaws in Lovelys testimony and dismiss
the refutations and arguments of the
petitioner, the prosecution evidence is still
inadequate to establish a prima facie
finding.
Same; Constitutional
Law; Opinion
expressed by Sen. Salonga of the likelihood
of a violent struggle if reforms are not
instituted is a
440
4
SUPREME COURT REPORTS ANNOTATE
40
legitimate exercise of freedom of thought

and expression.The prosecution has not
come up with even a single iota of evidence
466
which could positively link the petitioner to

any proscribed activities of the Movement
for Free Philippines or any subversive
organization mentioned in the complaint.
Lovely had already testified that during the
party of former Congressman Raul Daza
which was alleged to have been attended by
a number of members of the MFP, no
political action was taken but only political
discussion. Furthermore, the alleged opinion
of the petitioner about the likelihood of a
violent struggle here in the Philippines if
reforms are not instituted, assuming that he
really stated the same, is nothing but a
legitimate exercise of freedom of thought
and
expression.
No
man
deserves
punishment for his thoughts. Cogitationis
poenam nemo meretur. And as the late
Justice Oliver W. Holmes stated in the case
of U.S. v. Schwimmer, 279 U.S. 644, x x x if
there is any principle of the Constitution
that more imperatively calls for attachment
than any other it is the principle of free

thoughtnot free thought for those who
agree with us but freedom for the thought
that we hate.
Same; Same; Freedom
of
expression
enjoys primacy over any other rights or
freedoms.We have adopted the concept
that freedom of expression is a preferred
right and, therefore, stands on a higher level
than substantive economic or other liberties.
The primacy, the high estate accorded
freedom of expression is a fundamental
postulate of our constitutional system.
(Gonzales v. Commission on Elections, 29
SCRA 835). As explained by Justice Cardozo
in Palko v. Connecticut (302 U.S. 319) this
must be so because the lessons of history,
both political and legal, illustrate that
freedom of thought and speech is the
indispensable condition of nearly every
other form of freedom. Protection is
especially
mandated
for
political
467
discussions. This Court is particularly

concerned when allegations are made that
restraints have been imposed upon mere
criticisms of government and public officials.
Political discussion is essential to the
ascertainment of political truth. It cannot be
the basis of criminal indictments.
Same; Same; Expressing likelihood of
violence in the Philippines is not a
proscribed expression.The alleged remark
about the likelihood of violent struggle
unless reforms are instituted is not a threat
against the government. Nor is it even the
uninhibited, robust, caustic, or unpleasantly
sharp attack which is protected by the
guarantee of free speech. Parenthetically,
the American case of Brandenburg v.
Ohio (395 U.S. 444) states that the
constitutional guarantees of free speech and
free press do not permit a State to for441
bid or proscribe advocacy of the use of

force or of law violation except where such
advocacy is directed to inciting or producing
imminent lawless action and is likely to
incite or produce such action. The words
which petitioner allegedly used according to
the best recollections of Mr. Lovely are light
years away from such type of proscribed
advocacy.
Same; Same; Criminal Law; A bombing
mission directed to a particular family does
not
constitute
subversion.Such
a
statement wholly negates any politically
motivated or subversive assignment which
Lovely was supposed to have been
commissioned to perform upon the orders of
his co-accused and which was the very
reason why they were charged in the first
place.
Same; Same; Same; Evidence; Where
prosecution adopts respondents testimony as
its own, 441
it becomes bound by respondents
468
declarations.It should be noted that after

Lovelys
testimony,
the
prosecution
manifested to the court that it was adopting
him as a prosecution witness. Therefore, the
prosecution became irreversibely bound by
Lovelys disclaimers on the witness stand,
that it was not his intention to do some
kind of bombing against the government
and that he did not try to implicate
Salonga, especially since Lovely is the sole
witness adopted by the prosecution who
could supposedly establish the link between
the petitioner and the bombing incidents.
Same; Same; Same; Purposes
of
preliminary investigation.The purpose of a
preliminary investigation is to secure the
innocent against hasty, malicious and
oppressive prosecution, and to protect him
from an open and public accusation of crime,
from the trouble, expense and anxiety of a
public trial, and also to protect the state
from useless and expensive trials. (Trocio v.
Manta, 118 SCRA 241; citing Hashim v.

Boncan, 71 Phil. 216). The right to a
preliminary investigation is a statutory
grant, and to withhold it would be to
transgress constitutional due process. (See
People v. Oandasa, 25 SCRA 277) However,
in order to satisfy the due process clause it
is not enough that the preliminary
investigation is conducted in the sense of
making sure that a transgressor shall not
escape with impunity. A preliminary
investigation serves not only the purposes of
the State. More important, it is a part of the
guarantees of freedom and fair play which
are birthrights of all who live in our country.
It is, therefore, imperative upon the fiscal or
the judge as the case may be, to relieve the
accused from the pain of going through a
trial once it is ascertained that the evidence
is insufficient to sustain a prima facie
442
4
SUPREME COURT REPORTS ANNOTATE
42
469
case or that no probable cause exists to

form a sufficient belief as to the guilt of the
accused. Although there is no general
formula or fixed rule for the determination
of probable cause since the same must be
decided in the light of the conditions
obtaining in given situations and its
existence depends to a large degree upon the
finding or opinion of the judge conducting
the examination, such a finding should not
disregard the facts before the judge nor run
counter to the clear dictates of reasons (See
La Chemise Lacoste, S.A. v. Fernandez, 129
SCRA 391). The judge or fiscal, therefore,
should not go on with the prosecution in the
hope that some credible evidence might later
turn up during trial for this would be a
flagrant violation of a basic right which the
courts are created to uphold. It bears
repeating that the judiciary lives up to its
mission by vitalizing and not denigrating
constitutional rights. So it has been before.
It should continue to be so. (Mercado v.

Court of First Instance of Rizal, 116 SCRA
93).
ABAD SANTOS, J., concurring:

Criminal Procedure; Supreme Court; The
Court has reverted back to the idea of
resolving moot questions on the merits.I
am glad that this Court has abandoned its
cavalier treatment of petitions by dismissing
them on the ground that they have become
moot and academic and stopped there. I am
glad that it has reverted to De la Camara vs.
Enage, Gonzales vs. Marcos and Aquino vs.
Enrile which
are
mentioned
in
the ponencia of Justice Gutierrez.
Same; Same; The
Supreme
Courts
decision in this case was agreed upon on
October 24, 1984, but, alas, was still
circulating when the trial court dropped the
case against petitioner on January 18,
1985.Justice Gutierrez states that, The
470
Court had already deliberated on this case,

and a consensus on the Courts judgment
had been arrived at. Let me add that the
consensus had taken place as early as
October 24, 1984, and the decision started to
circulate for signature on November 2, 1984.
Alas, on January 18, 1985, the decision was
still circulatingovertaken by events. The
decision could have had a greater impact
had it been promulgated prior to the
executive action.
PETITION to review the judgment of

the Court of First Instance of Rizal, Br.
XVIII. Pao, J.
the Court.
443
GUTIERREZ, JR., J.:
The
petitioner
invokes
the
constitutionally protected right to life
and liberty guaranteed by the due
process clause, alleging that no prima
facie case has been established to
warrant the filing of an information for
subversion against him. Petitioner asks
this Court to prohibit and prevent the
respondents from using the iron arm of
the law to harass, oppress, and
persecute him, a member of the
democratic
opposition
in
the
Philippines.
The background of this case is a
matter of public knowledge.
A rash of bombings occurred in the
Metro Manila area in the months of
August, September and October of
443
1980. On
September 6, 1980, one Victor
Burns Lovely, Jr., a Philippine-born
American citizen from Los Angeles,
California, almost killed himself and
471
injured his younger brother, Romeo, as

a result of the explosion of a small
bomb inside his room at the YMCA
building in Manila. Found in Lovelys
possession by police and military
authorities were several pictures taken
sometime in May, 1980 at the birthday
party of former Congressman Raul
Daza held at the latters residence in a
Los Angeles suburb. Petitioner Jovito
R. Salonga and his wife were among
those whose likenesses appeared in the
group pictures together with other
guests, including Lovely.
As a result of the serious injuries he
suffered, Lovely was brought by
military and police authorities to the
AFP Medical Center (V. Luna Hospital)
where he was placed in the custody and
detention of Col. Roman P. Madella,
under the over-all direction of General
Fabian Ver, head of the National
Intelligence and Security Authority

(NISA). Shortly afterwards, Mr. Lovely
and his two brothers, Romeo and
Baltazar Lovely were charged with
subversion,
illegal
possession
of
explosives, and damage to property.
On September 12, 1980, bombs once
again exploded in Metro Manila
including one which resulted in the
death of an American lady who was
shopping at Rustans Supermarket in
Makati and others which caused
injuries to a number of persons.
444
444

On September 20, 1980, the Presidents

anniversary television radio press
conference was broadcast. The younger
brother of Victor Lovely, Romeo, was
presented during the conference. In his
interview, Romeo stated that he had
driven his elder brother, Victor, to the
472
petitioners house in Greenhills on two

occasions. The first time was on August
20, 1980. Romeo stated that Victor did
not bring any bag with him on that day
when he went to the petitioners
residence and did not carry a bag when
he left. The second time was in the
afternoon of August 31, 1980 when he
brought Victor only to the gate of the
petitioners house. Romeo did not enter
the petitioners residence. Neither did
he return that day to pick up his
brother.
The next day, newspapers came out
with almost identical headlines stating
in effect that petitioner had been linked
to the various bombings in Metro
Manila.
Meanwhile, on September 25, 1980,
Lovely was taken out of the hospitals
intensive care unit and transferred to
the office of Col. Madella where he was

held incommunicado for some time.
On the night of October 4, 1980, more
bombs were reported to have exploded
at three big hotels in Metro Manila,
namely: Philippine Plaza, Century
Park Sheraton and Manila Peninsula.
The bombs injured nine people. A
meeting of the General Military
Council was called for October 6, 1980.
On October 19, 1980, minutes after
the President had finished delivering
his speech before the International
Conference of the American Society of
Travel Agents at the Philippine
International Convention Center, a
small bomb exploded. Within the next
twenty-four hours, arrest, search, and
seizure orders (ASSOs) were issued
against persons who were apparently
implicated by Victor Lovely in the
series of bombings in Metro Manila.
473
One of them was herein petitioner.

Victor Lovely offered himself to be a
state witness and in his letter to the
President, he stated that he will reveal
everything he knows about the
bombings.
On October 21, 1980, elements of the
military went to the hospital room of
the petitioner at the Manila Medical
Center where he was confined due to
his recurrent and chronic ailment
445
of bronchial asthma and placed him

under arrest. The arresting officer
showed the petitioner the ASSO form
which however did not specify the
charge or charges against him. For
some time, the petitioners lawyers
were not permitted to visit him in his
hospital room until this Court in the
case of Ordoez v. Gen. Fabian Ver, et
al., (G.R. No. 55345, October 28, 1980)

issued an order directing that the
petitioners right to be visited by
counsel be respected.
On November 2, 1980, the petitioner
was transferred against his objections
from his hospital arrest to an isolation
room without windows in an army
prison camp at Fort Bonifacio, Makati.
The petitioner states that he was not
informed why he was transferred and
detained, nor was he ever investigated
445
or questioned
by any military or civil
authority.
Subsequently, on November 27, 1980,
the petitioner was released for
humanitarian reasons from military
custody and placed under house arrest
in the custody of Mrs. Lydia Salonga
still without the benefit of any
investigation or charges.
474
On December 10, 1980, the Judge

Advocate General sent the petitioner a
Notice of Preliminary Investigation
in People v. Benigno Aquino, Jr., et
al.(which included petitioner as a coaccused), stating that the preliminary
investigation of the above-entitled case
has been set at 2:30 oclock p.m. on
December 12, 1980 and that petitioner
was given ten (10) days from receipt of
the charge sheet and the supporting
evidence within which to file his
counter-evidence. The petitioner states
that up to the time martial law was
lifted on January 17, 1981, and despite
assurance to the contrary, he has not
received any copies of the charges
against him nor any copies of the socalled supporting evidence.
On February 9, 1981, the records of
the case were turned over by the Judge
Advocate Generals Office to the

Ministry of Justice.
On
February
24,
1981,
the
respondent City Fiscal filed a complaint
accusing petitioner, among others of
having violated Republic Act No. 1700,
as amended by P.D. 885 and Batas
Pambansa Blg. 31 in relation to Article
142 of the Revised Penal Code. The
inquest court set the preliminary inves446
446

tigation for March 17, 1981.

On March 6, 1981, the petitioner was
allowed to leave the country to attend a
series of church conferences and
undergo
comprehensive
medical
examinations of the heart, stomach,
liver, eye and ear including a possible
removal of his left eye to save his right
eye. Petitioner Salonga almost died as
one of the principal victims of the
475
dastardly bombing of a Liberal Party

rally at Plaza Miranda on August 20,
1971. Since then, he has suffered
serious disabilities. The petitioner was
riddled with shrapnel and pieces still
remain in various parts of his body. He
has an AV fistula caused by a piece of
shrapnel lodged one millimeter from
his aorta. The petitioner has limited
use of his one remaining hand and
arms, is completely blind and phthisical
in the left eye, and has scar like
formations in the remaining right eye.
He is totally deaf in the right ear and
partially deaf in the left ear. The
petitioners physical ailments led him
to seek treatment abroad.
On or around March 23, 1981, the
counsel for petitioner was furnished a
copy of an amended complaint signed
by Gen. Prospero Olivas, dated March
12, 1981, charging the petitioner, along
with 39 other accused with the

violation of R.A. 1700, as amended by
P.D. 885, Batas Pambansa Blg. 31 and
P.D. 1736. Hearings for preliminary
investigation were conducted. The
prosecution presented as its witnesses
Ambassador Armando Fernandez, the
Consul General of the Philippines in
Los Angeles, California, Col. Balbino
Diego, PSC/NISA, Chief, Investigation
and Legal Panel of the Presidential
Security Command and Victor Lovely
himself.
On October 15, 1981, the counsel for
petitioner filed a motion to dismiss the
charges against petitioner for failure of
the prosecution to establish a prima
facie case against him.
On December 2, 1981, the respondent
judge denied the motion. On January 4,
1982, he issued a resolution ordering
the filing of an information for violation
476
of the Revised Anti-Subversion Act, as

amended, against forty (40) people,
including herein petitioner.
The resolutions of the respondent
judge dated December 2, 1981 and
January 4, 1982 are now the subject of
the petition. It is the contention of the
petitioner that no prima facie case
447
has been established by the prosecution

to justify the filing of an information
against him. He states that to sanction
his further prosecution despite the lack
of evidence against him would be to
admit that no rule of law exists in the
Philippines today.
After a painstaking review of the
records, this Court finds the evidence
offered by the prosecution utterly
insufficient to establish a prima facie
case against the petitioner. We grant

the petition.
However, before going into the merits
of the case, we shall pass upon a
procedural issue raised by the
respondents.
The respondents call for adherence to
the consistent rule that the denial of a
motion to quash or to dismiss, being
447
interlocutory
in character, cannot be
questioned by certiorari; that since the
question of dismissal will again be
considered by the court when it decides
the case, the movant has a plain,
speedy and adequate remedy in the
ordinary course of law; and that public
interest
dictates
that
criminal
prosecutions should not be enjoined.
The general rule is correctly stated.
However, the respondents fail to
appreciate or take into account certain
exceptions when a petition for
477
certiorari is clearly warranted. The

case at bar is one such exception.
In the case of Mead v. Angel (115
SCRA 256) the same contentions were
advanced by the respondents to wit:
xxx
xxx
xxx
x x x Respondents advert to the rule that
when a motion to quash filed by an accused
in a criminal case shall be denied, the
remedy of the accused-movant is not to file a
petition for certiorari or mandamus or
prohibition, the proper recourse being to go
to trial, without prejudice to his right to
reiterate the grounds invoked in his motion
to quash if an adverse judgment is rendered
against him, in the appeal that he may take
therefrom in the manner authorized by law.
(Mill v. People, et al., 101 Phil. 599;Echarol
v. Purisima, et al., 13 SCRA 309.)
On this argument, we ruled:

There is no disputing the validity and
wisdom of the rule in-
448
448

voked by the respondents. However, it is

also recognized that, under certain
situations, recourse to the extraordinary
legal remedies of certiorari, prohibition or
mandamus to question the denial of a
motion to quash is considered proper in the
interest
of
more
enlightened
and
substantial justice, as was so declared in
Yap v. Lutero,G.R. No. L-12669, April 30,
1969.
Infinitely
more
important
than
conventional adherence to general rules
of criminal procedure is respect for the
citizens right to be free not only from
arbitrary arrest and punishment but
also from unwarranted and vexatious
prosecution. The integrity of a
democratic society is corrupted if a
person is carelessly included in the trial
of around forty persons when on the
478
very face of the record no evidence

linking him to the alleged conspiracy
exists.
Ex-Senator Jovito Salonga, himself a
victim of the still unresolved and
heinous Plaza Miranda bombings, was
arrested at the Manila Medical Center
while
hospitalized
for
bronchial
asthma. When arrested, he was not
informed of the nature of the charges
against him. Neither was counsel
allowed to talk to him until this Court
intervened through the issuance of an
order directing that his lawyers be
permitted to visit him (Ordonez v. Gen.
Fabian Ver, et al., G.R. No. 55345,
October 28, 1980). Only after four
months of detention was the petitioner
informed for the first time of the nature
of the charges against him. After the
preliminary
investigation,
the
petitioner moved to dismiss the
complaint but the same was denied.

Subsequently, the respondent judge
issued a resolution ordering the filing of
an information after finding that a
prima facie case had been established
against all of the forty persons accused.
In the light of the failure to show
prima facie that the petitioner was
probably guilty of conspiring to commit
the crime, the initial disregard of
petitioners
constitutional
rights
together with the massive and
damaging publicity made against him,
justifies the favorable consideration of
this petition by this Court. With former
Senator Benigno Aquino, Jr. now
deceased, there are at least 38 other coaccused to be tried with the petitioner.
The prosecution must present proof
beyond reasonable doubt against each
and every one of the 39
449
479
accused, most of whom have varying

participations in the charge for
subversion. The prosecutions star
witness Victor Lovely and the only
source of information with regard to the
alleged link between the petitioner and
the series of terrorist bombings is now
in the United States. There is reason to
believe the petitioners citation of
international news dispatches that the
prosecution may find it difficult if not
infeasible to bring him back to the
Philippines to testify against
**
In
the Philippines
Honor, I came back to tell what happened in the

Philippines. I was not the bomber, I was bombed.
The United Press International dispatch from

San
Francisco,
U.S.,
written
by
Spencer
Sherman, gives a fuller account, thus:

With the grand jury present in the courtroom Lovely
alleged it was Philippine authorities who were
responsible for his injuries. It was they, not him, who
placed the bomb in his hotel room, he said.
I came back to the States to tell what happened in
the Philippines. I was not the bomber. I was bombed.
There are so many secrets that will come out soon. I
cannot (testify) even if I will be jailed for lifetime. I
welcome that.
_______________
**
Francisco federal grand jury and instead said, Your
Daily
UPO press dispatch from
Express, dated
December 8, 1981, Lovely was quoted as having

said in the United States that I was not the
bomber, I was bombed.
Lovely, who was granted immunity in the United
States, reportedly would not testify before a San
San Francisco, November 24, 1981.
The Philippine News, a San Francisco-based

weekly, in its issue of December 23, 1981,
contains the same account, with the following
words:
480
The respondents contend that the

prosecution will introduce additional
almost murdered. I cannot continue. My friends were
evidence during the trial and if the
murdered before I came to the United States . . . I
evidence, by then, is not sufficient to
came back to the United States to tell what happened
prove the petitioners guilt, he would
in the Philippines. I was not the bomber, I was
anyway be acquitted. Yes, but under
bombed. There are many secrets that will come out
the circumstances of this case, at what
very soon I cannot. Even if I will be jailed for lifetime.
cost not only to the petitioner but to the
I welcome that.
basic fabric of our criminal justice
450
450
system?
The term prima facie evidence
the petitioner. If Lovely refused to
denotes evidence which, if unexplained
testify before an American federal
or uncontradicted, is sufficient to
grand jury how could he possibly be
sustain the proposition it supports or to
made to testify when the charges
establish the facts, or to counterbalance
against the respondent come up in the
the presumption of innocence to
course of the trial against the 39
warrant a conviction. The question
accused. Considering the foregoing, we
raised before us now is: Were the
find it in the interest of justice to
evidences
against
the
petitioner
resolve at this stage the issue of
uncontradicted and if they were
whether or not the respondent judge
unexplained or uncontradicted, would
gravely abused his discretion in issuing
they, standing alone, sufficiently
the questioned resolutions.
Your Honor . . . I am not going to participate I was
481
overcome the presumption of innocence

and warrant his conviction?
We do not think so.
The records reveal that in finding a
case against the petitioner, the
respondent judge relied only on the
testimonies of Col. Balbino Diego and
Victor Lovely. Ambassador Armando
Fernandez, when called upon to testify
on subversive organizations in the
United States nowhere mentioned the
petitioner as an organizer, officer or
member of the Movement for Free
Philippines (MFP), or any of the
organizations
mentioned
in
the
complaint. Col. Diego, on the other
hand, when asked what evidence he
was able to gather against the
petitioner depended only on the
statement of Lovely that it was the
residence of ex-Senator Salonga where
they met together with Renato Taada,
one of the brains of the bombing

conspiracy x x x and the fact that Sen.
Salonga has been meeting with several
subversive personnel based in the
U.S.A. was also revealed to me by
Victor Burns Lovely; and on the group
pictures taken at former Congressman
Raul Dazas birthday party. In con451
cluding that a conspiracy exists to

overthrow by violent means the
government of the Philippines in the
United States, his only bases were
documentary as well as physical and
sworn statements that were referred to
me or taken by me personally, which of
course negate personal knowledge on
his part. When asked by the court how
he would categorize petitioner in any of
the subversive organizations, whether
482
petitioner was an organizer, officer or a

member, the witness replied:
confined his investigation to Victor

Burns Lovely, the sole witness whose
A. To categorize former Senator Salonga if he were an organizer, he is an officer or
testimony had apparently implicated
he is a member, your Honor, please, we have to consider the surrounding
circumstances and on his involvement: first, Senator Salonga wanted
always to
petitioner
in the bombings which
travel to the United States atleast once a year or more often under the pretext of to
eventually
led to the filing of the
undergo some sort of operation and participate in some sort of seminar.
(t.s.n.,
April 21, 1981, pp. 14-15)
information.
Such testimony, being based on
Lovelys account of the petitioners
affidavits of other persons and purely
involvement with the formers bombing
hearsay, can hardly qualify as prima
mission is found in his sworn statement
facie evidence of subversion. It should
made before Col. Diego and Lt. Col.
not have been given credence by the
Madella and taken on October 17, 1980
court in the first place. Hearsay
at the AFP Medical Center. Lovely was
evidence, whether objected to or not,
not presented as a prosecution or state
has no probative value as the affiant
witness
but
only
as
a defense
could not have been cross-examined on
witness for his two younger brothers,
the facts stated therein. (SeePeople v.
Romeo and Baltazar, who were both
Labinia, 115 SCRA 223; People v.
included in the complaint but who were
Valero,112 SCRA 661). Moreover, as
later dropped from the information.
Victor Lovely, himself, was personally
Victor Lovely was examined by his
examined by the court, there was no
counsel and cross-examined by the
need for the testimony of Col. Diego.
fiscal. In the process, he identified the
Thus, the inquest judge should have
statement which he made before
483
attache case arrives, Il1 just call you. I gave him my number
second visit, Salonga said, Ill be very busy so just come bac
452
August at 4 P.M. On that date, I was with friends at Batulao R
to hurry back to be at Salongas place for the appointment. I a
Salongas place at exactly 4 P.M.
Col. Diego and Lt. Col. Madella. After
39. Q. What happened then?
Lovelys testimony, the prosecution
A. I was ushered to the sala by Mrs. Salonga and after
452
made a manifestation before the court

that it was adopting Lovely as a
prosecution witness.
According to Lovelys statement, the
following events took place:
36. Q.
A.
37. Q.
A.
38. Q.
A.
453

five minutes, Sen. Salonga joined me in the sala. Sen. Salonga
me that somebody will be coming to give me the attache case
not tell me the name.
40. Q. Are there any subject matters you discussed while waiting for
Did Psinakis tell you where to stay?
somebody to deliver your materials?
Yes, at first he told me to check-in at Manila Hotel or the Plaza Hotel
where
A.
Yes, Salonga asked if Sen. Aquino and I have met, I explained
somebody would come to contact me and give the materials needed in thethe efforts of Raul Daza in setting up that meeting but I have p
execution of my mission. I thought this was not safe so I disagreed with him.
business commitments at Norfolk, Virginia. I told him, howev
Mr. Psinakis changed the plan and instead told me to visit the residence of
through the efforts of Raul Daza, I was able to talk with Nino
Ex-Sen. Jovito Salonga as often as I can and someone will meet me thereintothe airport telephone booth in San Francisco. He also asked
give the materials I needed to accomplish my mission.
Raul Daza, Steve Psinakis and the latest opposition group acti
Did you comply as instructed?
it seems he is well informed.
Yes, I arrived in Manila on August 20, 1980 and stayed at the41.
residence
Q. of
How long did you wait until that somebody arrived?
Mr. Johnny Chua, husband of my business partner, then I went to theA. About thirty (30) minutes.
Hospital where I visited my mother and checked-in at Room 303
the What happened when the man arrived?
41.of Q.
YMCA at Concepcion Street, Manila.
A. This man arrived and I was greatly surprised to see Atty. Rena
Did you visit the residence of former Senator Jovito Salonga as directed by
Taada. Jovy Salonga was the one who met him and as I obse
Psinakis?
parang nasa sariling bahay si Taada nung dumating. They tal
I visited Sen. Salongas place three (3) times, the first visit was August 20
or (5) minutes in very low tones so I did not hear what they
five
21, and the last was 4:00 P.M. of August 31, 1980. In addition to these visits,
about. After their whispering conversations, Sen. Salonga left
I TALKED to him on the phone about three or four times. On my first visit,
timeI Atty. Nits Taada told me Nasa akin ang kailangan mo
told him I am expecting an attache case from somebody which will be kotse.
delivered to your house, for which Sen. Salonga replied Wala
namang
43.
Q. Were the materials given to you?
nagpunta dito at wala namang attache case para sa iyo. However, ifA.
yourWhen Sen. Salonga came back, we asked to be permitted to le
484
rode in Atty. Nits Taadas old Pontiac car colored dirty brown andasked Sen. Salonga if someone had given him an attache case for m
proceeded to Broadway Centrum where before I alighted, Atty. Taada
nobody. Afterw ards, I made three calls to Sen. Salonga. Sen. Salon
handed me a Puma bag containing all the materials I needed.
call me again on the 31st of August. I did not call him, I just went
xxx xxx
xxx
the 31st of August at 4 P.M. A few minutes after my arrival, Atty. R
45. Q. What were the contents of the Puma bag?
arrived. When he had a chance to be near me, he (Atty. Taada) wh
A. Ten (10) pieces of Westclox pocket watch with screw and wirings, that
ten he had the attache case and the materials I needed in his car. T
(10) pieces electrical blasting caps 4" length, ten (10) pieces non- were given to me by Atty. Taada when I alighted at the Broadway
electrical blasting caps 1" length, nine (9) pieces volts dry cell battery,
(Italics supplied)
two (2) improvised electrical testers, ten (10) plastic packs of high
During the cross-examination, counsel
explosive about 1 pound weight each.
for petitioner asked Lovely about the

454
SUPREME COURT REPORTS ANNOTATEDso-called destabilization plan which the
latter mentioned in his sworn
However, in his interview with Mr.
statement:
Ronnie Nathanielz which was aired on
Q. You mentioned in your statement taken on October 17, 1980, mark
about the so-called destabilization plan of Aquino. When you atten
Channel 4 on November 8, 1980 and
birthday party of Raul Daza wherein Jovito Salonga was also prese
destabilization plan as alleged by you already formulated?
which was also offered as evidence by
455
the accused, Lovely gave a different
story which negates the above
WITNESS:
testimony insofar as the petitioners
A. Not to my knowledge.
participation was concerned:
COURT TO WITNESS:
454
xxx
xxx
xxx
Q. Mr. Witness, who invited you to the party?
Q. Who were the people that you contacted in Manila and for what purpose?
A. Raul Daza, your Honor.
A. Before I left for the Philippines. Mr. Psinakis told me to check in atQ.
the Manila
Were you told that Mr. Salonga would be present in the party?
Hotel or the Plaza Hotel, and somebody would just deliver the materials
I
A I would
am really not quite sure, your Honor.
need. I disapproved of this, and I told him I would prefer a place that
Q.is familiar
Alright.toYou said initially it was social but then it became political.
me or who is close to me. Mr. Psinakis suggested the residence of Sen. Salonga.
any political action taken as a result of the party?
And so, I arrived in Manila on August 20, 1980, I made a call to Sen.
Salonga,
A. Only political discussion, your Honor. (TSN, July 8, 1981, pp. 69but he was out. The next day I made a call again. I was able to contact him. I made
an appointment to see him. I went to Sen. Salongas house the following day. I
485
Counsel for petitioner also asked

Lovely whether in view of the latters
awareness of the physical condition of
petitioner,
he
really
implicated
petitioner in any of the bombings that
occurred in Metro Manila. The fiscal
objected without stating any ground. In
sustaining the objection, the Court
said:
unfair to Mr. Salonga. (TSN. July 8, 1981,

p. 67)
Sustained . . . The use of the word

implicate might expand the role of Mr.
Salonga. In other words, you are widening
the avenue of Mr. Salongas role beyond the
participation stated in the testimony of this
witness about Mr. Salonga, at least, as far
as the evidence is concerned, I supposed, is
only being in the house of Mr. Salonga
which was used as the contact point. He
never mentions Mr. Salonga about the
bombings. Now these words had to be put in
the mouth of this witness. That would be
456
Respondent judge further said:
COURT:
As the Court said earlier, the parts or portions affecting Salonga o
witness coming to Manila already then the matter of . . . I have gone o
statement and there is no mention of Salonga insofar as activities in th
is concerned. I dont know why it concerns this cross-examination.
ATTY. YAP:
Because according to him, it was in pursuance of the plan that he
Manila.
456
SUPR
AN
COURT:
According to him it was Aquino. Daza, and Psinakis who
asked him to come here, but Salonga was introduced only when
he (Lovely) came here. Now, the tendency of the question is also
to connect Salonga to the activities in the United States. It seems
to be the thrust of the questions.
COURT:
In other words, the point of the Court as of the time when
you asked him question, the focus on Salonga was only from the
time when he met Salonga at Greenhills. It was the first time that
the name of Salonga came up. There was no mention of Salonga
in the formulation of the destabilization plan as affirmed by him.
But you are bringing this up although you are only crossexamining for Salonga as if his (Lovelys) activities in the
United States affected Salonga. (TSN. July 8, 1981, pp. 73-74).
486
Apparently, the respondent judge

wanted to put things in proper
perspective by limiting the petitioners
alleged participation in the bombing
mission only to the fact that petitioners
house was used as a contact point
between Lovely and Taada, which was
all that Lovely really stated in his
testimony.
However, in the questioned resolution
dated
December
2,
1981,
the
respondent judge suddenly included the
activities of petitioner in the United
States as his basis for denying the
motion to dismiss:
It is therefore clear that the prosecutions

evidence has established facts and
circumstances sufficient for a finding that
excludes a Motion to Dismiss by respondent
Salonga. The Movement for Free Philippines
is undoubtedly a force born on foreign soil, it
appears to rely on the resources of foreign
entities, and is being (sic) on gaining
ascendancy in the Philippines with the use
of force and for that purpose it has linked
itself with even communist organizations to
achieve its end. It appears to rely on aliens
for its supporters and financiers.
On the activities of Salonga in the United

States, the witness, Lovely, in one of his
statements declared: To the best of my
recollection he mentioned of some kind of
violent struggle in the Philippines being
most likely should reforms be not instituted
by President Marcos immediately.
The jump from the contact point

theory to the conclusion of involvement
in subversive activities in the United
States is not only inexplicable but
without foundation.
The respondents admit that no
evidence was presented directly linking
457
487
petitioner Salonga to actual acts of

violence or terrorism. There is no proof
of his direct participation in any overt
acts of subversion. However, he is
tagged as a leader of subversive
organizations for two reasons
1. (1)Because his house was used as
a contact point; and
2. (2)Because he mentioned some
kind of violent struggle in the
Philippines being most likely
should reforms be not instituted
by President Marcos immediately.
The contact point theory or what the
petitioner calls the guilt by visit or
guilt by association theory is too
tenuous a basis to conclude that
Senator Salonga was a leader or
mastermind of the bombing incidents.
To indict a person simply because some
plotters, masquerading as visitors,
have somehow met in his house or

office would be to establish a dangerous
precedent. The right of citizens to be
secure against abuse of governmental
processes in criminal prosecutions
would be seriously undermined.
The testimony of Victor Lovely
against petitioner Salonga is full of
inconsistencies. Senator Salonga and
Atty. Renato Taada could not have
whispered to one another because the
petitioner is almost totally deaf. Lovely
could not have met Senator Salonga at
a Manglapus party in Washington, D.C.
in 1977because the petitioner left for
the United States only on November,
1978. Senator Salonga denies having
known Mr. Lovely in the United States
or in the Philippines. He states that he
has hundred of visitors from week to
week in his residence but cannot recall
any Victor Lovely.
488
The presence of Lovely in a group

picture taken at Mr. Raul Dazas
birthday party in Los Angeles where
Senator Salonga was a guest is not
proof of conspiracy. As stated by the
petitioner, in his many years in the
turbulent world of politics, he has posed
with all kinds of people in various
groups and various places and could
not possibly vouch for their conduct.
Commenting on the matter, newspaper
columnist Teodoro
happens to pose with the petitioner for

a group picture at a birthday party
abroad, or even visit him with others in
his home, the petitioner does not
thereby become a rebel or subversive,
much less a leader of a subversive
group. More credible and stronger
evidence is necessary for an indictment.
Nonetheless, even if we discount the
flaws in Lovelys testimony and dismiss
the refutations and arguments of the
petitioner, the prosecution evidence is
still inadequate to establish a prima
458
458
facie finding.
The prosecution has not come up with
Valencia stated that Filipinos love to
even a single iota of evidence which
pose with important visitors and the
could positively link the petitioner to
picture proves nothing.
any proscribed activities of the
It is likewise probable that a national
Movement for Free Philippines or any
figure and former politician of Senator
subversive organization mentioned in
Salongas stature can expect guests and
the complaint. Lovely had already
visitors of all kinds to be visiting his
testified that during the party of former
home or office. If a rebel or subversive
489
Congressman Raul Daza which was

alleged to have been attended by a
number of members of the MFP, no
political action was taken but only
political discussion. Furthermore, the
alleged opinion of the petitioner about
the likelihood of a violent struggle here
in the Philippines if reforms are not
instituted, assuming that he really
stated the same, is nothing but a
legitimate exercise of freedom of
thought and expression. No man
deserves
punishment
for
his
thoughts. Cogitationis poenam nemo
meretur. And as the late Justice Oliver
W. Holmes stated in the case of U.S. v.
Schwimmer, 279 U.S. 644, x x x if
there is any principle of the
Constitution that more imperatively
calls for attachment than any other it is
the principle of free thoughtnot free
thought for those who agree with us but

freedom for the thought that we hate.
We have adopted the concept that
freedom of expression is a preferred
right and, therefore, stands on a higher
level than substantive economic or
other liberties. The primacy, the high
estate accorded freedom of expression is
a fundamental postulate of our
constitutional system. (Gonzales v.
Commission on Elections, 29 SCRA
835). As explained by Justice Car459
dozo in Palko v. Connecticut (302 U.S.

319) this must be so because the
lessons of history, both political and
legal, illustrate that freedom of thought
and speech is the indispensable
condition of nearly every other form of
freedom. Protection is especially
mandated for political discussions. This
490
Court is particularly concerned when

allegations are made that restraints
have been imposed upon mere
criticisms of government and public
officials. Political discussion is essential
to the ascertainment of political truth.
It cannot be the basis of criminal
indictments.
The United States Supreme Court
in Noto v. United States (367 U.S. 290)
distinguished between the abstract
teaching of the moral propriety or even
moral necessity for a resort to force and
violence and speech which would
prepare a group for violent action and
steel it to such action. In Watts v.
United States (394 U.S. 705), the
American court distinguished between
criminal threats and constitutionally
protected speech. It stated:
We do not believe that the kind of political
hyperbole indulged in by petitioner fits
within that statutory term. For we must

interpret the language Congress chose
against the background of a profound
national commitment to the principle that
debate on public issues should be
uninhibited, robust, and wide open and that
it may well include vehement, caustic, and
sometimes unpleasantly sharp attacks on
government and public officials. New York
Times Co. v. Sullivan (376 U.S. 254). The
language of the political arena, like the
language used in labor disputed is often
vituperative, abusive, and inexact. We agree
with petitioner that his only offense was a
kind of very crude offensive method of
stating a political opposition to the
President.
In the case before us, there is no

teaching of the moral propriety of a
resort to violence, much less an
advocacy of force or a conspiracy to
organize the use of force against the
491
duly constituted authorities. The

alleged remark about the likelihood of
violent struggle unless reforms are
instituted is not a threat against the
government. Nor is it even the
uninhibited,
robust,
caustic,
or
unpleasantly sharp attack which is
protected by the guarantee of free
speech. Parenthetically, the American
case of
allegedly used according to the best

recollections of Mr. Lovely are light
years away from such type of
proscribed advocacy.
Political discussion even among those
opposed to the present administration
is within the protective clause of
freedom of speech and expression. The
same cannot be construed as subversive
activities per se or as evidence of
membership
in
a
subversive
460
460
organization.
Under
Presidential
Decree No. 885, Section 3, paragraph 6,
Brandenburg v. Ohio (395 U.S. 444)
political discussion will only constitutestates
that
the
constitutional
prima facie evidence of membership in
guarantees of free speech and free
a subversive organization if such
press do not permit a State to forbid or
discussion amounts to:
proscribe advocacy of the use of force or
of law violation except where such
advocacy is directed to inciting or
producing imminent lawless action and
is likely to incite or produce such
action. The words which petitioner
(6) Conferring with officers or other

members
of
such
association
or
organization in furtherance of any plan or
enterprise thereof.
492
As stated earlier, the prosecution has

failed to produce evidence that would
establish any link between petitioner
and any subversive organization. Even
if we lend credence to Lovelys
testimony that a political discussion
took place at Dazas birthday party, no
proof whatsoever was adduced that
such discussion was in furtherance of
any plan to overthrow the government
through illegal means. The alleged
opinion that violent struggle is likely
unless reforms are instituted by no
means shows either advocacy of or
incitement to violence or furtherance of
the
objectives
of
a
subversive
organization.
Lovely also declared that he had
nothing to do with the bombing on
August 22, 1980, which was the only
bombing incident that occurred after
his arrival in Manila on August 20, and
before the YMCA explosion on

September 6, 1980. (See TSN, pp. 6363, July 8, 1981). He further testified
that:
WITNESS:
Actually, it was not my intention to do some kind of bombing agains
government. My bombing mission was directed against the particular fam
(referring to the Cabarrus family). [TSN, p. 11, July 9, 1981] [Rollo, p. 1
461
Such a statement wholly negates any

politically motivated or subversive
assignment which Lovely was supposed
to have been commissioned to perform
upon the orders of his co-accused and
which was the very reason why they
wer charged in the first place. The
respondent judge also asked Lovely
about the possible relation between
Cabarrus and petitioner:
COURT:
Q. Did you suspect any relation between Cabarrus and Jovito Salonga
implicate Jovito Salonga?
A. No, your Honor. I did not try to implicate Salonga.
493
It should be noted that after Lovelys

testimony, the prosecution manifested
to the court that it was adopting him as
a prosecution witness. Therefore, the
prosecution became irreversibely bound
by Lovelys disclaimers on the witness
stand, that it was not his intention to
do some kind of bombing against the
government and that he did not try to
implicate Salonga, especially since
Lovely is the sole witness adopted by
the prosecution who could supposedly
establish the link between the
petitioner and the bombing incidents.
The respondent court should have
taken these factors into consideration
before concluding that a prima facie
case exists against the petitioner.
Evidence must not only proceed from
the mouth of a credible witness but it
must be credible in itself such as the
common experience and observation of
mankind can approve as probable

under the circumstances. (People v.
Dayad, 56 SCRA 439). In the case at
bar, the prosecution cannot even
present a credible version of the
petitioners role in the bombings even if
it ignores the subsequent disclaimers of
Lovely and without relying on mere
affidavits including those made by
Lovely during his detention.
The resolution dated January 4, 1982
suffers from the same defect. In this
resolution,
Lovelys
previous
declarations about the bombings as
part of the alleged destabilization plan
and the people behind the same were
accorded such credibility by the
respondent judge as if they had already
been proved beyond reasonable doubt.
The purpose of a preliminary
investigation is to secure the innocent
494
against hasty, malicious and oppressive

prosecution,
State. More important, it is a part of

the guarantees of freedom and fair play
which are birthrights of all who live in
462
462
our country. It is, therefore, imperative
upon the fiscal or the judge as the case
and to protect him from an open and
may be, to relieve the accused from the
public accusation of crime, from the
pain of going through a trial once it is
trouble, expense and anxiety of a public
ascertained that the evidence is
trial, and also to protect the state from
insufficient to sustain a prima facie
useless and expensive trials. (Trocio v.
case or that no probable cause exists to
Manta,118 SCRA 241; citing Hashim v.
form a sufficient belief as to the guilt of
Boncan, 71 Phil. 216). The right to a
the accused. Although there is no
preliminary investigation is a statutory
general formula or fixed rule for the
grant, and to withhold it would be to
determination of probable cause since
transgress constitutional due process.
the samemust be decided in the light of
(See People v. Oandasa, 25 SCRA 277)
the conditions obtaining in given
However, in order to satisfy the due
situations and its existence depends to
process clause it is not enough that the
a large degree upon the finding or
preliminary investigation is conducted
opinion of the judge conducting the exin the sense of making sure that a
amination, such a finding should not
transgressor shall not escape with
disregard the facts before the judge nor
impunity. A preliminary investigation
run counter to the clear dictates of
serves not only the purposes of the
495
reasons (See La Chemise Lacoste, S.A.

v. Fernandez, 129 SCRA 391). The
judge or fiscal, therefore, should not go
on with the prosecution in the hope
that some credible evidence might later
turn up during trial for this would be a
flagrant violation of a basic right which
the courts are created to uphold. It
bears repeating that the judiciary lives
up to its mission by vitalizing and not
denigrating constitutional rights. So it
has been before. It should continue to
be so. (Mercado v. Court of First
Instance of Rizal, 116 SCRA 93).
The Court had already deliberated on
this case, a consensus on the Courts
judgment had been arrived at, and a
draft ponencia was
circulating
for
concurrences and separate opinions, if
any, when on January 18, 1985,
respondent
Judge
Rodolfo
Ortiz
granted the motion of respondent City
Fiscal Sergio Apostol to drop the

subversion case against the peti463
tioner. Pursuant to instructions of the

Minister of Justice, the prosecution
restudied its evidence and decided to
seek the exclusion of petitioner Jovito
Salonga as one of the accused in the
information filed under the questioned
resolution.
We were constrained by this action of
the prosecution and the respondent
Judge to withdraw the draft ponencia
from circulating for concurrences and
signatures and to place it once again in
the Courts crowded agenda for further
deliberations.
Insofar as the absence of a prima
facie case to warrant the filing of
subversion charges is concerned, this
decision has been rendered moot and
496
academic by the action of the

prosecution.
Respondent Fiscal Sergio Apostol
correctly points out, however, that he is
not precluded from filing new charges
for the same acts because the petitioner
has not been arraigned and double
jeopardy does not apply. In that sense,
the case is not completely academic.
Recent developments in this case
serve to focus attention on a not too
well known aspect of the Supreme
Courts functions.
The setting aside or declaring void, in
proper cases, of intrusions of State
authority into areas reserved by the
Bill of Rights for the individual as
constitutionally
protected
spheres
where even the awesome powers of
Government may not enter at will is
not the totality of the Courts functions.
The Court also has the duty to

formulate guiding and controlling
constitutional
principles,
precepts,
doctrines, or rules. It has the symbolic
function of educating bench and bar on
the extent of protection given by
constitutional guarantees.
In dela Camara v. Enage (41 SCRA
1), the petitioner who questioned a
P1,195,200.00 bail bond as excessive
and, therefore, constitutionally void,
escaped from the provincial jail while
his petition was pending. The petition
became moot because of his escape but
we nonetheless rendered a decision and
stated:
The fact that the case is moot and academic
should not preclude this Tribunal from
setting forth in language clear and
unmistakable, the obligation of fidelity on
the part of lower court
464
464

497
judges to the unequivocal command of the

Constitution that excessive bail shall not be
required.
In Gonzales v. Marcos (65 SCRA 624)

whether or not the Cultural Center of
the Philippines could validly be created
through an executive order was mooted
by Presidential Decree No. 15, the
Centers new charter pursuant to the
Presidents legislative powers under
martial law. Still, this Court discussed
the constitutional mandate on the
preservation and development of
Filipino culture for national identity.
(Article XV, Section 9, Paragraph 2 of
the Constitution).
In the habeas corpus case of Aquino,
Jr., v. Enrile,59 SCRA 183), during the
pendency of the case, 26 petitioners
were released from custody and one
withdrew his petition. The sole
remaining
petitioner
was
facing
charges of murder, subversion, and

illegal possession of firearms. The fact
that the petition was moot and
academic did not prevent this Court in
the exercise of its symbolic function
from promulgating one of the most
voluminous decisions ever printed in
the Reports.
In this case, the respondents agree
with our earlier finding that the
prosecution evidence miserably fails to
establish a prima facie case against the
petitioner, either as a co-conspirator of
a destabilization plan to overthrow the
government or as an officer or leader of
any subversive organization. They have
taken the initiative of dropping the
charges against the petitioner. We
reiterate the rule, however, that this
Court will not validate the filing of an
information based on the kind of
498
evidence against the petitioner found in

the records.
WHEREFORE,
the
petition
is
DISMISSED for having become moot
and academic.
SO ORDERED.
Fernando, C.J., Teehankee, Maka
siar,Concepcion,
Jr., MelencioHerrera, Plana, Escolin,Relova and Cue
vas, JJ., concur.
Aquino, De
la
Fuente and Alampay, JJ., no part.
Abad Santos, J., see separate
opinion.
465
ABAD SANTOS, J., concurring:

Del Castillo vs. Ponce Enrile, G.R. No.
62119, August 27, 1984, 131 SCRA 405,
was a petition for the writ of habeas
corpus. Before this Court could finally
act on the petition, the subject was

released and for that reason the
majority of this Court resolved to
dismiss the petition for having become
moot and academic. Justice Teehankee
and the undersigned disagreed with the
majority; we expressed the view that
despite the release of the subject, the
petition should have been resolved on
the merits because it posed important
legal questions.
Babst, et al. vs. National Intelligence
Board, Special Committee No. 2, et
al., G.R. No. 62992, Sept. 2, 1984, was a
petition for prohibition to restrain the
465
respondents
from interrogating the
petitioners, members of the print
media, on various aspects of their
works, feelings, sentiments, beliefs,
associations and even their private
lives. Again the majority of this Court
dismissed the petition because the
499
assailed proceedings had come to an

end thereby rendering the petition
moot and academic. In dismissing the
petition a short and mild note of
concern was added. And again Justice
Teehankee and the undersigned
disagreed with the majority. We
expressed the view that this Court
should rule squarely on the matters
raised in the petition rather than
dismiss it for having become moot and
academic.
I am glad that this Court has
abandoned its cavalier treatment of
petitions by dismissing them on the
ground that they have become moot
and academic and stopped there. I am
glad it has reverted to De la Camara vs.
Enage, Gonzales vs. Marcos and Aquino
vs. Enrile which are mentioned in
the ponencia of Justice Gutierrez.
I agree with the ponencia of Justice

Gutierrez that because the subversion
charges against the petitioner had been
dropped by the trial court on January
18, 1985, there is no longer any need to
prohibit
the
respondents
from
prosecuting Criminal Case No. Q-18606
insofar as he is concerned.
I am not revealing any confidential
matter by saying that the initial action
of this Court was to grant the petition,
i.e. prohibit the prosecution of the
petitioner. This is manifest
466
466

Bravo, Jr. vs. Borja
from the ponencia of Justice Gutierrez.

I regret that on this matter the Court
has been pre-empted by a first strike
which has occurred once too often.
Justice Gutierrez states that, The
Court had already deliberated on this
case, and a consensus on the Courts
500
judgment had been arrived at. Let me

add that the consensus had taken place
as early as October 24, 1984, and the
decision started to circulate for
signature on November 2, 1984. Alas,
on January 18, 1985, the decision was
still circulatingovertaken by events.
The decision could have had a greater
impact had it been promulgated prior
to the executive action.
Petition dismissed.
Notes.Petitioners
who
were
arrested without warrant by the
military for being subversive are
entitled to full enjoyment of rights
granted by law. (Morales, Jr. vs.
Enrile, 121 SCRA 538.)
The right of habeas corpus was
devised and exists as a speedy and
effectual remedy to relieve persons
from unlawful restraint. Any further
rights of the parties are left untouched
by decision on the writ, whose principal

purpose is to set the individual at
liberty. (Bernal vs. Enrile, 114 SCRA
940.)
o0o
501
HERACIO
R.
REVILLA,
petitioner, vs. HON.
COURT
OF
APPEALS, FORTUNATO REVILLA,
LUZ REVILLA DAVID, LORETO
REVILLA GUTIERREZ, VENERANDA
REVILLA
MANIQUEZ,
NICASIO
REVILLA,
PERFECTA
REVILLA
BALACANIA, JUSTINA REVILLA
DEL ROSARIO and AGRI-PINA
REVILLA CHACON, respondents.
Remedial Law; Evidence; Evidence is
negative when the witness states that he did
not see or know the occurrence of a fact and
positive when the witness affirms that a fact
did or did not occur.The peti-tioners
contention that Don Cayetanos denial
constitutes negative declaration which has
no probative value under the rules of evidence (p. 73, Rollo) is not correct. Don
Cayetanos assertion that he did not execute
another will, was not negative evidence.
Evidence is negative when the witness

states that he did not see or know the
occurrence of a fact, and positive when the
witness affirms that a fact did or did not
occur (2 Moore on Facts, p. 1338). Don
Cayetanos declaration that he did not
execute a second will, constitutes positive
evidence of a fact personally known to
himself: that he did not make a second will.
Same; Same; The lower courts distrust
for the testimonies of the attesting witnesses
to the second will deserve highest respect.
The testimonies of the notary and attesting
witnesses and even the photographs of what
purported to be the signing of the second
will were not given credit by the trial court
and the Court of Appeals. The courts
observation that the photographs do not
show the nature of the document that was
being signed, nor the date of the transaction,
is valid. The lower courts distrust for the
502
18190 affirming the decision of the

Regional Trial Court of Manila, Branch
39, in Special Proceeding No. 86-38444
PETITION for review of the decision of
which disallowed the second will
the Court of Appeals.
supposedly executed on September 13,
1982 by the late Don Cayetano Revilla
whose first Will dated January 28, 1978
the Court.
had been probated on March 21,
Manahan, Conrado
De
1980 on his own petition in Special
Vera, Aquino
&
Associates
Law
Proceeding No. 128828 of the same
Offices for petitioner.
court, while he was still alive.
Abad, Bautista & Associates for
In our resolution of November 19,
1990, we denied the petition for review
______________
for it raises only factual issues.
FIRST DIVISION.
However, upon the petitioners motion
for reconsideration, we set aside that
584
584
resolution and gave due course to the
Revilla vs. Court of Appeals
petition so that the parties may argue
GRIO-AQUINO, J.:
their respective positions with more
depth and scope. After a more thorough
This is a petition for review of the
consideration of those arguments, we
decision dated September 13, 1990 of
are persuaded that the decision of the
the Court of Appeals in CA-G.R. CV No.
testimonies of the attesting witnesses to the
second will deserves our highest respect.
503
Court of Appeals should not be

changed.
Don Cayetano Revilla y De la Fuente
owned two valuable pieces of land with
buildings on Calle Azcarraga (now C.M.
Recto Street) in the City of Manila, and
six (6) parcels of land in his hometown
of San Miguel, Bulacan. These
properties, now worth some P30
million, are registered in his name and
more particularly described as follows:
1. b)TRANSFER CERTIFICATE OF TITLE NO. 66173 (now

TCT No. 170751-ind.) REGISTRY OF DEEDS FOR THE
CITY OF MANILA
585
VOL. 217, JANUARY 27, 1993
A PARCEL OF LAND (Lot No. 24 of Block No. 2565 of the Cadastral
Survey of the City of Manila, Cadastral Case No. 46, G.L.R.O. Cadastral
Record No. 229) with the buildings and improvements now found thereon,
situated on the SW. line of Calle Azcarraga; District of Quiapo. x x x
containing an area of SEVEN HUNDRED SQUARE METERS AND
SEVENTY SQUARE DECIMETERS (700.70), MORE OR LESS.
1. a)TRANSFER CERTIFICATE OF TITLE NO. 76620 (not
Assessed valueP3,297,150.00
TCT No. 170750-ind.) REGISTRY OF DEEDS FOR THE

CITY OF MANILA
1. c)TRANSFER CERTIFICATE OF TITLE NO. T-192136

REGISTRY OF DEEDS FOR THE PROVINCE OF
A PARCEL OF LAND (Lot No. 22 of Block No. 2565 of the Cadastral
BULACAN
Survey of the City of Manila, Cadastral Case No. 46, G.L.R.O. Cadastral
Record No. 229) with the buildings and other improvements now found
A parcel of land (Lot 1245-A-6 of the subd. plan (LRC) Psd-177051, being
thereon, situated on the SW, line of Calle Azcarraga, District of Quiapo, x
a portion of Lot 1245-A, Psd-11366, LRC Cad. Rec. No. 700), situated in
x x containing an area of ONE THOUSAND ONE HUNDRED NINETY
the Barrio of Salacot, Mun. of San Miguel, Prov. of Bulacan, Island of
THREE SQUARE METERS AND SEVENTY SQUARE DECIMETERS
Luzon. x x x containing an area of TEN THOUSAND (10,000) SQUARE
(1,193.70), more or less, Assessed valueP1,834,980.00
METERS, more or less.
504
1. f)TRANSFER CERTIFICATE OF TITLE NO. 22263
Assessed valueP4,000.00

1. d)TRANSFER CERTIFICATE OF TITLE NO. T-192137
BULACAN

BULACAN
586
586

A parcel of land [Lot 1245-A-7 of the subd. plan (LRC) Psd-177051, being
a portion of Lot 1245-A, Psd-11366, LRC Cad. Rec. No. 700], situated in
the Barrio of Salacot, Mun. of San Miguel, Prov. of Bulacan, Island of
Luzon, x x x containing an area of SEVEN THOUSAND EIGHT
HUNDRED NINETY (7,890) SQUARE METERS, more or less.
A parcel of land (Lot No. 722 of the Cadastral Survey of San Miguel),
situated in the Municipality of San Miguel. x x x containing an area of
SEVENTEEN THOUSAND AND EIGHTY SIX (17,086) SQUARE
METERS, more or less.
1. e)TRANSFER CERTIFICATE OF TITLE NO. T-22049
1. g)TRANSFER CERTIFICATE OF TITLE NO. T-242301
BULACAN
BULACAN
A parcel of land (Lot 1245-A-9 of the subd. plan (LRC) Psd-177051, being
a portion of Lot 1245-A, Psd-11366, LRC Cad. Rec. No. 700), situated in
the Barrio of Salacot, Municipality of San Miguel, Prov. of Bulacan, x x x
containing an area of ONE THOUSAND FIVE HUNDRED FOURTEEN
(1,514) SQUARE METERS, more or less.
A parcel of land (Lot 108 of the Cad. Survey of San Miguel), situated in
the Municipality of San Miguel. x x x containing an area of FIVE
HUNDRED AND SEVENTY THREE SQUARE METERS more or less.
1. h)Cemetery lots with a mausoleum (Lots Nos. 66, 67, 68,

69, 70 and 71, Block No. 3) situated at the Sta. Rita
505
Memorial Park, San Miguel, Bulacan (no commercial

value). (pp. 63-64, Rollo.)
On January 28, 1978, Don Cayetano

Revilla, a bachelor, without issue nor
any surviving ascendants, executed a
last will and testament bequeathing all
his properties to his nine (9) nephews
and nieces, the parties herein, who are
full blood brothers and sisters,
including the petitioner, Heracio
Revilla. To each of them, he bequeathed
an undivided one-tenth (1/10) of his
estate reserving the last tenth for
masses to be said after his death, and
for the care of the religious images
which he kept in a chapel in San
Miguel, Bulacan, where masses could
be held also (p. 126, Records).
During his lifetime, Don Cayetano
had himself sought the probate of his
will and on March 21, 1980 the Court of
First Instance of Manila, Branch X,
after due hearing in Special Proceeding

No. 128828, allowed and admitted said
will to probate.
On November 19, 1981, however, the
City Hall of Manila was destroyed by
fire. The records of Special Proceeding
No. 128828 also went up in flames.
Shortly thereafter, a petition for the
reconstitution of the records of Special
Proceeding No. 128828 was filed, and
after a proper hearing wherein Don
Cayetano testified again, the petition
for reconstitution was granted. (Exh.
34). (pp. 51-52, 179, Rollo.)
587
VOL. 217, JANUARY 27, 1993
Don Cayetano died on November 11,

1986 at the age of 91.
On November 19, 1986, Heracio
Revilla, the oldest nephew, filed a
petition for probate of another will,
allegedly executed by Don Cayetano on
506
September 13, 1982 wherein he

(Heracio) was instituted as sole heir of
his uncles estate and executor of the
will.
The probate of the second will was
opposed by Heracios eight (8) brothers
and sisters, the private respondents
herein. As grounds for their opposition,
they alleged:
exploitation; d) that the alleged will was executed with undue and
improper pressure and influence on the part of the beneficiaries
thereon or some other persons for their benefit; e) that the will is
void and ineffective for the reason that it was executed under
duress or the influence of fear or of threats; and f) that the
decedent acted by mistake and the signatures in the alleged will
were procured by fraud or trick, and he did not intend that the
instrument should be his will at the time of fixing (sic) his
signatures thereto (Opposition to Pro-bate of Alleged Will, pp. 7-8,
x x x a) that on March 21, 1980 in Special Proceeding No. 128828,
Records).
the then Court of First Instance of Manila, Branch 10, allowed and
The private respondents also opposed

Heracios petition for appointment as
executor and/or special administrator of
the estate on the ground that the
alleged will is null and void, hence the
designation therein of Heracio as
executor is likewise null and void, and
that moreover, he is unfit for the trust
(pp. 9-12, Records).
In an order dated May 7, 1987, the
lower court held in abeyance the
resolution of the issue with regard to
admitted to probate the last will and testament of the deceased

Cayetano Revilla and that since then and up to the time of his
death, Cayetano Revilla never informed them that he revoked the
will dated January 28, 1978; (b) that the will sought to be probated
was not executed in accordance with law and that the signature of
Cayetano Revilla was different from his usual and customary
signature; (c) that when the will was allegedly executed the
decedent was already of unsound mind or otherwise mentally
incapable of making a will or was already incompetent and could
not, without outside aid, take care of himself and manage his
properties becoming thereby an easy prey of deceit and
507
the propriety of Heracios being

appointed as executor (pp. 34-36,
Records), but ordered the parties to
present their evidence pro and
court) erred in disallowing the alleged

second will of Don Cayetano Revilla.
After a careful examination of the
records, we share the appellate courts
doubts regarding the authenticity and
588
588
due execution of the second will.
Indeed, when Don Cayetano testified on
con vis-a-vis the probate of the second
November
17,
1982
in
the
will (Ibid).
reconstitution
proceedings,
he
On December 1, 1987, the trial court
was unaware of the second will which
rendered a decision disallowing the
he supposedly made only two months
second will and, accordingly, dismissed
previous on September 13, 1982. He
the case with costs against the
identified his first will and declared
petitioner (Decision, pp. 144-184,
that it was his true and only will. He
Records; pp. 52-53, Rollo.)
denied having subsequently made
On appeal to the Court of Appeals
another will. He could not have
(CA-G.R. CV No. 18190, Sept. 19,
executed a second will on September
1990), the decision of the lower court
13, 1982 because he was sick in the
was affirmed. This petition for review
hospital at that timefor two (2)
was filed by Heracio under Rule 45 of
months before October 21, 1982, or, in
the Rules of Court.
August to September 1982, and he did
The lone issue in this case is whether
the Court of Appeals (and the trial
508
not, and could not, sign any papers

while he was confined in the hospital.
Court which was approved by the Court we would like to request fr

envelope which contains a copy of the will and if this is your signat
xxx xxx xxx.
Q And at the back of this envelope are four signatures, are these you
ATTY. DAVID
A C.
(Looking
over the four signatures at the back of the envelope) Ye
May I request that this letter dated October 21, 1982, be marked Exhibit
..
signatures.
xxx xxx xxx.
your instructions
were to open this envelope x x x Buksan i
By the way Mr. Revilla, will you tell us whether you can still read Q
whenAnd
you signed
this
A Yes, that is right.
letter?
Q And since you are still alive you asked the Court that your last wi
A Yes, I can.
approved and allowed and what is in the last will and testament is w
Q Did you read the contents of this letter?
A Yes, sir. (pp. 119-120, Rollo; Underscoring ours.)
A Yes, I did.
Q When you were sick, before you signed this letter on October 21, He
1982,identified
were you confined
his first will and directed
at the hospital?
Atty. David to deliver it to the Court:
A Yes.
Q How long were you confined at the hospital, was it for one month?
siyang ibigay sa husgado (p. 122,
A More than one month, may be two months.
589
Rollo).
ATTY. DAVID
VOL. 217, JANUARY 27, 1993
589
Now that I have told you in the presence of your grand-son-in-law, At
will and testament
Q When you were in the hospital you cannot sign because you were sick?
590
A No, I cannot sign.
590
SUPREME COURT REPORTS ANNOTAT
xxx xxx xxx.
Q Will you tell us Don Cayetano if you ever executed a last will and testament after this
one has been probated by the Court?
which the court admitted and allowed to probate was burned, why
A None, sir. (pp. 20-30, tsn, November 27, 1982.)
envelope and you remember this is the envelope and you said you d
signatures appearing in this envelope are your signatures, now are y
He recognized the original will and
envelope opened?
acknowledged that he signed it.
A Yes, kung anong nandiyan, siyang ibigay sa husgado. (p. 122, (
ATTY. DAVID
Although the envelop containing a copy
x x x we were granted by the Court permission to come here to find out from you about
your will approved by the Court which was burned which needs to be
ofreconstituted
first which
will was sealed, with
Atty. Dacanay undertook as your counsel and I was included because your heirs requested
toonopen it after his funeral,
me, x x x. Since the documents were burned, we have here a browninstructions
envelope which states
its face Buksan ito pagkalibing kothen a signature Cayetano Revillathat one in the
509
Don Cayetano wanted to open it now

(p. 123, Rollo).
A (After going over the document, page by page and looking at the
Cayetano Revilla in every page) Yes, these are all my signatures, t
Cayetano Revilla. (p. 131, Rollo; Emphasis supplied.)
ATTY. LATOSA
Dacanay, in the pictures that were
Can you please read what is written in that envelope which you allowed to be opened.
taken during the signing of his first
A Yes, buksan ito pagkalibing ko.
ATTY. DAVID
will.
Do you want to open this now?
Q Now, in this envelope there are pictures five pictures in all,will yo
A Yes.
us if you can remember any of those persons appearing in the pictur
Q Do you wish to open this envelope now?
A This one, (testator pointing to a person in the picture)is Mr. Daca
A Yes, I want to open it now. (p. 123, Rollo.)
ATTY. DAVID
Don Cayetano declared that he
May I request that this picture wherein Don Cayetano Revilla iden
marked as Exhibit D. There is a person in this picture, the one sec
understood that the document inside
you go over it and see if you remember that person?
A I am that person.
the
envelope
was
his
will
Q Now in this second picture, do you recognize anybody here?
[naiintindihan ko po iyon (p. 131,
A Yes, I can recognize myself when I was signing the will.
Q Who else do you know is present in that picture?
Rollo)].
one, heinis Mr. Dacanay
Q This envelope which contained the last will and testament which A
I tookThis
the contents
Q How
your presence and in the presence of the other representation here including
the about the other one?
A Unang
I dont
know the others. (p. 133, Rollo; Underlining supplied.)
representatives of the Court, the document contained therein is entitled,
Pahina,
Huling Habilin Ni Don Cayetano Revilla, consisting of fourteen pages,
title means that assured Attorney David
Donthe Cayetano
this is your last will and testament?
that his original will was his genuine
A Yes, Naiintindihan ko po iyon.
Q And you executed this on the 28 of January as appearing. . . 28th will
of January,
1978,
as
and
testament
and not changed (p.
appearing on the 13th page of this last will and testament?
134, Rollo).
A Yes.
Q And all the pages of this last will and testament were all signed by
ATTY.
you which
DAVID
reads
Cayetano Revilla, will you go over these fourteen pages and tell us if thexxx
signatures
xxxhere xxx.
We are doing this Mr. Revilla because in case there will be an opp
591
and testament we can prove that this is the genuine will and testame
VOL. 217, JANUARY 27, 1993
591
A Yes, that is true sir, that is the truth. (p. 134, Rollo.)
592
reading Cayetano Revilla are your signatures?
510
592

himself:
He declared that he did not execute

another last will and testament after
the original will had been probated.
that he did not make a second

will. As correctly held by the Court of
Appeals:
This categorical denial by the late Cayetano Revilla must be
Q Will you tell us Don Cayetano if you ever executed a last will andbelieved
testament
this one
by after
everybody.
If he denied having executed another will,
has been probated by the Court?
who are we to insist that he made another or second will after the
A None, sir. (p. 135, Rollo.)
The petitioners contention that Don

Cayetanos denial constitutes negative
declaration which has no probative
value under the rules of evidence (p.
73, Rollo) is not correct. Don Cayetanos
assertion that he did not execute
another will, was not negative
evidence. Evidence is negative when
the witness states that he did not see or
know the occurrence of a fact, and
positive when the witness affirms that
a fact did or did not occur (2 Moore on
Facts, p. 1338). Don Cayetanos
declaration that he did not execute a
second
will,
constitutes
positive
evidence of a fact personally known to
probate of his will dated January 28, 1978? The testimonies of the
alleged notary public as well as the three instrumental witnesses
of the alleged second will of the late Cayetano Revilla cannot
outweigh the denial of the late Cayetano Revilla. x x x. (p. 95,
Rollo.)
Significantly, although the petitioner

opposed the reconstitution of Don
Cayetanos first will, he did not reveal
the second will which Don Cayetano
supposedly made only two (2) months
before he testified in the reconstitution
proceeding. Why was the second will
kept under wraps? Did Heracio fear
that if Don Cayetano were confronted
with the document, he would have
disowned it? The explanation of the
511
petitioner that an inquiry into the

existence of the second will was totally
uncalled
for,
immaterial,
and
irrelevant
(p.
96,
Rollo),
is
unconvincing. For if the second will
already existed on November 27, 1982,
it would have been Heracios strongest
argument against the reconstitution of
the probate of the first will.
The petitioners argument that Don
Cayetanos testimony is
593
VOL. 217, JANUARY 27, 1993
inadmissible
because
petitioners
counsel, Attorney Layosa, had no
opportunity to cross-examine him (p.
146, Rollo), does not wash. The
opportunity was there all the time.
Attorney Layosa simply made no
attempt to exercise his right to crossexamine Don Cayetano.
If Don Cayetanos testimony was an

honest
mistake
due
to
a
misapprehension of fact as the
petitioner insists (p. 35, Rollo), that
mistake would have been rectified by
inviting his attention to the second will.
It seems, however, that Attorney
Layosa was under constraint not to
disclose the second will to Don Cayetano.
Even the letter that Don Cayetano
supposedly sent to the court disowning
the petition 593
for reconstitution of the
records of the first probate proceeding,
did not disclose that he had already
made another will. As pointedly
observed by the Court of Appeals, if
Don Cayetano were aware that he
made a second will, he could have
easily told the Court that the
reconstitution proceeding was useless
512
because he had already made a second

will revoking the first (pp. 54-55, Rollo).
The testimonies of the notary and
attesting witnesses and even the
photographs of what purported to be
the signing of the second will were not
given credit by the trial court and the
Court
of
Appeals.
The
courts
observation that the photographs do
not show the nature of the document
that was being signed, nor the date of
the transaction, is valid. The lower
courts distrust for the testimonies of
the attesting witnesses to the second
will deserves our highest respect
(People vs. Sarol, 139 SCRA 125; Guita
vs. CA, 139 SCRA 576; People vs.
Cabanit, 139 SCRA 94).
Since the execution of the second will
could not have occurred on the date
(September 13, 1982) appearing therein
(for Don Cayetano was admittedly sick
in the hospital then) it must have been

procured at the time when the testator
was
a
virtual
prisoner,
held incommunicado, in his house. The
Honorable Judge (later Court of
Appeals Justice) Eduardo Bengson had
to issue an order commanding the
petitioner to allow his eight (8) brothers
and sisters to visit Don Cayetano. Only
then were they able to penetrate the
iron curtain that Heracio had placed
around their uncle. A videotape, taken
during their pleasant visit with the old
man and shown in court, belied
Heracios
594
594

allegation that Don Cayetano was

displeased with his said nephews and
nieces, that was why he left them out of
his second will.
513
Despite Judge Bengzons order,

Heracio did not cease his efforts to
monopolize Don Cayetano and his
estate. To isolate Don Cayetano and
make him inaccessible to the private
respondents, Heracio transferred him
from his own house on Claro M. Recto
Avenue in Manila to Heracios house in
Novaliches, Quezon City.
The execution of the second will in an
environment of secrecy and seclusion
and the disinheritance of his eight (8)
other nephews and nieces of whom he
was equally fond, justified the trial
courts and the Court of Appeals belief
that undue influence was exercised by
Heracio over Don Cayetano to make
him sign the second will (which Don
Cayetano did not know to be such) in
order to deprive his brothers and
sisters of their rightful share in their
uncles estate.
The employment of undue influence

by Heracio was not mutually
repugnant to fraud (p. 172, Rollo) as
the petitioner insists, for it was the
means employed by Heracio to defraud
his brothers and sisters of their share
in Don Cayetanos estate.
There was fraud because Don
Cayetano was not apprised that the
document he was signing with Co,
Barredo and Lim was a second will
revoking the dispositions of property
that he made in his first will. Had he
been aware that it was a second will,
and if it were prepared at his own
behest, he would not have denied that
he made it. He would probably have
caused it to be probated while he was
still alive, as he did with his first will.
But apparently, the instrument was
foisted on him without his being aware
of its true nature which the petitioner
514
assiduously concealed, not only from

the court and the private respondents,
but from Don Cayetano himself.
That the dispositions in the second
will were not made by Don Cayetano is
proven by the omission therefrom of
Don Caye-tanos reservation of onetenth of his properties and the income
thereof to pay for holy masses for the
repose of his soul and to be spent for
the maintenance of his family chapel
which houses the religious images he
owned in San Miguel, Bulacan. That
provision in his first will, for his
personal benefit, would not have
595
VOL. 217, JANUARY 27, 1993
been deleted by Don Cayetano if his

only purpose in making a second will
was to disinherit his eight nephews and
nieces. But Heracio overdid himself. He
wanted everything.
The objection to the deposition of Don

Cayetano for want of an oath before he
testified, is tardy. Objection to the lack
of an oath should have been made at
the taking of his deposition. Section
29(d), Rule 24 of the Rules of Court
provides:
1. (d)As to oral examination and other particulars.
Errors and irregularities occurring at the oral examination in the
manner of taking the deposition, in the form of the questions or
answers, in the oath or affirmation, or in the conduct of the parties
and errors of any kind which might be obviated, removed, or cured
if promptly prosecuted, are waived unless reasonable objection
thereto is made at the taking of the deposition. (Italics ours.)
While the petitioner

puts much stock in
595
the supposed due execution of the will
and the competence of the attesting
witnessesCo, Barredo and Limthe
trial court, with whom the Court of
Appeals agreed, gave them low marks
for credibility. The factual observations
515
of the Court of Appeals on this point

are quoted below:
this score, this Court entertains doubt as to its truthfulness

because it was testified to by Barredo, prosecution witness and
Assuming for the sake of arguments that the second will was
corroborated by Ms. Bingel, principal witness for the oppositors,
executed, the testimonies of the notary public who prepared and
that the old man is versatile in Tagalog as he is a Bulakeo but
before whom the will was acknowledged, as well as those of the
could not speak English except to say word, yes, sir. x x x. (p. 33,
three (3) instrumental witnesses thereof were not given credit by
Decision, p. 176, Records).
the lower court, and so with this Court, because of major

contradictions in their testimonies.
As
regards
notary
public
With respect to witness Alfredo Barredo, the truthfulness of

his testimonies was doubted by the lower court in this wise:
Atty.
Mendoza,
the
court a
x x x. Another point noticed by this Court is the testimony of Alfredo
quodoubted his credibility as follows:
Barredo that after talking with Atty. Mendoza at the phone he was asked
The prevarications on the testimonies of witnesses are not difficult to
by the old man to fetch the 2 witnesses however when asked on direct
find especially if we consider that in a second meeting only with Don
examination, he stated that he stayed all along with the old man and did
Cayetano, Atty. Mendoza would readily be entrusted with the delicate
not leave him even after talking with Atty. Mendoza, which spells a
and confidential preparation of a second will, designed to disinherit his
whale of difference in time element and enormously distanced from the
eight nephews and nieces in favor of Heracio, the operator of the bowling
truth. So also, his exaggerated demonstration of the ability of the old man
alley where witness Mendoza always play; x x x (p. 36, Decision; p. 179,
in answering even small children yes, sir, is too good to be true. x x x.
Records)
(pp. 33-34, Decision, pp. 176-177, Records).
x x x. Added to this is the statement of Atty. Mendoza that the

old man could understood (sic) both English and Tagalog. On
596
596
Witness Dr. Cos testimony that he did not charge the late
Cayetano Revilla for two services rendered by him and that he
only charged when a third service was made was also doubted by
the lower court. Said the court a quo:

516
x x x witnesses Co, a practicing dentist was munificent enough not to

charge Don Cayetano for two time services and only charged him the 3rd
time.
It may be added here that the testimony of Dr. Co that the

testator read his will in silence before they were asked to affix
their signatures (tsn., Aug. 17, 1987, pp. 30-31, 45) is completely
different from the testimony of another witness (Fernando Lim)
who testified that the late Don Cayetano read his will aloud before
he gave it to the witnesses for their signatures (tsn., Aug. 13, 1987,
pp. 47, 52).
The above citations of the inconsistencies and contradictions
fatally made by said witnesses are only some of the more
People vs. Musa
SO ORDERED.
Cruz (Chairman), Padilla and Bel
losillo, JJ.,concur.
Petition denied
Note.As between the positive
declaration of prosecution witnesses
and the negative statement of accused,
the former deserve more credence and
weight (People vs. Mariano, 191 SCRA
136).
o0o
important ones as discussed in the decision of the lower court. But

they are enough, to say the least, to convince this Court that
indeed said witnesses crossed the boundaries of their credibilities.
(pp. 56-57, Rollo.)

error in the decision of the Court of
Appeals, the petition for review is
DENIED. Costs against the petitioner.
597
VOL. 217, JANUARY 27, 1993
597
517
No. L-43955-56. July 30, 1979.

RENATO LAZATIN alias RENATO
STA.
CLARA,
petitioner,vs. HONORABLE
JUDGE
JOSE C. CAMPOS, JR., NORA L. DE
LEON,
BERNARDO DE LEON,
ARLENE DE LEON and IRMA L.
VELOSO, respondents.
*
Civil Law; Adoption; Nature and concept

of adoption; Kind of adoption recognized in
the Philippines; Adoption is never presumed
but must be affirmatively proved.Adoption
is a juridical act, a proceeding in rem, which
creates between two persons a relationship
similar to that which results from legitimate
paternity and filiation. Only an adoption
made through the court, or in pursuance
with the procedure laid down under Rule 99
of the Rules of Court is valid in this
jurisdiction. It is not of natural law at all,
but is wholly and entirely artificial. To
establish the relation, the statutory
requirements must be strictly carried out,

otherwise, the adoption is an absolute
nullity. The fact of adoption is never
presumed, but must be affirmatively proved
by the person claiming its existence. The
destruction by fire of a public building in
which the adoption papers would have been
filed if existent does not give rise to a
presumption of adoption nor is the
destruction of the records of an adoption
proceeding to be presumed. On the contrary,
the absence of a record of adoption has been
said to evolve a presumption of its nonexistence. Where, under the provisions of
the state, an adoption is effected by a court
order, the records of such court constitute
the evidence by which such adoption may be
established.
Same; Same; Evidence; Proof required to
establish adoption of child is thru judicial
decree of adoption; Absence of proof of order
of adoption by the court cannot be
518
substituted by parol evidence.The absence

of proof of such order of adoption by the
court, as provided by the statute, cannot be
substituted by parol evidence that a child
has lived with a person, not his parent, and
has been treated as a child to establish such
adoption. Even evidence of declaration of the
deceased, made in his lifetime, that he
intended to adopt a child as his heir, and
that he had adopted him, and of the fact
that the child resided with the deceased, as
a member of his family, from infancy until
he attained his majority, is not sufficient to
establish the fact of adoption. Nor does the
fact that the deceased spouses fed, clothed,
_______________
*
FIRST DIVISION
251
VOL. 92, JULY 30, 1979
25
1
Lazatin vs. Campos
educated, recognized and referred to one

like petitioner as an adopted child,
necessarily establish adoption of the child.
Withal, the attempts of petitioner to prove
his adoption by acts and declarations of
deceased do not discharge the mandatory
presentation of the judicial decree of
adoption. The thrust of petitioners evidence
is rather to establish his status as an
admitted illegitimate child, not an adopted
childwhich statuts of an admitted
illegitimate child was the very basis of his
petition for intervention in the estate
proceedings of the late Dr. Lazatin, as above
stated.
Same; Same; Same; Same; Same;Same; E
xception to the Rule; Secondary evidence
admissible where records of adoption
proceedings actually lost or destroyed; Order
of proof for introduction of secondary
evidence to prove adoption.Secondary
evidence is nonetheless admissible where
519
the records of adoption proceedings were

actually lost or destroyed. But, prior to the
introduction of such secondary evidence, the
proponent must establish the former
existence of the instrument. The correct
order of proof is as follows: Existence;
execution; loss; contents; although this order
may be changed if necessary in the
discretion of the court. The sufficiency of the
proof offered as a predicate for the
admission of an alleged lost deed lies within
the judicial discretion of the trial court
under all the circumstances of the particular
case. As earlier pointed out, petitioner failed
to establish the former existence of the
adoption paper and its subsequent loss or
destruction. Secondary proof may only be
introduced if it has first been established
that such adoption paper really existed and
was lost. This is indispensable. Petitioners
supposed adoption was only testified to by
him and is allegedly to be testified to by a
brother of the deceased Mariano H. Lazatin

or others who have witnessed that the
deceases spouses treated petitioner as their
child. If adoption was really made, the
records thereof should have existed and the
same presented at the hearing or
subsequent thereto or a reasonable
explanation of loss or destruction thereof, if
that be the case, adduced. Assuming the
mere fact that the deceased spouses treated
petitioner as their child does not justify the
conclusion that petitioner had been in fact
judicially adopted by the spouses nor does it
constitute admissible proof of adoption.
Same; Same; Remedial
Law;Pedigree; Pedigree
testimony
not
admissible to prove adoption of child.We
do not discount though that declarations in
regard to pedigree, although hearsay, are
admitted on the principle that they are
natural expressions of persons who must
520
know the truth. Pedigree testimony is

admitted because it is
252
2
52

ANNOTATED
Lazatin vs. Campos
the best that the nature of the case

admits and because greater evil might arise
from the rejection of such proof than from its
admission. But, in proving an adoption,
there is a better proof available and it
should be produced. The whereabouts of the
childs family and circulation of the
jurisdiction in which they resided and
investigation in those courts where adoption
are usually granted would surely produce an
adoption order, if indeed there was an order.
Besides, since the point in favor of receiving
hearsay evidence upon matters of family
history or pedigree is its reliability, it has
been set forth as a condition upon which
such evidence is received that it emanate
from a source within the family. Pursuant to

this view, before a declaration of a deceased
person can be admitted to prove pedigree, or
ancestry, the relationship of the declarant,
by either of blood or affinity to the family in
question, or a branch thereof, must
ordinarily be established by competent
evidence. Section 33 of Rule 130 states: The
act or declaration of a person deceased, or
outside of the Philippines, or unable to
testify, in respect to the pedigree of another
person related to him by birth or marriage,
may be received in evidence where it
occurred before the controversy, and the
relationship between the two persons is
shown by evidence other than such act or
declaration * * * *.
Same; Same; Same; Intervention;A
person cannot intervene in an estate
proceeding for failure to prove his adoption
by
the
deceased;
Requirements
for
intervention in estate proceeding; Burden of
521
proof to establish adoption is laid upon the

person
claiming
relationship
thru
adoption.As a necessary consequence,
petitioner Renato Lazatin alias Renato Sta.
Clara cannot properly intervene in the
settlement of the estate of Margarita de
Asis, Sp. Proc. No. 2341-P as an adopted
child because of lack of proof thereof. For
one to intervene in an estate proceeding, it
is a requisite that he has an interest in the
estate, either as one who would be benefited
as an heir or one who has a claim against
the estate like a creditor. A child by
adoption cannot inherit from the parent by
adoption unless the act of adoption has been
done in strict accord with the statute. Until
this is done, no rights are acquired by the
child and neither the supposed adopting
parent or adopted child could be bound
thereby. The burden of proof in establishing
adoption is upon the person claiming such
relationship. He must prove compliance
with the statutes relating to adoption in the

jurisdiction where the adoption occurred.
A fortiori, if no hereditary interest in the
estate can be gained by a claimant who
failed to submit proof thereof, whether the
will is probated or not, intervention should
be denied as it would merely result in
unnecessary
253
VOL. 92, JULY 30, 1979
25
3
Lazatin vs. Campos
complication. To succeed, a child must be

legitimate,
legitimated,
adopted,
acknowledged illegitimate natural child or
natural child by legal fiction or recognized
spurious child.
Same; Same; Evidence; Courts are liberal
in accepting proferred evidence; Trial court
rulings on procedural questions and
admissibility of evidence during the trial
interlocutory; Recourse of a party when his
522
proferred evidence was rejected, by the trial

court is to make a formal offer of evidence in
the appellate court; How formal offer of
evidence done in appellate courts; case at
bar.The Courts resolution allowing the
advance
testimonies
of
petitioners
witnesses was but in application of the
Courts longstanding admonition to trial
courts as reaffirmed in Lamagan vs. De la
Cruz, to be liberal in accepting proferred
evidence since even if they were to refuse to
accept the evidence, the affected party will
nevertheless be allowed to spread the
excluded evidence on the record, for review
on appeal. The Court therein once again
stressed the established rule that it is
beyond question that rulings of the trial
court on procedural questions and on
admissibility of evidence during the course
of the trial are interlocutory in nature and
may not be the subject of separate appeal or
review on certiorari, but are to be assigned
as errors and reviewed in the appeal

properly taken from the decision rendered
by the trial court on the merits of the case,
and that a partys recourse when his
proferred evidence is rejected by the trial
court is to make a formal offer stating on the
record what a party or witness would have
testified to were his testimony not
exclusded, as well as to attach to the record
any rejected exhibits.
PETITION for certiorari from an order

of the Court of First Instance of Rizal
(Pasay branch)
the Court.
Ernesto
T.
Zshornack,
Jr. for
petitioner.
Jose W. Diokno Law Officeprivate
respondents the Leons.
Arturo E. Balbastro for privates
respondent Veloso.
TEEHANKEE, J.:
523
The Court dismisses the petition

which seeks to overrule respondent
judges orders declaring that petitioner
has failed to establish by competent
evidence his alleged status as an
254
254

Lazatin vs. Campos
adopted child of the deceased Lazatin

spouses and prays for judgment of this
Court declaring as established the fact
of (his) adoption as a son of the
deceased spouses entitling him to
succeed in their estates as such.
Respondent judge correctly ruled that
he could not allow petitioner (who had
filed a motion to intervene in the
proceedings to probate the will of the
late Margarita de Asis Vda. de Lazatin
and to settle her estate as her adopted
son, after having earlier filed a motion
to
intervene
in
the
intestate
proceedings
of
her
pre-deceased
husband as his admitted illegitimate

[not natural] son), over the opposition
of private respondents, to introduce
evidence that he had enjoyed . . . the
status of an adopted child of the said
spouses without his first producing
competent and documentary proof that
there had been judicial proceedings for
his legal adoption by the said spouses
which resulted in the final judgment of
a competent court decreeing his
adoption.
On January 13, 1974, Dr. Mariano M.
Lazatin died intestate in Pasay City,
survived by his wife, Margarita de Asis,
and his adopted twin daughters,
respondent Nora L. de Leon, married to
respondent Bernardo de Leon, and
respondent Irma Lazatin, married to
Francisco Veloso.
One month after Marianos death, his
widow, Margarita de Asis, commenced
524
an intestate proceeding before the

Court of First Instance of Pasay,
docketed as Sp. Proc. No. 2326-P.
Mariano, Oscar, Virgilio and Yvonne,
claiming to be admitted illegitimate
(not natural) children of Dr. Lazatin
with one Helen Munoz, intervened.
Subsequently, one Lily Lazatin also
intervened, claiming to be another
admitted illegitimate (not natural)
child.
Two months after or on April 11,
1974, the widow, Margarita de Asis,
also died, leaving a holographic will
executed on May 29, 1970, providing,
among others, for a legacy of cash,
jewelry, and stocks to respondent
Arlene de Leon, a granddaughter; a
legacy of support to Rodolfo Gallardo, a
son of her late sister; and a legacy of
education to Ramon Sta. Clara, son of
petitioner Renato Lazatin alias Renato

Sta. Clara.
During her lifetime, Margarita de
Asis kept a safety deposit box at the
Peoples Bank and Trust Company,
Roxas
255
VOL. 92, JULY 30, 1979
Lazatin vs. Campos
255
Boulevard branch, which either she or

respondent Nora L. de Leon could open.
Five days after Margaritas death,
respondent
Nora
L.
de
Leon,
accompanied
by
her
husband,
respondent Bernardo de Leon, opened
the safety deposit box and removed its
contents: (a) shares of stock; (b) her
adoption papers and those of her sister,
respondent Irma L. Veloso; and (c)
jewelry belonging to her and to her
mother. Respondent Nora L. de Leon
claims that she opened the safety
deposit box in good faith, believing that
525
it was held jointly by her and her

deceased mother. Her sole reason for
opening the box was to get her stock
certificates and other small items
deposited therein. When she was to
close the deposit box, the bank
personnel informed her that she needed
an authority from the court to do so, in
view of her mothers death and so, she
removed everything from the box.
On June 3, 1974, private respondents
filed a petition to probate the will of the
late Margarita de Asis, before docketed
as Sp. Proc. No. 2341-P of respondent
Court. Days after having learned that
respondent Nora L. de Leon had opened
this safety deposit box, petitioners son,
Ramon Sta. Clara, filed a motion in the
probate court, claiming that the
deceased
had
executed
a
will
subsequent to that submitted for
probate and demanding its production.
He likewise prayed for the opening of

the safety deposit box. Respondent
Nora L. de Leon admitted that she
opened the box but there was no will or
any document resembling a will
therein.
Upon the order of the probate court,
presided over by Judge Arsenio B.
Alcantara, the safety deposit box was
opened on November 6, 1974, at which
time it was found to be empty, because
prior thereto respondent Nora L. de
Leon had already removed its contents.
On November 22, 1974, or seven
months after the death of Margarita de
Asis, petitioner intervened for the first
time in the proceedings to settle the
estate of the late Dr, Mariano M.
Lazatin (Sp. Proc. No. 2326-P), as an
child.
526
Under the same date of November 22,

1974, petitioners son, Ramon, filed a
petition in the estate proceedings of
Margarita de Asis to examine private
respondents on the contents of the
256
256

Lazatin vs. Campos
safety deposit box. Whereupon, on

January 31, 1975, the probate court
ordered respondent Nora L. de Leon to
deliver the properties taken from the
safety deposit box to the Clerk of Court.
Subsequently, however, the two cases
(Sp. Proc. No. 2326-P, Mariano Lazatin,
and 2341-P, Margarita de Asis) were
transferred to the sala of respondent
Judge Jose C. Campos, Jr.
On May 29, 1975, Judge Campos
issued an order requiring counsel for
respondents Nora L. de Leon and
Bernardo de Leon to produce all those
papers and items removed from the
safety deposit box and to deliver the

same to the custody of the court within
one week. Within the period ordered,
respondent Nora L. de Leon deposited
with the Clerk of Court, not the items
themselves, but two keys to a new
safety deposit box which could only be
opened upon order of the court.
On August 20, 1975, petitioner
Renato Lazatin alias Renato Sta. Clara
filed a motion to intervene in the estate
of Margarita de Asis, Sp. Proc. No.
2341-P, as an adopted child, on the
basis of an affidavit executed by
Benjamin Lazatin, brother of the
deceased Dr. Mariano M. Lazatin, that
petitioner was an illegitimate son of
Dr. Lazatin and was later adopted by
him. This affidavit was later modified
on August 19, 1975 to state that
petitioner was adopted by both Mariano
527
M. Lazatin and his wife Margarita de

Asis.
On September 29, 1975, Judge
Campos found respondent Nora L. de
Leon guilty of contempt of court for not
complying with the orders of January
31, 1975 and May 29, 1975, requiring
her to produce and deliver to the court
all the papers and items removed from
the safety deposit box. Her former
counsel was also found guilty of
contempt, sentenced to pay a fine of
P100.00 and suspended from appearing
in the two cases (Sp. Proc. No. 2326-P,
Mariano M. Lazatin, and Sp. Proc No.
2341-P, Margarita de Asis), on her
testimony that she, Nora L. de Leon,
acted upon his advice.
Respondent court heard petitioners
motion to intervene as an adopted son
in the estate of Margarita de Asis, Sp.
Proc. No. 2341-P, at which hearings
petitioner presented no decree of

adoption in his favor. Instead,
petitioner attempted to prove, over
private respondents objections, that he
had recognized
257
VOL. 92, JULY 30, 1979
Lazatin vs. Campos
257
the deceased spouses as his parents; he

had been supported by them until their
death; formerly he was known as
Renato Lazatin but was compelled to
change his surname to Sta. Clara
when the deceased spouses refused to
give consent to his marriage to his
present wife; that at first, he and his
wife stayed at the residence of Engracio
de Asis, father of Margarita, but a few
monts later, they transferred to the
Mercy Hospital at Taft Avenue, Manila,
owned by the deceased spouses, where
they continuously resided up to the
present.
Photographs
were
also
528
intended to be presented by petitioner,

e.g., photograph of Irma Veloso where
she addressed herself as sister of
petitioner; photograph of deceased
Margarita de Asis and petitioner when
he was a boy; document showing that
petitioners real name is Renato
Lazatin.
Respondent court first reserved its
ruling
on
private
respondents
objections to the admission of
petitioners evidence, but on November
14, 1975, when petitioner could not
present evidence on the issue of his
alleged legal adoption, respondent court
discontinued the hearing and gave the
parties time to file memoranda on the
question of the admissibility of the
evidence sought to be introduced by
petitoner.
On
March
4,
1976,
respondent
court
barred
the
1
introduction of petitioners evidence

because:
All the evidence submitted by Renato and
Ramon Sta. Clara through their counsel do
not prove or have no tendency to prove the
existence of any judicial proceeding where
the adoption of the parties above named were
taken up by any court. Neither do the
evidence tend to establish the presence of
any record of a proceeding in court where
the adoption of the above named persons
was held. The evidence, however, tends to
prove a status of a recognized natural child
which, however, is not the legal basis for
which Renato and Ramon seek to intervene
in this proceedings. In view thereof, and
taking into consideration the evidence
heretofore presented by the petitioners, any
further introduction of similar evidence,
documentary or oral, would not prove or
tend to prove the fact of their adoption but
rather of a recognized natural child.
529
________________
1
Annex 25, p. 1, Comment of respondents de
Leon.
258
258

Lazatin vs. Campos
Petitioner then filed on March 16,

1976, in both cases, a motion to declare
as established the fact of adoption in
view of respondent Nora L. de Leons
refusal to comply with the orders of
respondent court to deposit the items
she had removed from the safety
deposit box of Margarita de Asis. As
authority therefor, petitioner invokes
the sanction of Rule 29, Section 3 of the
Rules of Court, since according to him,
the order of the court for the production
of the items in the safety deposit box
can be considered as an order for
production and inspection of documents
under Rule 27.
Private respondents opposed the

motion, and on March 26, 1976,
respondent court denied petitioners
motion. On April 26, 1976, respondent
Nora L. de Leon deposited with
respondent court the items she had
removed from the safety deposit box.
An inventory was conducted by
respondent court, with notice to the
parties, and the items surrendered
consisted only of pieces of jewelry and
stock certificates.
On June 3, 1976, respondent court,
ruling on petitioners motion for
definite resolution on his previous
motion to declare as established the
fact of adoption, issued the following
order:
As far as the case of Renato Sta. Clara is
concerned and his Petition to establish his
status as an adopted child, the Court has
ruled that he has failed to establish such
530
status. The Court denies any motion for

reconsideration unless based on some
documentary proof.
Hence, the petition at bar.

We find the ruling of the respondent
court to be in conformity with law and
jurisprudence.
1. Adoption is a juridical act, a
proceeding in
rem, which
creates
between two persons a relationship
similar to that which results from
legitimate paternity and filiation. Only
an
2
________________
2
Tolentino, Civil Code of the Philippines, Vol.
1, 1974 ed., at 657; Ellis v. Republic, L-16922, 7

SCRA 962; Van Matre v. Sankey, 36 NE 628.
3
Valverde 473; See Annotation in Hofilea v.
Republic, L-26476, August 31, 1970, 34 SCRA

550.
259
VOL. 92, JULY 30, 1979
Lazatin vs. Campos
259
adoption made through the court, or in

pursuance with the procedure laid
down under Rule 99 of the Rules of
Court is valid in this jurisdiction. It is
not of natural law at all, but is wholly
and entirely artificial. To establish the
relation, the statutory requirements
must be strictly carried out, otherwise,
the adoption is an absolute nullity. The
fact of adoption is never presumed, but
must be affirmatively proved by the
person claiming its existence. The
destruction by fire of a public building
in which the adoption papers would
have been filed if existent does not give
rise to a presumption of adoption nor is
the destruction of the records of an
adoption proceeding to be presumed.
On the contrary, the absence of a record
of adoption has been said to evolve a
4
531
presumption
of
its
nonexistence. Where, under the provisions
of the statute, an adoption is effected by
a court order, the records of such court
constitute the evidence by which such
adoption may be established.
2. Petitioners flow of evidence in the
case below does not lead us to any proof
of judicial adoption. We can not pluck
from his chain of evidence any link to
the real existence of a court decree of
adoption in his favor. Petitioners proofs
do not show or tend to show that at one
time or another a specific court of
competent jurisdiction rendered in an
adoption proceeding initiated by the
late spouses an order approving his
adoption as a child of the latter. No
judicial records of such adoption or
copies thereof are presented or
attempted to be presented. Petitioner
merely proceeds from a nebulous
7
assumption that he was judicially

adopted between the years 1928 and
1932. By what particular court was the
adoption decreed or by whom was the
petition heard, petitioner does not even
manifest, much less show. There are no
witnesses cited to that adoption
proceeding or to the adoption decree.
Apparent_______________
In re: Adoption of Resaba Santos Yigo v.
Republic, 94 Phil. 244 (1954).

5
Succession of Pizzari, 75 So. 498.
Succession of DAsaro, 167 So. 2d 391; Appeal
of Ritchie, 53 NW 2d 753.
7
2 CJS 444.
532
Quinn v. Quinn, 58 NW 808; 2 CJS 444.
260
260

Lazatin vs. Campos
ly on the assumption that the adoption

was commenced in Manila, petitioners
counsel secured a certification from the
Court of First Instance of Manila
which, however, negatively reported
(T)hat among the salvaged records
now available in this Office, there has
not been found, after a diligent search,
any record regarding the adoption of
Mr. Renato Lazatin alias Renato Sta.
Clara allegedly filed sometime in the
years 1928 to 1931 by the spouses Dr.
Mariano M. Lazatin and Margarita de
Asis de Lazatin. The certification of
the Local Civil Registrar of Manila
(T)hat our pre-war records relative to
decisions of the Court of First Instance
were either destroyed or burned during
the Liberation of the City of Manila,
does not furnish any legal basis for a

presumption of adoption in favor of
petitioner. This is because there was no
proof that petitioner was really adopted
in Manila or that an adoption petition
was filed in the Court of First Instance
of Manila by the deceased spouses,
where, after hearing, a judgment of
approval was rendered by said court.
Moreover, if there was really such
adoption,
petitioner
could
have
conveniently secured a copy of the
newspaper publication of the adoption
as required under Section 4, Rule 99 of
the Rules of Court (formerly Section 4,
Rule 100) or a certification of the
publishing house to that effect.
Petitioners failure on this point is
another strong indication of the nonexistence of the adoption paper. We
also observed that the identity of the
one who gave the written consent to the
533
adoption (Section 3, Rule 99, Rules of

Court), whether the parents or
orphanage, does not appear in the
trend of petitioners evidence. The
collation of proof on this point is not so
difficult and such proof must be
presented if only to prove the real
existence of the adoption. And of
course, if the adoption records were
indeed destroyed or burned during the
war, the clear right and duty of
petitioner was to duly reconstitute the
records as provided by law.
3. The absence of proof of such order
of adoption by the court, as provided by
the statute, cannot be substituted by
parol evidence that a child has lived
with a person, not his parent, and has
been treated as a child to establish such
adoption. Even evidence of declaration
of the deceased, made in his
9
________________
Coombs v. Cook, 129 P. 698.
261
VOL. 92, JULY 30, 1979

Lazatin vs. Campos
261
lifetime, that he intendead to adopt a

child as his heir, and that he had
adopted him, and of the fact that the
child resided with the deceased, as a
member of his family, from infancy
until he attained his majority, is not
sufficient to establish the fact of
adoption. Nor does the fact that the
deceased
spouses
fed,
clothed,
educated, recognized and referred to
one like petitoner as an adopted child,
necessarily establish adoption of the
child. Withal,
the
attempts
of
petitioner to prove his adoption by acts
and declarations of the deceased do not
discharge the mandatory presentation
10
11
534
of the judicial decree of adoption. The

thrust of petitioners evidence is rather
to establish his status as an admitted
illegitimate child, not an adopted
childwhich status of an admitted
illegitimate child was the very basis of
his petition for intervention in the
estate proceedings of the late Dr.
Lazatin, as above stated. (Supra, at
page 3 hereof)
We do not discount though that
declarations in regard to pedigree,
although hearsay, are admitted on the
principle that they are natural
expressions of persons who must know
the truth. Pedigree testimony is
admitted because it is the best that the
nature of the case admits and because
greater evil might arise from the
rejection of such proof than from its
admission. But,
in
proving
an
adoption, there is a better proof
12
13
available and it should be produced.

The whereabouts of the childs family
and circulation of the jurisdiction in
which they resided and investigation in
those courts where adoption are usually
granted would surely produce an
adoption order, if indeed there was an
order. Besides, since the point in favor
of receiving hearsay evidence upon
matters of family history or pedigree is
its reliability, it has been set forth as a
condition upon which such evidence is
received that it emanate from a source
within the family. Pursuant to this
view, before a
14
________________
10
Haworth v. Haworth, 100 SW 531.
11
Wohlgemuth v. Browning, 384 SW 2d. 820.
535
12
See Sec. 33, Rule 130, Revised Rules of
Court.
13
Wigmore on Evidence, Sec. 1420.
14
In re: Estate of Helen M. Biggs, 328 NYS 2d.
138; Moran, Comments on the Rules of Court,

Vol. 5, 1970 ed., at 332, et seq.
262
262

Lazatin vs. Campos
declaration of a deceased person can be

admitted to prove pedigree, or ancestry,
the relationship of the declarant, by
either of blood or affinity to the family
in question; or a branch thereof, must
ordinarily be established by competent
evidence. Section 33 of Rule 130 states:
The act or declaration of a person
deceased, or outside of the Philippines,
or unable to testify, in respect to the
pedigree of another person related to
him by birth or marriage, may be
15
received in evidence where it occurred

before the controversy, and the
relationship between the two persons is
shown by evidence other than such act
or declaration * * * * *.
4. Secondary evidence is nonetheless
admissible where the records of
adoption proceedings were actually lost
or destroyed. But, prior to the
introduction
of
such
secondary
evidence, the proponent must establish
the former existence of the instrument.
The correct order of proof is as follows:
Existence; execution; loss; contents;
although this order may be changed if
necessary in the discretion of the
court. The sufficiency of the proof
offered as a predicate for the admission
of an alleged lost deed lies within the
judicial discretion of the trial court
under all the circumstances of the
particular case. As earlier pointed out,
16
17
536
petitioner failed to establish the former

existence of the adoption paper and its
subsequent
loss
or
destruction.
Secondary
proof
may
only
be
introduced if it has first been
established that such adoption paper
really existed and was lost. This is
indispensable. Petitioners
supposed
adoption was only testified to by him
and is allegedly to be testified to by a
brother of the deceased Mariano M.
Lazatin or others who have witnessed
that the deceased spouses treated
petitioner as their child. If adoption
was really made, the records thereof
should have existed and the same
presented at the hearing or subsequent
thereto or a reasonable explanation of
loss or destruction thereof, if that be
the case, adduced.
15
29 Am Jur 2d 565.
16
Jones on Evidence, Vol. 1, 5th ed., at 458, et
seq.
17
Burns v. Goodrich, 382 SW 2d 501.
18
Francisco, Revised Rules of Court, Evidence,
18
19
________________
107.
19
See Eusebio v. Valmores, 97 Phil. 167(1955).
263
VOL. 92, JULY 30, 1979
Lazatin vs. Campos
263
Assuming the mere fact that the

deceased spouses treated petitioner as
their child does not justify the
conclusion that petitioner had been in
fact judicially adopted by the spouses
nor does it constitute admissible proof
of adoption.
537
We cannot entertain the plea of

petitioner that the sanction of Rule 29
should be applied to consider as
established the fact of his adoption due
to the refusal of respondent Nora L. de
Leon to produce the document of
adoption, becausefirst, the fact or real
existence of petitioners adoption had
not been established; second, there is
no proof that such document of
adoption is in the possession of
respondent Nora L. de Leon; third,
the motu proprio order of the court for
Nora de Leon to produce the items
retrieved from the safety deposit box
cannot be treated as a mode of
discovery of production and inspection
of
documents
under
Rule
27;
and fourth, the items deposited in the
safety deposit box have already been
surrendered by respondent Nora L. de
Leon on April 26; 1976 and no
document of adoption in favor of

petitioner was listed as found in the
safety deposit box.
5. As a necessary consequence,
petitioner Renato Lazatin alias Renato
Sta. Clara cannot properly intervene in
the settlement of the estate of
Margarita de Asis, Sp. Proc. No. 2341-P
as an adopted child because of lack of
proof thereof. For one to intervene in an
estate proceeding, it is a requisite that
he has an interest in the estate, either
as one who would be benefited as an
heir or one who has a claim against the
estate like a creditor. A child by
adoption cannot inherit from the parent
by adoption unless the act of adoption
has been done in strict accord with the
statue. Until this is done, no rights are
acquired by the child and neither the
supposed adopting parent or adopted
child could be bound thereby. The
20
21
538
burden of proof in establishing adoption

is upon the person claiming such
relationship. He must prove compliance
with the statutes relating
________________
is probated or not, intervention should

be denied as it would merely result in
unnecessary complication. To succeed,
a child must be ligitimate, legitimated,
adopted, acknowledged illegitimate
natural child or natural child by legal
fiction or recognized spurious child.
In the face of the verified pleadings of
record
(constituting
judicial
admissions) which show that petitioner
sought to intervene on November 22,
1974 in the estate proceedings of his
alleged adoptive father Dr. Mariano M.
Lazatin (Sp. Proc. No. 2326-P) as an
child, while his intervention on August
20, 1975 in the estate of Margarita de
Asis, widow of the deceased Dr. Lazatin
(Sp. Proc, No. 2341-P) was as her
adopted child on the basis of the
affidavit of a brother of the deceased
Dr.
Lazatin,
Benjamin
Lazatin,
23
24
20
Ngo The Hua v. Chung Kiat Hua, L-17091,
Sept.
30,
1963, 9
SCRA
116;Sumilang
v.
Ramagosa, L-23135, Dec. 26, 1967, 21 SCRA

1369; Teotico v. del Val, L-18753, March 26,
1965, 13 SCRA 410.
21
In re Estate of Schick, 274 NE 2d 291,
quoting McCollister v. Yard, 57 NW 447.

264
264
25

Lazatin vs. Campos
to adoption in the jurisdiction where

the adoption occurred. A fortiori, if no
hereditary interest in the estate can be
gained by a claimant who failed to
submit proof thereof, whether the will
22
539
executed on August 19, 1975 (which

affidavit modified a first affidavit
executed on May 31, 1975, which failed
to state by oversight that Dr. Lazatin
and his wife had jointly adopted
petitioner, but stated that affiant knew
petitioner to be an illegitimate son of
Dr. Lazatin who later legally adopted
(him) as a son before the Court of First
Instance of Manila sometime between
the years 1928 and 1931) and
prescinding from the question of
whether a natural or spurious child
may be legally adopted by the putative
father, we hold
________________
23
Cache v. Udan, L-19996, April 30, 1965, 13
SCRA 697.
24
See Cid v. Burnaman, L-24414, July 31,
1968, 24 SCRA 438-39.

25
Supra, at page 3 hereof. In these cases
involving both estates of the deceased spouses,

petitioner asserts his claim of being an adopted
child, on the ground that respondent court had
definitively ruled that he failed to establish
such status (adoption). Petitioners Reply, Rollo,
p. 241. In his Reply to other respondents,
petitioner asserts that there is actually no issue
in the estate of Mariano Lazatin that your
petitioner was an acknowledged illegitimate son
of Mariano M. Lazatin and the only issue really
is . . . whether (he) is also an adopted son of the
22
In re Estate of Helen M. Riggs, 328 NYS 2d
138.
deceased spouses. Rollo, pp. 248-249.

265
VOL. 92, JULY 30, 1979
Lazatin vs. Campos
265
540
that no grave abuse of discretion nor

error of law as committed by
respondent judge in issuing the
questioned orders of March 4, 1976,
March 26, 1976 and June 3, 1976
denying petitioners petition to declare
as established in this proceeding the
fact of adoption and denying any
motion for reconsideration unless based
on some documentary proof. The Court
finds no basis to grant the affirmative
relief sought in this proceeding by
petitioner for a rendition of judgment
declaring as established the fact of
your petitioners adoption as a son of
the deceased spouses entitling him to
succeed in their estates as such in
accordance with the applicable law on
succession as to his inheritance.
Upon the filing of the petition, the
Court issued on June 16, 1976 a
temporary restraining order; which as
amended on July 21, 1976, restrained

respondent judge from proceeding with
the hearing scheduled on June 17, 1976
at 8:30 a.m., requiring the submission
of evidence to establish heirship in
Special Proceedings No. 2326-P entitled
Intestate Estate of the Late Mariano
M. Lazatin and Special Proceedings
No. 2341-P, entitled Testate Estate of
the late Margarita de Asis Vda. de
Lazatin, and from proceeding with the
probate of the alleged holographic will
of the deceased Doa Margarita de Asis
Vda. de Lazatin scheduled on June 29,
1976, August 10 and 12, 1976 and on
any other dates. With the Courts
determination of the issues as herein
set forth, there is no longer any need
for restraining the proceedings below
and the said restraining order shall be
immediately lifted.
541
On January 24, 1977, the Court upon

petitioners
motion
resolved
to
conditionally allow respondent judge
to take the deposition of petitioners
witnesses
to
perpetuate
their
testimonies pursuant to Rule 134,
Section 7 of the Rules of Court, subject
to the Courts ruling in due course on
the admissibility of such testimonies.
The Court thereby permitted in effect
the advance testimonies of petitioners
witnesses, principally among them
Rafael Lazatin and Esteban L. Lazatin,
both brothers of the deceased Dr.
Mariano L. Lazatin and as stated in
petitioners motion of January 11, 1977:
266
266

Lazatin vs. Campos
Substantially, the testimony of the abovenamed witnesses will be on the fact that
they had been informed by the deceased
spouses, Mariano and Margarita Lazatin
that your petitioner was their [Marianos

and Margaritas] judicially adopted son and
to elicit further from them the fact that your
petitioner enjoys the reputation of being
their judicially adopted son in the Lazatin
family.
The Courts resolution allowing the

advance testimonies of petitioners
witnesses was but in application of the
Courts longstanding admonition to
trial courts as reaffirmed in Lamagan
vs. De la Cruz , to be liberal in
accepting preferred evidence since even
if they were to refuse to accept the
evidence, the affected party will
nevertheless be allowed to spread the
excluded evidence on the record, for
review on appeal. The Court therein
once again stressed the established rule
that it is beyond question that rulings
of the trial court on procedural
questions and on admissibility of
26
542
evidence during the course of the trial

are interlocutory in nature and may not
be the subject of separate appeal or
review on certiorari, but are to be
assigned as errors and reviewed in the
appeal properly taken from the decision
rendered by the trial court on the
merits of the case, and that a partys
recourse when his proferred evidence is
rejected by the trial court is to make a
formal offer stating on the record what
a party or witness would have testified
to were his testimony not excluded, as
well as to attach to the record any
rejected exhibits.
At
the
continuation
of
the
proceedings below for declaration of
heirship and for probate of the alleged
holographic will of the deceased
Margarita de Asis Vda. de Lazatin,
petitioner who has failed to establish
his status as an alleged adopted child of
27
Margarita de Asis (unless, as reserved

to him by the court below, he can show
some documentary proof) and whose
intervention in the estate of the
deceased Dr. Mariano Lazatin is as an
admitted illegitimate child, will have to
decide whether he will pursue his first
theory of having the status of such
admitted illegitimate child of said
deceased. Whatever be his
________________
26
40 SCRA 101, 110 (1971).
27
Idem, at pages 106-107.
267
VOL. 92, JULY 30, 1979
Lazatin vs. Campos
267
theory and his course of action and

whether or not he may be duly allowed
to intervene in the proceedings below
as such alleged admitted illegitimate
543
child, his recourse in the event of an

adverse ruling against him is to make a
formal offer of proof and of his excluded
evidence, oral and documentary, and
seek a reversal on an appeal in due
course.
ACCORDINGLY, the petition is
dismissed and the questioned orders
denying petitioners petition below to
declare
as
established
in
this
proceeding the fact of [his] adoption
are hereby affirmed. The temporary
restraining order issued on June 16,
1976 and amended on July 21, 1976 is
ordered lifted, effective immediately.
Without costs.
SO ORDERED.
Makasiar, Fernandez,Guerrero and
Melencio-Herrera, JJ., concur.
De Castro, J., took no part.
Petition Dismissed.
Notes.Adoption
proceedings
being in rem, no court may entertain
them unless it has jurisdiction, not only
over the subject matter of the case and
over the parties, but also, over the res,
which is the personal status not only of
the person to be adopted, but also of the
adopting parents. (Ellis vs. Republic, 7
SCRA 962).
Adoption proceedings being in rem,
constructive notice by publication is
sufficient. (Santos vs. Aranzanso, 16
SCRA 344).
Relatives by blood or affinity are not
prohibited from adopting one another.
(Santos, Jr. vs. Republic,21 SCRA 379).
An individual who has already
adopted a child may still adopt another.
(Hofilea vs. Republic, 34 SCRA 545).
The acquisition, by the adopted
person, of the adopting parents
citizenship is not required. (Therkelsen
544
vs. Republic, 12 SCRA 400; Cathey vs.

Republic, 18 SCRA 86).
A person may legally adopt two or
more children and that if the children
to be adopted are all of age, the consent
of neither of their legitimate parents is
not necessary, all that is needed
268
268 SUPREME COURT REPORTS ANNOTATED
Matura vs. Laya
being their own consent. (Paulino vs.

Belen, 27 SCRA 357).
Adoption, as a privilege granted by
law, can be exercised by any person of
age and in full possession of his civil
rights. (In re: Adoption of Minors
Millindez, 39 SCRA 499).
Natural
mother
is
expressly
authorized by law to adopt her natural
child, and likewise, a stepfather is
expressly authorized by law to adopt
his
step-child.
(Malkinson
vs.
Agrava, 54 SCRA 66).
Adoption statutes, being humane and

statutory, held the interest and welfare
of the child to be a paramount
consideration and are designed to
provide homes, parental care and
education for unfortunate, needy or
orphaned children give them the
protection of society and family in the
person of the adopter as well as the
allow childless couples or persons to
experience the joys of parenthood and
give them legally a child in the person
of the adopted for the manifestation of
their
natural
parental
instincts.
(Malkinson vs. Agrava, 54 SCRA 66).
o0o
545
G.R. No. 85423. May 6, 1991.

JOSE
TABUENA,
petitioner, vs. COURT OF APPEALS
and EMILIANO TABERNILLA, JR.,
respondents.
*
Evidence; Evidence not formally offered

cannot be considered by the Court unless it
has been duly identified by testimony duly
recorded and second, it has itself been
incorporated in the records of the case.The
mere fact that a particular document is
marked as an exhibit does not mean it has
thereby already been offered as part of the
evidence of a party. It is true that Exhibits
A, B and C were marked at the pretrial of the case below, but this was only for
the purpose of identifying them at that time.
They were not by such marking formally
offered as exhibits. As we said in
Interpacific Transit, Inc. vs. Aviles, At the
trial on the merits, the party may decide to
formally offer (the exhibits) if it believes
they will advance its cause, and then again

it may decide not to do so at all. In the latter
event, such documents cannot be considered
evidence, nor can they be given any
evidentiary value. Chief Justice Moran
explained the rationale of the rule thus: x x
x The offer is necessary because it is the
duty of a judge to rest his findings of facts
and his judgment only and strictly upon the
evidence offered by the parties at the trial.
We did say in People vs. Napat-a that even
if there be no formal offer of an exhibit, it
may still be admitted against the adverse
party if, first, it has been duly identified by
testimony duly recorded and, second, it has
itself been incorporated in the records of the
case. But we do not find that these
requirements have been satisfied in the case
before us. The trial court said the said
exhibits could be validly considered because,
even if they had not been formally offered,
one of the plaintiffs witnesses, Cunegunda
546
Hernandez, testified on them at the trial

and was even cross-examined by the
defendants counsel. We do not agree.
Although she did testify, all she did was
identify the documents. Nowhere in her
testimony can we find a recital of the
contents of the exhibits.
_______________
*
FIRST DIVISION.
651
VOL. 196, MAY 6, 1991
Tabuena vs. Court of Appeals
Same; Courts; Courts are not authorized

to take judicial notice in the adjudication of
cases pending before them of the contents of
the records of other cases, even when such
cases have been tried or are pending in the
same court, and notwithstanding the fact
that both cases may have been heard or
actually pending before the same judge;
Exceptions.The respondent court also held
that the trial court committed no reversible
error in taking judicial notice of Tabuenas

testimony in a case it had previously heard
which was closely connected with the case
before it. It conceded that as a general rule
courts are not authorized to take judicial
notice, in the adjudication of cases pending
before them, of the contents of the records of
other cases, even when such cases have been
tried or are pending in the same court, and
notwithstanding the fact that both cases
may have been heard or are actually
651
pending
before
the
same
judge.
Nevertheless, it applied the exception that: x
x x in the absence of objection, and as a
matter of convenience to all parties, a court
may properly treat all or any part of the
original record of a case filed in its archives
as read into the record of a case pending
before it, when, with the knowledge of the
opposing party, reference is made to it for
that purpose, by name and number or in
some other manner by which it is
547
sufficiently designated; or when the original

record of the former case or any part of it, is
actually withdrawn from the archives by the
courts direction, at the request or with the
consent of the parties, and admitted as a
part of the record of the case then pending.
It is clear, though, that this exception is
applicable only when, in the absence of
objection, with the knowledge of the
opposing party, or at the request or with
the consent of the parties, the case is
clearly referred to or the original or part of
the records of the case are actually
withdrawn from the archives and admitted
as part of the record of the case then
pending. These conditions have not been
established here. On the contrary, the
petitioner was completely unaware that his
testimony in Civil Case No. 1327 was being
considered by the trial court in the case then
pending before it. As the petitioner puts it,
the matter was never taken up at the trial
and was unfairly sprung upon him, leaving

him no opportunity to counteract. The
respondent court said that even assuming
that the trial court improperly took judicial
notice of the other case, striking off all
reference thereto would not be fatal to the
plaintiffs cause because the said testimony
was merely corroborative of other evidences
submitted by the plaintiff. What other
evidences?
The
trouble
with
this
justification is that the exhibits it intends to
corroborate, to wit, Exhibits A, B and
C, have themselves not been formally
submitted.
652
65
2
Property; Ownership; Tax receipts and

declarations of ownership for taxation
purposes are not incontrovertible evidence of
ownership; they become strong evidence of
ownership acquired by prescription when
548
accompanied by proof of actual possession of

the property.It is true that tax
declarations are not conclusive evidence of
ownership, as we have held in many cases.
However, that rule is also not absolute and
yields to the accepted and well-known
exception. In the case at bar, it is not even
disputed that the petitioner and his
predecessors-in-interest have possessed the
disputed property since even before World
War II. In light of this uncontroverted fact,
the tax declarations in their name become
weighty and compelling evidence of the
petitioners ownership. As this Court has
held: While it is true that by themselves tax
receipts and declarations of ownership for
taxation purposes are not incontrovertible
evidence of ownership they become strong
evidence of ownership acquired by
prescription when accompanied by proof of
actual possession of the property. It is only
where payment of taxes is accompanied by
actual possession of the land covered by the

tax declaration that such circumstance may
be material in supporting a claim of
ownership.
PETITION to review the decision of the

Court of Appeals.
the Court.
Ramon Dimen for petitioner.
Dionisio A. Hernandez for private
respondent.
CRUZ, J.:
The petitioner faults the decision of the
trial court, as affirmed by the
respondent court, for lack of basis. It is
argued that the lower courts should not
have taken into account evidence not
submitted by the private respondent in
accordance with the Rules of Court.
549
The subject of the dispute is a parcel

of residential land consisting of about
440 square meters and situated in
Poblacion, Makato, Aklan. In 1973, an
action for recovery of ownership thereof
was filed in the Regional Trial Court of
Aklan by the estate of Alfredo
Tabernilla against Jose Tabuena, the
herein petitioner. After trial, judgment
was rendered in favor of the plaintiff
and the defendant was required to
vacate the disputed lot.
1
_______________
Rollo, pp. 59-72; decided by Judge Gerardo M.S. Pepito.
653
VOL. 196, MAY 6, 1991
As the trial court found, the lot was

sold by Juan Peralta, Jr. sometime in
1926 to Alfredo Tabernilla while the
two were in the United States.
Tabernilla returned to the Philippines
in 1934, and Damasa Timtiman, acting

upon her son Juans instruction,
conveyed the subject land to Tabernilla.
At the same time, she requested that
she be allowed to stay thereon as she
had been living there all her life.
Tabernilla agreed provided she paid the
realty taxes on the property, which she
promised to do, and did. She remained
on the said land until her death,
following which the petitioner, her son
and half-brother of Juan Peralta, Jr.,
took possession thereof. The complaint
was filed when demand was made upon
Tabuena to surrender the property and
he refused, claiming it as his own.
653
The trial court
rejected his defense
that he was the absolute owner of the
lot, which he inherited from his
parents, who acquired it even before
World War II and had been living
thereon since then and until they died.
550
Also disbelieved was his contention

that the subject of the sale between
Peralta and Tabernilla was a different
piece of land planted to coconut trees
and bounded on three sides by the
Makato River.
Tabuena appealed to the respondent
court, complaining that, in arriving at
its factual findings, the trial court motu
proprio took cognizance of Exhibits A,
B and C, which had been marked by
the plaintiff but never formally
submitted in evidence. The trial court
also erred when, to resolve the
ownership of the subject lot, it
considered the proceedings in another
case involving the same parties but a
different parcel of land.
The said exhibits are referred to in
the pre-trial order as follows:
Plaintiff proceeded to mark the following exhibits: Exh. A, letter
dated October 4, 1921 addressed in Makato, Capiz, Philippines;
Exh. A-1, paragraph 2 of the letter indicating that the amount of

P600.00the first P300.00 and then another P300.00 as interest
since October 4, 1921; Exh. A-2, is paragraph 3 of the letter; Exh.
B, a Spanish document; Exh. C, deed of conveyance filed by
Tomasa Timtiman and Alfredo Tabernilla in 1923; and Exh. C-1,
paragraph 4 of Exh. C.
In sustaining the trial court, the

respondent court held that, contrary to
the allegations of the appellant, the
said exhibits
654
654

were in fact formally submitted in

evidence as disclosed by the transcript
of stenographic notes, which it quoted
at length. The challenged decision also
upheld the use by the trial court of
testimony given in an earlier case, to
bolster its findings in the second case.
We have examined the record and
find that the exhibits submitted were
not the above-described documents but
2
551
Exhibits X and Y and their submarkings, which were the last will and
testament of Alfredo Tabernilla and the
order of probate. It is not at all denied
that the list of exhibits does not include
Exhibits A, B and C. In fact, the
trial court categorically declared that
Exhibits A, A-1, A-2, B, C, and C1, were not among those documents or
exhibits formally offered for admission
by plaintiff-administratrix. This is a
clear contradiction of the finding of the
appellate court, which seems to have
confused Exhibits A, B and C with
Exhibits X and Y, the evidence
mentioned in the quoted transcript.
Rule 132 of the Rules of Court
provides in Section 35 thereof as
follows:
The mere fact that a particular

document is marked as an exhibit does
not mean it has thereby already been
offered as part of the evidence of a
party. It is true that Exhibits A, B
and C were marked at the pre-trial of
the case below, but this was only for the
purpose of identifying them at that
time. They were not by such marking
formally offered as exhibits. As we said
in Interpacific Transit, Inc. vs.
Aviles, At the trial on the merits, the
party may decide to formally offer (the
exhibits) if it believes they will advance
its cause, and then again it may decide
not to do so at all. In the latter event,
such documents cannot be considered
evidence, nor can they be given any
evidentiary value.
3
Sec. 35. 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.

552
Ibid.,
pp.
27-29;
Gonzaga-Reyes, J.,
ponente, with
Bellosillo
and
Marigomen, JJ., concurring.

3
186 SCRA 385.
655
VOL. 196, MAY 6, 1991
Chief Justice Moran explained the

rationale of the rule thus:
x x x The offer is necessary because it is the duty of a judge to rest
his findings of facts and his judgment only and strictly upon the
evidence offered by the parties at the trial.
We did say in People vs. Napat-a that

even if there be no formal offer of an
exhibit, it may still be admitted against
the adverse party if, first, it has been
duly identified by testimony duly
recorded and, second, it has itself been
incorporated in the records of the case.
But we do not find that these
requirements have been satisfied in the
case before us. The trial court said the
said
exhibits
could
be
validly
considered because, even if they had
5
not been formally offered, one of the

plaintiffs
witnesses,
Cunegunda
Hernandez, testified on them at the
trial and was even cross-examined by
655
the defendants
counsel. We do not
agree. Although she did testify, all she
did was identify the documents.
Nowhere in her testimony can we find a
recital of the contents of the exhibits.
Thus, her interrogation on Exhibit
A ran:
ATTY. LEGASPI: What is this Exh. A about?

A The translation of the letter.
Q What is the content of this Exh. A, the letter of the sister of Juan Pe
Tabernilla?
Court: The best evidence is the document. Proceed.
6
She also did not explain the contents of

the other two exhibits.
The respondent court also held that
the trial court committed no reversible
error in taking judicial notice of
Tabuenas testimony in a case it had
previously heard which was closely
connected with the case before it. It
553
conceded that as a general rule courts

are not authorized to take judicial
notice, in the adjudication of cases
pending before them, of the contents of
the records of other cases, even when
such cases have been tried or are
pending in the same court, and
notwithstanding the fact
of a case pending before it, when, with the knowledge of the

opposing party, reference is made to it for that purpose, by name
and number or in some other manner by which it is sufficiently
designated; or when the original record of the former case or any
part of it, is actually withdrawn from the archives by the courts
direction, at the request or with the consent of the parties, and
admitted as a part of the record of the case then pending.
It is clear, though, that this exception is

applicable only when, in the absence of
_______________
objection, with the knowledge of the
opposing party, or at the request or
Moran, Comments on the Rules of Court, Vol. 6, 1970 Ed., p. 21.
with the consent of the parties, the
179 SCRA 403.
case is clearly referred to or the
TSN, April 17, 1980, p. 32.
original or part of the records of the
656
656
case are actually withdrawn from the
archives and admitted as part of the
that both cases may have been heard or
record of the case then pending. These
are actually pending before the same
conditions have not been established
judge. Nevertheless, it applied the
here. On the contrary, the petitioner
exception that:
was completely unaware that his
x x x in the absence of objection, and as a matter of convenience to
testimony in Civil Case No. 1327 was
all parties, a court may properly treat all or any part of the
being considered by the trial court in
4
original record of a case filed in its archives as read into the record
554
the case then pending before it. As the

petitioner puts it, the matter was never
taken up at the trial and was unfairly
sprung upon him, leaving him no
opportunity to counteract.
The respondent court said that even
assuming
that
the
trial
court
improperly took judicial notice of the
other case, striking off all reference
thereto would not be fatal to the
plaintiffs cause because the said
testimony was merely corroborative of
other evidences submitted by the
plaintiff. What other evidences? The
trouble with this justification is that
the exhibits it intends to corroborate, to
wit, Exhibits A, B and C, have
themselves
not
been
formally
submitted.
Considering the resultant paucity of
the evidence for the private respondent,
we feel that the complaint should have

been
_______________
Rollo, p. 25.
U.S. vs. Claveria, 29 Phil. 527.
657
VOL. 196, MAY 6, 1991
dismissed by the trial court for failure

of the plaintiff to substantiate its
allegations. It has failed to prove that
the subject lot was the same parcel of
land sold by Juan Peralta, Jr. to
Alfredo Tabernilla and not another
property, as the petitioner contends.
Even assuming it was the same lot,
there is no explanation for the sale
thereof by Juan Peralta, Jr., who was
only the son of Damasa Timtiman.
According to the trial court, there is no
question that before 1934 the land in
question
belonged
to
Damasa
555
Timtiman. Juan Peralta, Jr. could not

have validly conveyed title to property
that did not belong to him unless he
had appropriate authorization from the
owner. No such authorization has been
presented.
It is true that tax declarations are not
conclusive evidence of ownership, as we
have held in many cases. However, that
rule is also not absolute and yields to
the accepted and well-known exception.
In the case at bar, it is not even
disputed that the petitioner and his
predecessors-in-interest have possessed
the disputed property since even before
World War II. In light of this
uncontroverted
fact,
the
tax
declarations in their name become
weighty and compelling evidence of the
petitioners ownership. As this Court
has held:
While it is true that by themselves tax receipts and declarations of

ownership for taxation purposes are not incontrovertible evidence
of ownership they become strong evidence of ownership acquired
by prescription when accompanied by proof of actual possession of
the property.
It is only where payment of taxes is accompanied by actual

possession of the land covered by the tax declaration that such
circumstance may be material in supporting a claim of ownership.
10
The tax receipts accompanied by actual and continuous

possession of the subject parcels of land by the respondents and
their parents before them for more than 30 years qualify them to
register title to the said subject parcels of land.
11
The Court can only wonder why, if

Alfredo Tabernilla did purchase the
property and magnanimously allowed
Damasa
_______________
Republic vs. Court of Appeals, 131 SCRA 533.
10
Heirs of Celso Amarante vs. Court of Appeals, 185 SCRA 585.
11
Samson vs. Court of Appeals, 141 SCRA 194.
658
556
658

object
Timtiman to remain there, he did not

at least require her to pay the realty
taxes in his name, not hers. The
explanation given by the trial court is
that he was not much concerned with
the property, being a bachelor and fond
only of the three dogs he had bought
from America. That is specious
reasoning. At best, it is pure conjecture.
If he were really that unconcerned, it is
curious that he should have acquired
the property in the first place, even
as dacion en pago. He would have
demanded another form of payment if
he did not have the intention at all of
living on the land. On the other hand, if
he were really interested in the
property, we do not see why he did not
have it declared in his name when the
realty taxes thereon were paid by
Damasa Timtiman or why he did not
when the payments were made

in her own name.
In comparison, all the acts of Damasa
Timtiman and Jose Tabuena indicate
that they were the owners of the
disputed property. Damasa Timtiman
and her forebears had been in
possession thereof for more than fifty
years and, indeed, she herself stayed
there until she died. She paid the
realty taxes thereon in her own
name. Jose Tabuena built a house of
strong materials on the lot. He even
mortgaged the land to the Development
Bank of the Philippines and to two
private persons who acknowledged him
as the owner. These acts denote
ownership and are not consistent with
the private respondents claim that the
petitioner was only an overseer with
mere possessory rights tolerated by
Tabernilla.
12
13
14
15
557
It is the policy of this Court to accord

proper deference to the factual findings
of the courts below and even to regard
them as conclusive where there is no
showing that they have been reached
arbitrarily. The exception is where such
findings do not conform to the evidence
on record and appear indeed to have no
valid basis to sustain their correctness.
As in this case.
The conclusions of the trial court
were based mainly on Exhibits A, B
and C, which had not been formally
offered
_______________
12
Rollo, p. 64.
13
Exh. 7.
14
Rollo, pp. 39-40.
15
Exhs. 12, 13 and 14.
659
VOL. 196, MAY 6, 1991
as evidence and therefore should have

been totally disregarded, conformably
to the Rules of Court. The trial court
also erred when it relied on the
evidence submitted in Civil Case No.
1327 and took judicial notice thereof
without the consent or knowledge of the
petitioner, in violation of existing
doctrine. Thus vitiated, the factual
findings here challenged are as an
edifice built upon shifting sands and
should not have been sustained by the
respondent court.
Our own finding is that the private
respondent, as plaintiff in the lower
court, failed to prove his claim of
ownership over the disputed property
with evidence properly cognizable
under our adjudicative laws. By
contrast, there is substantial evidence
supporting the petitioners contrary
659
contentions that
should have persuaded
558
the trial judge to rule in his favor and

dismiss the complaint.
WHEREFORE,
the
petition
is
GRANTED. The appealed decision is
REVERSED and SET ASIDE, with
costs against the private respondent. It
is so ordered.
Narvasa (Chairman), Gancayco,
Grio-Aquino andMedialdea,
JJ., concur.
Petition granted. Decision reversed
and set aside.
Note.There is no need to formally
offer in evidence a document, such as a
birth certificate, attached to a motion,
under Rule 133, Sec. 7. (Brauo, Jr. vs.
Borja, 134 SCRA 466.)
o0o
559

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G.R. No. 156132. October 16, 2006.

CITIBANK, N.A. (Formerly First National City Bank) and

Actions; Pleadings and Practice; Forum Shopping; Motions for

VOL. 504, OCTOBER 16, 2006

Citibank, N.A. (Formerly First National City Bank) vs.

her Petition for Review, respondent had no obligation to execute

SUPREME COURT REPORTS ANNOTATED

VOL. 504, OCTOBER 16, 2006

Citibank, N.A. (Formerly First National City Bank) vs.

the admission is such that in the case of a promissory note aprima

SUPREME COURT REPORTS ANNOTATED

When the existence of a debt is fully established by the evidence

VOL. 504, OCTOBER 16, 2006

Banks and Banking; Checks; Managers Checks (MCs) are

SUPREME COURT REPORTS ANNOTATED

in payees account only. It is bound to scrutinize the check and to

VOL. 504, OCTOBER 16, 2006

Citibank, N.A. (Formerly First National City Bank) vs.

SUPREME COURT REPORTS ANNOTATED

that a check, whether an MC or an ordinary check, is not legal

VOL. 504, OCTOBER 16, 2006

Citibank, N.A. (Formerly First National City Bank) vs.

then sent to Signature Control for verification of the clients

SUPREME COURT REPORTS ANNOTATED

fairness, intelligence, and truthfulness, and equally well

is the subject of the inquiry.As the afore-quoted provision states,

VOL. 504, OCTOBER 16, 2006

Citibank, N.A. (Formerly First National City Bank) vs.

adopted the findings therein of wrongdoing or misconduct on the

SUPREME COURT REPORTS ANNOTATED

outstanding loans with her deposit account. As already found by

VOL. 504, OCTOBER 16, 2006

Citibank, N.A. (Formerly First National City Bank) vs.

Same; Pledge; Although the pertinent documents were entitled

SUPREME COURT REPORTS ANNOTATED

allegation and evidence presented by petitioners of the specific

containing the alleged forged signature, one cannot make a

Same; Best Evidence Rule; Forgery; When a document is

Same; Presumptions; It is presumed that evidence willfully

VOL. 504, OCTOBER 16, 2006

Citibank, N.A. (Formerly First National City Bank) vs.

Appeals; Review of matters, even those not assigned as errors

SUPREME COURT REPORTS ANNOTATED

of respondents money market placements, evidenced by PNs No.

VOL. 504, OCTOBER 16, 2006

Citibank, N.A. (Formerly First National City Bank) vs.

PETITION for review on certiorari of the decision and

Angara, Abello, Concepcion, Regala & Cruz co-counsel

Rollo, pp. 165-325.

Penned by Associate Justice Andres B. Reyes, Jr. with Associate Justices

Conrado M. Vasquez, Jr. and Amelita G. Tolentino, concurring;Id., at pp. 327366.

Id., at pp. 368-374.

SUPREME COURT REPORTS ANNOTATED

consistently establish its identity in the Petition at bar, the

TSN, Deposition of Mr. Francisco Tan, 3 September 1990, pp. 9-10.

Records, Vol. I, pp. 1-8.

Id., at pp. 148-157.

Id., at pp. 40-51.

24 August 1995 by the fourth Judge who handled the said

Id., at pp. 208-227.

VOL. 504, OCTOBER 16, 2006

Order, dated 11 December 1985, penned by Judge Ansberto P. Paredes,

Records, Vol. I, p. 346.

Penned by Judge Manuel D. Victorio, Records, Vol. III, pp. 1607-1621.