Salcedo-Ortaez v.

Court of Appeals
Doctrine: Under R.A. 4200, it is unlawful for any person , not being authorized by
all the parties to any private communication or spoken word, to tap any wire or
cable, or by using any other device or arrangement, to secretly overhear, intercept,
or record such communication or spoken word by using a device commonly known
as a dictaphone or dictagraph or detectaphone or walkie-talkie or tape-recorder, or
however otherwise described. The inadmissibility of such evidence obtained in
violation of said Act is mandatory under the law.
Facts:

Rafael Ortanez filed with the Regional Trial Court a complaint for annulment
of marriage with damages against Teresita Salcedo-Ortanez, on grounds of
lack of marriage license and/or psychological incapacity of Teresita.

Among the evidence orally formally offered by Ortanez were three cassette
tapes of alleged telephone conversations between Teresita and unidentified
persons.

Issues:
Teresita filed an objection/comment to Rafaels oral offer of evidence, assailing the
admissibility in evidence of the cassette tapes. Can her objection be sustained?
Held:
Yes. The evidence presented are inadmissible by virtue of RA 4200.
Rep. Act No. 4200 entitled "An Act to Prohibit and Penalize Wire Tapping and Other
Related Violations of the Privacy of Communication, and for other purposes"
expressly makes such tape recordings inadmissible in evidence. The relevant
provisions of Rep. Act No. 4200 are as follows:
"Section 1. It shall be unlawful for any person, not being authorized by all the
parties to any private communication or spoken word, to tap any wire or cable, or
by using any other device or arrangement, to secretly overhear, intercept, or record
such communication or spoken word by using a device commonly known as a
dictaphone or dictagraph or detectaphone or walkie-talkie or tape-recorder, or
however otherwise described. x x x"
"Section 4. Any communication or spoken word, or the existence, contents,
substance, purport, or meaning of the same or any par, thereof, or any information
therein contained, obtained or secured by any person in violation of the preceding

sections of this Act shall not be admissible in evidence in any judicial, quasi-judicial,
legislative or administrative hearing or investigation."
Clearly, respondents trial court and Court of Appeals failed consider the aforequoted provisions of the law in admitting in the casette tapes in question. Absent a
clear show that both parties to the telephone conversations allowed recording of the
same, the inadmissibility of the subject tapes is mandatory under Rep. Act No.
4200.

SEAOIL PETROLEUM CORPORATION VS. AUTOCORP GROUP AND PAUL Y.

RODRIGUEZ
G.R. No. 164326, October 17, 2008
FACTS:Petitioner Seaoil Petroleum Corporation purchased one unit of ROBEX 200 LC
Excavator, Model 1994 from respondent Autocorp Group. The sales agreement was
embodied in the Vehicle Sales Invoice No. A-0209 and Vehicle Sales Confirmation No. 258.
Seaoil issued 12 checks as payment therefor; however 10 checks were not honored by the
bank since Seaoil requested that payment be stopped. Autocorp filed a complaint for
recovery of personal property with damages and replevin in the Regional Trial Court.
Seaoil claims that Seaoil and Autocorp were only utilized as conduits to settle the obligation
of one foreign entity named Uniline Asia, in favor of another foreign entity, Focus Point
International, Incorporated. The real transaction is that Uniline, through Rodriguez, owed
money to Focus. In lieu of payment, Uniline instead agreed to convey the excavator to
Focus. This was to be paid by checks issued by Seaoil but which in turn were to be funded
by checks issued by Uniline.
Petitioner Seaoil in sum alleges that the written agreement failed to express the true intent
and agreement of the parties, thus parol evidence is admissible.
ISSUE:
Whether or not parol evidence rule is applicable in this case.
HELD:
No. 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.
Evidence of a prior or contemporaneous verbal agreement is generally not admissible to
vary, contradict or defeat the operation of a valid contract.
The Vehicle Sales Invoice is the best evidence of the transaction. The terms of the subject
sales invoice are clear. They show that Autocorp sold to Seaoil one unit Robex 200 LC
Excavator paid for by checks issued by one Romeo Valera.
Facts:
This is a case involving Citibank, N.A., a banking corporation duly registered under US Laws and is
licensed to do commercial banking and trust functions in the Philippines and Investor's Finance
Corporation (aka FNCB Finance), and affiliate company of Citibank, mainly handling money market
placements(MMPs are short term debt instruments that give the owner an unconditional right to receive a
stated, fixed sum of money on a specified date).

Modesta R. Sabeniano was a client of both petitioners Citibank and FNCB Finance.Unfortunately, the
business relations among the parties subsequently went awry. Subsequently, Sabeniano filed a complaint
with the RTC against petitioners as she claims to have substantial deposits and money market placements
with the petitioners and other investment companies, the proceeds of which were supposedly deposited
automatically and directly to her account with Citibank. Sabenianoalleged that Citibank et al refused to
return her deposits and the proceeds of her money market placements despite her repeated demands, thus,
the civil case for "Accounting, Sum of Money and Damages.
In their reply, Citibank et al admitted that Sabenianohad deposits and money market placements with
them, including dollar accounts in other Citibank branches. However, they also alleged that respondent
later obtained several loans from Citibank, executed through Promissory Notes and secured by a pledge
on her dollar accounts, and a deed of assignment against her MMPS with FNCB Finance. When
Sabeniano defaulted, Citibank exercised its right to off-set or compensate respondent's outstanding loans
with her deposits and money market placements, pursuant to securities she executed. Citibank supposedly
informed Sabeniano of the foregoing compensation through letters, thus, Citibank et al were surprised
when six years later,Sabeniano and her counsel made repeated requests for the withdrawal of respondent's
deposits and MMPs with 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 attorney's fees.
The case was eventually decided after 10 years with the Judge declaring the offsetting done as illegal and
the return of the amount with legal interest, while Sabeniano was ordered to pay her loans to Citibank.
The ruling was then appealed. The CA modified the decision but only to the extent of Sabenianos loans
which it ruled that Citibank failed to establish the indebtedness and is also without legal and factual basis.
The case was thus appealed to the SC.
Issue: Whether or not there was a valid offsetting/compensation of loan vis a visthe
a.)Deposits and
b.) MMPs.
Held:
General Requirement of Compensation:
Art. 1278. Compensation shall take place when two persons, in their own right, are creditors and
debtors of each other.
Art. 1279. In order that compensation may be proper, it is necessary;
(1) That each one of the obligors be bound principally, and that he be at the same time a
principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due are consumable, they
be of the same kind, and also of the same quality if the latter has been stated;
(3) That the two debts be due;

(4) That they be liquidated and demandable;

(5) That over neither of them there be any retention or controversy, commenced by third
persons and communicated in due time to the debtor.

1. Yes. As already found by this Court, petitioner Citibank was the creditor of respondent for her
outstanding loans. At the same time, respondent was the creditor of petitioner Citibank, as far as her
deposit account was concerned, since bank deposits, whether fixed, savings, or current, should be
considered as simple loan or mutuum by the depositor to the banking institution.122 Both debts consist in
sums of money. By June 1979, all of respondent's PNs in the second set had matured and became
demandable, while respondent's 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.

2. Yes, but technically speaking Citibank did not effect a legal compensation or off-set under Article 1278
of the Civil Code, but rather, it partly extinguished respondent's obligations through the application of the
security given by the respondent for her loans.

Respondent's money market placements were with petitioner FNCB Finance, and after several roll-overs,
they were ultimately covered by PNs No. 20138 and 20139, which, by 3 September 1979, the date the
check for the proceeds of the said PNs were issued, amounted to P1,022,916.66, inclusive of the principal
amounts and interests. As to these money market placements, respondent was the

creditor and petitioner FNCB Finance the debtor (thereby implying that money
market placement is a simple loan or mutuum); 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 respondent's money
market placements with petitioner FNCB Finance by virtue of the Deeds of Assignment executed by
respondent in its favor. 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 respondent's 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
respondent's 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 to Article 2118 of the Civil Code
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.

MCC
INDUSTRIAL
SALES
CORPORATION
vs.SSANGYONG
CORPORATION
G.R. No. 170633, October
17,
2007
Facts:
On April 13, 2000, Ssangyong Manila Office sent, by fax, a letter, to confrm MCC Industrial Sales
and Sanyo Seiki's order of 220 metric tons (MT) of hot rolled stainless steel addressed to MCC's
manager and President of Sanyo Seiki Stainless Steel Corporation Gregory Chan. On behalf of the
corporations, Chan, 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. Following their usual practice, delivery of the goods was to be made after the L/C had
been opened. On the same date, due to the fact that MCC could only open a partial letter of credit,
the order for 220MT of steel was split into two, one for 110MT and another for 110MT covered by Pro
Forma

Invoice

Nos.

ST2-POSTS0401-1

and

ST2-POSTS0401-2

respectively.

On June 20, 2000, Ssangyong, through its Manila Office, informed Sanyo Seiki and Chan, by way
of a fax transmittal, that stainless steel from Korea was ready to ship 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. The first L/C covering payment for 100MT of stainless
steel coil under Pro Forma Invoice No. ST2-POSTS080-2 was opened. The goods covered by the
said invoice were then shipped to and received by MCC. But, for the second L/C, MCC refused to
open it that resulted to the filing of civil action by SSangyong for damages due to breach of contract.

After Ssangyong rested its case, MCC filed a Demurrer to Evidence, alleging that respondent
failed to present the original copies of the pro forma invoices on which the civil action was based.
The court denied the demurrer, ruling that the documentary evidence is admissible pursuant to RA
8792 and that both testimonial and documentary evidence tended to substantiate the material
allegations in the complaint, suffice for the purposes of prima facie case. On appeal to the CA, the
appellate court affirmed the ruling of the trial court and ruled that the Pro Forma invoices were
admissible in evidence , although they were mere facsimile printouts of the steel orders.

Issue:
Whether or not the print out and/or photocopies of facsimile transmissions are electronic evidence
and

admissible

as

such.

Held:
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. 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 law's
definition of "electronic data message," which, as aforesaid, is interchangeable with "electronic
document," could not have included facsimile transmissions, which have an original paper-based
copy as sent and a paper-based facsimile copy as received. These two copies are distinct from each
other,

and

have

different

legal

effects.

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. Hence, the Supreme court held that Pro Forma
Invoices are mere photocopies of the original fax transmittals and not electronic evidence, contrary
to the position of both the trial and the appellate courts.