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G.R. No. 87434 August 5, 1992

PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC. and TAGUM PLASTICS, INC., petitioners,
vs.
SWEET LINES, INC., DAVAO VETERANS ARRASTRE AND PORT SERVICES, INC. and HON. COURT OF APPEALS, respondents.

De Lara, De Lunas & Rosales for petitioners.

Carlo L. Aquino for Sweet Lines, Inc.

REGALADO, J.:

A maritime suit 1 was commenced on May 12, 1978 by herein Petitioner Philippine American General Insurance Co., Inc. (Philamgen) and Tagum
Plastics, Inc. (TPI) against private respondents Sweet Lines, Inc. (SLI) and Davao Veterans Arrastre and Port Services, Inc. (DVAPSI), along with
S.C.I. Line (The Shipping Corporation of India Limited) and F.E. Zuellig, Inc., as co-defendants in the court a quo, seeking recovery of the cost of lost
or damaged shipment plus exemplary damages, attorney's fees and costs allegedly due to defendants' negligence, with the following factual
backdrop yielded by the findings of the court below and adopted by respondent court:

It would appear that in or about March 1977, the vessel SS "VISHVA YASH" belonging to or operated by the foreign common carrier, took on board
at Baton Rouge, LA, two (2) consignments of cargoes for shipment to Manila and later for transhipment to Davao City, consisting of 600 bags Low
Density Polyethylene 631 and another 6,400 bags Low Density Polyethylene 647, both consigned to the order of Far East Bank and Trust Company
of Manila, with arrival notice to Tagum Plastics, Inc., Madaum, Tagum, Davao City. Said cargoes were covered, respectively, by Bills of Lading Nos.
6 and 7 issued by the foreign common carrier (Exhs. E and F). The necessary packing or Weight List (Exhs. A and B), as well as the Commercial
Invoices (Exhs. C and D) accompanied the shipment. The cargoes were likewise insured by the Tagum Plastics Inc. with plaintiff Philippine American
General Insurance Co., Inc., (Exh. G).

In the course of time, the said vessel arrived at Manila and discharged its cargoes in the Port of Manila for transhipment to Davao City. For this
purpose, the foreign carrier awaited and made use of the services of the vessel called M/V "Sweet Love" owned and operated by defendant
interisland carrier.

Subject cargoes were loaded in Holds Nos. 2 and 3 of the interisland carrier. These were commingled with similar cargoes belonging to Evergreen
Plantation and also Standfilco.

On May 15, 1977, the shipment(s) were discharged from the interisland carrier into the custody of the consignee. A later survey conducted on July 8,
1977, upon the instance of the plaintiff, shows the following:

Of the cargo covered by Bill of Lading No. 25 or (2)6, supposed to contain 6,400 bags of Low Density Polyethylene 647 originally inside 160 pallets,
there were delivered to the consignee 5,413 bags in good order condition. The survey shows shortages, damages and losses to be as follows:

Undelivered/Damaged bags as tallied during discharge from vessel-173 bags; undelivered and damaged as noted and observed whilst stored at the
pier-699 bags; and shortlanded-110 bags (Exhs. P and P-1).

Of the 600 bags of Low Density Polyethylene 631, the survey conducted on the same day shows an actual delivery to the consignee of only 507
bags in good order condition. Likewise noted were the following losses, damages and shortages, to wit:

Undelivered/damaged bags and tally sheets during discharge from vessel-17 bags.

Undelivered and damaged as noted and observed whilst stored at the pier-66 bags; Shortlanded-10 bags.

Therefore, of said shipment totalling 7,000 bags, originally contained in 175 pallets, only a total of 5,820 bags were delivered to the consignee in
good order condition, leaving a balance of 1,080 bags. Such loss from this particular shipment is what any or all defendants may be answerable to
(sic).

As already stated, some bags were either shortlanded or were missing, and some of the 1,080 bags were torn, the contents thereof partly spilled or
were fully/partially emptied, but, worse, the contents thereof contaminated with foreign matters and therefore could no longer serve their intended
purpose. The position taken by the consignee was that even those bags which still had some contents were considered as total losses as the
remaining contents were contaminated with foreign matters and therefore did not ( sic) longer serve the intended purpose of the material. Each bag
was valued, taking into account the customs duties and other taxes paid as well as charges and the conversion value then of a dollar to the peso, at
P110.28 per bag (see Exhs. L and L-1 M and O). 2
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Before trial, a compromise agreement was entered into between petitioners, as plaintiffs, and defendants S.C.I. Line and F.E. Zuellig, upon the
latter's payment of P532.65 in settlement of the claim against them. Whereupon, the trial court in its order of August 12, 1981 3 granted plaintiffs'
motion to dismiss grounded on said amicable settlement and the case as to S.C.I. Line and F.E. Zuellig was consequently "dismissed with prejudice
and without pronouncement as to costs."

The trial court thereafter rendered judgment in favor of herein petitioners on this dispositive portion:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff Philippine General American Insurance Company Inc. and against the remaining
defendants, Sweet Lines Inc. and Davao Veterans Arrastre Inc. as follows:

Defendant Sweet Lines, Inc. is ordered to pay said plaintiff the sum of P34,902.00, with legal interest thereon from date of extrajudicial demand on
April 28, 1978 (Exh. M) until fully paid;

Defendant Sweet Lines Inc. and Davao Veterans Arrastre and (Port) Services Inc. are directed to pay jointly and severally, the plaintiff the sum of
P49,747.55, with legal interest thereon from April 28, 1978 until fully paid;

Each of said defendants are ordered to pay the plaintiffs the additional sum of P5,000 is reimbursable attorney's fees and other litigation expenses;

Each of said defendants shall pay one-fourth (1/4) costs. 4

Due to the reversal on appeal by respondent court of the trial court's decision on the ground of prescription, 5 in effect dismissing the complaint of
herein petitioners, and the denial of their motion for reconsideration, 6 petitioners filed the instant petition for review on certiorari, faulting respondent
appellate court with the following errors: (1) in upholding, without proof, the existence of the so-called prescriptive period; (2) granting arguendo that
the said prescriptive period does exist, in not finding the same to be null and void; and (3) assuming arguendo that the said prescriptive period is
valid and legal, in failing to conclude that petitioners substantially complied therewith. 7

Parenthetically, we observe that herein petitioners are jointly pursuing this case, considering their common interest in the shipment subject of the
present controversy, to obviate any question as to who the real party in interest is and to protect their respective rights as insurer and insured. In any
case, there is no impediment to the legal standing of Petitioner Philamgen, even if it alone were to sue herein private respondents in its own capacity
as insurer, it having been subrogated to all rights of recovery for loss of or damage to the shipment insured under its Marine Risk Note No. 438734
dated March 31, 1977 8 in view of the full settlement of the claim thereunder as evidenced by the subrogation receipt 9 issued in its favor by Far East
Bank and Trust Co., Davao Branch, for the account of petitioner TPI.

Upon payment of the loss covered by the policy, the insurer's entitlement to subrogation  pro tanto, being of the highest equity, equips it with a cause
of action against a third party in case of contractual breach. 10 Further, the insurer's subrogatory right to sue for recovery under the bill of lading in
case of loss of or damage to the cargo is jurisprudentially upheld. 11 However, if an insurer, in the exercise of its subrogatory right, may proceed
against the erring carrier and for all intents and purposes stands in the place and in substitution of the consignee, a fortiori such insurer is presumed
to know and is just as bound by the contractual terms under the bill of lading as the insured.

On the first issue, petitioners contend that it was error for the Court of Appeals to reverse the appealed decision on the supposed ground of
prescription when SLI failed to adduce any evidence in support thereof and that the bills of lading said to contain the shortened periods for filing a
claim and for instituting a court action against the carrier were never offered in evidence. Considering that the existence and tenor of this stipulation
on the aforesaid periods have allegedly not been established, petitioners maintain that it is inconceivable how they can possibly comply
therewith. 12 In refutation, SLI avers that it is standard practice in its operations to issue bills of lading for shipments entrusted to it for carriage and
that it in fact issued bills of lading numbered MD-25 and MD-26 therefor with proof of their existence manifest in the records of the case. 13 For its
part, DVAPSI insists on the propriety of the dismissal of the complaint as to it due to petitioners' failure to prove its direct responsibility for the loss of
and/or damage to the cargo. 14

On this point, in denying petitioner's motion for reconsideration, the Court of Appeals resolved that although the bills of lading were not offered in
evidence, the litigation obviously revolves on such bills of lading which are practically the documents or contracts sued upon, hence, they are
inevitably involved and their provisions cannot be disregarded in the determination of the relative rights of the parties thereto. 15

Respondent court correctly passed upon the matter of prescription, since that defense was so considered and controverted by the parties. This issue
may accordingly be taken cognizance of by the court even if not inceptively raised as a defense so long as its existence is plainly apparent on the
face of relevant pleadings. 16 In the case at bar, prescription as an affirmative defense was seasonably raised by SLI in its answer, 17 except that the
bills of lading embodying the same were not formally offered in evidence, thus reducing the bone of contention to whether or not prescription can be
maintained as such defense and, as in this case, consequently upheld on the strength of mere references thereto.

As petitioners are suing upon SLI's contractual obligation under the contract of carriage as contained in the bills of lading, such bills of lading can be
categorized as actionable documents which under the Rules must be properly pleaded either as causes of action or defenses, 18 and the
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genuineness and due execution of which are deemed admitted unless specifically denied under oath by the adverse party. 19 The rules on actionable
documents cover and apply to both a cause of action or defense based on said documents. 20

In the present case and under the aforestated assumption that the time limit involved is a prescriptive period, respondent carrier duly raised
prescription as an affirmative defense in its answer setting forth paragraph 5 of the pertinent bills of lading which comprised the stipulation thereon by
parties, to wit:

5. Claims for shortage, damage, must be made at the time of delivery to consignee or agent, if container shows exterior signs of damage or
shortage. Claims for non-delivery, misdelivery, loss or damage must be filed within 30 days from accrual. Suits arising from shortage, damage or
loss, non-delivery or misdelivery shall be instituted within 60 days from date of accrual of right of action. Failure to file claims or institute judicial
proceedings as herein provided constitutes waiver of claim or right of action. In no case shall carrier be liable for any delay, non-delivery, misdelivery,
loss of damage to cargo while cargo is not in actual custody of carrier. 21

In their reply thereto, herein petitioners, by their own assertions that —

2. In connection with Pars. 14 and 15 of defendant Sweet Lines, Inc.'s Answer, plaintiffs state that such agreements are what the Supreme Court
considers as contracts of adhesion (see Sweet Lines, Inc. vs. Hon. Bernardo Teves, et al., G.R. No. L-37750, May 19, 1978) and, consequently, the
provisions therein which are contrary to law and public policy cannot be availed of by answering defendant as valid defenses. 22

thereby failed to controvert the existence of the bills of lading and the aforequoted provisions therein, hence they impliedly admitted the same when
they merely assailed the validity of subject stipulations.

Petitioners' failure to specifically deny the existence, much less the genuineness and due execution, of the instruments in question amounts to an
admission. Judicial admissions, verbal or written, made by the parties in the pleadings or in the course of the trial or other proceedings in the same
case are conclusive, no evidence being required to prove the same, and cannot be contradicted unless shown to have been made through palpable
mistake or that no such admission was made. 23 Moreover, when the due execution and genuineness of an instrument are deemed admitted
because of the adverse party's failure to make a specific verified denial thereof, the instrument need not be presented formally in evidence for it may
be considered an admitted fact. 24

Even granting that petitioners' averment in their reply amounts to a denial, it has the procedural earmarks of what in the law on pleadings is called a
negative pregnant, that is, a denial pregnant with the admission of the substantial facts in the pleading responded to which are not squarely denied. It
is in effect an admission of the averment it is directed to. 25 Thus, while petitioners objected to the validity of such agreement for being contrary to
public policy, the existence of the bills of lading and said stipulations were nevertheless impliedly admitted by them.

We find merit in respondent court's comments that petitioners failed to touch on the matter of the non-presentation of the bills of lading in their brief
and earlier on in the appellate proceedings in this case, hence it is too late in the day to now allow the litigation to be overturned on that score, for to
do so would mean an over-indulgence in technicalities. Hence, for the reasons already advanced, the non-inclusion of the controverted bills of lading
in the formal offer of evidence cannot, under the facts of this particular case, be considered a fatal procedural lapse as would bar respondent carrier
from raising the defense of prescription. Petitioners' feigned ignorance of the provisions of the bills of lading, particularly on the time limitations for
filing a claim and for commencing a suit in court, as their excuse for non-compliance therewith does not deserve serious attention.

It is to be noted that the carriage of the cargo involved was effected pursuant to an "Application for Delivery of Cargoes without Original Bill of
Lading" issued on May 20, 1977 in Davao City 26 with the notation therein that said application corresponds to and is subject to the terms of bills of
lading MD-25 and MD-26. It would be a safe assessment to interpret this to mean that, sight unseen, petitioners acknowledged the existence of said
bills of lading. By having the cargo shipped on respondent carrier's vessel and later making a claim for loss on the basis of the bills of lading,
petitioners for all intents and purposes accepted said bills. Having done so they are bound by all stipulations contained therein. 27 Verily, as
petitioners are suing for recovery on the contract, and in fact even went as far as assailing its validity by categorizing it as a contract of adhesion,
then they necessarily admit that there is such a contract, their knowledge of the existence of which with its attendant stipulations they cannot now be
allowed to deny.

On the issue of the validity of the controverted paragraph 5 of the bills of lading above quoted which unequivocally prescribes a time frame of thirty
(30) days for filing a claim with the carrier in case of loss of or damage to the cargo and sixty (60) days from accrual of the right of action for
instituting an action in court, which periods must concur, petitioners posit that the alleged shorter prescriptive period which is in the nature of a
limitation on petitioners' right of recovery is unreasonable and that SLI has the burden of proving otherwise, citing the earlier case of Southern Lines,
Inc. vs. Court of Appeals, et al. 28 They postulate this on the theory that the bills of lading containing the same constitute contracts of adhesion and
are, therefore, void for being contrary to public policy, supposedly pursuant to the dictum in Sweet Lines, Inc. vs. Teves, et al. 29

Furthermore, they contend, since the liability of private respondents has been clearly established, to bar petitioners' right of recovery on a mere
technicality will pave the way for unjust enrichment. 30 Contrarily, SLI asserts and defends the reasonableness of the time limitation within which
claims should be filed with the carrier; the necessity for the same, as this condition for the carrier's liability is uniformly adopted by nearly all shipping
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companies if they are to survive the concomitant rigors and risks of the shipping industry; and the countervailing balance afforded by such stipulation
to the legal presumption of negligence under which the carrier labors in the event of loss of or damage to the cargo. 31

It has long been held that Article 366 of the Code of Commerce applies not only to overland and river transportation but also to maritime
transportation. 32 Moreover, we agree that in this jurisdiction, as viewed from another angle, it is more accurate to state that the filing of a claim with
the carrier within the time limitation therefor under Article 366 actually constitutes a condition precedent to the accrual of a right of action against a
carrier for damages caused to the merchandise. The shipper or the consignee must allege and prove the fulfillment of the condition and if he omits
such allegations and proof, no right of action against the carrier can accrue in his favor. As the requirements in Article 366, restated with a slight
modification in the assailed paragraph 5 of the bills of lading, are reasonable conditions precedent, they are not limitations of action. 33 Being
conditions precedent, their performance must precede a suit for enforcement 34 and the vesting of the right to file spit does not take place until the
happening of these conditions. 35

Now, before an action can properly be commenced all the essential elements of the cause of action must be in existence, that is, the cause of action
must be complete. All valid conditions precedent to the institution of the particular action, whether prescribed by statute, fixed by agreement of the
parties or implied by law must be performed or complied with before commencing the action, unless the conduct of the adverse party has been such
as to prevent or waive performance or excuse non-performance of the condition. 36

It bears restating that a right of action is the right to presently enforce a cause of action, while a cause of action consists of the operative facts which
give rise to such right of action. The right of action does not arise until the performance of all conditions precedent to the action and may be taken
away by the running of the statute of limitations, through estoppel, or by other circumstances which do not affect the cause of action. 37 Performance
or fulfillment of all conditions precedent upon which a right of action depends must be sufficiently alleged, 38 considering that the burden of proof to
show that a party has a right of action is upon the person initiating the suit. 39

More particularly, where the contract of shipment contains a reasonable requirement of giving notice of loss of or injury to the goods, the giving of
such notice is a condition precedent to the action for loss or injury or the right to enforce the carrier's liability. Such requirement is not an empty
formalism. The fundamental reason or purpose of such a stipulation is not to relieve the carrier from just liability, but reasonably to inform it that the
shipment has been damaged and that it is charged with liability therefor, and to give it an opportunity to examine the nature and extent of the injury.
This protects the carrier by affording it an opportunity to make an investigation of a claim while the matter is fresh and easily investigated so as to
safeguard itself from false and fraudulent claims. 40

Stipulations in bills of lading or other contracts of shipment which require notice of claim for loss of or damage to goods shipped in order to impose
liability on the carrier operate to prevent the enforcement of the contract when not complied with, that is, notice is a condition precedent and the
carrier is not liable if notice is not given in accordance with the stipulation, 41 as the failure to comply with such a stipulation in a contract of carriage
with respect to notice of loss or claim for damage bars recovery for the loss or damage suffered. 42

On the other hand, the validity of a contractual limitation of time for filing the suit itself against a carrier shorter than the statutory period therefor has
generally been upheld as such stipulation merely affects the shipper's remedy and does not affect the liability of the carrier. In the absence of any
statutory limitation and subject only to the requirement on the reasonableness of the stipulated limitation period, the parties to a contract of carriage
may fix by agreement a shorter time for the bringing of suit on a claim for the loss of or damage to the shipment than that provided by the statute of
limitations. Such limitation is not contrary to public policy for it does not in any way defeat the complete vestiture of the right to recover, but merely
requires the assertion of that right by action at an earlier period than would be necessary to defeat it through the operation of the ordinary statute of
limitations. 43

In the case at bar, there is neither any showing of compliance by petitioners with the requirement for the filing of a notice of claim within the
prescribed period nor any allegation to that effect. It may then be said that while petitioners may possibly have a cause of action, for failure to comply
with the above condition precedent they lost whatever right of action they may have in their favor or, token in another sense, that remedial right or
right to relief had prescribed.44

The shipment in question was discharged into the custody of the consignee on May 15, 1977, and it was from this date that petitioners' cause of
action accrued, with thirty (30) days therefrom within which to file a claim with the carrier for any loss or damage which may have been suffered by
the cargo and thereby perfect their right of action. The findings of respondent court as supported by petitioners' formal offer of evidence in the court
below show that the claim was filed with SLI only on April 28, 1978, way beyond the period provided in the bills of lading 45 and violative of the
contractual provision, the inevitable consequence of which is the loss of petitioners' remedy or right to sue. Even the filing of the complaint on May
12, 1978 is of no remedial or practical consequence, since the time limits for the filing thereof, whether viewed as a condition precedent or as a
prescriptive period, would in this case be productive of the same result, that is, that petitioners had no right of action to begin with or, at any rate,
their claim was time-barred.

What the court finds rather odd is the fact that petitioner TPI filed a provisional claim with DVAPSI as early as June 14, 1977 46 and, as found by the
trial court, a survey fixing the extent of loss of and/or damage to the cargo was conducted on July 8, 1977 at the instance of petitioners. 47 If
petitioners had the opportunity and awareness to file such provisional claim and to cause a survey to be conducted soon after the discharge of the
cargo, then they could very easily have filed the necessary formal, or even a provisional, claim with SLI itself 48 within the stipulated period therefor,
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instead of doing so only on April 28, 1978 despite the vessel's arrival at the port of destination on May 15, 1977. Their failure to timely act brings us
to no inference other than the fact that petitioners slept on their rights and they must now face the consequences of such inaction.

The ratiocination of the Court of Appeals on this aspect is worth reproducing:

It must be noted, at this juncture, that the aforestated time limitation in the presentation of claim for loss or damage, is but a restatement of the rule
prescribed under Art. 366 of the Code of Commerce which reads as follows:

Art. 366. Within the twenty-four hours following the receipt of the merchandise, the claim against the carrier for damage or average which may be
found therein upon opening the packages, may be made, provided that the indications of the damage or average which gives rise to the claim cannot
be ascertained from the outside part of the packages, in which case the claims shall be admitted only at the time of the receipt.

After the periods mentioned have elapsed, or the transportation charges have been paid, no claim shall be admitted against the carrier with regard to
the condition in which the goods transported were delivered.

Gleanable therefrom is the fact that subject stipulation even lengthened the period for presentation of claims thereunder. Such modification has been
sanctioned by the Supreme Court. In the case of Ong Yet (M)ua Hardware Co., Inc. vs. Mitsui Steamship Co., Ltd.,  et al., 59 O.G. No. 17, p. 2764, it
ruled that Art. 366 of the Code of Commerce can be modified by a bill of lading prescribing the period of 90 days after arrival of the ship, for filing of
written claim with the carrier or agent, instead of the 24-hour time limit after delivery provided in the aforecited legal provision.

Tested, too, under paragraph 5 of said Bill of Lading, it is crystal clear that the commencement of the instant suit on May 12, 1978 was indeed fatally
late. In view of the express provision that "suits arising from
. . . damage or loss shall be instituted within 60 days from date of accrual of right of action, " the present action necessarily fails on ground of
prescription.

In the absence of constitutional or statutory prohibition, it is usually held or recognized that it is competent for the parties to a contract of shipment to
agree on a limitation of time shorter than the statutory period, within which action for breach of the contract shall be brought, and such limitation will
be enforced if reasonable . . . (13 C.J.S. 496-497)

A perusal of the pertinent provisions of law on the matter would disclose that there is no constitutional or statutory prohibition infirming paragraph 5 of
subject Bill of Lading. The stipulated period of 60 days is reasonable enough for appellees to ascertain the facts and thereafter to sue, if need be,
and the 60-day period agreed upon by the parties which shortened the statutory period within which to bring action for breach of contract is valid and
binding. . . . (Emphasis in the original text.) 49

As explained above, the shortened period for filing suit is not unreasonable and has in fact been generally recognized to be a valid business practice
in the shipping industry. Petitioners' advertence to the Court's holding in the Southern Lines case, supra, is futile as what was involved was a claim
for refund of excess payment. We ruled therein that non-compliance with the requirement of filing a notice of claim under Article 366 of the Code of
Commerce does not affect the consignee's right of action against the carrier because said requirement applies only to cases for recovery of
damages on account of loss of or damage to cargo, not to an action for refund of overpayment, and on the further consideration that neither the
Code of Commerce nor the bills of lading therein provided any time limitation for suing for refund of money paid in excess, except only that it be filed
within a reasonable time.

The ruling in Sweet Lines categorizing the stipulated limitation on venue of action provided in the subject bill of lading as a contract of adhesion and,
under the circumstances therein, void for being contrary to public policy is evidently likewise unavailing in view of the discrete environmental facts
involved and the fact that the restriction therein was unreasonable. In any case, Ong Yiu vs. Court of Appeals, et al., 50 instructs us that "contracts of
adhesion wherein one party imposes a ready-made form of contract on the other . . . are contracts not entirely prohibited. The one who adheres to
the contract is in reality free to reject it entirely; if he adheres he gives his consent." In the present case, not even an allegation of ignorance of a
party excuses non-compliance with the contractual stipulations since the responsibility for ensuring full comprehension of the provisions of a contract
of carriage devolves not on the carrier but on the owner, shipper, or consignee as the case may be.

While it is true that substantial compliance with provisions on filing of claim for loss of or damage to cargo may sometimes suffice, the invocation of
such an assumption must be viewed vis-a-vis the object or purpose which such a provision seeks to attain and that is to afford the carrier a
reasonable opportunity to determine the merits and validity of the claim and to protect itself against unfounded impositions. 51 Petitioners' would
nevertheless adopt an adamant posture hinged on the issuance by SLI of a "Report on Losses and Damages," dated May 15, 1977, 52 from which
petitioners theorize that this charges private respondents with actual knowledge of the loss and damage involved in the present case as would
obviate the need for or render superfluous the filing of a claim within the stipulated period.

Withal, it has merely to be pointed out that the aforementioned report bears this notation at the lower part thereof: "Damaged by Mla. labor upon
unloading; B/L noted at port of origin," as an explanation for the cause of loss of and/or damage to the cargo, together with an iterative note stating
that "(t)his Copy should be submitted together with your claim invoice or receipt within 30 days from date of issue otherwise your claim will not be
honored."
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Moreover, knowledge on the part of the carrier of the loss of or damage to the goods deducible from the issuance of said report is not equivalent to
nor does it approximate the legal purpose served by the filing of the requisite claim, that is, to promptly apprise the carrier about a consignee's
intention to file a claim and thus cause the prompt investigation of the veracity and merit thereof for its protection. It would be an unfair imposition to
require the carrier, upon discovery in the process of preparing the report on losses or damages of any and all such loss or damage, to presume the
existence of a claim against it when at that time the carrier is expectedly concerned merely with accounting for each and every shipment and
assessing its condition. Unless and until a notice of claim is therewith timely filed, the carrier cannot be expected to presume that for every loss or
damage tallied, a corresponding claim therefor has been filed or is already in existence as would alert it to the urgency for an immediate investigation
of the soundness of the claim. The report on losses and damages is not the claim referred to and required by the bills of lading for it does not fix
responsibility for the loss or damage, but merely states the condition of the goods shipped. The claim contemplated herein, in whatever form, must
be something more than a notice that the goods have been lost or damaged; it must contain a claim for compensation or indicate an intent to
claim. 53

Thus, to put the legal effect of respondent carrier's report on losses or damages, the preparation of which is standard procedure upon unloading of
cargo at the port of destination, on the same level as that of a notice of claim by imploring substantial compliance is definitely farfetched. Besides,
the cited notation on the carrier's report itself makes it clear that the filing of a notice of claim in any case is imperative if carrier is to be held liable at
all for the loss of or damage to cargo.

Turning now to respondent DVAPSI and considering that whatever right of action petitioners may have against respondent carrier was lost due to
their failure to seasonably file the requisite claim, it would be awkward, to say the least, that by some convenient process of elimination DVAPSI
should proverbially be left holding the bag, and it would be pure speculation to assume that DVAPSI is probably responsible for the loss of or
damage to cargo. Unlike a common carrier, an arrastre operator does not labor under a presumption of negligence in case of loss, destruction or
deterioration of goods discharged into its custody. In other words, to hold an arrastre operator liable for loss of and/or damage to goods entrusted to
it there must be preponderant evidence that it did not exercise due diligence in the handling and care of the goods.

Petitioners failed to pinpoint liability on any of the original defendants and in this seemingly wild goose-chase, they cannot quite put their finger down
on when, where, how and under whose responsibility the loss or damage probably occurred, or as stated in paragraph 8 of their basic complaint filed
in the court below, whether "(u)pon discharge of the cargoes from the original carrying vessel, the SS VISHVA YASH," and/or upon discharge of the
cargoes from the interisland vessel the MV "SWEET LOVE," in Davao City and later while in the custody of defendant arrastre operator. 54

The testimony of petitioners' own witness, Roberto Cabato, Jr., Marine and Aviation Claims Manager of petitioner Philamgen, was definitely
inconclusive and the responsibility for the loss or damage could still not be ascertained therefrom:

Q In other words, Mr. Cabato, you only computed the loss on the basis of the figures submitted to you and based on the documents like the survey
certificate and the certificate of the arrastre?

A Yes, sir.

Q Therefore, Mr. Cabato, you have no idea how or where these losses were incurred?

A No, sir.

Q Mr. Witness, you said that you processed and investigated the claim involving the shipment in question. Is it not a fact that in your processing and
investigation you considered how the shipment was transported? Where the losses could have occurred and what is the extent of the respective
responsibilities of the bailees and/or carriers involved?

A With respect to the shipment being transported, we have of course to get into it in order to check whether the shipment coming in to this port is in
accordance with the policy condition, like in this particular case, the shipment was transported to Manila and transhipped through an interisland
vessel in accordance with the policy. With respect to the losses, we have a general view where losses could have occurred.  Of course we will have
to consider the different bailees wherein the shipment must have passed through, like the ocean vessel, the interisland vessel and the arrastre, but
definitely at that point and time we cannot determine the extent of each liability . We are only interested at that point and time in the liability as regards
the underwriter in accordance with the policy that we issued.

Q Mr. Witness, from the documents, namely, the survey of Manila Adjusters and Surveyors Company, the survey of Davao Arrastre contractor and
the bills of lading issued by the defendant Sweet Lines, will you be able to tell the respective liabilities of the bailees and/or carriers concerned?

A No, sir. (Emphasis ours.) 55

Neither did nor could the trial court, much less the Court of Appeals, precisely establish the stage in the course of the shipment when the goods were
lost, destroyed or damaged. What can only be inferred from the factual findings of the trial court is that by the time the cargo was discharged to
DVAPSI, loss or damage had already occurred and that the same could not have possibly occurred while the same was in the custody of DVAPSI,
as demonstrated by the observations of the trial court quoted at the start of this opinion.
 7

ACCORDINGLY, on the foregoing premises, the instant petition is DENIED and the dismissal of the complaint in the court a quo as decreed by
respondent Court of Appeals in its challenged judgment is hereby AFFIRMED

G.R. No. 169454               December 27, 2007

THE HEIRS OF MARCELINO DORONIO, NAMELY: REGINA AND FLORA, BOTH SURNAMED DORONIO, Petitioners,
vs.
HEIRS OF FORTUNATO DORONIO, NAMELY: TRINIDAD ROSALINA DORONIO-BALMES, MODING DORONIO, FLORENTINA DORONIO, AND
ANICETA ALCANTARA-MANALO, Respondents.

DECISION

REYES, R.T., J.:

For Our review on certiorari is the Decision1 of the Court of Appeals (CA) reversing that2 of the Regional Trial Court (RTC), Branch 45, Anonas,
Urdaneta City, Pangasinan, in an action for reconveyance and damages. The CA declared respondents as rightful owners of one-half of the subject
property and directed petitioners to execute a registerable document conveying the same to respondents.

The Facts

Spouses Simeon Doronio and Cornelia Gante, now both deceased, were the registered owners of a parcel of land located at Barangay Cabalitaan,
Asingan, Pangasinan covered by Original Certificate of Title (OCT) No. 352. 3 The courts below described it as follows:

Un terreno (Lote 1018), situada en el municipio de Asingan, Linda por el NE; con propriedad de Gabriel Bernardino; con el SE con propriedad de
Zacarias Najorda y Alejandro Najorda; por el SO con propriedad de Geminiano Mendoza y por el NO con el camino para Villasis; midiendo una
extension superficial mil ciento cincuenta y dos metros cuadrados. 4

The spouses had children but the records fail to disclose their number. It is clear, however, that Marcelino Doronio and Fortunato Doronio, now both
deceased, were among them and that the parties in this case are their heirs. Petitioners are the heirs of Marcelino Doronio, while respondents are
the heirs of Fortunato Doronio.

On April 24, 1919, a private deed of donation propter nuptias 5 was executed by spouses Simeon Doronio and Cornelia Gante in favor of Marcelino
Doronio and the latter’s wife, Veronica Pico. One of the properties subject of said deed of donation is the one that it described as follows:

Fourth – A piece of residential land located in the barrio of Cabalitian but we did not measure it, the area is bounded on the north by Gabriel
Bernardino; on the east by Fortunato Doronio; on the south by Geminiano Mendoza and on the west by a road to Villasis. Constructed on said land
is a house of light materials – also a part of the dowry. Value …200.00. 6

It appears that the property described in the deed of donation is the one covered by OCT No. 352. However, there is a significant discrepancy with
respect to the identity of the owner of adjacent property at the eastern side. Based on OCT No. 352, the adjacent owners are Zacarias Najorda and
Alejandro Najorda, whereas based on the deed of donation, the owner of the adjacent property is Fortunato Doronio. Furthermore, said deed of
donation remained a private document as it was never notarized. 7

Both parties have been occupying the subject land for several decades 8 although they have different theories regarding its present ownership.
According to petitioners, they are now the owners of the entire property in view of the private deed of donation propter nuptias in favor of their
predecessors, Marcelino Doronio and Veronica Pico.

Respondents, on the other hand, claim that only half of the property was actually incorporated in the said deed of donation because it stated that
Fortunato Doronio, instead of Zacarias Najorda and Alejandro Najorda, is the owner of the adjacent property at the eastern side. Respondents posit
that the donors respected and segregated the possession of Fortunato Doronio of the eastern half of the land. They are the ones who have been
possessing said land occupied by their predecessor, Fortunato Doronio.

Eager to obtain the entire property, the heirs of Marcelino Doronio and Veronica Pico filed, on January 11, 1993, before the RTC in Urdaneta,
Pangasinan a petition "For the Registration of a Private Deed of Donation" 9 docketed as Petition Case No. U-920. No respondents were named in
the said petition10 although notices of hearing were posted on the bulletin boards of Barangay Cabalitaan, Municipalities of Asingan and Lingayen. 11

During the hearings, no one interposed an objection to the petition. 12 After the RTC ordered a general default,13 the petition was eventually granted
on September 22, 1993. This led to the registration of the deed of donation, cancellation of OCT No. 352 and issuance of a new Transfer Certificate
of Title (TCT) No. 44481 in the names of Marcelino Doronio and Veronica Pico. 14 Thus, the entire property was titled in the names of petitioners’
predecessors.
 8

On April 28, 1994, the heirs of Fortunato Doronio filed a pleading before the RTC in the form of a petition in the same Petition Case No. U-920. The
petition was for the reconsideration of the decision of the RTC that ordered the registration of the subject deed of donation. It was prayed in the
petition that an order be issued declaring null and void the registration of the private deed of donation and that TCT No. 44481 be cancelled.
However, the petition was dismissed on May 13, 1994 on the ground that the decision in Petition Case No. U-920 had already become final as it was
not appealed.

Determined to remain in their possessed property, respondent heirs of Fortunato Doronio (as plaintiffs) filed an action for reconveyance and
damages with prayer for preliminary injunction15 against petitioner heirs of Marcelino Doronio (as defendants) before the RTC, Branch 45, Anonas,
Urdaneta City, Pangasinan. Respondents contended, among others, that the subject land is different from what was donated as the descriptions of
the property under OCT No. 352 and under the private deed of donation were different. They posited that spouses Simeon Doronio and Cornelia
Gante intended to donate only one-half of the property.

During the pre-trial conference, the parties stipulated, among others, that the property was originally covered by OCT No. 352 which was cancelled
by TCT No. 44481. They also agreed that the issues are: (1) whether or not there was a variation in the description of the property subject of the
private deed of donation and OCT No. 352; (2) whether or not respondents had acquired one-half of the property covered by OCT No. 352 by
acquisitive prescription; (3) whether or not the transfer of the whole property covered by OCT No. 352 on the basis of the registration of the private
deed of donation notwithstanding the discrepancy in the description is valid; (4) whether or not respondents are entitled to damages; and (5) whether
or not TCT No. 44481 is valid.16

RTC Decision

After due proceedings, the RTC ruled in favor of petitioner heirs of Marcelino Doronio (defendants). It concluded that the parties admitted the identity
of the land which they all occupy;17 that a title once registered under the torrens system cannot be defeated by adverse, open and notorious
possession or by prescription;18 that the deed of donation in consideration of the marriage of the parents of petitioners is valid, hence, it led to the
eventual issuance of TCT No. 44481 in the names of said parents; 19 and that respondent heirs of Fortunato Doronio (plaintiffs) are not entitled to
damages as they are not the rightful owners of the portion of the property they are claiming. 20

The RTC disposed of the case, thus:

WHEREFORE, premises considered, the Court hereby renders judgment DISMISSING the herein Complaint filed by plaintiffs against defendants. 21

Disagreeing with the judgment of the RTC, respondents appealed to the CA. They argued that the trial court erred in not finding that respondents’
predecessor-in-interest acquired one-half of the property covered by OCT No. 352 by tradition and/or intestate succession; that the deed of donation
dated April 26, 1919 was null and void; that assuming that the deed of donation was valid, only one-half of the property was actually donated to
Marcelino Doronio and Veronica Pico; and that respondents acquired ownership of the other half portion of the property by acquisitive prescription. 22

CA Disposition

In a Decision dated January 26, 2005, the CA reversed the RTC decision with the following disposition:

WHEREFORE, the assailed Decision dated June 28, 2002 is REVERSED and SET ASIDE. Declaring the appellants as rightful owners of one-half of
the property now covered by TCT No. 44481, the appellees are hereby directed to execute a registerable document conveying the same to
appellants.

SO ORDERED.23

The appellate court determined that "(t)he intention to donate half of the disputed property to appellees’ predecessors can be gleaned from the
disparity of technical descriptions appearing in the title (OCT No. 352) of spouses Simeon Doronio and Cornelia Gante and in the deed of donation
propter nuptias executed on April 24, 1919 in favor of appellees’ predecessors." 24

The CA based its conclusion on the disparity of the following technical descriptions of the property under OCT No. 352 and the deed of donation, to
wit:

The court below described the property covered by OCT No. 352 as follows:

"Un terreno (Lote 1018), situada en el municipio de Asingan, Linda por el NE; con propriedad de Gabriel Bernardino; con el SE con propriedad de
Zacarias Najorda y Alejandro Najorda; por el SO con propriedad de Geminiano Mendoza y por el NO con el camino para Villasis; midiendo una
extension superficial mil ciento cincuenta y dos metros cuadrados."

On the other hand, the property donated to appellees’ predecessors was described in the deed of donation as:
 9

"Fourth – A piece of residential land located in the barrio of Cabalitian but we did not measure it, the area is bounded on the north by Gabriel
Bernardino; on the east by Fortunato Doronio; on the south by Geminiano Mendoza and on the west by a road to Villasis. Constructed on said land
is a house of light materials – also a part of the dowry. Value …200.00." 25 (Emphasis ours)

Taking note "that the boundaries of the lot donated to Marcelino Doronio and Veronica Pico differ from the boundaries of the land owned by spouses
Simeon Doronio and Cornelia Gante," the CA concluded that spouses Simeon Doronio and Cornelia Gante donated only half of the property covered
by OCT No. 352.26

Regarding the allegation of petitioners that OCT No. 352 is inadmissible in evidence, the CA pointed out that, "while the OCT is written in the
Spanish language, this document already forms part of the records of this case for failure of appellees to interpose a timely objection when it was
offered as evidence in the proceedings a quo. It is a well-settled rule that any objection to the admissibility of such evidence not raised will be
considered waived and said evidence will have to form part of the records of the case as competent and admitted evidence." 27

The CA likewise ruled that the donation of the entire property in favor of petitioners’ predecessors is invalid on the ground that it impairs the legitime
of respondents’ predecessor, Fortunato Doronio. On this aspect, the CA reasoned out:

Moreover, We find the donation of the entire property in favor of appellees’ predecessors invalid as it impairs the legitime of appellants’ predecessor.
Article 961 of the Civil Code is explicit. "In default of testamentary heirs, the law vests the inheritance, x x x, in the legitimate x x x relatives of the
deceased, x x x." As Spouses Simeon Doronio and Cornelia Gante died intestate, their property shall pass to their lawful heirs, namely: Fortunato
and Marcelino Doronio. Donating the entire property to Marcelino Doronio and Veronica Pico and excluding another heir, Fortunato, tantamounts to
divesting the latter of his rightful share in his parents’ inheritance. Besides, a person’s prerogative to make donations is subject to certain limitations,
one of which is that he cannot give by donation more than what he can give by will (Article 752, Civil Code). If he does, so much of what is donated
as exceeds what he can give by will is deemed inofficious and the donation is reducible to the extent of such excess. 28

Petitioners were not pleased with the decision of the CA. Hence, this petition under Rule 45.

Issues

Petitioners now contend that the CA erred in:

1. DECLARING ADMISSIBILITY OF THE ORIGINAL CERTIFICATE OF TITLE NO. 352 DESPITE OF LACK OF TRANSLATION THEREOF.

2. (RULING THAT) ONLY HALF OF THE DISPUTED PROPERTY WAS DONATED TO THE PREDECESSORS-IN-INTEREST OF THE HEREIN
APPELLANTS.

3. (ITS) DECLARATION THAT THE DONATION PROPTER NUPTIAS IS INNOFICIOUS, IS PREMATURE, AND THUS IT IS ILLEGAL AND
UNPROCEDURAL.29

Our Ruling

OCT No. 352 in Spanish Although Not

Translated into English or Filipino Is
Admissible For Lack of Timely Objection

Petitioners fault the CA for admitting OCT No. 352 in evidence on the ground that it is written in Spanish language. They posit that "(d)ocumentary
evidence in an unofficial language shall not be admitted as evidence, unless accompanied with a translation into English or Filipino." 30

The argument is untenable. The requirement that documents written in an unofficial language must be accompanied with a translation in English or
Filipino as a prerequisite for its admission in evidence must be insisted upon by the parties at the trial to enable the court, where a translation has
been impugned as incorrect, to decide the issue.31 Where such document, not so accompanied with a translation in English or Filipino, is offered in
evidence and not objected to, either by the parties or the court, it must be presumed that the language in which the document is written is understood
by all, and the document is admissible in evidence.32

Moreover, Section 36, Rule 132 of the Revised Rules of Evidence provides:

SECTION 36. Objection. – Objection to evidence offered orally must be made immediately after the offer is made.

Objection to a question propounded in the course of the oral examination of a witness shall be made as soon as the grounds therefor shall become
reasonably apparent.

An offer of evidence in writing shall be objected to within three (3) days after notice of the offer unless a different period is allowed by the court.
 10

In any case, the grounds for the objections must be specified. (Emphasis ours)

Since petitioners did not object to the offer of said documentary evidence on time, it is now too late in the day for them to question its admissibility.
The rule is that evidence not objected may be deemed admitted and may be validly considered by the court in arriving at its judgment. 33 This is true
even if by its nature, the evidence is inadmissible and would have surely been rejected if it had been challenged at the proper time. 34

As a matter of fact, instead of objecting, petitioners admitted the contents of Exhibit "A," that is, OCT No. 352 in their comment 35 on respondents’
formal offer of documentary evidence. In the said comment, petitioners alleged, among others, that "Exhibits A, B, C, D, E, F and G, are admitted but
not for the purpose they are offered because these exhibits being public and official documents are the best evidence of that they contain and not for
what a party would like it to prove."36 Said evidence was admitted by the RTC.37 Once admitted without objection, even though not admissible under
an objection, We are not inclined now to reject it.38 Consequently, the evidence that was not objected to became property of the case, and all parties
to the case are considered amenable to any favorable or unfavorable effects resulting from the said evidence. 39

Issues on Impairment of Legitime

Should Be Threshed Out in a Special
Proceeding, Not in Civil Action for
Reconveyance and Damages

On the other hand, petitioners are correct in alleging that the issue regarding the impairment of legitime of Fortunato Doronio must be resolved in an
action for the settlement of estates of spouses Simeon Doronio and Cornelia Gante. It may not be passed upon in an action for reconveyance and
damages. A probate court, in the exercise of its limited jurisdiction, is the best forum to ventilate and adjudge the issue of impairment of legitime as
well as other related matters involving the settlement of estate. 40

An action for reconveyance with damages is a civil action, whereas matters relating to settlement of the estate of a deceased person such as
advancement of property made by the decedent, partake of the nature of a special proceeding. Special proceedings require the application of
specific rules as provided for in the Rules of Court. 41

As explained by the Court in Natcher v. Court of Appeals: 42

Section 3, Rule 1 of the 1997 Rules of Civil Procedure defines civil action and special proceedings, in this wise:

x x x a) A civil action is one by which a party sues another for the enforcement or protection of a right, or the prevention or redress of a wrong.

A civil action may either be ordinary or special. Both are governed by the rules for ordinary civil actions, subject to specific rules prescribed for a
special civil action.

xxxx

c) A special proceeding is a remedy by which a party seeks to establish a status, a right or a particular fact.

As could be gleaned from the foregoing, there lies a marked distinction between an action and a special proceeding. An action is a formal demand of
one’s right in a court of justice in the manner prescribed by the court or by the law. It is the method of applying legal remedies according to definite
established rules. The term "special proceeding" may be defined as an application or proceeding to establish the status or right of a party, or a
particular fact. Usually, in special proceedings, no formal pleadings are required unless the statute expressly so provides. In special proceedings, the
remedy is granted generally upon an application or motion.

Citing American Jurisprudence, a noted authority in Remedial Law expounds further:

It may accordingly be stated generally that actions include those proceedings which are instituted and prosecuted according to the ordinary rules and
provisions relating to actions at law or suits in equity, and that special proceedings include those proceedings which are not ordinary in this sense,
but is instituted and prosecuted according to some special mode as in the case of proceedings commenced without summons and prosecuted
without regular pleadings, which are characteristics of ordinary actions x x x. A special proceeding must therefore be in the nature of a distinct and
independent proceeding for particular relief, such as may be instituted independently of a pending action, by petition or motion upon notice.

Applying these principles, an action for reconveyance and annulment of title with damages is a civil action, whereas matters relating to settlement of
the estate of a deceased person such as advancement of property made by the decedent, partake of the nature of a special proceeding, which
concomitantly requires the application of specific rules as provided for in the Rules of Court.

Clearly, matters which involve settlement and distribution of the estate of the decedent fall within the exclusive province of the probate court in the
exercise of its limited jurisdiction.
 11

Thus, under Section 2, Rule 90 of the Rules of Court, questions as to advancement made or alleged to have been made by the deceased to any heir
may be heard and determined by the court having jurisdiction of the estate proceedings, and the final order of the court thereon shall be binding on
the person raising the questions and on the heir.

While it may be true that the Rules used the word "may," it is nevertheless clear that the same provision contemplates a probate court when it
speaks of the "court having jurisdiction of the estate proceedings."

Corollarily, the Regional Trial Court in the instant case, acting in its general jurisdiction, is devoid of authority to render an adjudication and resolve
the issue of advancement of the real property in favor of herein petitioner Natcher, inasmuch as Civil Case No. 71075 for reconveyance and
annulment of title with damages is not, to our mind, the proper vehicle to thresh out said question. Moreover, under the present circumstances, the
RTC of Manila, Branch 55, was not properly constituted as a probate court so as to validly pass upon the question of advancement made by the
decedent Graciano Del Rosario to his wife, herein petitioner Natcher.

We likewise find merit in petitioners’ contention that before any conclusion about the legal share due to a compulsory heir may be reached, it is
necessary that certain steps be taken first.43 The net estate of the decedent must be ascertained, by deducting all payable obligations and charges
from the value of the property owned by the deceased at the time of his death; then, all donations subject to collation would be added to it. With the
partible estate thus determined, the legitime of the compulsory heir or heirs can be established; and only then can it be ascertained whether or not a
donation had prejudiced the legitimes.44

Declaration of Validity of Donation

Can Be Challenged by an Interested
Party Not Impleaded in Petition for
Quieting of Title or Declaratory Relief
or Where There is No Res Judicata.
Moreover, This Court Can Consider
a Factual Matter or Unassigned Error
in the Interest of Substantial Justice.

Nevertheless, petitioners cannot preclude the determination of validity of the deed of donation on the ground that (1) it has been impliedly admitted
by respondents; (2) it has already been determined with finality by the RTC in Petition Case No. U-920; or (3) the only issue in an action for
reconveyance is who has a better right over the land. 45

The validity of the private deed of donation propter nuptias in favor of petitioners’ predecessors was one of the issues in this case before the lower
courts. The pre-trial order46 of the RTC stated that one of the issues before it is "(w)hether or not the transfer of the whole property covered by OCT
No. 352 on the basis of the private deed of donation notwithstanding the discrepancy in the description is valid." Before the CA, one of the errors
assigned by respondents is that "THE TRIAL COURT ERRED IN NOT FINDING THAT THE PRIVATE DEED OF DONATION DATED APRIL 26,
1919 WAS NULL AND VOID."47

The issue of the validity of donation is likewise brought to Us by petitioners as they stated in their Memorandum 48 that one of the issues to be
resolved is regarding the alleged fact that "THE HONORABLE COURT OF APPEALS ERRED IN FINDING THE DONATION INVALID." We are thus
poised to inspect the deed of donation and to determine its validity.

We cannot agree with petitioners’ contention that respondents may no longer question the validity of the deed of donation on the ground that they
already impliedly admitted it. Under the provisions of the Civil Code, a void contract is inexistent from the beginning. The right to set up the defense
of its illegality cannot be waived.49 The right to set up the nullity of a void or non-existent contract is not limited to the parties as in the case of
annullable or voidable contracts; it is extended to third persons who are directly affected by the contract. 50

Consequently, although respondents are not parties in the deed of donation, they can set up its nullity because they are directly affected by the
same.51 The subject of the deed being the land they are occupying, its enforcement will definitely affect them.

Petitioners cannot also use the finality of the RTC decision in Petition Case No. U-920 52 as a shield against the verification of the validity of the deed
of donation. According to petitioners, the said final decision is one for quieting of title. 53 In other words, it is a case for declaratory relief under Rule 64
(now Rule 63) of the Rules of Court, which provides:

SECTION 1. Who may file petition. – Any person interested under a deed, will, contract or other written instrument, or whose rights are affected by a
statute, executive order or regulation, or ordinance, may, before breach or violation thereof, bring an action to determine any question of construction
or validity arising under the instrument or statute and for a declaration of his rights or duties thereunder.

An action for the reformation of an instrument, to quiet title to real property or remove clouds therefrom, or to consolidate ownership under Article
1607 of the Civil Code, may be brought under this rule.
 12

SECTION 2. Parties. – All persons shall be made parties who have or claim any interest which would be affected by the declaration; and no
declaration shall, except as otherwise provided in these rules, prejudice the rights of persons not parties to the action. (Emphasis ours)

However, respondents were not made parties in the said Petition Case No. U-920. 1âwphi1 Worse, instead of issuing summons to interested parties,
the RTC merely allowed the posting of notices on the bulletin boards of Barangay Cabalitaan, Municipalities of Asingan and Lingayen, Pangasinan.
As pointed out by the CA, citing the ruling of the RTC:

x x x In the said case or Petition No. U-920, notices were posted on the bulletin boards of barangay Cabalitaan, Municipalities of Asingan and
Lingayen, Pangasinan, so that there was a notice to the whole world and during the initial hearing and/or hearings, no one interposed objection
thereto.54

Suits to quiet title are not technically suits in rem, nor are they, strictly speaking, in personam, but being against the person in respect of the res,
these proceedings are characterized as quasi in rem. 55 The judgment in such proceedings is conclusive only between the parties. 56 Thus,
respondents are not bound by the decision in Petition Case No. U-920 as they were not made parties in the said case.

The rules on quieting of title57 expressly provide that any declaration in a suit to quiet title shall not prejudice persons who are not parties to the
action.

That respondents filed a subsequent pleading58 in the same Petition Case No. U-920 after the decision there had become final did not change the
fact that said decision became final without their being impleaded in the case. Said subsequent pleading was dismissed on the ground of finality of
the decision.59

Thus, the RTC totally failed to give respondents their day in court. As a result, they cannot be bound by its orders. Generally accepted is the principle
that no man shall be affected by any proceeding to which he is a stranger, and strangers to a case are not bound by judgment rendered by the
court.60

Moreover, for the principle of res judicata to apply, the following must be present: (1) a decision on the merits; (2) by a court of competent
jurisdiction; (3) the decision is final; and (4) the two actions involve identical parties, subject matter and causes of action. 61 The fourth element is not
present in this case. The parties are not identical because respondents were not impleaded in Petition Case No. U-920. While the subject matter
may be the same property covered by OCT No. 352, the causes of action are different. Petition Case No. U-920 is an action for declaratory relief
while the case below is for recovery of property.

We are not persuaded by petitioners’ posture that the only issue in this action for reconveyance is who has a better right over the land; and that the
validity of the deed of donation is beside the point. 62 It is precisely the validity and enforceability of the deed of donation that is the determining factor
in resolving the issue of who has a better right over the property. Moreover, notwithstanding procedural lapses as to the appropriateness of the
remedies prayed for in the petition filed before Us, this Court can brush aside the technicalities in the interest of justice. In some instances, this Court
even suspended its own rules and excepted a case from their operation whenever the higher interests of justice so demanded. 63

Moreover, although respondents did not directly raise the issue of validity of the deed of donation at the commencement of the case before the trial
court, it was stipulated64 by the parties during the pre-trial conference. In any event, this Court has authority to inquire into any question necessary in
arriving at a just decision of a case before it.65 Though not specifically questioned by the parties, additional issues may also be included, if deemed
important for substantial justice to be rendered. 66

Furthermore, this Court has held that although a factual issue is not squarely raised below, still in the interest of substantial justice, this Court is not
prevented from considering a pivotal factual matter. The Supreme Court is clothed with ample authority to review palpable errors not assigned as
such if it finds that their consideration is necessary in arriving at a just decision. 67

A rudimentary doctrine on appealed cases is that this Court is clothed with ample authority to review matters, even if they are not assigned as errors
on appeal, if it finds that their consideration is necessary at arriving at a just decision of the case. 68 Also, an unassigned error closely related to an
error properly assigned or upon which the determination of the question raised by the error properly assigned is dependent, will be considered by the
appellate court notwithstanding the failure to assign it as an error. 69

Donation Propter Nuptias of Real

Property Made in a Private Instrument
Before the New Civil Code Took Effect
on August 30, 1950 is Void

We now focus on the crux of the petition, which is the validity of the deed of donation. 1avvphi1 It is settled that only laws existing at the time of the
execution of a contract are applicable to it and not the later statutes, unless the latter are specifically intended to have retroactive
effect.70 Accordingly, the Old Civil Code applies in this case as the donation propter nuptias was executed in 1919, while the New Civil Code took
effect only on August 30, 1950.
 13

Under the Old Civil Code, donations propter nuptias must be made in a public instrument in which the property donated must be specifically
described.71 Article 1328 of the Old Civil Code provides that gifts propter nuptias are governed by the rules established in Title 2 of Book 3 of the
same Code. Article 633 of that title provides that the gift of real property, in order to be valid, must appear in a public document. 72 It is settled that a
donation of real estate propter nuptias is void unless made by public instrument. 73

In the instant case, the donation propter nuptias did not become valid. Neither did it create any right because it was not made in a public
instrument.74 Hence, it conveyed no title to the land in question to petitioners’ predecessors.

Logically, then, the cancellation of OCT No. 352 and the issuance of a new TCT No. 44481 in favor of petitioners’ predecessors have no legal basis.
The title to the subject property should, therefore, be restored to its original owners under OCT No. 352.

Direct reconveyance to any of the parties is not possible as it has not yet been determined in a proper proceeding who among the heirs of spouses
Simeon Doronio and Cornelia Gante is entitled to it. It is still unproven whether or not the parties are the only ones entitled to the properties of
spouses Simeon Doronio and Cornelia Gante. As earlier intimated, there are still things to be done before the legal share of all the heirs can be
properly adjudicated.75

Titled Property Cannot Be Acquired

By Another By Adverse Possession
or Extinctive Prescription

Likewise, the claim of respondents that they became owners of the property by acquisitive prescription has no merit. Truth to tell, respondents
cannot successfully invoke the argument of extinctive prescription. They cannot be deemed the owners by acquisitive prescription of the portion of
the property they have been possessing. The reason is that the property was covered by OCT No. 352. A title once registered under the torrens
system cannot be defeated even by adverse, open and notorious possession; neither can it be defeated by prescription. 76 It is notice to the whole
world and as such all persons are bound by it and no one can plead ignorance of the registration. 77

The torrens system is intended to guarantee the integrity and conclusiveness of the certificate of registration, but it cannot be used for the
perpetration of fraud against the real owner of the registered land. 78 The system merely confirms ownership and does not create it. Certainly, it
cannot be used to divest the lawful owner of his title for the purpose of transferring it to another who has not acquired it by any of the modes allowed
or recognized by law. It cannot be used to protect a usurper from the true owner, nor can it be used as a shield for the commission of fraud; neither
does it permit one to enrich himself at the expense of another. 79 Where such an illegal transfer is made, as in the case at bar, the law presumes that
no registration has been made and so retains title in the real owner of the land. 80

Although We confirm here the invalidity of the deed of donation and of its resulting TCT No. 44481, the controversy between the parties is yet to be
fully settled. The issues as to who truly are the present owners of the property and what is the extent of their ownership remain unresolved. The
same may be properly threshed out in the settlement of the estates of the registered owners of the property, namely: spouses Simeon Doronio and
Cornelia Gante.

WHEREFORE, the appealed Decision is REVERSED AND SET ASIDE. A new one is entered:

(1) Declaring the private deed of donation propter nuptias in favor of petitioners’ predecessors NULL AND VOID; and

(2) Ordering the Register of Deeds of Pangasinan to:

(a) CANCEL Transfer Certificate of Title No. 44481 in the names of Marcelino Doronio and Veronica Pico; and

(b) RESTORE Original Certificate of Title No. 352 in the names of its original owners, spouses Simeon Doronio and Cornelia Gante.
 14

G.R. No. 165606             February 6, 2006

DEUTSCHE BANK MANILA, Petitioner,

vs.
SPOUSES CHUA YOK SEE and REBECCA SEE, JOMIRA CORPORATION, F.E.E. INTERNATIONAL PHILIPPINES, INC., JOSEFINA LIM,
LUCITA L. KHO, and LILY L. CO, Respondents.

DECISION

CALLEJO, SR., J.:

Before us is a petition for review of the Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No. 82912 which dismissed the petition for certiorari
filed by petitioner Deutsche Bank Manila assailing the Order2 of the Regional Trial Court of Makati, Branch 57.

The case arose from the following antecedents:

On January 15, 1998, Deutsche Bank (Manila) filed a complaint for Sum of Money and Damages against spouses Chua Yok See and Rebecca See,
Jomira Corporation, F.E.E. International Philippines, Inc., Josefina Lim, Lucita L. Kho and Lily Co with the Regional Trial Court (RTC) of Makati. 3 The
complaint was docketed as Civil Case No. 98-109 and raffled to Branch 57 of the Makati RTC, which was then presided by Judge Bonifacio Sanz
Maceda.

The complaint alleged, inter alia, that the defendants dealt in U$:₱ F/X Forwards with and through the plaintiff. The latter was given a Cut-Loss
Order to close, on a best effort basis, their F/X Forward positions once the exchange rate hit ₱26.45:$1.00. On July 11, 1997, the peso suddenly
depreciated against the US dollar, and due to the highly volatile and illiquid conditions of the foreign exchange market at the time, the plaintiff was
only able to implement the Cut-Loss Order on July 15, 1997 at the average closing rate of ₱30.43:$1.00. Consequently, the defendants incurred a
total loss of ₱45,812,240.00. In accordance with the security arrangement between the parties, the plaintiff applied the defendants’ deposits in the
Hold-Out Accounts to pay for the loss. According to the plaintiff, there remained an unpaid amount of ₱11,251,032.47. Despite demands, the
defendants failed to pay the said amount and even denied having made any investments in US$:₱ F/X Forwards with and through the plaintiff.4

The plaintiff prayed that, after due proceedings, judgment be rendered in its favor, as follows:

(a) Ordering defendants See Spouses and Jomira, jointly and solidarily, to pay Plaintiff Bank the amount of ₱4,551,116.49, plus legal interest, as
actual damages;

(b) Ordering defendants See Spouses and F.E.E., jointly and solidarily, to pay Plaintiff Bank the amount of ₱4,245,777.46, plus legal interest, as
actual damages;

(c) Ordering defendants Lim, Kho and Co, jointly and solidarily, to pay Plaintiff Bank the amount of ₱2,454,138.52, plus legal interest, as actual
damages;

(d) Ordering all the defendants, jointly and solidarily, to pay Plaintiff Bank the amount of ₱5,000,000.00 as exemplary damages;

(e) Ordering all the defendants, jointly and solidarily, to pay Plaintiff Bank the amount of ₱500,000.00 as and for attorney’s fees;

(f) Ordering all the defendants, jointly and solidarily, to pay the costs of suit; and

(g) Granting the Plaintiff Bank all other reliefs just and equitable under the premises. 5

In their Answer, the defendants interposed the following affirmative defenses:

4.1. The contracts upon which plaintiff’s claims are based are unenforceable under:

(a) The Statute of Frauds; and/or

(b) Articles 1317 and 1403 (1) of the New Civil Code, which provide:

"Art. 1317. No one may contract in the name of another without being authorized by the latter, or unless he has by law a right to represent him.
 15

A contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be
unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other
contracting party.

xxx

"Art. 1403 (1). The following contracts are unenforceable, unless they are ratified:

(1) Those entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his
powers.

x x x"

4.2. Plaintiff has no cause of action against the defendants.

4.2.1. Defendants have never entered into US$:Peso F/X Forward Transactions with plaintiff. Neither does plaintiff have the authority to deal in US$
F/X Forward transactions in behalf of the defendants, particularly those which are the subject of this suit.

4.2.2. Plaintiff has no basis to hold defendants liable to pay the losses supposedly incurred as a result of entering into the US$:Peso F/X Forward
transactions which are the subject of this suit.

4.2.3. Plaintiff has no basis, in law or contract, to offset losses supposedly incurred by defendants on US$:Peso F/X forward transactions against the
accounts of defendants Jomira, FEE and the Lim Sisters.

4.2.4. Plaintiff has no cause of action to hold defendants Chua Yok See and Rebecca See liable for any obligation incurred by defendants JOMIRA
and FEE.6

They prayed that, after due proceedings, judgment be rendered in their favor, as follows:

(1) Ordering plaintiff to pay the defendants the following amounts, representing their principal obligation ₱33,940,014.00 and US$494,950.27
covering the amount of the deposits plus interest;

(2) Ordering plaintiff to pay defendants the amount of ₱28 Million as actual damages;

(3) Ordering plaintiff to pay defendants ₱35 Million by way of moral damages and damage to defendant corporations’ goodwill;

(4) Ordering plaintiff to pay defendant at least ₱35 Million by way of exemplary damages;

(5) Ordering plaintiff to pay defendant at least ₱1 Million as and for attorney’s fees and expenses of litigation; and

(6) Ordering the plaintiff to pay the costs of the suit.

Defendants pray for such other relief as may be deemed just and equitable. 7

Before pre-trial, Judge Reinato G. Quilala replaced Judge Bonifacio Sanz Maceda as the Presiding Judge of Branch 57. On June 22, 1999, Judge
Quilala issued a Pre-Trial Order.8

Trial ensued. The plaintiff adduced documentary evidence marked as Exhibits "A" to "KKKKKKK" and their sub-markings. After the presentation of its
witnesses, the plaintiff offered its documentary evidence praying that –

x x x the foregoing documentary exhibits be admitted for the purposes for which they are offered and as part of the testimonies of the witnesses of
Plaintiff Deutsche Bank Manila particularly:

(a) Michael S. Chua;

(b) Carrie S. Tan;

(c) Manuel G. Ahyong, Jr.;

(d) Luz R. Par;

(e) Soccoro I. Calixto;

 16

(f) Eduardo Manansala; and

(g) Atty. Patricia-Ann T. Prodigalidad.

Deutsche Bank prays for such further or other relief as may be just and equitable under the premises. 9

The defendants filed their Objections/Comments to the Plaintiff’s Formal Offer of Documentary Evidence. 10 On April 30, 2003, the trial court issued
an Order pertaining to the documentary evidence of the plaintiffs and indicating the reasons for the denial or admission thereof:

1. Exhs. "A", "A-1" to "A-8" and sub-markings denied admission for being hearsay and self-serving. Said exhibits appear to be immaterial and
irrelevant as said defendants SEE’s Account No. 1071190 relative to which Exhibit "A" was prepared has already been closed by defendants prior to
the subject F/X transactions;

2. Exhs. "B", "B-1" to "B-4" are DENIED admission for being irrelevant and immaterial as defendants SEE’s Account No. 1071190 was closed by said
defendants prior to the subject F/X Transactions;

3. Exhs. "C", "C-1" to "C-2" are DENIED admission as the handwritten Summary of alleged F/X Transactions of defendants See covering the period
11 October 1996 to February 1998 are self-serving, immaterial and irrelevant to the subject FX transaction which were made in their personal
capacities are not the subject of the instant case.

4. Exhs. "D", "D-1" to "D-2" and their sub-markings; Exhs. "UU", "UU-1" to "UU-6"; "VV", "VV-1" to "VV-4" are admitted there being no objection to
their admission;

5. Exhs. "E","E-1 to "E-5" are admitted there being no objection to their admission;

6. Exhs. "F", "F-1" to "F-10", Exhs. "XX", "XX-1"; Exhs. "YY", "YY-1" to "YY-3"; Exhs. "ZZ" to"ZZ-2"; Exhs. "AAA", "AAA-1", "BBB", "BBB-1" to "BBB-
3", "CCC", "CCC-1" to "CCC-5" are admitted there being no objection to their admission;

7. Exhs. "G", "G-1" to "G-4" are denied admission for being hearsay and self-serving;

8. Exh. "H" and sub-markings, which is the unsigned Summary of the alleged F/X Transaction of FEE Enterprises covering the period of 2 December
1996 to 16 May 1997 is denied admission for being self-serving, immaterial and irrelevant to the subject FX transactions;

9. Exh. "I" which is the unsigned Summary of the alleged F/X transactions of FEE covering the period 30 May 1997 to 4 August 1997 is denied
admission for being self-serving. Said Exhibit does not support the purposes of the offer.

10. Exhs. "J", "J-1" to "J-3", are denied admission for being hearsay and self-serving;

11. Exhs. "K", "K-1" to "K-4", "L", "L-1" to "L-4" are denied admission as the said exhibits relative to defendants SEE’s account number 1071190 has
already been closed prior to the subject F/X Transactions;

12. Exhs. "M", "M-1" to "M-6", "O", "O-1" to "O-8" are denied admission for being hearsay and for being self-serving and said exhibits do not support
the purposes of the offer;

13. Exh. "N" is denied admission for being self-serving and said exhibits does not support the purposes of the offer; and immaterial and irrelevant to
the subject F/X transactions;

14. Exhs. "P" to "P-1" is (sic) admitted there being no objection to their admission.

15. Exhs. "Q", "Q-1" to "Q-8" are denied for being hearsay, self-serving and irrelevant as said exhibits do not support the purposes of the offer;

16. Exhs. "R", "R-1" are denied admission for being self-serving as said exhibits do not support the purposes of the offer. Also, said exhibits appear
to be immaterial and irrelevant to the subject F/X transactions;

17. Exhs. "S", "S-1" to "S-2" are denied admission for being irrelevant to the subject F/X Transactions;

18. Exhs. "T", "T-1" to "T-4" are admitted subject to the defendants’ objections/comment thereon;

19. Exhs. "U", "U-1" to "U-16" are admitted noting, however, defendants’ objection/comment thereto;

20. Exh. "V" is admitted noting, however, the defendants’ objection/comment thereto;

21. Exhs. "W", "W-1" to "W-6" are admitted, noting, however defendants’ objection/comment thereto;
 17

22. Exh. "X" is denied admission for being self-serving as said exhibits on its face was not addressed to defendants See in their representative
capacities;

23. Exhs. "Y", "Z", "AA", "AA-1", "BB", "EE", "FF", "GG" are denied admission for being self-serving as defendants neither entered nor authorized
plaintiff to enter into the subject F/X transactions;

24. Exhs. "CC", "DD" are denied admission for being self-serving, immaterial and irrelevant as the defendants Lim sisters have not entered into nor
did they authorize plaintiff to enter into the subject F/X Transactions in April and May 1997;

25. Exhs. "HH", "HH-1" to "HH-3" are denied admission for being irrelevant as Acct. No. 1071190 has been closed by defendant SEE prior to the
subject F/X Transactions;

26. Exhs. "II", "0II-1" to "II-4", "JJ", "JJ-1" to JJ-3", "KK", "KK-1" to "KK-4" are denied admission for being immaterial, irrelevant as the signing by
defendants of the said pro-forma exhibits did not exempt the plaintiff from sending a confirmation receipt covering an F/X Transactions to the
defendants for their conformity nor did it authorize plaintiff to execute F/X transactions for and in behalf of the defendants without their consent and
authority;

27. Exhs. "LL", "LL-1" to "LL-2"; "MM", "MM-1 to "MM-3" are denied admission for being irrelevant and immaterial as the instant case does not
involve an issue about facsimile order and instruction made by the defendants; Further, Account Number 1071190 of defendants SEE, to which Exh.
"LL" was executed, was closed by said defendants prior to the subject F/X transactions;

28. Exhs. "NN", "NN-1" to "NN-4", "QQ", "QQ-1" to "QQ-2" and sub-markings, "TT", "TT-1" to "TT-2" and sub-marking; Exhs. "HHH", "HHH-1" to
"HHH-3" are admitted, noting however the defendants’ objections/comment thereto;

29. Exhs. "OO", "OO-1" to "OO-5", "PP", "PP-1" to "PP-3" are denied admission for being immaterial, irrelevant as said exhibits relative to
defendants" SEE account number 10771190 (sic) was closed by said defendants prior to the subject F/X transactions;

30. Exhs. "DDD", "DDD-1" to "DDD-13" and sub-markings are admitted noting however the defendants’ objections/comments thereto;

31. Exhs. "RR" to "RR-6", "RR-5-A" are denied admission for being irrelevant and immaterial;

32. Exhs. "SS", "SS-1" are denied admission for being immaterial, irrelevant, to the subject F/X transactions, plaintiff is not suing for alleged losses
arising from the F/X transaction made by defendants See in their personal capacity.

33. Exhs. "WW", "WW-1" to "WW-2", "WW-1-A" are denied admission for being self-serving, immaterial and irrelevant and the said exhibits does not
support the purposes of the offer.

34. Exhs. "EEE", "EEE-1" are denied admission for being self-serving as defendant Chua Yok See did not give a stop loss order and Take Profit
Order to the plaintiff for the simple reason that defendants have not authorized, nor did they enter into the subject F/X transactions;

35 Exhs. "FFF", "FFF-1", "GGG", "GGG-1" to "GGG-3" are denied admission for being self-serving, immaterial to the subject F/X transactions;

36. Exhs. "III", "JJJ", "KKK", "LLL", "MMM", "NNN", "OOO", "OOO-1" to "OOO-7", "NNNNNN", "OOOOOO", "PPPPPP" are admitted, noting however
the defendants’ objections/ comments thereto.

37. Exhs. "PPP", "PPP-1", "QQQ", "RRR", "RRR-1", "SSS", "SSS-1" are denied admission for being immaterial and irrelevant to the subject F/X
transactions;

38. Exhs. "TTT", "UUU", "VVV", WWW", "XXX", "YYY", "ZZZ", "AAAA", "IIII", "JJJJ", "KKKK", "LLLL", "MMMM", "NNNN", "OOOO", "PPPP", "QQQQ",
"RRRR", "SSSS", "TTTT", "UUUU", "VVVV", "WWWW", "XXXX", "YYYY", "ZZZZ", "AAAAA", "BBBBB", "CCCCC", "DDDDD", "EEEEE", FFFFF",
"GGGGG", "HHHHH", "IIIII", "JJJJJ", "KKKKK", "MMMMM", "NNNNN", "OOOOO", "PPPPP", "QQQQQ", "RRRRR", "SSSSS", "TTTTT", "UUUUU",
"VVVVV", "WWWWW", "XXXXX", "YYYYY", "ZZZZZ", "AAAAAA", "BBBBBB", "FFFFFF", "GGGGGG", "HHHHHH" are denied admission for being
irrelevant as the said exhibits are grossly insufficient to show the completion of the subject F/X transactions;

39. Exhs. "IIIIII", "JJJJJJ", are denied admission for being immaterial and irrelevant as the said exhibits are grossly insufficient to prove the existence
of the subject F/X transactions;

40. Exh. "BBBB", "CCCC", "DDDD", "EEEE", "FFFF", "GGGG", "HHHH", "MMMMMM" are denied admission for being grossly insufficient to prove
the existence of the subject F/X Transactions;

41. Exhs. "LLLLL", "CCCCCC", "DDDDDD", "EEEEEE", are denied admission for being grossly insufficient to prove the existence of the subject F/X
transactions;
 18

42. Exhs. "KKKKKK", "LLLLLL", are denied admission for being grossly insufficient to prove the existence of the subject F/X Transactions;

43. Exh. "QQQQQQ" is denied admission for lack of confirmation receipt to support the said F/X transactions;

44. Exhs. "RRRRRR", "RRRRRR-1", "RRRRRR-2" are denied admission as it appears that the act of plaintiff in debiting the account of JOMIRA to
settle the alleged losses from the subject F/X transactions was unauthorized and without factual and legal basis;

45. Exh. "SSSSSS" is denied admission for lack of confirmation receipt to support the said F/X transactions;

46. Exhs. "TTTTTT", "UUUUUU" are denied admission for lack of confirmation receipt to support the said F/X transactions;

47. Exhs. "VVVVVV", "WWWWWW", are denied admission for lack of confirmation receipt to support the said F/X transactions;

48. Exhs. "XXXXXX", "YYYYYY", "ZZZZZZ", "AAAAAAA", "BBBBBBB", "CCCCCCC" are denied admission for lack of confirmation receipt to support
the said F/X transactions;

49. Exhs. "DDDDDDD", "EEEEEEE", are admitted, noting however the defendants’ objections/comments thereto;

50. Exhs. "FFFFFFF", "GGGGGGG", are denied admission for lack of confirmation receipt to support the said F/X transactions;

51. Exhs. "HHHHHHH", "IIIIIII", "JJJJJJJ", "KKKKKKK", are denied admission as plaintiff has no basis to match the subject F/X transactions.

SO ORDERED.11

The plaintiff filed a motion for the reconsideration 12 of the Order and an Omnibus Motion: (1) to Inhibit; and (2) to Defer Resolution of the Motion for
Reconsideration.13 In support of its motion, the plaintiff alleged that:

THE HONORABLE PRESIDING JUDGE’S CLEAR AND CATEGORICAL, ALBEIT ERRONEOUS PRONOUNCEMENTS, IN HIS ORDER DATED 30
APRIL 2003 SHOWS [sic] BIAS AND PARTIALITY, AND CONSTITUTES [sic] A PREJUDGMENT OF THE CASE. 14

The defendants opposed the motions of the plaintiff. 15 On September 5, 2003, the court issued an Order denying the omnibus motion, and granting
the plaintiff’s motion for reconsideration, thus:

Clearly, the Court’s duty to decide the instant case "without fear of repression" cannot be overturned by an unproven speculation of bias and
prejudice. The Court, therefore, cannot inhibit itself from hearing the instant case.

Thus, there is no cogent reason to defer the resolution of plaintiff’s Motion for Reconsideration.

After a consideration of the grounds relied upon by plaintiff in its Motion for Reconsideration, the Court finds reason to set aside its Order dated 30
April 2003.

WHEREFORE, plaintiff’s OMNIBUS MOTION TO INHIBIT AND DEFER RESOLUTION is hereby denied for lack of merit, while plaintiff’s MOTION
FOR RECONSIDERATION is hereby granted. All the documentary exhibits of plaintiff are hereby ordered admitted as part of the testimonies of the
witness who testified thereon.

SO ORDERED.16

The plaintiff filed a motion for the partial reconsideration of the trial court’s Order praying that:

WHEREFORE, plaintiff Deutsche Bank respectfully prays this Honorable Court reverse its 5 September 2003, insofar as it denied Deutsche’s Motion
to Inhibit dated 4 June 2003, and admitted Deutsche’s documentary exhibits, only as part of the testimony of the witnesses and, consequently, the
Honorable Presiding Judge Reinato G. Quilala voluntarily disqualify and/or inhibit himself from trying and deciding this case; and all of Deutsche’s
documentary exhibits be admitted for the purposes for which they are offered, and as part of the testimonies of its witnesses.

Deutsche Bank prays for such further or other relief as may be just and equitable. 17

The court denied the motion in its Order 18 dated January 7, 2004.

The plaintiff, now the petitioner, filed a petition for certiorari with the CA, contending that:

I THE RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR EXCESS OF JURISDICTION, IN NOT
INHIBITING HIMSELF FROM THE CASE CONSIDERING THAT THE EXPLICIT AND CATEGORICAL DECLARATIONS OF THE RESPONDENT
JUDGE IN HIS ORDER DATED 30 APRIL 2003 CLEARLY SHOW BIAS AND PARTIALITY AND CONSTITUTE A PREJUDGMENT OF THE CASE.
 19

II THE RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR EXCESS OF JURISDICTION, IN
ONLY ADMITTING THE DOCUMENTARY EXHIBITS OF PETITIONER AS PART OF THE TESTIMONIES OF THE WITNESSES WHO TESTIFIED
THEREON.19

In support of the second assigned error, the petitioner made the following allegations:

6.13 In its Motion for Reconsideration of the 30 April 2004 Order, petitioner moved that all of its documentary exhibits be admitted for the purposes
stated in the offer, and as part of the testimonies of its witnesses. Petitioner also called attention to the fact that there is no basis for the denial of said
exhibits, particularly since the reasons cited by the respondent Judge are not addressed to the admissibility of evidence, but rather to the weight
thereof.

6.14 Respondent Judge did not address any of the issues raised as to the propriety of admission of the documentary evidence. Instead, it made a
general statement admitting petitioner’s exhibits, but only as part of the witnesses’ testimonies.

6.15 Clearly, by not addressing the arguments raised in petitioner’s Motion for Reconsideration as to the admissibility of its documentary exhibits with
respect to the purposes stated therein, respondent Judge acted capriciously and whimsically. Under the principle of due process, Petitioner is
entitled to be apprised of the basis of any order. 20

The petition contained the following prayer:

WHEREFORE, it is most respectfully prayed of this Honorable Court that:

1. Upon the filing of this Petition, a Temporary Restraining Order/Writ of Preliminary Injunction be issued enjoining the Honorable Reinato G. Quilala
of the Regional Trial Court of Makati City, Branch 7, from conducting further proceedings in Civil Case No. 98-109, including but not limited to the
setting and conducting hearings for the reception of private respondents’ evidence until after the instant Petition is resolved.

2. The Petition be given due course and judgment be rendered reversing the Assailed Orders of the respondent Court, dated 5 September 2003 and
7 January 2004, and a writ of certiorari be issued:

a. Ordering the respondent Judge to inhibit himself from trying and deciding Civil Case No. 98-109; and

b. Admitting all of petitioner’s documentary exhibits for the purposes for which they are offered, and as part of the testimonies of its witnesses.

Other relief, just or equitable under the circumstances are likewise prayed for. 21

On September 20, 2004, the CA rendered judgment dismissing the petition. According to the CA,

Petitioner imputes to respondent Judge grave abuse of discretion upon: (a) the denial of almost all of its documentary evidence; (b) adopting, as the
court’s ruling, the objections of private respondents to the admissibility of said evidence; and (c) prejudging the case through its findings on the non-
liability of private Respondents. It also insists in the inhibition of respondent Judge for being biased and partial against them.

The imputation is not well-taken. Respondent Judge’s rejection of documentary exhibits on valid and lawful grounds does not amount to grave abuse
of discretion. As part of his judicial function, the respondent Judge is undeniably clothed with authority to admit or reject evidence determinative of
the outcome of the case. He may properly intervene in the presentation of evidence to expedite and prevent unnecessary waste of time.

Petitioner, being the plaintiff in the main case, has yet to present and prove at the trial its evidence-in-chief in support of its cause of action.
Appreciation of the evidence is at best preliminary and should not prevent the trial judge from making a final assessment of the evidence before him
after full trial. Thus, respondent Judge correctly declared:

"Other than the pronouncements made by the Court in its Order dated 30 April 2003, plaintiff has not shown any circumstances or actuations on the
part of the Court that would even hint at any bias or prejudice. Plaintiff’s claim that the Court has already prejudged the cases is also unfounded,
there being no evidence to show such alleged prejudgment. It should be noted that the Court merely ruled on the admissibility of the documents
presented as exhibits and not on the probative value of the documents. Besides, the plaintiff is not left without any remedy since they [sic] can resort
to the tender of their [sic] excluded evidenced [sic] under Sec. 40, Rule 132 of the Revised Rules of Court."

If, indeed, respondent Judge misappreciated certain evidence, such are not jurisdictional matters that may be determined and ruled upon in a
certiorari proceeding. A review of facts and evidence is not the province of the extraordinary remedy of certiorari, which is extra-ordinem –beyond the
ambit of appeal. Petitioner, nonetheless, failed to prove grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
respondent Judge.
 20

Consequently, respondent Judge’s inhibition from hearing the case is uncalled for. The issue of voluntary inhibition is primarily a matter of
conscience and sound discretion based on valid reasons on the part of the judge. Mere suspicion that a judge is partial to one of the parties is not
enough to show that the former favors the latter. Bare allegations cannot overturn the presumption that a judge acted regularly and with impartiality.

Hence, petitioner’s application for temporary restraining order/writ of preliminary injunction cannot be granted for lack of factual and legal basis. 22

Petitioner now comes to this Court for relief claiming that the appellate court erred, as follows:

A. THE COURT OF APPEALS ERRED IN FAILING TO CONSIDER THAT JUDGE QUILALA’S DENIAL OF ADMISSION TO MOST OF
DEUTSCHE’S EXHIBITS BASED ON HIS PERCEIVED LACK OF WEIGHT THEREOF, AND, CONSEQUENTLY, HIS RESOLUTION OF THE MAIN
FACTUAL ISSUE INVOLVED IN THE CONTROVERSY WAS GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION.

B. THE COURT OF APPEALS ERRED IN NOT REVERSING JUDGE QUILALA’S ASSAILED ORDERS ADMITTING THE DOCUMENTARY
EXHIBITS OF DEUTSCHE ONLY AS PART OF THE TESTIMONIES OF THE WITNESSES WHO TESTIFIED THEREON, WHICH HE ISSUED
WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION.

C. THE COURT OF APPEALS ERRED IN NOT CONSIDERING THAT JUDGE QUILALA, WHO RULED THAT RESPONDENTS DID NOT HAVE
ANY LIABILITY ON THE TRANSACTIONS SUBJECT OF THE CASE BECAUSE THE SAME WERE ALLEGEDLY NOT AUTHORIZED, AND WHO
MADE AN EXPRESS FINDING ON THE MAIN FACTUAL ISSUE IN THIS CASE, EVEN IF RESPONDENTS HAD YET TO PRESENT THEIR
EVIDENCE, SHOULD BE COMPELLED TO INHIBIT HIMSELF ON THE GROUND OF BIAS AND PREJUDGMENT. 23

Petitioner claims that the trial court committed grave abuse of discretion when it rejected some of its exhibits in its April 30, 2003 Order on

the ground that it made an express finding on the main factual issue of the case. According to petitioner, the RTC should have ruled only on the
admissibility of the evidence. Rather, the trial court practically denied all of its documentary evidence on grounds not pertaining to their admissibility,
but based on their weight or probative value. Petitioner submits that admissibility of the evidence should not be confounded with its probative value.
Petitioner also disputes the trial court’s finding that some of the documents were self-serving because, while they may have been prepared by the
petitioner, they were presented before the trial court and offered in evidence after respondents were given an opportunity to rebut their veracity and
authenticity. It avers that the trial court’s substantial lack of appreciation of the rules of evidence amounts to grave abuse of discretion. 24

Petitioner likewise maintains that the trial court committed grave abuse of discretion when it issued its September 5, 2003 Order admitting all of its
documentary evidence but only as part of the testimonies of its witnesses. It alleges that the trial court did not address any of the issues it raised
regarding the propriety of admitting its documentary evidence. The petitioner avers that a document or writing which is admitted not as independent
evidence but merely as part of the testimony of a witness does not constitute proof of the facts stated therein; hence, it is as if the documents were
denied admission.25

Petitioner avers that Judge Quilala should be compelled to inhibit himself from the case on the ground of bias and prejudice. It contends that the
RTC judge has revealed his lack of impartiality in his April 30, 2003 Order when he made a prejudgment on the merits of the case, particularly on the
factual issue of whether or not the F/X forward transactions were authorized. In denying some of the documents, the RTC judge declared that they
are "self-serving as respondents neither entered nor authorized plaintiff to enter into the subject F/X transactions." Petitioner adds that Judge
Quilala’s partiality towards the respondents and his prejudgment of the case also showed when he denied other documents for being "irrelevant as
the said exhibits are grossly insufficient to show the completion of the subject F/X transactions" since whether or not such completion took place
remains an issue.26

For their part, the respondents argue that, assuming Judge Quilala erred in admitting the petitioner’s documentary exhibits only as part of the
testimonies of its witnesses, such error can hardly be considered as correctible by certiorari or amounting to grave abuse of discretion. As long as
the court acts within its jurisdiction, any alleged error committed in the exercise thereof will amount to nothing more than errors of judgment which
are reviewable by timely appeal, and not via special civil action of certiorari. It is axiomatic that the trial court has the authority and discretion to rule
on the admissibility of each documentary evidence vis-à-vis the purpose for which it is offered. Thus, it may exclude evidence, although admissible
for certain purposes, if it is inadmissible for which it is offered, and its exclusion is not reversible error. Besides, according to respondents, the
petitioner’s exhibits suffer defects that render them inadmissible to prove the purposes for which they were offered. 27 Therefore, there is no factual
basis or legal justification for the inhibition of the presiding judge. The element of bias and prejudice must stem from an extrajudicial source. Mere
disagreement as to the proper application of certain procedural and even substantive rules neither prove bias nor prejudice on the part of the judge
nor necessitate his inhibition.28

The issue to be resolved in this case is whether or not the presiding judge committed grave abuse of discretion correctible by certiorari in (a)
admitting the petitioner’s documentary exhibits only as part of the testimonies of the witnesses who respectively testified thereon, and (b) not
inhibiting himself from the case.

The petition is without merit.

 21

Courts are required to resolve the admissibility of the evidence offered immediately after the objection is made or within a reasonable time. It must be
made during the trial and at such time as will give the other party an opportunity to meet the situation presented by the ruling. Courts are further
mandated to state the reason or reasons for their ruling if there are two or more objections by the other party. 29 Due process requires no less. In this
case, we note that, in the Order of September 5, 2003, the trial court failed to state its reasons for reconsidering its earlier order, and for admitting
the documentary evidence of the petitioners only as part of the testimonies of its witnesses. At any rate, we find that the issue raised in this case is
not jurisdictional; hence, the filing of the petition for certiorari with the CA was not proper.

Indeed, a writ of certiorari may be issued only for the correction of errors of jurisdiction or grave abuse of discretion amounting to lack or excess of
jurisdiction,30 not errors of judgment.31 Where the issue or question involves or affects the wisdom or legal soundness of the decision—not the
jurisdiction of the court to render said decision—the same is beyond the province of a petition for certiorari. 32 Grave abuse of discretion implies such
capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. 33 The abuse of discretion must be patent and gross as to
amount to an evasion of positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law as where the power
is exercised in an arbitrary and despotic manner by reason of passion and hostility. 34

Petitioner, in imputing grave abuse of its discretion to the trial court in its ruling on the admissibility of its documentary exhibits, relies on such court’s
previous order rejecting some of its exhibits. However, it should be noted that the trial court has subsequently admitted all the documentary exhibits
of the petitioner although merely as part of the testimonies of the witnesses.

We rule that neither of these rulings could be a basis for a certiorari proceeding. The trial court, in so ruling, did not commit grave abuse of discretion.
Not every error in proceeding, or every erroneous conclusion of law or fact, is abuse of discretion. 35 If at all there was any mistake in said decisions,
such mistake can only be characterized as an error of judgment. A ruling on the admission of evidence, even if wrong, is not an abuse of discretion
but simply an erroneous ruling.36 As long as the trial court acts within its jurisdiction, any alleged error committed in the exercise of its discretion will
amount to nothing more than mere errors of judgments, correctible by an appeal and not by a petition for certiorari. 37

In Lee v. People,38 the petitioner therein filed a petition for certiorari under Rule 65 of the Rules of Court before the CA assailing the order of the trial
court admitting certain documents offered by the prosecution. The Court declared that the order admitting in evidence the disputed documents was
issued by the trial court in the exercise of its jurisdiction, and that even if erroneous, the same is a mere error of judgment and not of jurisdiction, and
hence, the remedy of the petitioner was to appeal in due course. 39 In the present case, there is likewise no dispute that the trial court had jurisdiction
over the case. As such, it had jurisdiction to rule on the admissibility of the documents offered in evidence.

The proper remedy of petitioner was to appeal in due course from the judgment or decision of the trial court on the merits of the case to the CA. 40 On
appeal, the petitioner may assail the trial court’s Order on the admission of its evidence and pray that the appellate court resolve whether the trial
court’s rulings thereon are correct. Since the documents were admitted and made part of the records of the case, the appellate court can easily
ascertain whether the trial court erred in not admitting all the documents for the purpose for which they were offered. The early case of Lamagan v.
De la Cruz41 is supportive of this:

As the petitioner-appellant concedes in her petition and brief, 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. If the rule were otherwise, there simply would be no end to the trial of cases, for any litigant, not satisfied with the trial court’s ruling admitting or
excluding any proffered oral or documentary evidence, would then indefinitely tie up the trial while elevating the ruling for review by the appellate
court.42

This Court has consistently ruled that in a petition for certiorari from an interlocutory order, the petitioner is burdened to prove that the remedy of
appeal would not afford adequate and expeditious relief. 43 A remedy is plain, speedy, and adequate remedy if it will promptly relieve the petitioners
from the injurious effects of the acts of the lower court. 44 Appeal in due course is a speedy and adequate remedy. 45

Petitioner’s contention that the trial court showed bias and prejudgment of the case is likewise without merit. To disqualify a judge on the ground of
bias and prejudice, the movant must prove the same with clear and convincing evidence. 46 Bare allegations of partiality will not suffice. It cannot be
presumed, especially if weighed against the sacred oaths of office of magistrates, requiring them to administer justice fairly and equitably. 47

In this case, petitioner solely relies on the unfavorable rulings of the trial court, particularly on the admission of its documentary exhibits. However, as
the Court has already ruled, this is not sufficient to establish bias and prejudice on the part of the trial court. Thus, the Court held in Webb v.
People:48

To prove bias and prejudice on the part of the respondent judge, petitioners harp on the alleged adverse and erroneous rulings of respondent judge
on their various motions. By themselves, however, they do not sufficiently prove bias and prejudice to disqualify respondent judge. To be
disqualifying, the bias and prejudice must be shown to have stemmed from an extrajudicial source and result in an opinion on the merits on some
basis other than what the judge learned from his participation in the case. Opinions formed in the course of judicial proceedings, although erroneous,
as long as they are based on the evidence presented and conduct observed by the judge, do not prove personal bias or prejudice on the part of the
judge. As a general rule, repeated rulings against a litigant, no matter how erroneous and vigorously and consistently expressed, are not a basis for
 22

disqualification of a judge on grounds of bias and prejudice. Extrinsic evidence is required to establish bias, bad faith, malice or corrupt purpose, in
addition to the palpable error which may be inferred from the decision or order itself. Although the decision may seem so erroneous as to raise
doubts concerning a judge's integrity, absent extrinsic evidence, the decision itself would be insufficient to establish a case against the judge. The
only exception to the rule is when the error is so gross and patent as to produce an ineluctable inference of bad faith or malice.

We hasten to stress that a party aggrieved by erroneous interlocutory rulings in the course of a trial is not without remedy. The range of remedy is
provided in our Rules of Court and we need not make an elongated discourse on the subject. But certainly, the remedy for erroneous rulings, absent
any extrinsic evidence of malice or bad faith, is not the outright disqualification of the judge. For there is yet to come a judge with the omniscience to
issue rulings that are always infallible. The courts will close shop if we disqualify judges who err for we all err. 49

The records do not show that the trial court was motivated by malice and bad faith in issuing its orders. In fact, it even partially granted petitioner’s
motion for reconsideration of its previous order denying some of the documentary exhibits, and admitted all of its documentary exhibits as part of the
testimonies of its witnesses. Even if the ruling may be erroneous, it is not a sufficient ground to require the presiding judge to inhibit himself from
hearing the case.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 82912, dated September 30, 2004, is AFFIRMED.

G.R. No. 105813 September 12, 1994

CONCEPCION M. CATUIRA, petitioner,
vs.
COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.

Arnold V. Guerrero & Associates for petitioner.

BELLOSILLO, J.:

Is the testimony of a witness inadmissible in evidence if not formally offered at the time the witness is called to testify, as required in Sec. 35, in
relation to Sec. 34, Rule 132, of the Revised Rules on Evidence? 1

On 8 June 1990, two (2) Informations for estafa were filed against petitioner Concepcion M. Catuira with the Regional Trial Court of Calamba,
Laguna, for having issued two (2) checks in payment of her obligation to private complainant Maxima Ocampo when petitioner had no sufficient
funds to cover the same, which checks upon presentment for payment were dishonored by the drawee bank. 2

After the prosecution had presented its evidence, petitioner Concepcion M. Catuira filed a Motion to Dismiss (by way of Demurrer to Evidence) under
Sec. 15, Rule 119, of the 1985 Revised Rules on Criminal Procedure. 3 Petitioner contended that the testimony of private respondent Ocampo was
inadmissible in evidence since it was not properly introduced when she was called to testify as mandated in Sec. 35, Rule 132, of the Revised Rules
on Evidence. Petitioner also argued that even if the testimony of private respondent was considered, the evidence of the prosecution still failed to
prove that the checks were issued in payment of an obligation.

On 26 July 1991, the trial court denied the motion to dismiss for lack of merit. On 18 October 1991, it likewise denied the motion to reconsider its
denial of the motion to dismiss.

On 4 November 1991 petitioner elevated her case to the Court of Appeals through a petition for certiorari, prohibition and mandamus. In a similar
move, the appellate court rejected her petition and sustained the trial court in its denial of the motion to dismiss. Hence, this recourse seeking to
annul the decision of the Court of Appeals rendered on 27 February 1992 as well as its resolution of 1 June 1992. 4

Petitioner claims that the Court of Appeals erred when it accepted the testimony of private respondent despite the undisputed fact that it was not
offered at the time she was called to testify; her testimony should have been stricken off the record pursuant to Sec. 34, Rule 132, which prohibits
the court from considering evidence which has not been formally offered; and, it was error for respondent appellate court to declare that petitioner's
objection was not done at the proper time since under Sec. 36, Rule 132, 5 objection to evidence offered orally must be made immediately after the
offer is made. Evidently, petitioner could not have waived her right to object to the admissibility of the testimony of private respondent since the rule
requires that it must be done only at the time such testimony is presented and the records plainly show that the opportunity for petitioner to object
only came when the prosecution attempted, albeit belatedly, to offer the testimony after it has rested its case. 6

The petition is devoid of merit. The reason for requiring that evidence be formally introduced is to enable the court to rule intelligently upon the
objection to the questions which have been asked. 7 As a general rule, the proponent must show its relevancy, materiality and competency. Where
the proponent offers evidence deemed by counsel of the adverse party to be inadmissible for any reason, the latter has the right to object. But such
right is a mere privilege which can be waived. Necessarily, the objection must be made at the earliest opportunity, lest silence when there is
opportunity to speak may operate as a waiver of objections. 8
 23

Thus, while it is true that the prosecution failed to offer the questioned testimony when private respondent was called to the witness stand, petitioner
waived this procedural error by failing to object at the appropriate time, i.e., when the ground for objection became reasonably apparent the moment
private respondent was called to testify without any prior offer having been made by the proponent. Most apt is the observation of the appellate court:

While it is true that the prosecution failed to offer in evidence the testimony of the complaining witness upon calling her to testify and that it was only
after her testimony and after the petitioner moved that it be stricken that the offer was made, the respondent Court did not gravely err in not
dismissing the case against the petitioner on the ground invoked. For, she should have objected to the testimony of the complaining witness when it
was not first offered upon calling her and should not have waited in ambush after she had already finished testifying. By so doing she did not save
the time of the Court in hearing the testimony of the witness that after all according to her was inadmissible. And for her failure to make known her
objection at the proper time, the procedural error or defect was
waived. 9

Indeed, the rationale behind Sec. 34, Rule 132, is manifest in the minutes of the Revision of Rules Committee. 10 Thus —

The new rule would require the testimony of a witness to offer it at the time the witness is called to testify. This is the best time to offer the testimony
so that the court's time will not be wasted. Since it can right away rule on whether the testimony is not necessary because it is irrelevant or
immaterial.

If petitioner was genuinely concerned with the ends of justice being served, her actuations should have been otherwise. Instead, she attempted to
capitalize on a mere technicality to have the estafa case against her dismissed. 11 But even assuming that petitioner's objection was timely, it was at
best pointless and superfluous. For there is no debating the fact that the testimony of complaining witness is relevant and material in the criminal
prosecution of petitioner for estafa. It is inconceivable that a situation could exist wherein an offended party's testimony is immaterial in a criminal
proceeding. Consequently, even if the offer was belatedly made by the prosecution, there is no reason for the testimony to be expunged from the
record. On the contrary, the unoffered oral evidence must be admitted if only to satisfy the court's sense of justice and fairness and to stress that
substantial justice may not be denied merely on the ground of technicality. 12

WHEREFORE, the decision of the Court of Appeals sustaining the order of the Regional Trial Court of Calamba, Laguna, Br. 35, denying petitioner's
motion to dismiss (by way of demurrer to evidence) is AFFIRMED. Costs against petitioner.

G.R. No. L-9181           November 28, 1955

THE PEOPLE OF THE PHILIPPINES, petitioner,

vs.
THE HON. NICASIO YATCO, Judge of the Court of First Instance of Rizal, Quezon City Branch, and JUAN CONSUNJI and ALFONSO
PANGANIBAN, respondents.

Office of the Solicitor General Ambrosio Padilla, Solicitor Meliton G. Soliman, City Attorney Pedro R. Revilla and Assistant City Attorney Julian E.
Lustre for petitioner.
Estanislao A. Fernandez, Augusto Ilagan, Claro T. Almeda and Rufino Navarro for respondents.

REYES, J.B.L., J.:

In an amended information filed by the City Attorney of Quezon City on March 22, 1955, Juan Consunji, Alfonso Panganiban, and another whose
identity is still unknown, were charged with having conspired together in the murder of one Jose Ramos (Criminal Case No. Q-1637 of the Court of
First Instance of Quezon City). Trial of the case started on May 3, 1955, and in several hearings the prosecution had been presenting its evidence.
During the progress of the trial on May 18, 1955, while the prosecution was questioning one of its witnesses, Atty. Arturo Xavier of the National
Bureau of Investigation, in connection with the making of a certain extra-judicial confession (allegedly made before him) by defendant Juan Consunji
to the witness, counsel for the other defendant Alfonso Panganiban interposed a general objection to any evidence on such confession on the
ground that it was hearsay and therefore incompetent as against the other accused Panganiban. The Court below ordered the exclusion of the
evidence objected to, but on an altogether different ground: that the prosecution could not be permitted to introduce the confessions of defendants
Juan Consunji and Alfonso Panganiban to prove conspiracy between them, without prior proof of such conspiracy by a number of definite acts,
conditions, and circumstances. Thereafter, according to the transcript, the following remarks were made:

FISCAL LUSTRE:

May we know from counsel if he is also objecting to the admissibility of the confession of Consunji as against the accused Consunji himself?

COURT:

That would be premature because there is already a ruling of the Court that you cannot prove a confession unless you prove first conspiracy thru a
number of indefinite acts, conditions and circumstances as required by law. Annex "B" of the petition, p. 9
 24

The prosecution then moved in writing for a reconsideration of the order of exclusion, but again the motion was denied. Wherefore, this petition for
certiorari was brought before this Court by the Solicitor General, for the review and annulment of the lower Court's order completely excluding any
evidence on the extrajudicial confessions of the accused Juan Consunji and Alfonso Panganiban without prior proof of conspiracy.

We believe that the lower Court committed a grave abuse of discretion in ordering the complete exclusion of the prosecution's evidence on the
alleged confessions of the accused Juan Consunji at the stage of the trial when the ruling was made.

Section 14, Rule 123, Rules of Court, is specific as to the admissibility of the extrajudicial confession of an accused, freely and voluntarily made, as
evidence against him.

SEC. 14. Confession. — The declaration of an accused expressly acknowledging the truth of his guilt as to the offense charged, may be given in
evidence against him.

Under the rule of multiple admissibility of evidence, even if Consunji's confession may not be competent as against his co-accused Panganiban,
being hearsay as to the latter, or to prove conspiracy between them without the conspiracy being established by other evidence, the confession of
Consunji was, nevertheless, admissible as evidence of the declarant's own guilt (U. S. vs. Vega, 43 Phil. 41; People vs. Bande, 50 Phil. 37;
People vs. Buan, 64 Phil. 296), and should have been admitted as such.

The rule cited by the Court below in support of its exclusion of the proffered evidence is Sec. 12 of Rule 123, providing that:

The act or declaration of a conspirator relating to the conspiracy and during its existence may be given in evidence against the co-conspirator after
the conspiracy is shown by evidence other than such act or declaration.

Manifestly, the rule refers to statements made by one conspirator during the pendency of the unlawful enterprises ("during its existence") and in
furtherance of its object, and not to a confession made, as in this case, long after the conspiracy had been brought to an end (U. S. vs. Empeinado, 9
Phil., 613; U. S. vs. Raymundo, 14 Phil., 416; People vs. Badilla, 48 Phil., 718; People vs. Nakpil, 52 Phil., 985).

Besides, the prosecution had not yet offered the confessions to prove conspiracy between the two accused, nor as evidence against both of them. In
fact, the alleged confessions (both in writing and in tape recordings) had not yet even been identified (the presentation of Atty. Xavier was precisely
for the purpose of identifying the confessions), much less formally offered in evidence. For all we know, the prosecution might still be able to adduce
other proof of conspiracy between Consunji and Panganiban before their confessions are formally offered in evidence. Assuming, therefore, that
section 12 of Rule 123 also applies to the confessions in question, it was premature for the respondent Court to exclude them completely on the
ground that there was no prior proof of conspiracy.

It is particularly noteworthy that the exclusion of the proferred confessions was not made on the basis of the objection interposed by Panganiban's
counsel, but upon an altogether different ground, which the Court issued motu proprio. Panganiban's counsel objected to Consunji's confession as
evidence of the guilt of the other accused Panganiban, on the ground that it was hearsay as to the latter. But the Court, instead of ruling on this
objection, put up its own objection to the confessions — that it could not be admitted to prove conspiracy between Consunji and Panganiban without
prior evidence of such conspiracy by a number of indefinite acts, conditions, circumstances, etc. and completely excluded the confessions on that
ground. By so doing, the Court overlooked that the right to object is a mere privilege which the parties may waive; and if the ground for objection is
known and not reasonably made, the objection is deemed waived and the Court has no power, on its own motion, to disregard the evidence
(Marcella vs. Reyes, 12 Phil., 1).

We see no need for the present to discuss the question of the admissibility of the individual extrajudicial confessions of two or more accused for the
purpose of establishing conspiracy between them through the identity of the confessions in essential details. After all, the confessions are not before
us and have not even been formally offered in evidence for any purpose. Suffice it to say that the lower Court should have allowed such confessions
to be given in evidence at least as against the parties who made them, and admit the same conditionally to establish conspiracy, in order to give the
prosecution a chance to get into the record all the relevant evidence at its disposal to prove the charges. At any rate, in the final determination and
consideration of the case, the trial Court should be able to distinguish the admissible from the inadmissible, and reject what, under the rules of
evidence, should be excluded.

Once more, attention should be called to the ruling of this Court in the case of Prats & Co. vs.  Phoenix Insurance Co., 52 Phil., 807, 816-817:

In the course of long experience we have observed that justice is most effectively and expeditiously administered in the courts where trial objections
to the admission of proof are received with least favor. The practice of excluding evidence on doubtful objections to its materiality or technical
objections to the form of the questions should be avoided. In a case of any intricacy it is impossible for a judge of first instance, in the early stages of
the development of the proof, to know with any certainty whether testimony is relevant or not; and where there is no indication of bad faith on the part
of the Attorney offering the evidence, the court may as a rule safely accept the testimony upon the statement of the attorney that the proof offered
will be connected later. Moreover, it must be remembered that in the heat of the battle over which the presides, a judge of first instance may possibly
fall into error in judging of the relevancy of proof where a fair and logical connection is in fact shown. When such a mistake is made and the proof is
erroneously ruled out, the Supreme Court, upon appeal, often finds itself embarrassed and possibly unable to correct the effects of the error without
 25

returning the case for a new trial, — a step which this Court is always very loath to take. On the other hand, the admission of proof in a court of first
instance, even if the question as to its form, materiality, or relevancy is doubtful, can never result in much harm to either litigant, because the trial
judge is supposed to know the law; and it is duty, upon final consideration of the case, to distinguish the relevant and material from the irrelevant and
immaterial. If this course is followed and the cause is prosecuted to the Supreme Court upon appeal, this Court then has all the material before it
necessary to make a correct judgment.

There is greater reason to adhere to such policy in criminal cases where questions arise as to admissibility of evidence for the prosecution, for the
unjustified exclusion of evidence may lead to the erroneous acquittal of the accused or the dismissal of the charges, from which the People can no
longer appeal.

Wherefore, the order excluding the confessions of the accused Juan Consunji and Alfonso Panganiban is annulled and set aside and the Court
below is directed to proceed with the trial in accordance with law and this opinion. Costs against respondents Juan Consunji and Alfonso
Panganiban. So ordered.

G.R. No. 86062 June 6, 1990

INTERPACIFIC TRANSIT, INC., petitioner,

vs.RUFO AVILES and JOSEPHINE AVILES, respondents. Balane, Barican, Cruz, Alampay Law Office for petitioner. Francisco G. Mendoza private
respondents. CRUZ, J.:

This case hinges on the proper interpretation and application of the rules on the admissibility of documentary evidence and the viability. of a civil
action for damages arising from the same acts imputed to the defendant in a criminal action where he has been acquitted.

In the information filed against Rufo and Josephine Aviles, the private respondents herein, it was alleged that being then sub-agents of Interpacific
Transit, Inc. and as such enjoying its trust and confidence, they collected from its various clients payments for airway bills in the amount of
P204,030.66 which, instead of remitting it to their principal, they unlawfully converted to their own personal use and benefit. 1

At the trial, the prosecution introduced photocopies of the airway bills supposedly received by the accused for which they had not rendered proper
accounting. This was done in, the course of the direct examination of one of the prosecution witnesses. 2 The defense objected to their presentation,
invoking the best evidence rule. The prosecution said it would submit the original airway bills in due time. Upon such undertaking, the trial court
allowed the marking of the said documents a s Exhibits "B" to "OO." The e prosecution n did submit the original airway bills nor did it prove their loss
to justify their substitution with secondary evidence. Nevertheless, when the certified photocopies of the said bills formally were offered, 3 in
evidence, the defense interposed no objection.

In acquitting the accused, Judge Herminio I. Benito of the Regional Trial Court of Makati rejected the agency theory of the prosecution and held that
the relationship between the petitioner and Rufo Aviles was that of creditor and debtor only. "Under such relationship,' it declared, "the outstanding
account, if any, of the accused in favor of ITI would be in the nature of an indebtedness, the non- payment of which does not Constitute estafa." 4

The court' also held that the certified photocopies of the airway by were not admissible under the rule that "there can be no evidence of a writing the
content of which is the subject of inquiry other' than the writing itself." Loss of the originals had not been proved to justify the exception to the rule as
one of the prosecution witness had testified that they were still in the ITI bodega. Neither had it been shown that the originals had been "recorded in
an existing record a certified copy of which is made evidence by law."

In its order denying the motion for reconsideration, the trial court declared that it "had resolved the issue of whether the accused has civil obligation
to ITI on the basis of the admissibility in evidence of the xerox copies of the airway bills." 5

Right or wrong, the acquittal on the merits of the accused can no longer be the subject of an appeal under the double jeopardy rule. However, the
petitioner seeks to press the civil liability of the private respondents, on the ground that the dismissal of the criminal action did not abate the civil
claim for the recovery of the amount. More to the point, ITI argues that the evidence of the airways bills should not have been rejected and that it had
sufficiently established the indebtedness of the private respondents to it.

The Court of Appeals 6 affirmed, the decision of the trial court in toto, adding that the existing record spoken of in Section 2 (e) and (d) of Rule 130 of
the Rules of Court must be in the custody, of a public officer only. It also declared that:

Since no evidence of civil liability was presented, no necessity existed on the part of the private respondents to present evidence of payment of an
obligation which was not shown to exist.

The petitioner now asks this Court to annul that judgment as contrary to law and the facts established at the As in the courts below, it is insisting on
the admissibility of its evidence to prove the civil liability of the private respondents.

We agree with the petitioner. The certified photocopies of the airway bills should have been considered.
 26

In assessing this evidence, the lower courts confined themselves to the best evidence rule and the nature of the documents being presented, which
they held did not come under any of the exceptions to the rule. There is no question that the photocopies were secondary evidence and as such
were not admissible unless there was ample proof of the loss of the originals; and neither were the other exceptions allowed by the Rules applicable.
The trouble is that in rejecting these copies under Rule 130, Section 2, the respondent court disregarded an equally important principle long
observed in our trial courts and amply supported by jurisprudence.

This is the rule that objection to documentary evidence must be made at the time it is formally offered. as an exhibit and not before. Objection prior to
that time is premature.

It is instructive at this paint to make a distinction between Identification of documentary evidence and its formal offer as an exhibit. The first is done in
the course of the trial and is accompanied by the marking of the evidence an an exhibit. The second is done only when the party rests its case and
not before. The mere fact that a particular document is Identified and marked as an exhibit does not mean it will be or has been offered as part of the
evidence of the party. The party may decide to formally offer it if it believes this will advance its cause, and then again it may decide not to do so at
all. In the latter event, the trial court is, under Rule 132, Section 35, not authorized to consider it.

Objection to the documentary evidence must be made at the time it is formally offered, not earlier. The Identification of the document before it is
marked as an exhibit does not constitute the formal offer of the document as evidence for the party presenting it. Objection to the Identification and
marking of the document is not equivalent to objection to the document when it is formally offered in evidence. What really matters is the objection to
the document at the time it is formally offered as an exhibit.

In the case at bar, the photocopies of the airway bills were objected to by the private respondents as secondary evidence only when they, were
being Identified for marking by the prosecution. They were nevertheless marked as exhibits upon the promise that the original airway bills would be
submitted later. it is true that the originals were never produced. Yet, notwithstanding this omission, the defense did not object when the exhibits as
previously marked were formally offered in evidence. And these were subsequently admitted by the trial court. 7

In People v. Teodoro, 8 a document being Identified by a prosecution witness was objected to as merely secondary, whereupon the trial judge
ordered the testimony stricken out. This Court, in holding the objection to be premature, said:

It must be noted that the Fiscal was only Identifying the official records of service of the defendant preparatory to introducing them as evidence. ...
The time for the presentation of the records had not yet come; presentation was to be made after their Identification. For what purpose and to what
end the Fiscal would introduce them as evidence was not yet stated or disclosed. ... The objection of counsel for the defendant was, therefore,
premature, especially as the Fiscal had not yet stated for what purpose he would introduce the said records. ...

The time for objecting the evidence is when the same is offered. (Emphasis supplied).

The objection of the defense to the photocopies of the airway bins while they were being Identified and marked as exhibits did not constitute the
objection it should have made when the exhibits were formally offered in evidence by the prosecution. No valid and timely objection was made at that
time. And it is no argument to say that the earlier objection should be considered a continuing objection under Sec. 37 of Rule 132, for that provision
obviously refers to a single objection to a class of evidence (testimonial or documentary) which when first offered is considered to encompass the
rest of the evidence. The presumption is, of course, that there was an offer and a seasonable objection thereto. But, to repeat, no objection was
really made in the case before us because it was not made at the proper time.

It would have been so simple for the defense to reiterate its former objection, this time seasonably, when the formal offer of exhibits was made. It is
curious that it did not, especially so since the objections to the formal offer of exhibits was made in writing. In fact, the defense filed no objection at all
not only to the photocopies but to all the other exhibits of the prosecution.

The effect of such omission is obvious. The rule is that evidence not objected to is deemed admitted and may be validly considered by the court in
arriving at its judgment. 9 This is true even if by its nature the evidence is inadmissible and would have surely been rejected if it had been challenged
at the proper time.

The records certainly would have been the, beet proof of such former conviction. The certificate was not the best proof. There seems to be no
justification for the presentation of proof of a character. ... Under an objection upon the ground that the said certificate was not the best proof, it
should have been rejected. Once admitted, however, without objection, even though not admissible under an objection, we are not inclined now to
reject it. If the defendant had opportunely presented an objection to the admissibility of said certificate, no doubt the prosecution would have
presented the best proof upon the questions to which said certificate relates. 10

(It) is universally accepted that when secondary or incompetent evidence is presented and accepted without any objection on the part of the other
party, the latter is bound thereby and the court is obliged to grant it the probatory value it deserves. 11

We hold therefore that it was erroneous for the lower courts to reject the photocopies of the airway bills to prove the liability of the private
respondents to the petitioner. While we may agree that there was really no criminal liability that could attach to them because they had no fiduciary
 27

relationship with ITI, the rejected evidence sufficiently established their indebtedness to the petitioner. Hence, we must reverse the ruling below that
"on account of the inadmissibility of the prosecution's Exhibits 'B' and 'OO', coupled with the denial made by the accused, there appears to be no
concrete proof of such accountability."

Accoording to Rule 120, Section 2, of the Rules of Court:

In case of acquittal, unless there is a clear showing that the act from which the civil liability might arise did not exist, the judgment shall make a
finding on the civil liability of the accused in favor of the offended party.

With the admission of such exhibits pursuant to the ruling above made, we find that there is concrete proof of the defendant's accountability. More
than this, we also disbelieve the evidence of the private respondents that the said airway bills had been paid for. The evidence consists only of check
stubs corresponding to payments allegedly made by the accused to the ITI, and we find this insufficient.

As it is Aviles who has alleged payment, it is for him to prove that allegation. He did not produce any receipt of such payment. He said that the
cancelled payment checks had been lost and relied merely on the check stubs, which are self-serving. The prosecution correctly stressed in its
motion for reconsideration that the accused could have easily secured a certification from the bank that the checks allegedly issued to ITI had been
honored. No such certification was presented. In short, the private respondents failed to establish their allegation that payment for the airway bills
delivered to them had been duly remitted to ITI.

In Padilla v. Court of Appeals, 12 we held:

There appear to be no sound reasons to require a separate civil action to still be filed considering that the facts to be proved in the civil case have
already been established in the criminal proceedings where the accused was acquitted. He was, in fact, exonerated of the charge. The constitutional
presumption of innocence called for more vigilant efforts on the part of prosecuting attorneys and defense counsel, a keener awareness by all
witnesses of the serious implications of perjury, and a more studied consideration by the judge of the entire records and of applicable statutes and
precedents. To require a separate civil action simply because the accused was I acquitted would mean needless clogging of court dockets and
unnecessary duplication of litigation with all its attendant loss of time, effort, and money on the part of all concerned.

By the same token, we find that remand of this case to, the trial court for further hearings would be a needless waste of time and effort to the
prejudice of the speedy administration of justice. Applying the above ruling, we hereby declare therefore, on the basis of the evidence submitted at
the trial as reflected in the records before us, that the private respondents are liable to the petitioner in the sum of P204,030.66, representing the cost
of the airway bills.

WHEREFORE, the petition is GRANTED. The challenged decision of the Court of Appeals is SET ASIDE and a new one is rendered ORDERING
the private respondents to. pay to the petitioner the sum of P204,030.66, with 6% interest from November 16, 1981, plus the costs of this suit.
 28

G.R. No. 140944             April 30, 2008

RAFAEL ARSENIO S. DIZON, in his capacity as the Judicial Administrator of the Estate of the deceased JOSE P. FERNANDEZ, petitioner,
vs.
COURT OF TAX APPEALS and COMMISSIONER OF INTERNAL REVENUE, respondents.

DECISION

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Civil Procedure seeking the reversal of the Court of Appeals
(CA) Decision2 dated April 30, 1999 which affirmed the Decision 3 of the Court of Tax Appeals (CTA) dated June 17, 1997. 4

The Facts

On November 7, 1987, Jose P. Fernandez (Jose) died. Thereafter, a petition for the probate of his will 5 was filed with Branch 51 of the Regional Trial
Court (RTC) of Manila (probate court).[6] The probate court then appointed retired Supreme Court Justice Arsenio P. Dizon (Justice Dizon) and
petitioner, Atty. Rafael Arsenio P. Dizon (petitioner) as Special and Assistant Special Administrator, respectively, of the Estate of Jose (Estate). In a
letter7 dated October 13, 1988, Justice Dizon informed respondent Commissioner of the Bureau of Internal Revenue (BIR) of the special proceedings
for the Estate.

Petitioner alleged that several requests for extension of the period to file the required estate tax return were granted by the BIR since the assets of
the estate, as well as the claims against it, had yet to be collated, determined and identified. Thus, in a letter 8 dated March 14, 1990, Justice Dizon
authorized Atty. Jesus M. Gonzales (Atty. Gonzales) to sign and file on behalf of the Estate the required estate tax return and to represent the same
in securing a Certificate of Tax Clearance. Eventually, on April 17, 1990, Atty. Gonzales wrote a letter 9 addressed to the BIR Regional Director for
San Pablo City and filed the estate tax return 10 with the same BIR Regional Office, showing therein a NIL estate tax liability, computed as follows:

COMPUTATION OF TAX

Conjugal Real Property (Sch. 1) P10,855,020.00

Conjugal Personal Property (Sch.2) 3,460,591.34

Taxable Transfer (Sch. 3)

Gross Conjugal Estate 14,315,611.34

Less: Deductions (Sch. 4) 187,822,576.06

Net Conjugal Estate NIL  

Less: Share of Surviving Spouse NIL.  

Net Share in Conjugal Estate NIL  

xxx

Net Taxable Estate NIL.  

Estate Tax Due NIL.11

On April 27, 1990, BIR Regional Director for San Pablo City, Osmundo G. Umali issued Certification Nos. 2052 [12] and 2053[13] stating that the taxes
due on the transfer of real and personal properties [14] of Jose had been fully paid and said properties may be transferred to his heirs. Sometime in
August 1990, Justice Dizon passed away. Thus, on October 22, 1990, the probate court appointed petitioner as the administrator of the Estate. 15
 29

Petitioner requested the probate court's authority to sell several properties forming part of the Estate, for the purpose of paying its creditors, namely:
Equitable Banking Corporation (P19,756,428.31), Banque de L'Indochine et. de Suez (US$4,828,905.90 as of January 31, 1988), Manila Banking
Corporation (P84,199,160.46 as of February 28, 1989) and State Investment House, Inc. (P6,280,006.21). Petitioner manifested that Manila Bank, a
major creditor of the Estate was not included, as it did not file a claim with the probate court since it had security over several real estate properties
forming part of the Estate.16

However, on November 26, 1991, the Assistant Commissioner for Collection of the BIR, Themistocles Montalban, issued Estate Tax Assessment
Notice No. FAS-E-87-91-003269,17 demanding the payment of P66,973,985.40 as deficiency estate tax, itemized as follows:

Deficiency Estate Tax- 1987

Estate tax P31,868,414.48

25% surcharge- late filing 7,967,103.62

late payment 7,967,103.62

Interest 19,121,048.68

Compromise-non filing 25,000.00

non payment 25,000.00

no notice of death 15.00

no CPA Certificate 300.00

Total amount due & collectible P66,973,985.4018

In his letter19 dated December 12, 1991, Atty. Gonzales moved for the reconsideration of the said estate tax assessment. However, in her
letter20 dated April 12, 1994, the BIR Commissioner denied the request and reiterated that the estate is liable for the payment of P66,973,985.40 as
deficiency estate tax. On May 3, 1994, petitioner received the letter of denial. On June 2, 1994, petitioner filed a petition for review 21 before
respondent CTA. Trial on the merits ensued.

As found by the CTA, the respective parties presented the following pieces of evidence, to wit:

In the hearings conducted, petitioner did not present testimonial evidence but merely documentary evidence consisting of the following:

Nature of Document (sic) Exhibits

1. Letter dated October 13, 1988 from Arsenio P. Dizon addressed to the "A"
Commissioner of Internal Revenue informing the latter of the special
proceedings for the settlement of the estate (p. 126, BIR records);

2. Petition for the probate of the will and issuance of letter of administration "B" & "B-1"
filed with the Regional Trial Court (RTC) of Manila, docketed as Sp. Proc.
No. 87-42980 (pp. 107-108, BIR records);

3. Pleading entitled "Compliance" filed with the probate Court submitting the "C"
final inventory of all the properties of the deceased (p. 106, BIR records);

4. Attachment to Exh. "C" which is the detailed and complete listing of the "C-1" to "C-17"
properties of the deceased (pp. 89-105, BIR rec.);

5. Claims against the estate filed by Equitable Banking Corp. with the "D" to "D-24"
probate Court in the amount of P19,756,428.31 as of March 31, 1988,
 30

together with the Annexes to the claim (pp. 64-88, BIR records);

6. Claim filed by Banque de L' Indochine et de Suez with the probate Court "E" to "E-3"
in the amount of US $4,828,905.90 as of January 31, 1988 (pp. 262-265,
BIR records);

7. Claim of the Manila Banking Corporation (MBC) which as of November 7, "F" to "F-3"
1987 amounts to P65,158,023.54, but recomputed as of February 28,
1989 at a total amount of P84,199,160.46; together with the demand letter
from MBC's lawyer (pp. 194-197, BIR records);

8. Demand letter of Manila Banking Corporation prepared by Asedillo, "G" & "G-1"
Ramos and Associates Law Offices addressed to Fernandez Hermanos,
Inc., represented by Jose P. Fernandez, as mortgagors, in the total
amount of P240,479,693.17 as of February 28, 1989 (pp. 186-187, BIR
records);

9. Claim of State Investment House, Inc. filed with the RTC, Branch VII of "H" to "H-16"
Manila, docketed as Civil Case No. 86-38599 entitled "State Investment
House, Inc., Plaintiff, versus Maritime Company Overseas, Inc. and/or
Jose P. Fernandez, Defendants," (pp. 200-215, BIR records);

10. Letter dated March 14, 1990 of Arsenio P. Dizon addressed to Atty. Jesus "I"
M. Gonzales, (p. 184, BIR records);

11. Letter dated April 17, 1990 from J.M. Gonzales addressed to the Regional "J"
Director of BIR in San Pablo City (p. 183, BIR records);

12. Estate Tax Return filed by the estate of the late Jose P. Fernandez "K" to "K-5"
through its authorized representative, Atty. Jesus M. Gonzales, for
Arsenio P. Dizon, with attachments (pp. 177-182, BIR records);

13. Certified true copy of the Letter of Administration issued by RTC Manila, "L"
Branch 51, in Sp. Proc. No. 87-42980 appointing Atty. Rafael S. Dizon as
Judicial Administrator of the estate of Jose P. Fernandez; (p. 102, CTA
records) and

14. Certification of Payment of estate taxes Nos. 2052 and 2053, both dated "M" to "M-5"
April 27, 1990, issued by the Office of the Regional Director, Revenue
Region No. 4-C, San Pablo City, with attachments (pp. 103-104, CTA
records.).

Respondent's [BIR] counsel presented on June 26, 1995 one witness in the person of Alberto Enriquez, who was one of the revenue examiners who
conducted the investigation on the estate tax case of the late Jose P. Fernandez. In the course of the direct examination of the witness, he identified
the following:

Documents/Signatures BIR Record

1. Estate Tax Return prepared by the BIR; p. 138

2. Signatures of Ma. Anabella Abuloc and Alberto Enriquez, Jr. appearing at -do-
the lower Portion of Exh. "1";

3. Memorandum for the Commissioner, dated July 19, 1991, prepared by pp. 143-144
revenue examiners, Ma. Anabella A. Abuloc, Alberto S. Enriquez and
 31

Raymund S. Gallardo; Reviewed by Maximino V. Tagle

4. Signature of Alberto S. Enriquez appearing at the lower portion on p. 2 of -do-

Exh. "2";

5. Signature of Ma. Anabella A. Abuloc appearing at the lower portion on p. 2 -do-

of Exh. "2";

6. Signature of Raymund S. Gallardo appearing at the Lower portion on p. 2 -do-

of Exh. "2";

7. Signature of Maximino V. Tagle also appearing on p. 2 of Exh. "2"; -do-

8. Summary of revenue Enforcement Officers Audit Report, dated July 19, p. 139
1991;

9. Signature of Alberto Enriquez at the lower portion of Exh. "3"; -do-

10. Signature of Ma. Anabella A. Abuloc at the lower portion of Exh. "3"; -do-

11. Signature of Raymond S. Gallardo at the lower portion of Exh. "3"; -do-

12. Signature of Maximino V. Tagle at the lower portion of Exh. "3"; -do-

13. Demand letter (FAS-E-87-91-00), signed by the Asst. Commissioner for p. 169
Collection for the Commissioner of Internal Revenue, demanding payment
of the amount of P66,973,985.40; and

14. Assessment Notice FAS-E-87-91-00 pp. 169-17022

The CTA's Ruling

On June 17, 1997, the CTA denied the said petition for review. Citing this Court's ruling in Vda. de Oñate v. Court of Appeals ,23 the CTA opined that
the aforementioned pieces of evidence introduced by the BIR were admissible in evidence. The CTA ratiocinated:

Although the above-mentioned documents were not formally offered as evidence for respondent, considering that respondent has been declared to
have waived the presentation thereof during the hearing on March 20, 1996, still they could be considered as evidence for respondent since they
were properly identified during the presentation of respondent's witness, whose testimony was duly recorded as part of the records of this case.
Besides, the documents marked as respondent's exhibits formed part of the BIR records of the case. 24

Nevertheless, the CTA did not fully adopt the assessment made by the BIR and it came up with its own computation of the deficiency estate tax, to
wit:

Conjugal Real Property P 5,062,016.00

Conjugal Personal Prop. 33,021,999.93

Gross Conjugal Estate 38,084,015.93

Less: Deductions 26,250,000.00

Net Conjugal Estate P 11,834,015.93

Less: Share of Surviving Spouse 5,917,007.96

 32

Net Share in Conjugal Estate P 5,917,007.96

Add: Capital/Paraphernal

Properties – P44,652,813.66

Less: Capital/Paraphernal Deductions 44,652,813.66

Net Taxable Estate P 50,569,821.62

============

Estate Tax Due P 29,935,342.97

Add: 25% Surcharge for Late Filing 7,483,835.74

Add: Penalties for-No notice of death 15.00

No CPA certificate 300.00

Total deficiency estate tax P 37,419,493.71

============

exclusive of 20% interest from due date of its payment until full payment thereof

[Sec. 283 (b), Tax Code of 1987].25

Thus, the CTA disposed of the case in this wise:

WHEREFORE, viewed from all the foregoing, the Court finds the petition unmeritorious and denies the same. Petitioner and/or the heirs of Jose P.
Fernandez are hereby ordered to pay to respondent the amount of P37,419,493.71 plus 20% interest from the due date of its payment until full
payment thereof as estate tax liability of the estate of Jose P. Fernandez who died on November 7, 1987.

SO ORDERED.26

Aggrieved, petitioner, on March 2, 1998, went to the CA via a petition for review. 27

The CA's Ruling

On April 30, 1999, the CA affirmed the CTA's ruling. Adopting in full the CTA's findings, the CA ruled that the petitioner's act of filing an estate tax
return with the BIR and the issuance of BIR Certification Nos. 2052 and 2053 did not deprive the BIR Commissioner of her authority to re-examine or
re-assess the said return filed on behalf of the Estate. 28

On May 31, 1999, petitioner filed a Motion for Reconsideration 29 which the CA denied in its Resolution30 dated November 3, 1999.

Hence, the instant Petition raising the following issues:

1. Whether or not the admission of evidence which were not formally offered by the respondent BIR by the Court of Tax Appeals which was
subsequently upheld by the Court of Appeals is contrary to the Rules of Court and rulings of this Honorable Court;

2. Whether or not the Court of Tax Appeals and the Court of Appeals erred in recognizing/considering the estate tax return prepared and filed by
respondent BIR knowing that the probate court appointed administrator of the estate of Jose P. Fernandez had previously filed one as in fact, BIR
Certification Clearance Nos. 2052 and 2053 had been issued in the estate's favor;

3. Whether or not the Court of Tax Appeals and the Court of Appeals erred in disallowing the valid and enforceable claims of creditors against the
estate, as lawful deductions despite clear and convincing evidence thereof; and

4. Whether or not the Court of Tax Appeals and the Court of Appeals erred in validating erroneous double imputation of values on the very same
estate properties in the estate tax return it prepared and filed which effectively bloated the estate's assets. 31
 33

The petitioner claims that in as much as the valid claims of creditors against the Estate are in excess of the gross estate, no estate tax was due; that
the lack of a formal offer of evidence is fatal to BIR's cause; that the doctrine laid down in Vda. de Oñate has already been abandoned in a long line
of cases in which the Court held that evidence not formally offered is without any weight or value; that Section 34 of Rule 132 of the Rules on
Evidence requiring a formal offer of evidence is mandatory in character; that, while BIR's witness Alberto Enriquez (Alberto) in his testimony before
the CTA identified the pieces of evidence aforementioned such that the same were marked, BIR's failure to formally offer said pieces of evidence
and depriving petitioner the opportunity to cross-examine Alberto, render the same inadmissible in evidence; that assuming arguendo that the ruling
in Vda. de Oñate is still applicable, BIR failed to comply with the doctrine's requisites because the documents herein remained simply part of the BIR
records and were not duly incorporated in the court records; that the BIR failed to consider that although the actual payments made to the Estate
creditors were lower than their respective claims, such were compromise agreements reached long after the Estate's liability had been settled by the
filing of its estate tax return and the issuance of BIR Certification Nos. 2052 and 2053; and that the reckoning date of the claims against the Estate
and the settlement of the estate tax due should be at the time the estate tax return was filed by the judicial administrator and the issuance of said
BIR Certifications and not at the time the aforementioned Compromise Agreements were entered into with the Estate's creditors. 32

On the other hand, respondent counters that the documents, being part of the records of the case and duly identified in a duly recorded testimony
are considered evidence even if the same were not formally offered; that the filing of the estate tax return by the Estate and the issuance of BIR
Certification Nos. 2052 and 2053 did not deprive the BIR of its authority to examine the return and assess the estate tax; and that the factual findings
of the CTA as affirmed by the CA may no longer be reviewed by this Court via a petition for review. 33

The Issues

There are two ultimate issues which require resolution in this case:

First. Whether or not the CTA and the CA gravely erred in allowing the admission of the pieces of evidence which were not formally offered by the
BIR; and

Second. Whether or not the CA erred in affirming the CTA in the latter's determination of the deficiency estate tax imposed against the Estate.

The Court’s Ruling

The Petition is impressed with merit.

Under Section 8 of RA 1125, the CTA is categorically described as a court of record. As cases filed before it are litigated de novo, party-litigants shall
prove every minute aspect of their cases. Indubitably, no evidentiary value can be given the pieces of evidence submitted by the BIR, as the rules on
documentary evidence require that these documents must be formally offered before the CTA. 34 Pertinent is Section 34, Rule 132 of the Revised
Rules on Evidence which reads:

SEC. 34. Offer of evidence. — The court shall consider no evidence which has not been formally offered. The purpose for which the evidence is
offered must be specified.

The CTA and the CA rely solely on the case of Vda. de Oñate, which reiterated this Court's previous rulings in People v. Napat-a35 and People v.
Mate36 on the admission and consideration of exhibits which were not formally offered during the trial. Although in a long line of cases many of which
were decided after Vda. de Oñate, we held that courts cannot consider evidence which has not been formally offered, 37 nevertheless, petitioner
cannot validly assume that the doctrine laid down in Vda. de Oñate  has already been abandoned. Recently, in Ramos v. Dizon,38 this Court,
applying the said doctrine, ruled that the trial court judge therein committed no error when he admitted and considered the respondents' exhibits in
the resolution of the case, notwithstanding the fact that the same were not formally offered. Likewise, in Far East Bank & Trust Company v.
Commissioner of Internal Revenue,39 the Court made reference to said doctrine in resolving the issues therein. Indubitably, the doctrine laid down
in Vda. De Oñate  still subsists in this jurisdiction. In Vda. de Oñate, we held that:

From the foregoing provision, it is clear that for evidence to be considered, the same must be formally offered. Corollarily, the mere fact that a
particular document is identified and marked as an exhibit does not mean that it has already been offered as part of the evidence of a party.
In Interpacific Transit, Inc. v. Aviles [186 SCRA 385], we had the occasion to make a distinction between identification of documentary evidence and
its formal offer as an exhibit. We said that the first is done in the course of the trial and is accompanied by the marking of the evidence as an exhibit
while the second is done only when the party rests its case and not before. A party, therefore, may opt to formally offer his evidence if he believes
that it will advance his cause or not to do so at all. In the event he chooses to do the latter, the trial court is not authorized by the Rules to consider
the same.

However, in People v. Napat-a [179 SCRA 403] citing People v. Mate [103 SCRA 484], we relaxed the foregoing rule and allowed evidence not
formally offered to be admitted and considered by the trial court provided the following requirements are present, viz.: first, the same must have been
duly identified by testimony duly recorded and, second, the same must have been incorporated in the records of the case.40
 34

From the foregoing declaration, however, it is clear that Vda. de Oñate is merely an exception to the general rule. Being an exception, it may be
applied only when there is strict compliance with the requisites mentioned therein; otherwise, the general rule in Section 34 of Rule 132 of the Rules
of Court should prevail.

In this case, we find that these requirements have not been satisfied. The assailed pieces of evidence were presented and marked during the trial
particularly when Alberto took the witness stand. Alberto identified these pieces of evidence in his direct testimony. 41 He was also subjected to cross-
examination and re-cross examination by petitioner. 42 But Alberto’s account and the exchanges between Alberto and petitioner did not sufficiently
describe the contents of the said pieces of evidence presented by the BIR. In fact, petitioner sought that the lead examiner, one Ma. Anabella A.
Abuloc, be summoned to testify, inasmuch as Alberto was incompetent to answer questions relative to the working papers. 43 The lead examiner
never testified. Moreover, while Alberto's testimony identifying the BIR's evidence was duly recorded, the BIR documents themselves were not
incorporated in the records of the case.

A common fact threads through Vda. de Oñate and Ramos that  does not exist at all in the instant case. In the aforementioned cases, the exhibits
were marked at the pre-trial proceedings to warrant the pronouncement that the same were duly incorporated in the records of the case. Thus, we
held in Ramos:

In this case, we find and so rule that these requirements have been satisfied. The exhibits in question were presented and marked during the pre-
trial of the case thus, they have been incorporated into the records. Further, Elpidio himself explained the contents of these exhibits when he was
interrogated by respondents' counsel...

But what further defeats petitioner's cause on this issue is that respondents' exhibits were marked and admitted during the pre-trial stage as shown
by the Pre-Trial Order quoted earlier. 44

While the CTA is not governed strictly by technical rules of evidence, 45 as rules of procedure are not ends in themselves and are primarily intended
as tools in the administration of justice, the presentation of the BIR's evidence is not a mere procedural technicality which may be disregarded
considering that it is the only means by which the CTA may ascertain and verify the truth of BIR's claims against the Estate. 46 The BIR's failure to
formally offer these pieces of evidence, despite CTA's directives, is fatal to its cause. 47 Such failure is aggravated by the fact that not even a single
reason was advanced by the BIR to justify such fatal omission. This, we take against the BIR.

Per the records of this case, the BIR was directed to present its evidence 48 in the hearing of February 21, 1996, but BIR's counsel failed to
appear.49 The CTA denied petitioner's motion to consider BIR's presentation of evidence as waived, with a warning to BIR that such presentation
would be considered waived if BIR's evidence would not be presented at the next hearing. Again, in the hearing of March 20, 1996, BIR's counsel
failed to appear.50 Thus, in its Resolution51 dated March 21, 1996, the CTA considered the BIR to have waived presentation of its evidence. In the
same Resolution, the parties were directed to file their respective memorandum. Petitioner complied but BIR failed to do so. 52 In all of these
proceedings, BIR was duly notified. Hence, in this case, we are constrained to apply our ruling in Heirs of Pedro Pasag v. Parocha:53

A formal offer is necessary because judges are mandated to rest their findings of facts and their judgment only and strictly upon the evidence offered
by the parties at the trial. Its function is to enable the trial judge to know the purpose or purposes for which the proponent is presenting the evidence.
On the other hand, this allows opposing parties to examine the evidence and object to its admissibility. Moreover, it facilitates review as the appellate
court will not be required to review documents not previously scrutinized by the trial court.

Strict adherence to the said rule is not a trivial matter. The Court in Constantino v. Court of Appeals ruled that the formal offer of one's evidence is
deemed waived after failing to submit it within a considerable period of time. It explained that the court cannot admit an offer of evidence made after
a lapse of three (3) months because to do so would "condone an inexcusable laxity if not non-compliance with a court order which, in effect, would
encourage needless delays and derail the speedy administration of justice."

Applying the aforementioned principle in this case, we find that the trial court had reasonable ground to consider that petitioners had waived their
right to make a formal offer of documentary or object evidence. Despite several extensions of time to make their formal offer, petitioners failed to
comply with their commitment and allowed almost five months to lapse before finally submitting it. Petitioners' failure to comply with the rule on
admissibility of evidence is anathema to the efficient, effective, and expeditious dispensation of justice.

Having disposed of the foregoing procedural issue, we proceed to discuss the merits of the case.

Ordinarily, the CTA's findings, as affirmed by the CA, are entitled to the highest respect and will not be disturbed on appeal unless it is shown that
the lower courts committed gross error in the appreciation of facts. 54 In this case, however, we find the decision of the CA affirming that of the CTA
tainted with palpable error.

It is admitted that the claims of the Estate's aforementioned creditors have been condoned. As a mode of extinguishing an obligation, 55 condonation
or remission of debt56 is defined as:
 35

an act of liberality, by virtue of which, without receiving any equivalent, the creditor renounces the enforcement of the obligation, which is
extinguished in its entirety or in that part or aspect of the same to which the remission refers. It is an essential characteristic of remission that it be
gratuitous, that there is no equivalent received for the benefit given; once such equivalent exists, the nature of the act changes. It may become
dation in payment when the creditor receives a thing different from that stipulated; or novation, when the object or principal conditions of the
obligation should be changed; or compromise, when the matter renounced is in litigation or dispute and in exchange of some concession which the
creditor receives.57

Verily, the second issue in this case involves the construction of Section 79 58 of the National Internal Revenue Code59 (Tax Code) which provides for
the allowable deductions from the gross estate of the decedent. The specific question is whether the actual claims of the aforementioned creditors
may be fully allowed as deductions from the gross estate of Jose despite the fact that the said claims were reduced or condoned through
compromise agreements entered into by the Estate with its creditors.

"Claims against the estate," as allowable deductions from the gross estate under Section 79 of the Tax Code, are basically a reproduction of the
deductions allowed under Section 89 (a) (1) (C) and (E) of Commonwealth Act No. 466 (CA 466), otherwise known as the National Internal Revenue
Code of 1939, and which was the first codification of Philippine tax laws. Philippine tax laws were, in turn, based on the federal tax laws of the United
States. Thus, pursuant to established rules of statutory construction, the decisions of American courts construing the federal tax code are entitled to
great weight in the interpretation of our own tax laws. 60

It is noteworthy that even in the United States, there is some dispute as to whether the deductible amount for a claim against the estate is fixed as of
the decedent's death which is the general rule, or the same should be adjusted to reflect post-death developments, such as where a settlement
between the parties results in the reduction of the amount actually paid. 61 On one hand, the U.S. court ruled that the appropriate deduction is the
"value" that the claim had at the date of the decedent's death. 62 Also, as held in Propstra v. U.S., 63 where a lien claimed against the estate was
certain and enforceable on the date of the decedent's death, the fact that the claimant subsequently settled for lesser amount did not preclude the
estate from deducting the entire amount of the claim for estate tax purposes. These pronouncements essentially confirm the general principle that
post-death developments are not material in determining the amount of the deduction.

On the other hand, the Internal Revenue Service (Service) opines that post-death settlement should be taken into consideration and the claim should
be allowed as a deduction only to the extent of the amount actually paid. 64 Recognizing the dispute, the Service released Proposed Regulations in
2007 mandating that the deduction would be limited to the actual amount paid. 65

In announcing its agreement with Propstra,66 the U.S. 5th Circuit Court of Appeals held:

We are persuaded that the Ninth Circuit's decision...in Propstra correctly apply the Ithaca Trust date-of-death valuation principle to enforceable
claims against the estate. As we interpret Ithaca Trust, when the Supreme Court announced the date-of-death valuation principle, it was making a
judgment about the nature of the federal estate tax specifically, that it is a tax imposed on the act of transferring property by will or intestacy and,
because the act on which the tax is levied occurs at a discrete time, i.e., the instance of death, the net value of the property transferred should be
ascertained, as nearly as possible, as of that time. This analysis supports broad application of the date-of-death valuation rule. 67

We express our agreement with the date-of-death valuation rule, made pursuant to the ruling of the U.S. Supreme Court in Ithaca Trust Co. v. United
States.68 First. There is no law, nor do we discern any legislative intent in our tax laws, which disregards the date-of-death valuation principle and
particularly provides that post-death developments must be considered in determining the net value of the estate. It bears emphasis that tax burdens
are not to be imposed, nor presumed to be imposed, beyond what the statute expressly and clearly imports, tax statutes being construed strictissimi
juris against the government.69 Any doubt on whether a person, article or activity is taxable is generally resolved against taxation. 70 Second. Such
construction finds relevance and consistency in our Rules on Special Proceedings wherein the term "claims" required to be presented against a
decedent's estate is generally construed to mean debts or demands of a pecuniary nature which could have been enforced against the deceased in
his lifetime, or liability contracted by the deceased before his death .71 Therefore, the claims existing at the time of death are significant to, and should
be made the basis of, the determination of allowable deductions.

WHEREFORE, the instant Petition is GRANTED. Accordingly, the assailed Decision dated April 30, 1999 and the Resolution dated November 3,
1999 of the Court of Appeals in CA-G.R. S.P. No. 46947 are REVERSED and SET ASIDE. The Bureau of Internal Revenue's deficiency estate tax
assessment against the Estate of Jose P. Fernandez is hereby NULLIFIED. No costs.
 36

G.R. No. 152866               October 6, 2010

THE HEIRS OF ROMANA SAVES, namely: FIDELA ALMAIDA, EMILIANO ALMAIDA, JESUS ALMAIDA, CATALINA ALMAIDA, ALFREDO RAMOS,
GINA RAMOS, LUZ ALMAIDA, ANITA ALMAIDA, PETRA GENERAL, EDNA GENERAL, ESTHER ALMAIDA, DIONISIA ALMAIDA, CORNELIA
ALMAIDA, FELIMON ALMAIDA (represented by SINFROSA ALMAIDA); The Heirs of RAFAELA SAVES, namely: JULIANA DIZON, HILARIA
DIZON, JOVENCIO DIZON, MAURA DIZON, BABY DIZON & ULDARICO AMISTOSO (represented by ULDARICO AMISTOSO); The Heirs of
JANUARIA SAVES, namely: FELICIDAD MARTINEZ, MARLOU MARTINEZ, ROWENA MARTINEZ, BABY LOU MARTINEZ, BOBERT MARTINEZ,
JERRY MARTINEZ (represented by FELICIDAD MARTINEZ); The Heirs of MAXIMO SAVES, namely: ELPIDIO AMIGO, CELESTINA DEMETRIA
AMIGO, MEREN (daughter of SEVERA SAVES), FRUTO ROSARIO (represented by ELPIDIO AMIGO); The Heirs of BENEDICTA SAVES, namely:
AUTEMIA JUCOM, CATALINA JUCOM, DOLORES JUCOM, SERGIA JUCOM, BENEDICTA JUCOM, JOSEFINA JUCOM, FLORDIVIDA
REMETILLO, FELINA REMETILLO and ANNA MARIE REMETILLO, (represented by AUTEMIA JUCOM), Petitioners,
vs.
THE HEIRS OF ESCOLASTICO SAVES, namely: REMEDIOS SAVES-ADAMOS, LUZ SAVES-HERNANDEZ and DODONG SAVES, and
ENRIQUETA CHAVES-ABELLA, Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

This is a petition for review on certiorari  under Rule 45 of the Rules of Court from the Decision 1 promulgated on June 28, 2001 by the Court of
Appeals, in CA-G.R. CV No. 51058, entitled "The Heirs of Romana Saves, et al. v. The Heirs of Escolastico Saves, et al. ," reversing the
Decision2 dated May 23, 1995 of the Regional Trial Court (RTC) of Dumaguete City, Branch 39 in Civil Case No. 7678, in favor of the petitioners.

The facts of this case as narrated in the assailed Court of Appeals’ Decision are as follows:

Sometime on January 1921, several persons filed their respective claims before the then, Court of First Instance of the province of Oriental Negros
for the titling of the respective lots they occupy, among them were Severo Chaves and Benedicta Chaves, who filed their claim for Lot No. 382, to be
titled in their names, together with Escolastico Saves, Maximo Saves, Romana Saves, Rafaela Saves, and Januaria Saves, in Cadastral Case No.
15.

On April 22, 1921, a Decision was rendered by the court, adjudicating several parcels of land to different claimants, among the lots adjudicated, were
as follows:

1. Lote No. 382 – Se adjudica pro indiviso y en partes iguales a los hermanos Benedicta Saves, Escolastico Saves, Romana Saves, finado Rafaela
Saves, Januaria Saves y Maximo Saves finado en la proindiviso de una sixta parte cada uno. La parte que corresponde a los difuntos Romana
Saves y Maximo Saves perteneceran a sus hijos respectivos;

2. Lote No. 383 – Se adjudica con las mejores existentes en el a la acciedad conyugal formada por Escolastico Saves y Gaudencia Valencia;

3. Lote No. 386 – Se adjudica con las mejoras ixistentes en el a la acciedad conyugal formada por Escolastico Saves y Gaudencia Valencia;

Also on April 22, 1921, Decree No. 177831 was issued by the United States of America for the Court of First Instance of the Province of Negros
ordering the registration of Lot No. 382 in the names of Benedicta Saves, Escolastica Saves, the sons of Romana Saves, deceased, Rafaela Saves,
Januaria Saves, and the sons of Maximo Saves, deceased.

Thereafter, Severo Saves died intestate, leaving his wife, Teresa Ramirez, his four (4) surviving children, and the heirs of his two children who
predeceased him.

On June 21, 1941, Adelaida S. Martinez and Felicidad S. Martinez, who were the heirs of Januaria Saves, who predeceased them, sold their 1/6
share in Lot No. 382 to a certain Gaudencia Valencia evidenced by a public instrument, with Doc. No. 1029, Page 46, Book IV, Series of 1941, of the
notarial register, per allegation in a Motion for the Issuance of Transfer Certificate of Title, filed by Gaudencia Valencia.

On June 30, 1941, a Deed of Sale was executed by the heirs of Romana Saves, namely: Sinforosa Alimayda, Juan Alimayda, Vicente Alimayda,
Felimon Alimayda and Porferia Alimayda; the sole heir of Rafaela Saves, Pablo Saves Dizon; and the sole heir of Escolastico Saves, Teodoro
Saves, their respective 1/6 share in Lot No. 382, or 3/6 of the property, to Gaudencia Valencia.

On June 6, 1947, Benedicta Saves and Marcela Saves, the sole heir of Maximo Saves, sold their respective 1/6 share in Lot No. 382, also to
Gaudencia Valencia, or 2/6 of the property, as embodied in a Deed of Absolute Sale.
 37

Considering that all the 1/6 share, rights, and participation of each co-owner in Lot No. 382 were already sold to Gaudencia Valencia, she initiated
the titling of the said property under her name in a Motion for Issuance of Transfer Certificate of Title before the Court of First Instance of Negros
Oriental. Subsequently, Transfer Certificate of Title No. 148 was issued by the Register of Deeds for Negros Oriental in the name of Gaudencia
Valencia.

Sometime in 1961, Gaudencia Valencia sold the entire property to Enriqueta Chavez Abella, and Transfer Certificate of Title No. 110 was issued in
the name of Enriqueta Chavez, who was married to Charles Abella. 1avvphi1

In 1979, Meleriana Saves, who was then residing in Cebu, wrote her relatives in Negros Oriental, the herein appellees, asking them to verify from the
Register of Deeds information pertaining to Lot 382, as they were among the heirs entitled to said property.

On March 17, 1981, a case for Reconveyance, Partition, and Damages was filed before the Regional Trial Court of Negros Oriental by plaintiffs-
appellees, alleging, inter alia, that Lot No. 382 was fraudulently acquired by Gaudencia Valencia, and that Gaudencia Valencia fictitiously sold the lot
to her grandchild Enriqueta Chaves Abella.

The complaint was amended twice by plaintiffs considering that the original plaintiffs and defendants were all deceased.

The parties failed to arrive to an amicable settlement during the pre-trial stage, but have agreed to exclude Lot 386 in the litigation and limited the
issues as to the ownership of lots 382 and 383, thus, trial ensued. 3 (Citations omitted.)

The trial court rendered a Decision in favor of the petitioners, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing considerations, judgment is rendered –

1. Dismissing defendants’ counterclaim;

2. Declaring the Deed of Sale and Deed of Absolute Sale null and void ab initio; and being derived from a polluted source, whatever documents
Gaudencia Valencia executed in favor of defendant Enriquita Chavez Abella in relation to Lot No. 382, Dumaguete Cadastre and the issuance of
TCT No. 110 covering said lot, suffers the same legal infirmity that of a total nullity;

3. Ordering defendant Enriquita Chavez Abella to convey and deliver unto the plaintiffs their shares of Lot No. 382, Dumaguete Cadastre in the
proportion of their respective rights and interests thereto which they are entitled to participate and succeed from the shares of their predecessors-in-
interest who are the original registered owners of the aforesaid lot; and after which, the parties are ordered to effect physical division and partition of
the lot in question to avoid further animosity between and among themselves;

4. Ordering defendant Enriquita Chavez Abella to pay plaintiffs ₱6,000.00 as litigation expenses and ₱2,500.00 as plaintiff’s counsel court
appearances as well as moral damages in the sum of ₱120,000.00;

5. Dismissing plaintiff’s claim of Lot No. 383, Dumaguete Cadastre, for lack of merit, the same is originally titled in the name of Escolastico Saves,
married to Gaudencia Valencia; and

6. Defendant Enriquita Chavez Abella is ordered to pay the costs. 4 (Citations omitted.)

Respondents appealed the RTC Decision to the Court of Appeals which reversed and set aside the same in the herein assailed Court of Appeals
Decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the Decision dated, May 23, 1995 rendered by the Regional Trial Court of Negros Oriental, Branch 39, is
hereby REVERSED and SET ASIDE, and a new one entered, declaring Transfer Certificate of Title No. 110 in the name of Enriqueta Chaves Abella
as valid and subsisting, and the complaint filed by the plaintiffs is DISMISSED for lack of merit. 5

Petitioners filed a Motion for Reconsideration but this was denied by the Court of Appeals in a Resolution 6 promulgated on March 7, 2002, the
dispositive portion of which reads:

WHEREFORE, the foregoing premises considered, the Motion for Reconsideration is DENIED for lack of merit. 7

Unperturbed by the adverse Court of Appeals Decision, petitioners come before this Court and raise the following issues:

(a) Can the Court of Appeals, in the exercise of its appellate jurisdiction, consider as evidence exhibits not formally offered as such by the
defendants (now respondents) in the trial court?

(b) Are exhibits (Exhibits "7", "8" and "13") not formally offered as evidence by the defendants in the trial court subject to judicial notice by the Court
of Appeals for the purpose of utilizing the same as basis for the reversal of the trial court’s decision?
 38

(c) Is it legally correct to consider a rule of evidence simply as a rule of procedure? x x x. 8

Petitioners also put into issue the failure of the Court of Appeals to consider respondent Enriquita Chaves-Abella (hereinafter "Abella") a purchaser
and registrant in bad faith9 and the reasonableness of its declaration that, even if petitioners are indeed co-owners of Lot No. 382, they are already
barred due to the equitable principle of estoppel by laches in asserting their rights over the same. 10

We find the instant petition to be without merit.

The first three issues propounded by petitioners can be summed up into the question of whether or not the Court of Appeals can consider evidence
not formally offered in the trial court as basis for the herein assailed Court of Appeals ruling.

Petitioners draw attention to the fact that respondents did not formally offer Exhibits "7," "8" and "13" at the trial court proceedings. In accordance
with Section 34, Rule 132 of the Revised Rules of Court, 11 the trial court did not consider them as evidence. Despite this, the Court of Appeals
allegedly utilized the same as basis for reversing and setting aside the trial court’s decision.

It is a basic procedural rule that the court shall consider no evidence which has not been formally offered. The purpose for which the evidence is
offered must be specified.12 A formal offer is necessary because judges are mandated to rest their findings of facts and their judgment only and
strictly upon the evidence offered by the parties at the trial. Its function is to enable the trial judge to know the purpose or purposes for which the
proponent is presenting the evidence. On the other hand, this allows opposing parties to examine the evidence and object to its admissibility.
Moreover, it facilitates review as the appellate court will not be required to review documents not previously scrutinized by the trial court. 13

However, in People v. Napat-a,14 citing People v. Mate,15 we relaxed the foregoing rule and allowed evidence not formally offered to be admitted and
considered by the trial court provided the following requirements are present, viz: first, the same must have been duly identified by testimony duly
recorded and, second, the same must have been incorporated in the records of the case. 16

In the case at bar, the records would show that the above requisites have been satisfactorily complied with respect to Exhibit "7."

With regard to Exhibit "7," which is a document entitled " Motion for the Issuance of Transfer Certificate of Title " filed by Gaudencia Valencia
(hereinafter "Valencia") in the same trial court that led to the issuance of Transfer Certificate of Title (TCT) No. 148, the records would show that it is
the same document that petitioners’ witness Fruto Rosario identified in his March 5, 1984 testimony and marked as petitioner-plaintiffs’ Exhibit "I." He
testified as follows:

Empleo Here is another document, Mr. Rosario, which appears to be a motion for issuance of transfer certificate of title, dated March 9, 1948, in 3
pages. Will you please go over this certified true copy of the motion in Cad. Case No. 1, GLRO Rec. No. 140, Lot 382, and find out if these are
among the documents which you have obtained in connection with your verification?

A Yes, this is the one, these are among the documents.

Empleo We request that this certified true copy of the motion for issuance of transfer certificate of title in Cad. Case No. 1, GLRO Rec. No. 140, Lot
382, be marked as Exhibit "I" for page one; "I-1" for page two and "I-2" for page 3.

Appearing on Exh. I is a third paragraph, which states, "that Maximo Saves, owner of 1/6 of Lot 382 is now dead, upon his death Marcela Saves is
the only heiress and successor of his rights and interest in and over 1/6 portion of said lot." Do you understand that?

A Yes, Sir.

Q Is it true that Maximo Saves left only one heir named Marcela Saves?

A No, Sir, it is not true.

Q Why is it not true?

A Because Maximo had two children, Sir.

Empleo We request that paragraph 3 be marked as Exhibit "I-3".

Court (to witness): Who died ahead Severa or Maximo?

A Maximo, Sir.

Court Who died ahead Marcela or Severa?

A Severa.
 39

Court Did Severa die before 1948?

A No, Sir, because she died before the war; she died in 1940.

Court So, when this motion for issuance of certificate of title was filed on March 10, 1948, Severa had already died?

A Yes, Sir.

Court And when this motion was filed on March 10, 1948, Marcela was still alive?

A Yes.

Court That is why the motion and which resulted to a certificate of title had only claim Marcela as a surviving heir of Maximo?

A That is not so, Sir, because what about us the children of Severa?

Court ORDER

The hour of noon having come, continuance of the direct examination of fifth plaintiffs’ witness Fruto Rosario, as already scheduled, will be done
tomorrow at 10:30 a.m.17

Verily, Exhibit "7" was incorporated and made part of the records of this case as a common exhibit of the parties. 18 That only plaintiffs were able to
formally offer the said motion as Exhibit "I" most certainly does not mean that it can only be considered by the courts for the evidentiary purpose
offered by plaintiffs. It is well within the discretion of the courts to determine whether an exhibit indeed serves the probative purpose for which it is
offered.

Likewise, Exhibit "13," which is TCT No. 11019 or the Torrens title that was issued to respondent Abella after she bought Lot No. 382 from Valencia,
complies with the requirements enunciated in Napat-a and Mate.

The records of the case bear out that Exhibit "13" was identified by respondent Abella during the continuation of her direct examination on March 15,
1988. This much was noted even by the trial court in its Decision dated May 23, 1995, to wit:

During the continuation of the direct examination, witness Enriquita Chavez Abella testified and identified the TCT No. 110 of Lot No. 382 registered
in the name of Enriquita Chavez which priorly reserved and now marked Exh. "13." x x x. 20 (Emphasis supplied.)

Moreover, it cannot be denied that Exhibit "13" was included in the records that was elevated to the Court of Appeals. 21 In fact, the Court of Appeals
correctly noted Abella’s testimony regarding this document in resolving petitioners’ motion for reconsideration. 22

It is likewise worth emphasizing that under the Revised Rules on Evidence, an admission, verbal or written, made by a party in the course of the
proceedings in the same case, does not require proof – such admission may be contradicted only by showing that it is made through palpable
mistake or that no such admission was made.23

The existence of Exhibit "13" was not only known to petitioners but it was expressly alleged in their Appellees’ Brief 24 filed with the Court of Appeals
and their Petition for Review25 filed with this Court that Lot No. 382 is registered in the name of respondent Abella.

Indeed, petitioners did not merely acknowledge the existence of TCT No. 110 (respondents’ Exhibit "13"), but in fact relied upon it in order to put
forward their main theory that the sale from Valencia to respondent Abella is fictitious or void because, according to petitioners, it appears from the
said title that respondent Abella was supposedly only nine years old at the time of the transaction. Verily, it is inconsistent for petitioners to claim that
Exhibit "13" proves its theory and in the same breath assail it as inadmissible.

Lastly, petitioners’ present objection to Exhibit "8" hardly deserves any credit. Exhibit "8" is a rather innocuous document which has no bearing on
any of the significant issues in this case. Its existence was only referred to in the second paragraph of page 7 of the RTC Decision wherein it is
identified as an "Order of the Hon. Court dated May 11, 1948." 26 Though it never formed part of the records of this case upon appeal, a careful
perusal of the assailed Court of Appeals’ Decision would reveal that Exhibit "8" was not in any way used or referred to by the Court of Appeals in
arriving at the aforementioned ruling.

Anent the issue of whether or not the Court of Appeals erred in failing to consider that respondent Abella is a purchaser in bad faith, petitioner insists
that "for failing to exercise prudent (sic) and caution in buying the property in question," 27 respondent Abella is a buyer in bad faith. She did not
investigate closely the basis of the ownership of Gaudencia Valencia, her grandmother, over Lot No. 382 which a buyer in good faith should have
done under the circumstances. She did not even bother to know the persons from whom her grandmother acquired the parcel in question. 28
 40

Respondents argue that the issue of good faith or bad faith of Enriquita Chaves-Abella was not raised in the Complaint filed by petitioners in the
RTC. Petitioners’ original theory of the case is that the sale by Gaudencia Valencia to Enriquita Chaves-Abella was fictitious because the latter was
only nine years old at the time of the sale. However, during trial, it was clearly established by common evidence that Enriquita was already married to
Charles Abella when she bought the lot in 1961, and, as a matter of fact, the purchase money was provided by her husband, Charles. Confronted
with the above situation which completely destroyed their theory of the case, petitioners switched from their "fictitious sale to a 9-year old" theory to
an entirely different theory, to wit: that Enriquita Chaves-Abella is a purchaser in bad faith. 29

Despite this, the RTC declared that respondent Abella is a purchaser in bad faith because "[s]he did not investigated (sic) closely the basis of the
ownership of Gaudencia Valencia over Lot No. 382 which a buyer in good faith should have done under the circumstances." 30

The Court of Appeals reversed the above finding and ruled that respondent Abella is an innocent purchaser for value and in good faith because the
"[r]ecords reveal that appellant derived her title of Lot No. 382 from the title of Gaudencia Valencia, who sold the entire property to the former.
Appellant relied on the face of Transfer Certificate of Title No. 148 in the name of Gaudencia Valencia, which was free from any encumbrances or
annotation."31

We agree with the Court of Appeals’ ruling in this regard.

It is a well-settled doctrine that one who deals with property registered under the Torrens system need not go beyond the same, but only has to rely
on the certificates of title. He is charged with notice only of such burdens and claims as are annotated on the certificates. 32

In the case at bar, TCT No. 110, which represented proof of respondent Abella’s ownership of Lot No. 382, did not contain any encumbrance or
annotation that was transferred from its title of origin - TCT No. 148. It must be recalled that the plaintiffs called Abella as one of their witnesses
during the trial of this case. It is Abella’s unrebutted testimony, elicited as a hostile witness for the plaintiffs, that her predecessor-in-interest’s
(Valencia’s) title was clean when she (Abella) purchased the property. 33 To be sure, the burden to prove that Abella had notice of any defect in the
title of her predecessor lies with the plaintiffs. Plaintiffs failed to substantiate their contention. On the contrary, their own evidence tended to prove
that Abella was a purchaser in good faith of the property.

Likewise, there is no cogent reason or legal compulsion for respondent Abella to inquire beyond Valencia’s title over the property at issue since the
latter had been in possession of Lot No. 382 prior to the sale. Settled is the rule that a buyer of real property in possession of persons other than the
seller must be wary and should investigate the rights of those in possession, for without such inquiry the buyer can hardly be regarded as a buyer in
good faith and cannot have any right over the property. 34 As pointed out by the assailed Court of Appeals’ Decision, Valencia had been occupying
the property prior to its sale to respondent Abella. Herein petitioners were never in possession of the property from the very start, nor did they have
any idea that they were entitled to the fruits of the property not until co-petitioner Meleriana Saves wrote her relatives, co-petitioners in this case,
about the possibility of having a claim to the property. 35

Neither does the plaintiffs’ insistence that Exhibits "G" and "H" (the deeds of sale executed in favor of Valencia) were void support their theory that
Abella is a purchaser in bad faith. To begin with, we agree with the Court of Appeals’ ruling that the purported irregularities in Exhibits "G" and "H"
relied upon by the trial court hardly suffice to deem the said contracts as null and void. There is no need to repeat the Court of Appeals’
comprehensive and apt discussions on this point here. What must be highlighted, however, is the fact that Abella had no participation in the
execution of Exhibits "G" and "H" which were signed by the parties thereto when she was very young. Like any stranger to the said transactions, it
was reasonable for Abella to assume that these public documents were what they purport to be on their face in the absence of any circumstance to
lead her to believe otherwise.

A purchaser in good faith is one who buys property without notice that some other person has a right to or interest in such property and pays its fair
price before he has notice of the adverse claims and interest of another person in the same property. 36 Clearly, the factual circumstances
surrounding respondent Abella’s acquisition of Lot No. 382 makes her an innocent purchaser for value or a purchaser in good faith.

Finally, on the issue of whether or not petitioners, in the remote possibility that they are co-owners of Lot No. 382, are barred from asserting their
claims over the same because of estoppel by laches, petitioners argue that they are not guilty of unreasonable and unexplained delay in asserting
their rights, considering that they filed the action within a reasonable time after their discovery of the allegedly fictitious deeds of sale, which evinced
Lot No. 382’s transfer of ownership to Valencia, in 1980. They maintain that the delay in the discovery of the simulated and fictitious deeds was due
to the fact that Escolastico Saves with spouse Valencia committed the acts surreptitiously by taking advantage of the lack of education of plaintiffs’
ascendants.37

Respondents counter petitioners’ claims by underscoring the fact that, since the 1940’s when their predecessors-in-interest sold their shares in and
over Lot No. 382 up to the filing of this case in 1981, petitioners had never taken possession of Lot No. 382 nor did they file any claim adverse to the
ownership of Gaudencia Valencia. Since the sale of Lot No. 382 by Valencia to respondent Abella in 1961 up to 1981 when this case was filed,
petitioners had continued to sleep on their professed rights. As found by the Court of Appeals, "[p]laintiffs were never in possession of the property
from the very start, nor did they have any inkling that they were entitled to the fruits of the property, not until one of the plaintiffs wrote her relatives
about the possibility of being heirs to the property." 38
 41

On this issue, we again hold in favor of respondents.

Laches is defined as the failure to assert a right for an unreasonable and unexplained length of time, warranting a presumption that the party entitled
to assert it has either abandoned or declined to assert it. 39 In the case at bar, plaintiffs, assuming that they or their predecessors-in-interest had rights
over the land in question, obviously neglected to exercise these rights by failing to assert any adverse claim over the property or demand any share
of its fruits for many years. Not unlike their predecessors, petitioners never interposed any challenge to Valencia’s continued possession under title
of ownership over Lot No. 382 ever since the entire property was sold to her in 1947 which led to the issuance of TCT No. 148 in her name.
Likewise, petitioners and their predecessors-in-interest did not mount any opposition to the sale of Lot No. 382 by Valencia to respondent Abella in
1961 which prompted the issuance of TCT No. 110. It was not only until 1981, or 34 years from Valencia’s acquisition of the entire lot and 20 years
from the transfer of ownership over the same to respondent Abella, that petitioners decided to assert their alleged rights over the property in a proper
action in court.

Petitioners contend that the delay is attributable to the surreptitious manner by which Valencia acquired Lot No. 382 from their predecessors-in-
interest but, on this point, petitioner’s evidence gravely lacks credibility and weight as shown by the records. Instead, the evidence thus presented by
both parties, as found by the Court of Appeals, would lean towards the conclusion that petitioners’ inaction for the past so many years belies any
present conviction on their part that they have any existing interest over the property at all. Thus, even if we grant that petitioners are co-owners of
the property at issue, it is only fair and reasonable for this Court to apply the equitable principle of estoppel by laches against them in order to avoid
an injustice to respondent Abella who is the innocent purchaser for value in this case. 40

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals, dated June 28, 2001 in CA-G.R. CV No. 51058, is hereby AFFIRMED.
Costs against petitioners.
 42

G.R. No. L-27950 July 29, 1971

TORIBIA LAMAGAN, petitioner-appellant,
vs.
HON. RAFAEL DE LA CRUZ, as Judge of the Court of First Instance of Camarines Sur, and COSME O. FOLLOSCO, respondents-appellees.

Moises C. Kallos for petitioner-appellant.

Reyes & Dy-Liacco for respondent-appellee Cosme O. Follosco.

TEEHANKEE, J.:

Appeal by certiorari from a resolution of the Court of Appeals dismissing the petition for certiorari filed with said court by appellant seeking to set
aside a formal ruling issued by the Court of First Instance of Camarines Sur during the course of the trial of the ejectment case below sustaining the
adverse party's objection of evidence preferred * by appellant as defendant therein and indicating the nature of evidence that would be deemed
admissible and competent against the adverse party's torrens title.

As narrated in the petition itself, a complaint for ejectment and damages was filed on September 12, 1963 by respondent Cosme O. Follosco as
plaintiff against petitioner Toribia Lamagan and her husband Ambrosio Leonor (now deceased) as defendants in the lower court presided by
respondent judge.1 Follosco prayed of the lower court that it order defendants to vacate the 48-hectare portion of his land "illegally occupied" by them
and to restore possession thereof to him. The disputed portion of land is part of several lots totaling over 500 hectares, of which Follosco is the
registered owner by virtue of original certificate of title No. 178 issued by the Camarines Sur register of deeds in April, 1950.

In answer to Follosco's complaint, petitioner Lamagan and her late husband as defendants claimed that they and their predecessors-in-interest were
in open and adverse possession of the property since 1890; that Follosco's title was acquired through fraud and deceit, and that the land should be
deemed held in trust by Follosco for them, and that the suit was brought by Follosco "only after many years since he obtained his title thereto to hide
from defendants' knowledge that the latter's land was in fact covered by (Follosco's) title." 2 As counterclaim, defendants prayed for the reconveyance
of the disputed land to them on the theory that the same should be deemed as held in trust by Follosco for them.

The issues having been joined, Follosco as plaintiff presented through counsel his evidence, oral and documentary, and closed his case. Defendants
then presented as their first witness petitioner's late husband in support of their defense and counterclaim for reconveyance. In the course of his
direct examination by petitioner's counsel, Follosco's counsel objected to a question dealing with the ownership of the land and manifested a
continuing objection to all similar questions which would elicit evidence of alleged ownership of defendants, on the ground that Follosco's title was
already indefeasible and beyond judicial review.

The question was apparently extensively argued and respondent court adjourned the trial at noon and issued his three-page written resolution of
August 15, 1966, ruling that any claims of defendants based on an alleged pre-existing right prior to the alleged fraudulent issuance of the title in
favor of Follosco was already barred under section 38 of Act 496 and that since no petition to reopen and review the decree of registration on the
ground of fraud had been filed within one year from issuance of the decree, Follosco's title had become indefeasible and could no longer be attacked
collaterally. Respondent court therefore ruled that "the court so resolves that all questions tending to elicit proof of ownership other than those which
will prove a better and earlier issued Torrens Title duly registered in favor of the defendants or any of the defendants  shall be barred and be not
heard" and sustained Follosco's objection to defendants' line of questioning, holding that "(T)his court, without attempting to decide the case at its
present stage, will, therefore, entertain from the defendants proofs and evidence which will indomitably (sic) show a better and earlier Torrens Title
issued to the defendants, if there is any."

Petitioner-defendant claims that the effect of respondent court's questioned resolution was to totally prevent her from adducing at the trial any further
evidence in support of her defense to the action for ejectment and of her counterclaim for reconveyance of the disputed land, such as her
documentary evidence, allegedly consisting, inter alia, of a possessory information title in the name of one Mariano Lamagan dated November 21,
1891, deed of sale by Mariano Lamagan in favor of Nicolas Cambiado dated April 13, 1909, deed of sale by Nicolas Cambiado in favor of Leoncio
Lamagan (petitioner's father) dated August 7, 1913, tax declarations, etc. Her motion for reconsideration having been denied by the trial court's order
of September 29, 1966, she asked respondent court to suspend further proceedings in the case below pending her elevation of the disputed ruling
for review by the appellate courts, and respondent court acceded accordingly.

Petitioner accordingly filed her petition for certiorari with the Court of Appeals,3 which handed down its minute resolution of June 21, 1967, dismissing
the same for failure to state a sufficient cause of action for the following principal reasons: "... (b) in the [respondent court's] resolution of August 15,
1966, the petitioner is permitted to present evidence which will indubitably show a better right; and (c) the issue does not appear to be within the
ambit of a writ of certiorari." The appellate court in its August 2, 1967 resolution, denying petitioner's motion for reconsideration of its dismissal order,
further noted that "the counterclaim for reconveyance has already prescribed (J. M. Tuason & Co., Inc. vs. Adolfo Magangal, G.R. No. L-15539,
January 30, 1962)."
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Hence this appeal to which the Court gave due course on the strength of petitioner's urgent plea for relief from the "virtual refusal of the trial court to
hear defendants in their defense, violative of due process."

The crux of the issues presented by petitioner-appellant in the appeal is basically procedural with particular reference to the rules governing the
admission or exclusion of evidence: did the appellate court commit any grave error, correctible by certiorari, in refusing to review on certiorari the trial
court's disputed ruling in the case below rejecting petitioner's contested evidence and dismissing the petition filed for the purpose, on the principal
ground that such ruling is an interlocutory matter and any question as to the correctness thereof does not fall "within the ambit of a writ of certiorari"
and may only be reviewed on appeal taken from a decision rendered on the merits of the case.

The appellate court's dismissal of the petition was in full accord with the rules and applicable jurisprudence of the Court and must be affirmed.

1. As petitioner-appellant concedes in her petition and brief, 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. If the rule were otherwise, there simply would be no end to the trial of cases, for any litigant, not satisfied with the trial court's ruling
admitting or excluding any proferred (sic) oral or documentary evidence, would then indefinitely tie up the trial while elevating the ruling for review by
the appellate court.

2. Neither has petitioner made out a case for her claim that she should be permitted the special recourse of seeking a review of the trial court's ruling
by certiorari, since it virtually ruled out all her evidence in support of her defense to the ejectment and of her counterclaim for reconveyance, and
hence, appeal in due course was not an adequate remedy.

The true and special function of writ of certiorari was defined by the Court in Fernando vs. Vasquez4 thus: "A line must be drawn between errors of
judgment and errors of jurisdiction. An error of judgment is one which the court may commit in the exercise of its jurisdiction. An error of jurisdiction
renders an order or judgment void or voidable. Errors of jurisdiction are reviewable on certiorari; errors of judgment, only by appeal. Let us not lose
sight of the true function of the writ of certiorari — "to keep an inferior court within the bounds of its jurisdiction or to prevent it from committing such
a grave abuse of discretion amounting to excess of jurisdiction ." And, abuse of discretion must be so grave and patent to justify the issuance of the
writ."

The Court likewise cited therein the exceptional cases where certiorari had been entertained despite the existence of the remedy of an appeal. "But
in those cases, either public welfare and the advancement of public policy so dictate, or the broader interests of justice so require, or the orders
complained of were found to be completely null and void, or appeal was not considered the appropriate remedy, such as in appeals from orders of
preliminary attachment or appointment of receiver." 5 Thus, in People vs. Abalos,6 the Court granted as an exception a writ of certiorari against the
trial court's ruling rejecting rebuttal evidence for the prosecution, pointing out that "once the accused has been acquitted, there is no means to secure
a review by appeal, no matter how erroneous the action of the lower court may have been." No equally compelling reason has been advanced by
petitioner as would place her case within the exceptions.

3. Petitioner may have reason in law to complain against the trial court's ruling that it would admit from her only evidence of "a better and earlier
issued torrens title duly registered in favor of the defendants or any of (them)", since it merely held petitioner's one-year period to reopen the decree
in favor of respondent Follosco on the ground of fraud to have already lapsed, but did not take into account petitioner's action in equity (by way of her
counterclaim) for the reconveyance of the land on the principle of constructive trust. Such an action precisely concedes that the adverse party
wrongfully succeeded in obtaining a torrens title but prays that such title should be ordered canceled and reconveyed in favor of the claimant as the
true beneficiary rightfully entitled thereto.

Assuming that the trial court erred in rejecting petitioner's proferred (sic) evidence, petitioner's recourse is clear under the long established rules, to
wit, to make a formal offer of the evidence under Rule 132, section 35, stating on the record what a party or witness would have testified to were his
testimony not excluded, as well as attaching to the record any rejected exhibits. The Court has long noted that "it is the better practice to unite with
the record exhibits ... which have been rejected,"7 and that such rejected or excluded exhibits "should have been permitted by the judge a quo to be
attached to the record even if not admitted in evidence, so that in case of an appeal ... the court ad quem may thus be able to examine said exhibits
and to judge whether or not their rejection was erroneous ."8

4. The validity of the cited rule, i.e. to bring up to the appellate court the rejected exhibits upon a proper appeal from a decision on the merits of the
case, enabling the appellate court to examine all the exhibits and evidence of record and judge accordingly whether the trial court erred in rejecting
the excluded exhibits was evident in the very case at bar. Here, petitioner sought to attach to the records here the exhibits which she intended to
present to the trial court but were ruled out by it. Since there has been no decision rendered as yet by the trial court and respondent has denounced
the proferred (sic) documents as "gross and careless forgery" 9 which should be passed upon by the trial court in the first instance, the Court had to
order said documents expunged from the records of the case at bar. 10

Again, respondent has cited the 1953 case of Follosco vs. Director of Lands, 11 wherein the appeal of petitioner Lamagan and her other co-
appellants (as homestead claimants) from the lower court's order denying their petition to set aside its judgment of August 27, 1948 declaring
respondent Follosco the owner of the land subject of the registration proceedings was turned down by this Court. This fact places in grave doubt the
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veracity of petitioner's allegation that Follosco had sought to hide from her the fact of his having secured title to the land in question, and appears to
provide ample justification for the appellate court's pronouncement in its August 2, 1967 resolution as to her counterclaim for reconveyance having
"already prescribed."

At any rate, all these questions will have first to be necessarily passed upon and resolved by the trial court in the decision that it has yet to render —
which serves but to demonstrate the impropriety and prematurity of petitioner's present action.

5. Finally, it seems in order, nevertheless, to reiterate the Court's admonitions to trial courts, as in Abalos, 12 citing the 1929 case of Prats & Co. vs.
Phoenix Insurance Co., 13 that "(I)n the course of long experience we have observed that justice is most effectively and expeditiously administered in
the courts where trivial objections to the admission of proof are received with least favor. The practice of excluding evidence on doubtful objections to
its materiality or technical objections to the form of the questions should be avoided. In a case of any intricacy it is impossible for a judge of first
instance, in the early stages of the development of the proof, to know with certainty whether testimony is relevant or not; and where there is no
indication of bad faith on the part of the attorney offering the evidence, the court may as a rule safely accept the testimony upon the statement of the
attorney that the proof offered will be connected later." In other words, where there is no indication of bad faith on the part of the party offering the
evidence or of a design to unduly prolong the trial, the Court has counseled trial courts to be liberal in accepting proferred (sic) evidence, since even
if they were to refuse to accept the evidence, the affected party should nevertheless be allowed to spread the excluded evidence on the record, for
review on appeal, as indicated in paragraph 3 supra.

As pointed out in Prats, supra "the admission of proof in a court of first instance, even if the question as to its form, materiality, or relevancy is
doubtful, can never result in much harm to either litigant, because the trial judge is supposed to know the law; and it is its duty, upon final
consideration of the case, to distinguish the relevant and material from the irrelevant and immaterial. If this course is followed and the cause is
prosecuted to the Supreme Court upon appeal, this court then has all the material before it necessary to make a correct judgment."

In any event, should the trial court exclude evidence that it deems clearly irrelevant and inadmissible, it should not — in the absence of an injunction
order from the appellate courts or of strong compelling reasons above indicated - order the suspension of the trial pending the outcome of any
recourse sought by the affected party from the higher courts but should continue with the trial and render in due course its judgment, which may then
be properly appealed from. Needless delay in the trial and determination of the case would thus be avoided, unlike in the case at bar where the trial
court erroneously acceded to suspending the trial below pending the outcome of this proceeding. It should be sufficient in such cases that the trial
court afford the affected party a reasonable period and opportunity to secure from the higher courts a preliminary injunction order against the
continuation of the trial, and thereafter proceed with the trial and judgment of the case upon the party's failure to secure such injunctive order.

ACCORDINGLY, the resolution appealed from is hereby affirmed and the petition is dismissed. With costs against petitioner.